UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
DC 20549




FORM
10-Q
  (Mark
One)
  x
                QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
 For the
quarterly period ended   September 30,
2009
 
  ̈
                    TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934
 For the
transition period from 
to
 Commission
File Number:  000-49725
 Constitution
Mining Corp.
 (Exact
name of registrant as specified in its charter)
  Delaware
                          88-0455809(State
      or other jurisdiction of incorporation or organization)
                          (I.R.S.
      Employer Identification No.)
 
 Pasaje
      Mártir Olaya 129, Oficina 1203, Centro Empresarial José Pardo Torre A,
      Miraflores, Lima, Perú(Address
      of principal executive offices)+51-1-446-6807(Registrant’s
      telephone number, including area code)_________________________________________________________________(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 issuer was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days.ý
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).   ýYes ̈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,” “non-accelerated filer,” and “a 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 ý
  Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).  ̈Yes  ý No
  Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:
  Class
                                      
                                      Outstanding
      at November 12, 2009Common
      Stock, $0.001 par value
                                      
                                      70,522,523
 Table of Contents
  
 
 
 FORM
      10-Q
                                            CONSTITUTION
      MINING CORP.
                                            SEPTEMBER
      30, 2009
                                            TABLE OF CONTENTS
                                          PagePART
      I – FINANCIAL INFORMATIONItem
      1.
                                          Financial Statements.
                                          3Item
      2.
                                          Management’s Discussion and Analysis of Financial Condition and
      Results of Operations.
                                          4Item
      3.
                                          Quantitative and Qualitative Disclosures About Market
      Risk.
                                          16Item
      4T.
                                          Controls and Procedures.
                                          16PART
      II – OTHER INFORMATIONItem
      1.
                                          Legal Proceedings.
                                          18Item
      1A.
                                          Risk Factors.
                                          18Item
      2.
                                          Unregistered Sales of Equity Securities and Use of
      Proceeds.
                                          18Item
      3.
                                          Defaults Upon Senior Securities.
                                          19Item
      4.
                                          Submission of Matters to a Vote of Security
      Holders.
                                          19Item
      5.
                                          Other Information.
                                          19Item
      6.
                                          Exhibits.
                                          19SignaturesExhibitsCertifications
 
 
 
 - 2 -
 Table of Contents
 
 
 PART
I - FINANCIAL INFORMATION
  Item 1.     Financial
Statements.
  Our
      unaudited consolidated financial statements included in this Form 10-Q are
      as follows:F-1
                                              Unaudited
      Consolidated Balance Sheet as of September 30, 2009.F-2
                                              Unaudited
      Consolidated Statements of Loss and Comprehensive Loss for the three and
      nine months ended September 30, 2009 and 2008 and from inception on March
      6, 2000 to September 30, 2009.F-3
                                              Unaudited
      Consolidated Statements of Cash Flows for the three and nine months ended
      September 30, 2009 and 2008 and from inception on March 6, 2000 to
      September 30, 2009.F-4
                                              Unaudited
      Consolidated Statement of Changes in Stockholders'
      Equity (Deficiency) from inception on March 6, 2000 to September 30,
      2009.F-5
                                              Notes
      to Unaudited Consolidated Financial
Statements.
 These
unaudited consolidated financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
for interim financial information and the SEC instructions to Form
10-Q.  In the opinion of management, all adjustments considered
necessary for a fair presentation have been included.  Operating
results for the interim period ended September 30, 2009 are not necessarily
indicative of the results that can be expected for the full year.
 - 3 -
 Table of Contents
  
 Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Consolidated
Balance Sheets
 (Expressed
in U.S. Dollars)
 (Unaudited)
 
 As
      at
                                                    30
      September
                                                    2009
                                                  
                                                  
                                                  As
      at
                                                    31
      December
                                                    2008
                                                    (Audited)$
                                                  
                                                  
                                                  
                                                  $AssetsCurrentCash
      and cash equivalents
                                                  
                                                  
                                                  1,153,669
                                                  
                                                  
                                                  
                                                  66,580Amounts
      receivable (Note 4)
                                                  
                                                  
                                                  92,000
                                                  
                                                  
                                                  
                                                  60,000Prepaid
      expenses
                                                  
                                                  
                                                  4,058
                                                  
                                                  
                                                  
                                                  271,2501,249,727
                                                  
                                                  
                                                  
                                                  397,830Mineral property costs(Note 7)
                                                  
                                                  
                                                  4,070,000
                                                  
                                                  
                                                  
                                                  5,120,260Equipment(Note
      5)
                                                  
                                                  
                                                  140,122
                                                  
                                                  
                                                  
                                                  102,049Website development cost(Note 6)
                                                  
                                                  
                                                  31,166
                                                  
                                                  
                                                  
                                                  47,2955,491,015
                                                  
                                                  
                                                  
                                                  5,667,434LiabilitiesCurrentAccounts
      payable and accrued liabilities (Note 8)
                                                  
                                                  
                                                  1,399,446
                                                  
                                                  
                                                  
                                                  547,891Due
      to related parties (Note 9)
                                                  
                                                  
                                                  236,871
                                                  
                                                  
                                                  
                                                  12,3791,636,317
                                                  
                                                  
                                                  
                                                  560,270Stockholders’
      equityCapital stock (Note
      11)Authorized300,000,000
      common shares, par value $0.001 and50,000,000
      preferred shares, par value $0.001Issued
      and outstanding30
      September 2009 – 68,022,523 common shares, par value
$0.00131
      December 2008 – 58,469,456 common shares, par value $0.001
                                                  
                                                  
                                                  68,023
                                                  
                                                  
                                                  
                                                  58,469Share subscriptions received in
      advance(Note 11)
                                                  
                                                  
                                                  1,699,350
                                                  
                                                  
                                                  
                                                  -Additional
      paid in capital
                                                  
                                                  
                                                  18,309,585
                                                  
                                                  
                                                  
                                                  7,945,496Warrants(Note
      11)
                                                  
                                                  
                                                  782,288
                                                  
                                                  
                                                  
                                                  3,976,863Deficit,
      accumulated during the exploration stage
                                                  
                                                  
                                                  (17,004,548
                                                  )
                                                  
                                                  
                                                  (6,873,664
                                                  )3,854,698
                                                  
                                                  
                                                  
                                                  5,107,1645,491,015
                                                  
                                                  
                                                  
                                                  5,667,434
 
 Nature, Basis of
Presentation and Continuance of Operations Commitments Subsequent Events
    
 F -
1
 Table of Contents
 
 Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Consolidated
Statements of Loss and Comprehensive Loss
 (Expressed
in U.S. Dollars)
 (Unaudited)
  For
      the period from the date of inception on 6 March 2000 to 30 September
      2009
                                                  
                                                  
                                                  For
      the
                                                    three
      month period
                                                    ended
      30 September 2009
                                                  
                                                  
                                                  For
      the
                                                    three
      month period
                                                    ended
      30 September 2008
                                                  
                                                  
                                                  For
      the
                                                    nine
      month period
                                                    ended
      30 September 2009
                                                  
                                                  
                                                  For
      the
                                                    nine
      month period
                                                    ended
      30
                                                    September
      2008$
                                                  
                                                  
                                                  
                                                  $
                                                  
                                                  
                                                  
                                                  $
                                                  
                                                  
                                                  
                                                  $
                                                  
                                                  
                                                  
                                                  $Operating
      expensesAmortization
      expense (Notes 5 and 6)
                                                  
                                                  
                                                  264,195
                                                  
                                                  
                                                  
                                                  21,077
                                                  
                                                  
                                                  
                                                  12,620
                                                  
                                                  
                                                  
                                                  63,314
                                                  
                                                  
                                                  
                                                  25,639Default
      on oil and gas deposit
                                                  
                                                  
                                                  25,000
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Exploration
      costs
                                                  
                                                  
                                                  2,517,778
                                                  
                                                  
                                                  
                                                  715,769
                                                  
                                                  
                                                  
                                                  85,921
                                                  
                                                  
                                                  
                                                  1,592,817
                                                  
                                                  
                                                  
                                                  776,536Interest
      on convertible debentures
                                                  
                                                  
                                                  126,525
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Interest
      and bank charges
                                                  
                                                  
                                                  41,599
                                                  
                                                  
                                                  
                                                  38,557
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  41,599
                                                  
                                                  
                                                  
                                                  -Investor
      relations
                                                  
                                                  
                                                  1,724,119
                                                  
                                                  
                                                  
                                                  340,949
                                                  
                                                  
                                                  
                                                  128,510
                                                  
                                                  
                                                  
                                                  955,401
                                                  
                                                  
                                                  
                                                  400,400Management
      fees (Note 10)
                                                  
                                                  
                                                  723,553
                                                  
                                                  
                                                  
                                                  71,412
                                                  
                                                  
                                                  
                                                  77,822
                                                  
                                                  
                                                  
                                                  232,470
                                                  
                                                  
                                                  
                                                  251,134Office
      and miscellaneous
                                                  
                                                  
                                                  594,184
                                                  
                                                  
                                                  
                                                  191,876
                                                  
                                                  
                                                  
                                                  46,284
                                                  
                                                  
                                                  
                                                  356,026
                                                  
                                                  
                                                  
                                                  114,775Professional
      fees
                                                  
                                                  
                                                  1,811,147
                                                  
                                                  
                                                  
                                                  248,368
                                                  
                                                  
                                                  
                                                  241,518
                                                  
                                                  
                                                  
                                                  605,578
                                                  
                                                  
                                                  
                                                  557,827Rent
      (Note 10)
                                                  
                                                  
                                                  166,049
                                                  
                                                  
                                                  
                                                  19,201
                                                  
                                                  
                                                  
                                                  22,983
                                                  
                                                  
                                                  
                                                  61,244
                                                  
                                                  
                                                  
                                                  41,146Stock-based
      compensation (Note 12)
                                                  
                                                  
                                                  4,930,136
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  2,033,607
                                                  
                                                  
                                                  
                                                  2,271,494
                                                  
                                                  
                                                  
                                                  2,033,607Travel
      and entertainment
                                                  
                                                  
                                                  415,021
                                                  
                                                  
                                                  
                                                  46,313
                                                  
                                                  
                                                  
                                                  67,064
                                                  
                                                  
                                                  
                                                  107,447
                                                  
                                                  
                                                  
                                                  150,022Write-down
      of mineral property acquisition costs (Note 7)
                                                  
                                                  
                                                  4,054,260
                                                  
                                                  
                                                  
                                                  4,054,260
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  4,054,260
                                                  
                                                  
                                                  
                                                  760,260Net
      operating loss before other items
                                                  
                                                  
                                                  (17,393,566
                                                  )
                                                  
                                                  
                                                  (5,747,782
                                                  )
                                                  
                                                  
                                                  (2,716,329
                                                  )
                                                  
                                                  
                                                  (10,341,650
                                                  )
                                                  
                                                  
                                                  (5,111,346
                                                  )Other
      itemsForeign
      exchange gain (loss)
                                                  
                                                  
                                                  74,108
                                                  
                                                  
                                                  
                                                  68,907
                                                  
                                                  
                                                  
                                                  (1,159
                                                  )
                                                  
                                                  
                                                  75,762
                                                  
                                                  
                                                  
                                                  (858
                                                  )Gain
      on sale of oil and gas property
                                                  
                                                  
                                                  307,115
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  307,115Interest
      income
                                                  
                                                  
                                                  12,795
                                                  
                                                  
                                                  
                                                  4
                                                  
                                                  
                                                  
                                                  4,437
                                                  
                                                  
                                                  
                                                  4
                                                  
                                                  
                                                  
                                                  6,681Recovery
      of project management fees
                                                  
                                                  
                                                  60,000
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  -Provision
      for potential legal claims (Notes 7 and 8)
                                                  
                                                  
                                                  (65,000
                                                  )
                                                  
                                                  
                                                  -
                                                  
                                                  
                                                  
                                                  (200,000
                                                  )
                                                  
                                                  
                                                  135,000
                                                  
                                                  
                                                  
                                                  (200,000
                                                  )389,018
                                                  
                                                  
                                                  
                                                  68,911
                                                  
                                                  
                                                  
                                                  (196,722
                                                  )
                                                  
                                                  
                                                  210,766
                                                  
                                                  
                                                  
                                                  112,938Net
      operating loss and comprehensive loss for the period
                                                  
                                                  
                                                  (17,004,548
                                                  )
                                                  
                                                  
                                                  (5,678,871
                                                  )
                                                  
                                                  
                                                  (2,913,051
                                                  )
                                                  
                                                  
                                                  (10,130,884
                                                  )
                                                  
                                                  
                                                  (4,998,408
                                                  )Basic
      and diluted loss per common share
                                                  
                                                  
                                                  
                                                  (0.089
                                                  )
                                                  
                                                  
                                                  (0.055
                                                  )
                                                  
                                                  
                                                  (0.164
                                                  )
                                                  
                                                  
                                                  (0.098
                                                  )Weighted
      average number of common shares used in per share
    calculations
                                                  
                                                  
                                                  
                                                  64,027,326
                                                  
                                                  
                                                  
                                                  53,227,011
                                                  
                                                  
                                                  
                                                  61,633,618
                                                  
                                                  
                                                  
                                                  50,962,812
  F -
2
 Table of Contents
 
 Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Consolidated
Statements of Cash Flows
 (Expressed
in U.S. Dollars)
 (Unaudited)
 For
      the period from the date of inception on 6 March 2000 to 30
      September
                                                        2009
                                                      
                                                      
                                                      For
      the three month period ended 30 September 2009
                                                      
                                                      
                                                      For
      the three month period ended 30 September 2008
                                                      
                                                      
                                                      For
      the
                                                        nine
      month period ended
                                                        30
      September 2009
                                                      
                                                      
                                                      For
      the
                                                        nine
      month period ended
                                                        30
      September 2008$
                                                      
                                                      
                                                      
                                                      $
                                                      
                                                      
                                                      
                                                      $
                                                      
                                                      
                                                      
                                                      $
                                                      
                                                      
                                                      
                                                      $Cash
      flows used in operating activitiesLoss
      for the period
                                                      
                                                      
                                                      (17,004,548
                                                      )
                                                      
                                                      
                                                      (5,678,871
                                                      )
                                                      
                                                      
                                                      (2,913,051
                                                      )
                                                      
                                                      
                                                      (10,130,884
                                                      )
                                                      
                                                      
                                                      (4,998,408
                                                      )Adjustments
      to reconcile loss to net cash used by operating activitiesAccrued
      interest (Note 7)
                                                      
                                                      
                                                      126,525
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Amortization
      (Notes 5 and 6)
                                                      
                                                      
                                                      264,195
                                                      
                                                      
                                                      
                                                      21,077
                                                      
                                                      
                                                      
                                                      12,620
                                                      
                                                      
                                                      
                                                      63,314
                                                      
                                                      
                                                      
                                                      25,639Contributions
      to capital by related party – expenses (Notes 10 and 14)
                                                      
                                                      
                                                      15,000
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Common
      shares issued for services (Note 11)
                                                      
                                                      
                                                      24,199
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (25,253
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      24,199Value
      of common shares issued for mineral properties
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Warrant
      issued for services
                                                      
                                                      
                                                      25,252
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      25,253
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      25,253Gain
      on sale of oil and gas property
                                                      
                                                      
                                                      (307,115
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (307,115
                                                      )Stock-based
      compensation (Note 12)
                                                      
                                                      
                                                      4,930,136
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      2,033,607
                                                      
                                                      
                                                      
                                                      2,271,494
                                                      
                                                      
                                                      
                                                      2,033,607Write-down
      of mineral property acquisition
                                                        costs
      (Note 7)
                                                      
                                                      
                                                      4,054,260
                                                      
                                                      
                                                      
                                                      4,054,260
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      4,054,260
                                                      
                                                      
                                                      
                                                      760,260Changes
      in operating assets and liabilities(Increase)
      decrease in deposit and prepaid expenses
                                                      
                                                      
                                                      (4,058
                                                      )
                                                      
                                                      
                                                      1,756
                                                      
                                                      
                                                      
                                                      (45,350
                                                      )
                                                      
                                                      
                                                      267,192
                                                      
                                                      
                                                      
                                                      8,358(Increase)
      decrease in amounts receivable
                                                      
                                                      
                                                      (92,000
                                                      )
                                                      
                                                      
                                                      (62,000
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (32,000
                                                      )
                                                      
                                                      
                                                      -Increase
      (decrease) in accounts payable and accrued liabilities
                                                      
                                                      
                                                      1,399,446
                                                      
                                                      
                                                      
                                                      690,992
                                                      
                                                      
                                                      
                                                      (296,824
                                                      )
                                                      
                                                      
                                                      851,555
                                                      
                                                      
                                                      
                                                      234,799(6,568,708
                                                      )
                                                      
                                                      
                                                      (972,786
                                                      )
                                                      
                                                      
                                                      (1,208,998
                                                      )
                                                      
                                                      
                                                      (2,655,069
                                                      )
                                                      
                                                      
                                                      (2,193,408
                                                      )Cash
      flows used in investing activitiesAcquisition
      of mineral property interests (Note 7)
                                                      
                                                      
                                                      (975,260
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (50,000
                                                      )
                                                      
                                                      
                                                      (25,000
                                                      )
                                                      
                                                      
                                                      (250,260
                                                      )Purchase
      of equipment (Note 5)
                                                      
                                                      
                                                      (210,288
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (15,478
                                                      )
                                                      
                                                      
                                                      (85,258
                                                      )
                                                      
                                                      
                                                      (96,387
                                                      )Website
      development costs (Note 6)
                                                      
                                                      
                                                      (64,693
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (25,000
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (64,693
                                                      )Purchase
      of oil and gas property
                                                      
                                                      
                                                      (642,006
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -(1,892,247
                                                      )
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      (90,478
                                                      )
                                                      
                                                      
                                                      (110,258
                                                      )
                                                      
                                                      
                                                      (411,340
                                                      )Cash
      flows from financing activitiesCommon
      shares issued for cash (Note 11)
                                                      
                                                      
                                                      2,491,545
                                                      
                                                      
                                                      
                                                      1,000,477
                                                      
                                                      
                                                      
                                                      11,114
                                                      
                                                      
                                                      
                                                      1,146,286
                                                      
                                                      
                                                      
                                                      717,561Increase
      in due to related parties
                                                      
                                                      
                                                      236,871
                                                      
                                                      
                                                      
                                                      47,678
                                                      
                                                      
                                                      
                                                      (382,874
                                                      )
                                                      
                                                      
                                                      224,492
                                                      
                                                      
                                                      
                                                      15,102Issuance
      of warrants (Note 11)
                                                      
                                                      
                                                      4,521,858
                                                      
                                                      
                                                      
                                                      768,097
                                                      
                                                      
                                                      
                                                      3,714,317
                                                      
                                                      
                                                      
                                                      782,288
                                                      
                                                      
                                                      
                                                      3,714,317Convertible
      debentures
                                                      
                                                      
                                                      665,000
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      -Share
      subscriptions received in advance (Note 11)
                                                      
                                                      
                                                      1,699,350
                                                      
                                                      
                                                      
                                                      192,373
                                                      
                                                      
                                                      
                                                      (242,315
                                                      )
                                                      
                                                      
                                                      1,699,350
                                                      
                                                      
                                                      
                                                      -9,614,624
                                                      
                                                      
                                                      
                                                      2,008,625
                                                      
                                                      
                                                      
                                                      3,100,242
                                                      
                                                      
                                                      
                                                      3,852,416
                                                      
                                                      
                                                      
                                                      4,446,980Increase
      in cash and cash equivalents
                                                      
                                                      
                                                      1,153,669
                                                      
                                                      
                                                      
                                                      1,035,839
                                                      
                                                      
                                                      
                                                      1,800,766
                                                      
                                                      
                                                      
                                                      1,087,089
                                                      
                                                      
                                                      
                                                      1,842,232Cash
      and cash equivalents, beginning of period
                                                      
                                                      
                                                      -
                                                      
                                                      
                                                      
                                                      117,830
                                                      
                                                      
                                                      
                                                      96,108
                                                      
                                                      
                                                      
                                                      66,580
                                                      
                                                      
                                                      
                                                      54,642Cash
      and cash equivalents, end of period
                                                      
                                                      
                                                      1,153,669
                                                      
                                                      
                                                      
                                                      1,153,669
                                                      
                                                      
                                                      
                                                      1,896,874
                                                      
                                                      
                                                      
                                                      1,153,669
                                                      
                                                      
                                                      
                                                      1,896,874
 
 Supplemental Disclosures with Respect
of Cash Flows(Note 14)
  F -
3
 Table of Contents
 Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Consolidated
Statements of Changes in Stockholders’ Equity (Deficiency)
 (Expressed
in U.S. Dollars)
 (Unaudited)
 Number
      of
                                                                                                                              shares
      issued
                                                                                                                            Share
                                                                                                                              capital
                                                                                                                            Additional
                                                                                                                              paid-in
      capital
                                                                                                                            Share
                                                                                                                              subscription
      received in
                                                                                                                              advance
                                                                                                                            Warrants
                                                                                                                            Deficit,
                                                                                                                              accumulated
                                                                                                                              during
      the
                                                                                                                              explorationstage
                                                                                                                            Total
                                                                                                                              stockholders’
                                                                                                                              equity$
                                                                                                                            
                                                                                                                            $
                                                                                                                            
                                                                                                                            $
                                                                                                                            $
                                                                                                                            
                                                                                                                            $
                                                                                                                            
                                                                                                                            $Balance
      at 6 March 2000 (inception)Common
      shares issued – cash
                                                                                                                            
                                                                                                                            2,000,000
                                                                                                                            
                                                                                                                            2,000
                                                                                                                            
                                                                                                                            1,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            3,000Net
      loss for the period
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (2,291)
                                                                                                                            
                                                                                                                            (2,291)Balance
      at 31 December 2000
                                                                                                                            
                                                                                                                            2,000,000
                                                                                                                            
                                                                                                                            2,000
                                                                                                                            
                                                                                                                            1,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (2,291)
                                                                                                                            
                                                                                                                            709Common
      shares issued – cash
                                                                                                                            
                                                                                                                            5,000,000
                                                                                                                            
                                                                                                                            5,000
                                                                                                                            
                                                                                                                            42,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            47,000Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (10,571)
                                                                                                                            
                                                                                                                            (10,571)Balance
      at 31 December 2001
                                                                                                                            
                                                                                                                            7,000,000
                                                                                                                            
                                                                                                                            7,000
                                                                                                                            
                                                                                                                            43,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (12,862)
                                                                                                                            
                                                                                                                            37,138Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (12,097)
                                                                                                                            
                                                                                                                            (12,097)Balance
      at 31 December 2002
                                                                                                                            
                                                                                                                            7,000,000
                                                                                                                            
                                                                                                                            7,000
                                                                                                                            
                                                                                                                            43,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (24,959)
                                                                                                                            
                                                                                                                            25,041Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (11,019)
                                                                                                                            
                                                                                                                            (11,019)Balance
      at 31 December 2003
                                                                                                                            
                                                                                                                            7,000,000
                                                                                                                            
                                                                                                                            7,000
                                                                                                                            
                                                                                                                            43,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (35,978)
                                                                                                                            
                                                                                                                            14,0223
      for 1 forward split
                                                                                                                            
                                                                                                                            14,000,000
                                                                                                                            
                                                                                                                            14,000
                                                                                                                            
                                                                                                                            (14,000)
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (6,451)
                                                                                                                            
                                                                                                                            (6,451)Balance
      at 31 December 2004
                                                                                                                            
                                                                                                                            21,000,000
                                                                                                                            
                                                                                                                            21,000
                                                                                                                            
                                                                                                                            29,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (42,429)
                                                                                                                            
                                                                                                                            7,5712
      for 1 forward split
                                                                                                                            
                                                                                                                            21,000,000
                                                                                                                            
                                                                                                                            21,000
                                                                                                                            
                                                                                                                            (21,000)
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (18,338)
                                                                                                                            
                                                                                                                            (18,338)Balance
      at 31 December 2005
                                                                                                                            
                                                                                                                            42,000,000
                                                                                                                            
                                                                                                                            42,000
                                                                                                                            
                                                                                                                            8,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (60,767)
                                                                                                                            
                                                                                                                            (10,767)Common
      shares issued –  cash
                                                                                                                            
                                                                                                                            4,000,000
                                                                                                                            
                                                                                                                            4,000
                                                                                                                            
                                                                                                                            76,000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            80,000Contributions
      to capital by related party – expenses (Notes 10 and 14)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            14,400
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            14,400Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (289,343)
                                                                                                                            
                                                                                                                            (289,343)Balance
      at 31 December 2006
                                                                                                                            
                                                                                                                            46,000,000
                                                                                                                            
                                                                                                                            46,000
                                                                                                                            
                                                                                                                            98,400
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (350,110)
                                                                                                                            
                                                                                                                            (205,710)Contributions
      to capital by related party – expenses (Notes 10 and 14)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            600
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            600Common
      shares issued –  debt (Notes 11 and 14)
                                                                                                                            1,145,300
                                                                                                                            
                                                                                                                            1,145
                                                                                                                            
                                                                                                                            21,761
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            22,906Common
      shares issued –  cash (Note 11)
                                                                                                                            1,437,000
                                                                                                                            
                                                                                                                            1,437
                                                                                                                            
                                                                                                                            501,513
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            502,950Stock-based
      compensation
                                                                                                                              (Note
      12)
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            625,035
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            625,035Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (1,218,721)
                                                                                                                            
                                                                                                                            (1,218,721)Balance
      at 31 December 2007
                                                                                                                            
                                                                                                                            48,582,300
                                                                                                                            
                                                                                                                            48,582
                                                                                                                            
                                                                                                                            1,247,309
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            (1,568,831)
                                                                                                                            
                                                                                                                            (272,940)Common
      shares issued –  mineral
                                                                                                                              properties (Notes 7, 11 and 14)
                                                                                                                            3,800,000
                                                                                                                            
                                                                                                                            3,800
                                                                                                                            
                                                                                                                            4,166,200
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            4,170,000Common
      shares issued –  cash (Note 11)
                                                                                                                            
                                                                                                                            6,016,511
                                                                                                                            
                                                                                                                            6,016
                                                                                                                            
                                                                                                                            4,706,272
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            4,712,288Common
      shares issued –  services
                                                                                                                              (Notes 11 and 14)
                                                                                                                            70,645
                                                                                                                            
                                                                                                                            71
                                                                                                                            
                                                                                                                            49,380
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            49,451Value
      assigned to warrants (Note 11)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (3,739,570)
                                                                                                                            -
                                                                                                                            
                                                                                                                            3,739,570
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -Share
      issuance costs
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (517,702)
                                                                                                                            -
                                                                                                                            237,293
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (280,409)Stock-based
      compensation (Note 12)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            2,033,607
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            2,033,607Net
      loss for the year
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (5,304,833)
                                                                                                                            
                                                                                                                            (5,304,833)Balance
      at 31 December 2008
                                                                                                                            
                                                                                                                            58,469,456
                                                                                                                            
                                                                                                                            58,469
                                                                                                                            
                                                                                                                            7,945,496
                                                                                                                            -
                                                                                                                            3,976,863
                                                                                                                            
                                                                                                                            (6,873,664)
                                                                                                                            
                                                                                                                            5,107,164Common shares issued -
                                                                                                                              mineralproperties
      (Notes 7, 11 and 14)
                                                                                                                            
                                                                                                                            4,300,000
                                                                                                                            
                                                                                                                            4,300
                                                                                                                            
                                                                                                                            2,974,7000
                                                                                                                            -
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            2,979,000Common
      shares issued - cash(Note
      11)
                                                                                                                            5,253,067
                                                                                                                            
                                                                                                                            5,254
                                                                                                                            
                                                                                                                            1,923,320
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            1,928,574Value assigned to warrants
                                                                                                                              (Note
      11)
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (782,288)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            782,288
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -Warrants
      expired (Note 11)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            3,739,570
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (3,739,570)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -Agent comensation warrantsexpired (Note 11)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            237,293
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (237,293)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -Share subscription received
                                                                                                                              inadvance
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            1,699,350
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            1,699,350Stock-based
      compensation
                                                                                                                              (Note 12)
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            2,271,494
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            2,271,494Net loss for the period
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            -
                                                                                                                            
                                                                                                                            (10,130,884)
                                                                                                                            
                                                                                                                            (10,130,884)Balance
      at 30 September 2009
                                                                                                                            
                                                                                                                            68,022,523
                                                                                                                            
                                                                                                                            68,023
                                                                                                                            
                                                                                                                            18,309,585
                                                                                                                            
                                                                                                                            1,699,350
                                                                                                                            
                                                                                                                            782,288
                                                                                                                            
                                                                                                                            (17,004,548)
                                                                                                                            
                                                                                                                            3,854,698
 The
accompanying notes are an integral part of these consolidated financial
statements.
 F -
4
 Table of Contents
  Constitution Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 1.
                                                              Nature,
      Basis of Presentation and Continuance of
  Operations
 
 Constitution
Mining Corp. (the “Company”) was incorporated in the State of Nevada under the
name “Crafty Admiral Enterprises, Ltd.” on 6 March 2000. On 9 March 2007 the
Company changed their name to “Nordic Nickel Ltd.”. The Company changed their
name pursuant to a parent/subsidiary merger between the Company (as Crafty
Admiral Enterprises, Ltd.) and its wholly-owned non-operating subsidiary, Nordic
Nickel Ltd., which was established for the purpose of giving effect to this name
change. On 15 November 2007 the Company changed their name to “Constitution
Mining Corp.”. The Company changed their name pursuant to a parent/subsidiary
merger between the Company (as Nordic Nickel Ltd.) and its wholly-owned
non-operating subsidiary, Constitution Mining Corp., which was established for
the purpose of giving effect to this name change. The Company is in the
exploration stage as its operations principally involve the examination and
investigation of land that may contain valuable minerals, for the purpose of
discovering the presence of ore, if any, and its extent.
 
 The
accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiary, Constitution Mining Argentina SA, a
company incorporated under the laws of Argentina, since its date of
incorporation on 4 March 2008.
 
 The
Company is an exploration stage enterprise, as defined in Accounting Standards
Codification (the “Codification” or “ASC”) 915-10, “Development Stage Entities”.
The Company is devoting all of its present efforts in securing and establishing
a new business, and its planned principle operations have not commenced, and,
accordingly, no revenue has been derived during the organization
period.
 
 The
consolidated financial statements of the Company have been prepared in
accordance with accounting principles generally accepted in the United States of
America (“GAAP”) applicable to exploration stage enterprises, and are expressed
in U.S. dollars.  The Company’s fiscal year end is 31
December.
 
 The
Company’s consolidated financial statements as at 30 September 2009 and for the
nine month period then ended have been prepared on a going concern basis, which
contemplates the realization of assets and the settlement of liabilities and
commitments in the normal course of business.  The Company had a loss
of $10,130,884 for the nine month period ended 30 September 2009 (30 September
2008 – $4,998,408) and has working capital deficit of $386,590 at 30 September
2009 (31 December 2008 – $162,440).
 
 Management
cannot provide assurance that the Company will ultimately achieve profitable
operations or become cash flow positive, or raise additional debt and/or equity
capital.  Management believes that the Company’s capital resources
should be adequate to continue operating and maintaining its business strategy
during the fiscal year ending 31 December 2009.  However, if the
Company is unable to raise additional capital in the near future, due to the
Company’s liquidity problems, management expects that the Company will need to
curtail operations, liquidate assets, seek additional capital on less favorable
terms and/or pursue other remedial measures.  These consolidated
financial statements do not include any adjustments related to the
recoverability and classification of assets or the amounts and classification of
liabilities that might be necessary should the Company be unable to continue as
a going concern.
 
  F -
5
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 On 27
June 2006, the Company acquired a 100% interest in an oil and gas property lease
located in St. Francis County, Arkansas (the “Tombaugh Lease”) for cash payment
of $642,006.   In 2007, the Company shifted its focus from oil and gas
sector to mineral exploration.
 
 Although
management is currently implementing its business plan, and seeking additional
sources of equity or debt financing and or a partner, there is no assurance
these activities will be successful.  This raises substantial doubt about
the ability of the Company to continue as a going concern.  The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
 
 2.
                                                              Changes
      in Accounting Policies
 
 The
Accounting Standards Codification
 
 In June
2009, the Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standards No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principle – a
replacement of FASB Statement No. 162”.  The Codification
reorganized existing U.S. accounting and reporting standards issued by the FASB
and other related private sector standard setter into a single source of
authoritative accounting principles arranged by topic.  The
Codification supersedes all existing U.S. accounting standards; all other
accounting literature not included in the Codification (other than Securities
and Exchange Commission guidance for publicly-traded companies) is considered
non-authoritative.  The Codification was effective on a prospective
basis for interim and annual reporting periods ending after 15 September
2009.  The adoption of the Codification changed the Company’s
references to U.S. GAAP accounting standards but did not impact the Company’s
results of operations, financial position or liquidity.
 
 Subsequent
Events
 
 In May
2009, the FASB issued new guidance for accounting for subsequent
events.  The new guidance, which is now part of ASC 855, “Subsequent Events” is
intended to establish general standards of accounting for and disclosure of
events that occur after the balance sheet date, but before financial statements
are issued or are available to be issued.  It requires the disclosure
of the date through which an entity has evaluated subsequent events and the
basis for that date.  This disclosure should alert all users of
financial statements that an entity has not evaluated subsequent events after
that date in the set of financial statements being presented.  The new
guidance was effective on a prospective basis for interim or annual reporting
periods ending after 15 June 2009.  The adoption of this guidance did
not have a material impact on the Company’s consolidated financial
statements.
 
  F -
6
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 Convertible
Debt
 
 In May
2008, the FASB issued new guidance for accounting for convertible debt
instruments that may be settled in cash.  The new guidance, which is
now part of ASC 470-20, “Debt
with Conversion and Other Options” requires the liability and equity
components to be separately accounted for in a manner that will reflect the
entity’s nonconvertible debt borrowing rate.  The Company will
allocate a portion of the proceeds received from the issuance of convertible
notes between a liability and equity component by determining the fair value of
the liability component using the Company’s nonconvertible debt borrowing
rate.  The difference between the proceeds of the notes and the fair
value of the liability component will be recorded as a discount on the debt with
a corresponding offset to paid-in capital.  The resulting discount
will be accreted by recording additional non-cash interest expense over the
expected life of the convertible notes using the effective interest rate
method.  The new guidance was to be applied retrospectively to all
periods presented upon those fiscal years.  The adoption of this
guidance did not have a material impact on the Company’s consolidated financial
statements.
 
 Useful
Life of an Intangible Assets
 
 In April
2008, the FASB issued new guidance for determining the useful life of an
intangible assets.  The new guidance, which is now part of ASC 350,
“Intangibles – Goodwill and
Other”.  In determining the useful life of intangible assets,
ASC 350 removes the requirement to consider whether an intangible asset can be
renewed without substantial cost of material modifications to the existing terms
and conditions and, instead, requires an entity to consider its own historical
experience in renewing similar arrangements.  ASC 350 also requires
expanded disclosure related to the determination of intangible asset useful
lives.  The new guidance was effective for financial statements issued
for fiscal years beginning after 15 December 2008.  The adoption of
this guidance did not have a material impact on the company’s consolidated
financial statements.
 
 Derivative
Instruments and Hedging Activities
 
 In March
2008, the FASB issued new guidance on the disclosure of derivative instruments
and hedging activities.  The new guidance, which is now part of ASC
815, “Derivatives and Hedging
Activities” requires qualitative disclosures about objectives and
strategies for using derivatives, quantitative disclosures about fair value
amounts of, and gains and losses on, derivative instruments, and disclosures
about credit-risk-related contingent features in derivative
agreements.  The new guidance was effective prospectively for
financial statements issued for fiscal years beginning after 15 November 2008,
with early application encouraged.  The adoption of this guidance did
not have a significant impact on the Company’s consolidated financial
statements.
 
  F -
7
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 Business
Combinations
 
 In
December 2007, the FASB issued revised guidance for accounting for business
combinations.  The revised guidance, which is now part of ASC 805,
“Business Combination”
requires the fair value measurement of assts acquired, liabilities assumed and
any noncontrolling interest in the acquiree, at the acquisition date with
limited exceptions.  Previously, a cost allocation approach was used
to allocate the cost of the acquisition based on the estimated fair value of the
individual assets acquired and liabilities assumed.  The cost
allocation approach treated acquisition-related costs and restructuring costs
that the acquirer expected to incur as a liability on the acquisition date, as
part of the cost of the acquisition.  Under the revised guidance,
those costs are recognized in the consolidated statement of income separately
from the business combination.  The revised guidance applies to
business combinations for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after 15 December
2008.    The adoption of this guidance did not have a
material impact on the Company’s consolidated financial statements.
 
 Noncontrolling
Interests in Consolidated Financial Statements.
 
 In
December 2007, the FASB issued new guidance for accounting for noncontrolling
interests.  The new guidance, which is now part of ASC 810, “Consolidation” establishes
accounting and reporting standards for ownership interests in subsidiaries held
by parties other than the parent, the amount of consolidated net income
attributable and to the noncontrolling interest, changes in a parent’s ownership
interest, and the valuation of retained noncontrolling equity investments when a
subsidiary is deconsolidated.  The new guidance also establishes
disclosure requirements that clearly identify and distinguishes between the
interests of the parent and the interests of the noncontrolling
owners.  The new guidance was effective for fiscal years beginning
after 15 December 2008.  The adoption of this guidance did not have a
material effect on the Compayn’s results of operations, financial position or
cash flows.
 
 3.
                                                              Significant
      Accounting Policies
 
 The
following is a summary of significant accounting policies used in the
preparation of these consolidated financial statements.
 
 Principles
of consolidation
 
 All
inter-company balances and transactions have been eliminated in these
consolidated financial statements.
 
 Cash
and cash equivalents
 
 Cash and
cash equivalents include highly liquid investments with original maturities of
three months or less.
 
  F -
8
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 Financial
instruments
 
 The
carrying value of cash and cash equivalents, amounts receivable, accounts
payable and accrued liabilities and amounts due to related parties approximates
their fair value because of the short maturity of these
instruments.  The Company’s operations are in the U.S. and Argentina
and virtually all of its assets and liabilities are giving rise to significant
exposure to market risks from changes in foreign currency rates.  The
Company’s financial risk is the risk that arises from fluctuations in foreign
exchange rates and the degree of volatility of these
rates.  Currently, the Company does not use derivative instruments to
reduce its exposure to foreign currency risk.
 
 Derivative
financial instruments
 
 The
Company has not, to the date of these consolidated financial statements, entered
into derivative instruments to offset the impact of foreign currency
fluctuations.
 
 Income
taxes
 
 Deferred
income taxes are reported for timing differences between items of income or
expense reported in the financial statements and those reported for income tax
purposes in accordance with ASC 740, “Income Taxes”, which requires
the use of the asset/liability method of accounting for income
taxes.  Deferred income taxes and tax benefits are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and for tax losses and 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 Company provides for deferred taxes for the estimated
future tax effects attributable to temporary differences and carry-forwards when
realization is more likely than not.
 
 Basic
and diluted net loss per share
 
 The
Company computes net income (loss) per share in accordance with ASC 260 “Earnings per
Share”.  ASC 260 requires presentation of both basic and
diluted earnings per share (“EPS”) on the face of the income
statement.  Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of
shares outstanding (denominator) during the period.  Diluted EPS gives
effect to all dilutive potential common shares outstanding during the period
using the treasury stock method and convertible preferred stock using the
if-converted method.  In computing diluted EPS, the average stock
price for the period is used in determining the number of shares assumed to be
purchased from the exercise of stock options or warrants.  Diluted EPS
excluded all dilutive potential shares if their effect is
anti-dilutive.
 
 Comprehensive
loss
 
 ASC 220,
“Comprehensive Income”,
establishes standards for the reporting and display of comprehensive loss and
its components in the financial statements.  As at 30 September 2009,
the Company has no items that represent a comprehensive loss and, therefore, has
not included a schedule of comprehensive loss in the consolidated financial
statements.
 
  F -
9
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 Mineral
property costs
 
 Mineral
property acquisition costs are initially capitalized as tangible assets when
purchased. At the end of each fiscal quarter end, the Company assesses the
carrying costs for impairment.  If proven and probable reserves are
established for a property and it has been determined that a mineral property
can be economically developed, costs will be amortized using the
units-of-production method over the estimated life of the probable
reserve.
 
 Mineral
property exploration costs are expensed as incurred.
 
 Estimated
future removal and site restoration costs, when determinable are provided over
the life of proven reserves on a units-of-production basis.  Costs,
which include production equipment removal and environmental remediation, are
estimated each period by management based on current regulations, actual
expenses incurred, and technology and industry standards.  Any charge
is included in exploration expense or the provision for depletion and
depreciation during the period and the actual restoration expenditures are
charged to the accumulated provision amounts as incurred.
 
 As of the
date of these consolidated financial statements, the Company has not established
any proven or probable reserves on its mineral properties and incurred only
acquisition and exploration costs.
 
 Although
the Company has taken steps to verify title to mineral properties in which it
has an interest, according to the usual industry standards for the stage of
exploration of such properties, these procedures do not guarantee the Company’s
title.  Such properties may be subject to prior agreements or
transfers and title may be affected by undetected defects.
 
 Equipment
 
 Equipment
is recorded at cost and depreciation is provided over its estimated economic
life at 30%.
 
 Website
development costs
 
 The costs
of computer software developed or obtained for internal use, during the
preliminary project phase, as defined under ASC 350-40, “Internal-Use Software”, will
be expensed as incurred.  The costs of website development during the
planning stage, as defined under ASC 350-50, “Website Development Costs”,
will also be expensed as incurred.
 
 Computer
software, website development incurred during the application and infrastructure
development stage, including external direct costs of materials and services
consumed in developing the software and creating graphics and website content,
will be capitalized and amortized over the estimated useful life, beginning when
the software is ready for use and after all substantial testing is completed and
the website is operational.
 
  F -
10
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 Segments
of an enterprise and related information
 
 ASC 280,
“Segment Reporting”establishes guidance for the
way that public companies report information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the
public.  It also establishes standards for disclosures regarding
products and services, geographic areas and major customers.  ASC 280
defines operating segments as components of a company about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance.  The Company has evaluated this Codification and does not
believe it is applicable at this time.
 
 Start-up
expenses
 
 The
Company has adopted ASC 720-15, “Start-Up Costs”, which
requires that costs associated with start-up activities be expensed as
incurred.  Accordingly, start-up costs associated with the Company's
formation have been included in the Company’s expenses for the period from the
date of inception on 6 March 2000 to 30 September 2009.
 
 Foreign
currency translation
 
 The
Company 's functional and reporting currency is U.S.
dollars.  The consolidated financial statements of the
Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency
Matters”.  Monetary assets and liabilities denominated in
foreign currencies are translated using the exchange rate prevailing at the
balance sheet date.  Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are included
in the determination of income.  The Company has not, to the date
of these consolidated financial statements, entered into derivative instruments
to offset the impact of foreign currency fluctuations.
 
 Use
of estimates
 
 The
preparation of consolidated financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenues and expenditures during the reporting period.  Actual results
could differ from these estimates.
 
 Comparative
figures
 
 Certain
comparative figures have been adjusted to conform to the current period’s
presentation.
 
  F -
11
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 Stock-based
compensation
 
 Effective 1
January 2006, the Company adopted the provisions of ASC 718, “Compensation – Stock
Compensation”, which establishes accounting for equity instruments
exchanged for employee services. Under the provisions of ASC 718, stock-based
compensation cost is measured at the grant date, based on the calculated fair
value of the award, and is recognized as an expense over the employees’
requisite service period (generally the vesting period of the equity grant). The
Company adopted ASC 718 using the modified prospective method, which
requires the Company to record compensation expense over the vesting period
for all awards granted after the date of adoption, and for the unvested portion
of previously granted awards that remain outstanding at the date of adoption.
 Accordingly, financial statements for the periods prior to 1
January 2006 have not been restated to reflect the fair value method of
expensing share-based compensation.  Adoption of ASC 718 does not change
the way the Company accounts for share-based payments to non-employees,
with guidance provided by ASC 505-50, “Equity-Based Payments to
Non-Employees”.
 
 Recent
accounting pronouncements
 
 In June
2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No.
167, “Amendments to FASB
Interpretation No. 46(R)”.  SFAS No. 167, which amends ASC
810-10, “Consolidation”, prescribes a
qualitative model for identifying whether a company has a controlling financial
interest in a variable interest entity (“VIE”) and eliminates the quantitative
model.  The new model identifies two primary characteristics of a
controlling financial interest: (1) provides a company with the power to direct
significant activities of the VIE, and (2) obligates a company to absorb losses
of and/or provides rights to receive benefits from the VIE.  SFAS 167
requires a company to reassess on an ongoing basis whether it holds a
controlling financial interest in a VIE.  A company that holds a
controlling financial interest is deemed to be the primary beneficiary of the
VIE and is required to consolidate the VIE.  SFAS No. 167, which is
referenced in ASC 105-10-65, has not yet been adopted into the Codification and
remains authoritative.  SFAS No. 167 is effective 1 January
2010.  The Company does not expect that the adoption of SFAS No. 167
will have a material impact on its consolidated financial
statements.
 
 In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfer of Financial
Assets – an amendment of FASB Statement”.  SFAS No. 166 removes
the concept of a qualifying special-purpose entity from ASC 860-10, “Transfers and Servicing”, and
removes the exception from applying ASC 810-10, “Consolidation”. This
statements also clarifies the requirements for isolation and limitations on
portions of financial assets that are eligible for sale
acconting.  SFAS No. 166, which is referenced in ASC 105-10-65, has
not yet been adopted into the Codification and remains
authoritative.  This statement is effective 1 January
2010.  The Company does not expect that the adoption of SFAS No. 166
will have a material impact on its consolidated financial
statements.
 
 In August
2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, “Fair Value Measurement and
Disclosure (Topic 820) – Measuring Liabilities at Fair Value”, which
provides valuation techniques to measure fair value in circumstances in which a
quoted price in an active market for the identical liability is not
available.  The guidance provided in this update is effective 1
January 2010.  The Company does not expect that the adoption of this
guidance will have a material impact on its consolidated financial
statements.
 
  F -
12
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 International
Financial Reporting Standards
 
 In
November 2008, the Securities and Exchange Commission (“SEC”) issued for comment
a proposed roadmap regarding potential use of financial statements prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board.  Under the proposed
roadmap, the Company would be required to prepare consolidated financial
statements in accordance with IFRS in fiscal year 2014, including comparative
information also prepared under IFRS for fiscal 2013 and 2012.  The
Company is currently assessing the potential impact of IFRS on its consolidated
financial statements and will continue to follow the proposed roadmap for future
developments.
 
 4. Amounts Receivable
 
 Amounts
receivable are non-interest bearing, unsecured and have settlement dates within
one year.
 
 Included
in amounts receivable at 30 September 2009 is $62,000 related to an amount due
from a company controlled by a former director of the Company.  This
amount is non-interest bearing, unsecured and has no fixed terms of
repayment.
 
 5. Equipment
 
 Net
      Book ValueCost
                                                              
                                                              
                                                              Accumulated
                                                                amortization
                                                              
                                                              
                                                              30
      September 2009
                                                              
                                                              
                                                              31
      December 2008
                                                                (Audited)$
                                                              
                                                              
                                                              
                                                              $
                                                              
                                                              
                                                              
                                                              $
                                                              
                                                              
                                                              
                                                              $Equipment
                                                              
                                                              
                                                              210,288
                                                              
                                                              
                                                              
                                                              70,166
                                                              
                                                              
                                                              
                                                              140,122
                                                              
                                                              
                                                              
                                                              102,049
 
 During
the nine month period ended 30 September 2009, total additions to equipment were
$85,258 (30 September 2008 - $96,387).
 
 6. Website
Development Cost
 
 Net
      Book ValueCost
                                                              
                                                              
                                                              Accumulated
                                                                amortization
                                                              
                                                              
                                                              30
      September 2009
                                                              
                                                              
                                                              31
      December 2008
                                                                (Audited)$
                                                              
                                                              
                                                              
                                                              $
                                                              
                                                              
                                                              
                                                              $
                                                              
                                                              
                                                              
                                                              $Website
      development
                                                              
                                                              
                                                              64,693
                                                              
                                                              
                                                              
                                                              33,527
                                                              
                                                              
                                                              
                                                              31,166
                                                              
                                                              
                                                              
                                                              47,295
 
 During
the nine month period ended 30 September 2009, total additions to website
development were $Nil (30 September 2008 - $64,693).
 
  F -
13
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 7.
                                                              Mineral
      Property Costs
 
 Peruvian
Gold Sands
 
 On 29
September 2008, the Company entered into a Mineral Right option agreement with
Temasek Investments Inc. (“Temasek”) to acquire mining properties totalling 382
km2 in
Northeastern Peru (the “Peruvian Agreement”).  Pursuant to this
Peruvian Agreement, the company acquired four separate options from Temasek,
each providing for the acquisition of a 25% interest in certain mining
properties.
 
 The
Company may exercise the initial 25% option by fulfilling the following
conditions:
 
 a.
                                                              Pay
      a non-refundable $375,000 on the date the Peruvian Agreement is executed
      (paid);
 b.
                                                              Issue
      2,000,000 common shares within 5 business days (issued and valued at
      $1.01) (Notes 11 and 14); and
 c.
                                                              Pay
      an additional $375,000 prior to 28 December 2008
  (paid).
 
 The
Company entered into an amending agreement dated 12 May 2009 (the “Peruvian
Amendment”) and a second amending agreement dated 29 October 2009 (the “Second
Peruvian Amendment”) with Temasek.  Under the Second Peruvian
Amendment, the Company may now exercise the second 25% option resulting in the
acquisition of a 50% interest in the Mineral Rights by fulfilling the following
conditions as set out in the Second Peruvian Amendment:
 
 a.
                                                              Exercise and complete the initial 25% option by 29 March 2009
      (completed);
 b.
                                                              Issue an additional 2,000,000 common shares by 29 March 2009 (issued and
      valued at $0.65) (Notes 11 and 14);
 c.
                                                              Pay an additional $750,000 by 29 October 2009 (Note
  16);
 d.
                                                              Issue an additional 500,000 common shares by 29 October 2009 (Note 16);
      and
 
 The
Company may exercise the third 25% option by fulfilling the following
conditions:
 
 a.
                                                              Exercise and complete the initial and second 25% options by 29
      October 2009;
 b.
                                                              Issue an additional 2,000,000 common shares by 29 October 2009 (Note
      16); and
 c.
                                                              Pay an additional $3,000,000 by 31 March
  2010.
 
  F -
14
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 The
Company may exercise the final 25% option by fulfilling the following conditions
by 29 March 2010:
 
 a.
                                                              Exercise
      and complete the initial, second and third 25%
  options;
 b.
                                                              Pay
      an additional $5,000,000; and
 c.
                                                              Issue
      an additional 4,000,000 common
shares.
 
 The
property is subject to a 2.5% net returns royalty that the Company can reduce to
1.0% upon payment of a further $2,000,000 within 90 days of the exercise and
completion of the final 25% option (Note 15).
 
 During
the nine month period ended 30 September 2009, the Company incurred $1,498,014
in exploration costs for the Peruvian Agreement.
 
 Atena
Gold Project
 
 On 12
December 2007, the Company entered into an assignment agreement (the “Atena
Agreement”) to acquire the right to explore and option to purchase the 3,676
hectare Atena Gold Project located in the Salta Province of
Argentina.   Pursuant to the Atena Agreement, the Company is
required to issue 500,000 common shares (issued and valued at $0.70 per common
share) and pay $60,000 (paid). The Company will acquire 100% of the option if it
incurs a minimum of $3,740,000 in work commitment expenditures on the property
and issue 7,000,000 common shares according to the following schedule (Notes 11,
14 and 16):
 
 a.
                                                              $240,000 in expenditures (incurred) plus a further issuance of 1,000,000
      common shares (issued and
                                                                valued at $1.59 per common share) on or before 15 March
      2008;
 b.
                                                              a further $500,000 in expenditures plus a further issuance of 2,000,000
      common  shares on or before
                                                                15 March 2009 (issued and valued at
  $0.73);
 c.
                                                              a further $1,000,000 in expenditures plus a further issuance of 4,000,000
      common shares on or before
                                                                15 March 2010; and
 d.
                                                              a further $2,000,000 in expenditures on or before 15 March
      2011.
 
 The
Company entered into an amending agreement dated 5 May 2009 (the “Atena
Amendment”) with Proyectos Mineros S.A. (“PMSA”).  Under the Atena
Amendment, the $500,000 in expenditures originally required to be made by the
Company on the Atena Gold Project property by 15 March 2009 is waived upon the
issuance of the 2,000,000 common shares (issued) of the Company as required
under the Atena Agreement.
 
 The
option is subject to a 1% net smelter returns royalty.
 
 During
the nine month period ended 30 September 2009, the Company incurred $87,982 in
exploration costs for the Atena Agreement.
 
 During
the nine month period ended 30 September 2009, the Company announced that it was
suspending their exploration program on the Atena Gold Project for at least the
remainder of 2009 and would allocated their resources exclusively to pursue the
exploration and development of their property interests in Northeastern Peru,
the Peruvian Agreement, as a result of the Company’s decision to seek disposal
of their interest in the Atena Gold Project.
 
  F -
15
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 During
the nine month period ended 30 September 2009, the Company recorded a provision
for write-down of mineral property costs of $3,530,260 related to the Atena
property.
 
 Cerro
Amarillo Property
 
 On 8
January 2008, the Company entered into an assignment agreement (the “Cerro
Amarillo Agreement”) to explore and option the 14,221 hectare Cerro Amarillo
Property located in the Province of Mendoza, Argentina with a company related to
the Company by way of a director and shareholder in common.  Pursuant
to the terms of the Cerro Amarillo Agreement, the Company issued 300,000 common
shares (issued and valued at $0.70 per common share) and pay $10,000
(paid).  The Company is to acquire a 100% of the option if it incurs a
minimum of $450,000 in work commitment expenditures on the property and issues
2,100,000 common shares according to the following schedule (Notes 11, 14 and
16):
 
 a.
                                                              $200,000
      in expenditures (incurred $25,000) plus a further issuance of 300,000
      common shares on or before 8 January 2009 (issued and valued at
      $0.73);
 b.
                                                              a
      further $250,000 in expenditures plus a further issuance of 600,000 common
      shares on or before 8 January 2010;
 c.
                                                              a
      further issuance of 600,000 common shares on or before 8 January 2011;
      and
 d.
                                                              a
      further issuance of 600,000 common shares on or before 8 January
      2012.
 
 The
Company entered into an amending agreement dated 5 May 2009 (the “Cerro Amarillo
Amendment”) with PMSA.  Under the Cerro Amarillo Amendment, the
$200,000 in expenditures originally required to be made by the Company on the
Cerro Amarillo property by 8 January 2009 is waived upon the issuance of the
300,000 common shares (issued) of the Company as required under the Cerro
Amarillo Agreement.
 
 To
exercise the option the company is required to issue a further 3,000,000 common
shares.  The option is subject to a 1% net smelter returns
royalty.
 
 During
the nine month period ended 30 September 2009, the Company incurred $Nil in
exploration costs for the Cerro Amarillo Agreement.
 
 During
the nine month period ended 30 September 2009, the Company announced that it was
suspending their exploration program on the Cerro Amarillo Property for at least
the remainder of 2009 and would allocated their resources exclusively to pursue
the exploration and development of their property interests in northeastern
Peru, the Peruvian Agreement, as a result of the Company’s decision to seek
disposal of their interest in the Cerro Amarillo Property.
 
 During
the nine month period ended 30 September 2009, the Company recorded a provision
for write-down of mineral property costs of $524,000 related to the Cerro
Amarillo property.
 
  F -
16
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 Amira,
Amira Norte and Esparta II
 
 On 17
March 2008, the Company entered into an assignment agreement with PMSA (the
“Amira Agreement”), a company related to the Company by way of a director and
shareholder in common. Under the Agreement,  PMSA assigned to the
Company PMSA’s right to explore and option to purchase a 90% interest in three
mining properties referred to as “Amira”, “Amira Norte” and “Esparta II”
(collectively, the "Properties"), which are located in the Province of Salta,
Argentina. In order for the Company to keep its interest in good standing and to
exercise the option to acquire a 90% interest in the Properties, the Company
must make the following payments to the Titleholder, as set forth in the Amira
Agreement (Note 16):
 
 a.         US$75,000
by 19 January 2009;
 b.         a
further US$150,000 by 19 January 2010;
 c.         a
further US$200,000 by 19 January 2011; and
 d. further
US$1,000,000 by 19 January 2012, by means of which final payment the Option to
acquire a 90%
 interest in the Properties will have been automatically
exercised.
 
 The
Company entered into an amending  assignment agreement dated 5 May
2009 (the “Amira Amendment”)  with Silvia Rodriguez, owner of the
Properties, whereby the payment originally due on 19 January 2009 under the
Amira Agreement is due as follows:
 
 a. US$25,000
on or by the end on 30 June 2009 (not paid); and
 b. US$50,000
on or before by the end of 30 September 2009 (not paid).
 
 During
the nine month period ended 30 September 2009, the Company incurred $4,048 in
exploration costs for the Amira Agreement.
 
 During
the nine month period ended 30 September 2009, the Company announced that it was
suspending their exploration program on the Properties for at least the
remainder of 2009 and would allocated their resources exclusively to pursue the
exploration and development of their property interests in Northeastern Peru,
the Peruvian Agreement, as a result of the Company’s decision to seek disposal
of their interest in the Properties.
 
 8.
                                                              Accounts Payable and Accrued
      Liabilities
 
 Accounts
payable and accrued liabilities are non-interest bearing, unsecured and have
settlement dates within one year.
 
 Included
in accounts payable and accrued liabilities at 30 September 2009 is $45,000 (31
December 2008 - $200,000) related to settlement of potential legal claims on
incidents arising from the mineral property interests and $20,000 for the legal
fees relating to it.
 
  F -
17
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 9.
                                                              Due
      to Related Parties
 
 As at 30
September 2009, the amount due to related parties consists of $236,871 (31
December 2008 - $12,379) payable to the directors of the
Company.  This balance is non-interest bearing, unsecured and has no
fixed terms of repayment.
 
 10.
                                                              Related
      Party Transactions
 
 During
the nine month period ended 30 September 2009, the Company paid or accrued
management and consulting fees of $232,470 (30 September 2008 - $251,134) to directors and
officers of the Company or companies controlled by directors and
officers.
 
 During
the nine month period ended 30 September 2009, director and shareholder of the
Company made contributions to capital for management fees and rent of $Nil (30
September 2008 - $Nil, cumulative - $12,000) and $Nil (30 September 2008 - $Nil,
cumulative - $3,000) respectively.  This amount has been recorded as
an increase in expenditures and an increase in additional paid-in capital (Note
14).
 
 11.
                                                              Capital
      Stock
 
 Authorized
 
 The total
authorized capital consists of:
 
 ·
                                                              300,000,000
      of common shares with par value of
$0.001
 ·
                                                              50,000,000
      of preferred shares with par value of
$0.001
 
 Issued
and outstanding
 
 As at 30
September 2009, the total issued and outstanding capital stock is 68,022,523
common shares with a par value of $0.001 per common share.
 
 On 2
September 2009, the Company issued 923,428 Units at a price of $0.35 per Unit
for total proceeds of $323,200. Each Unit consist of one common share and one
share purchase warrant. Each share purchase warrant entitles the holder to
purchase an additional common share at the price of $0.70 up to 2 September
2011, commencing 2 March 2010.
 
 On 14
August 2009, a total of 5,007,300 previously outstanding share purchase warrants
expired.
 
 On 14
August 2009, a total of 350,511 previously outstanding agent compensation
warrants expired.
 
 On 9 July
2009, the Company issued 4,129,639 Units at a price of $0.35 per Unit for total
proceeds of $1,445,374. Each Unit consist of one common share and one share
purchase warrant. Each share purchase warrant entitles the holder to purchase an
additional common share at the price of $0.70 up to 9 July 2011, commencing 9
January 2010.
  F -
18
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 On 29
June 2009, the Company issued 2,000,000 common shares valued at $0.65 per common
share pursuant to the Peruvian Gold Sands assignment agreement (Notes 7 and
14).
 
 On 2 June
2009, the Company issued 2,000,000 common shares valued at $0.73 per common
share pursuant to the Atena Agreement (Notes 7 and 14).
 
 On 2 June
2009, the Company issued 300,000 common shares valued at $0.73 per common share
pursuant to the Cerro Amarillo Agreement (Notes 7 and 14).
 
 On 17
April 2009, the Company issued 200,000 Units at a price of $0.80 per Unit for
proceeds of $160,000. Each unit consists of one common share and one share
purchase warrant. Each share purchase warrant entitles the holder to purchase an
additional common share at a price of $0.70 up to 17 April 2010, commencing 17
October 2009.
 
 On 7
April 2009, a total of 1,009,211 previously outstanding share purchase warrants
were cancelled.
 
 On 7
April 2009, a total of 70,645 previously outstanding agent compensation warrants
were cancelled.
 
 During
the year ended 31 December 2008, the company issued 2,000,000 common shares
valued at $1.01 per common share in pursuant to the Peruvian Gold Sands
assignment agreement (Notes 7 and 14).
 
 During
the year ended 31 December 2008, the Company issued 350,511 agent compensation
warrants for services rendered by a private placement agent.  Each
share purchase warrant entitles the holder to purchase one common share at a
price of $1.40 up to 19 August 2009, commencing 19 February 2009 (Note
14).
 
 During
the year ended 31 December 2008, the Company issued 5,007,300 Units at a price
of $0.80 per Unit for proceeds of $3,725,431, net of issue costs of
$280,409.  Each unit consists of one common share and one share
purchase warrant.  Each share purchase warrant entitles the holder to
purchase an additional common share at a price of $1.40 up to 19 August 2009,
commencing 19 February 2009.
 
 During
the year ended 31 December 2008, the Company issued 1,000,000 common shares
valued at $1.59 per common share pursuant to the Atena Gold Project assignment
agreement (Notes 7 and 14)
 
 During
the year ended 31 December 2008, the Company issued an additional 70,645 Units
at a price of $0.70 per Unit for services rendered by a private placement agent.
Each Unit consists of one common share and one share purchase warrant. Each
share purchase warrant entitles the holder to purchase an additional common
share at a price of $1.40 up to 7 April 2009, commencing 7 October 2008 (Note
14).
 
 During
the year ended 31 December 2008, the Company issued 1,009,211 Units at a price
of $0.70 per Unit.  Each Unit consists of one common share and one
share purchase warrant.  Each share purchase warrant entitles the
holder to purchase an additional common share at a price of $1.40 up to 7 April
2009, commencing 7 October 2008.
 
 During
the year ended 31 December 2008, the Company issued 300,000 common shares valued
at $0.70 per common share pursuant to the Cerro Amarillo assignment agreement
(Notes 7 and 14).
  F -
19
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 During
the year ended 31 December 2008, the Company issued 500,000 common shares valued
at $0.70 per common share pursuant to the Atena Gold Project assignment
agreement (Notes 7 and 14).
 
 During
the year ended 31 December 2007, the Company issued 1,145,300 common shares for
convertible debentures of $22,906 (Note 14).
 
 During
the year ended 31 December 2007, the Company issued 1,437,000 common shares for
cash proceeds of $502,950.
 
 Share
Subscriptions Received in Advance
 
 Share
subscriptions received in advance consists of $1,699,350 cash received by the
Company for 2,614,384 common shares valued at $0.65 that were not yet issued at
30 September 2009.
 
 Share
Purchase Warrants
 
 The
following share purchase warrants were outstanding at 30 September
2009:
 
 Exercise
      price
                                                              
                                                              
                                                              Number
                                                                of
      warrants
                                                              
                                                              
                                                              Remaining
                                                                contractual
      life (years)$Warrants
                                                              
                                                              
                                                              0.70
                                                              
                                                              
                                                              
                                                              200,000
                                                              
                                                              
                                                              
                                                              0.55Warrants
                                                              
                                                              
                                                              0.70
                                                              
                                                              
                                                              
                                                              4,129,639
                                                              
                                                              
                                                              
                                                              1.77Warrants
                                                              
                                                              
                                                              0.70
                                                              
                                                              
                                                              
                                                              923,428
                                                              
                                                              
                                                              
                                                              1.925,253,067
 
  F -
20
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 The
following is a summary of warrant activities during the nine month periods ended
30 September 2009 and 2008:
 
 Number
      of warrants
                                                              
                                                              
                                                              Weighted
      average exercise price$Outstanding
      at 1 January 2009
                                                              
                                                              
                                                              6,437,667
                                                              
                                                              
                                                              
                                                              1.40Granted
                                                              
                                                              
                                                              5,253,067
                                                              
                                                              
                                                              
                                                              0.70Exercised
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Cancelled
                                                              
                                                              
                                                              (1,079,856
                                                              )
                                                              
                                                              
                                                              1.40Expired
                                                              
                                                              
                                                              (5,357,811
                                                              )
                                                              
                                                              
                                                              1.40Outstanding
      at 30 September 2009
                                                              
                                                              
                                                              5,253,067
                                                              
                                                              
                                                              
                                                              0.70Weighted
      average fair value of warrants granted during the period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              0.15
 
 Number
      of warrants
                                                              
                                                              
                                                              Weighted
      average exercise price$Outstanding
      at 1 January 2008
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Granted
                                                              
                                                              
                                                              6,437,667
                                                              
                                                              
                                                              
                                                              1.40Exercised
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Cancelled
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Expired
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Outstanding
      at 30 September 2008
                                                              
                                                              
                                                              6,437,667
                                                              
                                                              
                                                              
                                                              1.40Weighted
      average fair value of warrants granted during the period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              0.62
 
  F -
21
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 The
weighted average grant date fair value of warrants issued during the nine month
period ended 30 September 2009, amounted to $0.15 per warrant (30 September 2008
- $0.62). The fair value of each warrant granted was determined using the
Black-Scholes warrant pricing model and the following weighted average
assumptions:
 
 2009
                                                              
                                                              
                                                              2008Risk
      free interest rate
                                                              
                                                              
                                                              0.89
                                                              %
                                                              
                                                              
                                                              2.02
                                                              %Expected
      life
                                                              
                                                              1.96
      years
                                                              
                                                              
                                                              1
      yearAnnualized
      volatility
                                                              
                                                              
                                                              97.84
                                                              %
                                                              
                                                              
                                                              120.80
                                                              %Expected
      dividends
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
 
 Stock
Options
 
 The following incentive stock options
were outstanding at 30 September 2009:
 
 Exercise
      price
                                                              
                                                              
                                                              Number
                                                                of
      options
                                                              
                                                              
                                                              Remaining
                                                                contractual
      life (years)$Options
                                                              
                                                              
                                                              1.05
                                                              
                                                              
                                                              
                                                              1,425,000
                                                              
                                                              
                                                              
                                                              9.11Options
                                                              
                                                              
                                                              1.00
                                                              
                                                              
                                                              
                                                              3,210,000
                                                              
                                                              
                                                              
                                                              8.35Options
                                                              
                                                              
                                                              0.70
                                                              
                                                              
                                                              
                                                              5,440,000
                                                              
                                                              
                                                              
                                                              9.6410,075,000
 
  F -
22
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 The
following is a summary of stock option activities during the nine month periods
ended 30 September 2009 and 2008:
 
 Number
      of shares
                                                              
                                                              
                                                              Weighted
      average exercise price$Outstanding
      at 1 January 2009
                                                              
                                                              
                                                              4,835,000
                                                              
                                                              
                                                              
                                                              1.02Granted
                                                              
                                                              
                                                              5,440,000
                                                              
                                                              
                                                              
                                                              0.70Exercised
                                                              
                                                              
                                                              -Cancelled
                                                              
                                                              
                                                              (200,000
                                                              )
                                                              
                                                              
                                                              1.03Outstanding
      at 30 September 2009
                                                              
                                                              
                                                              10,075,000
                                                              
                                                              
                                                              
                                                              0.84Weighted
      average fair value of options granted during the period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              0.63Outstanding
      and exercisable at 1 January 2008
                                                              
                                                              
                                                              3,200,000
                                                              
                                                              
                                                              
                                                              0.30Granted
                                                              
                                                              
                                                              6,880,000
                                                              
                                                              
                                                              
                                                              1.00Exercised
                                                              
                                                              
                                                              -Cancelled
                                                              
                                                              
                                                              (6,220,000
                                                              )
                                                              
                                                              
                                                              0.67Outstanding
      and exercisable at 30 September 2008
                                                              
                                                              
                                                              3,860,000
                                                              
                                                              
                                                              
                                                              1.00Weighted
      average fair value of options granted during the period
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              0.93
 
 12.
                                                              Stock-Based
      Compensation
 
 During
the nine month period ended 30 September 2009, the Company granted 5,440,000
stock options (30 September 2008 – 6,880,000) entitling the holders to purchase
common shares of the Company for proceeds of $0.70 per common share expiring 20
May 2019. A total of 200,000 of the outstanding stock options were cancelled
during the nine month period ended 30 September 2009 (30 September 2008 –
6,220,000) (Note 11).
 
 The total
estimated fair value of the 2,380,000 stock options which vested during the nine
month period ended 30 September 2009 was $2,271,494 ($0.95 per
option).  During the nine month period ended 30 September 2009,
stock-based compensation of $2,271,494 (30 September 2008 - $Nil, cumulative -
$4,930,136) has been recorded in the consolidated statement of operations with a
corresponding amount recorded as contributed surplus in stockholders’
equity.
 
  F -
23
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 The fair
value of each option was estimated on the date of grant using Black-Scholes
option pricing model. The assumptions about stock-price volatility have been
based exclusively on the implied volatilities of publicly traded options to buy
the Company’s stock with contractual terms closest to the expected life of
options granted to employees, directors or consultants.
 
 The
following assumptions were used for the Black-Scholes valuation of stock options
granted:
 
 2009
                                                              
                                                              
                                                              2008Risk
      free interest rate
                                                              
                                                              
                                                              3.19
                                                              %
                                                              
                                                              
                                                              3.65
                                                              %Expected
      life
                                                              
                                                              10
      years
                                                              
                                                              
                                                              10
      yearsAnnualized
      volatility
                                                              
                                                              
                                                              120
                                                              %
                                                              
                                                              
                                                              149
                                                              %Expected
      dividends
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
 
 13.
                                                              Income
Taxes
 
 The
Company has losses carried forward for income tax purposes to 30 September
2009.  There are no current or deferred tax expenses for the nine
month period ended 30 September 2009 due to the Company’s loss position. The
Company has fully reserved for any benefits of these losses. The deferred tax
consequences of temporary differences in reporting items for consolidated
financial statement and income tax purposes are recognized, as appropriate.
Realization of the future tax benefits related to the deferred tax assets is
dependent on many factors, including the Company’s ability to generate taxable
income within the net operating loss carryforward period.  Management
has considered these factors in reaching its conclusion as to the valuation
allowance for financial reporting purposes.
 
 The
provision for refundable federal income tax consists of the
following:
 
 For
      the nine month period ended 30 September 2009
                                                              
                                                              
                                                              For
      the nine month period ended 30 September 2008$
                                                              
                                                              
                                                              
                                                              $Deferred
      tax asset attributable to:Current
      operations
                                                              
                                                              
                                                              3,449,412
                                                              
                                                              
                                                              
                                                              1,699,458Amortization
                                                              
                                                              
                                                              (21,614
                                                              )
                                                              
                                                              
                                                              (8,717
                                                              )Stock-based
      compensation
                                                              
                                                              
                                                              (772,308
                                                              )
                                                              
                                                              
                                                              (691,426
                                                              )Provision
      for potential legal claims
                                                              
                                                              
                                                              45,900
                                                              
                                                              
                                                              
                                                              -Less:
      Change in valuation allowance
                                                              
                                                              
                                                              (2,701,390
                                                              )
                                                              
                                                              
                                                              (999,315
                                                              )Net
      refundable amount
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
 
  F -
24
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 The
composition of the Company’s deferred tax assets as at 30 September 2009 and 31
December 2008 is as follows:
 
 As
      at 30 September
                                                                2009
                                                              
                                                              
                                                              As
      at 31 December 2008
                                                                (Audited)$
                                                              
                                                              
                                                              
                                                              $Net
      income tax operating loss carryforward
                                                              
                                                              
                                                              (11,730,217
                                                              )
                                                              
                                                              
                                                              (3,799,141
                                                              )Statutory
      federal income tax rate
                                                              
                                                              
                                                              34.06
                                                              %
                                                              
                                                              
                                                              34.15
                                                              %Effective
      income tax rate
                                                              
                                                              
                                                              0.00
                                                              %
                                                              
                                                              
                                                              0.00
                                                              %Deferred
      tax assetsTax
      loss carryforward
                                                              
                                                              
                                                              3,995,409
                                                              
                                                              
                                                              
                                                              1,296,269Less:
      Valuation allowance
                                                              
                                                              
                                                              (3,995,409
                                                              )
                                                              
                                                              
                                                              (1,296,269
                                                              )Net
      deferred tax asset
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
 
 The
potential income tax benefit of these losses has been offset by a full valuation
allowance.
 
 As at 30
September 2009, the Company has an unused net operating loss carryforward
balance of approximately $11,730,217 that is available to offset future taxable
income.  This unused net operating loss carryforward balance for
income tax purposes expires between the years 2020 to 2029.
 
 14.
                                                              Supplemental
      Disclosures with Respect to Cash
Flows
 
 For
      the period from the date of inception on 6 March 2000 to 30 September
      2009
                                                              
                                                              
                                                              For
      the three month period ended 30 September 2009
                                                              
                                                              
                                                              For
      the
                                                                three
      month period
                                                                ended
      30 September 2008
                                                              
                                                              
                                                              For
      the
                                                                nine
      month period
                                                                ended
      30 September
                                                                2009
                                                              
                                                              
                                                              For
      the
                                                                nine
      month period
                                                                ended
      30 September
                                                                2008$
                                                              
                                                              
                                                              
                                                              $
                                                              
                                                              
                                                              
                                                              $
                                                              
                                                              
                                                              
                                                              $
                                                              
                                                              
                                                              
                                                              $Cash
      paid during the period for interest
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -Cash
      paid during the period for income taxes
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
 
  F -
25
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 During
the nine month period ended 30 September 2009, the Company recorded a total
write-down of mineral property expenditures in the amount of $4,054,260 related
to the Atena, Cerro Amarillo and Amira properties (Note 7).
 
 During
the nine month period ended 30 September 2009, the Company issued 2,000,000
common shares valued at $0.65 per common share pursuant to the Peruvian Gold
Sands assignment agreement (Notes 7 and 11).
 
 During
the nine month period ended 30 September 2009, the Company issued 2,000,000
common shares valued at $0.73 per common share pursuant to the Atena Agreement
(Notes 7 and 11).
 
 During
the nine month period ended 30 September 2009, the Company issued 300,000 common
shares valued at $0.73 per common share pursuant to the Cerro Amarillo Agreement
(Notes 7 and 11).
 
 During
the nine month period ended 30 September 2009, director and shareholder of the
Company made contributions to capital for management fees and rent of $Nil (30
September 2008 - $Nil, cumulative - $12,000) and $Nil (30 September 2008 - $Nil,
cumulative - $3,000) respectively.  This amount has been recorded as
an increase in expenditures and an increase in additional paid-in capital (Note
10).
 
 During
the year ended 31 December 2008, the Company issued 500,000 common shares valued
at $0.70 per common share in pursuant to the Atena Gold Project assignment
agreement (Notes 7 and 11).
 
 During
the year ended 31 December 2008, the Company issued 2,000,000 common shares
valued at $1.01 per common share in pursuant to the Peruvian Gold Sands
assignment agreement (Notes 7 and 11).
 
 During
the year ended 31 December 2008, the Company issued 300,000 common shares valued
at $0.70 per common share pursuant to the Cerro Amarillo assignment agreement
(Notes 7 and 11).
 
 During the year ended 31 December
2008, the Company issued 70,645 common shares valued at $49,252 and 70,645
warrants valued at $25,252 for agent services rendered (Note 11).
 
 During
the year ended 31 December 2008, the Company issued 1,000,000 common shares
valued at $1.59 per common share pursuant to the Atena Gold Project assignment
agreement (Notes 7 and 11).
 
 During
the year ended 31 December 2008, the Company issued 350,511 agent compensation
warrants valued at $237,293 for agent services rendered (Note 11).
 
 By
agreements effective 18 January 2008, the Company assigned all of its rights,
title and interest in the Tombaugh Lease with a book value of $481,504 to a
purchaser in consideration for the purchaser assuming the Company’s outstanding
payment obligations of $788,619 related to its convertible debentures. The
Company recorded a gain of $307,115 upon completion of the
transaction.
 
 During
the year ended 31 December 2008, the Company issued $Nil common shares (31
December 2007 – 1,145,300) for convertible debentures of $Nil (31 December 2007
- $22,906) (Note 11).
  F -
26
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 30
September 2009
 
 During
the period ended 31 December 2008 the Company accrued interest of $Nil (31
December 2007 - $74,770, cumulative – $126,525) on convertible
debentures.
 
 15.
                                                              Commitments
 
 The Company is subject to certain
outstanding and future commitments related to its mineral property interest
(Note 7).
 
 16.
                                                              Subsequent
      Events
 
 Subsequent
to the nine month period ended 30 September 2009 to the date the financial
consolidated statements were available to be issued on 6 November 2009, the
following events occurred:
 
 a.
                                                              On
      20 October 2009, the Company terminated the Atena Agreement, the Cerro
      Amarillo Agreement and the Amira Agreement (Note
  7).
 
 b.
                                                              On
      21 October 2009, the Company completed its reincorporation in the State of
      Delaware by merging into a wholly-owned subsidiary, Constitution Mining
      Corp., a Delaware Corporation.  The reincorporation was approved
      by the stockholders of the Company at the special meeting of stockholders
      held on 21 October 2009.  In the reincorporation, each
      outstanding share of common stock of the Company was converted into one
      share of common stock of the surviving Delaware
    corporation.
 
 c.
                                                              On
      29 October 2009, the Company entered into a second amending agreement with
      Temasek related to the Peruvian property (the “Second Peruvian Amendment”)
      (Note 7).
 
 d.
                                                              On
      2 November 2009, the Company paid $750,000 and issued 2,500,000 common
      shares of the Company related to Peruvian property (Note
    7).
 
 
  F -
27
 Table of Contents
 Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
  This
Quarterly Report on Form 10-Q contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934.  The words “believe,”
“expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,”
“plan,” “future,” “continue,” and other expressions that are predictions of or
indicate future events and trends and that do not relate to historical matters
identify forward-looking statements.  These forward-looking statements
are based largely on our expectations or forecasts of future events, can be
affected by inaccurate assumptions, and are subject to various business risks
and known and unknown uncertainties, a number of which are beyond our
control.  Therefore, actual results could differ materially from the
forward-looking statements contained in this document, and readers are cautioned
not to place undue reliance on such forward-looking statements.  We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.  A wide variety of factors could cause or contribute to
such differences and could adversely impact revenues, profitability, cash flows
and capital needs.  There can be no assurance that the forward-looking
statements contained in this document will, in fact, transpire or prove to be
accurate.
  Factors
that could cause or contribute to our actual results differing materially from
those discussed herein or for our stock price to be adversely affected include,
but are not limited to: (i) risk that we fail to meet the requirements
of the agreement under which we acquired our options, including any payments or
any exploration obligations that we have regarding these properties, which could
result in the loss of our right to exercise the options to acquire the mineral
and mining rights underlying these properties as well as the ability to recover
any consideration paid to date; (ii) risk that we cannot attract, retain and
motivate qualified personnel, particularly employees, consultants and
contractors for our operations in Peru; (iii) our short operating history; (iv)
our ability to manage business expansion; (v) risks and uncertainties relating
to the interpretation of drill results, the geology, grade and continuity of
mineral deposits; (vi) results of initial feasibility, pre-feasibility and
feasibility studies, and the possibility that future exploration, development or
mining results will not be consistent with our expectations; (vii) mining and
development risks, including risks related to accidents, equipment breakdowns,
labor disputes or other unanticipated difficulties with or interruptions in
production; (viii) the potential for delays in exploration or development
activities or the completion of feasibility studies; (ix) risks related to the
inherent uncertainty of production and cost estimates and the potential for
unexpected costs and expenses; (x) risks related to commodity price
fluctuations; (xi) the uncertainty of profitability based upon our history of
losses; (xii) risks related to failure to obtain adequate financing on a timely
basis and on acceptable terms for our planned exploration and development
projects; (xiii) risks related to environmental regulation and liability; (xiv)
risks that the amounts reserved or allocated for environmental compliance,
reclamation, post-closure control measures, monitoring and on-going maintenance
may not be sufficient to cover such costs; (xv) risks related to tax
assessments; (xvi) political and regulatory risks associated with mining
development and exploration; (xvii) other risks and uncertainties related to our
prospects, properties and business strategy; (xviii) potential that stockholders
may lose all or part of their investment if we are unable to compete in our
industry; (xix)  our dependence on key personnel; (xx) sale of
substantial amounts of our common stock that may have a depressive effect on the
market price of the outstanding shares of our common stock; (xxi) possible
issuance of common stock subject to options and warrants that may dilute the
interest of stockholders; (xxii) our ability to comply with Sarbanes-Oxley
Act of 2002 Section 404; (xxiii) our nonpayment of dividends and lack of
plans to pay dividends in the future; (xxiv) future sale of a substantial
number of shares of our common stock that could depress the trading price of our
common stock, lower our value and make it more difficult for us to raise
capital; (xxv) our additional securities available for issuance, which, if
issued, could adversely affect the rights of the holders of our common stock;
(xxvi) our stock price which is likely to be highly volatile because of
several factors, including a relatively  limited public float; and
(xxvii) indemnification of our officers and directors.
 - 4 -
 Table of Contents
  
 As used
in this Quarterly Report, the terms “we,” “us,” “our,” and “Constitution Mining”
mean Constitution Mining Corp. and our subsidiaries, unless otherwise
indicated.
  Overview
  We were
incorporated in the state of Nevada under the name Crafty Admiral Enterprises,
Ltd. on March 6, 2000.  Our original business plan was to sell classic
auto parts to classic auto owners all over the world through an Internet site
and online store; however, we were unsuccessful in implementing the online store
and were unable to afford the cost of purchasing, warehousing and shipping the
initial inventory required to get the business started.  As a result,
we ceased operations in approximately July 2002.
  During
our fiscal year ended December 31, 2006, we reorganized our operations to pursue
the exploration, development, acquisition and operation of oil and gas
properties.  On June 27, 2006, we acquired a leasehold interest in a
mineral, oil and gas property located in St. Francis County, Arkansas for a cash
payment of $642,006, pursuant to an oil and gas agreement we entered into on
April 29, 2006 (the “Tombaugh Lease”).  Shortly after acquiring the
Tombaugh Lease, we suspended our exploration efforts on the property covered by
the Tombaugh Lease in order to pursue business opportunities developing nickel
deposits in Finland, Norway and Western Russia.  On January 18, 2008,
we assigned all of our right, title and interest in and to the Tombaugh Lease to
Fayetteville Oil and Gas, Inc., which agreed to assume all of our outstanding
payment obligations on the Tombaugh Lease as consideration for the
assignment.  On March 9, 2007, we changed our name to better reflect
our business to “Nordic Nickel Ltd.” pursuant to a parent/subsidiary merger with
our wholly-owned non-operating subsidiary, Nordic Nickel Ltd., which was
established for the purpose of giving effect to this name change.  We
were not successful pursuing business opportunities developing nickel deposits
in Finland, Norway and Western Russia and again sought to reorganize our
operations in November 2007.
  In
November 2007, we reorganized our operations and changed our name to
“Constitution Mining Corp.” to better reflect our current focus which is the
acquisition, exploration, and potential development of mining
properties.  Since November 2007, we entered into agreements to secure
options to acquire the mineral and mining rights underlying properties located
in the Salta and Mendoza provinces of Argentina and in northeastern
Peru.
  On
October 21, 2009, we reincorporated from the State of Nevada to the State of
Delaware.
  We are
considered an exploration or exploratory stage company because we are involved
in the examination and investigation of land that we believe may contain
valuable minerals, for the purpose of discovering the presence of ore, if any,
and its extent.  There is no assurance that a commercially viable
mineral deposit exists on any of the properties underlying our mineral property
interests, and a great deal of further exploration will be required before a
final evaluation as to the economic and legal feasibility for our future
exploration is determined.  We have no known reserves of any type of
mineral.  To date, we have not discovered an economically viable
mineral deposit on any of the properties underlying our mineral property
interests, and there is no assurance that we will discover one.  If we
cannot acquire or locate mineral deposits, or if it is not economical to recover
any mineral deposits that we do find, our business and operations will be
materially and adversely affected.
  Our
current business plan calls for investing any surplus operating capital
resulting from retained earnings into bullion accounts and does not include
holding retained earnings, if any, in cash or cash equivalents.  In
the event that commercially exploitable reserves of minerals exist on any of our
property interests and we are able to make a profit, our business plan is to
sell enough mineral reserves to satisfy all of our expenses and invest all
retained mineral reserves in bullion accounts established in Zurich,
Switzerland.  The price of precious and base metals such as gold and
silver has fluctuated widely in recent years, and is affected by numerous
factors beyond our control, including international, economic and
 - 5 -
 Table of Contents
  political
trends, expectations of inflation, currency exchange fluctuations, interest
rates, global or regional consumptive patterns, speculative activities and
increased production due to new extraction developments and improved extraction
and production methods.  The effect of these factors on the price of
base and precious metals, and, therefore, the change in the value of our
retained earnings, if any, held in bullion accounts cannot accurately be
predicted and is subject to significant fluctuation.  There can be no
assurance that the value of any bullion accounts established by us in the future
to hold retained mineral reserves, if any, will not be adversely impacted by
fluctuations in the price of base and precious metals resulting in significant
losses.
  Termination
of Assignment Agreements for Argentinean Properties
  On
December 12, 2007, we entered into an assignment agreement with Proyectos
Mineros S.A. (“PMSA”) (formerly Recursos Maricunga S.A.) to acquire PMSA’s right
to explore and an option to purchase certain mineral rights on properties known
as the Atena Gold Project located in the Salta Province of Argentina (the “Atena
Property”).  Effective March 17, 2008, we entered into an assignment
agreement with PMSA, whereby PMSA assigned to us PMSA’s right to explore and an
option to purchase a 90% interest in the mineral rights of three mining
properties referred to as “Amira”, “Amira Norte” and “Esparta II”, located in
the Province of Salta, Argentina (the “Amira-Esparta Properties”).  On
January 8, 2008, we entered into an assignment agreement with PMSA to acquire
PMSA’s right to explore and option to purchase certain mineral rights on
properties known as the Cerro Amarillo Property located in the Departamento
Malargue, Province of Mendoza, Argentina (the “Cerro Amarillo
Property”).  We collectively refer to the Atena, Amira-Esparta and
Cerro Amarillo Properties as the “Argentinean Properties.”
  In light
of the current economic environment, our management, in the second quarter of
fiscal 2009, determined that it was necessary to reassess the Company’s current
direction and proposed plans for exploration.  In connection with this
review, we announced that we were suspending our exploration program on the
Argentinean Properties for at least the remainder of 2009 and would allocate our
resources exclusively to pursue the exploration and development of our property
interests in northeastern Peru.
  We
continued to monitor the current economic environment globally and within
Argentina and noted an increasing trend toward instability within
Argentina.  Rising and excessive inflation rates in Argentina
significantly increased the costs of our proposed operations in Argentina beyond
our initial expectations.  After further evaluation, we noted that
Argentinean governmental bodies were pursing policies and regulations which
would have adversely impacted our planned operations in
Argentina.  The existence of a working capital deficiency added
support to our conclusion that it is presently not the best allocation of our
resources to conduct exploration activities in two different
countries.  For the foregoing reasons, we determined it to be in our
best interest to seek to dispose of our interests in the Argentinean Properties
as soon as practicable so as to prevent any default on any of these underlying
option agreements.
  We
reviewed our available alternatives and canvassed a number of qualified parties
in an attempt to dispose of our interests in the Argentinean properties for
value.  As a result of our inability to locate an interested party to
enter into a transaction to dispose of our interests in the Argentinean
Properties for value, we determined subsequent to the reporting period to
terminate each of the assignment agreements under which we held the option to
acquire the mineral and mining rights underlying these Argentinean
properties.  We determined that terminating these assignment
agreements at this time was in our best interests in order to avoid incurring
any additional obligations under each of the respective assignment
agreements.  Subsequent to the reporting period, we sent each of the
notice of termination letters.  The termination of the assignment
agreement relating to Atena and Amira-Esparta Properties was effective
immediately and the termination date of the assignment agreement relating to the
Cerro Amarillo Property will be effective thirty days following the date of the
termination notice.
 - 6 -
 Table of Contents
  
 As a
result of our termination of each of the assignment agreements under which we
held the option to acquire the mineral and mining rights underlying properties
located in the Salta and Mendoza provinces of Argentina, our rights under these
agreements reverted back to the assignor and we are not be entitled to recover
any of the consideration we have paid, which is an aggregate of 4,100,000 shares
of our common stock and $70,000.  Proyectos Mineros S.A. (“PMSA”)
(formerly Recursos Maricunga S.A.) is the assignor for each of the properties
located in the Salta and Mendoza provinces of
Argentina.  Dr. Willem Fuchter, who served as our Chief Executive
Officer and member of our board of directors from January 10, 2008 until his
resignation from both positions on September 25, 2009, is also the president and
director of PMSA and holds a 50% ownership interest in the voting securities of
PMSA.
  Peru
Property
  Our
properties located in Peru are in the exploration state.  These
properties are without known reserves and the proposed plan of exploration
detailed below is exploratory in nature.  These properties are
described below.
  On
September 29, 2008 (the “Effective Date”), we entered into a Mineral Right
Option Agreement (the “Option Agreement”) with Temasek Investments Inc.
(“Temasek”), a company incorporated under the laws of Panama in relation to the
Peru property.  Pursuant to the Option Agreement, we acquired four
separate options from Temasek, each providing for the acquisition of a
twenty-five percent interest in certain mineral rights in Peru, as described in
Annex 1 of the Option Agreement (the “Mineral Rights”), pursuant to which we
could potentially acquire one hundred percent of the Mineral
Rights.  The Mineral Rights are owned by Compañía Minera Marañón
S.A.C. (“Minera Marañón”).  Bacon Hill Invest Inc. (“Bacon Hill”), a
corporation incorporated under the laws of Panama and a wholly-owned subsidiary
of Temasek, owns 999 shares of the 1,000 shares of Minera Marañón that are
issued and outstanding.  Temasek owns the single remaining share of
Minera Marañón.  The acquisition of each twenty-five percent interest
in the Mineral Rights will occur through the transfer to us of twenty-five
percent of the outstanding shares of Bacon Hill.
  A
description of the Mineral Rights is set forth below:
  Name
                                                                                                  Area
                                                                                                    (hectares)
                                                                                                  Dept.
                                                                                                  Province
                                                                                                  District
                                                                                                  ObservationAixa
      2
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheAlana
      10
                                                                                                  900
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      11
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      12
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      13
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      14
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      15
                                                                                                  800
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      16
                                                                                                  800
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      17
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      18
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      19
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      4
                                                                                                  900
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      5
                                                                                                  700
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      6
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      7
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      8
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPAlana
      9
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Fully
      overlap Zona de Amortiguamiento ANPBianka
      5
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheCastalia
      1
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheCastalia
      2
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheCastalia
      3
                                                                                                  500
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
 
  - 7 -
 Table of Contents
  
 Delfina
      1
                                                                                                  900
                                                                                                  Amazonas
                                                                                                  Condorcanqui
                                                                                                  Nieva
                                                                                                  Partially
      overlap Zona de Amortiguamiento ANPDelfina
      2
                                                                                                  900
                                                                                                  Amazonas
                                                                                                  Condorcanqui
                                                                                                  Nieva
                                                                                                  Partially
      overlap Zona de Amortiguamiento ANPDelfina
      3
                                                                                                  1000
                                                                                                  Amazonas
                                                                                                  Condorcanqui
                                                                                                  Nieva
                                                                                                  Partially
      overlap Zona de Amortiguamiento ANPDelfina
      4
                                                                                                  700
                                                                                                  Amazonas
                                                                                                  Condorcanqui
                                                                                                  Nieva
                                                                                                  Partially
      overlap Zona de Amortiguamiento ANPDelfina
      5
                                                                                                  1000
                                                                                                  Amazonas
                                                                                                  Condorcanqui
                                                                                                  Nieva
                                                                                                  Partially
      overlap Zona de Amortiguamiento ANPMika
      1
                                                                                                  600
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheMika
      10
                                                                                                  900
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Partially
      overlap Zona de Amortiguamiento ANPMika
      2
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheMika
      3
                                                                                                  900
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheMika
      4
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheMika
      5
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheMika
      6
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheMika
      7
                                                                                                  900
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheMika
      8
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
                                                                                                  Partially
      overlap Zona de Amortiguamiento ANPMika
      9
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheRosalba
      1
                                                                                                  900
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheRosalba
      2
                                                                                                  900
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheRosalba
      3
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheRosalba
      4
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  MansericheRosalba
      5
                                                                                                  1000
                                                                                                  Loreto
                                                                                                  Datem
      del Marañon
                                                                                                  Manseriche
      - Barranca
 
 We may
exercise the initial twenty-five percent option, which provides for the
acquisition of a twenty-five percent interest in the Mineral Rights, after
fulfilling the following conditions:
  · Payment
of $375,000 to Temasek upon execution of the Option Agreement;
  · Issuance
of 2,000,000 shares of our common stock to Temasek within five business days
from the Effective Date; and
  · Payment
of an additional $375,000 to Temasek within ninety days of the Effective
Date.
 Since the
execution of the Option Agreement, we have paid a total of $750,000 and have
issued 2,000,000 shares of our common stock to Temasek in accordance with the
terms of the Option Agreement, enabling us to exercise the initial twenty-five
percent option and acquire a twenty-five percent interest in the Mineral Rights
on October 23, 2008.
  The
Option Agreement provided that we may exercise the second twenty-five percent
option, resulting in our acquisition of a fifty percent interest in the Mineral
Rights, after fulfilling the following conditions within six months of the
Effective Date, March 29, 2009:
  · Payment
of an additional $1,250,000 to Temasek, and
 · Issuance
of 2,000,000 additional shares of our common stock to
Temasek.
 On May
12, 2009, we entered into an agreement with Temasek to amend the Temasek Option
Agreement (the “Amended Option Agreement”) in order to revise the conditions
required by us to exercise the second twenty-five percent
option.  Under the terms of the Amended Option Agreement, we may
exercise the second twenty-five percent option, resulting in our acquisition of
a fifty percent interest in the Mineral Rights, after fulfilling the following
conditions:
  · Issuance
of 2,000,000 additional shares of our common stock to Temasek within six months
from the Effective Date or as soon as
 practicable thereafter (which shares were issued in June 2009),
and
  · Payment
within 12 months from the Effective Date of an additional $1,250,000 to Temasek,
plus interest at a rate of 5% per annum
 accruing from the date of the Amended Option Agreement to the date such
payment is made.
 - 8 -
 Table of Contents
  
 On June
29, 2009, we issued 2,000,000 shares of common stock to Temasek and its
designees as partial consideration for the exercise of the second twenty-five
percent option to acquire an aggregate fifty percent interest in the Mineral
Rights.
  On
November 2, 2009, we executed an agreement with Temasek to again amend the
Temasek Option Agreement (the “Second Amended Option Agreement”) in order to
revise the payment terms for the $1,250,000 outstanding that is required to be
paid by us in order to exercise the second twenty-five percent
option.  Under the terms of the Second Amended Option Agreement, we
may exercise the second twenty-five percent option, resulting in our acquisition
of a fifty percent interest in the Mineral Rights, after making payment to
Temasek of $750,000 (United States Dollars Seven Hundred and Fifty Thousand) and
issuing to Temasek 500,000 shares of our common stock within 13 months from the
Effective Date (October 29, 2009) or as soon as practicable
thereafter.  On or about November 2, 2009, we made the $750,000
payment to Temasek and issued 500,000 shares of our common stock to Temasek,
resulting in the exercise of the second twenty-five percent option and our
acquisition of an aggregate of a fifty percent interest in the Mineral
Rights.
  Under the
terms of the initial Option Agreement, we were entitled to exercise the third
twenty-five percent option, resulting in our acquisition of a seventy-five
percent interest in the Mineral Rights, after fulfilling the following
conditions within twelve months of the Effective Date (September 29,
2009):
  ·
                                                                                                                                Payment
      of an additional $3,000,000 to Temasek, and
 ·
                                                                                                                                  Issuance
      of 2,000,000 additional shares of the Company’s common stock to
      Temasek.
 Under the
terms of the Second Amended Option Agreement, the parties also agreed to revise
the payment terms for the consideration required to exercise the third
twenty-five percent option.  Under the terms of the Second Amended
Option Agreement, we may exercise the third twenty-five percent option,
resulting in our acquisition of a seventy-five percent interest in the Mineral
Rights, after fulfilling the following conditions:
  ·
                                                                                                                                      Exercise
      the second twenty-five percent option, resulting in our acquisition of a
      fifty percent interest in the Mineral Rights, within 13 months as from the
      Effective Date  (October 29, 2009) or as soon as practicable
      thereafter;
 ·
                                                                                                                                        Issuance
      of 2,000,000 shares of our common stock to Temasek, or whoever persons the
      Temasek indicates, within 13 months as from the Effective Date (October
      29, 2009) or as soon as practicable thereafter; and
 ·
                                                                                                                                          Payment
      of $ 3,000,000 (United States Dollars Three Million) to the order and the
      direction of the Temasek on or before March 31,
  2010.
 We will
require additional financing in order to be able to exercise the third
twenty-five percent option.  There can be no assurance that we will be
successful in securing the necessary funding to exercise the third twenty-five
percent option.  Provided we are successful in securing additional
financing, we intend to exercise the third twenty-five percent option on or
before March 31, 2010.  In the event that we are unable to secure
additional financing in order to be able to exercise the third twenty-five
percent option in the time frame set forth above, our ownership interest in the
Mineral Rights may be limited to our current fifty percent
interest.
  We may
exercise the fourth twenty-five percent option, resulting in our acquisition of
a one hundred percent interest in the Mineral Rights, after fulfilling the
following conditions within eighteen months of the Effective Date (March 29,
2010):
  · Payment
of an additional $5,000,000 to Temasek, and
  · Issuance
of 4,000,000 additional shares of our common stock to
Temasek.
 - 9 -
 Table of Contents
  We will
require additional financing in order to be able to exercise the fourth
twenty-five percent option.  There can be no assurance that we will be
successful in securing the necessary funding to exercise the fourth twenty-five
percent option.  Provided we are successful in securing additional
financing, we intend to exercise the fourth twenty-five percent option within
eighteen months of March 29, 2010.  In the event that we have
exercised the third twenty-five percent option, but are unable to secure
sufficient financing in order to be able to exercise the fourth twenty-five
percent option in the time frame set forth above, our ownership interest in the
Mineral Rights may be limited to a seventy-five percent interest.
  Upon our
fulfillment of the conditions set forth above resulting in our acquisition of a
one hundred percent interest in the Mineral Rights, Temasek will hold its single
share of Minera Marañón in trust for our sole benefit and hold the share
strictly in accordance with our instructions.
  In the
event that we acquired a one hundred percent interest in the Mineral Rights,
Temasek is entitled to an annual 2.5% net returns royalty related to the Mineral
Rights.  However, if we pay Temasek $2,000,000 within ninety days of
our acquisition of a one hundred percent interest in the Mineral Rights, Temasek
will only be entitled to an annual 1.0% net returns royalty related to the
Mineral Rights.
  If we
fail to exercise the third twenty-five percent option, resulting in our
continuing to hold our current fifty percent interest in the Mineral Rights, but
we fail to acquire a one hundred percent interest in the Mineral Rights, the
Option Agreement provides that we and Temasek will form a joint venture for
the purpose of placing the Peru Property into commercial
production.  In the event that this condition is satisfied and we
enter into a joint venture agreement with Temasek, our responsibilities under
the joint venture would include developing a feasible mining project and all
necessary facilities and Temasek shall retain a carried free interest in the
mining rights.  If we enter into a joint venture with Temasek, but do
not develop a feasible mining project within three years of the Effective Date
(September 29, 2011), we will be required to pay Temasek an advance minimum
mining royalty of $500,000 per year, which will be deducted from Temasek’s net
return royalty on the Mineral Rights.
  Proposed
Exploration Program
  Shortly
after our acquisition of the Peru property in September 2008, we commenced the
initial stages of our exploration and development program and have carried out
the following activities:
  · Completed
an initial social base line study to document all surface rights owners and
people resident in the project area;
  · Implemented
a community relations program to inform local communities of the project and
what potential opportunities
 that may exist for community involvement in the implementation phases of the
development program;
  · Submitted
a Declaración de Impacto
Ambiental to the Ministry of Mines and Energy in Peru and received
approval to
 start the exploration;
  · Completed
the field work for the Evaluación de Impacto Ambiental
semidetallado which, if approved by the Peruvian
 Ministry of Mines & Energy, will allow us to undertake extensive
drilling and bulk sampling programs;
  · Acquired
churn drilling equipment for further evaluation and development of
resources;
  · Set-up an
operational base in the project area in the town of Saramiriza;
  · Contracted
various consulting firms and experienced and knowledgeable individuals with
specific skills in the exploration
 of alluvial deposits to assist us with the exploration and development of
the Peru property; and
  · Commissioned
and subsequently receiv ed a
preliminary master plan which indicated the size and scope of our
projected
 operations and areas where more information is
required.
 - 10 -
 Table of Contents
  The
principle objective of our planned exploration and development program is to
bring a dredger and appropriately matched floating plant onto the property to
assist us in conducting trial mining tests which requires that we undertake the
following actions:
  · Drill an
area on the property where known mineralization exists at closely-spaced centers
in accordance with mining industry
 standards;
  · Extend
the resource though a wider-spaced program of reconnaissance drilling so as to
indicate the potential size of the deposit;
  · Perform
additional geotechnical and metallurgical studies to complement existing
information in order to prepare the optimum
 processing route to be adopted in the exploitation phase; and
  · Prepare
scoping, prefeasibility, and full feasibility studies.
 An
exploration base was set up in the town of Saramiriza.  We are
reviewing the exploration program and methods given the experience gained in the
last year of operating in this difficult terrain.Steve McMullan, a
geophysicist and member of our board of directors, will evaluate the
effectiveness of using seismic and or other geophysical methods to better define
the boundaries of the alluvial gold mineralization over the next fiscal
quarter.  A geophysical survey if considered to be effective would be
conducted along selected lines across the Marañón gravels in order to define the
limit of the gold bearing sands and gravels and could be initiated in the first
quarter of 2010 at an approximate cost of $10,000.  The selection of
seismic lines will be made on the basis of interpretation of aerial photos and
satellite images, as well as from reconnaissance-scale mapping of sedimentary
features.  Scout drilling utilizing churn drills will be undertaken on
favorable areas, and anomalous zones will be followed up with reverse
circulation drilling in order to fully develop resources and
reserves.
  We
recently purchased churn drilling equipment in the United States and had it
shipped to Peru.  The equipment cost approximately $85,000 and we
acquired such funds through the issuance of securities in private equity
offerings.  The drill is now in place on the project and we commenced
the initial phrase of our drilling program in August 2009.  A second
hand Bangka drilling rig was also acquired in late October at a cost of $15,000
and is being used in locations where churn drilling is not
possible.  Our plans are to continue drilling and test pitting for a
period of at least 18 months.  If we are unable to secure additional
financing in the near future, we will be unable to sustain any drilling activity
and be forced to cease our exploration and development program.  Our
plans currently anticipate that 200 holes will be drilled to a depth of 50m at
100m centers in the area of known mineralization, with a view to developing a
reserve. The objective of this drilling is to define resources of sufficient
size to sustain a fleet of high capacity dredges and floating plants in the
future.  Bulk samples collected by excavating small pits and shafts
will be required for metallurgical testing as well as to confirm drill
results.  This is presently being undertaken at all locations where
significant gold mineralization is encountered in the drill holes.  At
the same time, mine development planning, process design, and other engineering
studies will be conducted with a view to completing a feasibility study within a
twenty-four month period.  Permitting is anticipated to be initiated as
early in the exploration and development cycle as possible, so that trial or
pilot dredging can be started as soon as feasibility has been
established.
  During
the reporting period, we continued drill testing the main zone of alluvial
mineralization previously defined by Monica de Iquitos and in addition to
testing other locations within the concession area.
  Preliminary on-site drill results indicated gold is present in the majority of
the drill holes and pits at variable grades and additional drilling is required
to better quantify the boundaries of the alluvial gold
mineralization..  We caution that the drill results previously
reported do not in any way indicate the presence of a commercially viable
mineral deposit.  There is no assurance that a commercially viable
mineral deposit exists on the properties underlying our mineral property
interests in Perú and a great deal of further exploration is required before a
final evaluation as to the economic and legal feasibility of
 - 11 -
 Table of Contents
  future
exploration is determined.  We have developed an extensive plan of
exploration with the principal objective of determining whether minerals that
exists on the property are of sufficient quantity to support commercial
production.  We have commenced our planned exploration program, but
must secure additional financing in the near future in order to be able to
sustain any drilling activity or we will be forced to cease our exploration and
development program.
  Our
current cash on hand is insufficient to complete any of the activities set forth
in our planned exploration program.  If we are unable to secure
additional financing in the near future, we will be forced to cease our
exploration and development program.  Provided we are able to secure
additional financing through ongoing private equity offerings, we anticipate
that we will incur the following costs for the next twelve months:
 Activity
                                                                                                                                                                                                        USD 000sMINERAL
      PROPERTY COSTS:Surface
      Rights Access
                                                                                                                                                                                                        150EXPLORATIONMapping
                                                                                                                                                                                                        230Geophysics
      – Seismic
                                                                                                                                                                                                        400DRILLINGReconnaissance
                                                                                                                                                                                                        1,500Resource
      Definition
                                                                                                                                                                                                        2,000GEOTECHNICAL
                                                                                                                                                                                                          Pits
      & Shafts
                                                                                                                                                                                                        200TECHNICAL
      SERVICESConsultants
                                                                                                                                                                                                        580Personnel
                                                                                                                                                                                                        430CAMP
      AND FIELD EXPENSESCamp
                                                                                                                                                                                                        630Field
                                                                                                                                                                                                        250TRANSPORT
      AND LOGISTICSAir
      Transport
                                                                                                                                                                                                        480Water
      Transport
                                                                                                                                                                                                        120Ground
      Transport
                                                                                                                                                                                                        150EQUIPMENT
      & PERMITTING
                                                                                                                                                                                                        210COMMUNITY
      OUTREACH
                                                                                                                                                                                                        300ADMINISTRATION
                                                                                                                                                                                                        150TOTAL
                                                                                                                                                                                                        7,780
 
 Results
of Operations for the Three and Nine Months Ended September 30, 2009 and
2008
  We have
not generated any revenues from operations since our inception.
  We
incurred operating expenses in the amount of $5,747,782 for the three months
ended September 30, 2009, as compared to operating expenses of $2,716,329 for
the three months ended September 30, 2008.  We incurred operating
expenses in the amount of $10,341,650 for the nine months ended September 30,
2009, as compared to operating expenses of $5,111,346 for the nine months ended
September 30, 2008.  The substantial increase in our operating
expenses for the three and nine months ended September 30, 2009, as compared to
the three and nine months ended September 30, 2008, was
 - 12 -
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  primarily
attributable to the write down of mineral property acquisition costs and
increased exploration costs incurred during the three and nine months ended
September 30, 2009.  We reported a write down of mineral property
costs of $4,054,260 for the three and nine months ended September 30, 2009, as
compared to nil and $760,260 for the three and nine months ended September 30,
2008, respectively.   The write down in mineral property cost in
the three and nine months ended September 30, 2009 related to our decision to
dispose of our interest to acquire the mineral rights to Atena, Cerro Amarillo
and Amira-Esparta properties located in Argentina.  Our exploration
costs for the three months ended September 30, 2009 increased to $715,769 from
$85,921 for the three months ended September 30, 2008.  Our
exploration costs for the nine months ended September 30, 2009 increased to
$1,592,817 from $776,536 for the nine months ended September 30,
2008.  The increase in exploration costs relates to the commencement
of the initial phase of our exploration program on our property interests in
Peru.
  We
reported other income of $68,911 during the three months ended September 30,
2009, as compared to other expenses of $196,722 for the three months ended
September 30, 2008.  The increase in other income for the three months
ended September 30, 2009, as compared to the three months ended September 30,
2008, related to a foreign exchange gain of $68,907 and lack of any provision
for potential legal claims during the three months ended September 30,
2009.  During the three months ended September 30, 2008, we recorded a
provision for potential legal claims of $200,000 and also reported a foreign
exchange loss of $1,159.
  We
reported other income of $210,766 during the nine months ended September 30,
2009, as compared to other income of $112,938 for the nine months ended
September 30, 2008.  The substantial increase in other income for the
nine months ended September 30, 2009, as compared to the nine months ended
September 30, 2008, is attributable to us entering into a settlement agreement
of potential legal claims during the nine months ended September 30, 2009 in an
amount which was $135,000 less than the provision amount for potential legal
claims of $200,000 which we recorded during the nine months ended September 30,
2008.
  As a
result of the above, for the three months ended September 30, 2009, we reported
a net loss of $5,678,871, as compared to a net loss of $2,913,051 for the three
months ended September 30, 2008.  We reported a net loss of
$10,130,884 for the nine months ended September 30, 2009, as compared to a net
loss of $4,998,408 for the nine months ended September 30, 2008.  The
increase in our net loss was primarily attributable to increased operating
expenses incurred as a result of the write down of mineral property acquisition
costs and increased exploration costs incurred during the three and nine months
ended September 30, 2009, as compared to the three and nine months ended
September 30, 2008.
  As a
result of the above, the basic and diluted loss per common share was $0.089 and
$0.055 for the three months ended September 30, 2009 and 2008,
respectively.  The basic and diluted loss per common share was $0.164
and $0.098 for the nine months ended September 30, 2009 and 2008,
respectively.
  Liquidity
and Capital Resources
  At September 30, 2009, we had cash and cash equivalents of $1,153,669 (December
31, 2008 - $66,580) and a working capital deficit of $386,590 (December 31, 2008
- $162,440).
  During
the twelve month period following the date of this report, we anticipate
that we will not generate any revenue.  Our proposed plan of
exploration anticipates that we will incur exploration related expenditures of
$7,780,000 over the next twelve months.  We anticipate spending
approximately $200,000 in ongoing general and administrative expenses per month
for the next twelve months, for a total anticipated general and administrative
expenditures of $2,400,000 over the next twelve months.  The general
and administrative expenses for the year will consist primarily of professional
fees for the audit and legal work relating to our regulatory filings throughout
the year, investor relations related expenditures, as well as transfer agent
fees and general office expenses.  Our current cash on hand is
insufficient to be able to make our planned exploration expenditures and to pay
for our general
 - 13 -
 Table of Contents
  administrative
expenses over the next twelve months.  Accordingly, we must obtain
additional financing in order to continue our plan of operations during and
beyond the next twelve months.  We believe that debt financing will
not be an alternative for funding additional phases of exploration as we do not
have limited tangible assets to secure any debt financing.  We
anticipate that additional funding will be in the form of equity financing from
the sale of our common stock.  We are currently seeking additional
funding in the form of equity financing from the sale of our common stock, but
cannot provide investors with any assurance that we will be able to raise
sufficient funding from the sale of our common stock to fund our complete
exploration program.  In the absence of such financing, we will not be
able to pursue our exploration program and maintain our mineral property
interests in good standing.  If we do not fulfill the terms of any of
these option agreements according to our business plan, then our ability to
commence or continue operations could be materially limited.  We also
may be forced to abandon our mineral property interests and cease
operations.
  Due to
our ongoing need to obtain additional financing to fund our operations in the
current economic environment, our management determined initially that it would
be in our best interest to postpone our exploration program on the properties
located in the Salta and Mendoza provinces of Argentina for at least the
remainder of 2009 in order to exclusively pursue the exploration and development
of our property interests in northeastern Peru.  Thereafter, we
determined it to be in our best interest to seek to dispose of our interests in
the properties located in the Salta and Mendoza provinces of Argentina as soon
as practicable.  As a result of our inability to dispose of our
interests in the properties located in the Salta and Mendoza provinces of
Argentina for value, we sent notices terminating the assignment agreements under
which we acquired our interest in these propertieson October 20,
2009.  We determined that terminating these assignment agreements at
this time was in our best interests in order to avoid incurring any additional
obligations.  If we are unable to raise additional capital in the near
future, we will continue to experience liquidity problems and management expects
that we will need to further curtail operations, liquidate assets, seek
additional capital on less favorable terms and/or pursue other remedial
measures.
  We may
also consider entering into a joint venture arrangement to provide the required
funding to explore the properties underlying our mineral property
interests.  We have not undertaken any efforts to locate a joint
venture participant.  Even if we determine to pursue a joint venture
participant, there is no assurance that any third party would enter into a joint
venture agreement with us in order to fund exploration of the properties
underlying our mineral property interests.  If we enter into a joint
venture arrangement, we would likely have to assign a percentage of our interest
in our mineral property interests to the joint venture participant.
  Cash
Used in Operating Activities
  Operating
activities for the nine months ended September 30, 2009 and 2008 used cash of
$2,655,069 and $2,193,408, respectively, which reflect our recurring operating
losses.  Our net loss of $10,130,884 for nine months ended September
30, 2009 was the primary reason for our negative operating cash flow, as
compared to our net loss of $4,998,408 for the nine months ended September 30,
2008.
  Cash
Used in Investing Activities
  For the
nine months ended September 30, 2009, we used $110,258 in investing activities,
as compared to $411,340 used in investing activities during the nine months
ended September 30, 2008.  For the nine months ended September 30,
2009, we purchased $85,258 in equipment, and expended $25,000 in connection with
the acquisition of mineral property interests, as compared to $250,260 for the
acquisition of mineral property interest, $96,387 in purchased equipment and
$64,693 in website development costs during the nine months ended September 30,
2008.
 - 14 -
 Table of Contents
  
 Cash
from Financing Activities
  As we
have had no revenues since inception, we have financed our operations primarily
by using existing capital reserves and through private placements of our common
stock.  Net cash flows provided by financing activities for the nine
months ended September 30, 2009 was $3,852,416 as compared to $4,446,980 for the
nine months ended September 30, 2008.  A decrease in the cash flow
provided by financing activities was primarily due to a slight decrease in
equity financing secured during the nine months ended September 30, 2009, as
compared to the nine months ended September 30, 2008.
  Off
Balance Sheet Arrangements
  We do not
have any off-balance sheet debt nor did we have any transactions, arrangements,
obligations (including contingent obligations) or other relationships with any
unconsolidated entities or other persons that may have material current or
future effect on financial conditions, changes in the financial conditions,
results of operations, liquidity, capital expenditures, capital resources, or
significant components of revenue or expenses.
  Going
Concern
  We have
incurred net losses for the period from inception on March 6, 2000 to September
30, 2009 of $17,004,548and
have no source of revenue.  The continuity of our future operations is
dependent on our ability to obtain financing and upon future acquisition,
exploration and development of profitable operations from our mineral
properties.  These conditions raise substantial doubt about our
ability to continue as a going concern.
  Critical
Accounting Policies
  In
December 2001, the SEC requested that all registrants list their most “critical
accounting polices” in the Management Discussion and Analysis.  The
SEC indicated that a “critical accounting policy” is one which is both important
to the portrayal of a company’s financial condition and results, and requires
management’s most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain.  We believe the following critical accounting estimates
affect our more significant judgments and estimates used in the preparation of
our consolidated financial statements:
  Mineral
Property Costs
  Mineral
property acquisition costs are initially capitalized as tangible assets when
purchased.  At the end of each fiscal quarter end, we assess the
carrying costs for impairment.  If proven and probable reserves are
established for a property and it has been determined that a mineral property
can be economically developed, costs will be amortized using the
units-of-production method over the estimated life of the probable
reserve.
  Mineral
property exploration costs are expensed as incurred.
  Estimated
future removal and site restoration costs, when determinable are provided over
the life of proven reserves on a units-of-production basis.  Costs,
which include production equipment removal and environmental remediation, are
estimated each period by management based on current regulations, actual
expenses incurred, and technology and industry standards.  Any charge
is included in exploration expense or the provision for depletion and
depreciation during the period and the actual restoration expenditures are
charged to the accumulated provision amounts as incurred.
  As of the
date of these financial statements, we have not established any proven or
probable reserves on our mineral properties and incurred only acquisition and
exploration costs.
 - 15 -
 Table of Contents
  
 Although
we have taken steps to verify title to mineral properties in which it has an
interest, according to the usual industry standards for the stage of exploration
of such properties, these procedures do not guarantee our title.  Such
properties may be subject to prior agreements or transfers and title may be
affected by undetected defects.
  Stock-Based
Compensation
 Effective January 1, 2006, we adopted the provisions of ASC 718,
“Compensation – Stock
Compensation”, which establishes accounting for equity instruments
exchanged for employee services. Under the provisions of ASC 718, stock-based
compensation cost is measured at the grant date, based on the calculated fair
value of the award, and is recognized as an expense over the employees’
requisite service period (generally the vesting period of the equity
grant).  We adopted ASC 718 using the modified prospective method,
which requires us to record compensation expense over the vesting period
for all awards granted after the date of adoption, and for the unvested portion
of previously granted awards that remain outstanding at the date of adoption.
 Accordingly, financial statements for the periods prior
to January 1, 2006 have not been restated to reflect the fair value
method of expensing share-based compensation.  Adoption of ASC 718 does not
change the way we account for share-based payments to non-employees, with
guidance provided by ASC 505-50, “Equity-Based Payments to
Non-Employees”.
 Foreign
Currency Translation
 Our functional and reporting currency is U.S.
dollars.  Our consolidated financial statements are
translated to U.S. dollars in accordance with ASC 830, “Foreign Currency
Matters”.  Monetary assets and liabilities denominated in
foreign currencies are translated using the exchange rate prevailing at the
balance sheet date.  Gains and losses arising on translation or
settlement of foreign currency denominated transactions or balances are included
in the determination of income.  We have not, to the date of
these consolidated financial statements, entered into derivative instruments to
offset the impact of foreign currency fluctuations.
 International
Financial Reporting Standards
  In
November 2008, the Securities and Exchange Commission (“SEC”) issued for comment
a proposed roadmap regarding potential use of financial statements prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board.  Under the proposed
roadmap, we would be required to prepare financial statements in accordance with
IFRS in fiscal year 2014, including comparative information also prepared under
IFRS for fiscal 2013 and 2012.  We are currently assessing the
potential impact of IFRS on its financial statements and will continue to follow
the proposed roadmap for future developments.
  Item
3.      Quantitative
and Qualitative Disclosures About Market Risk
  Not
Applicable.
  Item 4T.      Controls and
Procedures
  Evaluation
of Disclosure Controls and Procedures
  We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of September 30, 2009.  This evaluation
was carried out under the supervision and with the participation of our
Chief
 - 16 -
 Table of Contents
  Executive
Officer, Mr. Gary Artmont, and our Chief Financial Officer, Mr. Kenneth
Phillippe.  Based upon that evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that, as of September 30, 2009, our
disclosure controls and procedures are effective.
  Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC’s rules and
forms.  Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required
disclosure.
  Limitations
on the Effectiveness of Internal Controls
  Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error.  Our disclosure controls and procedures are designed
to provide reasonable assurance of achieving our objectives and our Chief
Executive Officer and Chief Financial Officer concluded that our disclosure
controls and procedures are effective at that reasonable assurance
level.  Further, the design of a control system must reflect the fact
that there are resource constraints, and the benefits of controls must be
considered relative to their costs.  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,
within our company 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.  Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the internal control.  The design of any system of
controls also is based in part upon certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future
conditions.  Over time, control may become inadequate because of
changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate.
  Changes
in Internal Control Over Financial Reporting
  There
have been no changes in our internal controls over financial reporting during
the quarter ended September 30, 2009 that have materially affected or are
reasonably likely to materially affect such controls.
 - 17 -
 Table of Contents
  PART
II – OTHER INFORMATION
  Item 1.       Legal
Proceedings.
  In
January 2008, a contractor was critically injured in an automobile accident
while working for us in the area referred to as the Atena Project located in
northwestern Argentina.  The contractor’s family has filed a claim in
the Argentina court system seeking monetary damages in the amount of $300,000
from the driver of the automobile, who is considered an employee under
Argentinean labor law.  Although we were not been named as a party in
this action, we have anticipated that we may be named as a defendant in this
action.  During the year ended December 31, 2008, we recorded
provisions for potential legal claims relating to this incident in the amount of
$200,000.  During the reporting period, we agreed to make scheduled
payments totaling $65,000 in settlement of any potential legal claims arising
out of the accident described above.
  Item 1A.    Risk
Factors.
  Not
Applicable.
  Item
2.      Unregistered
Sales of Equity Securities and Use of Proceeds.
  On
September 2, 2009, we completed a private equity offering of 923,428 units at
$0.35 per unit (the "Units") to a total of twenty-two (22) investors.  Each
Unit consisted of one (1) share of common stock, par value $0.001, and one (1)
common stock purchase warrant (the “Warrant”) to purchase one (1) share of
common stock, exercisable commencing six months from the closing date of the
offering and terminating two years from the closing date of the
offering.  As a result, we issued a total of 923,428 shares of common
stock and warrants to purchase 923,428 shares of common stock in connection with
this private equity offering.  The exercise price per Warrant is
$0.70.  The gross proceeds we received from this private equity
offering was $323,200.
  The Units
were not sold through an underwriter and accordingly, there were no underwriting
discounts or commissions involved.  No registration rights were granted to
any of the investors.
  The
securities offered and sold in connection with this private equity offering were
in reliance on the following exemptions from registration under the Securities
Act of 1933, as amended (the "Securities Act"): (a) in the case of U.S.
persons, Section 4(2) of the Securities Act or Regulation D promulgated
thereunder, and (b) in the case of non-U.S. persons, Regulation S
promulgated under the Securities Act.  In connection with this private
equity offering, we relied on each of the investors' written
representations.  With respect to the securities sold to U.S. persons,
sales were made to persons who represented that they were "accredited investors"
as that term is defined in Rule 501(a) under the Securities
Act.   With respect to the securities sold to non-U.S. persons,
sales were made to persons who represented that they were not a "U.S. person" as
that term is defined in Rule 902(k) of Regulation S under the Securities
Act.  Each investor represented that they were acquiring the
securities for investment only and not with a view toward resale or
distribution. We requested our stock transfer agent to affix appropriate
restricted legends to the stock certificate issued to each investor.  Each
investor was given adequate access to sufficient information about us to make an
informed investment decision.  Neither we nor anyone acting on our
behalf offered or sold these Units by any form of general solicitation or
general advertising.
  Subsequent
to the reporting period and pursuant to the terms of the Mineral Rights Option
Agreement, as amended (the “Option Agreement”), that we entered with Temasek
Investments Inc. (“Temasek”) relating to the Peru Property, we issued to Temasek
and its designees a total of 2,500,000 shares of our common stock as part of the
consideration required to exercise the second and third twenty-five percent
options to acquire the mineral rights underlying the property that is the
subject of the Option Agreement.  These shares were issued pursuant to
Section 4(2) of the Securities Act and Regulation S promulgated thereunder. We
did not engage in any general solicitation or advertising. The stock certificate
was issued with the appropriate legends affixed to the restricted
stock.
 - 18 -
 Table of Contents
  
 Item 3.  Defaults upon Senior
Securities.
  None.
  Item 4.    Submission of Matters to
a Vote of Security Holders.
  We held a
Special Meeting of Shareholders on October 21, 2009 in order to approve an
Agreement and Plan of Merger pursuant to which Constitution Mining Corp. will
reincorporate from the State of Nevada to the State of Delaware.  This
proposal, as set forth in our proxy statement for the 2009 Special Meeting of
Shareholders was approved by our shareholders as follows:
 For
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            Against
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            AbstainApproval
      of Agreement and Plan of Merger pursuant to which Constitution Mining
      Corp. will reincorporate from the State of Nevada to the State of
      Delaware.
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            34,209,623
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            28,689
                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                                            3,350
 
 Item 5.     Other
Information.
  None.
  Item
6.       Exhibits.
  See the
Exhibit Index following the signatures page of this report, which is
incorporated herein by reference.
 - 19 -
 Table of Contents
  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.
  Constitution
      Mining Corp.Date:
                                                                                                                                                                                                                                                                                                                                                            November
      16, 2009By:
      /s/  Gary
      Artmont
                                                                                                                                                                                                                                                                                                                                                                  Gary
      Artmont
                                                                                                                                                                                                                                                                                                                                                                  Title:Chief
      Executive Officer and DirectorDate:
                                                                                                                                                                                                                                                                                                                                                            November
      16, 2009By:
      /s/  Kenneth
      Phillippe
                                                                                                                                                                                                                                                                                                                                                                  Kenneth
      Phillippe
                                                                                                                                                                                                                                                                                                                                                                  Title:Chief
      Financial Officer
 - 20 -
 Table of Contents
 CONSTITUTION
MINING CORP.
 (the
“Registrant”)
 (Commission
File No. 000-49725)
 Exhibit Index
 to
 Quarterly
Report on Form 10-Q
 for
the Quarter Ended September 30, 2009
 
 Exhibit
                                                                                                                                                                                                                                                                                                                                                          No.
                                                                                                                                                                                                                                                                                                                                                        Description
                                                                                                                                                                                                                                                                                                                                                        Incorporated
      Herein by Reference to
                                                                                                                                                                                                                                                                                                                                                        Filed
      Herewith2.1
                                                                                                                                                                                                                                                                                                                                                        Agreement
      and Plan of Merger, dated October 21, 2009, by and between the Registrant
      and Constitution Mining Corp., a Nevada corporation and the Registrant’s
      predecessor in interest
                                                                                                                                                                                                                                                                                                                                                        Exhibit
      2.1 of Form 8-K filed on October 23, 20093.1
                                                                                                                                                                                                                                                                                                                                                        Certificate
      of Incorporation
                                                                                                                                                                                                                                                                                                                                                        Exhibit
      2.1 of Form 8-K filed on October 23, 20093.2
                                                                                                                                                                                                                                                                                                                                                        Bylaws
                                                                                                                                                                                                                                                                                                                                                        Exhibit
      2.1 of Form 8-K filed on October 23, 200910.1
                                                                                                                                                                                                                                                                                                                                                        Mineral
      Right Option Agreement
                                                                                                                                                                                                                                                                                                                                                        Exhibit
      10.1 of Form 8-K filed on September 29, 200810.2
                                                                                                                                                                                                                                                                                                                                                        Amendment
      to Mineral Right Option Agreement,
                                                                                                                                                                                                                                                                                                                                                          dated
      May 12, 2009
                                                                                                                                                                                                                                                                                                                                                        Exhibit
      10.1 of Form 10-Q filed on May 15, 200910.3
                                                                                                                                                                                                                                                                                                                                                        Second
      Amendment to Mineral Right Option Agreement
                                                                                                                                                                                                                                                                                                                                                        Exhibit
      10.1 of Form 8-K filed on November 3, 200931.1
                                                                                                                                                                                                                                                                                                                                                        Certification of Chief Executive Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                        X31.2
                                                                                                                                                                                                                                                                                                                                                        Certification of Chief Financial Officer pursuant to 18
      U.S.C. Section 1350, as adopted pursuant to Section 302 of the
      Sarbanes-Oxley Act of 2002
                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                        X32.1
                                                                                                                                                                                                                                                                                                                                                        Certification of Chief Executive Officer and Chief
      Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
      to Section 906 of the Sarbanes-Oxley Act of 2002
                                                                                                                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                                                                                                                        X
 
 
  - 21 -
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Contents