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 March 31,
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)




Nevada
              88-0455809(State
      or other jurisdiction of incorporation or organization)
              (I.R.S.
      Employer Identification No.)





Manuela Saenz 323, Suite 706, Buenos Aires,
      Argentina C1107BPA(Address
      of principal executive offices)+54-11-5236-9978(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 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 April 1, 2009Common
      Stock, $0.001 par value
                
                58,469,456







Table of Contents








FORM
      10-Q
                        CONSTITUTION
      MINING CORP.
                        MARCH
      31, 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.
                      18Item
      4T.
                      Controls and Procedures.
                      18PART II – OTHER INFORMATIONItem
      1.
                      Legal Proceedings.
                      19Item
      1A.
                      Risk Factors.
                      19Item
      2.
                      Unregistered Sales of Equity Securities and Use of
      Proceeds.
                      19Item
      3.
                      Defaults Upon Senior Securities.
                      19Item
      4.
                      Submission of Matters to a Vote of Security
      Holders.
                      19Item
      5.
                      Other Information.
                      20Item
      6.
                      Exhibits.
                      20SignaturesExhibitsCertifications







- 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 March 31, 2009.F-2
              Unaudited
      Consolidated Statements of Operations for the three months ended March 31,
      2009, 2008 and 2007 and from inception on March 6, 2000 to March 31,
      2009.F-3
              Unaudited
      Consolidated Statements of Cash Flows for the three months ended March 31,
      2009, 2008 and 2007 and from inception on March 6, 2000 to March 31,
      2009.F-4
              Unaudited
      Consolidated Statement of Changes in Stockholders' Equity from
      inception on March 6, 2000 to March 31, 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 March 31, 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
                  31
      March
                  2009
                
                
                As
      at
                  31
      December
                  2008
                  (Audited)$
                
                
                
                $AssetsCurrentCash
      and cash equivalents
                
                
                35,490
                
                
                
                66,580Amounts
      receivable (Note 4)
                
                
                30,000
                
                
                
                60,000Prepaid
      expense
                
                
                14,785
                
                
                
                271,25080,275
                
                
                
                397,830Mineral property costs(Note 7)
                
                
                5,145,260
                
                
                
                5,120,260Property and equipment(Note 5)
                
                
                171,576
                
                
                
                102,049Website development cost(Note 6)
                
                
                41,904
                
                
                
                47,2955,439,015
                
                
                
                5,667,434LiabilitiesCurrentAccounts
      payable and accrued liabilities (Note 8)
                
                
                1,095,016
                
                
                
                547,891Due
      to related parties (Note 9)
                
                
                150,211
                
                
                
                12,3791,245,227
                
                
                
                560,270Stockholders’
      equity (deficiency)Capital stock (Note
      11)Authorized300,000,000
      common shares, par value $0.001 and50,000,000
      preferred shares, par value $0.001Issued
      and outstanding31
      March 2009 – 58,469,456 common shares, par value $0.00131
      December 2008 – 58,469,456 common shares, par value $0.001
                
                
                58,469
                
                
                
                58,469Share subscriptions received in
      advance(Note 11)
                
                
                240,000
                
                
                
                -Additional
      paid in capital
                
                
                9,442,716
                
                
                
                7,945,496Warrants(Note
      11)
                
                
                3,976,863
                
                
                
                3,976,863Deficit,
      accumulated during the exploration stage
                
                
                (9,524,260
                )
                
                
                (6,873,664
                )4,193,788
                
                
                
                5,107,1645,439,015
                
                
                
                5,667,434
 
 Nature, Basis of
Presentation and Continuance of Operations Note
1 Commitments Subsequent
Event Contingency
  The
accompanying notes are an integral part of these consolidated financial
statements.  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 31
                  March
      2009
                
                
                For
      the
                  three
      month
                  period
                  ended
      31
                  March
      2009
                
                
                For
      the
                  three
                  month
                  period
                  ended
      31
                  March
      2008
                
                
                For
      the
                  three
                  month
                  period
                  ended
      31
                  March
      2007$
                
                
                
                $
                
                
                
                $
                
                
                
                $ExpensesAcquisition
      of mineral property interests
                
                
                -
                
                
                
                -
                
                
                
                650,260
                
                
                
                -Amortization
      expense (Notes 5 and 6)
                
                
                222,003
                
                
                
                21,122
                
                
                
                3,643
                
                
                
                32,100Default
      on oil and gas deposit
                
                
                25,000
                
                
                
                -
                
                
                
                -
                
                
                
                -Exploration
      costs
                
                
                1,407,112
                
                
                
                482,151
                
                
                
                421,491
                
                
                
                -Interest
      on convertible debentures
                
                
                126,525
                
                
                
                -
                
                
                
                -
                
                
                
                18,391Investor
      relations
                
                
                1,027,844
                
                
                
                259,126
                
                
                
                94,993
                
                
                
                -Management
      fees (Note 10)
                
                
                565,159
                
                
                
                74,076
                
                
                
                78,000
                
                
                
                21,200Office
      and miscellaneous
                
                
                318,769
                
                
                
                80,611
                
                
                
                39,441
                
                
                
                843Professional
      fees
                
                
                1,367,194
                
                
                
                161,625
                
                
                
                150,249
                
                
                
                25,938Rent
                
                
                131,605
                
                
                
                26,800
                
                
                
                7,297
                
                
                
                600Stock-based
      compensation (Note 12)
                
                
                4,155,862
                
                
                
                1,497,220
                
                
                
                -
                
                
                
                -Travel
      & entertainment
                
                
                360,581
                
                
                
                53,007
                
                
                
                44,201
                
                
                
                -Net
      operating loss before other items
                
                
                (9,707,654
                )
                
                
                (2,655,738
                )
                
                
                (1,489,575
                )
                
                
                (99,072
                )Other
      itemsForeign
      exchange gain (loss)
                
                
                3,488
                
                
                
                5,142
                
                
                
                (8,155
                )
                
                
                -Gain
      on sale of oil and gas property
                
                
                307,115
                
                
                
                -
                
                
                
                307,115
                
                
                
                -Interest
      income
                
                
                12,791
                
                
                
                -
                
                
                
                1,990
                
                
                
                -Recovery
      of project management fees
                
                
                60,000
                
                
                
                -
                
                
                
                -
                
                
                
                -Provision
      for potential legal claims (Notes 8 and 17)
                
                
                (200,000
                )
                
                
                -
                
                
                
                -
                
                
                
                -183,394
                
                
                
                5,142
                
                
                
                300,950
                
                
                
                -Net
      operating loss and comprehensive loss for the period
                
                
                (9,524,260
                )
                
                
                (2,650,596
                )
                
                
                (1,188,625
                )
                
                
                (99,072
                )Basic
      and diluted loss per common share
                
                
                
                
                
                
                (0.045
                )
                
                
                (0.024
                )
                
                
                (0.002
                )Weighted
      average number of common shares used in per share
    calculations
                
                
                
                
                
                
                58,469,456
                
                
                
                49,162,519
                
                
                
                46,000,000
  The
accompanying notes are an integral part of these consolidated financial
statements.
  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 31
                  March
      2009
                
                
                For
      the
                  three
                  month
                  period
                  ended
      31
                  March
                  2009
                
                
                For
      the
                  three
                  month
                  period
                  ended
      31
                  March
                  2008
                
                
                For
      the
                  three
                  month
                  period
                  ended
      31
                  March
                  2007$
                
                
                
                $
                
                
                
                $
                
                
                
                $Cash
      flows used in operating activitiesNet
      loss for the period
                
                
                (9,524,260
                )
                
                
                (2,650,596
                )
                
                
                (1,188,625
                )
                
                
                (99,072
                )Adjustments
      to reconcile loss to net cash used by operating activitiesAccrued
      interest (Notes 14)
                
                
                126,525
                
                
                
                -
                
                
                
                -
                
                
                
                18,391Amortization
      (Notes 5 and 6)
                
                
                222,003
                
                
                
                21,122
                
                
                
                3,643
                
                
                
                32,100Contributions
      to capital by related party – expenses
                
                
                15,000
                
                
                
                -
                
                
                
                -
                
                
                
                600Common
      shares issued for services (Notes 11 and 14)
                
                
                24,199
                
                
                
                -
                
                
                
                -
                
                
                
                -Value
      of common shares issued for mineral properties
                
                
                -
                
                
                
                -
                
                
                
                560,000
                
                
                
                -Warrants
      issued for services (Notes 11 and 14)
                
                
                25,252
                
                
                
                -
                
                
                
                -
                
                
                
                -Gain
      on sale of oil and gas property
                
                
                (307,115
                )
                
                
                -
                
                
                
                (307,115
                )
                
                
                -Stock-based
      compensation (Note 12)
                
                
                4,155,862
                
                
                
                1,497,220
                
                
                
                -
                
                
                
                -Changes
      in operating assets and liabilities(Increase)
      decrease in prepaid expenses
                
                
                (14,785
                )
                
                
                256,465
                
                
                
                49,708
                
                
                
                -(Increase)
      decrease in amounts receivable
                
                
                (30,000
                )
                
                
                30,000
                
                
                
                4,000
                
                
                
                -Increase
      in accounts payable and accrued liabilities
                
                
                1,095,016
                
                
                
                547,125
                
                
                
                169,644
                
                
                
                33,403Increase
      in due to related parties
                
                
                150,211
                
                
                
                137,832
                
                
                
                155,123
                
                
                
                -(4,062,092
                )
                
                
                (160,832
                )
                
                
                (553,622
                )
                
                
                (14,578
                )Cash
      flows used in investing activitiesAcquisition
      of mineral property interest (Note 7)
                
                
                (975,260
                )
                
                
                (25,000
                )
                
                
                -
                
                
                
                -Purchase
      of equipment (Note 5)
                
                
                (210,288
                )
                
                
                (85,258
                )
                
                
                (4,467
                )
                
                
                -Website
      development costs (Note 6)
                
                
                (64,693
                )
                
                
                -
                
                
                
                (39,693
                )
                
                
                -Purchase
      of oil and gas property
                
                
                (642,006
                )
                
                
                -
                
                
                
                -
                
                
                
                -(1,892,247
                )
                
                
                (110,258
                )
                
                
                (44,160
                )
                
                
                -Cash
      flows from financing activitiesIssuance
      of common shares (Note 11)
                
                
                1,345,259
                
                
                
                -
                
                
                
                -
                
                
                
                -Issuance
      of warrants (Note 11)
                
                
                3,739,570
                
                
                
                -
                
                
                
                -
                
                
                
                -Convertible
      debentures
                
                
                665,000
                
                
                
                -
                
                
                
                -
                
                
                
                -Share
      subscriptions received in advance (Note 11)
                
                
                240,000
                
                
                
                240,000
                
                
                
                706,447
                
                
                
                185,1505,989,829
                
                
                
                240,000
                
                
                
                706,447
                
                
                
                185,150Increase
      (decrease) in cash and cash equivalents
                
                
                35,490
                
                
                
                (31,090
                )
                
                
                108,665
                
                
                
                170,572Cash
      and cash equivalents, beginning of period
                
                
                -
                
                
                
                66,580
                
                
                
                54,642
                
                
                
                27,472Cash
      and cash equivalents, end of period
                
                
                35,490
                
                
                
                35,490
                
                
                
                163,307
                
                
                
                198,044
 
 Supplemental Disclosures with Respect
of Cash Flows(Note 14)
  The
accompanying notes are an integral part of these consolidated financial
statements.  F -
3
 Table of Contents
 Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Consolidated
Statements of Changes in Stockholders’ Equity
 (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)
                  
                  5,107,164Share
      subscription received
      in          advance
                  
                  -
                  
                  -
                  
                  -
                  240,000
                  -
                  
                  -
                  
                  240,000Stock-based
      compensation (Note 12)
                  
                  -
                  
                  -
                  
                  1,497,220
                  -
                  -
                  
                  -
                  
                  1,497,220Net
      loss for the period
                  
                  -
                  
                  -
                  
                  -
                  
                  -
                  
                  -
                  
                  (2,650,596)
                  
                  (2,650,596)Balance
      at 31 March 2009
                  
                  58,469,456
                  
                  58,469
                  
                  9,442,716
                  
                  240,000
                  
                  3,976,863
                  
                  (9,524,260)
                  
                  4,193,788
 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)
 31
March 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 Statement of Financial
Accounting Standards (“SFAS”) No. 7. 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 31 March 2009 and for the
three 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 $2,650,596 for the three month period ended 31 March 2009 (31 March 2008 -
$1,188,625) and has working capital deficit of $1,164,952 at 31 March 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)
 31
March 2009
 
 On June
27, 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. Recent
Accounting Policies
 
 In May
2008, the FASB issued FSP Accounting Principles Board Opinion No. 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement)”.  FSP 14-1 requires issuers of convertible debt
instruments that may be settled in cash to separately account for the liability
and equity components in a manner that will reflect the entity’s nonconvertible
debt borrowing rate when interest cost is recognized in periods subsequent to
adoption.  Upon adoption of FSP 14-1, 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 non-convertible 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 provisions of FSP 14-1 are to be applied retrospectively
to all periods presented upon adoption and are effective for fiscal years
beginning after 15 December 2008 and interim periods within those fiscal
years.  Management has not determined the effect that adopting this
statement would have on the Company’s financial position, cash flows and results
of operations.
 
 In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial
Guarantee Insurance Contracts – an interpretation of FASB Statement No.
60”.  SFAS No. 163 provides enhanced guidance on the
recognition and measurement to be used to account for premium revenue and claim
liabilities and related disclosures and is limited to financial guarantee
insurance (and reinsurance) contracts, issued by enterprises included within the
scope of FASB Statement No. 60, “Accounting and Reporting by
Insurance Enterprises.”SFAS No. 163 also requires that an
insurance enterprise recognize a claim liability prior to an event of default
when there is evidence that credit deterioration has occurred in an insured
financial obligation.  SFAS No. 163 is effective for financial
statements issued for fiscal years and interim periods beginning after 15
December 2008, with early application not permitted.  The Company does
not expect SFAS No. 163 to have an impact on its consolidated financial
statements.
 
 In April
2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of
Intangible Assets”.  In determining the useful life of
intangible assets, FSP FAS 142-3 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.  FSP FAS 142-3 also requires expanded disclosure related
to the determination of intangible asset useful lives.  FSP FAS 142-3
is effective for financial statements issued for
  F -
6
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 fiscal
years beginning after 15 December 2008.  Management has not determined
the effect that adopting this statement would have on the Company’s financial
position, cash flows or results of operations.
  In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement No.
133”.  SFAS No. 161 is intended to improve transparency in
financial reporting by requiring enhanced disclosures of an entity’s derivative
instruments and hedging activities and their effects on the entity’s financial
position, financial performance, and cash flows.  SFAS No. 161 applies
to all derivate instruments within the scope of SFAS No. 133, “Accounting for Derivative
Instruments and Hedging Activities”.  It also applies to
non-derivative hedging instruments and all hedged items designated and
qualifying as hedges under SFAS No. 133.  SFAS No. 161 is effective
prospectively for financial statements issued for fiscal years beginning after
15 November 2008, with early application encouraged.  The adoption of
SFAS No. 161 is not expected to have a material impact on the Company’s
consolidated financial statements.
 
 In
December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations”. SFAS
No. 141(R) establishes principles and requirements for how an acquirer
recognizes and measures in its financial statements the identifiable assets
acquired, the liabilities assumed, any noncontrolling interest in the
acquiree  and the goodwill acquired. SFAS No. 141(R) also establishes
disclosure requirements to enable the evaluation of the nature and financial
effects of the business combination. SFAS No. 141(R) is effective for fiscal
years beginning after 15 December 2008.  The adoption of SFAS No.
141(R) is not expected to have a material impact on the Company’s consolidated
financial statements.
 
 In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of Accounting Research Bulletin
No. 51”.  SFAS No. 160 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.  SFAS No. 160 also establishes disclosure requirements
that clearly identify and distinguish between the interests of the parent and
the interests of the noncontrolling owners.  SFAS No. 160 is effective
for fiscal years beginning after 15 December 2008.  The adoption of
SFAS No. 160 is not expected to have a material impact on the Company’s
consolidated financial statements.
 
 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 -
7
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 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 SFAS No. 109, “Accounting for 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 SFAS No.128,
“Earnings per
Share”.  SFAS No. 128 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
 
 SFAS No.
130, “Reporting Comprehensive
Income”, establishes standards for the reporting and display of
comprehensive loss and its components in the financial statements.  As
at 31 March 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 -
8
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
  Mineral
property costs
 
 Mineral
property acquisition costs are initially capitalized as tangible assets when
purchased in accordance with Emerging Issues Task Force (“EITF”) 04-2, “Whether Mineral Rights Are Tangible
or Intangible Assets”. 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.
 
 Property,
plant and equipment
 
 Property,
plant and equipment are recorded at cost and depreciation is provided over their
estimated economic lives at 30%.
 
 Website
development costs
 
 The costs
of computer software developed or obtained for internal use, during the
preliminary project phase, as defined under AICPA Statement of Position 98-1
“Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use”, will be
expensed as incurred.  The costs of website development during the
planning stage, as defined under EITF No. 00-2 “Accounting for Web Site 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 -
9
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 Segments
of an enterprise and related information
 
 SFAS No.
131, “Disclosures about
Segments of an Enterprise and Related Information”, supersedes SFAS No. 14,
“Financial Reporting for
Segments of a Business Enterprise.”  SFAS No. 131 establishes
standards 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.  SFAS No.
131 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 SFAS and does not believe
it is applicable at this time.
 
 Start-up
expenses
 
 The
Company has adopted Statement of Position No. 98-5, “Reporting the Costs of Start-up
Activities”, 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 31 March
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 SFAS No. 52, “Foreign Currency
Translation.”  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 -
10
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 Stock-Based
Compensation
 
 Effective
1 January 2006, the Company adopted the provisions of SFAS No. 123(R), “Share-Based Payment”, which
establishes accounting for equity instruments exchanged for employee services.
Under the provisions of SFAS No.123(R), 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). Before 1 January 2006, the
Company accounted for stock-based compensation to employees in accordance with
Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees,” and complied with the disclosure requirements of SFAS No.
123, “Accounting for
Stock-Based Compensation”.  The Company adopted SFAS No. 123(R)
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 SFAS No. 123(R) does not change the way the Company accounts
for share-based payments to non-employees, with guidance provided by SFAS No.
123 (as originally issued) and EITF No. 96-18, “Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”.
 
 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 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 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.
 
 5. Property
and Equipment
 
 Net
      Book ValueCost
                            
                            
                            Accumulated
                              amortization
                            
                            
                            31
      March
                              2009
                            
                            
                            31
      December
                              2008$
                            
                            
                            
                            $
                            
                            
                            
                            $
                            
                            
                            
                            $Equipment
                            
                            
                            210,288
                            
                            
                            
                            38,712
                            
                            
                            
                            171,576
                            
                            
                            
                            102,049
 
 During
the three month period ended 31 March 2009, total additions to property and
equipment were $85,258 (31 March 2008 - $4,467).
  F -
11
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 6. Website
Development Cost
 
 Net
      Book ValueCost
                            
                            
                            Accumulated
                              amortization
                            
                            
                            31
      March
                              2009
                            
                            
                            31
      December
                              2008$
                            
                            
                            
                            $
                            
                            
                            
                            $
                            
                            
                            
                            $Website
      development
                            
                            
                            64,693
                            
                            
                            
                            22,789
                            
                            
                            
                            41,904
                            
                            
                            
                            47,295
 
 During
the three month period ended 31 March 2009, total additions to website
development were $Nil (31 March 2008 - $39,693).
 
 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 may exercise the second 25% option by fulfilling the following
conditions by 29 March 2009:
 
 a.
              Exercise
      and complete the initial 25% option
(completed);
 b.
              Pay
      an additional $1,250,000 (incurred $415,465) (Note 16);
  and
 c.
              Issue
      an additional 2,000,000 common shares (not issued) (Note
    16).
 
 The
Company may exercise the third 25% option by fulfilling the following conditions
by 29 September 2009:
 
 a.
              Exercise
      and complete the initial and second 25%
options;
 b.
              Pay
      an additional $3,000,000; and
 c.
              Issue
      an additional 2,000,000 common
shares.
 
 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.
  F -
12
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 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).
  The
Company breached a certain term of its Peruvian Agreement and the Peruvian
Agreement is in default as at 31 March 2009. Subsequent to 31 March 2009, the
Company re-negotiated the terms of the Peruvian Agreement with Temasek to extend
the option payment due date related to the acquisition of the second 25%
interest (Note 16).
 
 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 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 15):
 
 a.
              $240,000
      in expenditures (incurred) plus a further issuance of 1,000,000 common
      shares (issued and valued at $1.59 per share) on or before 15 March
      2008;
 b.
              a
      further $500,000 in expenditures (incurred $66,470) plus a further
      issuance of 2,000,000 common  shares on or before 15 March 2009
      (not issued) (Note 16);
 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
      option is subject to a 1% net smelter returns
  royalty.
 
 The
Company breached a certain term of its Atena Agreement and the Atena Agreement
is in default as at 31 March 2009. Subsequent to 31 March 2009, the Company
re-negotiated the terms of the Atena Agreement with Proyectos Mineros S.A.
(“PMSA”) to extend the option payment due date related to item “b” in the above
schedule (Note 16).
 
 Cerro
Amarillo Property
 
 On 8
January 2008, the Company entered into an assignment agreement (the “Cero
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 Cero Amarillo Agreement, the Company issued 300,000 common
shares (issued and valued at $0.70 per 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
15):
 
 a.
              $200,000
      in expenditures (incurred $25,000) plus a further issuance of 300,000
      common shares on or before 8 January 2009 (not issued) (Note
      16);
 b.
              a
      further $250,000 in expenditures plus a further issuance of 600,000 common
      shares on or before 8 January
2010;
  F -
13
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 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.
 
 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.
 
 The
Company breached a certain term of its Cerro Amarillo Agreement and the Cerro
Amarillo Agreement is in default as at 31 March 2009. Subsequent to 31 March
2009, the Company re-negotiated the terms of the Cero Amarillo Agreement with
PMSA to extend the option payment due date related to item “a” in the above
schedule (Note 16).
 
 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 15):
 
 a.         US$75,000
by 19 January 2009 (incurred $216) (Note 16);
 b.         a
further US$150,000 by 19 January 2010;
 c.         a
further US$200,000 by 19 January 2011; and
 d. a 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 breached a certain term of its Amira Agreement and the Amira Agreement
is in default as at 31 March 2009. Subsequent to 31 March 2009, the Company
re-negotiated the terms of the Amira Agreement with Silvia Rodriguez to extend
the option payment due date related to item “a” in the above schedule (Note
16).
 
 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 31 March 2009 is a provision for
$200,000 (31 March 2008 - $Nil) related to potential legal claims on incidents
arising from the mineral property interests (Note 17).
 
 9. Due
to Related Parties
 
 As at 31
March 2009, the amount due from related parties consists of $150,211 (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.
 
  F -
14
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 10. Related
Party Transactions
 
 During
the three month period ended 31 March 2009, the Company paid or accrued
management and consulting fees of $74,076 (31 March 2008 - $78,000) to directors
and officers of the Company or company’s controlled by directors and
officer.
 
 During
the three month period ended 31 March 2009, director and shareholder of the
Company made contributions to capital for management fees and rent of $Nil (31
March 2008 - $Nil, cumulative - $12,000) and $Nil (31 March 2008 - $600,
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 31
March 2009, the total issued and outstanding capital stock is 58,469,456 common
shares with a par value of $0.001 per share.
 
 During
the year ended 31 December 2008, the company issued 2,000,000 common shares
valued at $1.01 per 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 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).
  F -
15
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
  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 share pursuant to the Cerro Amarillo assignment agreement (Notes 7
and 14).
 
 During
the year ended 31 December 2008, the Company issued 500,000 common shares valued
at $0.70 per 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 $240,000 cash received by the
Company for 428,571 common shares that were not yet issued at 31 March
2009.  These common shares were issued subsequent to 31 March 2009
(Note 16).
 
 Share
Purchase Warrants
 
 The
following share purchase warrants were outstanding at 31 March
2009:
 
 Exercise
      price
                          
                          
                          Number
                            of
      warrants
                          
                          
                          Remaining
                            contractual
      life (years)$Warrants
                          
                          
                          1.40
                          
                          
                          
                          1,009,211
                          
                          
                          
                          0.02Warrants
                          
                          
                          1.40
                          
                          
                          
                          70,645
                          
                          
                          
                          0.02Warrants
                          
                          
                          1.40
                          
                          
                          
                          5,007,300
                          
                          
                          
                          0.38Agent
      compensation warrants
                          
                          
                          1.40
                          
                          
                          
                          350,511
                          
                          
                          
                          0.386,437,667
 
  F -
16
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 The
following is a summary of warrant activities during the three month period ended
31 March 2009:
 
 Number
      of
                          warrants
                        
                        
                        Weighted
                          average
                          exercise
                          price$Outstanding
      at 1 January 2009
                        
                        
                        6,437,667
                        
                        
                        
                        1.40Granted
                        
                        
                        -
                        
                        
                        
                        -Exercised
                        
                        
                        -
                        
                        
                        
                        -Cancelled
                        
                        
                        -
                        
                        
                        
                        -Outstanding
      at 31 March 2009
                        
                        
                        6,437,667
                        
                        
                        
                        1.40Weighted
      average fair value of warrants granted during the period
                        
                        
                        
                        
                        
                        
                        -
 
 The
weighted average grant date fair value of warrants issued during the three month
period ended 31 March 2008, amounted to $Nil per warrant (31 December 2008
-  $0.62). The fair value of each warrant granted was determined using
the Black-Scholes option pricing model and the following weighted average
assumptions:
 
 2009
                        
                        
                        2008Risk
      free interest rate
                        
                        
                        -
                        
                        
                        
                        2.02
                        %Expected
      life
                        
                        
                        -
                        
                        
                        1
      yearAnnualized
      volatility
                        
                        
                        -
                        
                        
                        
                        120.80
                        %Expected
      dividends
                        
                        
                        -
                        
                        
                        
                        -
 
 Stock
Options
 
 The following incentive stock options
were outstanding at 31 March 2009:
 
 Exercise
      price
                        
                        
                        Number
                          of
      options
                        
                        
                        Remaining
                          contractual
      life (years)$Options
                        
                        
                        1.05
                        
                        
                        
                        1,550,000
                        
                        
                        
                        9.61Options
                        
                        
                        1.00
                        
                        
                        
                        3,210,000
                        
                        
                        
                        8.854,760,000
 
  F -
17
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 The
following is a summary of stock-based compensation activities during the three
month periods ended 31 March 2009 and 2008:
 
 Number
      of
                          shares
                        
                        
                        Weighted
                          average
                          exercise
                          price$Outstanding
      at 1 January 2009
                        
                        
                        4,835,000
                        
                        
                        
                        1.02Granted
                        
                        
                        -
                        
                        
                        
                        -Exercised
                        
                        
                        -Cancelled
                        
                        
                        (75,000
                        )
                        
                        
                        1.00Outstanding
      at 31 March 2009
                        
                        
                        4,760,000
                        
                        
                        
                        1.02Weighted
      average fair value of options granted during the period
                        
                        
                        
                        
                        
                        
                        -
 
 Number
      of
                          shares
                        
                        
                        Weighted
                          average
                          exercise
                          price$Outstanding
      and exercisable at 1 January 2008
                        
                        
                        3,200,000
                        
                        
                        
                        0.30Granted
                        
                        
                        6,380,000
                        
                        
                        
                        1.00Exercised
                        
                        
                        -Cancelled
                        
                        
                        (3,200,000
                        )
                        
                        
                        0.30Outstanding
      and exercisable at 31 March 2008
                        
                        
                        6,380,000
                        
                        
                        
                        1.00Weighted
      average fair value of options granted during the year
                        
                        
                        
                        
                        
                        $
                        1.00
 
 12. Stock-Based
Compensation
 
 The total
estimated fair value of the 1,605,000 stock options which vested during the
three month period ended 31 March 2009 was $1,497,220 ($0.93 per
option).  During the three month period ended 31 March 2009,
stock-based compensation of $1,497,220 (31 March 2008 - $Nil, 31 March 2007 -
$Nil, cumulative - $4,155,862) has been recorded in the consolidated statement
of operations with a corresponding amount recorded as contributed surplus in
stockholders’ equity.
 
  F -
18
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 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 applying the guidance
provided by SAB 107.
 
 The
following assumptions were used for the Black-Scholes valuation of stock options
granted:
 
 2009
                          
                          
                          2008Risk
      free interest rate
                          
                          
                          -
                          
                          
                          
                          3.65
                          %Expected
      life
                          
                          
                          -
                          
                          
                          10
      yearsAnnualized
      volatility
                          
                          
                          -
                          
                          
                          
                          149
                          %Expected
      dividends
                          
                          
                          -
                          
                          
                          
                          -
 
 13.
              Income Taxes
 
 The
Company has losses carried forward for income tax purposes to 31 March
2009.  There are no current or deferred tax expenses for the period
ended 31 March 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
                          three
      month
                          period
      ended
                          31
      March 2009
                        
                        
                        For
      the
                          three
      month
                          period
      ended
                          31
      March 2008$
                        
                        
                        
                        $Deferred
      tax asset attributable to:Current
      operations
                        
                        
                        901,203
                        
                        
                        
                        404,133Amortization
                        
                        
                        (7,182
                        )
                        
                        
                        (1,239
                        )Stock
      based compensation
                        
                        
                        (509,055
                        )
                        
                        
                        -Less:
      Change in valuation allowance
                        
                        
                        (384,966
                        )
                        
                        
                        (402,894
                        )Net
      refundable amount
                        
                        
                        -
                        
                        
                        
                        -
 
 
  F -
19
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 The
composition of the Company’s deferred tax assets as at 31 March 2009and 31 December 2008 is as
follows:
 
 As
      at 31
                          March
                          2009
                        
                        
                        As
      at 31
                          December
      2008
                          (Audited)$
                        
                        
                        
                        $Net
      income tax operating loss carryforward
                        
                        
                        (4,931,395
                        )
                        
                        
                        (3,799,141
                        )Statutory
      federal income tax rate
                        
                        
                        34.15
                        %
                        
                        
                        34.15
                        %Effective
      income tax rate
                        
                        
                        0.00
                        %
                        
                        
                        0.00
                        %Deferred
      tax assetsTax
      loss carryforward
                        
                        
                        1,684,071
                        
                        
                        
                        1,296,269Less:
      Valuation allowance
                        
                        
                        (1,684,071
                        )
                        
                        
                        (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 31
March 2009, the Company has an unused net operating loss carryforward balance of
approximately $4,931,395 that is available to offset future taxable
income.  This unused net operating loss carryforward balance for
income tax purposes expires between the years 2008 to 2029.
 
 14. Supplemental
Disclosures with Respect to Cash Flows
 
 For
      the period from the date of inception on 6 March 2000 to 31 March
      2009
                          
                          
                          For
      the three month period ended 31 March 2009
                          
                          
                          For
      the three month period ended 31 March 2008
                          
                          
                          For
      the three month period ended 31 March 2007$
                          
                          
                          
                          $
                          
                          
                          
                          $
                          
                          
                          
                          $Cash
      paid during the year for interest
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Cash
      paid during the year for income taxes
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
 
 During
the year ended 31 December 2008, the Company issued 500,000 common shares valued
at $0.70 per 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 share in pursuant to the Peruvian Gold Sands assignment
agreement (Notes 7 and 11).
  F -
20
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 
 During
the year ended 31 December 2008, the Company issued 300,000 common shares valued
at $0.70 per 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 $25,253 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 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).
 
 During
the three month period ended 31 March 2009, director and shareholder of the
Company made contributions to capital for management fees and rent of $Nil (31
March 2008 - $Nil, 31 March 2007 - $Nil, cumulative - $12,000) and $Nil (31March
2008 - $Nil, 31 March 2007 - $600, cumulative - $3,000)
respectively.  This amount has been recorded as an increase in
expenditures and an increase in additional paid-in capital (Note
10).
 
 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).
 
 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
Event
 
 i.
              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. This amount was received as share
      subscriptions in advance at 31 March 2009 (Note
  11).
 
 ii.
              On
      12 March 2009, the Company entered into an amending agreement (the
      “Peruvian Amendment”) with Temasek to acquire the remaining 75% of the
      Peruvian Gold Sands property (Note
7).
  F -
21
 Table of Contents
  Constitution
Mining Corp.
 (An
Exploration Stage Company)
 Notes to
Consolidated Financial Statements
 (Expressed
in U.S. Dollars)
 (Unaudited)
 31
March 2009
 
 Under the
Peruvian Amendment, the Company may exercise the second 25% option by fulfilling
the issuance of 2,000,000 common shares of the Company as soon as practicable
and pay $1,250,000 by 29 September 2009. The Company must also pay interest on
any unpaid amount of the option payment of $1,250,000 at 5% per annum accruing
from 12 May 2009 to the date that payment is made (Note 7).
 
 iii.
              On
      5 May 2009, the Company and PMSA entered into an amending assignment
      agreement (the “Atena Amendment”) whereby 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 of the Company as required under the Atena Agreement (Note
      7).
 
 iv.
              On
      5 May 2009, the Company and PMSA entered into an amending agreement (the
      “Cerro Amarillo Amendment”) whereby 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 of the Company as required under the Cero Amarillo Agreement
      (Note 7).
 
 v.
              On
      5 May 2009, the Company  and Silvia Rodriguez, owner of the
      Properties, entered into an amending  assignment agreement (the
      “Amira Amendment”) whereby the payment originally due on 19 January 2009
      under the Amira Agreement is due as follows (Note
  7):
 
 a.
              US$25,000
      on or by the end on 30 June 2009;
and
 b.
              US$50,000
      on or before by the end of 30 September
2009.
 
 17. Contingency
 
 In January 2008, a contractor of the
Company was critically injured in an automobile accident while working for the
Company 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 from the driver of the automobile, who is
considered an employee under Argentina labor law.  Although the
Company has not been named as a party in this action, the Company anticipates
that the Company may be named as a defendant in this action.  The
Company has recorded a provision for potential legal claims of $200,000 in the
consolidated financial statements (Note 8).
  F -
22
 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) our short operating history; (ii)
our ability to manage business expansion; (iii) risks and uncertainties relating
to the interpretation of drill results, the geology, grade and continuity of
mineral deposits; (iv) 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; (v) mining and
development risks, including risks related to accidents, equipment breakdowns,
labor disputes or other unanticipated difficulties with or interruptions in
production; (vi) the potential for delays in exploration or development
activities or the completion of feasibility studies; (vii) risks related to the
inherent uncertainty of production and cost estimates and the potential for
unexpected costs and expenses; (viii) risks related to commodity price
fluctuations; (ix) the uncertainty of profitability based upon our history of
losses; (x) risks related to failure to obtain adequate financing on a timely
basis and on acceptable terms for our planned exploration and development
projects; (xi) risks related to environmental regulation and liability; (xii)
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; (xiii) risks related to tax
assessments; (xiv) political and regulatory risks associated with mining
development and exploration; (xv) other risks and uncertainties related to our
prospects, properties and business strategy; (xvi) potential that stockholders
may lose all or part of their investment if we are unable to compete in our
industry; (xvii)  our dependence on key personnel; (xvii) 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;
(xviii) possible issuance of common stock subject to options and warrants
that may dilute the interest of stockholders; (xix) our ability to comply
with Sarbanes-Oxley Act of 2002 Section 404; (xx) our nonpayment of
dividends and lack of plans to pay dividends in the future; (xxi) 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; (xxii) our additional securities
available for issuance, which, if issued, could adversely affect the rights of
the holders of our common stock; (xxiii) our stock price which is likely to
be highly volatile because of several factors, including a
relatively  limited public float; and (xxiv) indemnification of
our officers and directors.





As used
in this Quarterly Report, the terms “we,” “us,” “our,” and “Constitution Mining”
mean Constitution Mining Corp. and our subsidiaries, unless otherwise
indicated.




- 4
-
 Table of Contents




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.





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 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. For this reason, the proposed plan of
exploration described below is exploratory in nature.  To date, we
have not discovered an economically viable mineral deposit on the property
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 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


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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.





Subsequent
to the reporting period, our ongoing need to obtain additional financing to fund
our operations in the current economic environment was the catalyst for
management’s determination to reassess our current direction and proposed plans
for exploration.  Following this reassessment, our management has
determined that it would be in our best interest to focus our exploration
efforts for at least  the remainder of 2009 exclusively on our
properties which management believe are the most promising within a limited
geographical area.  As a result, we have decided to postpone
indefinitely our exploration program on the properties located in the Salta and
Mendoza provinces of Argentina and to allocate our resources exclusively to the
exploration and development of our property interests in northeastern
Peru.





Peru
Property




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 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
ANP





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Alana
      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
              MansericheDelfina
      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 issued
2,000,000 shares of our common stock to Temasek in accordance with the terms of
the Option Agreement and completed the acquisition of the initial twenty-five
percent option, which provided for the acquisition of a twenty-five percent
interest in the Mineral Rights.




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:




-
            payment
      of an additional $1,250,000 to Temasek, and-
            issuance
      of 2,000,000 additional shares of our common stock to
    Temasek.




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Subsequent
to the reporting period, we entered into an agreement with Temasek to amend the
Option Agreement (the “Amended Option Agreement”) in order to revise the
conditions required for 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 6
      months from the Effective Date or as soon as practicable thereafter,
      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 that payment is
    made.





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 within twelve months of the Effective Date:




·
            payment
      of an additional $3,000,000 to Temasek, and·
            issuance
      of 2,000,000 additional shares of our common stock to
    Temasek.




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:




·
            payment
      of an additional $5,000,000 to Temasek, and·
            issuance
      of 4,000,000 additional shares of our common stock to
    Temasek.




Upon our
acquisition of a 100% interest in the Mineral Rights, Temasek will hold its
single share of Minera Marañón in trust for our sole benefit and shall hold the
share strictly in accordance with our instructions.




Upon our
acquisition of 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
exercise the second twenty-five percent option, resulting in our acquisition of
a fifty percent interest in the Mineral Rights, and we fail to acquire a one
hundred percent interest in the Mineral Rights, we will form a joint
venture with Temasek in which we will be wholly responsible for developing a
feasible mining project and all necessary facilities and Temasek shall retain a
carried free interest in the mining rights.  If we do not develop a
feasible mining project within three years of the Effective Date, we will be
responsible 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





We have commenced our exploration and
development program on the Peru property.  Since the identification
and acquisition of the Peru property in September 2008, we 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;


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·
            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 received a preliminary master plan which indicated the
      size and scope of our projected operations and areas where more
      information is required.





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 has been set up in
the town of Saramiriza.  A seismic survey will be conducted along selected
lines across the Marañón gravels in order to define the limit of the gold
bearing sands and gravels.  This information is needed to plan a drilling
program and to assist with locating drill collar positions.  The selection
of seismic lines will 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.





Drilling is expected to commence in
early June 2009 and continue for a period of 18 months.We recently
purchased churn drilling equipment in the United States and are in the
process of shipping this equipment to Peru.We
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 which will
sustain trial or pilot mining by a bucket wheel dredge connected to a floating
processing plant.  An additional 300 holes are anticipated to be
drilled to a depth of 50m for the drilling of fences of holes at one-kilometer
spacing across the 20km-wide alluvial field in order to extend the
mineralization and the resource potential to sustain a fleet of high capacity
dredges and floating plants.Bulk samples
collected by backhoe and/or excavator will be required for metallurgical testing
as well as to confirm drill results.  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 an 18 month period. 
Permitting work will 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.


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Anticipated costs for the next twelve
months are as follows:





Activity
                  USD 000sMINERAL
      PROPERTY COSTS:Annual
      Fee
                  200Surface
      Rights Access
                  150EXPLORATIONMapping
                  230Geophysics
      - Seismic
                  400DRILLINGReconnaissance
                  1,500Resource
      Definition
                  2,000TECHNICAL
      SERVICESConsultants
                  580Personnel
                  430CAMP
      AND FIELD EXPENSESCamp
                  630Field
                  250TRANSPORT
      AND LOGISTICSAir
      Transport
                  480Water
      Transport
                  120Ground
      Transport
                  150EQUIPMENT
      & PERMITTING
                  210COMMUNITY
      OUTREACH
                  300ADMINISTRATION
                  150TOTAL
                  7,780




Atena
Property




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 (the “Atena Option”) to purchase certain mineral rights
on properties known as the Atena Gold Project (“Atena”) located in the Salta
Province of Argentina (the “Atena Property”).  The Atena Property
consists of an aggregate 3,676 hectares.  PMSA acquired its right to
explore and the Atena Option to purchase the mineral rights to these properties
from Rio Tinto Mining & Exploration Ltd., Argentine Branch.





The mineral rights on the Atena
Property consist of mining claims referred to in Argentina as “minas” which
remain valid so long as the annual fee referred to as “canon minero” is
paid.





Pursuant to the terms of the assignment
agreement, we have issued to PMSA 1,500,000 shares of our common stock and paid
PMSA $60,000.  We will acquire 100% of this Atena Option if we incur a
minimum of an additional $3,500,000 in work commitment expenditures on the Atena
Property (the “Atena Expenditures”) and issue 6,000,000 shares of our common
stock to PMSA in accordance with the following schedule:


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·
            $500,000
      in Atena Expenditures, plus an additional issuance of 2,000,000 shares of
      our common stock on or before March 15, 2009;·
            an
      additional $1,000,000 payment in Atena Expenditures, plus a further
      issuance of 4,000,000 shares of our common stock on or before March 15,
      2010; and





·
            a
      final $2,000,000 payment in Atena Expenditures on or before March 15,
      2011.





As of
March 15, 2009, we had not issued the 2,000,000 shares of our common stock nor
incurred $500,000 in Atena Expenditures as required under the assignment
agreement in order to be able to exercise the Atena
Option.    PMSA agreed to waive the obligation that we incur
$500,000 in Atena Expenditures by March 15, 2009 following our issuance to PMSA
of  2,000,000 shares of our common stock as required under the assignment
agreement.





We will acquire 100% of the Atena
Option if we have completed our commitments under the Atena Expenditures
and issued shares of our common stock to PMSA, as set forth above, on or before
March 15, 2011.  Following the completion of this acquisition and
payment of the consideration set forth above, we will grant to PMSA a 1% net
smelter returns royalty.  The Atena Option grants us the exclusive
possession of the properties for mineral exploration, together with the right to
purchase the minerals rights to these properties upon exercise of the Atena
Option.





Proposed
Exploration Program




A Phase 1 exploration program was
completed on the Atena Property in February 2008.  During this phase,
field geologists collected composite samples approximately every 50 metres along
the entire-36 kilometre vein system on the project area.  The samples were
sent to ALS Chemex, the South American division of the ALS Laboratory Group, for
analysis.  Results of these samples indicated an anomalous area of
approximately five kilometres by three kilometres,  which is the subject of
follow-up exploration in a Phase 2 program.  The Phase 2 program comprises
of trenching and detailed sampling, as well as detailed geological
mapping.  These activities are expected to outline the shape and tenor
of pay shoots which can then be tested in the subsurface by diamond drilling in
a Phase 3 program.  While the project area lies at 3900m above sea
level in the altiplano or puna of northwest Argentina, fieldwork can be
conducted all year-round.  The Phase 2 program has been completed and
we are awaiting the results.





Subsequent to the reporting period, our
management determined that it would be in our best interest to suspend our
exploration program on the Atena Property for at least the remainder of 2009 and
exclusively pursue the exploration and development of our property interests in
northeastern Peru. As a result, the commencement of the Phase 3 drilling program
has been postponed indefinitely.




Amira,
Amira Norte and Esparta II Properties




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 (the “Amira-Esparta 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”).  Pursuant to the terms of our agreement
with PMSA, PMSA has assigned to us all of PMSA’s rights and obligations under an
option agreement by and between PMSA and the registered titleholder to the
Amira-Esparta Properties, Ms. Silvia Rene Rodriguez, in consideration of our
recognizing to PMSA a 1% net smelter returns royalty on the Amira-Esparta
Properties.  The mineral rights underlying the Amira-Esparta
Properties consist of manifestations of discovery (referred to as
“manifestciones de descubrimientos”), which are a form of mineral title that
allows the conversion of


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exploration
concessions (referred to as “cateos”)to
mining claims (referred to as “minas”). The manifestations of discovery are used
as a basis for location of mining claims, but do not have a definite area until
the claims are proposed.  Within a period following designation of a
manifestation of discovery, the claimant may do further exploration, if
necessary, to determine the size and shape of the ore body.   All of
these forms of mineral title require the payment of an annual fee referred to as
“canon minero.”  In order for us to keep our interest in good standing
and to exercise the Amira-Esparta Option, we must make the following payments to
Ms. Rodriguez, as set forth in the underlying option agreement:





·
            $75,000
      on or before January 19, 2009;·
            an
      additional payment of $150,000 on or before January 19,
    2010;





·
            an
      additional payment of $200,000 on or before January 19, 2011;
      and·
            a
      final payment of $1,000,000 on or before January 19, 2012, which shall
      also be the final payment required and such payment will cause the
      Amira-Esparta Option to have been automatically
  exercised.





As of
January 19, 2009, we had not paid Ms. Rodriguez the $75,000 payment required in
order to be able to exercise the Amira-Esparta
Option.    Ms. Rodriguez has agreed to modify the payment
terms for this payment.  As a result of this modification to the
payment terms, we are now required to pay Ms. Rodriguez $25,000 on or before
June 30, 2009 and $50,000 on or before September 30, 2009 in order to satisfy
this obligation.




Proposed
Exploration Program




The Amira-Esparta Properties located in
the province of Salta, Argentina, are located in close proximity to our
interests discussed above under the subheading “Atena Property” and together
these properties form a part of a mining project referred to as the “Atena
Project.”  The location and scope of our exploration program
activities on the Atena Property will be extended to also include the
Amira-Esparta Properties.





Cerro
Amarillo Property





On January 8, 2008, we entered into an
assignment agreement with PMSA to acquire PMSA’s right to explore and option
(the “Cero Amarillo 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”).  The
Cerro Amarillo Property consists of an aggregate 14,221.7 hectares.





The mineral rights underlying the Cerro
Amarillo Property consist of manifestations of discovery (referred to as
“manifestciones de descubrimientos”), which are a form of mineral title that
allows the conversion of exploration concessions (referred to as “cateos”)to
mining claims (referred to as “minas”). The manifestations of discovery are used
as a basis for location of mining claims, but do not have a definite area until
the claims are proposed.  Within a period following designation of a
manifestation of discovery, the claimant may do further exploration, if
necessary, to determine the size and shape of the ore body.   All of
these forms of mineral title require the payment of an annual fee referred to as
“canon minero.”





Pursuant to the terms of the assignment
agreement, we issued to PMSA 300,000 shares of our common stock and paid PMSA
$10,000 in July 2008.  We will acquire 100% of the Cerro Amarillo
Option if we incur a minimum of $450,000 in work commitment expenditures on this
property (the “Cerro Amarillo Expenditures”) and issue 2,100,000 shares of our
common stock to PMSA in accordance with the following schedule:


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·
            $200,000
      in Cerro Amarillo Expenditures, plus a further issuance of 300,000 shares
      of our common stock on or before January 8, 2009;·
            an
      additional $250,000 payment of Cerro Amarillo Expenditures, plus a further
      issuance of 600,000 shares of our common stock on or before January 8,
      2010;





·
            an
      additional issuance of 600,000 shares of our common stock on or before
      January 8, 2011; and·
            a
      final issuance of 600,000 shares of our common stock on or before January
      8, 2012.





As of
January 8, 2009, we had not issued the 300,000 shares of our common stock nor
incurred $200,000 in Cerro Amarillo Expenditures as required under the
assignment agreement in order to be able to exercise the Cerro Amarillo
Option.  PMSA agreed to waive the obligation that we incur $200,000 in
Cerro Amarillo Expenditures by January 8, 2009 following our issuance to PMSA of
the 300,000 shares of our common stock as required under the assignment
agreement.





If we exercise the Cerro Amarillo
Option to acquire 100% of the Cerro Amarillo Property, then we must issue an
additional 3,000,000 shares of our common stock to PMSA.  The Cerro
Amarillo Option is subject to a 1% net smelter returns royalty on the Cerro
Amarillo Property in favor of the underlying titleholder.  The Cerro
Amarillo Option contains certain work expenditure obligations, which are
intended to be satisfied by the Cerro Amarillo Expenditures.




Proposed
Exploration Program




The Cerro
Amarillo Property is untested property that has drill targets indicated by
geophysics, as well as a number of other unexplored prospective areas. 
Although a number of drill targets have been outlined by
previous work, recent exploration work involved additional exploration
by detailed mapping and sampling on the whole of the Cerro Amarillo
Property, as well as the region with a view to identifying additional drill
targets before undertaking a first stage drill program.  In addition, some
ten kilometer of access road will need to be constructed in anticipation of the
drill program.




With respect to the timeframe,
fieldwork can be conducted for approximately nine months of each year at the
Cerro Amarillo Property, which lies in a snow belt.  Because of the
onset of the austral winter and the occurrence of significant snow, the drilling
can only commence in the spring and summer seasons.





In February 2008, we commenced
exploration on the Cerro Amarillo Property in Mendoza, Argentina.  The
Phase 1 program, designed to further identify trench and drill targets,
comprises detailed mapping and sampling together with ground magnetic
surveying.   We have established a camp on the Cerro Amarillo
Property from which exploration activities will be conducted.  An
international geological consultant, supported by local geologists and field
technicians, led this project, which was completed in eight weeks.





The detailed mapping confirmed that the
Cerro Amarillo Property occurrences contain a classical porphyry-style
mineralized system that includes stockwork, disseminated, breccias, skarn, and
vein-types of mineralization.  These types of mineralization are zoned with
a central porphyry plug containing vein stockworks together with disseminated
mineralization  This plug is surrounded by mineralized hydrothermal
breccias (shattered rock) with abundant pyrite that may result in an excellent
supergene trap


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for
leached copper and gold.  Skarn replacement mineralization occurs in almost
a perfect ring at the intersection of the vertical cylinder of breccias and the
shallow-dipping calcareous sedimentary sequence.  At the current level of
erosion, almost the entire ring is exposed.  Sparse peripheral veins occur
out to a radius of approximately one kilometer.  The unique level of
exposure of this system could potentially allow the core stockwork-disseminated
mineralization, the supergene breccias, and the skarns to be extracted in a
single open-pit with a very low stripping ratio.





The
second phase was expected to commence in either September of October of 2009
following the grant of a permit for the construction of a drill road up to the
prospect.  In addition to building the access road, we planned to
establish an exploration camp on the property and carry our the first 1000
meters of a 3000 meter drill program to test the drill targets on the Cerro
Amarillo Property.  The remaining 2000 meters of drilling was expected
to be completed in early in 2010.





Subsequent to the reporting period, our
management determined that it would be in our best interest to suspend our
exploration program on the Cerro Amarillo Property for at least the remainder of
2009 and exclusively pursue the exploration and development of our property
interests in northeastern Peru. As a result, the commencement of the drilling
program and construction of a drill road up to the prospect has been postponed
indefinitely.





Results
of Operations for the Three Months Ended March 31, 2009 and 2008




We
have not generated any revenues from operations since our
inception.





We incurred operating expenses in the
amount of $2,655,738 for the three months ended March 31, 2009, as compared to
operating expenses of $1,489,575 for the three months ended March 31,
2008.  The substantial increase in our operating expenses for the
three months ended March 31, 2009, as compared to the three months ended March
31, 2008, relates to significant stock-based compensation expenditures incurred
during the three months ended March 31, 2009.  We
reported stock-based compensation of $1,497,220 for the three months ended
March 31, 2009, compared to no stock-based compensation for the three months
ended March 31, 2008.





We
incurred exploration costs of $482,151 for the three months ended March 31, 2009
compared to$421,491
for the three months ended March 31, 2008.  Exploration costs incurred
during the three months ended March 31, 2009 related to the initial phases of
our exploration programs on the Peru property. We incurred professional
fees of $161,625 for the three months ended March 31, 2009, compared to
professional fees of $150,249 for the three months ended March 31,
2008.  Professional fees, which primarily include legal and accounting
expenses, increased because our legal and accounting needs increased as a result
of changing the focus of our operations in November 2007.  We reported
management fees of $74,076 for the three months ended March 31, 2009, compared
to $78,000 for the three months ended March 31, 2008. We incurred investor
relations expenses of $259,126 for the three months ended March 31, 2009,
compared to $94,993 for the three months ended March 31, 2008.  The
increase in investor relations costs during the three months ended March 31,
2009, as compared to the prior year, is attributable to expenditures associated
with increasing awareness of our current and future operations.





We received other income of $5,142
during the three months ended March 31, 2009, as compared to other income of
$300,950 for the three months ended March 31, 2008.  The substantial
decrease in other income is attributable to a one time event in 2008 where we
assigned all of our right, title and interest in and to a leasehold interest in
an oil and gas property located in St. Francis County, Arkansas to an assignee
who agreed to assume all of our outstanding payment obligations as consideration
for the assignment.  In connection with this assignment, we reported
other income of $307,115 during the three months ended March 31,
2008.


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As a
result of the above, for the three months ended March 31, 2009, we reported a
net loss of $2,650,596, as compared to a net loss of $1,188,625for
the three months ended March 31, 2008.  The increasein our net loss was
primarily attributable to increased operating expenses incurred as a result of a
significant increase in significant stock-based compensation expenditures
incurred during the three months ended March 31, 2009, as compared to the three
months ended March 31, 2008.





As a
result of the above, the basic and diluted loss per common share was $0.045 and
$0.024 for the three months ended March 31, 2009 and 2008,
respectively.





Liquidity
and Capital Resources




At March
31, 2009, we had cash and cash equivalents of $35,490, as compared to $163,307
at March 31, 2008, and a working capital deficit of $1,164,952, as compared
to $235,635 at March 31, 2008.





During
the three 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 $100,000 in ongoing general and administrative expenses
per month for the next twelve months, for a total anticipated expenditure of
$1,200,000 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, 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 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 subsequent to the
reporting period that it would be in our best interest to postpone indefinitely
our exploration program on the properties located in the Salta and Mendoza
provinces of Argentina for at least the remainder of 2009 and exclusively pursue
the exploration and development of our property interests in northeastern
Peru.  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.


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Cash
Used in Operating Activities





Operating
activities for the three months ended March 31, 2009 and 2008 used cash of
$160,832 and $553,622, respectively, which reflect our recurring operating
losses.  Our net loss of $2,650,596 for three months ended March 31,
2009 was the primary reason for our negative operating cash flow, as compared to
our net loss of $1,188,625 for the three months ended March 31,
2008.





Cash
Used in Investing Activities





For the
three months ended March 31, 2009, we used $110,258 in investing activities, as
compared to $44,160 used in investing activities during the three months ended
March 31, 2008.  For the three months ended March 31, 2009, we
purchased $85,258 in equipment, and expended $25,000 in connection with the
acquisition of mineral property interests, as compared to $4,467 in equipment
and $39,693 in website development costs during the three months ended March 31,
2008.





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 three
months ended March 31, 2009 was $240,000 as compared to $706,447 for the three
months ended March 31, 2008. A decrease in the cash flow provided by financing
activities was primarily due to a reduction in equity financing available to us
during the three months ended March 31, 2009 which is attributable to present
market conditions, as compared to the three months ended March 31,
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 March 31,
2009 of $9,524,260 and 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:


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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.




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 SFAS No. 123(R), “Share-Based Payment”, which
establishes accounting for equity instruments exchanged for employee services.
Under the provisions of SFAS No.123(R), 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).  Before January 1,
2006, we accounted for stock-based compensation to employees in accordance with
Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to
Employees,” and complied with the disclosure requirements of SFAS No.
123, “Accounting for
Stock-Based Compensation”.  We adopted SFAS No. 23(R) 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 1 January 2006 have not been restated to reflect the fair value method
of expensing share-based compensation.  Adoption of SFAS No. 123(R) does
not change the way we account for share-based payments to non-employees, with
guidance provided by SFAS No. 123 (as originally issued) and Emerging Issues
Task Force Issue No. 96-18, “Accounting for Equity Instruments
That Are Issued to Other Than Employees for Acquiring, or in Conjunction with
Selling, Goods or Services”.




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 SFAS No.
52, “Foreign Currency
Translation.”  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.


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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 March 31, 2009.  This evaluation was
carried out under the supervision and with the participation of our Chief
Executive Officer, Mr. Willem Fuchter, and our former Chief Financial Officer,
Mr. Peter Wiget.  Based upon that evaluation, our Chief Executive
Officer and former Chief Financial Officer concluded that, as of March 31, 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 March 31, 2009 that have materially affected or are reasonably
likely to materially affect such controls.




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PART
II – OTHER INFORMATION




Item 1.      Legal
Proceedings




During the three months ended March 31,
2009, there have been no material developments in the legal proceedings
discussed in our Annual Report on Form 10-K for the year ended December 31,
2008.




Item 1A.Risk Factors




Not Applicable.




Item 2.  Unregistered Sales
of Equity Securities and Use of Proceeds




Subsequent to the reporting period on
April 17, 2009, we sold 200,000 units at $0.80 per unit (the "Units") to a
single investor.  Each Unit consists 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 issuance date and terminating one year from the closing date of the
offering.  As a result, we issued a total of 200,000 shares of common stock
and warrants to purchase 200,000 shares of our common stock in connection with
this sale of securities.  The exercise price for the Warrant is $0.70
per share of common stock.  The gross proceeds we received from this sale
of securities was $160,000.





These securities were offered and sold
in reliance on Regulation S promulgated under the Securities Act of 1933, as
amended (the "Securities Act").  In connection with this offer and
sale of securities, we relied on the investor’s written
representations.  The investor was not a "U.S. person" as that term is
defined in Rule 902(k) of Regulation S under the Securities Act.  The
investor represented that it was 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 the  investor.  The  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.





Item 3.   Defaults upon Senior
Securities




None.




Item
4.Submission of Matters to a Vote of Security Holders




No matters have been submitted to our security holders for a vote, through the
solicitation of proxies or otherwise, during the quarter ended March 31,
2009.






We held our Annual Meeting of Shareholders on April 27, 2009. The director
nominees named below were elected to a term expiring at the 2010 Annual Meeting
of Shareholders by the indicated votes cast for and withheld with respect to
each nominee.







Name
      of Nominee
                
                For
                
                WithheldWillem
      Fuchter
                
                30,805,871
                
                0Patrick
      Gorman
                
                31,270,772
                
                0Hernan
      Zaballa
                
                30,806,486
                
                0Gary
      Artmont
                
                30,806,871
                
                0Robert
      Van Tassell
                
                31,270,772
                
                0Alois
      Wiget
                
                30,805,871
                
                0Michael
      Stocker
                
                30,806,871
                
                0





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All of the other proposals, as set
forth in our proxy statement for the 2009 Annual Meeting of Shareholders, were
approved by our shareholders as follows:




For
                
                Against
                
                AbstainApproval
      of the Stock Incentive Plan, as amended
                
                31,200,127
                
                100,525
                
                70,645Ratification
      of the selection of James Stafford, Inc., Chartered Accountants to serve
      as our independent registered public accounting firm for
    2009.
                
                25,382,572
                
                20,385
                
                0





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.




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SIGNATURES




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




Constitution
      Mining Corp.Date:
            May
      15, 2009By:
      /s/ Willem
      Fuchter
              Willem
      Fuchter
              Title:Chief
      Executive Officer and DirectorDate:
            May
      15, 2009By:
      /s/ Kenneth
      Phillippe
              Kenneth
      Phillippe
              Title:Chief
      Financial Officer

















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CONSTITUTION
MINING CORP.


(the
“Registrant”)


(Commission
File No. 000-49725)


Exhibit Index


to


Quarterly
Report on Form 10-Q


for
the Quarter Ended March 31, 2009





Exhibit
                  No.
                Description
                Incorporated
      Herein by
                  Reference
      to
                Filed
      Herewith10.1
                Amendment No. 1 to Mineral Right Option Agreement, dated
      September 29, 2008, between Temasek Investments Inc. and Constitution
      Mining Corp.
                
                X31.1
                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








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