---

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,
2010

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

For the transition period from ________to ________

COMMISSION FILE NUMBER000-50033

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

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

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

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

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). 
[
] Yes [ ] No

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

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

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

Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date: As of
November 15, 2010, the Registrant had 122,434,442 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 three and nine months ended
September 30, 2010 are not necessarily indicative of the results that can be
expected for the year ending December 31, 2010.

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

2

---

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

|                                                                                                                                                                                                                           |   | (Unaudited)        |   |   |                   |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------------ | - | - | ----------------- | -
|                                                                                                                                                                                                                           |   | September 30, 2010 |   |   | December 31, 2009 |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|ASSETS                                                                                                                                                                                                                     |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Current assets                                                                                                                                                                                                             |   |                    |   |   |                   |  
|Cash                                                                                                                                                                                                                       | $ | 3,166,543          |   | $ | 3,651,015         |  
|Short-term investments                                                                                                                                                                                                     |   | 898,632            |   |   | -                 |  
|Other receivables                                                                                                                                                                                                          |   | 30,000             |   |   | -                 |  
|Prepaid expenses                                                                                                                                                                                                           |   | 140,143            |   |   | 90,284            |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total current assets                                                                                                                                                                                                       |   | 4,235,318          |   |   | 3,741,299         |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Property and equipment, net                                                                                                                                                                                                |   | 4,211,241          |   |   | 3,763,118         |  
|Mineral properties                                                                                                                                                                                                         |   | 31,948,053         |   |   | 31,948,053        |  
|Reclamation bonds                                                                                                                                                                                                          |   | 908,368            |   |   | 908,368           |  
|Deposits                                                                                                                                                                                                                   |   | 22,200             |   |   | 22,200            |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total
      non-current assets                                                                                                                                                                                             |   | 37,089,862         |   |   | 36,641,739        |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total assets                                                                                                                                                                                                               | $ | 41,325,180         |   | $ | 40,383,038        |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|LIABILITIES AND STOCKHOLDERS'
      EQUITY                                                                                                                                                                                 |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Current liabilities                                                                                                                                                                                                        |   |                    |   |   |                   |  
|Accounts payable                                                                                                                                                                                                           | $ | 354,579            |   | $ | 133,541           |  
|Accounts payable - related
      party                                                                                                                                                                                     |   | 54,513             |   |   | 101,213           |  
|Accrued payroll and related taxes                                                                                                                                                                                          |   | 51,613             |   |   | 14,799            |  
|Due to related party                                                                                                                                                                                                       |   | 23,290             |   |   | 23,290            |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total current
      liabilities                                                                                                                                                                                            |   | 483,995            |   |   | 272,843           |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Long-term liabilities                                                                                                                                                                                                      |   |                    |   |   |                   |  
|Accrued reclamation and remediation costs                                                                                                                                                                                  |   | 275,338            |   |   | 275,338           |  
|Deferred tax liability                                                                                                                                                                                                     |   | 6,032,792          |   |   | 7,368,534         |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total long-term
      liabilities                                                                                                                                                                                          |   | 6,308,130          |   |   | 7,643,872         |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total
      liabilities                                                                                                                                                                                                    |   | 6,792,125          |   |   | 7,916,715         |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Commitments and contingencies - Note 13                                                                                                                                                                                    |   | -                  |   |   | -                 |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Stockholders' equity 
        
      Common stock, $0.001 par value; 400,000,000 shares 
                authorized,
      121,934,442 and 110,899,442 
                shares,
      respectively, issued and outstanding |   | 121,934            |   |   | 110,899           |  
|Additional paid-in capital                                                                                                                                                                                                 |   | 47,935,352         |   |   | 42,099,452        |  
|Common stock subscribed                                                                                                                                                                                                    |   | -                  |   |   | 162,000           |  
|Accumulated other comprehensive income                                                                                                                                                                                     |   | 14,890             |   |   | -                 |  
|Accumulated deficit during
      exploration stage                                                                                                                                                                         |   | (13,539,121        | ) |   | (9,906,028        | )
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total
      stockholders' equity                                                                                                                                                                                           |   | 34,533,055         |   |   | 32,466,323        |  
|                                                                                                                                                                                                                           |   |                    |   |   |                   |  
|Total
      liabilities and stockholders' equity                                                                                                                                                                           | $ | 41,325,180         |   | $ | 40,383,038        |  

See Accompanying Notes to these Consolidated Financial
  Statements

F-1

---

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

|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   | For the period from |  
|---------------------------------------------------------------------- | - | -------------------------- | - | - | ------------------------- | - | - | ------------------ | - | - | ------------------ | - | - | ------------------- | -
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   | February 20, 2001   |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   | (date of inception) |  
|                                                                       |   | For the three months ended |   |   | For the nine months ended |   |   | through            |  
|                                                                       |   | September 30, 2010         |   |   | September 30, 2009        |   |   | September 30, 2010 |   |   | September 30, 2009 |   |   | September 30, 2010  |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Revenue                                                                | $ | -                          |   | $ | -                         |   | $ | -                  |   | $ | -                  |   | $ | -                   |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Operating expenses                                                     |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Mineral exploration and evaluation
      expenses                      |   | 1,077,039                  |   |   | 1,167,184                 |   |   | 1,887,936          |   |   | 2,432,731          |   |   | 8,622,178           |  
|Mineral exploration and
      evaluation expenses - related party      |   | 136,827                    |   |   | 126,780                   |   |   | 423,641            |   |   | 375,971            |   |   | 2,470,786           |  
|General and administrative                                             |   | 698,765                    |   |   | 302,605                   |   |   | 2,252,184          |   |   | 781,181            |   |   | 5,764,800           |  
|General and
      administrative - related party                       |   | -                          |   |   | -                         |   |   | 21,066             |   |   | -                  |   |   | 21,066              |  
|Depreciation                                                           |   | 181,009                    |   |   | 10,901                    |   |   | 370,521            |   |   | 32,637             |   |   | 436,511             |  
|Mineral and property
      holding costs                               |   | 15,000                     |   |   | 15,000                    |   |   | 45,000             |   |   | 45,000             |   |   | 455,500             |  
|Mineral and property holding costs -
      reimbursed to related party |   | -                          |   |   | -                         |   |   | -                  |   |   | -                  |   |   | 295,000             |  
|Write-off of mineral
      rights                                      |   | -                          |   |   | -                         |   |   | -                  |   |   | -                  |   |   | 14,000              |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Total
      operating expenses                                         |   | 2,108,640                  |   |   | 1,622,470                 |   |   | 5,000,348          |   |   | 3,667,520          |   |   | 18,079,841          |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Loss from operations                                                   |   | (2,108,640                 | ) |   | (1,622,470                | ) |   | (5,000,348         | ) |   | (3,667,520         | ) |   | (18,079,841         | )
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Other income (expense)                                                 |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Interest income                                                        |   | 9,310                      |   |   | 2,184                     |   |   | 27,223             |   |   | 12,544             |   |   | 310,283             |  
|Interest expense                                                       |   | (234                       | ) |   | (200                      | ) |   | (3,728             | ) |   | (626               | ) |   | (5,983              | )
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Total
      other income (expense)                                     |   | 9,076                      |   |   | 1,984                     |   |   | 23,495             |   |   | 11,918             |   |   | 304,300             |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Loss before income taxes                                               |   | (2,099,564                 | ) |   | (1,620,486                | ) |   | (4,976,853         | ) |   | (3,655,602         | ) |   | (17,775,541         | )
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Income tax benefit                                                     |   | 564,611                    |   |   | 557,197                   |   |   | 1,343,760          |   |   | 1,265,857          |   |   | 4,236,420           |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Net loss                                                               | $ | (1,534,953                 | ) | $ | (1,063,289                | ) | $ | (3,633,093         | ) | $ | (2,389,745         | ) | $ | (13,539,121         | )
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Loss per common share - basic and diluted                              | $ | (0.01                      | ) | $ | (0.01                     | ) | $ | (0.03              | ) | $ | (0.02              | ) |   |                     |  
|                                                                       |   |                            |   |   |                           |   |   |                    |   |   |                    |   |   |                     |  
|Weighted average common shares outstanding -
      basic and diluted   |   | 121,934,442                |   |   | 98,261,756                |   |   | 121,368,545        |   |   | 97,431,895         |   |   |                     |  

See Accompanying Notes to these Consolidated Financial
  Statements

F-2

---

|IRELAND INC.                                   
|-----------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)              
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
|AND COMPREHENSIVE INCOME                       
|(UNAUDITED)                                    

|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   | Accumulated |  |   | Accumulated    |   |   |            |  
|---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | - | ---------- |  | - | --------------- |  | - | ------------- | - | - | ----------- |  | - | -------------- | - | - | ---------- | -
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   | Common        |   |   | Other       |  |   | Deficit During |   |   | Total      |  
|                                                                                                                                                     |  | Common Stock |  |   | Additional |  |   | Stock           |  |   | Comprehensive |   |   | Exploration |  |   | Stockholders'  |  
|                                                                                                                                                     |  | Shares       |  |   | Amount     |  |   | Paid-in Capital |  |   | Subscribed    |   |   | Income      |  |   | Stage          |   |   | Equity     |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2008                                                                                                                           |  | 97,010,087   |  | $ | 97,010     |  | $ | 36,059,449      |  | $ | -             |   | $ | -           |  | $ | (6,657,376     | ) | $ | 29,499,083 |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Amortization of stock options
      issued to a 
        director and employees over 
        vesting
      periods                                  |  | -            |  |   | -          |  |   | 32,717          |  |   | -             |   |   | -           |  |   | -              |   |   | 32,717     |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash 
        Reg. S - Private Placement, 
        $0.45 per share,
      net of $21,711 
        financing costs |  | 400,000      |  |   | 400        |  |   | 157,889         |  |   | -             |   |   | -           |  |   | -              |   |   | 158,289    |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash 
        Reg. D - Private Placement, 
        $0.45 per share,
      net of $2,292 
        financing costs  |  | 863,800      |  |   | 863        |  |   | 385,555         |  |   | -             |   |   | -           |  |   | -              |   |   | 386,418    |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash 
        Reg. S - Private Placement, 
        $0.45 per share,
      net of $39,107 
        financing costs |  | 1,546,111    |  |   | 1,546      |  |   | 655,097         |  |   | (195,750      | ) |   | -           |  |   | -              |   |   | 460,893    |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash 
        Reg. D - Private Placement, 
        $0.45 per share,
      net of $1,062 
        financing costs  |  | 400,000      |  |   | 400        |  |   | 178,538         |  |   | -             |   |   | -           |  |   | -              |   |   | 178,938    |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Net loss, September 30, 2009                                                                                                                         |  | -            |  |   | -          |  |   | -               |  |   | -             |   |   | -           |  |   | (2,389,745     | ) |   | (2,389,745 | )
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Balance, September 30, 2009                                                                                                                          |  | 100,219,998  |  | $ | 100,219    |  | $ | 37,469,245      |  | $ | (195,750      | ) | $ | -           |  | $ | (9,047,121     | ) | $ | 28,326,593 |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2009                                                                                                                           |  | 110,899,442  |  | $ | 110,899    |  | $ | 42,099,452      |  | $ | 162,000       |   | $ | -           |  | $ | (9,906,028     | ) | $ | 32,466,323 |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Amortization of stock options
      and warrants 
        issued to directors, officers and 
       
      consultants over vesting periods          |  | -            |  |   | -          |  |   | 813,097         |  |   | -             |   |   | -           |  |   | -              |   |   | 813,097    |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of stock options 
        to directos and officers                                                                                          |  | -            |  |   | -          |  |   | 79,831          |  |   | -             |   |   | -           |  |   | -              |   |   | 79,831     |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash 
        Reg. S - Private Placement, 
        $0.45 per share,
      net of $6,399 
        financing costs  |  | 200,000      |  |   | 200        |  |   | 83,401          |  |   | -             |   |   | -           |  |   | -              |   |   | 83,601     |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash 
        Reg. D - Private Placement, 
        $0.45 per share,
      net of $5,344 
        financing costs  |  | 10,835,000   |  |   | 10,835     |  |   | 4,859,571       |  |   | (162,000      | ) |   | -           |  |   | -              |   |   | 4,708,406  |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Unrealized gain on short-term
      investments, 
        net of $8,018 deferred tax                                                                 |  | -            |  |   | -          |  |   | -               |  |   | -             |   |   | 14,890      |  |   | -              |   |   | 14,890     |  
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Net loss, September 30, 2010                                                                                                                         |  | -            |  |   | -          |  |   | -               |  |   | -             |   |   | -           |  |   | (3,633,093     | ) |   | (3,633,093 | )
|                                                                                                                                                     |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |  |   |                |   |   |            |  
|Balance, September 30, 2010                                                                                                                          |  | 121,934,442  |  | $ | 121,934    |  | $ | 47,935,352      |  | $ | -             |   | $ | 14,890      |  | $ | (13,539,121    | ) | $ | 34,533,055 |  

See Accompanying Notes to these Consolidated Financial
  Statements

F-3

---

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

|                                                                                             |   |                           |   |   |                    |   |   | For the period from |  
|-------------------------------------------------------------------------------------------- | - | ------------------------- | - | - | ------------------ | - | - | ------------------- | -
|                                                                                             |   |                           |   |   |                    |   |   | February 20, 2001   |  
|                                                                                             |   |                           |   |   |                    |   |   | (date of inception) |  
|                                                                                             |   | For the nine months ended |   |   | through            |  
|                                                                                             |   | September 30, 2010        |   |   | September 30, 2009 |   |   | September 30, 2010  |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                         |   |                           |   |   |                    |   |   |                     |  
|Net loss                                                                                     | $ | (3,633,093                | ) | $ | (2,389,745         | ) | $ | (13,539,121         | )
|Adjustments to reconcile loss from
      operating to net cash used in operating activities: |   |                           |   |   |                    |   |   |                     |  
|Depreciation                                                                                 |   | 370,521                   |   |   | 32,637             |   |   | 436,511             |  
|Write-off
      of mineral rights                                                            |   | -                         |   |   | -                  |   |   | 14,000              |  
|Consulting accrual                                                                           |   | -                         |   |   | -                  |   |   | 15,000              |  
|Stock based
      expenses                                                                   |   | 892,928                   |   |   | 32,717             |   |   | 2,537,326           |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Changes in operating assets and
      liabilities:                                           |   |                           |   |   |                    |   |   |                     |  
|Other receivables                                                                            |   | (30,000                   | ) |   | 27,394             |   |   | (2,606              | )
|Prepaid
      expenses                                                                       |   | (49,859                   | ) |   | 15,599             |   |   | (290,218            | )
|Other assets                                                                                 |   | -                         |   |   | -                  |   |   | (2,200              | )
|Reclamation
      deposit                                                                    |   | -                         |   |   | 24,720             |   |   | (925,042            | )
|Mineral property acquisition costs                                                           |   | -                         |   |   | -                  |   |   | (1,022,663          | )
|Accounts
      payable and accrued liabilities                                               |   | 211,152                   |   |   | 588,980            |   |   | 357,103             |  
|Deferred income taxes                                                                        |   | (1,343,760                | ) |   | (1,265,857         | ) |   | (4,236,420          | )
|Accrued
      reclamation and remediation costs                                              |   | -                         |   |   | -                  |   |   | 275,338             |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Net cash used in operating activities                                                        |   | (3,582,111                | ) |   | (2,933,555         | ) |   | (16,382,992         | )
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|CASH FLOW FROM INVESTING ACTIVITIES                                                          |   |                           |   |   |                    |   |   |                     |  
|Purchase of property
      and equipment                                                     |   | (818,644                  | ) |   | (224,342           | ) |   | (3,498,704          | )
|Purchase of short-term investments                                                           |   | (875,724                  | ) |   | -                  |   |   | (875,724            | )
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Net cash used in investing activities                                                        |   | (1,694,368                | ) |   | (224,342           | ) |   | (4,374,428          | )
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|CASH FLOW FROM FINANCING ACTIVITIES                                                          |   |                           |   |   |                    |   |   |                     |  
|Proceeds from stock
      issuance                                                           |   | 4,965,750                 |   |   | 1,248,710          |   |   | 24,455,710          |  
|Proceeds from option issuance                                                                |   | -                         |   |   | -                  |   |   | 20,000              |  
|Stock issuance costs                                                                         |   | (11,743                   | ) |   | (64,172            | ) |   | (560,037            | )
|Common stock subscribed                                                                      |   | (162,000                  | ) |   | -                  |   |   | -                   |  
|Proceeds from
      borrowings from related party                                            |   | -                         |   |   | -                  |   |   | 8,290               |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Net cash provided by
      financing activities                                              |   | 4,792,007                 |   |   | 1,184,538          |   |   | 23,923,963          |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|NET CHANGE IN CASH                                                                           |   | (484,472                  | ) |   | (1,973,359         | ) |   | 3,166,543           |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|CASH AT BEGINNING OF PERIOD                                                                  |   | 3,651,015                 |   |   | 2,565,823          |   |   | -                   |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|CASH AT END OF PERIOD                                                                        | $ | 3,166,543                 |   | $ | 592,464            |   | $ | 3,166,543           |  
|                                                                                             |   | -                         |   |   |                    |   |   |                     |  
|                                                                                             |   | -                         |   |   |                    |   |   |                     |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|SUPPLEMENTAL INFORMATION                                                                     |   |                           |   |   |                    |   |   |                     |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Interest paid                                                                                | $ | 3,728                     |   | $ | 626                |   | $ | 5,983               |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Income taxes paid                                                                            | $ | -                         |   | $ | -                  |   | $ | -                   |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Non-cash investing and
      financing activities:                                           |   |                           |   |   |                    |   |   |                     |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Assets acquired for common
      stock and warrants issued for mineral properties            | $ | -                         |   | $ | -                  |   | $ | 21,584,351          |  
|                                                                                             |   |                           |   |   |                    |   |   |                     |  
|Net deferred tax
      liability assumed                                                     | $ | -                         |   | $ | -                  |   | $ | 10,261,194          |  

See Accompanying Notes to these Consolidated Financial
  Statements

F-4

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Basis of presentation The accompanying unaudited
      consolidated financial statements have been prepared in accordance with
      Securities and Exchange Commission requirements for interim financial
      statements. Therefore, they do not include all of the information and
      footnotes required by accounting principles generally accepted in the
      United States for complete financial statements. The financial statements
      should be read in conjunction with the Form 10-K for the year ended
      December 31, 2009 of Ireland Inc. (the Company).                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The interim financial statements present the consolidated
      balance sheets, statements of operations, stockholders equity and
      comprehensive income, and cash flows of the Company. The financial
      statements have been prepared in accordance with accounting principles
      generally accepted in the United States.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | These consolidated financial statements have been
      prepared by the Company without audit and include all adjustments (which
      consist solely of normal recurring adjustments) which, in the opinion of
      management, are necessary for a fair presentation of financial position
      and results of operations. Certain information and footnote disclosures
      normally included in financial statements prepared in accordance with
      generally accepted accounting principles have been condensed or omitted,
      although the Company believes that the disclosures are adequate to make
      the information presented not misleading. It is suggested that these
      consolidated financial statements be read in conjunction with the
      Companys audited consolidated financial statements and notes thereto for
      the year ended December 31, 2009.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Description of business The Company is
      considered an exploration stage company since its formation and the
      Company has not yet realized any revenues from its planned operations. The
      Company is primarily focused on the acquisition and exploration of mining
      properties. Upon identification of commercially minable reserves, the
      Company expects to actively prepare the site for its extraction and enter
      the development stage.                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | History The Company was incorporated on February
      20, 2001 under the laws of the State of Nevada under the name Merritt
      Ventures Corp. On December 19, 2005, the Company changed its name to
      Ireland Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Going concern The accompanying financial
      statements have been prepared assuming the Company will continue as a
      going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Since its formation, the Company has incurred cumulative net losses   of $13,539,121 as of September 30, 2010. This amount is comprised of net losses from operations of $13,539,121 and other comprehensive income of $14,890. The Company has not commenced its commercial mining and mineral processing operations; rather, it is still in the exploration stage, raising substantial doubt about the Company’s ability to continue as a going concern.  The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives.                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The ability of the Company to continue as a going concern
      is dependent on additional sources of capital and the success of the
      Companys plan. The financial statements do not include any adjustments
      that might be necessary if the Company is unable to continue as a going
      concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

F-5

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Principles of consolidation The consolidated
      financial statements include the accounts of the Company and its
      wholly-owned subsidiaries, Columbus Minerals Inc. (CMI) (including its
      wholly- owned single-member LLC subsidiary Columbus Salt Marsh LLC
      (CSM)) and Rand Metals LLC (Rand). Significant intercompany accounts
      and transactions have been eliminated.                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Exploration costs Mineral exploration costs are
      expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Fair value of financial instruments- Fair value
      accounting establishes a fair value hierarchy that prioritizes the inputs
      of valuation techniques used to measure fair value. The hierarchy gives
      the highest priority to unadjusted quoted prices in active markets for
      identical assets or liabilities (Level 1 measurements) and the lowest
      priority to unobservable inputs (Level 3 measurements). The three levels
      of the fair value hierarchy are described
      below:

| | Level 1 | Unadjusted quoted prices in active markets that
      are accessible at the measurement  date for identical,
      unrestricted assets or liabilities;                                
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                       
| | Level 2 | Quoted prices in markets that are not active,
      or inputs that are observable, either directly or indirectly, for
      substantially the full term of the asset or liability; and
| |         |                                                                                                                                                                                       
| | Level 3 | Prices or valuation techniques that require
      inputs that are both significant to the fair value measurement and
      unobservable (supported by little or no market activity).  

The Companys financial instruments
  consist of investments in U.S. Treasury Notes. These investments are classified
  within Level 1 of the fair value hierarchy as their fair value is determined
  using quoted prices in active markets.

Short-term investments
  Short-term investments generally have a maturity of three months to five years
  at the date of purchase. Investments with maturities beyond one year are
  classified as short-term based on their highly liquid nature and because such
  marketable securities represent the investment of cash that is available for
  current operations. Short-term investments classified as available-for-sale are
  recorded at fair value based on quoted market prices with the unrealized gains
  and losses reflected in accumulated other comprehensive income until realized.
  Realized gains and losses are determined on a specific identification method and
  are recognized in the statement of operations.

The Company evaluates unrealized
  losses, if any, in its investment securities for other-than temporary impairment
  using both qualitative and quantitative criteria. In the event that an
  investment is determined to be other-then-temporarily impaired, the Company
  recognizes the loss in the statement of operations. The Company generally only
  invests in debt securities.

Mineral rights The Company
  capitalizes acquisition and option costs of mineral property rights. The amount
  capitalized represents fair value at the time the mineral rights were
  acquired.

The Company capitalizes acquisition and
  option costs of mineral rights as tangible assets. Upon commencement of
  commercial production, the mineral rights will be amortized using the
  unit-of-production method over the life of the mineral rights. If the Company
  does not continue with exploration after the completion of the feasibility
  study, the mineral rights will be expensed at that time.

F-6

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Mineral property acquisition costs Costs of
      acquiring mining properties are capitalized upon acquisition. Mine
      development costs incurred to develop new ore deposits, to expand the
      capacity of mines, or to develop mine areas substantially in advance of
      current production are also capitalized once proven and probable reserves
      exist and the property is a commercially mineable property. Costs incurred
      to maintain current production or to maintain assets on a standby basis
      are charged to operations. Costs of abandoned projects are charged to
      operations upon abandonment. The Company evaluates the carrying value of
      capitalized assets to determine if these costs are in excess of their
      recoverable amount whenever events or changes in circumstances indicate
      that their carrying amounts may not be recoverable. The periodic
      evaluation of the carrying value of capitalized costs and any related
      property and equipment costs are based upon expected future cash flows
      and/or estimated salvage value in accordance with Accounting Standards
      Codification (ASC) 360-10-35- 15, Impairment or Disposal of
        Long-Lived Assets.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Property and equipment Property and equipment
      are stated at cost less accumulated depreciation. Depreciation is provided
      principally on the straight-line method over the estimated useful lives of
      the assets, which range from 3 to 39 years. The cost of repairs and
      maintenance is charged to expense as incurred. Expenditures for property
      betterments and renewals are capitalized. Upon sale or other disposition
      of a depreciable asset, cost and accumulated depreciation are removed from
      the accounts and any gain or loss is reflected in other income
      (expense).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company periodically evaluates whether events and
      circumstances have occurred that may warrant revision of the estimated
      useful life of property and equipment or whether the remaining balance of
      property and equipment should be evaluated for possible impairment. If
      events and circumstances warrant evaluation, the Company uses an estimate
      of the related undiscounted cash flows over the remaining life of the
      property and equipment in measuring their recoverability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Impairment of long-lived assets The Company
      reviews and evaluates long-lived assets for impairment when events or
      changes in circumstances indicate that the related carrying amounts may
      not be recoverable. The assets are subject to impairment consideration
      under ASC 360-10-35-17, Measurement of an Impairment Loss, if
      events or circumstances indicate that their carrying amount might not be
      recoverable. As of September 30, 2010, exploration progress is on target
      with the Companys exploration and evaluation plan, and no events or
      circumstances have happened to indicate that the related carrying values
      of the properties may not be recoverable. When the Company determines that
      an impairment analysis should be done, the analysis will be performed
      using the rules of ASC 930-360-35, Asset Impairment, and
      360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived
        Assets.                                                                                                                                                                                                                                                               

F-7

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Various factors could impact the Companys ability to
      achieve forecasted production schedules. Additionally, commodity prices,
      capital expenditure requirements and reclamation costs could differ from
      the assumptions the Company may use in cash flow models used to assess
      impairment. The ability to achieve the estimated quantities of recoverable
      minerals from exploration stage mineral interests involves further risks
      in addition to those factors applicable to mineral interests where proven
      and probable reserves have been identified. These additional risks are due
      to the lower level of confidence that the identified mineralized material
      can ultimately be mined economically.                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Material changes to any of these factors or assumptions
      discussed above could result in future impairment charges to
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Reclamation and remediation costs (asset retirement
      obligation) The Company accrued costs associated with environmental
      remediation obligations in accordance with ASC 410-20, Asset Retirement
        Obligations. In accordance with ASC 410-20-25, Asset Retirement
          Obligations - Recognition, the Company records a liability for the
      present value of the estimated environmental remediation costs in the
      period in which the liability is incurred and becomes determinable, with
      an offsetting increase in the carrying amount of the associated asset. The
      liability will be accreted, and the asset will be depreciated over the
      life of the related assets. As reclamation work is performed or
      liabilities are otherwise settled, the recorded amount of the liability
      will be reduced.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company accrues costs associated with environmental
      remediation obligation when it is probable that such costs will be
      incurred, and they are reasonably estimable. Estimates for reclamation and
      other closure costs are prepared in accordance with ASC 450, Contingencies, or ASC 410-30-25, Asset Retirement and
        Environmental Obligations - Recognition. Costs of future expenditures
      for environmental remediation are not discounted to their present value
      unless subject to a contractually obligated fixed payment schedule. Such
      costs are based on managements current estimate of amounts to be incurred
      when the remediation work is performed, within current laws and
      regulations.                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Future reclamation and environmental-related expenditures
      are difficult to estimate, in many circumstances, due to the early stage
      nature of the exploration project, the uncertainties associated with
      defining the nature and extent of environmental disturbance and the
      application of laws and regulations by regulatory authorities and changes
      in reclamation or remediation technology. The Company periodically reviews
      accrued liabilities for such reclamation and remediation costs as evidence
      indicating that the liabilities have potentially changed becomes
      available. Changes in estimates are reflected in the statement of
      operations in the period an estimate is revised.                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Accruals for reclamation and environmental matters
      totaled $275,338 at September 30, 2010 and December 31, 2009. The Company
      is in the exploration stage and is unable to determine the estimated
      timing of expenditures relating to these accruals at this time. It is
      reasonably possible that the ultimate cost of reclamation and remediation
      could change in the future and that changes to these estimates could have
      a material effect on future operating results as new information becomes
      known. For additional information, see Note 14.                                                                                                                                                                                                                                                                       

F-8

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Use of estimates The preparation of financial
      statements in conformity with generally accepted accounting principles
      requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities, the disclosure of contingent
      assets and liabilities at the date of the financial statements and the
      reported amounts of revenues and expenses for the reporting period. Actual
      results could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Earnings (loss) per share The Company follows
      ASC 260, Earnings Per Share, and ASC 480, Distinguishing Liabilities from
      Equity, which establish standards for the computation, presentation and
      disclosure requirements for basic and diluted earnings per share for
      entities with publicly-held common shares and potential common stock
      issuances. Basic earnings (loss) per share are computed by dividing net
      income by the weighted average number of common shares outstanding. In
      computing diluted earnings per share, the weighted average number of
      shares outstanding is adjusted to reflect the effect of potentially
      dilutive securities, such as stock options and warrants. Common stock
      equivalent shares are excluded from the computation if their effect is
      antidilutive. The weighted average of common stock equivalents, which
      include stock options and warrants to purchase common stock, on September
      30, 2010 and 2009 that were not included in the computation of diluted
      EPS, because the effect would be antidilutive, were 36,670,762 and
      19,599,686, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Expenses of offering The Company accounts for
      specific incremental costs directly to a proposed or actual offering of
      securities as a direct charge against the gross proceeds of the
      offering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Income taxes The Company accounts for its income
      taxes in accordance with ASC 740, Income Taxes, which requires
      recognition of deferred tax assets and liabilities for future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective
      tax bases and tax credit carry-forwards. Deferred tax assets and
      liabilities are measured using enacted tax rates expected to apply to
      taxable income in the years in which those temporary differences are
      expected to be recovered or settled. The effect on deferred tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that includes the enactment date.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | For acquired properties that do not constitute a business
      as defined in ASC 805-10-55-4, *Definition of a* *Business*,
      deferred income tax liability is recorded on GAAP basis over income tax
      basis using statutory federal and state rates. The resulting estimated
      future federal and state income tax liability associated with the
      temporary difference between the acquisition consideration and the tax
      basis is computed in accordance with ASC 740-10-25-51, Acquired
        Temporary Differences in Certain Purchase Transactions that are Not
        Accounted for as Business Combinations. The amount is reflected as an
      increase to the total purchase price which is then applied to the
      underlying acquired assets in the absence of a goodwill component
      associated with the acquisition transactions.                                                                                                                                                                                                                                                                                                             

F-9

---

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

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES (continued)
|-- | --------------------------------------------------------------------------------------

Stock-based compensation The
  Company accounts for share-based payments in accordance with ASC 718, Compensation  Stock Compensation, which requires all share-based
  payments to employees, including grants of employee stock options, to be
  recognized in the financial statements based on the grant date fair value of the
  award. In accordance with ASC 718-10-30-9, Measurement Objective  Fair Value
    at Grant Date, the Company estimates the fair value of the award using a
  valuation technique. For this purpose, the Company uses the Binomial Lattice
  option pricing model. The Company believes that this model provides the best
  estimate of fair value due to its ability to incorporate inputs that change over
  time, such as volatility and interest rates, and to allow for actual exercise
  behavior of option holders. The compensation cost is recognized over the
  requisite service period which is generally equal to the vesting period.

The fair value of performance-based
  stock option grants is determined on their grant date through use of the
  Binomial Lattice option pricing model. The total value of the award is
  recognized over the requisite service period only if management has determined
  that achievement of the performance condition is probable. The requisite service
  period is based on managements estimate of when the performance condition will
  be met. Changes in the requisite service period or the estimated probability of
  achievement can materially affect the amount of stock-based compensation
  recognized in the financial statements.

The fair value of market-based stock
  option grants is determined on their grant date through use of an option pricing
  model which uses a combination of Monte Carlo simulation and a Trinomial Lattice
  function. The requisite service period for market-based awards is derived from
  the model. Achievement of the market condition earlier than estimated can
  materially affect the amount of stock-based compensation recognized in the
  financial statements.

New accounting pronouncements
  From time to time, new accounting pronouncements are issued by the FASB that are
  adopted by the Company as of the specified effective date. Unless otherwise
  discussed, management believes that the impact of recently issued standards did
  not or will not have a material impact on the Companys consolidated financial
  statements upon adoption.

In January 2010, the FASB issued ASU
  2010-06, Improving Disclosures About Fair Value Measurements, which
  requires reporting entities to make new disclosures about recurring or
  nonrecurring fair-value measurements including significant transfers into and
  out of Level 1 and Level 2 fair-value measurements and information on purchases,
  sales, issuances, and settlements on a gross basis in the reconciliation of
  Level 3 fair value measurements. ASU 2010-6 is effective for annual reporting
  periods beginning after December 15, 2009, except for Level 3 reconciliation
  disclosures which are effective for annual periods beginning after December 15,
  2010. The Company does not have any assets or liabilities classified as Level 3.
  As the update only pertains to disclosures, its adoption is not expected to have
  an impact on the Companys financial position, results of operations or cash
  flows.

In February 2010, the FASB issued ASU
  2010-09, Subsequent Events (Topic 855), Amendment to Certain Recognition and
    Disclosure Requirements, to remove the requirement for SEC filers to
  disclose the date through which an entity has evaluated subsequent events. This
  change removes potential conflicts with current SEC guidance and clarifies the
  intended scope of the reissuance disclosure provisions. The update was effective
  upon its date of issuance, February 24, 2010, and the Company has adopted the
  amendments accordingly. As the update only pertained to disclosures, it had no
  impact on the Companys financial position, results of operations or cash flows
  upon adoption.

F-10

---

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

|2. | SHORT-TERM INVESTMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | The Companys short-term investments are classified as
      available for sale and consist of U.S. Treasury Notes which are publicly
      traded and valued. All investments are measured at fair value on a
      recurring basis based on quoted market prices. Therefore, all investments
      are considered to be within Level 1 of the fair value hierarchy. As of
      September 30, 2010, the Companys investments were as
      follows:

| |                     |   |                  |  |   | Unrealized    |  |   | Unrealized    |  |   |          | 
| | ------------------- | - | ---------------- |  | - | ------------- |  | - | ------------- |  | - | -------- | 
| |                     |   |                  |  |   | Gains in      |  |   | Losses in     |  |   |          | 
| |                     |   |                  |  |   | Accumulated   |  |   | Accumulated   |  |   |          | 
| |                     |   |                  |  |   | Other         |  |   | Other         |  |   |          | 
| |                     |   |                  |  |   | Comprehensive |  |   | Comprehensive |  |   | Recorded | 
| |                     |   | Cost
      Basis |  |   | Income        |  |   | Income        |  |   | Basis    | 
| |                     |   |                  |  |   |               |  |   |               |  |   |          | 
| | Available for sale  |   |                  |  |   |               |  |   |               |  |   |          | 
| | U.S. Treasury Notes | $ | 875,724          |  | $ | 22,908        |  | $ | --            |  | $ | 898,632  | 
| |                     |   |                  |  |   |               |  |   |               |  |   |          | 
| |                     | $ | 875,724          |  | $ | 22,908        |  | $ | --            |  | $ | 898,632  | 

|   | All available for sale investments mature in July 2015.
      The Company did not have any investments as of December 31,
      2009.
|-- | -------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                      
|3. | PREPAID EXPENSES                                                                                                                     
|   |                                                                                                                                      
|   | Prepaid expenses at September 30, 2010 and December 31,
      2009 consisted of the following:                                       

| |                    |   | September 30, |  |   | December 31, | 
| | ------------------ | - | ------------- |  | - | ------------ | 
| |                    |   | 2010          |  |   | 2009         | 
| |                    |   |               |  |   |              | 
| | Claims maintenance | $ | 66,182        |  | $ | 34,166       | 
| | Insurance policies |   | 55,095        |  |   | 49,973       | 
| | Retainers          |   | 12,000        |  |   | 2,000        | 
| | Other              |   | 6,866         |  |   | 4,145        | 
| |                    |   |               |  |   |              | 
| |                    | $ | 140,143       |  | $ | 90,284       | 

F-11

---

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

|4. | PROPERTY AND EQUIPMENT                                                                                 
|-- | -------------------------------------------------------------------------------------------------------
|   |                                                                                                        
|   | Property and equipment consisted of the following as of
      September 30, 2010 and December 31, 2009:

| |                               |   | September 30, |  |   | December 31, | 
| | ----------------------------- | - | ------------- |  | - | ------------ | 
| |                               |   | 2010          |  |   | 2009         | 
| |                               |   |               |  |   |              | 
| | Furniture and fixtures        | $ | 20,456        |  | $ | 8,921        | 
| | Computers and equipment       |   | 41,165        |  |   | 39,137       | 
| | Land                          |   | 30,000        |  |   | 30,000       | 
| | Site improvements             |   | 2,909,067     |  |   | 99,631       | 
| | Site equipment                |   | 1,123,469     |  |   | 231,035      | 
| | Vehicles                      |   | 23,595        |  |   | 23,595       | 
| | Building                      |   | 500,000       |  |   | --           | 
| | Construction in progress:     |   |               |  |   |              | 
| | Building                      |   | --            |  |   | 500,000      | 
| | Site improvements             |   | --            |  |   | 2,325,198    | 
| | Site equipment                |   | --            |  |   | 571,591      | 
| |                               |   |               |  |   |              | 
| |                               |   | 4,647,752     |  |   | 3,829,108    | 
| | Less accumulated depreciation |   | 436,511       |  |   | 65,990       | 
| |                               |   |               |  |   |              | 
| |                               | $ | 4,211,241     |  | $ | 3,763,118    | 

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

Depreciation expense was $370,521 and
  $32,637 for the nine months ended September 30, 2010 and 2009, respectively.

F-12

---

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

|5. | COLUMBUS PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As of December 31, 2007, the Company had earned a 15%
      interest in the Columbus Project by satisfying its option agreement
      requirements and had the right to merge with the corporation holding the
      remaining 85% interest in the Columbus Project in Esmeralda County,
      Nevada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Pursuant to the option assignment agreement dated March
      30, 2007, as amended August 8, 2007, the Company granted a 5% net smelter
      return royalty to Nanominerals Corp (NMC), one of the principal
      stockholders of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On February 20, 2008, the Company, through its
      wholly-owned subsidiary CMI, acquired a 100% interest in the Columbus
      Project, including an option for additional mining claims, by way of
      merger with the owner of the Columbus Project, Columbus Brine Inc.
      (CBI). Under the terms of the Merger Agreement, the Company issued an
      aggregate of 10,440,087 shares of its common stock and 5,220,059 share
      purchase warrants to the former shareholders of CBI. Each share purchase
      warrant issued by the Company entitles the holder to purchase one
      additional share of the Companys common stock at a price of $2.39 per
      share for a period of 5 years. This acquisition supersedes the option
      agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company believes that the acquisition of the Columbus
      Project was beneficial because it provides for 100% ownership of the
      properties and fosters greater opportunity to finance and further develop
      the project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | This merger was treated as a statutory merger for tax
      purposes whereby CMI was the surviving merger
      entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

F-13

---

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

|5. | COLUMBUS PROJECT(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company applied EITF 98-03 (which has been superseded
      by ASC 805-10-25-1) with regard to the acquisition of the Columbus
      Project. The Company determined that the acquisition of the Columbus
      Project did not constitute an acquisition of a business, as that term is
      defined in ASC 805- 10-55-4, and the Company recorded the acquisition as a
      purchase of assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | As required by ASC 930-805-30, Mining  Business
      Combinations  Initial Recognition, and ASC 740-10-25-49-55, Income
        Taxes  Overall  Recognition  Acquired Temporary Differences in Certain
        Purchase Transactions that are Not Accounted for as Business
        Combinations, the purchase price of $32 million was allocated to the
      assets acquired and liabilities assumed based on their respective fair
      values at the date of acquisition. The purchase price allocated to the
      real properties was based on fair market values determined using an
      independent real estate appraisal firm (Arden Salvage Company), and the
      fair value of the remaining assets acquired and liabilities assumed were
      based on managements best estimates taking into account all available
      information at the time.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Pursuant to the terms of the acquisition of CBI, the
      Company issued an aggregate of 10,440,087 shares of common stock and
      5,220,059 share purchase warrants to the former shareholders of CBI. Each
      share purchase warrant issued by the Company entitles the holder to
      purchase one additional share of the Companys common stock at a price of
      $2.39 per share for a period of 5 years. Each warrant provides the holder
      with a cashless right of exercise. If the holder chooses to utilize this
      cashless exercise right, the total number of shares that the holder will
      be entitled to exercise will be determined by the following formula: [( A B) C] ÷ Awhere:                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | A = the average closing price of the Companys
      common stock during the five trading days prior to exercise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | B = the exercise price of $2.39.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | C = the maximum number of shares of the
      Companys common stock issuable upon exercise of the warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | If the holder chooses to utilize the cashless exercise
      right, the holder must do so with respect to all of the unexercised
      warrants held by him.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company will have the right to accelerate the
      expiration date of the warrants at any time after August 19, 2010 if the
      average closing price of the Companys common stock over any 20
      consecutive trading days is equal to or greater than 150% of the exercise
      price. If the Company exercises this acceleration right, the expiration
      date for the warrants will be accelerated to 30 days after the Company
      sends out notice that it is exercising the acceleration right.                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company estimated the fair value of warrants issued
      in connection with the acquisition of CBI using the Binomial Lattice
      pricing model.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

F-14

---

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

|5. | COLUMBUS PROJECT(continued)                                                                     
|-- | ------------------------------------------------------------------------------------------------
|   |                                                                                                 
|   | The following table reflects the recorded purchase
      consideration for the Columbus Project:

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


The following table reflects the
  components of the Columbus Project:

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


F-15

---

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

|6. | RED MOUNTAIN PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Red Mountain Project, located in San Bernardino,
      California, is subject to an underlying option assignment agreement, as
      amended August 8, 2007. Under the terms of this agreement, to earn a 60%
      interest, the Company is required to pay $5,000 per month until December
      31, 2011 and spend an aggregate of $1,200,000 in additional qualifying
      expenditures by December 31, 2011.                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company may at any time during the life of the Red
      Mountain Project earn a 100% interest by paying $100,000, issuing shares
      of common stock with an aggregate value of $1,400,000 and issuing share
      purchase warrants to purchase up to an additional 25% of the number of
      shares of common stock to be issued. If the project achieves commercial
      production, the Company will be required to pay an additional $100,000,
      issue shares of common stock with an aggregate value of $2,400,000 and
      issue share purchase warrants to purchase up to an additional 25% of the
      number of shares of common stock to be issued.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Pursuant to the option assignment agreement, as amended
      August 8, 2007, the Company granted a 5% net smelter return royalty to
      NMC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-16

---

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

|7. | PRIVATE PLACEMENTS                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------
|   |                                                                                                            
|   | For the nine months ended September 30, 2010, the Company
      completed the following private placements:
|   |                                                                                                            
|   |                                                                                                            
|   |                                                                                                            
|   |                                                                                                            

For the nine months ended September 30,
  2009, the Company completed two private placement offerings each to US
  accredited investors and non-US persons for total gross proceeds of $1,248,710.
  A total of 3,209,911 units were issued at a price of $0.45. Each unit sold
  consisted of one share of the Companys common stock and one-half of one share
  purchase warrant. Each whole share purchase warrant entitles the holder to
  purchase one additional share of the Companys common stock at a price of $0.75
  per share for a period expiring June 30, 2013. The Company incurred commissions
  payable to agents in connection with these private placements in the amount of
  $55,648 in cash and issued warrants to purchase up to 52,998 shares of common
  stock. The warrants have an expiration date of June 30, 2013 and an exercise
  price of $0.75 per share. Financing costs related to these offerings were
  $8,524.

F-17

---

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

|7. | PRIVATE PLACEMENTS(continued)                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                        
|   | Warrants associated with the 2010 and 2009 equity
      issuances do not constitute a registration payment arrangement.
|   |                                                                                                                        
|   | A summary of investor warrant activity for the nine
      months ended September 30, 2010 and 2009 is as
      follows:

| |                                                       |  | Number of  |  |   |                   | 
| | ----------------------------------------------------- |  | ---------- |  | - | ----------------- | 
| |                                                       |  | Shares     |  |   | Exercise Price    | 
| | Outstanding and exercisable,
      December 31, 2008  |  | 15,380,709 |  | $ | 0.75  2.39       | 
| | Granted                                               |  | 1,658,043  |  |   | 0.75              | 
| | Exercised                                             |  | --         |  |   | --                | 
| | Forfeited/expired                                     |  | --         |  |   | --                | 
| | Outstanding and exercisable,
      September 30, 2009 |  | 17,038,752 |  | $ | 0.75 - 2.39       | 
| |                                                       |  |            |  |   |                   | 
| | Outstanding and exercisable,
      December 31, 2009  |  | 22,598,357 |  | $ | 0.75 - 2.39       | 
| | Granted                                               |  | 5,523,500  |  |   | 0.75              | 
| | Exercised                                             |  | --         |  |   | --                | 
| | Forfeited/expired                                     |  | --         |  |   | --                | 
| |                                                       |  |            |  |   |                   | 
| | Outstanding and exercisable, September 30,
      2010 |  | 28,121,857 |  | $ | 0.75
      - 2.39 | 

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

F-18

---

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

|8. | SHARE BASED COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | On March 27, 2007, the Board of Directors adopted the
      2007 Stock Incentive Plan (the Plan). Under the terms of the Plan,
      options to purchase up to 6,000,000 shares of the common stock of the
      Company, subject to an increase each quarter equal to 15% of the increase
      in the total number of outstanding shares during the previous quarter, may
      be granted to officers, directors, employees and eligible
      consultants.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | At September 30, 2010, the Company had options
      outstanding that vest on three different types of vesting
      schedules:                                                                                                                                                                                                                                                                                                                                 

| | 1. | Service-based;        
| | -- | ----------------------
| |    |                       
| | 2. | Performance-based; and
| |    |                       
| | 3. | Market-based.         

For service-based and performance-based
  stock option grants the Company utilizes the Binomial Lattice pricing model to
  estimate the fair values of options and warrants granted in exchange for
  services. The Company used the following assumptions to estimate the fair value
  of the options granted:

2010
      
      
      2009Dividend yield
      
      --
      
      
      --Expected volatility
      
      116 .8 - 118.7%
      
      
      73.9%Risk-free interest rate
      
      1.69  3.33 %
      
      
      3.07  3.32 %Expected life (years)
      
      2.75  8.0
      
      
      4.25  6.5


For market-based stock option grants
  the Company utilizes a combination of a Monte Carlo simulation and a Trinomial
  Lattice function to estimate the fair values of options in exchange for
  services. The Company used the following assumptions to estimate the fair value
  of the options granted:

2010Dividend yield
      
      --Expected volatility
      
      116 .8%Risk-free interest rate
      
      2.96 %Expected life (years)
      
      8.0


The expected life represents the
  weighted-average period the awards are expected to remain outstanding and is a
  derived output of the option pricing models. The expected life is impacted by
  all of the underlying assumptions and calibration of the Companys models. The
  models estimate the probability of exercise as a function of these variables
  based on the history of exercises and cancellations on past grants made by the
  Company. The requisite service period for market-based stock option awards is a
  derived output of the hybrid Monte Carlo -Trinomial Lattice model.

F-19

---

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

8. SHARE BASED COMPENSATION(continued)

For grants awarded during 2010 the expected volatility is based
  on the historical volatility levels of the Companys common stock. For 2009
  grants, the expected volatility was based on the average volatility of a
  representative peer group. The risk-free interest rate is based on the implied
  yield available on U.S. Treasury zero-coupon issues over the equivalent
  contractual lives of the options.

Total expense for the nine months ended September 30, 2010 and
  2009 related to the granting and vesting of all share based payments was
  $892,928 and $32,717, respectively. Such expenses are included in general and
  administrative expense and mineral exploration and evaluation expense.

During the nine months ended September 30, 2010, the Company
  granted stock options and warrants as follows:

| | a) | On July 22, 2010, the Company granted nonqualified stock
      options for the purchase of 200,000 and 200,000 shares of common stock, to
      its two independent directors. The options are exercisable at $0.53 per
      share and vest as follows: 100,000 on the grant date, 50,000 on September
      30, 2010 and 50,000 on December 31, 2010. The options expire five years
      after the particular vesting date.                                                                                                                                                                                                              
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | b) | On July 22, 2010, the Company granted nonqualified stock
      options for the purchase of 300,000 shares of common stock at $0.75 per
      share to the CEO. The options vest as follows: 50,000 on the grant date,
      50,000 on December 31, 2010 and 50,000 every six months thereafter
      commencing on December 31, 2012. The options expire five years after the
      particular vesting date.                                                                                                                                                                                                                                
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | c) | On July 22, 2010, the Company granted nonqualified stock
      options for the purchase of 100,000 shares of common stock at $0.75 per
      share to the CFO. The options vest as follows: 16,667 on the grant date,
      16,667 on December 31, 2010 and 16,667 every six months thereafter. The
      final group of 16,665 options vest on December 31, 2012. The options
      expire five years after the particular vesting date.                                                                                                                                                                                                   
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | d) | On July 22, 2010, the Company granted nonqualified
      market-based stock options for the purchase of 150,000 and 50,000 shares
      of common stock at $0.53 per share to the CEO and CFO, respectively. The
      options vest on the first date after the grant date that the closing price
      of the Companys common stock exceeds $1.00 per share for twenty
      consecutive trading days. The options expire five years after the date
      that they vest. The requisite service periods for these stock option
      awards, as derived from the Monte Carlo -Trinomial Lattice model was
      determined to be one year.

F-20

---

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

|8. | SHARE BASED COMPENSATION(continued)
|-- | -----------------------------------
|   |                                    
|   | e)                                 
|   |                                    
|   |                                    
|   |                                    
|   | f)                                 
|   |                                    
|   | g)                                 
|   |                                    
|   | h)                                 
|   |                                    
|   | i)                                 

During the nine months ended September 30, 2009, the Company
  granted 270,000 stock options to a director and an employee with a weighted
  average exercise price of $0.48 per share. During the nine months ended
  September 30, 2009, the Company granted 200,000 warrants to a consultant with a
  weighted average exercise price of $0.55 per share.

F-21

---

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

|8. | SHARE BASED COMPENSATION(continued)                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                  
|   | The following table summarizes the Companys stock option
      and warrant activity for the nine months ended September 30, 2010 and
      2009:

| |                             |  |           |  |   | Weighted       | 
| | --------------------------- |  | --------- |  | - | -------------- | 
| |                             |  | Number of |  |   | Average        | 
| |                             |  | Shares    |  |   | Exercise Price | 
| |                             |  |           |  |   |                | 
| | Balance, December 31, 2008  |  | 3,954,719 |  | $ | 0.15           | 
| | Options granted and assumed |  | 470,000   |  |   | 0.51           | 
| | Options expired             |  | --        |  |   | --             | 
| | Options forfeitures         |  | --        |  |   | --             | 
| | Options exercised           |  | --        |  |   | --             | 
| |                             |  |           |  |   |                | 
| | Balance, September 30, 2009 |  | 4,424,719 |  | $ | 0.19           | 

| |                             |  |           |   |   | Weighted       | 
| | --------------------------- |  | --------- | - | - | -------------- | 
| |                             |  | Number of |   |   | Average        | 
| |                             |  | Shares    |   |   | Exercise Price | 
| |                             |  |           |   |   |                | 
| | Balance, December 31, 2009  |  | 4,724,719 |   | $ | 0.23           | 
| |                             |  |           |   |   |                | 
| | Options granted and assumed |  | 5,267,197 |   |   | 0.72           | 
| | Options expired             |  | (79,719   | ) |   | 1.36           | 
| | Options forfeitures         |  | --        |   |   | --             | 
| | Options exercised           |  | --        |   |   | --             | 
| |                             |  |           |   |   |                | 
| | Balance, September 30, 2010 |  | 9,912,197 |   | $ | 0.48           | 

F-22

---

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

|8. | SHARE BASED COMPENSATION(continued)                                                                                                       
|-- | ------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                           
|   | The following table summarizes information about options
      and warrants granted during the nine months ended September 30,
      2009:

| |                   |  |  | Exercise Price      |  |   |          |  |  |               |  |   |              | 
| | ----------------- |  |  | ------------------- |  | - | -------- |  |  | ------------- |  | - | ------------ | 
| |                   |  |  | Equals, Exceeds     |  |   |          |  |  |               |  |   |              | 
| | Number of Options |  |  | or                  |  |   | Weighted |  |  |               |  |   |              | 
| | and Warrants      |  |  | is Less than Mkt.   |  |   | Average  |  |  | Range of      |  |   | Weighted     | 
| | Granted           |  |  | Price of Stock      |  |   | Exercise |  |  | Exercise      |  |   | Average Fair | 
| | During 2009       |  |  | on
      Grant Date |  |   | Price    |  |  | Price         |  |   | Value        | 
| | 470,000           |  |  | Equals              |  | $ | 0.51     |  |  | $0.48 - $0.55 |  | $ | 0.26         | 
| | --                |  |  | Exceeds             |  |   | --       |  |  | --            |  |   | --           | 
| | --                |  |  | Less Than           |  |   | --       |  |  | --            |  |   | --           | 
| |                   |  |  |                     |  |   |          |  |  |               |  |   |              | 

The following table summarizes
  information about options and warrants granted during the nine months ended
  September 30, 2010:

| |                   |  |  | Exercise Price      |  |   |          |  |  |               |  |   |              | 
| | ----------------- |  |  | ------------------- |  | - | -------- |  |  | ------------- |  | - | ------------ | 
| |                   |  |  | Equals, Exceeds     |  |   |          |  |  |               |  |   |              | 
| | Number of Options |  |  | or                  |  |   | Weighted |  |  |               |  |   |              | 
| | and Warrants      |  |  | is Less than Mkt.   |  |   | Average  |  |  | Range of      |  |   | Weighted     | 
| | Granted           |  |  | Price of Stock      |  |   | Exercise |  |  | Exercise      |  |   | Average Fair | 
| | During 2010       |  |  | on
      Grant Date |  |   | Price    |  |  | Price         |  |   | Value        | 
| | 567,197           |  |  | Equals              |  | $ | 0.76     |  |  | $0.75 - $0.81 |  | $ | 0.27         | 
| | 4,500,000         |  |  | Exceeds             |  | $ | 0.71     |  |  | $0.53 - $0.75 |  | $ | 0.37         | 
| | 200,000           |  |  | Less Than           |  | $ | 0.82     |  |  | $0.82         |  | $ | 0.56         | 
| |                   |  |  |                     |  |   |          |  |  |               |  |   |              | 

F-23

---

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

|8. | SHARE BASED COMPENSATION(continued)                                                                                                                                         
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                             
|   | The following table summarizes the status of the
      Companys unvested shares as of September 30, 2009 and changes during the
      nine months ended September 30, 2009:

| |                              |  |           |   |   | Weighted Average | 
| | ---------------------------- |  | --------- | - | - | ---------------- | 
| |                              |  | Number of |   |   | Grant Date       | 
| |                              |  | Shares    |   |   | Fair
      Value | 
| |                              |  |           |   |   |                  | 
| | Unvested, December 31, 2008  |  | 37,500    |   | $ | 0.55             | 
| | Options granted              |  | 270,000   |   |   | 0.39             | 
| | Options vested               |  | (107,500  | ) |   | 0.30             | 
| | Options forfeited            |  | --        |   |   | --               | 
| |                              |  |           |   |   |                  | 
| | Unvested, September 30, 2009 |  | 200,000   |   | $ | 0.47             | 

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

| |                              |  |            |   |   | Weighted Average | 
| | ---------------------------- |  | ---------- | - | - | ---------------- | 
| |                              |  | Number of  |   |   | Grant Date       | 
| |                              |  | Shares     |   |   | Fair
      Value | 
| |                              |  |            |   |   |                  | 
| | Unvested, December 31, 2009  |  | 540,000    |   | $ | 0.46             | 
| | Granted                      |  | 4,833,333  |   |   | 0.38             | 
| | Vested                       |  | (1,565,000 | ) |   | 0.39             | 
| | Forfeited                    |  | --         |   |   | --               | 
| |                              |  |            |   |   |                  | 
| | Unvested, September 30, 2010 |  | 3,808,333  |   | $ | 0.39             | 

As of September 30, 2010, there was
  $1,275,585 of total unrecognized compensation cost related to unvested stock
  options and warrants. This cost is expected to be fully recognized as follows:

2010
      $
      320,6892011
      
      909,6372012
      
      45,259Total
      $
      1,275,585


F-24

---

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

|9. | WARRANTS AND OPTIONS                                                                                                                                                                                                                                   
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                        
|   | The following table summarizes all of the Companys stock
      option and warrant activity for the nine months ended September 30, 2010
      and 2009, including private placement warrants and share based payment
      stock options and warrants:

| |                             |  |            |   |   | Weighted       | 
| | --------------------------- |  | ---------- | - | - | -------------- | 
| |                             |  | Number of  |   |   | Average        | 
| |                             |  | Shares     |   |   | Exercise Price | 
| | Balance, December 31, 2008  |  | 19,335,428 |   | $ | 1.07           | 
| | Options granted and assumed |  | 2,128,043  |   |   | 0.70           | 
| | Options expired             |  | --         |   |   | --             | 
| | Options forfeitures         |  | --         |   |   | --             | 
| | Options exercised           |  | --         |   |   | --             | 
| |                             |  |            |   |   |                | 
| | Balance, September 30, 2009 |  | 21,463,471 |   | $ | 1.03           | 
| |                             |  |            |   |   |                | 
| | Balance, December 31, 2009  |  | 27,323,076 |   | $ | 0.97           | 
| | Options granted and assumed |  | 10,790,697 |   |   | 0.74           | 
| | Options expired             |  | (79,719    | ) |   | 1.36           | 
| | Options forfeitures         |  | --         |   |   | --             | 
| | Options exercised           |  | --         |   |   | --             | 
| |                             |  |            |   |   |                | 
| | Balance, September 30, 2010 |  | 38,034,054 |   | $ | 0.90           | 

F-25

---

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

|10. | INCOME TAXES                                                                                                                          
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                       
|    | The Company is a Nevada corporation and is subject to
      federal income taxes. Nevada does not impose a corporate income
      tax.
|    |                                                                                                                                       
|    | The income tax benefit consisted of the following for the
      nine months ended September 30, 2010 and September 30,
      2009:    

| |                                                      |   | September 30, |   |   | September 30, |  
| | ---------------------------------------------------- | - | ------------- | - | - | ------------- | -
| |                                                      |   | 2010          |   |   | 2009          |  
| |                                                      |   |               |   |   |               |  
| | Income tax benefit based on statutory tax
      rate | $ | 1,741,899     |   | $ | (1,279,461    | )
| | Non-deductible and other                             |   | (1,729        | ) |   | 2,177         |  
| | Change in valuation allowance                        |   | (396,410      | ) |   | 11,427        |  
| |                                                      |   |               |   |   |               |  
| | Income tax benefit                                   | $ | 1,343,760     |   | $ | (1,265,857    | )

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

| |                                           |   | September 30, |   |   | December 31, |  
| | ----------------------------------------- | - | ------------- | - | - | ------------ | -
| |                                           |   | 2010          |   |   | 2009         |  
| | Deferred income tax assets:               |   |               |   |   |              |  
| |                                           |   |               |   |   |              |  
| | Net operating loss carryforward           | $ | 5,042,417     |   | $ | 3,698,657    |  
| | Option compensation                       |   | 888,064       |   |   | 575,539      |  
| | Property, plant & equipment               |   | 81,568        |   |   | --           |  
| | Reclamation and remediation costs         |   | 96,368        |   |   | 96,368       |  
| |                                           |   |               |   |   |              |  
| | Gross deferred income tax asset           |   | 6,108,417     |   |   | 4,370,564    |  
| | Valuation allowance                       |   | (1,066,000    | ) |   | (669,590     | )
| |                                           |   |               |   |   |              |  
| |                                           |   | 5,042,417     |   |   | 3,700,974    |  
| | Deferred income tax liabilities:          |   |               |   |   |              |  
| |                                           |   |               |   |   |              |  
| | Property, plant & equipment               |   | --            |   |   | 2,317        |  
| | Unrealized gain on short-term investments |   | 8,018         |   |   | --           |  
| | Acquisition related liabilities           |   | 11,067,191    |   |   | 11,067,191   |  
| |                                           |   |               |   |   |              |  
| | Net deferred income tax liability         | $ | 6,032,792     |   | $ | 7,368,534    |  

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

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

F-26

---

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

|10. | INCOME TAXES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The resulting estimated future federal income tax
      liability associated with the temporary difference between the acquisition
      consideration and the tax basis is reflected as an increase to the total
      purchase price which has been applied to the underlying mineral and
      Columbus project assets in the absence of there being a goodwill component
      associated with the acquisition transactions.                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company had cumulative net operating losses of
      approximately $14,406,905 and $10,567,591 as of September 30, 2010 and
      December 31, 2009, respectively for federal income tax purposes.
      Cumulative net operating losses from December 31, 2006 and previous years
      are effectively nil due to the annual limitation imposed by the Internal
      Revenue Code of 1986 as a result of the ownership percentage change
      limitations. The net operating loss carryforwards will expire between 2027
      and 2030.                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company and its subsidiary file income tax returns in
      the United States. These tax returns are subject to examination by
      taxation authorities provided the years remain open under the relevant
      statues of limitations, which may result in the payment of income taxes
      and/or a decrease in the net operating losses available for carryforwards.
      The Company is no longer subject to income tax examinations by US federal
      tax authorities for years prior to 2006. While the Company believes that
      its tax filings do not include uncertain tax positions, the results of
      potential examinations or the effect of changes in tax law cannot be
      ascertained at this time. The Company currently has no tax years under
      examination.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|11. | COMPREHENSIVE INCOME                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The components of comprehensive income, net of tax, were
      as follows for the nine months ended September 30,
      2010:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                           |   | September 30, |  
| | ----------------------------------------- | - | ------------- | -
| |                                           |   | 2010          |  
| | Net Loss                                  | $ | (3,633,093    | )
| | Other Comprehensive Income, net of tax:   |   |               |  
| | Unrealized gain on short-term investments |   | 14,890        |  
| | Comprehensive Income                      | $ | (3,618,203    | )

The tax effect of each component of
  comprehensive income for the nine months ended September 30, 2010:

| |                                    |   | September 30, |  
| | ---------------------------------- | - | ------------- | -
| |                                    |   | 2010          |  
| |                                    |   |               |  
| | Unrealized holding gains           | $ | 22,908        |  
| | Income tax expense                 |   | (8,018        | )
| |                                    |   |               |  
| | Total unrealized gains, net of tax | $ | 14,890        |  

For the nine months ended September 30,
  2009, there was no other comprehensive income recognized.

F-27

---

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

|12. | PROPERTY RENTAL AGREEMENTS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company, through its subsidiary CMI, has a lease
      agreement for mining claims with DDB Syndicate, an entity owned by related
      parties, including Douglas D.G. Birnie, Chief Executive Officer of the
      Company; Mr. Chizmar, a former director of the Company; three former
      officers and directors of CBI; Geotech Mining Inc., Jack Corp. and Wiser
      Corp. Geotech Mining Inc., Jack Corp. and Wiser Corp. are affiliates of
      Nanominerals Corp (NMC).                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The DDB Syndicate has leased the DDB Claims to CSM, a
      wholly owned subsidiary of the Company. The mining lease agreement (the
      DDB Agreement), between the DDB Syndicate and CSM, provides CSM with a
      lease, extending for approximately 5 years, with an option to purchase the
      DDB Claims at any time during the lease period. To maintain the lease
      rights, CSM paid the DDB Syndicate $130,000 by June 30, 2008, with annual
      rental payments thereafter of $30,000 per year, payable on June 30, 2009,
      2010, and 2011, respectively. CSM may exercise its option to purchase the
      DDB Claims by paying a purchase price of $400,000, less any rental
      payments made by CSM prior to exercising the option, or paying the DDB
      Syndicate $10, plus the grant of a 2% royalty of net smelter returns on
      the DDB Claims.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company paid the $30,000 rental payments due on June
      30, 2010 and 2009, respectively. The payments consist of $3,651 in
      payments to each of the eight owners of DDB Syndicate including
      reimbursement of expenses of $792 to a company controlled by Douglas D.G.
      Birnie.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|13. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Lease obligations The Company rents office space
      in Henderson, Nevada. The lease terms expired on September 1, 2008 and the
      Company continues to rent the existing space under month-to-month
      terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Rental expense resulting from this operating lease
      agreement was $49,725 and $41,625 for the nine months ended September 30,
      2010 and 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Columbus Project Pursuant to the option
      assignment agreement dated March 30, 2007, as amended August 8, 2007, the
      Company granted a 5% net smelter return royalty to NMC, one of the
      principal stockholders of the Company. The Columbus Project is further
      discussed in Note 5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Red Mountain Project Pursuant to the option
      assignment agreement, as amended August 8, 2007, the Company granted a 5%
      net smelter return royalty to NMC, one of the principal stockholders of
      the Company. The Red Mountain Project is further discussed in Note
      6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-28

---

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

|14. | ENVIRONMENTAL AND RECLAMATION ACTIVITIES                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                            
|    | The liabilities accrued for the reclamation and
      remediation costs at September 30, 2010 and December 31, 2009, were as
      follows:

| |                                                    |   | September 30, |  |   | December 31, | 
| | -------------------------------------------------- | - | ------------- |  | - | ------------ | 
| |                                                    |   | 2010          |  |   | 2009         | 
| |                                                    |   |               |  |   |              | 
| | Exploration properties:                            |   |               |  |   |              | 
| | Columbus                                           | $ | 275,338       |  | $ | 275,338      | 
| |                                                    |   |               |  |   |              | 
| | Reclamation and remediation costs,
      long-term | $ | 275,338       |  | $ | 275,338      | 

The activity in the accrued reclamation
  and remediation cost liability for the nine months ended September 30, 2010, was
  as follows:

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


|    | The Company maintains reclamation bonds with the Bureau
      of Land Management in the amount of $908,368 as of September 30, 2010 and
      December 31, 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|15. | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | The Company maintains its cash accounts in financial
      institutions. Cash accounts are insured by the Federal Deposit Insurance
      Corporation (FDIC) for up to $250,000 per financial institution. The
      Company has never experienced a material loss or lack of access to its
      cash accounts; however, no assurance can be provided that access to the
      Companys cash accounts will not be impacted by adverse conditions in the
      financial markets. At September 30, 2010, the Company had deposits in
      excess of FDIC insured limits in the amount of
      $2,375,941.

F-29

---

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

|16. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Pursuant to option assignment agreements related to both
      the Columbus and Red Mountain projects, the Company granted a 5% net
      smelter return royalty to NMC. NMC is the Companys largest shareholder,
      owning approximately 33% of the Companys outstanding common stock. The
      Columbus Project is further discussed in Note 5. The Red Mountain Project
      is further discussed in Note 6.                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | During the nine months ended September 30, 2010, the
      Company utilized the services of NMC to provide technical assistance and
      financing related activities. These services related primarily to the
      Columbus project and the Red Mountain project.                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | In addition to the above services, NMC provided dedicated
      use of its laboratory, instrumentation, milling equipment and research
      facilities. NMC provided invoices for these fees plus expenses.                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | For the nine months ended September 30, 2010, the Company
      incurred total fees and reimbursements of expenses to NMC of $315,000 and
      $78,641, respectively, for a total of $393,641. At September 30, 2010, the
      Company had an outstanding balance due to NMC of $43,052.                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company also had an outstanding balance for accrued
      compensation to Douglas D.G. Birnie, its executive officer, of $11,461.
      The amount is payable to a company wholly owned by Douglas D.G.
      Birnie.                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Accounts payable  related party totaled $54,513 as of
      September 30, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | Due to related parties includes amounts due to former
      officers of the Company. At September 30, 2010, the remaining amount of
      due to related parties was $23,290.                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | As further discussed in Note 12, the Company, through its
      subsidiary CMI, has a lease agreement for mining claims with DDB
      Syndicate, an entity owned by related parties, including Douglas D.G.
      Birnie, Chief Executive Officer of the Company; Mr. Chizmar, a former
      director of the Company; three former officers and directors of CBI;
      Geotech Mining Inc., Jack Corp. and Wiser Corp. Geotech Mining Inc., Jack
      Corp. and Wiser Corp. are affiliates of NMC. Rental payments to DDB
      Syndicate were $30,000 for the nine months ended September 30, 2010 and
      2009, respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | For the nine months ended September 30, 2010, the Company
      incurred fees of $21,066 for services performed by one of its independent
      directors, Mark Brennan, primarily for executive search
      assistance.                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|17. | CONCENTRATION OF ACTIVITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | For the nine months ended September 30, 2010, the Company
      purchased services from two major vendors, Boart Longyear and NMC, which
      exceeded more than 10% of total purchases and amounted to $442,488 and
      $393,641, respectively. NMC is a related party as further discussed in
      Note 16.                                                                                                                                                                                                                                                                                                                    

F-30

---

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

Cautionary Statement Regarding Forward-Looking
Statements

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

OVERVIEW

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

In February 2008, we acquired our lead project, a prospective
gold, silver and calcium carbonate property located in Esmeralda County, Nevada,
that we call the Columbus Project. The Columbus Project consists of 19,738
acres of placer mineral claims, including a 378 acre Permitted Mine Area
(58-acre mill site and mill facility and 320-acre mine site). Our current
permits allow us to mine up to 792,000 tons per year to 40 feet in depth for the
purpose of extracting precious metals and calcium carbonate from the Permitted
Mine Area. We also have a mineral lease covering, and the option to acquire, an
additional 23,440 acres of placer mineral claims adjoining the current project
area (the DDB Claims).

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

In addition to the Columbus Project, we own the right to
acquire a prospective gold, silver and tungsten property located in San
Bernardino County, California, that we call the Red Mountain Project.

The discussion provided in this Quarterly Report should be read
in conjunction with our Annual Report on Form 10-K for the year ended December
31, 2009 filed with the United States Securities and Exchange Commission (the
SEC) on April 15, 2010.

RECENT CORPORATE DEVELOPMENTS

The following significant developments occurred since our
fiscal quarter ended June 30, 2010:

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

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

3

---

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

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


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

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


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

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

Number of Options to
    Exercise Price
    Vesting Date
    Expiration DateVest
    Per Share16,667
    $0.75
    June 30, 2010
    June 29, 201516,667
    $0.75
    December 31, 2010
    December 30, 201516,667
    $0.75
    June 30, 2011
    June 29, 201616,667
    $0.75
    December 31, 2011
    December 30, 201616,667
    $0.75
    June 30, 2012
    June 30, 201716,665
    $0.75
    December 31, 2012
    December 30, 2017


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

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


4

---

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

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

Grant of Options to Independent Directors Pursuant to the
2007 Stock Incentive Plan

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

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

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


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

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


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

Exercise of Options by Director

On October 27, 2010, we issued an aggregate of 500,000 shares
of our common stock to Mr. Steele upon the exercise of options with an exercise
price of $0.05 per share granted to Mr. Steele under our 2007 Stock Incentive
Plan. The shares were issued to Mr. Steele pursuant to the exemptions from
registration provided by Section 4(2) of the Securities Act of 1933, as
amended.

PLAN OF OPERATIONS

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

5

---

The Columbus Project

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

|(a) | Mineral Resources/Reserves: Exploration and development work to date has identified three different host materials (clay, sand, brine) each of which could potentially contain commercial quantities of silver and gold mineralization within the project area. The sand zones outcrop on the western side of the Columbus basin and dip gently eastward. The clay zones also outcrop and overlay the sand zones. The brine zone occurs as an aquifer at some 400 feet depth underlying the sand/clay zones. Minimal work has been done by the Company on the brine zone, however previous work has shown some potential for both silver and gold in the brine. The Company’s exploration efforts have focused on drilling both the sand and clay zones within the approximately 5,000 acre Columbus Project Area of Interest outlined by previous geochemical exploration work.                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The 2008 and 2009 drilling program identified some 343 million tons of mineralized sand and/or clay material, grading 0.040 opt gold equivalent from the surface to 100 feet depth. (AuE opt = Au opt + 0.013 Ag opt)(based on $900/oz Au and $12/oz Ag). The boundaries of these mineralized zones were identified at a wide drill hole spacing (about 1⁄4 mile X 1⁄2 mile). The 2010 drill program was designed to both infill drill and to extend these previously drilled mineralized zones. All drill programs have been conducted by independent and qualified third parties under strict Chain-of-Custody, Quality Assurance and Quality Control standards. Samples will continue to be assayed using caustic fusion and metal extraction methods.                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The first phase of the 2010 drill program consisted of 147 holes drilled to a depth of 40 feet (permitted mining depth) within the permitted 320-acre mine site area. The goal of this drilling is to further define the mineralogy and grades within these mineralized clays. The second phase of the 2010 drill program consisted of 28 holes to a depth of 200 feet within the clay and sand zones located in the northwest sector of the property. These holes are designed to both infill and extend the mineral resources in this area. The 2010 drill program was completed in October 2010, ahead of schedule and under budget. Results will be reported as received.                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|(b) | Feasibility Study: The Company currently has a production permit for the Columbus Project. The production permit allows for the extraction of precious metals and the production of calcium carbonate on the 378 acre site (320 acre mine site and 58 acre mill site) at a mine rate of up to 792,000 tons per year. During the period 2008-2010 the Company has developed a dredge mine, constructed a Pilot Plant and began operations to develop and prove the extractive metallurgy for the Columbus project. To date the pilot facility has focused on the extraction of precious metals from the clays found within the permitted mine area. These clays contain a significant amount of organic material which has limited the gold and silver extraction in the CIP thiosulphate circuit. As an example, 0.011 opt gold and 0.037 opt silver was extracted as metal from 58.58 tons of low grade (0.02 opt Au, 0.39 opt Ag) head ore that was processed through the plant. This represented an average recovery of 51% for Au and 9.5% for Ag. During this initial test, no effort was made to optimize either head grade or extraction rates.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Since the first test runs, activities have focused on maximizing gold and silver extraction rates and minimizing processing costs. Maximizing gold and silver extraction involves the optimization of five primary variables of the process flow sheet: percentage of solids in the slurry, thiosulphate concentration, leach time, oxidation method and carbon loading. Process testing has substantially determined the first three variables and is now focused on oxidation and carbon loading. It is here where solving the current organic issue will allow final optimization of the oxidation and carbon loading circuit. When this work is completed, we expect to engage independent engineers to operate the pilot plant to confirm results and to complete the feasibility study.                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | If the operation of the pilot plant proves, to our satisfaction, that the Columbus Project is economically viable, we may seek to expand the production process and/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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

6

---

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

We anticipate spending approximately $3,370,000 on our
exploration and development program and $255,000 on our capital expenditures for
the Columbus Project from October 1, 2010 until September 30, 2011.

The Red Mountain Project

Sampling and Drilling Program: Our exploration and
development program for the Red Mountain Project currently consists of a
Drilling and Sampling program. Currently the Red Mountain Project is not in
active development. We have set a budget of $440,000 for Drilling and Sampling
at Red Mountain for the twelve months ending September 30, 2011; however, this
program is contingent on certain milestones being achieved at our lead project,
the Columbus Project. We have reallocated funds originally budgeted towards the
Red Mountain Project in order to provide us with maximum flexibility in
achieving our technical milestones at our lead project.

Cash Requirements

We have budgeted for the following cash expenditures for the
period from October 1, 2010 until September 30, 2011:

|Columbus Project                       |  |                                               |           |  
|-------------------------------------- |  | --------------------------------------------- | --------- | -
|                                       |  | Property Payments                             |           | $
|                                       |  | Drilling Program and Mineralization Estimates |           |  
|                                       |  | Pilot Plant / Project
      Feasibility       |           |  
|                                       |  | Total for Columbus Project                    |           | $
|Red Mountain Project                   |  |                                               |           |  
|                                       |  | Property Acquisition and Maintenance Costs    |           | $
|                                       |  | Sampling Exploration Program                  |           |  
|                                       |  | Total for Red Mountain Project                |           | $
|General and Administration             |  |                                               |           |  
|                                       |  | Total for General and Administration          |           | $
|Total Expected Expenses                |  | $                                             | 5,660,000 |  
|Total Expected Capital Expenditures    |  | $                                             | 255,000   |  
|Total Expected Cash
      Expenditures |  | $                                             | 5,915,000 |  

7

---

As of September 30, 2010, we had cash in the amount of
$3,166,543 and a working capital surplus of $3,751,323. We do not currently have
sufficient financial resources to pay for our anticipated cash expenditures for
the period from October 1, 2010 to September 30, 2011. We anticipate that our
existing financial resources are sufficient only to pay for the anticipated
costs of our exploration and development programs until June 30, 2011.
Thereafter, we anticipate that we will require additional financing to complete
our planned exploration and development plans. If we are unable to obtain
sufficient financing to complete our planned exploration and development plans,
we will scale back our plans depending upon our existing financial resources. We
do not currently have any financing arrangements in place.

RESULTS OF OPERATIONS

Three Months and Nine Months Summary

|                       |   | Three Months Ended |   |   | Percentage |   |  | Nine Months Ended |  |   | Percentage |  
|---------------------- | - | ------------------ | - | - | ---------- | - |  | ----------------- |  | - | ---------- | -
|                       |   | September 30,      |   |   | Increase / |   |  | September 30,     |  |   | Increase / |  
|                       |   | 2010               |   |   | 2009       |   |  | (Decrease)        |  |   | 2010       |  
|Revenue                | $ | -                  |   | $ | -          |   |  | n/a               |  | $ | -          |  
|                       |   |                    |   |   |            |   |  |                   |  |   |            |  
|Operating Expenses     |   | (2,108,640         | ) |   | (1,622,470 | ) |  | 30.0%             |  |   | (5,000,348 | )
|Other Income (Expense) |   | 9,076              |   |   | 1,984      |   |  | 357.5%            |  |   | 23,495     |  
|Income Tax Benefit     |   | 564,611            |   |   | 557,197    |   |  | 1.3%              |  |   | 1,343,760  |  
|Net Loss               | $ | (1,534,953         | ) | $ | (1,063,289 | ) |  | 44.4%             |  | $ | (3,633,093 | )

Revenue

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

Operating Expenses

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

|                                                          |   | Three Months Ended |  |   | Percentage |  |  | Nine Months Ended |  |   | Percentage | 
|--------------------------------------------------------- | - | ------------------ |  | - | ---------- |  |  | ----------------- |  | - | ---------- | 
|                                                          |   | September 30,      |  |   | Increase / |  |  | September 30,     |  |   | Increase / | 
|                                                          |   | 2010               |  |   | 2009       |  |  | (Decrease)        |  |   | 2010       | 
|Mineral exploration and evaluation expenses               | $ | 1,077,039          |  | $ | 1,167,184  |  |  | (7.7)%            |  | $ | 1,887,936  | 
|Mineral exploration and evaluation expenses related party |   | 136,827            |  |   | 126,780    |  |  | 7.9%              |  |   | 423,641    | 
|General and administrative                                |   | 698,765            |  |   | 302,605    |  |  | 130.9%            |  |   | 2,252,184  | 
|General and administrative  related party                |   | -                  |  |   | -          |  |  | n/a               |  |   | 21,066     | 
|Depreciation                                              |   | 181,009            |  |   | 10,901     |  |  | 1560.5%           |  |   | 370,521    | 
|Mineral and property holding costs                        |   | 15,000             |  |   | 15,000     |  |  | n/a               |  |   | 45,000     | 
|Total Expenses                                            | $ | 2,108,640          |  | $ | 1,622,470  |  |  | 30.0%             |  | $ | 5,000,348  | 

8

---

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

The item Mineral exploration and evaluation expenses  related
party represents (a) amounts paid or reimbursed to Nanominerals Corp. for
exploration work conducted on the Columbus and Red Mountain Projects; and (b)
amounts paid in respect of the DDB Claims to the DDB Syndicate, an entity owned
by related parties.  Nanominerals is our largest shareholder, owning
approximately 32.8% of our outstanding common stock.

During the fiscal quarter ended September 30, 2010, we incurred
fees payable to Nanominerals of $105,000 for technical and financing related
services relating primarily to the Columbus and Red Mountain Projects. In
addition, we incurred $31,827 in respect to reimbursable expenses paid for by
Nanominerals. At September 30, 2010, we were indebted to Nanominerals in the
amount of $43,052 for unpaid fees and reimbursable expenses.

During the nine months ended September 30, 2010, we made
$30,000 in rental payments to the DDB Syndicate under the terms of our lease
agreement for the DDB Claims. The DDB Syndicate is a mining syndicate made up of
a company controlled by Douglas D.G. Birnie (our President and Chief Executive
Officer and a member of our Board of Directors), Lawrence E. Chizmar (a former
member of our Board of Directors and a former director of CBI), three former
officers, directors and affiliates of CBI, and three companies affiliated with
Nanominerals. The $30,000 in rental payments made to the DDB Syndicate consisted
of $3,719 paid to each member of the DDB Syndicate, including $250 paid to a
company controlled by Mr. Birnie for the reimbursement of legal and government
filing fees related to the DDB Claims.

We also had an outstanding balance for accrued compensation due
to Douglas D.G. Birnie (our President and Chief Executive Officer and a member
of our Board of Directors) in the amount of $ 11,461, payable to a company
controlled by Mr. Birnie.

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

LIQUIDITY AND CAPITAL RESOURCES

|Working Capital     |   |                       |   |   |                      |   |  |                       | 
|------------------- | - | --------------------- | - | - | -------------------- | - |  | --------------------- | 
|                    |   |                       |   |   |                      |   |  | Percentage            | 
|                    |   | At September 30, 2010 |   |   | At December 31, 2009 |   |  | Increase / (Decrease) | 
|Current Assets      | $ | 4,235,318             |   | $ | 3,741,299            |   |  | 13.2%                 | 
|Current Liabilities |   | (483,995              | ) |   | (272,843             | ) |  | 77.4%                 | 
|Working Capital     | $ | 3,751,323             |   | $ | 3,468,456            |   |  | 8.2%                  | 

|Cash Flows                              |   |                    |   |   |                    |  
|--------------------------------------- | - | ------------------ | - | - | ------------------ | -
|                                        |   | Nine Months Ended  |   |   | Nine Months Ended  |  
|                                        |   | September 30, 2010 |   |   | September 30, 2009 |  
|Cash Flows used in Operating Activities | $ | (3,582,111         | ) | $ | (2,933,555         | )
|Cash Flows used in Investing Activities |   | (1,694,368         | ) |   | (224,342           | )
|Cash Flows from Financing Activities    |   | 4,792,007          |   |   | 1,184,538          |  
|Net Change in Cash During Period        | $ | (484,472           | ) | $ | (1,973,359         | )

9

---

At September 30, 2010 we had a working capital surplus of
$3,751,323 as compared with a working capital surplus of $3,468,456 at December
31, 2009. The increase in our working capital surplus is primarily attributable
to the $4,965,750 in proceeds that were received in January 2010 from the sale
of 11,035,000 units.

Financing Requirements

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

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

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

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

On October 27, 2010, we issued an aggregate of 500,000 shares
of our common stock to Michael A. Steele, a member of our board of directors,
upon the exercise of options with an exercise price of $0.05 per share. The
options were granted to Mr. Steele under our 2007 Stock Incentive Plan. The
shares were issued to Mr. Steele pursuant to the exemptions from registration
provided by Section 4(2) of the Securities Act of 1933, as amended.

There is no assurance that the actual costs of our exploration
and development programs will not exceed our estimates. Furthermore, we may need
additional financing to proceed beyond our current exploration and development
plans. Our ability to obtain additional financing will be subject to a number of
factors, including the variability of market prices for gold and silver,
investor interest in our mineral projects, and the performance of equity markets
in general. These factors may make the timing, amount, terms or conditions of
additional financing unavailable to us. If we are not able to obtain financing
when needed or in an amount sufficient to enable us to complete our programs, we
may be required to adjust our exploration and development plans depending upon
our existing capital resources.

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

OFF-BALANCE SHEET ARRANGEMENTS

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

10

---

CRITICAL ACCOUNTING POLICIES

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

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
also disclosed in the notes to our unaudited consolidated financial statements
for the period ended September 30, 2010 included in this Quarterly Report on
Form 10-Q.

Mineral Rights

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

Exploration Costs

Mineral exploration costs are expensed as incurred.

Mineral Property Acquisition Costs

Costs of acquiring mining properties are capitalized upon
acquisition. Mine development costs incurred either to develop new ore deposits,
expand the capacity of mines, or to develop mine areas substantially in advance
of current production are also capitalized once proven and probable reserves
exist and the property is a commercially mineable property. Costs incurred to
maintain current production or to maintain assets on a standby basis are charged
to operations. Costs of abandoned projects are charged to operations upon
abandonment. We evaluate the carrying value of capitalized mining costs and
related property and equipment costs to determine if these costs are in excess
of their recoverable amount whenever events or changes in circumstances indicate
that their carrying amounts may not be recoverable. The periodic evaluation of
carrying value of capitalized costs and any related property and equipment costs
are based upon expected future cash flows and/or estimated salvage value in
accordance with Accounting Standards Codification (ASC) 360-10-35-15,
Impairment or Disposal of Long-Lived Assets.

Reclamation and Remediation Costs (Asset Retirement
Obligation)

We accrued costs associated with environmental remediation
obligations in accordance with ASC 410-20, Asset Retirement Obligations.In accordance with ASC 410-20-25, Asset Retirement Obligations -
Recognition, we record a liability for the present value of the estimated
environmental remediation costs in the period in which the liability is incurred
and becomes determinable, with an offsetting increase in the carrying amount of
the associated asset. The liability will be accreted and the asset will be
depreciated over the life of the related assets. As reclamation work is
performed or liabilities are otherwise settled, the recorded amount of the
liability is reduced.

We accrue costs associated with environmental remediation
obligation when it is probable that such costs will be incurred and they are
reasonably estimable. Estimates for reclamation and other closure costs are
prepared in accordance with ASC 450, Contingencies, or ASC 410-30-25,
Asset Retirement and Environmental Obligations -Recognition. Costs of
future expenditures for environmental remediation are not discounted to their
present value unless subject to a contractually obligated fixed payment
schedule. Such costs are based on managements current estimate of amounts to be
incurred when the remediation work is performed, within current laws and
regulations.

11

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

Accruals for reclamation and environmental matters totaled
$275,338 at September 30, 2010 and December 31, 2009. We are in the exploration
stage and are unable to determine the estimated timing of expenditures relating
to these accruals at this time. It is reasonably possible the ultimate cost of
reclamation and remediation could change in the future, and that changes to
these estimates could have a material effect on future operating results as new
information becomes known. For additional information, see Note 14 of the
financial statements included with this Quarterly Report on Form 10-Q.

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

Not Applicable.

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

As of September 30, 2010, an evaluation was performed under the
supervision and with the participation of our management, including our Chief
Executive Officer (CEO) and Chief Financial Officer (CFO), of the
effectiveness of the design and operation of our disclosure controls and
procedures. These controls and procedures are based on the definition of
disclosure controls and procedures in Rule 13a-15(e) and Rule 15d-15(e)
promulgated under the Securities Exchange Act of 1934.

Based on that evaluation as of September 30, 2010, our
management, including the CEO and CFO, concluded that our disclosure controls
and procedures were effective to ensure that the information required to be
disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in SEC rules and forms.

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

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

12

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PART II - OTHER INFORMATION

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

None.

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

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

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

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

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

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

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

We expect to spend approximately $5,915,000 on the exploration
and development of our Columbus and Red Mountain Projects and the general costs
of operating and maintaining our business and mineral properties for the twelve
months ending September 30, 2011. We do not currently have sufficient financial
resources to pay for our anticipated expenditures for that period. We anticipate
that our existing financial resources are sufficient only to pay for the
anticipated costs of our exploration and development programs until June 30,
2011. Thereafter, we anticipate that we will require additional financing to
complete our planned exploration and development plans. In addition, actual
costs of completing our exploration and development plans could be greater than
anticipated and we may need additional financing sooner than anticipated. If we
are unable to obtain sufficient financing to complete our planned exploration
and development plans, we will scale back our plans depending upon our existing
financial resources. We do not currently have any financing arrangements in
place.

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

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

The most likely source of future financing presently available
to us is through the sale of shares of our common stock. The only other
anticipated alternative for the financing of further exploration would be the
offering by us of an interest in our mineral properties to be earned by another
party or parties carrying out further exploration 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.

13

---

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

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

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

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

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

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

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

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

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

14

---

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

15

---

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

Our shares constitute a penny stock under the Securities
Exchange Act of 1934 and are expected to remain classified as a penny stock for
the foreseeable future. Classification as a penny stock makes it more difficult
for a broker-dealer to sell the stock into a secondary market, which makes it
more difficult for a purchaser to liquidate his or her investment. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares will be subject to Rules 15g-2 through 15g-9 of the Exchange Act. Rather
than having to comply with these rules, some broker-dealers will refuse to
attempt to sell a penny stock.

No assurance that forward looking assessments will be
realized.

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

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

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

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

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

16

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

On October 27, 2010, we issued an aggregate of 500,000 shares
of our common stock to Michael A. Steele, a member of our board of directors,
upon the exercise of options with an exercise price of $0.05 per share. The
options were granted to Mr. Steele under our 2007 Stock Option Plan in March
2007. The shares were issued to Mr. Steele pursuant to the exemptions from
registration provided by Section 4(2) of the Securities Act of 1933, as
amended.

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

None.

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

None.

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

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

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

17

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|Exhibit |  |                                                                                                                                                                   
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                            
|10.12   |  | Non-Qualified Stock Option Agreement
      for Douglas D.G. Birnie. (14)                                                                                          
|10.13   |  | Non-Qualified Stock Option Agreement for Robert
      D. McDougal. (14)                                                                                           
|10.14   |  | Non-Qualified Stock Option Agreement
      for Michael A. Steele. (14)                                                                                            
|10.15   |  | Non-Qualified Stock Option Agreement for Mark H.
      Brennan. (14)                                                                                              
|14.1    |  | Code of Ethics. (10)                                                                                                                                              
|21.1    |  | List of Subsidiaries.(13)                                                                                                                                         
|31.1    |  | Certification
      of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002.                                               
|31.2    |  | Certification of Principal
      Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                     
|32.1    |  | Certification
      of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
      pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|32.2    |  | Certification of Principal
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002.

|(1)  | Filed as an exhibit to our Registration Statement on Form
      SB-2 originally filed on April 18, 2002, as amended.              
|---- | ----------------------------------------------------------------------------------------------------------------------------------
|(2)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2005 filed on April 12, 2006.       
|(3)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 30, 2007.                                              
|(4)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2006 filed on April 5, 2007.        
|(5)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on June 21, 2007.                                               
|(6)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on August 14, 2007.                                             
|(7)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on November 9, 2007.                                            
|(8)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on December 20, 2007.                                           
|(9)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on February 6, 2008.                                            
|(10) | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2003, filed on September 28,
  2004.
|(11) | Filed as a Schedule to Exhibit 10.2.                                                                                              
|(12) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2007 filed on March 31, 2008.         
|(13) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2009 filed on April 15, 2010.         
|(14) | Filed as an exhibit to our Current Report on Form 8-K
      filed on July 28, 2010.                                               

18

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SIGNATURES

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

|      |                   |  |     | IRELAND INC.                                          
|----- | ----------------- |  | --- | ------------------------------------------------------
|      |                   |  |     |                                                       
|      |                   |  |     |                                                       
|      |                   |  |     |                                                       
|Date: | November 22, 2010 |  | By: | /s/ Douglas D.G. Birnie                               
|      |                   |  |     | DOUGLAS D.G. BIRNIE                                   
|      |                   |  |     | Chief Executive Officer, President and
      Secretary
|      |                   |  |     | (Principal Executive Officer)                         
|      |                   |  |     |                                                       
|      |                   |  |     |                                                       
|      |                   |  |     |                                                       
|      |                   |  |     |                                                       
|Date: | November 22, 2010 |  | By: | /s/ Robert D. McDougal                                
|      |                   |  |     | ROBERT D. MCDOUGAL                                    
|      |                   |  |     | Chief Financial Officer and Treasurer                 
|      |                   |  |     | (Principal Financial Officer)                         

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