UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C.  20549  FORM 20-F  [] REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 OR [   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to __________ OR [   ] SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report  Commission File Number: 001-32556  RADIUS GOLD INC. (Exact name of Registrant as specified in its charter)  British Columbia, Canada (Jurisdiction of incorporation or organization)  200 Burrard Street, Suite 650, Vancouver, British Columbia, Canada V6C 3L6 (Address of principal executive offices)  Securities to be registered pursuant to Section 12(b) of the Act:  Title of each className on each exchange on which registeredNoneNone  Securities to be registered pursuant to Section 12(g) of the Act:  Common Shares, without par value (Title of Class)  Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None  Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report. 86,675,617 Common Shares, no par value  Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.   Yes ___     No  X  If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.   Yes ___   No  X  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past ninety days.            Yes XNo ____  Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     Yes ___     No  X  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer.  See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act.  Large accelerated filer ___  Accelerated filer  ___ Non-accelerated filer  X  Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:  U.S. GAAP [   ] International Financial Reporting Standards as issued Other [  ] by the International Accounting Standards Board [X]  Indicate by check mark which financial statement item the registrant has elected to follow: Item 17 X Item 18 ___  If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No X   N/A   Index to Exhibits on Page 56    TABLE OF CONTENTSPART IItem 1.Identity of Directors, Senior Management and Advisors1Item 2.Offer Statistics and Expected Timetable1Item 3.Key Information1Item 4.Information on the Company6Item 5.Operating and Financial Review and Prospects21Item 6.Directors, Senior Management and Employees32Item 7.Major Shareholders and Related Party Transactions40Item 8.Financial Information41Item 9.The Offer and Listing41Item 10.Additional Information44Item 11.Quantitative and Qualitative Disclosures about Market Risk52Item 12.Description of Other Securities Other Than Equity Securities52PART IIItem 13.Defaults, Dividend Arrearages and Delinquencies53Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds53Item 15.Controls and Procedures53Item 16.Reserved54Item 16A.Audit Committee Financial Expert54Item 16B.Code of Ethics54Item 16C.Principal Accountant Fees and Services54Item 16D.Exemptions from Listing Standards for Audit Committees55Item 16E.Purchase of Equity Securities by the Issuer and Affiliated Purchasers55Item 16F.Changes in Registrant's Certifying Accountant55Item 16G.Corporate Governance55Item 16H.Mine Safety Disclosure55PART IIIItem 17.Financial Statements55Item 18.Financial Statements56Item 19.Exhibits56                    GLOSSARY OF TECHNICAL TERMS  In this Annual Report, the following technical terms have the following meanings:  Vein, Veinlet (small)A tabular mineral deposit formed within or adjacent to faults or fractures by the deposition of minerals from hydrothermal fluids.AditA passage driven horizontally into a mountainside providing access to a mineral deposit from the surface of the working of a mine.AgThe elemental symbol for silver.AlterationThe chemical and mineralogical changes in a rock mass resulting from the passage of hydrothermal fluids.Anomalous or anomaliesA sample or location in which either (i) the concentration of an element(s) or (ii) geophysical response is significantly different from the average background values that typify an area.AnomalyThe geographical area corresponding to anomalous geochemical or geophysical values.ArsenopyriteA sulphide of arsenic and iron.AsThe elemental symbol for arsenic.AssayAn analysis to determine the presence, absence or quantity of one or more elemental components.AuThe elemental symbol for gold.Au Eq. g/tDenotes gold equivalent grades: gold grade plus silver grades which have been converted to gold grades by using a ratio generally based on the prevailing spot prices of gold and silver.BackgroundThe average concentration of an element or typical geophysical response in an area.BrecciaA rock consisting of sharp fragments in fine grained material.CretaceousThe geologic period extending from 135 million to 63 million years ago.DevelopmentPreparation of a mineral deposit for commercial production including installations of plant and machinery and the construction of all related facilities.Diamond drillA type of rotary drill in which the cutting is done by abrasion rather than percussion. The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face. The drill cuts a core of rock which is recovered in long cylindrical sections, an inch or more in diameter.  DipThe angle which a geological structure forms with a horizontal surface, measured perpendicular to the strike of the structure.EpithermalA term applied to high-level hydrothermal systems which form at depths of ~1 km to surficial hotspring settings.ExplorationThe prospecting, mapping, sampling, remote sensing, geophysical surveying, diamond drilling and other work involved in the searching for ore bodies.FaultA fracture in a rock across which there has been displacement.FractureBreaks in a rock, usually planar.GPSGlobal Positioning System  a space based satellite positioning system whereby receiver units on the ground or in the air use triangulation from known satellite signals to derive a location in three dimensional space.GradeThe concentration of an ore metal in a rock sample, given either as weight percent for base metals (e.g. Cu, Zn, Pb) or in grams per tonne (g/t) or ounces per short ton (oz/t) for precious metals. The grade of an ore deposit is calculated, often using sophisticated statistical procedures, as an average of the grades of a very large number of samples collected from throughout the deposit.g/tGrams of per metric tonne. Usually used in association with gold or silver.Heap leachA process used for the recovery of metals from crushed ore in heaps using a suitable leaching solution.Hectare or haAn area totaling 10,000 square metres.Highly anomalousAn anomaly which is 50 to 100 times average background.Host rockThe body of rock in which mineralization of economic interest occurs.HydrothermalPertaining to hot fluids, dominantly water, in the earths crust which may carry metals and other compounds in solution to the site of ore deposition or wall rock alteration.ICPA type of assay technique.IntrusiveA rock mass formed below earths surface from magma which has intruded into a preexisting rock massMesothermalA hydrothermal ore deposit typically a vein system- formed at intermediate temperatures (200-300oC) and pressures/depths.Mineral resource,
measured mineral  resource,
indicated mineral resource,
inferred mineral resourceUnder CIM standards, a mineral resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the earths crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.

The terms mineral resource, measured mineral resource, indicated mineral resource, and inferred mineral resource used in this Annual Report are mining terms defined under CIM standards and used in accordance with Canadian National Instrument 43-101  Standards of Disclosure for Mineral Projects. They are not defined terms under United States standards and generally may not be used in documents filed with the SEC by U.S. companies.

A mineral resource estimate is based on information on the geology of the deposit and the continuity of mineralization. Assumptions concerning economic and operating parameters,including cut-off grades and economic mining widths, based on factors typical for the type of deposit, may be used if these factors have not been specifically established for the deposit at the time of the mineral resource estimate. A mineral resource is categorized on the basis of the degree of confidence in the estimate of quantity and grade or quality of the deposit, as follows:

Inferred mineral resource:Under CIM standards, an inferred mineral resource is that part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Indicated mineral resource:Under CIM standards, an indicated mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

Measured mineral resource:Under CIM standards, a measured mineral resource is that part of a mineral resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.MineralizationMinerals of value occurring in rocks.MtA million tonnes.OreA natural aggregate of one or more minerals which, at a specified time and place may be mined, processed and sold at a profit, or from which some part may profitably be separated.Ounce / ozTroy ounce, equal to approximately 31.103 grams.OutcropAn exposure of rock at the earths surface.QuartzA common rock-forming mineral (SiO2) that is frequently a dominant constituent of veins, especially those containing gold and silver mineralization.RCReverse Circulation drilling.RhyoliteA silica-rich volcanic rock chemically equivalent to granite. Usually light colored, very fine-grained or glassy-looking.Silicification / silicifiedComplete or partial replacement of a rock by quartz, often during hydrothermal alteration.StrikeAzimuth of a plane surface aligned at right angles to the dip of the plane used to describe the orientation of stratigraphic units or structures.TertiaryThe geological period extending from the end of the Cretaceous (65 million years ago) to approximately 2 million years before the present time.TonneA metric tonne, 1000 kilograms or 2,204.6 pounds.UTMThe UTM (Universal Transverse Mercator) system is a world-wide geographic coordinate system defined in meters.    NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended (the Exchange Act), which represent expectations or beliefs of the Company about future events. These statements can be identified generally by forward-looking words such as expect, believe, anticipate, plan, intend, estimate, may, will or similar words.  Information concerning the interpretation of drill results and mineral resource estimates also may be deemed to be forward-looking statements, as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed.  Forward-looking statements are statements about the future and are inherently uncertain, and actual achievements of the Company or other future events or conditions may differ materially from those reflected in the forward-looking statements due to a variety of risks, uncertainties and other factors, including, without limitation, those described in Item 3.D. of this Annual Report under the heading, Risk Factors, and elsewhere in this Annual Report.  Some of these risks and assumptions include:  · completion of environmental review; · general economic and business conditions, including changes in exchange rates; · prices of natural resources, costs associated with mineral exploration and development, and other economic conditions; · natural phenomena; · actions by government authorities, including changes in government regulation; · uncertainties associated with legal proceedings; and · changes in the resources market.  The Companys forward-looking statements contained in this Annual Report are made as of the respective dates set forth in this Annual Report.  Such forward-looking statements are based on the beliefs, expectations and opinions of management as of the date the statements are made.  The Company does not intend to update these forward-looking statements.  For the reasons set forth above, investors should not place undue reliance on forward-looking statements. You should carefully review the cautionary statements and risk factors contained in this and other documents that we file from time to time with the Securities and Exchange Commission (the SEC).       PART I   Item 1. Identity of Directors, Senior Management and Advisers.  A. Directors and Senior Management. Not Applicable  B. Advisers. Not Applicable  C. Auditors. Not Applicable   Item 2. Offer Statistics and Expected Timetable. Not Applicable   Item 3. Key Information.  A. Selected Financial Data. The following tables set forth and summarize selected consolidated financial data for the Company, prepared in accordance with International Financial Reporting Standards (IFRS) as issued bythe International Accounting Standards Board (IASB) for 2011 and 2010 and in accordance with Canadian generally accepted accounting principles (GAAP), reconciled to U.S. GAAP, for 2009, 2008 and 2007.  The Companys transition date to IFRS was January 1, 2010.  The financial data for dates and periods prior to January 1, 2010 have not been restated.  The consolidated financial statements have been audited by BDO Canada LLP, Chartered Accountants as at and for the years ended December 31, 2011 and 2010 and are reported in Canadian dollars. The selected financial data should be read in conjunction with Item 5, Operating and Financial Review and Prospects and in conjunction with the Consolidated Financial Statements of the Company and the Notes thereto contained elsewhere in this Annual Report.  The Companys fiscal period ends on December 31 of each year. The following are summaries of certain selected financial information for the Companys most recently completed fiscal year and the fiscal year ended December 31, 2010.    - 1 -    IFRS(in 000s, except per share data)As at
12/31/11As at
12/31/10Working Capital3,6508,245Resource Properties4,1034,910Long Term Debt--Shareholders Equity(9,576)(13,398)Total Assets10,35114,584Revenue--Net Loss(2,167)(4,578)Loss Per Share(0.03)(0.07)Comprehensive Loss(2,001)(4,952)Dividends Per Share--Weighted Average Number of Shares83,23261,530   Resource property acquisition costs and exploration costs (exploration and evaluation assets) Under IFRS and Canadian GAAP resource property acquisition costs and exploration costs may be deferred and amortized to the extent they meet certain criteria.  Under US GAAP, resource property acquisition costs are considered tangible assets and must be capitalized unless the resource properties do not have proven reserves.  Prior to January 1, 2009, the Companys policy under Canadian GAAP was to defer and amortize mineral property acquisition costs and exploration costs to the extent they meet certain criteria.  Capitalized costs under Canadian GAAP are amortized on a unit-of-production basis based on proved, probable and possible reserves.  During the year ended December 31, 2009, the Company changed its accounting policy for exploration costs under Canadian GAAP by expensing the costs as incurred as it more accurately reflects the exploration industry.  This accounting change was applied retroactively with restatement of prior periods.  As a result of the change in accounting policy there were no ongoing differences between Canadian and US GAAP in the accounting for mineral properties with the exception of mineral property acquisition costs of $4,211,802 previously expensed under US GAAP that remain capitalized to mineral properties under Canadian GAAP.  Except where otherwise indicated, all information extracted from or based on the Consolidated Financial Statements of the Company are presented in accordance with IFRS. No dividends have been declared in any of the years presented above.  Exchange Rate Information In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars.  References in this document to $ and CDN$ refer to Canadian dollars, unless otherwise specified; and references to US$ refer to US dollars.    - 2 -    The following table sets forth the high and low rates of exchange for the Canadian dollar, expressed as Canadian dollars per U.S. dollar, for each month during the previous six months and the average of such exchange rates during the five most recent years ended December 31.  The average rates presented in the table below represent the average of the exchange rates on the last day of each month during a year for the past five fiscal years.  Exchange rates represent the noon buying rate in New York City for cable transfers payable in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.  The noon rate of exchange on April 16, 2012 as set forth in the H.10 statistical release of the Federal Reserve Board, for the conversion of Canadian dollars into United States dollars was US$1.00 = CDN$1,0025.  Exchange Rate U.S. Dollars into
Canadian DollarsHighLowMonth ended March 31, 20121.00130.9848Month ended February 28, 20121.00160.9866Month ended January 31, 20121.02720.9986Month ended December 31, 20111.04031.0106Month ended November 30, 20111.04871.0125Month ended October 31, 20111.06050.9932  AverageFiscal year ended December 31, 20110.9858Fiscal year ended December 31, 20101.0298Fiscal year ended December 31, 20091.1373Fiscal year ended December 31, 200811.0679Fiscal year ended December 31, 200711.0742  1 For December 2008 and prior periods, the exchange rate refers to the noon buying rate as reported by the Federal Reserve Bank of New York.  For January 2009 and later periods, the exchange rate refers to the exchange rate as set forth in the H.10 statistical release of the Federal Reserve Board.  B. Capitalization and Indebtedness. Not Applicable  C. Reasons for the Offer and Use of Proceeds. Not Applicable    - 3 -    D. Risk Factors. There is no assurance that the business of the Company will achieve profitable operations. At December 31, 2011, the Company had not yet achieved profitable operations, has accumulated losses since inception, and is expected to incur further losses in the development of its business.  The Company has depended on financing in order to conduct its planned work programs on mineral properties, meet its ongoing levels of corporate overhead and discharge its liabilities as they come due.  While the Company has been successful in securing financings in the past, there is no assurance that it will be able to do so in the future. Mining operations and exploration activities are subject to various federal, provincial and local laws and regulations. The mineral projects in which the Company has an interest are located in Guatemala, Nicaragua and Mexico.  Mineral exploration and mining activities in these countries may be affected in varying degrees by political instability and government regulations relating to the mining industry.  Any changes in regulations or shifts in political conditions are beyond the control of the Company and may adversely affect its business.  Future operations may be affected in varying degrees by government regulations with respect to restrictions on production, price controls, export controls, income taxes, expropriations of property, environmental legislation and mine safety.                The mining industry is highly speculative and involves substantial risks. Few properties that are explored are ultimately developed into producing mines.  At present, there are no known bodies of commercial ore on any of the Companys properties and the proposed exploration programs are an exploratory search for ore.  Unusual or unexpected formation, formation pressures, fires, power outages, labour disruptions, flooding, explorations, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the conduct of exploration programs.  Although the management of the Company has experience in the exploration and development of mineral properties, it has relied on and may continue to rely upon consultants and others for exploration and operating expertise.  The economics of developing mineral properties is affected by many factors including the cost of operations, variation of the grade of minerals mined and fluctuations in the price of any minerals produced. The Company is dependent on public and private distributions of equity to obtain capital in order to sustain operations. There can be no assurance that the Company will be able to obtain adequate financing in the future or that the terms of such financing will be favourable.  Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and development of its projects with the possible loss of such properties. Dilution from further equity financing. If the Company raises additional funding by issuing additional equity securities, such financing may substantially dilute the interests of existing shareholders of the Company and reduce the value of their investment.    - 4 -    Operating hazards and risks associated with the mining industry could result in the Company having to significantly reduce or cease operations. Hazards such as unusual or unexpected formations and other conditions are involved in mineral exploration and development.  The Company may become subject to liability for pollution, cave-ins or hazards against which it cannot insure or against which it may elect not to insure.  The payment of such liabilities may have a material, adverse effect on the Companys financial position. Title to mineral properties are not guaranteed and could result in future claims against the Company. While the Company has obtained the usual industry standard title reports with respect to its properties which confirms ownership and that there are no registered encumbrances against the properties, this should not be construed as a guarantee of title.  The properties may be subject to prior unregistered agreements or transfers and title may be affected by undetected defects or native land claims.                Permits and licenses may be required in order to carry out business activities. The operations of the Company may require licenses and permits from various governmental authorities.  There can be no assurance that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects.                The Company may be adversely affected by mineral prices. Even if the Companys exploration programs are successful, factors beyond the control of the Company may affect the marketability of any minerals discovered.  Metal prices have historically fluctuated widely and are affected by numerous factors beyond the Companys control, including international, economic and political trends, expectations for inflation, currency exchange fluctuations, interest rates, global or regional consumption patterns, speculative activities and worldwide production levels.  The effect of these factors cannot accurately be predicted. The Company may not be able to compete with current and potential exploration companies. The mineral exploration and mining industry is intensely competitive in all its phases. The Company competes with many companies possessing greater financial resources and technical facilities than itself for the acquisition of mineral interests as well as for the recruitment and retention of qualified employees.    - 5 -    It may be difficult for United States investors to effect services of process against the Company. The Company is incorporated under the laws of the Province of British Columbia, Canada.  Consequently, it will be difficult for United States investors to affect service of process in the United States upon the directors or officers of the Company, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended.  The majority of the Companys directors and officers are residents of Canada and all of the Companys assets are located outside of the United States.  A judgment of a United States court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the United States court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities.   Item 4. Information on the Company.  A. History and Development of the Company The Company was incorporated under the name Radius Explorations Ltd. on September 9, 1997 pursuant to the British Columbia Company Act by registration of its Memorandum and Articles.  On July 1, 2004, the Company and PilaGold Inc. amalgamated (the Amalgamation) under the British Columbia Business Corporations Act by registration of a Notice of Articles with the new name Radius Gold Inc..  The Companys registered address is 200 Burrard Street, Suite 650, Vancouver, BC  V6C 3L6 (tel:  604-801-5432).  See Item 4D, Property, Plant and Equipment, for information regarding capital expenditures made by the Company on its properties.  B. Business Overview. The Company is a natural resource property exploration company in the exploration stage with no history of cash flows from operations.  In 1997, it commenced activities by carrying out exploration work in the Yukon Territory, Canada.  The Company changed its focus to Latin America when it acquired property interests in Mexico and Guatemala in 1999 and in Nicaragua in 2003.  In 2008, the Company signed joint venture agreements to develop its Tambor gold deposit in Guatemala, and to further explore the Rubi Property in Peru.  In 2009, the Company optioned out its Nicaragua portfolio of properties and its property in Mexico.  In 2009 and 2010, the Company acquired a significant land position in the Yukon Territory, Canada by staking and pursuant to option agreements. Also in 2010, the Company made applications for geothermal provisional land use permits in Guatemala. On December 8, 2011, the Company completed a spin-out transaction (the Spin-Out) whereby the Company transferred all of its Yukon and Alaskan property assets, certain marketable securities, and $1.0 million in cash to a newly formed company called Rackla Metals Inc. (Rackla) in return for Rackla shares and warrants.  (See Item 5, Strategic Transactions below). Currently, the Company has property interests in Guatemala, Nicaragua and Mexico.  (See Property and Equipment, below, and Note 9 to the Financial Statements).    - 6 -    Presently, the Company is in the exploration stage and its properties do not contain a known commercially viable minable deposit.  There is no assurance that a commercially viable mineral deposit exists on any of the Companys properties, and further exploration is required before a final evaluation of the economic and legal feasibility is determined.  C. Organizational Structure.  The following table sets forth the name of each material subsidiary of the Company, the jurisdiction of its incorporation and the direct or indirect percentage ownership by the Company of such subsidiary.  NameDate of
IncorporationJurisdictionPercentage
OwnedExploraciones Minera de Guatemala, S.A.July 5, 1996Guatemala100%Minerales Sierra Pacifico, S.A.November 17, 1999Guatemala100%Recursos del Golfo, S.A.December 10, 2004Guatemala100%Minerales de Nicaragua S.A.November 18, 2002Nicaragua100%Desarrollo Geologico Minero, S.A.,May 15, 2003Nicaragua100%Radius (Cayman) Inc.January 31, 2005Cayman Isl.100%   D. Property and Equipment The Company holds interests in properties in Guatemala, Nicaragua and Mexico, as set out in the following map and more particularly described below: [radiusform_20f2011001.jpg]        - 7 -    Guatemala         In Guatemala, exploration concessions are granted for an initial period of three years.  Thereafter, an extension of two years may be obtained, and then a final extension of two years, for a total of seven years.  Thereafter, the concession is either converted to an exploitation concession, or forfeited. In order to keep its properties in Guatemala in good standing, the Company would have to pay filing fees to the Guatemala government, paid annually in advance, equal to US$48.81 per square kilometer, or fraction thereof, for the first three years after the granting of a concession, and US$97.62 per square kilometer, or fraction thereof, for the fourth and fifth years, if so extended, and US$146.43 per square kilometer, or fraction thereof, for the sixth and seventh years, if so extended.  The Company would have to also file annual exploration reports. The Companys properties in Guatemala are set out in the following map: [radiusform_20f2011002.jpg]    - 8 -    1. Tambor Project The Companys Tambor Project consists of six concessions (one granted exploitation, four exploitation applications, and one exploration  application) located in south-central Guatemala as follows:  NameSize (Hectares)Expiry DateSanta Margarita Derivada2000.00Exploitation license applied for Jan. 21, 2009Carlos Antonio Derivada335.00Exploitation license applied for Nov. 10, 2009La Laguna Derivada187.50Exploitation license applied for Oct. 14, 2009Progreso VII Derivada2,000.00Exploitation license applied for Nov. 23, 2011Marga75.00Exploration license applied for Sept. 9, 2008Las Navajas1,519.42Exploration license applied for Nov. 12, 20086,116.92 In June 2008, the Company granted to Kappes, Cassiday & Associates (KCA) the right to earn a 51% interest in the Tambor Project by spending a total of US$6.5M on the property within 4 years through staged annual expenditure commitments, or by putting the property into commercial production within 4 years.  When KCA has earned its 51%, a joint venture will be formed between KCA and the Company. Once commercial production has been achieved, KCA will receive preferential payback of 75% (the Company 25%) of after-tax cash flow from initial production until it receives an amount equal to its investment, less US$2 million.  At that point, the Company will receive 75% of the after-tax cash flow (KCA 25%) until it too receives the amount of preferential cash flow received by KCA, after which revenues will be split on a 51:49 basis (KCA:the Company). In January 2004, the Company obtained a National Instrument 43-101 Technical Report compliant gold resource estimate on the Tambor Project for the Company.  There are no material changes to the property since the date of this report.  The Technical Report has been filed in SEDAR.com.  The following is a summary of the Technical Report. Exploration and Development History The Tambor Project is located in south-central Guatemala.  Tambor is a metasediment and greenstone hosted, structurally controlled mesothermal lode gold deposit.  Quartz-gold-arsenopyrite mineralization occurs in veins and breccias localized by kink bands in sheared host rocks. The project hosts at least 13 gold-bearing mineral occurrences spread over a 14km by 6km area. The Tambor property received progressively more-detailed work programs between 2000 and 2003. The bulk of the work was completed by Gold Fields Ltd. who formed a joint venture with the Company in 2001 to explore the property.  The initial exploration program included the establishment of 100 line-kilometers of grid and soil sampling.  A total of 3,958 soil samples were collected over an 11 square kilometer area.  The grid area was also geologically mapped and over 1,400 rocks samples were collected along the 7-kilometer gold trend.    - 9 -    Early work focused on the Bella Vista area, including the Laguna North, Laguna South and JNL targets and on the Tierra Blanca area, all in the western end of the JV property. In the Bella Vista area, 15 hand trenches were excavated on six of the nine known soil anomalies. During 2002, Gold Fields conducted initial scout drilling on seven areas, mainly on the western end and east end of the JV properties.  Of these seven areas, only the Laguna North area has received follow up drilling. In the final months of 2002, high grade quartz vein hosted mineralization with visible gold was located at Guapinol South.  Hand excavated trenches there returned values up to 10.1m of 31g/t Au in trench GP-5. In early 2003, Gold Fields made a new high grade discovery 200 m east of the Guapinol South veins in an area called Poza del Coyote.  The first trench on this zone returned a high-grade core of 10.93m at 66.83 g/t Au within a broader lower grade mineralized zone.  An initial ten-hole reverse circulation (RC) drilling program returned high grade intercepts in five holes with moderate-grade intercepts in four additional holes. After completing the first stage drilling at Poza del Coyote, Gold Fields moved a core drill onto the Guapinol South area and had completed 31 core holes by the end of July 2003.  About half the holes had high grade intercepts, although some were fairly narrow (1.5 to 2.0 meter core length).  The core drill was then moved to Poza del Coyote and the Cliff Zone between there and Coyote.  The results from the cliff zone returned some high grade intercepts. In late 2003, the Company commissioned the calculation of a resource estimate on Tambor which was completed in January 2004 (see above). During February and March 2004, the Company completed a geophysical orientation survey over the Tambor gold project in Guatemala.  The survey was designed to test the suitability of a new 3D Induced Polarization (IP) method to locate additional mineralization.  At total of 18 line km of surveying was completed on the Guapinol and Laguna Norte zones, over drill sections containing known mineralized intercepts.  Initial interpretations suggest that there is a correlation between the known geochemical anomalies and the 3D IP geophysical anomalies. During late 2006, the Company initiated the planning and development of an underground exploration adit on the Guapinol zone at Tambor.  In early 2007 permits were obtained and underground exploration commenced at the Tambor project by way of an exploration drift to access the high grade gold zones at Guapinol.  The primary objective of the underground work was to provide information on the structural controls, continuity and grade of the high grade gold mineralization and hence the potential to develop additional resources.  In July 2007, the exploration adit intersected the target vein as planned 202.1m into the hill.  The width of the vein exposure in the main tunnel was 3.2m, with a dip of 75o for a true width of 3.09m.  Diamond drill hole PDD-03-033, first reported in the Companys news release dated August 13, 2003, returned 80.5g/t Au over 5.3m from a quartz vein.  The vein was sampled on both sidewalls of the adit and gave results of:  74.5 g/t Au over 3.40m (includes 0.2m of quartz veining on HW) from the vein on the east tunnel wall (est. true width 3.28m)  77.7 g/t Au over 2.40m from the vein on the west tunnel wall (est. true width 2.32m)    - 10 -    In order to understand the continuity of the mineralized structure and plunge of the vein, four crosscuts were excavated underground: 2 parallel and to the west of the main drift (CW-1 & 2), and 2 parallel and to the east of the main drift (CE1 & 2).  All four cross cuts intercepted the zone and confirmed the continuity of the shoot and demonstrated the assumed easterly-dipping plunge to the high grade mineralized. Geology, Mineral Deposits and Resources Current understanding of the gold mineralization on the Tambor property suggests that it is a classic example of an orogenic (mesothermal) lode gold deposit. Specifically, Tambor is a metasediment and greenstone hosted, structurally controlled mesothermal lode gold deposit. Quartz-gold-arsenopyrite mineralization occurs in veins and breccias localized by kink bands in sheared host rocks. The project hosts at least 13 gold-bearing mineral occurrences spread over a 14km by 6km area. Gold mineralization is associated with the convergence of the North American and Caribbean plates along major structures which evolved from transpressional to transcurrent movement. Mineralization is post-peak metamorphism.  The gold zones are structurally controlled discordant veins, quartz-crush zones and vein stock works associated with shear zones. Gold Fields prepared several resource estimates for Tambor JV properties but has not made them public.  The main part of the resource is in the Guapinol South, Cliff and Poza del Coyote area. The NI43-101 compliant gold resource estimate for the Tambor Gold Project.  Tambor contains 216,000 ounces of gold in inferred resources and 57,800 ounces in indicated resources.  The definitions of the measured, indicated and inferred resources conform to CIM Guidelines as defined in CIM Standards on the Mineral Resources and Reserves Definitions and Guidelines, dated August 20, 2000.  The resource estimate is tabulated below:  Cautionary Note to U.S. Investors concerning estimates of Indicated ResourcesThis section uses the term indicated resources. We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.  U.S. Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.  Tambor: Indicated Resource EstimateAreaTonnesGrade (g/t Au)Contained Gold (Ounces)Guapinol South Cliff Zone336,0003.91042,200Poza del Coyote120,0004.02415,500Total456,0003.94057,800    - 11 -    Cautionary Note to U.S. Investors concerning estimates of Inferred ResourcesThis section uses the term inferred resources. We advise U.S. investors that while this term is recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize it.  Inferred resources have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category.  Under Canadian rules estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies.  U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.  Tambor: Inferred Resource EstimateAreaTonnesGrade (g/t Au)Contained Gold (Ounces)Guapinol South Cliff Zone368,0005.32563,000Poza del Coyote228,0004.21931,000Laguna North1,951,0001.950122,200Total2,547,0002.641216,200  To assess the mineable continuity of a deposit and hence how far resources may reasonably be projected, the estimate used indicator variograms at an approximate mining cutoff.  Using reasonable economic criteria in effect when the resource estimate was prepared in late 2003 of:  a gold price of $250 per ounce; gold recovery of 70% for a heap leach operation; and an operating cost of $4.00 per tonne, results in a calculated economic cutoff grade of 0.5 g/t Au.  For purposes of the initial resource assessment, a cutoff grade of 0.3 g/t Au was selected.  A cutoff grade of 0.3 g/t Au is considered appropriate for resource estimation because of the demonstrated continuity of gold mineralization at this grade.  Material included in the resource having a grade between 0.3 g/t Au and 0.5 g/t Au can be considered internal dilution that may need to be mined with the ore.  The average grade of the resource estimate at the 0.3 g/t Au cutoff is 2.83 g/t Au, well above the economic cutoff grade. It should be noted that selection of a final cutoff for the deposit will require detailed metallurgical testing. Core drilling in 2003 defined a NI43-101 resource estimate of 57,800 ounces gold in the indicated category, and 216,200 ounces gold in the inferred category (see the Companys press release dated December 10, 2003).  This resource was established within a 1km strike length of a soil anomaly that is consistent for over 14 km.    - 12 -    Sample Collection, Preparation and Analysis A rigorous Quality Assurance/Quality Control approach was adopted by Goldfields throughout the programme and all data supplied to the Company was reviewed by a Qualified Person according to Ni 43-101 to ensure reliable results. Samples were prepared at Rocky Mountain Geochemical/BSi Inspectorate Laboratories in Guatemala City. BSi is a subsidiary of Inspectorate America Corporation, a ISO 9002-certified laboratory. Rock samples were crushed to minus 10 mesh and a 300 gramme sub-sample was pulverized to minus 200 mesh. These Pulps were flown to Reno, Nevada for analayis at Rocky Mountains geochemical laboratory. Gold was assyed by a 30g Fire Assay/Atomic Absorption and for 30 additional elements by aqua regia ICP. All rock samples returning >1 g/t Au were subsequaently re-assayed by 30 gramme fire assay with gravimetric finish. Sample standards, blanks and duplicates account for approximately 10 percent of samples which were inserted into the sample stream, and duplicate samples were also sent to a second laboratory for gold check analysis. Goldfields also completed metallic sieve analysis on selected mineralized intervals from Guapinol South drilling and results indicated that normal for assays are good indicators of the total gold content of the samples.  Current Exploration and Development In February 2008, the Company announced the results of metallurgical testwork performed on a 90kg sample collected from underground workings. The results were very encouraging and confirm the free milling, coarse grained nature of the gold at Tambor and its amenability to gravity pre-concentration as the principal method of recovery, followed by either cyanidation or flotation.  The sample head grade ranged from 36 g/t to 40.7 g/t Au. In June 2008, the Company granted to KCA the right to develop, and earn an interest in, the Tambor Project.  The agreement calls for an initial 150 tonne per day operation from both underground and surface pits, exploiting gold mineralization hosted by a series of high-grade mesothermal quartz veins and stockworks.  Metallurgical test work by both Gold Fields and the Company indicates that most of the gold is coarse and free milling, and recoveries of up to 66% can be achieved using gravity concentration alone. KCA submitted an environmental impact assessment (EIA) in June 2010 which included the mining and development plan.  In June 2011, the EIA was approved and in February 2012, the final permit needed to begin construction of the Tambor gold mine was issued.  KCA has commenced construction, and earth moving for the foundations for the plant is underway.  A mining permit application has been submitted. KCA has constructed a modular mill, with a 150tpd ball mill and flotation cells, at its Reno Nevada facility, as a set of modular units mounted on 40-ft skids.  The mill has been engineered for a target capacity of 150 tonnes per day or 52,500 tonnes per year. KCA is aiming to begin gold production within two to three months after obtaining the mining permit. There has been no mining surface development conducted at Tambor other than surface exploration trenching of soil anomalies.    - 13 -     2. Southeastern Guatemala         The Company holds a 100% interest in 24 concessions (one ,reconnaissance application, three exploitation applications, and 20 exploration applications) located in southeastern Guatemala, as follows:  Concession NameSize (Hectares)Expiry Date / Application DateLa Luz *2,000.00Exploitation licence applied for July 28, 2011Aurora *2,000.00Exploitation licence applied for July 28, 2011El Dorado II *2,000.00Exploitation licence applied for July 28, 2011Joyita1,364.32Exploration licence applied for Sept. 9, 2008Marisol I4,500.00Exploration licence applied for Feb. 3, 2010Marisol II2,636.59Exploration licence applied for Feb. 3, 2010CECI3,062.15Exploration licence applied for Feb. 3, 2010Cirilo I1,350.00Exploration licence applied for March 18, 2010Cirilo II801.17Exploration licence applied for March 18, 2010Salvador I6,400.00Exploration licence applied for March 18, 2010Salvador II6,000.00Exploration licence applied for May 12, 2010Frida7,133.92Exploration licence applied for May 12, 2010Belen7,371.51Exploration licence applied for May 12, 2010Paola9,956.10Exploration licence applied for May 12, 2010El Caminero9,322.38Exploration licence applied for May 12, 2010Eliza65,581.63Reconnaissance licence applied for May 27, 2010Carolina9,992.2Exploration licence applied for June 11, 2010Conchita8,579.55Exploration licence applied for June 11, 2010La Pena8,110.43Exploration licence applied for June 11, 2010Karen8,848.27Exploration licence applied for June 11, 2010Juanita5,167.80Exploration licence applied for July 13, 2010Las Pomas6,154.30Exploration licence applied for Feb. 23, 2011El Arco169.92Exploration licence applied for April 15, 2011El Muro514.50Exploration licence applied for April 15, 2011179,016.76 * These applications totalling 6,000 hectares were converted from a previously granted exploration licence which covered 9,548.80 hectares. The majority of these concessions lie within extensive hydrothermal fields in Tertiary volcanic and sedimentary rocks in southeastern Guatemala hosts both Escobal, Tahoe Resources Inc.s mesothermal Ag-Au-Pb-Zn deposit and Cerro Blanco, Goldcorp Inc.s hot-spring epithermal Au-Ag deposit. The hydrothermal field is a product of Tertiary to Quaternary-aged extension tectonics related to the Jocotan, Motagua, and Polochic continental wrench faults and their associated structures.    - 14 -    Pyramid Hill, M28, and Holly Prospects In April 2010, the Company commenced a reactivation of its exploration efforts at these prospects (these collectively have been previously referred to as the Holly-Banderas property).  The Company discovered and drilled these gold-silver occurrences between 2002 and 2004 when gold and silver spot prices were close to their record lows.  However, the recent discovery of the world-class Escobal deposit some 70 km west of these prospects underscores the potential of the district and has led the Companys technical team to review the geology and the results obtained by the previous work. The Pyramid Hill prospect is a northwest-trending, subvertical brittle fault with associated mineralized cataclastic breccias and veins.  The extent of mineralization has been mapped to over 2 km in strike length. Less than 500 m northeast of Pyramid Hill, the M28 zone consists of a series of stacked southwest dipping hydrothermal quartz veins offset by late normal block faulting.  Drilling highlights from previous early work programs on these zones include 2.2m of 6.9 ppm Au and 261 ppm Ag in hole BDD-014 at Pyramid Hill, and 4.3m of 6.0 ppm Au and 72 ppm Ag in hole BDD-04 at M28 (for full drill results from these drill campaigns (see Radius Gold news release dated April 13, 2004). The Holly zone is spatially associated with the east-west trending Jocotan continental wrench fault, approximately 9 km west-northwest of the Pyramid Hill prospect.  Previous drilling returned results of up to 14.2 m of 4.14 ppm Au and 150 ppm Ag in hole HDD-001, and 9m of 1.84 ppm Au and 45 ppm Ag in hole HDD-007 (see Radius Explorations Ltd. news release from December 17, 2002).  Mineralization occurs in association with epithermal quartz and quartz-hematite veins within the Jocotan fault conglomerates and basinal sediments as well as in the metamorphic phyllites to the north of the fault, although only the former have been drill tested. Recent prospecting at the Holly zone has led to the discovery of hydrothermal quartz veins (El Pino and La Pena occurrences) hosted in the metamorphic rocks to the north of the Jocotan fault, bearing grades of up to 58 ppm Au and 1937 ppm Ag over 5.1 m in surface trenching (see Radius news release of May 16, 2011).  The metamorphic rocks north of the Jocotan fault were not previously believed to be a likely host for epithermal mineralization, and this discovery opens up the area to significant further exploration. Previous drilling on the Pyramid Hill, M28, and Holly prospects only tested the epithermal systems to relatively shallow depths, generally less than 150 m below surface.  In contrast, the metal-productive depths of most low-sulphidation epithermal systems is generally thought to be 200 to 600 m below the hydrothermal systems water table, indicating that the present drilling does not adequately test the mineralization system.  Upon review, and with the present gold and silver prices in mind, management feels that these prospects warrant significant deeper drilling to comprehensively test the potential metal-productive zones of these prospects. El Zapote Prospects The El Zapote Zone is located approximately 1 km southwest of the Pyramid Hill zone (see Radius news release dated February 3, 2011), and consists of a northwest-trending stockwork zone exposed along a ridge and a southwest-facing cliff. The stockwork zone consists of centimetre-scale epithermal quartz-chalcedony veins and veinlets hosted in felsic volcanic and volcaniclastic rocks. The general orientation, nature of the mineralization, and spatial proximity suggests it is part of the same epithermal ore system as Pyramid Hill and M28 zones.    - 15 -    Radiuss early stage exploration results at Zapote are very positive:  Anomalous gold and silver mineralization has been detected in rock and soil samples over more than 600m strike length, and reconnaissance soil sampling indicates that the zone may extend for up to 3 km in total. 250 samples, a mix of outcrop and float, were collected across a 500 m x 300 m area trending northwest along the exposed southwest facing cliff.  The samples returned gold values ranging from trace to 6.06 ppm Au, and averaged 0.94 ppm Au.  Of the samples taken, 55% graded > 0.5 ppm Au, including 25% samples grading > 1 ppm Au. Radius is undertaking the necessary community and environmental studies prior to applying to MEM for a permit to drill test El Zapote. The initial drill plan calls for a pair of scissor holes beneath the main Zapote ridge to test the orientation, thickness, and grade distribution of the zone. Ivy Prospect At the Ivy prospect, located 38 km due west of the Pyramid Hill, M28, and El Zapote prospects, and also spatially-associated with the Jocotan fault, gold mineralization is associated with an altered diorite intrusive.  The prospect was identified during follow up of regional stream sediment anomalies. Radiuss geologists have identified zones of brecciation and silicification within a diorite body that carry significant gold values.  This is a very early stage prospect but initial results are very encouraging, with gold values ranging from trace up to 14 ppm Au in grab and channel samples with the intrusive body.  A limestone unit that appears to overlie the diorite, possibly a roof pendant to the intrusive, shows silicification and jasperoid development with weakly anomalous Au values (200 to 400 ppb).  Further prospecting of the area identified the brecciated diorite which returned the superior gold values.  Follow-up work will commence as soon as the pending exploration license has been granted. Regional Exploration The Companys land package of exploration licenses and pending exploration licenses are located in a very prospective epithermal district. Existing regional geochemical data are sparse over large tracts of the land package, and the Company has begun a multipronged work program to evaluate its potential.  A satellite imagery of alteration mineralogy is underway to map zones of potential desirable clay alteration signatures and zones of high silica. Landsat imagery is also being used to identify the major structural corridors and lineaments over the land package.  In conjunction, a regional stream geochemistry and prospecting program is underway with plans to cover the entire land package in a comprehensive way.  It is expected that the results of the alteration study will help guide the field teams in their efforts.  Prospective zones of hydrothermal alteration have already been identified and sampling, mapping, and prospecting is currently underway. All work at the southeastern Guatemala concessions is being funded from the Companys existing cash resources, and the work is supervised by the Companys Exploration Manager. No Resource or Reserve has been defined within the Holly - Banderas Projects.    - 16 -         3. Geothermal Licences After revisiting its hot spring database for Guatemala, the Company submitted in June 2010 applications for Provisional Use Permits for a number of active geothermal systems that may have potential as geothermal resources for power generation.  As at December 31, 2011, Provisional Use Permits have been granted on 81,000 hectares, and 29,300 hectares remain under application. Power generation in Guatemala is currently comprised of hydroelectric power stations, steam turbines, gas turbines, diesel generators and geothermal power stations, with geothermal power contributing less than 3% of the total power generated.  According to a recent study by the Argentine consultancy, Montamat, which evaluated electricity prices in 13 Latin American countries, prices in Guatemala are amongst the highest in Latin America at roughly $0.17/kwh, surpassed only by the Dominican Republic and Panama.  At the same time, the Guatemalan government is forecasting that electric power demand is expected to reach a compounded annual growth rate over 8.0% to 2015.  Guatemala must increase its installed capacity to meet the projected demand growth. A study published in International Geothermal Development in 2003 noted that geothermal resources in Guatemala are estimated at 800 to 4,000 megawatts (MW) capacity, but most likely around 1,000MW.  In 2003 the countrys installed generating capacity was 1,700MW suggesting that geothermal energy could contribute significantly to securing the countrys future power requirements.  By 2007, Guatemala had succeeded in harnessing 46 MW of geothermal energy in the fields of Zunil and Amatitlán, both owned by the American geothermal technology company Ormat Technologies.  Feasibility studies are being carried out on 3 other geothermal fields. The Company was negotiating the details of an option agreement over its portfolio of geothermal applications with Molten Power Corp. (Molten), a private Vancouver based geothermal power development company.  After reviewing the permit process and determining its property investment goals, Molten has advised the Company that it will not proceed with its proposed option.  The Company will therefore seek a new joint venture partner to further develop these geothermal systems. Nicaragua In Nicaragua, concessions are granted for 25 years.  If the Company decides to keep its properties in good standing the Company must pay yearly filing fees as follows:  YearUS$ per hectare per year1$0.252$0.753, 4$1.505, 6$3.007, 8$4.009, 10$8.0011 - 25$12.00 One-half of each yearly payment must be paid in January and the second half in July.  The Company must also file annual exploration reports.    - 17 -    The Company began exploring in Nicaragua in 2003.  In addition to discovering a number of exploration projects with potential to host gold resources; specifically the Trebol, Pavon and San Pedro exploration properties (the Properties), the Companys technical team also compiled an extensive regional exploration data base covering much of the Central American country (the Regional Exploration Projects).  1. Trébol Property The Trébol Property is comprised of three granted exploration concessions located within the Region Autonoma Atlantico Norte in northeastern Nicaragua, as set out in the following map: [radiusform_20f2011003.jpg] The concessions are described as follows:  NameSize (Hectares)Expiry DateLa Amapola13,809.90April 19, 2032El Trébol28,383.17April 19, 2032La Flor15,504.91April 19, 203257,697.98    - 18 -    2. Pavon Project The Pavon gold project is located in central Nicaragua, a 5 hour drive from Managua and about 1 hour from the town of Waslala.  It outcrops on a main road and access to most parts of the project area is possible by foot or on horse back.  It is located in a hilly agricultural region largely given over to cattle grazing.  The original forest cover has been cut down over many years by slash and burn farmers.  The property consists of one granted exploration concession, more particularly described as follows:  NameSize (Hectares)Expiry DateNatividad1,301.10February 11, 2029   3. San Jose (formerly called San Pedro) Property  The San Jose Property is comprised of applications for two granted exploration concessions located in the east-central Nicaragua, more particularly described as follows:  NameSize (Hectares)Expiry DateSan Jose12,474.57November 25, 2035Tatiana13,657.00July 22, 203526,131.57  Access to the Property is via truck from Copalar to San Pedro (2 hrs), boat to La Estrelia (20mins), followed by a 5km horse ride to the camp, 5km.  From the camp it is possible to walk to all of the showings in the northwest of the San Jose project, which cover a 2km by 1.5km area.  In the dry season you can drive to about 1km west of the zone. Transactions with B2Gold Corp. In June 2009, the Company granted to B2Gold Corp. (B2Gold) an option (the Option) to acquire an interest in the Companys entire Nicaragua mineral property portfolio. B2Gold had the right to acquire a 60% interest in the Trebol, Pavon and San Jose properties in Nicaragua by spending a total of US$4 million on exploration on any one or more of the properties within 4 years from the date of the agreement.  When B2Gold has spent the US$4 million, it would own a 60% interest in all of the properties and a joint venture would be formed whereby each party will contribute its pro-rated share of the exploration costs. In addition, B2Gold had the right to review the conceptual gold resource outlined by Meridian Gold on the Pavon vein system, and had the right to decide to put the property into production within a time frame of 3 years.  After production is achieved, ownership of the Pavon resource area would be transferred 100% to B2Gold, and the Company would receive 40% of the net cash flow generated from the operation.    - 19 -    The Company also agreed to provide its regional exploration data base to B2Gold, on an exclusive basis.  If as a result of reviewing the regional data, B2Gold identified a prospect or project for acquisition and exploration on ground that is not covered by an existing concession, the Company would apply for a concession over the area and that area would then be designated a project area. On April 6, 2012, Radius and B2Gold entered into a binding letter agreement pursuant to which B2Gold has agreed to acquire a 100% interest in the Trebol and Pavon properties in consideration of $20 million, payable in common shares of B2Gold at a price per share equal to the volume weighted average price of B2Golds common shares on the Toronto Stock Exchange (TSX) for the ten trading days immediately preceding the date of the letter agreement. In addition, B2Gold has agreed to make contingent payments to Radius of US$10 per ounce of gold on 40% of any proven and probable mineral reserves in excess of 500,000 ounces (on a 100% basis). Pursuant to the option agreement described above, B2Gold had earned a 60% interest in the Trebol and Pavon properties by expending a total of US$4 million on exploration, resulting in a 60% - 40% B2Gold  Radius joint venture. The completion of the property acquisition is subject to a number of conditions, including the completion by B2Gold of satisfactory due diligence, the negotiation and execution of a definitive purchase agreement and the approval of all relevant regulatory authorities, including the approval of the TSX for the listing of the common shares of B2Gold to be issued in connection with the transaction. B2Gold and Radius have also agreed to enter into a joint venture agreement on 60% - 40% basis with respect to each of the Companys San Jose and B2Golds La Magnolia properties in Nicaragua and continue jointly exploring the properties, with B2Gold and Radius contributing 60% and 40% respectively, of the exploration expenditures of each joint venture.  All other aspects of the Option will be terminated. No Resource or Reserve has been defined within the Trebol, Natividad or San Jose properties. Mexico Tlacolula Property The Tlacolula Property consists of one granted exploration concession, described as follows:  NameSize (Hectares)Expiry DateReduccion Tlacolula 212,642November 21, 2057  The Company discovered silver mineralization in 2005 following a regional stream geochemical survey in various areas of the state of Oaxaca.  An initial trenching program on the Tlacolula property defined a broad low grade silver/gold anomaly associated with opaline silica, indicating a high level system.  In late 2009, the Company optioned the Tlacolula silver project to Fortuna Silver Mines Inc. (TSX-FVI) (Fortuna).  The Company and Fortuna have certain directors in common.    - 20 -    Fortuna can earn a 60% interest by spending US$2-million on exploration, which includes a commitment to drill 1,500m by January 2013, and making staged annual payments totalling US$250,000 cash and US$250,000 in common shares by January 2014.  The 12,642 hectare property is located 14km east-southeast of the city of Oaxaca and 30 km northeast of Fortunas 100%-owned San Jose silver-gold development project.  To date, the Company has received US$100,000 cash and 23,174 shares of Fortuna. No Resource or Reserve has been defined within the Tlacolula Property. Yukon Territory / Alaska In December 2011, the Company disposed of all its property assets in the Yukon Territory and Alaska.  See Strategic Transactions below.   Item 5. Operating and Financial Review and Prospects. Overview At the date of this Annual Report, the Company has not been able to identify a known body of commercial grade ore on any of its properties, and the ability of the Company to realize the costs it has incurred to date on these properties is dependent upon the Company being able to identify a commercial ore body, to finance its exploration costs and to resolve any environmental, regulatory or other constraints which may hinder the successful development of the property, or being able to realize the costs incurred on a subsequent disposal of the property. The following discussion and analysis of the financial condition and operating results of the Company for the two years ended December 31, 2011 and 2010 should be read in conjunction with the Consolidated Financial Statements and related notes to the financial statements which have been prepared in accordance with IFRS.  The discussion and analysis set forth below covers the results measured under IFRS. Strategic Transactions In 2004, Radius Explorations Ltd. and PilaGold Inc. amalgamated (the Amalgamation) and continued as one company, Radius Gold Inc., pursuant to the provisions of the British Columbia Business Corporations Act.  The holders of Radius Explorations shares received one (1) Radius Gold share for every one (1) Radius Explorations share held, and PilaGold shareholders received one (1) Radius Gold share for every two and one-quarter (2.25) PilaGold shares held. Pursuant to an Arrangement Agreement dated November 3, 2011, and effective December 8, 2011, the Company completed a spin out transaction (the Spin Out) whereby the Company transferred all of its Yukon and Alaskan property assets, certain marketable securities, and $1.0 million in cash to Rackla in return for Rackla shares and warrants, the majority of which were distributed to the Companys shareholders by way of a plan of arrangement. The objective of the Spin Out is to maximize shareholder value by allowing the market to independently value geographically separate property portfolios.  The Spin Out has resulted in two strategically positioned companies, one focused on Latin America and the other focused on the Yukon.    - 21 -    A. Operating Results.   Compliance The Companys consolidated financial statements of the Company as at and for the years ended December 31, 2011 and 2010 have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB).  This is the first time that the Company has prepared its consolidated financial statements in accordance with IFRS, having previously prepared its consolidated financial statements in accordance with pre-changeover Canadian GAAP. Critical Accounting Policies Investment in Associate Where the Company has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate.  Associates are initially recognized in the consolidated statement of financial position at cost.  The Company's share of post-acquisition profits and losses is recognized in the consolidated statement of comprehensive income, except that losses in excess of the Companys investment in the associate are not recognized unless there is an obligation to make good those losses. Profits and losses arising on transactions between the Company and its associates are recognized only to the extent of unrelated investors' interests in the associate.  The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate. Any premium paid for an associate above the fair value of the Company's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalized and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.  Mineral Exploration and Evaluation Expenditures  Acquisition costs for exploration and evaluation assets are capitalized and include the cash consideration paid and the fair value of common shares issued on acquisition, based on the trading price of the shares on the date of the agreement to issue the shares.  Exploration expenditures, net of recoveries, are charged to operations as incurred.  After a property is determined by management to be commercially feasible, exploration and development expenditures on the property will be capitalized. On transfer to development properties, capitalized exploration and evaluation assets are assessed for impairment. Options are exercisable entirely at the discretion of the optionee and amounts received from optionees in connection with option agreements are credited against the capitalized acquisition costs classified as exploration and evaluation assets on the balance sheet and amounts received in excess are credited to gain from exploration and evaluation asset option agreements on the statement of operations.    - 22 -    Where the Company has entered into option agreements to acquire interests in exploration and evaluation assets that provide for periodic payments or periodic share issuances, amounts unpaid and unissued are not recorded as liabilities since they are payable and issuable entirely at the Companys option. Option payments are recorded as exploration and evaluation costs when the payments are made or received and the share issuances are recorded as exploration and evaluation costs using the fair market value of the Companys common shares at the earlier of the date the counterpartys performance is complete or the issuance date. The Company is in the process of exploring and developing its exploration and evaluation assets and has not yet determined the amount of reserves available.  Management reviews the carrying value of exploration and evaluation assets on a periodic basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable will recognize impairment in value based upon current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the asset or from the sale of the asset.  Amounts shown for exploration and evaluation assets represent costs incurred net of write-downs and recoveries, and are not intended to represent present or future values. Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.  Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed.  Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated.  Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Companys commitment to a plan of action based on the then known facts. Share-based payments Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive loss/income over the vesting period.  Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest.  As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied.  The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied. Where terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statements of comprehensive loss/income over the remaining vesting period. Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date.  The grant date fair value is recognized in comprehensive loss/income over the vesting period, described as the period during which all the vesting conditions are to be satisfied. Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the statement of comprehensive loss/income.  Options or warrants granted related to the issuance of shares are recorded as a reduction of share capital.    - 23 -    When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model. All equity-settled share-based payments are reflected in other equity reserve, until exercised.  Upon exercise, shares are issued from treasury and the amount reflected in other equity reserve is credited to share capital, adjusted for any consideration paid. Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognized the amount that otherwise would have been recognized for services received over the remainder of the vesting period.  Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date.  Any such excess is recognized as an expense. Impairment of Non-Financial Assets Impairment tests on non-financial assets, including exploration and evaluation assets are undertaken whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.  Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the assets cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets. An impairment loss is charged to the profit or loss, except to the extent they reverse gains previously recognized in other comprehensive loss/income. Financial Instruments Financial Assets Financial assets are classified  into one of the following categories based on the purpose for which the asset was acquired.  All transactions related to financial instruments are recorded on a trade date basis.  The Companys accounting policy for each category is as follows: Loans and Receivables These assets are non-derivative financial assets resulting from the delivery of cash or other assets by a lender to a borrower in return for a promise to repay on a specified date or dates, or on demand.  They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue and subsequently carried at amortized cost, using the effective interest rate method, less any impairment losses.  Amortized cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transactions costs.  Gains or losses are recognized in the profit or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process.    - 24 -    TheCompanys loans and receivables comprise advances and other receivables, amounts due from related parties, deposits and cash and cash equivalents in the consolidated statement of financial position. Available-For-Sale Investments Non-derivative financial assets not included in the other categories are classified as available-for-sale and comprise principally the Companys strategic investments in entities not qualifying as subsidiaries or associates.  Available-for-sale investments are carried at fair value with changes in fair value recognized in accumulated other comprehensive loss/income.  Where there is a significant or prolonged decline in the fair value of an available-for-sale financial asset (which constitutes objective evidence of impairment), the full amount of the impairment, including any amount previously recognized in other comprehensive loss/income, is recognized in profit or loss.  If there is no quoted market price in an active market and fair value cannot be readily determined, available-for-sale investments are carried at cost. Purchases and sales of available-for-sale financial assets are recognized on a trade date basis.  On sale or impairment, the cumulative amount recognized in other comprehensive loss/income is reclassified from accumulated other comprehensive loss/income to profit or loss. Impairment of Financial Assets At each reporting date the Company assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired.  A financial asset or group of financial assets is deemed to be impaired, if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or group of financial assets. Financial Liabilities Financial liabilities are classified as other financial liabilities, based on the purpose for which the liability was incurred, and comprise trade payables and accrued liabilities.  These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method.  This ensures that any interest expense over the period of repayment is at a constant rate on the balance of the liability carried in the statement of financial position.  Interest expense, in this context, includes initial transaction costs and premiums payable on redemption, as well as any interest or coupon payable while the liability is outstanding. Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid.  Trade payable amounts are unsecured and are usually paid within forty-five days of recognition. Critical Accounting Estimates and Judgments  The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities.  Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.    - 25 -    The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:  a) Where the Company holds less than 20% of the voting rights in an investment but the Company has the power to exercise significant influence through common officers and board members, such an investment is treated as an associate. The Company can exercise significant influence over Rackla Metals Inc.  b) The Company determines the fair value of financial instruments that are not quoted, using valuation techniques.  Those techniques are significantly affected by the assumptions used and information known at the time of measurement.  In that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realized immediately. The valuation technique used for unquoted securities is disclosed in Note 6 of the consolidated financial statements.  c) The Company is subject to income tax in several jurisdictions and significant judgment is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain.  As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised when, despite the company's belief that its tax return positions are supportable, the company believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The company believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law.  This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.  d) Although the Company has taken steps to verify title to mineral properties in which it has an interest, 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.  e) The recoverability of amounts receivable and prepayments which are included in the consolidated statements of financial position.  f) The carrying value of the investment in exploration and evaluation costs and the recoverability of the carrying value which are included in the consolidated statement of financial position.  g) The estimated useful lives of property and equipment which are included in the consolidated statement of financial position and the related amortization included in the consolidated statement of comprehensive loss for the year ended December 31, 2011.    - 26 -    Accounting Change Conversion to IFRS Effective January 1, 2011, Canadian publicly listed entities were required to prepare their financial statements in accordance with IFRS. Due to the requirement to present comparative financial information, the effective transition date is January 1, 2010. The Companys IFRS conversion team identified three phases to the conversion: Scoping and Diagnostics, Analysis and Development, and Implementation and Review.  The Company has completed its IFRS conversion plan through to implementation.  Review and post implementation will continue in future periods. The Companys financial statements were prepared in accordance with Canadian GAAP until December 31, 2010. While IFRS uses a conceptual framework similar to Canadian GAAP, there are significant differences in recognition, measurement and disclosures. For a description of the significant accounting policies the Company has adopted under IFRS, including the estimates and judgments we consider most significant in applying those accounting policies, please refer to note 3 of the consolidated financial statements for December 31, 2011. The adoption of IFRS resulted in some changes to the consolidated balance sheets and income statements of the Company previously reported under Canadian GAAP. To help users of the financial statements better understand the impact of the adoption of IFRS on the Company, The Company has provided reconciliations from Canadian GAAP to IFRS for total assets, liabilities, and equity, as well as net income and comprehensive income for the comparative reporting periods. Please refer to note 20 of the consolidated financial statements for December 31, 2011 for the reconciliations between IFRS and Canadian GAAP. IFRS 1 First-time Adoption of International Financial Reporting Standards Adoption of IFRS requires the application of IFRS 1, First-time Adoption of International Financial Reporting Standards, which provides guidance for an entitys initial adoption of IFRS. IFRS 1 gives entities adopting IFRS for the first time a number of optional exemptions and mandatory exceptions, in certain areas, to the general requirement for full retrospective application of IFRS. Please refer to note 20 of the consolidated financial statements for December 31, 2011 for a detailed description of the IFRS 1 exemptions the Company elected to apply. Controls and Procedures The Companys plan to convert its consolidated financial statements to IFRS at the change over date of January 1, 2011, with comparative financial results included a formal project governance structure that involved the Audit Committee and senior management to monitor progress and review and approve recommendations. The IFRS transition plan was comprehensive and addressed topics such as the impact of IFRS on accounting policies and implementation decisions, infrastructure, business activities, compensation matters and control activities.  The Company identified and implemented the required accounting process changes that resulted from the application of IFRS accounting policies and these changes were not significant. The Company has completed the design, implementation and documentation of the internal controls over accounting process changes resulting from the application of IFRS accounting policies. The Company applied its existing control framework to the IFRS changeover process.    - 27 -    Business Activities and Key Performance Measures The Company is not subject to any financial covenants or key ratios, therefore the transition had no impact in this regard.  The impact of the IFRS conversion project on the Companys compensation arrangements has been assessed and there was no impact to existing compensation arrangements. Information Technology and Systems The IFRS transition project did not have a significant impact on the Companys information systems for the convergence periods. The Company also does not expect significant changes in the post-convergence periods. Review The post-implementation phase will involve continuous monitoring of changes in IFRS in future periods. The Company notes that the standard-setting bodies that determine IFRS have significant ongoing projects that could impact the IFRS accounting policies that the Company has selected. The Company has processes in place to ensure that potential changes are monitored and evaluated. The impact of any new IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations will be evaluated as they are drafted and published. Results of Operations Year Ended December 31, 2011 compared to December 31, 2010 The net loss for the year ended December 31, 2011 was $2,167,377 compared to $4,578,174 for the year ended December 31, 2010, a decrease of $2,410,797.  The current year has a significantly lower net loss due to the gain of distribution of assets to Rackla in the amount of $4,807,443.  Excluding this gain the current year would show a net loss of $6,974,820, an increase of $2,396,646 over the comparative year.  This significant increase is due to a higher level of exploration activities during the current year on both the Yukon and Guatemala properties.  Exploration expenditures for the current year totalled $6,390,053 compared to $2,838,390 for the comparative year, an increase of $3,551,663.  Included in exploration expenditures during the current year were flow-through expenditures of approximately $4.38 million compared to less than half that amount in 2010.  The Company also conducted a drill program during the current year in southeast Guatemala.  Overall costs for both the current and comparative year were offset by property option payments received by the Company which resulted in a gain on mineral property option payments totalling $157,088 in 2011 and $247,447 in 2010.  Both annual periods also recorded a deferred income tax recovery with the current year amount reducing the net loss before income taxes by $716,754 and the comparative year amount by $358,533.  As the Company fulfilled its flow-through commitments on exploration expenditures, a previously recorded deferred tax liability was transferred to the statement of comprehensive loss.  A significant cost item that was recorded in the current year but not in the comparative year was $289,313 in plan of arrangement costs.  These costs were associated with the Rackla spin-out transaction.    - 28 -    Corporate expenses in the year ended December 31, 2011 were $1,242,463 compared to $2,445,015 in the year ended December 31, 2010, a decrease of $1,202,552.  However, the current year only recorded an amount of $306,915 in share-based compensation charges compared to $1,612,792 being charged in the comparative year.  When excluding this non-cash item, the current years corporate expenses were higher by $103,325.  Once again, a notable cost increase concerned consulting fees.  Besides the financial advisory and services agreement entered into during 2011, there were consulting costs associated with an IFRS consultant and geological software training.  Also similar to the quarterly comparison, salaries and wages for the current year were noticeably less due to the same reasons given above. Mineral Properties Year Ended December 31, 2011 A summary of the Companys expenditures on its mineral properties, including the properties spun-out to Rackla, during the year ended December 31, 2011 is as follows: Yukon/Alaska - $4,954,479 was incurred on exploration activities but this amount was offset by a $25,000 government grant received and other recovered costs totalling $13,199 during the year.  Acquisition costs during the year totalled $386,619 of which $266,919 was cash and $119,700 was the value of shares issued.  Acquisition costs were then offset by $75,000, which was a portion of the proceeds received as an option payment from Solomon on the Ten Mile Creek property. Guatemala - $1,387,041 was incurred on exploration. Nicaragua - $29,899 was incurred on miscellaneous exploration related costs. Mexico - $18,634 was incurred on miscellaneous exploration related costs.  The Company also received cash and shares from Fortuna with a combined value of $59,588 as a result of option payments received on its Tlacolula Property. Year Ended December 31, 2010 During the year ended December 31, 2010, the Company incurred the following expenditures on its mineral properties: Yukon/Alaska - $828,844 was incurred on acquisition costs and $2,016,987 on exploration.  Of the $828,844 in acquisition costs, $111,300 was the value of common shares issued pursuant to option agreements.  During 2010, the Company received an option payment on its Ten Mile Creek Property of $116,000, consisting of $100,000 cash and $16,000 in Solomon Resources Limited shares and received 400,000 shares of Wesgold as option payments on the Snowcap Property.  As a result, there were cost recoveries that reduced the carrying value of acquisition costs of the Ten Mile Creek Property and the Snowcap Property to nil. Nicaragua - $55,992 was incurred on exploration. Guatemala - $753,900 was incurred on exploration.    - 29 -    Mexico - $11,511 was incurred on miscellaneous exploration related costs.  The Company also received cash and shares from Fortuna with a combined value of $41,148 as a result of option payments received on its Tlacolula Property. Per Share Losses The net loss and loss per share for fiscal 2011 was significantly lower than in fiscal 2010 despite significantly more exploration expenditures being incurred in fiscal 2011.  The lower net loss and loss per share was the result of a gain on distribution totaling $4.8 million due to the Spin Out.    The Companys weighted average number of shares increased significantly in both fiscal 2011 and fiscal 2010, mostly as a result of private placements.  B. Liquidity and Capital Resources Outlook The Company expects its current capital resources to be sufficient to carry out its planned exploration programs and operating costs for the next twelve months; however, the Company has not yet achieved profitable operations, has accumulated losses of $53,312,682 since inception, and is expected to incur further losses in the development of its business.  However, the Company has sufficient cash resources and a working capital surplus of $3.65 million to meet its obligations for at least the next twelve months from the end of the reporting year. Actual funding requirements may vary from those planned due to a number of factors, including the progress of exploration and development activity.  Management believes it will be able to raise equity capital as required in the long term, but recognizes the uncertainty attached thereto.  The Company continues to use various strategies to minimize its dependence on equity capital, including the securing of joint venture partners where appropriate. Year ended December 31, 2011 compared to December 31, 2010 The Companys cash decreased from approximately $7.72 million at December 31, 2010 to $1.76 million at December 31, 2011.  Working capital at December 31, 2011 was $3.65 million compared to $8.24 million at December 31, 2010.  Flow-through proceeds raised in 2010 were required to be spent on eligible exploration activities on its previously held Yukon properties.  As at December 8, 2011, the date of the Spin-Out, the Company had fulfilled its 2010 flow-through commitment of $4.38 million during 2011.  During the current year, the Company closed a non-flow-through private placement to raise gross proceeds of $3.66 million, of which $1.0 million was transferred to Rackla as part of the Spin-Out.  The remaining funds continue to be used for exploration activities on the Companys southeast Guatemala properties and for general working capital purposes.    - 30 -    While the Company transferred its available-for-sale investments in Wesgold and Solomon to Rackla as part of the Spin-Out, it continues to hold a portfolio of available-for-sale investments consisting of 1,007,406 common shares of Focus Ventures Ltd., 14,569 common shares of Fortuna, and 7,175,700 warrants in Rackla, all public companies with common directors or officers.  As at December 31, 2011, the carrying amount for the available-for-sale investments was $641,707 compared to $994,609 as at December 31, 2010.  An unrealized gain (net of tax) of $165,966 has been recorded in other comprehensive income during the current year. The Company also holds 7,175,700 common shares in Rackla but they are not included in available-for-sale investments on the statement of financial position.  Instead, the shares are included in the investment in Rackla which is being accounted for under the equity method for investments with significant influence. The fair market value of the Rackla shares was $1.65 million and the carrying amount of the investment in Rackla was $1.5 million as at December 31, 2011.  C. Research and Development, Patents and Licenses, etc. Not applicable.  D. Trend Information. The Company is an exploration stage natural resource company engaged in the process of exploring and evaluating its mineral properties and projects and has not yet determined whether its properties and projects contain ore reserves that are economically recoverable.  Consequently, there is no production, sales, or inventory in the conventional sense.  The Companys financial success will be dependent upon the extent to which it can discover mineralization and the economic viability of developing such properties.  Such development may take years to complete and the amount of resulting income, if any, is difficult to determine with any certainty.  The sales value of any mineralization discovered by the Company is largely dependent upon factors beyond the Companys control such as the market value of the commodities produced. The Company is not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon the Companys net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.  E. Off-balance Sheet Arrangements The Company has no Off-Balance Sheet Arrangements.  F. Tabular Disclosure of Contractual Obligations The following table lists as of December 31, 2011 information with respect to the Companys known contractual obligations.    - 31 -    Payments due by periodContractual ObligationsTotalless than 1 year1-3 years3-5 yearsmore than 5 yearsLong-Term Debt Obligations00000Capital (Finance) Lease Obligations00000Operating Lease Obligations(1)$1,992,528$293,389$594,126$528,494$576,519Purchase Obligations00000Other Long-Term Liabilities Reflected on the Company's Balance Sheet under IFRS00000Total$1,992,528$293,389$594,126$528,494$576,519  (1) Amount indicated is for office rent leases for the Companys corporate operations in Vancouver, BC.   G. Safe harbour See Note Regarding Forward-Looking Statements.       Item 6. Directors, Senior Management and Employees.  A. Directors and Senior Management. The following table lists as of April 16, 2012 the names of the directors and senior management of the Company.  The directors and senior management have served in their respective capacities since their election and/or appointment and will serve until the next Annual General Meeting of Shareholders or until a successor is duly elected, unless the office is vacated in accordance with the Companys Articles.    - 32 -   Name and Municipality of ResidencePosition(s) heldDate of First AppointmentSimon Ridgway
Pemberton, BC, CanadaDirector, Chairman of the Board & Chief Executive OfficerSeptember 30, 1997Ralph Rushton
Vancouver, BC, CanadaDirector & PresidentMay 2, 2003Mario Szotlender,
Caracas, VenezuelaDirectorDecember 13, 1999Bradford Cooke
North Vancouver, BC, CanadaDirectorJuly 1, 2004William Katzin
North Vancouver, BC, CanadaDirectorJuly 27, 2011Kevin Bales
Delta, BC, CanadaChief Financial OfficerJuly 23, 2009Sally Whittall
Maple Ridge, BC, CanadaCorporate SecretaryDecember 2, 2011  Biographical Information The following is a brief description of the employment background of the Companys directors and senior management: Simon T.P. Ridgway, Age 63  Director, Chairman of the Board & Chief Executive Officer Mr. Simon Ridgway is an exploration financier with 20 years experience financing and managing exploration companies operating in North, Central and South America.  Mr. Ridgway began his career prospecting for gold in the Yukon Territory where he learned the value added approach of grass roots exploration.  A firm believer in the gold potential of Central America, his practical, low cost approach to exploration management has led to major discoveries in Honduras and Guatemala.  He is a director of Emerick Resources Corp., Focus Ventures Ltd., Fortuna Silver Mines Inc. and Wesgold Minerals Corp., all publicly-traded resource companies.    - 33 -    Ralph Rushton, Age 49  President and Director Mr. Ralph Rushton earned a BSc. in Geology from Portsmouth in the UK, an MSc from the University of Alberta, and studied Business Communications at Simon Fraser University in Vancouver. With 15 years experience in gold mining and exploration gained mainly with the Anglo American group in Southern Africa, the Middle East and Eastern Europe, Mr. Rushtons current responsibilities include corporate development work and investor relations, and maintaining the Companys links with senior mining companies.  He is also a director of Emerick Resources Corp., Wesgold Minerals Inc. and Western Pacific Resources Corp., all publicly-traded resource companies. Mario Szotlender, Age 51 - Director Mr. Szotlender holds a degree in international relations and is fluent in several languages.  He has successfully directed Latin American affairs for numerous private and public companies over the past 25 years, specializing in developing new business opportunities and establishing relations within the investment community.  He has been involved in various mineral exploration and development joint ventures (precious metals and diamonds) in Central and South America, including heading several mineral operations in Venezuela, such as Las Cristinas in the 1980's. He was President of Mena Resources Inc. until it was purchased by Rusoro Mining Ltd., of which he also was President.  Mr. Szotlender is a Director of Endeavour Silver Corp., Focus Ventures Ltd., Fortuna Silver Mines Inc., Iron Creek Capital Corp. and Magellan Minerals Ltd., all publicly-trade resource companies.  He also consults to other public companies, and to several private exploration companies. Bradford Cooke, Age 57 - Director Bradford Cooke, P. Geo., is a professional geologist with over 30 years experience in the mining industry. He has participated in the discovery of several mineral deposits, including uranium in Labrador, gold and tungsten in B.C., gold in Suriname and silver in Mexico, and has raised over CAD$250 million in equity and joint venture financings for resource projects since 1988. Mr. Cooke received his B.Sc. Geology (Honors) degree in 1976 and a M.Sc. Geology degree in 1984. From 1976 to 1987, he worked as a project geologist for Noranda Mines, Shell Minerals, Chevron Minerals and as a geological consultant to junior mining companies. Mr. Cooke founded Canarc Resource Corp. in 1988 and Endeavour Silver Corp. in 2003, both publicly-traded resource companies. William Katzin, Age 57 - Director Mr. Katzin is a graduate of the University of Cape Town, South Africa with a Bachelor of Commerce and Law degree.  He is a member of the Institute of Chartered Accountants of British Columbia.  He has been a partner in private practice with a Vancouver firm of Chartered Accountants since 1986 and has experience working with resource and exploration companies.   - 34 -    Kevin Bales, Age 45  Chief Financial Officer Mr. Bales has 17 years of financial reporting experience in mining and information technology industries.  He currently serves as Chief Financial Officer for several public junior exploration companies with operations in Canada, the United States, Central America and South America.  Mr. Bales holds a Bachelor of Management degree with a major in accounting from the University of Lethbridge.  He is also CFO of Emerick Resources Corp., Focus Ventures Ltd., Iron Creek Resources Corp., Rackla Metals Inc., Wesgold Minerals Inc. and Western Pacific Resources Corp., all publicly-traded resource companies. Sally Whittall, Age 52  Corporate Secretary Ms. Whittall was a corporate securities legal assistant in a major Vancouver law firm for six years prior to joining a group of mineral exploration companies in 1994.  She has completed the Canadian Securities Course.  Ms. Whittall is currently the Corporate Secretary of and handles the corporate regulatory work for Emerick Resources Corp., Focus Ventures Ltd., Fortuna Silver Mines Inc., Iron Creek Resources Corp., Rackla Metals Inc., Wesgold Minerals Inc. and Western Pacific Resources Corp., all publicly-traded resource companies. There are no family relationships among the members of the board of directors or the members of senior management of the Company.  There are no arrangements or understanding with major shareholders, customers, suppliers or others, pursuant to which any member of the board of directors or member of senior management was selected.  B. Compensation. Directors and senior management are compensated in a manner consistent with their respective contributions to the overall benefit of the Company. During the fiscal year ended December 31, 2011, the Company paid to its Directors and senior management the following amounts:  NamePositionAmountSimon Ridgway (1) (2)Chairman & Chief Executive Officer$  60,000Kevin BalesChief Financial Officer$  30,737Ralph Rushton (2)President$  40,404Sally Whittall (3)Corporate Secretary$    1,839Tim Osler (3)Former Corporate Secretary$  21,175  (1) Paid to Mill Street Services Ltd., a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee.  (2) Simon Ridgways position change from President to Chairman on December 8, 2011, and Ralph Rushtons position changed from Vice-President, Corporate Development to President on December 8, 2011.  (3) Ms. Whittall was appointed Corporate Secretary in the place of Tim Osler on December 8, 2011.    - 35 -    The following stock options were granted to the Companys directors and senior management during the fiscal year ended December 31, 2011:  NamePositionNo. of
OptionsExercise
PriceExpiry DateWilliam KatzinDirector150,000$0.81July 26, 2021 The Company has no standard arrangement pursuant to which directors are compensated for their services in their capacity as such except for the granting from time to time of incentive stock options.  The following table sets out all options in the Company which are held as of April 16, 2012 by the current directors and officers:  OptioneesNumber of Shares
SubjectExercise
Price ($)Expiration DateSimon Ridgway300,000
200,000220,000720,000$0.56
$0.29
$0.69September 5, 2012
January 7, 2020
September 23, 2020Mario Szotlender100,000
125,000100,000325,000$0.56
$0.29
$0.69September 5, 2012 
January 7, 2020
September 23, 2020Ralph Rushton150,000
200,000100,000450,000$0.56
$0.29
$0.69September 5, 2012 
January 7, 2020
September 23, 2020Bradford Cooke100,000
125,000100,000325,000$0.56
$0.29
$0.69September 5, 2012 
January 7, 2020
September 23, 2020William Katzin150,000$0.81July 26, 2021Kevin Bales110,000100,000210,000$0.29
$0.69January 7, 2020
September 23, 2020Sally Whittall50,000 
70,000100,000220,000$0.56
$0.29
$0.69September 5, 2012 
January 7, 2020
September 23, 2020TOTAL:2,400,000    - 36 -    C. Board Practices. The directors of the Company are elected annually and hold office until the next Annual General Meeting of the members of the Company or until their successors in office are duly elected or appointed.  All directors are elected for a one-year term.  All officers serve at the pleasure of the board of directors.  The next annual general meeting will be held no later than December 31, 2012. Currently, there are no directors service contracts with the Company or any of its subsidiaries providing for benefits upon termination of employment. Audit Committee The Audit Committee of the Company is comprised of William Katzin, Mario Szotlender and Bradford Cooke, all of whom are independent and financially literate.  The Audit Committee Charter provides that the primary function of the Audit Committee is to assist the Board of Directors of the Company (the Board) in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the shareholders and others, the systems of internal controls and management information systems established by management and the Companys external audit process and monitoring compliance with the Companys legal and regulatory requirements with respect to its financial statements. The Audit Committee is accountable to the Board.  In the course of fulfilling its specific responsibilities hereunder, the Audit Committee is expected to maintain an open communication between the Companys external auditors and the Board.  The responsibilities of a member of the Audit Committee are in addition to such members duties as a member of the Board. The Audit Committee does not plan or perform audits or warrant the accuracy or completeness of the Companys financial statements or financial disclosure or compliance with generally accepted accounting procedures as these are the responsibility of management and the external auditors. Compensation Committee The Compensation Committee of the Company is comprised of William Katzin, Mario Szotlender and Bradford Cooke, all of whom are independent of management.  The Compensation Committee Charter provides that the function of the Compensation Committee is to assist the Board in discharging its oversight responsibilities relating to compensation, including the compensation of key senior management employees of the Company. The Compensation Committee is to review and make recommendations to the Board on an annual basis with respect to the Companys stock option plan and make recommendations respecting grants of options.  It shall also review and recommend to the Board annually, or more frequently as required, managements succession plans for the Executive Management, including the specific development plans and career planning for potential successors to occupy these positions. Disclosure Committee  The Disclosure Committee of the Company is comprised of Simon Ridgway and Ralph Rushton, and was formed in order to ensure that communications with the investing public about the Company are timely, factual, accurate, and broadly disseminated in accordance with all applicable legal and regulatory requirements.    - 37 -    The Disclosure Committee Charter extends to all employees of the Company, its Board of Directors, those authorized to speak on its behalf and all other insiders.  It covers disclosures in documents filed with the securities regulators, financial and non-financial disclosure, including managements discussion and analysis and written statements made in the Companys annual and quarterly reports, new releases, letter to shareholders, presentations by senior management and information contained on the Companys website and other electronic communications with analysts and investors, interviews with the media as well as speeches, press conferences and conference calls.  D. Employees. As at December 31, 2011, the Company had 17 employees, 13 in the Vancouver office and 4 in Guatemala and Nicaragua.  Thirteen employees provide administrative services and 4 employees provide geological services.  None of the employees is represented by a union.  E. Share Ownership. The following table sets forth, as of April 16, 2012, the number of the Companys Common Shares beneficially owned by (a) the directors and members of senior management of the Company, individually, and as a group, and (b) the percentage ownership of the outstanding Common Shares represented by such shares.  The security holders listed below are deemed to be the beneficial owners of Common Shares underlying options and warrants which are exercisable within 60 days from the above date.  Unless otherwise indicated, the shareholders listed possess sole voting and investment power with respect to the shares shown.  Title 
of ClassName and Address of Beneficial OwnerAmount
and Nature(1)Percentage 
of Class(1)CommonSimon Ridgway
Pemberton, BC5,604,452(2)6.38%CommonRalph Rushton
Vancouver, BC555,001(3)0.64%CommonMario Szotlender
Caracas, Venezuela2,033,231(4)2.33%CommonBradford Cooke
North Vancouver, BC600,000(5)0.69%CommonWilliam Katzin
West Vancouver, BC150,000(6)0.17%CommonKevin Bales
Delta, BC210,000(7)0.24%CommonSally Whittall
Maple Ridge, BC225,757(8)0.26%CommonAll Directors and Senior Management as a group
(7 individuals)9,378,44110.71%    - 38 -    (1) Based on 86,675,617 shares outstanding as at April 16, 2012, plus any Common Shares deemed to be beneficially owned by the individual (or, for the last row of the table, by the group) pursuant to options and warrants which are exercisable by the individual (or, for the last row of the table, by the group) within 60 days from the above date.  (2) 1,220,000 of these shares represent currently exercisable warrants and stock options.  3,009,640 of the free trading shares are held by Mill Street Services Ltd., a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee.  9,389 of the free trading shares are held by Elvietri Holdings, AVV, a private company owned by Simon Ridgway.  (3) 460,000 of these shares represent currently exercisable warrants and stock options.  (4) 539,285 of these shares represent currently exercisable stock options.  (5) 400,000 of these shares represent currently exercisable warrants and stock options.  (6) All of these shares represent currently exercisable stock options.  (7) All of these shares represent currently exercisable stock options.  (8) 220,000 of these shares represent currently exercisable stock options. Stock Option Plan  In January 2010, the Company established a Director and Employee Stock Option Plan, the material terms of which are as follows:  1. the Plan reserves a rolling maximum of 10% of the issued capital of the Company at the time of granting of each option, with no vesting provisions; 2. no more than 5% of the issued capital may be reserved for issuance to any one individual in any 12 month period; 3. no more than 2% of the issued capital may be reserved for issuance to any Consultant (as defined by the TSX Venture Exchange) or to an optionee providing investor relations services in any 12 month period; 4. the minimum exercise price of an option cannot be less than the Market Price (as defined by the TSX Venture Exchange) of the Companys shares; 5. options will be granted for a period of up to 10 years; 6. options are non-assignable and non-transferable; and 7. there are provisions for adjustment in the number of shares issuable on exercise of options in the event of a share consolidation, split, reclassification or other relevant change in the Companys corporate structure or capitalization. As at April 16, 2012, there were 5,140,000 shares reserved for issuance and subject to outstanding options granted under the Plan.      - 39 -    Item 7. Major Shareholders and Related Party Transactions.  A. Major Shareholders. A major shareholder of the Company is a person that beneficially owns, directly or indirectly, more than 5% of the Companys issued and outstanding Common Shares including any Common Shares deemed to be beneficially owned by the shareholder pursuant to options and warrants which are exercisable by the shareholder within 60 days from April 16, 2012.  To the best of the Companys knowledge, as of April 16, 2012 the only major shareholder in the Company is Simon Ridgway who holds or has the ability to hold 5,604,452 shares, or 6.38%. To the best of the Companys knowledge, there are no arrangements the operation of which may result in a change in control of the Company. The Company is a publicly-owned corporation, the shares of which are owned by residents of Canada, the United States, and other countries.  The Company is not controlled directly or indirectly by another corporation or any foreign government.  As of April 16, 2012, there were 86,675,617 shares of the Company outstanding, of which approximately 2,628 U.S. holders of record or beneficial holders, held a total of 15,390,045 shares (17.8%).  The number of beneficial holders was determined based on a review of the number of holders represented by Broadridge Investor Communications, a U.S. mailing service.  B. Related Party Transactions. The Company and PilaGold Inc. amalgamated and continued as one company pursuant to the provisions of the British Columbia Business Corporations Act on July 1, 2004.  Certain of the directors and officers of the Company were directors, officers and/or shareholders of PilaGold Inc. Effective as at the Amalgamation date of July 1, 2004, the Company agreed to pay to Mill Street Services Ltd. $16,000 per month for Mr. Ridgways services as President of the Company.  Mill Street Services Ltd. is a private company owned by the Ridgway Family Trust, of which Simon Ridgway is the Trustee.  During 2011, Mill Street billed portions of this fee to other public companies of which Mr. Ridgway is a director for his services rendered to those companies and the portion billed to the Company was $5,000 per month. During the fiscal year ended December 31, 2011, the Company paid an aggregate of $164,155 to directors, officers and companies which have common directors with the Company for consulting, management and administrative services.  C. Interests of Experts and Counsel. Not Applicable.    - 40 -      Item 8. Financial Information.  A. Consolidated Statements and Other Financial Information. The financial statements as required under Item 17 are attached hereto and found immediately following Item 19 of this Annual Report.  The Companys auditor is BDO Canada LLP, Chartered Accountants.  An auditors report of BDO Canada LLP with respect to the fiscal years ended December 31, 2011 and 2010 and the balance sheets as at December 31, 2011 and 2010 and January 1, 2010, are included herein immediately preceding the consolidated financial statements. There are no legal proceedings currently pending which may have, or have had in the recent past, significant effects on the Companys financial position or profitability. The Company has no history of paying dividends and the Company does not contemplate that any dividends will be paid on its shares in the immediate or the foreseeable future.  The present policy of the Company is to retain future earnings for use in its operations and the expansion of its business.  B. Significant Changes. There have been no significant changes in the Company since the date of the Companys annual financial statements.    Item 9. The Offer and Listing.  The Company shares were listed and posted for trading on the TSX Venture Exchange (the TSXV) (formerly the Canadian Venture Exchange and before that, the Vancouver Stock Exchange) on October 7, 1998 and currently trades on the TSXV.  The TSXV trading symbol is RDU.  Effective October 4, 2002, the Company began trading on the Regulated Unofficial Market of the Frankfurt Stock Exchange under the trading symbol RE1.  The Company has the German Security ID number of 725224. Effective December 22, 2004, the Companys shares began trading on the U.S. Over-the-Counter Bulletin Board (OTCBB) under the trading symbol RDUFF.  A. Offer and Listing Details.  The following tables set forth the reported high and low closing bid prices on the TSXVand the OTCBBfor (a) the Companys five most recent fiscal years; (b) each quarterly period for the Companys past two fiscal years and for the first quarter of the Companys 2012 fiscal year, and (c) for each of the three months from December 2011 to March 2012.    - 41 -    High and Low Price for the Five Most Recent Fiscal YearsFiscal Year ended December 31TSXV (CAD$)OTCBB (US$)HighLowHighLow2011$0.93$0.20$0.93$0.182010$0.97$0.20$0.97$0.172009$0.28$0.09$0.33$0.062008$0.58$0.04$0.57$0.022007$0.78$0.39$0.77$0.36  High and Low Prices for Each Quarterly Period for the Past Two Fiscal Years and For the First Quarter of Fiscal 2012Period EndedTSXV (CAD$)OTCBB (US$)HighLowHighLowMarch 31, 2012$0.39$0.24$0.39$0.23December 31, 2011$0.49$0.20$0.49$0.18September 30, 2011$0.93$0.37$0.93$0.35June 30, 2011$0.84$0.44$0.88$0.48March 31, 2011$0.92$0.53$0.93$0.54December 31, 2010$0.97$0.50$0.97$0.53September 30, 2010$0.82$0.28$0.78$0.25June 30, 2010$0.41$0.28$0.43$0.27March 31, 2010$0.46$0.20$0.43$0.17    - 42 -    High and Low Prices for the Most Recent Six MonthsTSXV (CAD$)OTCBB (US$)PeriodHighLowHighLowMarch 2012$0.35$0.24$0.35$0.24February 2012$0.39$0.30$0.39$0.30January 2012$0.35$0.24$0.35$0.23December 2011$0.41$0.20$0.40$0.18November 2011$0.44$0.31$0.44$0.33October 2011$0.49$0.32$0.49$0.29 On April 16, 2012, the closing price of the Common Shares was $0.34 per Common Share on TSXV and US$0.33 per Common Share on the OTCBB.  During the last three years, the Common Shares have not been subject to any trading suspensions.  B. Plan of Distribution. Not Applicable  C. Markets. The Companys shares were listed and posted for trading on the TSX Venture Exchange (the TSXV) (formerly the Canadian Venture Exchange and before that, the Vancouver Stock Exchange) on October 7, 1998 and currently trades on the TSXV.  The TSXV trading symbol is RDU.  Effective October 4, 2002, the Companys shares began trading on the Regulated Unofficial Market of the Frankfurt Stock Exchange under the trading symbol RE1.  The Company has the German Security ID number of 725224. Effective December 22, 2004, the Companys shares began trading on the U.S. Over-the-Counter Bulletin Board under the trading symbol RDUFF.  D. Selling Shareholders. Not Applicable.  E. Dilution. Not Applicable  F. Expenses of the Issue.  Not Applicable   - 43 -    Item 10. Additional Information.  A. Share Capital. Not Applicable  B. Articles of Association. The Companys Articles do not contain any restrictions on the type of business in which the Company may engage. Section 17 of the Companys Articles provides that, A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act.  A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting. Section 13.5 of the Articles provides that the directors may from time to time determine the remuneration of directors.  However, a disclosable interest does not include compensation to be paid to a director, and therefore such interest is not required to be disclosed pursuant to Section 17 of the Articles.  Management believes that, in the absence of an independent quorum, a director cannot vote compensation to himself or herself. The borrowing powers of the directors are addressed in Part 8, which states that, The Company, if authorized by the directors, may:  (1) borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;  (2) issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;  (3) guarantee the repayment of money by any other person or the performance of any obligation of any other person; and  (4) mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company. There is no provision in the Companys Articles regarding a mandatory age for retirement of directors.  There is no requirement for a director to hold shares of the Company.    - 44 -    All of the authorized shares of common stock of the Company are of the same class and, once issued, rank equally as to dividends, voting powers, and participation in assets.  Holders of common stock are entitled to one vote for each share held of record on all matters to be acted upon by the shareholders.  Holders of common stock are entitled to receive such dividends as may be declared from time to time by the Board of Directors, in its discretion, out of funds legally available therefor. Upon liquidation, dissolution or winding up of the Company, holders of common stock are entitled to receive pro rata the assets of Company, if any, remaining after payments of all debts and liabilities.  No shares have been issued subject to call or assessment.  There are no pre-emptive or conversion rights and no provisions for redemption or purchase for cancellation, surrender, or sinking or purchase funds. Any modification, amendment or variation of such shareholder rights or provisions are governed by the British Columbia Business Corporations Act and must be approved by a vote of at least 2/3 of the votes cast at a shareholders meeting.  Unless the British Columbia Business Corporations Act or the Companys Articles otherwise provide, any action to be taken by a resolution of the members may be taken by an ordinary resolution or by a vote of a majority of the shares represented at the shareholders meeting. The conditions governing the manner in which annual general meetings and extraordinary general meetings of shareholders are convoked, including the conditions of admission are described in the Articles of the Company in Section 10  Meetings of Shareholders. Section 10.1 states that, Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and place as may be determined by the directors. Section 10.4 states that, The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:  (1) if and for so long as the Company is a public company, 21 days;  (2) otherwise, 10 days.  The conditions of admission are described in Section 11.5 where it is stated that, The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting. There are no limitations on the rights to own securities.    - 45 -    There is no provision of the Companys Articles, charter or bylaws that would have an effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company (or any of its subsidiaries). There are no conditions imposed by the Articles governing changes in the capital, where such conditions are more stringent that is required by law.  C. Material Contracts. Other than as disclosed elsewhere in this Annual Report, the Company has not entered into any material contracts, other than contracts entered into in the ordinary course of business, during the two year period immediately preceding the filing of this Annual Report.  D. Exchange Controls. The Company is not aware of any Canadian federal or provincial laws, decrees, or regulations that restrict the export or import of capital, including foreign exchange controls, or that affect the remittance of dividends, interest or other payments to non-Canadian holders of the common shares.  There are no limitations on the right of non-Canadian owners to hold or vote the common shares imposed by Canadian federal or provincial law or by the charter or other constituent documents of the Company.  E. Taxation The following summary of the material Canadian federal income tax consequences are stated in general terms and are not intended to be advice to any particular shareholder.  Each prospective investor is urged to consult his or her own tax advisor regarding the tax consequences of his or her purchase, ownership and disposition of Common Shares.  The tax consequences to any particular holder of Common Shares will vary according to the status of that holder as an individual, trust, corporation or member of a partnership, the jurisdiction in which that holder is subject to taxation, the place where that holder is resident and, generally, according to that holders particular circumstances.  This summary is applicable only to holders who are resident in the United States, have never been resident in Canada, deal at arms length with the Company, hold their Common Shares as capital property and who will not use or hold the Common Shares in carrying on business in Canada.  Special rules, which are not discussed in this summary, may apply to a United States holder that is an issuer that carries on business in Canada and elsewhere. This summary is based upon the provisions of the Income Tax Act of Canada and the regulations thereunder (collectively, the Tax Act or ITA) and the Canada-United States Tax Convention (the Tax Convention) as at the date of this Annual Report and the current administrative practices of Canada Customs and Revenue Agency.  This summary does not take into account provincial income tax consequences. Management urges each holder to consult his own tax advisor with respect to the income tax consequences applicable to him in his own particular circumstances.    - 46 -    Canadian Income Tax Consequences The summary below is restricted to the case of a holder (a Holder) of one or more Common Shares who for the purposes of the Tax Act is a non-resident of Canada, holds his Common Shares as capital property and deals at arms length with the Company. Dividends A Holder will be subject to Canadian withholding tax (Part XIII Tax) equal to 25%, or such lower rates as may be available under an applicable tax treaty, of the gross amount of any dividend paid or deemed to be paid on his Common Shares. Under the Tax Convention, the rate of Part XIII Tax applicable to a dividend on Common Shares paid to a Holder who is a resident of the United States is, if the Holder is a company that beneficially owns at least 10% of the voting stock of the Company, 5% and, in any other case, 15% of the gross amount of the dividend. The Company will be required to withhold the applicable amount of Part XIII Tax from each dividend so paid and remit the withheld amount directly to the Receiver General for Canada for the account of the Holder. Disposition of Common Shares A Holder who disposes of Common Shares, including by deemed disposition on death, will not be subject to Canadian tax on any capital gain thereby realized unless the common Share constituted taxable Canadian property as defined by the Tax Act. Generally, a common share of a public corporation will not constitute taxable Canadian property of a Holder unless he held the common share as capital property used by him carrying on a business in Canada, or he or persons with whom he did not deal at arms length alone or together held or held options to acquire, at any time within the 60 months preceding the disposition, 25% or more of the issued shares of any class of the capital stock of the Company. A Holder who is a resident of the United States and realizes a capital gain on disposition of Common Shares that was taxable Canadian property will nevertheless, by virtue of the Treaty, generally be exempt from Canadian tax thereon unless (a) more than 50% of the value of the Common Shares is derived from, or from an interest in, Canadian real estate, including Canadian mineral resources properties, (b) the Common Shares formed part of the business property of a permanent establishment that the Holder has or had in Canada within the 12 months preceding disposition, or (c) the Holder (i) was a resident of Canada at any time within the ten years immediately preceding the disposition, and for a total of 120 months during any period of 20 consecutive years, preceding the disposition, and (ii) owned the Common Shares when he ceased to be resident in Canada. A Holder who is subject to Canadian tax in respect of a capital gain realized on disposition of Common Shares must include one half of the capital gain (taxable capital gain) in computing his taxable income earned in Canada.  The Holder may, subject to certain limitations, deduct one half of any capital loss (allowable capital loss) arising on disposition of taxable Canadian property from taxable capital gains realized in the year of disposition in respect to taxable Canadian property and, to the extent not so deductible, from such taxable capital gains of any of the three preceding years or any subsequent year.    - 47 -    United States Federal Income Tax Consequences The following is a discussion of material United States Federal income tax consequences, under the law, generally applicable to a U.S. Holder (as defined below) of Common Shares.  This discussion does not cover any state, local or foreign tax consequences. The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the Code), Treasury Regulations, published Internal Revenue Service (IRS) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possible on a retroactive basis, at any time.  In addition, the discussion does not consider the potential effects, both adverse and beneficial, or recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.  The discussion is for general information only and it is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of Common Shares of the Company.  Each holder and prospective holder of Common Shares of the Company is advised to consult their own tax advisors about the federal, state, local, and foreign tax consequences of purchasing, owning and disposing of Common Shares of the Company applicable to their own particular circumstances. U.S. Holders As used herein, a (U.S. Holder) includes a holder of Common Shares of the Company who is a citizen or resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof, an estate whose income is taxable in the United States irrespective of source or a trust subject to the primary supervision of a court within the United States and control of a United States fiduciary as described in Section 7701(a)(30) of the Code.  This summary does not address the tax consequences to, and U.S. Holder does not include, persons subject to special provisions of Federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a functional currency other than the U.S. dollar, shareholders who hold Common Shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their Common Shares through the exercise of employee stock options or otherwise as compensation for services.  This summary is limited to U.S. Holders who own Common Shares as capital assets.  This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire Common Shares. Distribution of Common Shares U.S. Holders receiving dividend distributions (including constructive dividends) with respect to common shares of the Company are required to include in gross income for United States Federal income tax purposes the gross amount of such distributions equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions.  Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holders United States Federal Income tax liability or, alternatively, for individuals may be deducted in computing the U.S. Holders United States Federal taxable income by those individuals who itemize deductions.  (See more detailed discussion at Foreign Tax Credit below).  To the extent that distributions exceed current or accumulated earnings and profits of the Company, they generally will be treated first as a return of capital up to the U.S. Holders adjusted basis in the common shares and thereafter as gain from the sale or exchange of the common shares. Dividend income will be taxed at marginal tax rates applicable to ordinary income while preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust.  There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation.    - 48 -   In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally any gain or loss recognized upon a subsequent sale of other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss. Dividends paid on the common shares of the Company will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.  A U.S. Holder which is a corporation may, under certain circumstances, be entitled to a 70% deduction of the United States source portion of dividends received from the Company (unless the Company qualifies as a foreign personal holding company or a passive foreign investment company, as defined below) if such U.S. Holder owns shares representing at least 10% of the voting power and value of the Company.  The availability of this deduction is subject to several complex limitations which are beyond the scope of this discussion. Under current Treasury Regulations, dividends paid on the Companys common shares, if any, generally will not be subject to information reporting and generally will not be subject to U.S. backup withholding tax. However, dividends and the proceeds from a sale of the Companys common shares paid in the U.S. through a U.S. or U.S. related paying agent (including a broker) will be subject to U.S. information reporting requirements and may also be subject to the 30% U.S. backup withholding tax, unless the paying agent is furnished with a duly completed and signed Form W-9. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against the U.S. Holders U.S. federal income tax liability, provided the required information is furnished to the IRS. Foreign Tax Credit For individuals whose entire income from sources outside the United States consists of qualified passive income, the total amount of creditable foreign taxes paid or accrued during the taxable year does not exceed $300 ($600 in the case of a joint return) and an election is made under section 904(k), the limitation on credit does not apply. A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of Common Shares of the Company may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld.  Generally, it will be more advantageous to claim a credit because a credit reduces United States Federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayers income subject to tax.  This election is made on a year-by-year basis and applies to all foreign income taxes (or taxes in lieu of income tax) paid by (or withheld from) the U.S. Holder during the year.  There are significant and complex limitations which apply to the credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holders United States income tax liability that the U.S. Holders foreign source income bears to his/her or its worldwide taxable income in the determination of the application of this limitation.  The various items of income and deduction must be classified into foreign and domestic sources. Complex rules govern this classification process.  In addition, this limitation is calculated separately with respect to specific classes of income such as passive income, high tax income, financial services income, and certain other classifications of income.  Dividends distributed by the Company will generally constitute passive income or, in the case of certain U.S. Holders, financial services income for these purposes.  The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and management urges holders and prospective holders of common shares of the Company to consult their own tax advisors regarding their individual circumstances.    - 49 -   Disposition of Common Shares A U.S. Holder will recognize gain or loss upon the sale of Common Shares of the Company equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholders tax basis in the Common Shares of the Company.  Preferential tax rates apply to long-term capital gains of U.S. Holders, which are individuals, estates or trusts.  This gain or loss will be capital gain or loss if the Common Shares are capital assets in the hands of the U.S. Holder, which will be a short-term or long-term capital gain or loss depending upon the holding period of the U.S. Holder.  Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year.  Deductions for net capital losses are subject to significant limitations.  For U.S. Holders which are not corporations, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted, but individuals may not carry back capital losses.  For U.S. Holders which are corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted. Other Considerations In the following circumstances, the above sections of the discussion may not describe the United States Federal income tax consequences resulting from the holding and disposition of Common Shares of the Company. Passive Foreign Investment Company As a foreign corporation with U.S. Holders, the Company could potentially be treated as a passive foreign investment company (PFIC), as defined in Section 1297 of the Code, depending upon the percentage of the Companys income which is passive, or the percentage of the Companys assets which is held for the purpose of producing passive income. Certain United States income tax legislation contains rules governing PFICs, which can have significant tax effects on U.S. shareholders of foreign corporations.  These rules do not apply to non-U.S. shareholders.  Section 1297(a) of the Code defines a PFIC as a corporation that is not formed in the United States and, for any taxable year, either (i) 75% or more of its gross income is passive income, which includes interest, dividends and certain rents and royalties or (ii) the average percentage, by fair market value (or, if the company is a controlled foreign corporation or makes an election, by adjusted tax basis), of its assets that produce or are held for the production of passive income is 50% or more.  The taxation of a US shareholder who owns stock in a PFIC is extremely complex and is therefore beyond the scope of this discussion.  Management urges US persons to consult with their own tax advisors with regards to the impact of these rules.    - 50 -    Controlled Foreign Corporation A Controlled Foreign Corporation (CFC) is a foreign corporation more than 50% of whose stock by vote or value is, on any day in the corporations tax year, owned (directly or indirectly) by U.S. Shareholders.  If more than 50% of the voting power of all classes of stock entitled to vote is owned, actually or constructively, by citizens or residents of the United States, United States domestic partnerships and corporations or estates or trusts other than foreign estates or trusts, each of whom own actually or constructively 10% or more of the total combined voting power of all classes of stock of the Company, then the Company could be treated as a controlled foreign corporation under Subpart F of the Code.  This classification would affect many complex results, one of which is the inclusion of certain income of a CFC, which is subject to current U.S. tax. The United States generally taxes United States Shareholders of a CFC currently on their pro rata shares of the Subpart F income of the CFC. Such United States Shareholders are generally treated as having received a current distribution out of the CFCs Subpart F income and are also subject to current U.S. tax on their pro rata shares of the CFCs earnings invested in U.S. property.  The foreign tax credit described above may reduce the U.S. tax on these amounts. In addition, under Section 1248 of the Code, gain from the sale or exchange of shares by a U.S. Holder of common shares of the Corporation, and such U.S. Holder owned 10% or more of the voting power at any time during the five-year period ending with the sale or exchange is treated as ordinary income to the extent of earnings and profits of the Company (accumulated in corporate tax years beginning after 1962, but only while the shares were held and while the Company was controlled) attributable to the shares sold or exchanged. If a foreign corporation is both a PFIC and a CFC, the foreign corporation generally will not be treated as a PFIC with respect to the United States Shareholders of the CFC.  This rule generally will be effective for taxable years of United States Shareholders beginning after 1986 and for taxable years of foreign corporations ending with or within such taxable years of United States Shareholders.  The PFIC provisions continue to apply in the case of PFIC that is also a CFC with respect to the U.S. Holders that are less than 10% shareholders.  Because of the complexity of Subpart F, a more detailed review of these rules is outside of the scope of this discussion. The amount of any backup withholding will not constitute additional tax and will be allowed as a credit against the U.S. Holders federal income tax liability. Filing of Information Returns Under a number of circumstances, a United States Investor acquiring Common Shares of the Company may be required to file an information return with the Internal Revenue Service Center where they are required to file their tax returns.  In particular, any U.S. Holder who becomes the owner, directly or indirectly, of 10% or more of the Common Shares of the Company will be required to file such a return.  Other filing requirements may apply, and management urges U.S. Holders to consult their own tax advisors concerning these requirements.  F. Dividends and Paying Agents. Not Applicable  G. Statement by Experts. Not Applicable    - 51 -    H. Documents on Display. The documents concerning the Company which are referred to in this Annual Report may be inspected at the Companys executive offices, located at Suite 650, 200 Burrard Street, Vancouver, BC V6C 3L6.  I. Subsidiary Information. Not Applicable    Item 11. Quantitative and Qualitative Disclosures about Market Risk.  Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.  Market prices are comprised of three types of risk: foreign currency risk, interest rate risk, and equity price risk.  Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.  The Company is exposed to fluctuations in foreign currencies through its operations in foreign countries.  The Company monitors this exposure, but has no hedge positions.  As at December 31, 2011, cash totalling $255,717 (December 31, 2010: $252,026) was held in US dollars, $2,441 (December 31, 2010: $3,773) in Nicaragua Cordoba, $8,091 (December 31, 2010: $15,220) in Guatemala Quetzal, $21,859 (December 31, 2010: $10,096) in Mexican Pesos and $696 (December 31, 2010: $837) in Peruvian Sols. Based on the above net exposures at December 31, 2011, a 10% depreciation or appreciation of the above currencies against the Canadian dollar would approximately result in a $29,000 increase or decrease in the Companys after tax net earnings, respectively. Interest Rate Risk Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.  The Company does not have any borrowings.  Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions.  The Company considers this risk to be limited. Equity Price Risk Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets.  The Companys available-for-sale investments are exposed to significant equity price risk due to the potentially volatile and speculative nature of the businesses in which the investments are held.  The available-for-sale investments held in Focus, Rackla Warrants and Fortuna, and previously held in Solomon and Wesgold, are monitored by Management with decisions on sale taken at Board level.  A 10% decrease in fair value of the shares would approximately result in a $64,000 decrease in equity.   Item 12. Description of Securities Other than Equity Securities. Not Applicable    - 52 -      PART II    Item 13. Defaults, Dividend Arrearages and Delinquencies. None.    Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds. None.    Item 15. Controls and Procedures  Disclosure Controls and Procedures The Companys management, including the Chief Executive Officer and the Chief Financial Officer, has reviewed and evaluated the effectiveness of the Companys disclosure controls and procedures as of December 31, 2011.  Based on that review and evaluation, management has concluded that the Companys disclosure controls and procedures are effective in providing management with all material information required to be disclosed in this annual report on a timely basis.  Managements Annual Report on Internal Control over Financial Reporting  Management is responsible for establishing and maintaining adequate internal control over financial reporting. All internal control systems, no matter how well designed, have inherent limitations and may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.  Managements framework for evaluating the effectiveness of its internal controls is based upon the criteria established in Internal Control Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission.  As at December 31, 2011, management assessed the effectiveness of our internal controls over financial reporting and concluded that such internal controls over financial reporting are effective and that there were no material weaknesses in our internal controls over financial reporting.  Attestation Report of the Registered Accounting Firm. This annual report does not include an attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys registered public accounting firm pursuant to the rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this Annual Report.     - 53-    Changes in Internal Controls Over Financial Reporting Other than controls and procedures relating to the Companys transition to IFRS, there has been no material change in the Companys internal controls over financial reporting that occurred during the period covered by this Annual Report, that has materially affected or is reasonably likely to materially affect, the Companys internal controls over financial reporting.   Item 16. [Reserved]  Item 16A. Audit Committee Financial Expert  The Company has identified among the three directors currently serving on the audit committee, William Katzin as an Audit Committee Financial Expert.  Mr. Katzin has been a Chartered Accountant for over 25 years and has experience working with resource and exploration companies.  Item 16B. Code of Ethics The Company has not adopted a formal written code of ethics given its relatively small size.  Directors and officers of the Company are subject to the laws of the Province of British Columbia, Canada, whereby they are required to act honestly, in good faith and in the best interests of the Company.  Item 16C. Principal Accountant Fees and Services The chart below sets forth the total amounts billed the Company by BDO Canada LLP during the Companys fiscal years ended December 31, 2011 and 2010, and breaks down these amounts by category of service:  Years ended December 3120112010Audit:$98,500$95,000Audit Related:$51,500-Tax (tax return preparation)$5,500$6,200All Other Fees--Total$155,500$101,200 Audit is the aggregate amount billed for the audit of the Companys consolidated annual financial statements in connection with statutory and regulatory filings or engagements.  Audit Related Fees consists of $4,500 for IFRS transition review and $47,000 for services relating to the Spin-Out.    - 54 -    Audit Committee's pre-approval policies and procedures The Audit Committee nominates and engages the independent auditors to audit the financial statements, and approves all audit, audit-related services, tax services and other services provided by the Companys outside auditors.  Any services provided by the auditors that are not specifically included within the scope of the audit must be pre-approved by the audit committee prior to any engagement.  The audit committee is permitted to approve certain fees for audit-related services, tax services and other services pursuant to a de minimusexception before the completion of the engagement.  In 2011, none of the fees paid to the auditors were approved pursuant to the de minimusexception.  Item 16D. Exemptions from the Listing Standards for Audit Committees. Not Applicable  Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers. None  Item 16F. Changes in Registrants Certifying Accountant. None  Item 16G. Corporate Governance.  Not applicable  Item 16H. Mine Safety Disclosure.  Not applicable   PART III    Item 17. Financial Statements. The Companys Consolidated Financial Statements are stated in Canadian Dollars and are prepared in accordance with IFRS as issued by the IASB, effective with the Companys transition to IFRS on January 1, 2011. Previously, the Companys consolidated financial statements were prepared in accordance with Canadian Generally Accepted Accounting Principles (CGAAP). Material measurement differences between CGAAP and accounting principles in the United States, applicable to the Company, were described in the Companys previous consolidated financial statements. The Consolidated Financial Statements of the Company as required under Item 17 of Form 20-F attached hereto are individually listed under Item 19, and are found immediately following the text of this Annual Report.  The audit report of BDO Canada LLP, Chartered Accountants is included herein immediately preceding the Consolidated Financial Statements.      - 55 -    Item 18. Financial Statements. Not Applicable    Item 19. Exhibits. Financial Statements The Consolidated Financial Statements of the Corporation and exhibits listed below are filed with this Annual Report on Form 20-F in the United States. The following financial statements are attached to and form part of this Annual Report: Consolidated Financial Statements of the Company-
Report of Independent Registered Public Accounting Firm of BDO Canada LLP, Chartered Accountants-
Consolidated Statements of Financial Position as at December 31, 2011, December 31, 2010 and January 1, 2010-
Consolidated Statements of Comprehensive Loss for the years ended December 31, 2011 and 2010-
Consolidated Statements of Changes in Equity for the years ended December 31, 2011 and 2010-
Consolidated Statements of Cash Flows for the years ended December 31, 2011 and 2010-
Notes to the Consolidated Financial Statements of the Company for the year ended December 31, 2011 Exhibits The following exhibits are attached to and form part of this Annual Report: Exhibit No.Description1 (1)Certificate of Amalgamation and Articles of the Company dated July 1, 2004.4 (2)Agreement dated June 2, 2008 between the Company and Kappes, Cassiday & Associates.4 (3)Agreement dated December 23, 2009 between the Company and B2Gold Corp.4Agreement dated November 3, 2011 between the Company and Rackla Metals Inc.4Agreement dated April 6, 2012 between the Company and B2Gold Corp.8 (4)List of Subsidiaries18 (5)Letter Regarding Accounting Policy Change31.1Section 302 Certification of the President, C.E.O. and C.F.O.32.1Section 906 Certification of the President, C.E.O. and C.F.O.    - 56 -    (1) Incorporated by reference to the Companys Form 20-F Registration Statement dated July 13, 2005. (2) Incorporated by reference to the Companys Form 20-F Registration Statement dated May 27, 2009. (3) Incorporated by reference to the Companys Form 20-F Registration Statement dated June 30, 2010. (4) See Item 4, Organizational Structure, herein. (5) Incorporated by reference to the Companys Form 20F Registration Statement dated June 28, 2011.     - 57 -         [radiusform_20f2011004.jpg]   (An Exploration Stage Company) CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2011 (Expressed in Canadian Dollars)      - 58 -    [radiusform_20f2011005.jpg] Independent Auditors Report  To the shareholders of Radius Gold Inc.   We have audited the accompanying consolidated financial statements of Radius Gold Inc. which comprises the consolidated statements of financial position as at December 31, 2011 and 2010 and January 1, 2010, and the consolidated statements of comprehensive loss, changes in equity and cash flows for the years ended December 31, 2011 and 2010 and related notes which includes a summary of significant accounting policies and other explanatory information.  Management's Responsibility for the Financial Statements  Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.  Auditors Responsibility  Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.  An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.  Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Radius Gold Inc. as at December 31, 2011 and 2010 and January 1, 2010 and its financial performance and its cash flows for the years ended December 31, 2011 and 2010 then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. (signed) BDO Canada LLP  Chartered AccountantsVancouver, CanadaApril 25, 2012   - 59 -    RADIUS GOLD INC. (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF FINANCIAL POSITION For the year ended December 31, 2011 (Expressed in Canadian Dollars)  December 31,December 31,January 1,201120102010(Note 20)(Note 20)ASSETSCurrent assetsCash and cash equivalents (Notes 5 and 8)$       1,763,574$       7,715,347$          499,266Available-for-sale investments (Notes 6 and 8)641,707994,6091,715,650Advances and other receivables (Note 15)766,939303,610111,706Taxes receivable361,69795,5049,945Due from related parties (Note 15)541,889176,508152,948Prepaid expenses and deposits349,833145,14852,829Total current assets4,425,6399,430,7262,542,344Non-current assetsLong-term deposits70,42523,88123,881Property and equipment (Note 7)251,100219,708180,604Exploration and evaluation assets  (Notes 8 and 9)4,103,3464,909,7354,171,592Investment in associate (Note 8)1,500,647--Total non-current assets5,925,5185,153,3244,376,077TOTAL ASSETS$     10,351,157$     14,584,050$       6,918,421LIABILITIES and SHAREHOLDERS' EQUITYCurrent liabilitiesAccounts payable and accrued liabilities (Note 15)$          775,439$          547,978$          246,549Other liability (Note 10)-637,754-Total liabilities775,4391,185,732246,549Shareholders' equityShare capital  (Note 12)56,592,61352,631,20942,587,194Other equity reserve6,251,3385,966,6274,332,232Deficit(53,312,682)(45,078,001)(40,499,827)Accumulated other comprehensive (loss) income44,449(121,517)252,273Total shareholders' equity9,575,71813,398,3186,671,872TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY$     10,351,157$     14,584,050$       6,918,421  APPROVED ON BEHALF OF THE BOARD OF DIRECTORS AND AUTHORIZED FOR ISSUE ON APRIL 25, 2012 BY:  Simon Ridgway, Director Mario Szotlender, Director  Simon Ridgway Mario Szotlender The accompanying notes form an integral part of these consolidated financial statements    - 60 -    RADIUS GOLD INC. (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  20112010(Note 20)EXPLORATION EXPENDITURES$       6,390,053$       2,838,390GENERAL AND ADMINISTRATIVE EXPENSESAmortization58,33448,000Consulting fees (Note 15)114,54430,000Donations1,5932,000Legal and audit fees132,763133,896Management fees (Note 15)60,00060,000Office and miscellaneous (Note 10)62,18646,344Public relations124,662103,779Rent and utilities25,71425,105Repair and maintenance27,8026,549Salaries and wages (Note 15)216,435247,271Share-based compensation (Note 13)306,9151,612,792Telephone and communications18,79812,300Transfer agent and regulatory fees25,65934,936Travel and accommodation67,05882,0431,242,4632,445,015Loss before other items(7,632,516)(5,283,405)OTHER INCOME (EXPENSES)Share of post-tax profits (losses) of associate (Note 8)(6,250)-Gain on distribution (Note 8)4,807,443-Plan of Arrangement costs (Note 8)(289,313)-Foreign currency exchange gain15,13410,106Gain on disposal of property and equipment2,8864,365Gain on sale of available-for-sale investments-1,213Gain from mineral property option agreements157,088247,447Investment income61,39734,275Write off of accounts payable and accrued liabilities-52,500Write off of prepaid expenses and deposits-(3,208)Loss before income taxes( 2,884,131)(4,936,707)Deferred income tax recovery (Note 14)716,754358,533Net loss for the year$    (2,167,377)$    (4,578,174)Other comprehensive income (loss)Fair value gains (losses) on available-for-sale investments (net of tax)165,966(373,790)Total comprehensive loss$    (2,001,411)$    (4,951,964)Basic and diluted loss per share$(0.03)$(0.07)Weighted average number of common shares outstanding83,231,67961,530,309  The accompanying notes form an integral part of these consolidated financial statements    - 61 -    RADIUS GOLD INC. (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY For the year ended December 31, 2011 (Expressed in Canadian Dollars)  Number of common SharesShare capitalOther equity reserveAccumulated other comprehensive income (loss)DeficitTotalBalance, January 1, 2010 (Note 20)53,548,488$    42,587,194$     4,332,232$            252,273$   (40,499,827)$      6,671,872Loss for the year----(4,578,174)(4,578,174)Shares issued for private placements24,406,1439,816,211---9,816,211Shares issued for finders' fees953,549415,404---415,404Shares issued for property acquisition222,509111,300---111,300Options exercised460,000187,100---187,100Warrants exercised136,85068,650---68,650Transfer of other equity reserve on
exercise of options-137,282(137,282)---Transfer of other equity reserve on
exercise of warrants-243(243)---Share issuance costs-(692,175)159,128--(533,047)Available-for-sale investments---(373,790)-(373,790)Share-based compensation--1,612,792--1,612,792Balance, December 31, 201079,727,53952,631,2095,966,627(121,517)(45,078,001)13,398,318Loss for the year----(2,167,377)(2,167,377)Shares issued for private placements6,100,0003,660,000---3,660,000Shares issued for finders' fees199,250119,550---119,550Shares issued for property acquisition159,512119,700---119,700Options exercised105,00037,250---37,250Warrants exercised384,316195,448---195,448Transfer of other equity reserve on
exercise of options-33,213(33,213)---Transfer of other equity reserve on
exercise of warrants-22,252(22,252)---Share issuance costs-(226,009)33,261--(192,748)Available-for-sale investments---165,966-165,966Fair value of distributed assets (Note 8)----(6,067,304)(6,067,304)Share-based compensation (Note 13)--306,915--306,915Balance, December 31, 201186,675,617$    56,592,613$     6,251,338$        44,449$  (53,312,682)$     9,575,718 The accompanying notes form an integral part of these consolidated financial statements   - 62 -    RADIUS GOLD INC. (An Exploration Stage Company) CONSOLIDATED STATEMENTS OF CASH FLOWS For the year ended December 31, 2011 (Expressed in Canadian Dollars)   20112010(Note 20)Cash provided by (used in):OPERATING ACTIVITIESLoss for the year$    (2,167,377)$   (4,578,174)Items not involving cash:Amortization58,33448,000Gain from mineral property option agreements(157,088)(247,447)Gain from disposal of property and equipment(2,886)(4,365)Write off of prepaid expenses and deposits-3,208Write off of accrued liabilities-(52,500)Investment income(61,397)-Gain on disposal of investments-(1,213)Gain on distribution(4,807,443)-Loss on associate6,250-Deferred income tax expense (recovery)(716,754)(358,533)Share-based compensation306,9151,612,792(7,541,446)(3,578,232)Changes in non-cash working capital items:Advances and other receivables(463,329)(191,904)Taxes receivable(266,193)(83,562)Prepaid expenses(204,685)(95,527)Long-term deposits(46,544)-Due from related parties(365,381)(23,560)Accounts payable and accrued liabilities227,461352,047(8,660,117)(3,620,738)FINANCING ACTIVITIESProceeds on issuance of common shares3,892,69811,098,514Costs of issue of shares(73,198)(117,643)3,819,50010,980,871INVESTING ACTIVITIESCash distributed on distribution of Rackla Metals shares(1,000,000)-Expenditures on exploration and evaluation asset acquisition costs(191,919)(717,544)Investment income61,397-Gain from mineral property option agreements106,206120,574Proceeds from sale of assets24,47728,199Proceeds from sale of available-for-sale investments1,412539,299Purchase of property & equipment(113,599)(110,938)(1,112,026)(140,410)Foreign exchange on opening cash and cash equivalents870(3,642)INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS(5,951,773)7,216,081Cash and cash equivalents - beginning of year7,715,347499,266CASH AND CASH EQUIVALENTS  -  END OF YEAR$       1,763,574$      7,715,347 The accompanying notes form an integral part of these consolidated financial statements    - 63 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  1. CORPORATE INFORMATION  Radius Gold Inc. (the Company) was formed by the amalgamation of Radius Explorations Ltd. and PilaGold Inc. effective on July 1, 2004.  The Company is domiciled in Vancouver, Canada and is engaged in acquisition and exploration of mineral properties located primarily in Central America and up to December 8, 2011, in Canada (Note 8).  The address of the Companys head office is #650  200 Burrard Street, Vancouver, BC, Canada V6C 3L6.  2. BASIS OF PREPARATION  Statement of Compliance  These consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).  This is the first time that the Company has prepared its consolidated financial statements in accordance with IFRS, having previously prepared its consolidated financial statements in accordance with pre-changeover Canadian Generally Accepted Accounting Principles (pre-changeover Canadian GAAP).  An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Company is provided in Note 20.  Basis of Measurement  These consolidated financial statements have been prepared on the historical cost basis, as modified by any revaluation of available-for-sale financial assets.  The consolidated financial statements are presented in Canadian dollars (CDN), which is also the Companys functional currency.  The preparation of financial statements in compliance with IFRS requires management to make certain critical accounting estimates. It also requires management to exercise judgment in applying the Companys accounting policies.  The areas involving a higher degree of judgment of complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 4.  Nature of Operations  These financial statements have been presented on the basis that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  Realization values may be substantially different from the carrying values shown and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classification of assets and liabilities should the Company be unable to continue as a going concern.  At December 31, 2011, the Company had no revenue producing operations and accumulated losses of $53,312,682 since inception. However, the Company has sufficient cash resources and a working capital surplus of $3.6 million to meet its obligations for at least the next twelve months from the end of the reporting year.  The Company will periodically have to raise funds to continue operations and, although it has been successful in doing so in the past, there is no assurance it will be able to do so in the future.     - 64 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  The accounting policies set out below have been applied consistently to all years presented in these consolidated financial statements and in preparing the opening IFRS Statement of Financial Position at January 1, 2010 for the purposes of the transition to IFRS, unless otherwise indicated.  a) Basis of Consolidation  These consolidated financial statements include the accounts of the Company, and its wholly owned subsidiaries. A wholly owned subsidiary is an entity in which the Company has control, directly or indirectly, where control is defined as the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities. All material intercompany transactions and balances have been eliminated on consolidation. Subsidiaries are deconsolidated from the date control ceases.  Details of the Companys principal subsidiaries at December 31, 2011 are as follows:  NamePlace of IncorporationInterest %Principal ActivityMinerales Sierra Pacifico S.A.Guatemala100%Exploration companyExploraciones Mineras de Guatemala S.AGuatemala100%Exploration companyRecursos Del Golfo, S.A.,Guatemala100%Exploration companyMinerales de Nicaragua S.A.Nicaragua100%Exploration companyDesarrollo Geologico Minerao, S.A.Nicaragua100%Exploration companyRadius (Cayman) IncCayman Islands100%Holding companyPavon (Cayman) Inc.Cayman Islands100%Holding companyGeometales Del Norte-GeonorteMexico100%Exploration company  b) Investment in Associate  Where the Company has the power to participate in (but not control) the financial and operating policy decisions of another entity, it is classified as an associate.  Associates are initially recognized in the consolidated statement of financial position at cost.  The Company's share of post-acquisition profits and losses is recognized in the consolidated statement of comprehensive income, except that losses in excess of the Companys investment in the associate are not recognized unless there is an obligation to make good those losses.  Profits and losses arising on transactions between the Company and its associates are recognized only to the extent of unrelated investors' interests in the associate. The investor's share in the associate's profits and losses resulting from these transactions is eliminated against the carrying value of the associate.  Any premium paid for an associate above the fair value of the Company's share of the identifiable assets, liabilities and contingent liabilities acquired is capitalized and included in the carrying amount of the associate. Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment is tested for impairment in the same way as other non-financial assets.  c) Available-for-sale Investments  Available-for-sale investments are recorded at fair market value as they are considered available-for-sale.    - 65 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICES - (contd)  d) Foreign Currency Translation  The functional and presentation currency of the Company and its principal subsidiaries is the Canadian dollar. Transactions entered into in a currency other than the entitys functional currency are translated as follows: unsettled monetary items denominated in a foreign currency are translated into Canadian dollars at exchange rates prevailing at the balance sheet date and non-monetary items are translated at exchange rates prevailing when the assets were acquired or obligations incurred.  Foreign currency denominated revenue and expense items are translated at exchange rates prevailing at the transaction date.  Gains or losses arising from the translations are included in operations.  e) Cash and Cash Equivalents  Cash and cash equivalents includes cash at banks and on hand, and other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and subject to an insignificant risk of change of value.  f) Mineral Exploration and Evaluation Expenditures  Acquisition costs for exploration and evaluation assets are capitalized and include the cash consideration paid and the fair value of common shares issued on acquisition, based on the trading price of the shares on the date of the agreement to issue the shares.  Exploration expenditures, net of recoveries, are charged to operations as incurred.  After a property is determined by management to be commercially feasible, exploration and development expenditures on the property will be capitalized. On transfer to development properties, capitalized exploration and evaluation assets are assessed for impairment.  Options are exercisable entirely at the discretion of the optionee and amounts received from optionees in connection with option agreements are credited against the capitalized acquisition costs classified as exploration and evaluation assets on the balance sheet and amounts received in excess are credited to gain from exploration and evaluation asset option agreements on the statement of operations.  Where the Company has entered into option agreements to acquire interests in exploration and evaluation assets that provide for periodic payments or periodic share issuances, amounts unpaid and unissued are not recorded as liabilities since they are payable and issuable entirely at the Companys option. Option payments are recorded as exploration and evaluation costs when the payments are made or received and the share issuances are recorded as exploration and evaluation costs using the fair market value of the Companys common shares at the earlier of the date the counterpartys performance is complete or the issuance date.  The Company is in the process of exploring and developing its exploration and evaluation assets and has not yet determined the amount of reserves available.  Management reviews the carrying value of exploration and evaluation assets on a periodic basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable will recognize impairment in value based upon current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the asset or from the sale of the asset.  Amounts shown for exploration and evaluation assets represent costs incurred net of write-downs and recoveries, and are not intended to represent present or future values.  Environmental expenditures that relate to current operations are expensed or capitalized as appropriate.  Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed.  Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the costs can be reasonably estimated.  Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Companys commitment to a plan of action based on the then known facts.    - 66 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)  g) Property, Equipment and Amortization  Recognition and Measurement  On initial recognition, property and equipment are valued at cost, being the purchase price and directly attributable cost of acquisition required to bring the asset to the location and condition necessary to be capable of operating in a manner intended by the Company, including appropriate borrowing costs and the estimated present value of any future unavoidable costs of dismantling and removing items.  The corresponding liability is recognized within provisions.  Property and equipment is subsequently measured at cost less accumulated amortization, less any accumulated impairment losses, with the exception of land which is not amortized. When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.  Subsequent Costs  The cost of replacing part of an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably.  The carrying amount of the replaced part is derecognized.  The costs of day-to-day servicing of property and equipment are recognized in profit or loss as incurred.  Major Maintenance and Repairs  Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably.  All other repairs and maintenance are charged to the profit or loss during the financial period in which they are incurred.  Gains and Losses  Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount, that are recognized net within other income in profit or loss.  Amortization  Amortization is recognized in profit or loss and property and equipment is amortized over their estimated useful lives using the following methods:  Leasehold improvements 5 years straight-line Trucks 4  8 years straight-line Computer equipment 25% - 50% declining balance Field equipment 30% declining balance Furniture and equipment 20% declining balance Geophysical equipment 20% declining balance  Additions to equipment are amortized at one-half rate during the year of acquisition.    - 67 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)  h) Earning / Loss per Share  Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of shares outstanding during the year.  Diluted earnings per share reflect the potential dilution of securities that could share in earnings of an entity.  In a loss year, potentially dilutive common shares are excluded from the loss per share calculation as the effect would be anti-dilutive.  Basic and diluted loss per share is the same for the periods presented.  For the years ended December 31, 2011 and 2010, potentially dilutive common shares (relating to options and warrants outstanding at year-end) totalling 15,945,737 (2010: 14,294,696) were not included in the computation of loss per share because their effect was anti-dilutive.  i) Income Taxes  Income tax expense comprises current and deferred tax. Current and deferred tax are recognized in net income except to the extent that it relates to a business combination or items recognized directly in equity or in other comprehensive loss/income.  Current income taxes are recognized for the estimated income taxes payable or receivable on taxable income or loss for the current year and any adjustment to income taxes payable in respect of previous years.  Current income taxes are determined using tax rates and tax laws that have been enacted or substantively enacted by the year-end date.  Deferred tax assets and liabilities are recognized where the carrying amount of an asset or liability differs from its tax base, except for those taxable temporary differences arising on the initial recognition of goodwill or on the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting nor taxable profit or loss.  Recognition of deferred tax assets for unused tax losses, tax credits and deductible temporary differences is restricted to those instances where it is probable that future taxable profit will be available against which the deferred tax asset can be utilized.  At the end of each reporting year the Company reassesses unrecognized deferred tax assets.  The Company recognizes a previously unrecognized deferred tax asset only to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.  j) Share Capital  Equity instruments are contracts that give a residual interest in the net assets of the Company.  Financial instruments issued by the Company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.  The Companys commons shares, share warrants, options and flow-through shares are classified as equity instruments.  Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from proceeds.  Flow-through Shares  The Company has previously issued flow-through common shares to finance a significant portion of its exploration programs in Canada.  Pursuant to the terms of the flow-through share agreements, these shares transfer the tax deductibility of qualifying resource expenditures to investors.  On issuance, the Company bifurcates the flow-through share into i) a flow-through share premium, equal to the estimated premium, if any, investors pay for the flow-through feature, which is recognized as a liability, and ii) share capital.  Upon expenditures being incurred, the Company derecognizes the liability and recognizes a deferred tax liability for the amount of the tax reduction renounced to the shareholders.  The premium reversal is recognized as a recovery in deferred tax expense and the related deferred tax, if any, is recognized as tax provision.    - 68 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)  j) Share Capital (contd)  Proceeds received from the issuance of flow-through shares are restricted to be used only for Canadian resource property exploration expenditures within a two-year period.  The portion of the proceeds received but not yet expended at the end of the Companys reporting year is disclosed separately as flow-through share proceeds.  The Company may also be subject to a Part XII.6 tax on flow-through proceeds renounced under the Look-back Rule, in accordance with Government of Canada flow-through regulations.  k) Share-based Payments  Where equity-settled share options are awarded to employees, the fair value of the options at the date of grant is charged to the statement of comprehensive loss/income over the vesting period.  Performance vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognized over the vesting period is based on the number of options that eventually vest.  As long as all other vesting conditions are satisfied, a charge is made irrespective of whether these vesting conditions are satisfied.  The cumulative expense is not adjusted for failure to achieve a market vesting condition or where a non-vesting condition is not satisfied.  Where terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to the statements of comprehensive loss/income over the remaining vesting period.  Where equity instruments are granted to employees, they are recorded at the fair value of the equity instrument granted at the grant date.  The grant date fair value is recognized in comprehensive loss/income over the vesting period, described as the period during which all the vesting conditions are to be satisfied.  Where equity instruments are granted to non-employees, they are recorded at the fair value of the goods or services received in the statement of comprehensive loss/income.  Options or warrants granted related to the issuance of shares are recorded as a reduction of share capital.  When the value of goods or services received in exchange for the share-based payment cannot be reliably estimated, the fair value is measured by use of a valuation model.  All equity-settled share-based payments are reflected in other equity reserve, until exercised.  Upon exercise, shares are issued from treasury and the amount reflected in other equity reserve is credited to share capital, adjusted for any consideration paid.  Where a grant of options is cancelled or settled during the vesting period, excluding forfeitures when vesting conditions are not satisfied, the Company immediately accounts for the cancellation as an acceleration of vesting and recognized the amount that otherwise would have been recognized for services received over the remainder of the vesting period.  Any payment made to the employee on the cancellation is accounted for as the repurchase of an equity interest except to the extent the payment exceeds the fair value of the equity instrument granted, measured at the repurchase date.  Any such excess is recognized as an expense.    - 69 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)  l) Provisions  Rehabilitation Provision  The fair value of obligations associated with the retirement of tangible long-lived assets, including exploration and evaluation expenditure is recorded in the period it is incurred with a corresponding increase to the carrying amount of the related asset.  The obligations recognized are statutory, contractual or legal obligations.  The liability is accreted over time for changes in the fair value of the liability through charges to accretion, which is included in depletion, amortization and accretion expense.  The costs capitalized to the related assets are amortized in a manner consistent with the depletion and amortization of the related asset.  At December 31, 2011, the fair value of the exploration and evaluation rehabilitation costs was $nil  Other Provisions  Provisions are recognized where a legal or constructive obligation has been incurred as a result of past events, it is probable that an outflow of resources embodying economic benefit will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. If material, provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in any provision due to passage of time is recognized as accretion expense.  m) Impairment of Non-Financial Assets  Impairment tests on non-financial assets, including exploration and evaluation assets are undertaken whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.  Where the carrying value of an asset exceeds its recoverable amount, which is the higher of value in use and fair value less costs to sell, the asset is written down accordingly.  Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the assets cash-generating unit, which is the lowest group of assets in which the asset belongs for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets.  An impairment loss is charged to the profit or loss, except to the extent they reverse gains previously recognized in other comprehensive loss/income.  n) Financial Instruments  Financial Assets  Financial assets are classified  into one of the following categories based on the purpose for which the asset was acquired.  All transactions related to financial instruments are recorded on a trade date basis.  The Companys accounting policy for each category is as follows:    - 70 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)  n) Financial Instruments (contd)  Loans and Receivables  These assets are non-derivative financial assets resulting from the delivery of cash or other assets by a lender to a borrower in return for a promise to repay on a specified date or dates, or on demand.  They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue and subsequently carried at amortized cost, using the effective interest rate method, less any impairment losses.  Amortized cost is calculated taking into account any discount or premium on acquisition and includes fees that are an integral part of the effective interest rate and transactions costs.  Gains or losses are recognized in the profit or loss when the loans and receivables are derecognized or impaired, as well as through the amortization process. TheCompanys loans and receivables comprise advances and other receivables, amounts due from related parties, deposits and cash and cash equivalents in the consolidated statement of financial position.  Available-For-Sale Investments  Non-derivative financial assets not included in the other categories are classified as available-for-sale and comprise principally the Companys strategic investments in entities not qualifying as subsidiaries or associates.  Available-for-sale investments are carried at fair value with changes in fair value recognized in accumulated other comprehensive loss/income.  Where there is a significant or prolonged decline in the fair value of an available-for-sale financial asset (which constitutes objective evidence of impairment), the full amount of the impairment, including any amount previously recognized in other comprehensive loss/income, is recognized in profit or loss.  If there is no quoted market price in an active market and fair value cannot be readily determined, available-for-sale investments are carried at cost.  Purchases and sales of available-for-sale financial assets are recognized on a trade date basis.  On sale or impairment, the cumulative amount recognized in other comprehensive loss/income is reclassified from accumulated other comprehensive loss/income to profit or loss.  Impairment of Financial Assets  At each reporting date the Company assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired.  A financial asset or group of financial assets is deemed to be impaired, if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset and that event has an impact on the estimated future cash flows of the financial asset or group of financial assets.  Financial Liabilities  Financial liabilities are classified as other financial liabilities, based on the purpose for which the liability was incurred, and comprise trade payables and accrued liabilities.  These liabilities are initially recognized at fair value net of any transaction costs directly attributable to the issuance of the instrument and subsequently carried at amortized cost using the effective interest rate method.  This ensures that any interest expense over the period of repayment is at a constant rate on the balance of the liability carried in the statement of financial position.  Interest expense, in this context, includes initial transaction costs and premiums payable on redemption, as well as any interest or coupon payable while the liability is outstanding.  Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid.  Trade payable amounts are unsecured and are usually paid within forty-five days of recognition.    - 71 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (contd)  o) Standards, Amendments and Interpretations Not Yet Effective  The following new standards and interpretations have been issued by the IASB but are not yet effective:  IFRS 9 Financial Instruments  IFRS 9 is part of the IASB's wider project to replace IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 retains but simplifies the mixed measurement model and establishes two primary measurement categories for financial assets: amortized cost and fair value.  The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset.  The standard is effective for annual periods beginning on or after January 1, 2015. The Company is in the process of evaluating the impact of the new standard.  IFRS 10 Consolidated Financial Statements  IFRS 10 requires an entity to consolidate an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Under existing IFRS, consolidation is required when an entity has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. IFRS 10 replaces SIC-12 Consolidation - Special Purpose Entities and parts of IAS 27 Consolidated and Separate Financial Statements. The Company is yet to assess the full impact of IFRS 10 and intends to adopt the standard no later than the accounting period beginning January 1, 2013.  IFRS 11 Joint Arrangements  IFRS 11 requires a venturer to classify its interest in a joint arrangement as a joint venture or joint operation. Joint ventures will be accounted for using the equity method of accounting whereas for a joint operation the venturer will recognize its share of the assets, liabilities, revenue and expenses of the joint operation. Under existing IFRS, entities have the choice to proportionately consolidate or equity account for interests in joint ventures. IFRS 11 supersedes IAS 31 Interests in Joint Ventures and SIC-13 Jointly Controlled Entities - Non-monetary Contributions by Venturers. The Company is yet to assess the full impact of IFRS 11 and intends to adopt the standard no later than the accounting period beginning January 1, 2013.  IFRS 12 Disclosure of Interests in Other Entities  IFRS 12 establishes disclosure requirements for interests in other entities, such as joint arrangements, associates, special purpose vehicles and off balance sheet vehicles. The standard carries forward existing disclosures and also introduces significant additional disclosure requirements that address the nature of, and risks associated with, an entitys interests in other entities. The Company is yet to assess the full impact of IFRS 12 and intends to adopt the standard no later than the accounting period beginning January 1, 2013.  IFRS 13 Fair Value Measurement  IFRS 13 is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and in many cases does not reflect a clear measurement basis or consistent disclosures. The Company is yet to assess the full impact of IFRS 13 and intends to adopt the standard no later than the accounting period beginning January 1, 2013.  There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company.    - 72 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS  The Company makes estimates and assumptions about the future that affect the reported amounts of assets and liabilities.  Estimates and judgments are continually evaluated based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.  In the future, actual experience may differ from these estimates and assumptions.  The effect of a change in an accounting estimate is recognized prospectively by including it in comprehensive income in the period of the change, if the change affects that period only, or in the period of the change and future periods, if the change affects both.  Significant assumptions about the future and other sources of estimation uncertainty that management has made at the statement of financial position date, that could result in a material adjustment to the carrying amounts of assets and liabilities, in the event that actual results differ from assumptions made, relate to, but are not limited to, the following:  a) Where the Company holds less than 20% of the voting rights in an investment but the Company has the power to exercise significant influence through common officers and board members, such an investment is treated as an associate. The Company can exercise significant influence over Rackla Metals Inc.  b) The Company determines the fair value of financial instruments that are not quoted, using valuation techniques.  Those techniques are significantly affected by the assumptions used and information known at the time of measurement.  In that regard, the derived fair value estimates cannot always be substantiated by comparison with independent markets and, in many cases, may not be capable of being realized immediately. The valuation technique used for unquoted securities is disclosed in Note 6.  c) The Company is subject to income tax in several jurisdictions and significant judgment is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain.  As a result, the company recognizes tax liabilities based on estimates of whether additional taxes and interest will be due. These tax liabilities are recognised when, despite the company's belief that its tax return positions are supportable, the company believes that certain positions are likely to be challenged and may not be fully sustained upon review by tax authorities. The company believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law.  This assessment relies on estimates and assumptions and may involve a series of complex judgments about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact income tax expense in the period in which such determination is made.  d) Although the Company has taken steps to verify title to mineral properties in which it has an interest, 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.  e) The recoverability of amounts receivable and prepayments which are included in the consolidated statements of financial position;  f) The carrying value of the investment in exploration and evaluation costs and the recoverability of the carrying value which are included in the consolidated statement of financial position;  g) The estimated useful lives of property and equipment which are included in the consolidated statement of financial position and the related amortization included in the consolidated statement of comprehensive loss for the year ended December 31, 2011;    - 73 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  5. CASH AND CASH EQUIVALENTS Cash and cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.   The Company does not hold any deposits with maturities of greater than three months from the date of acquisition.  Cash at banks and on hand earns interest at floating rates based on daily bank deposit rates.  6. AVAILABLE-FOR-SALE INVESTMENTS Available-for-sale investments are recorded at fair value.  As of December 31, 2011, available-for-sale investments consisted of 1,007,406 common shares of Focus Ventures Ltd. (Focus), 14,569 common shares of Fortuna Silver Mines Inc. (Fortuna), and 7,175,700 warrants of Rackla Metals Inc. (Rackla), all public companies with common directors or officers. As at December 31, 2011, the recorded amount for the available-for-sale investments was $641,707 (December 31, 2010: $994,609, January 1, 2010: $1,715,650).  An unrealized gain (net of tax) of $165,966 was recorded in other comprehensive income during year ended December 31, 2011 (2010: loss of $373,790). There are no impairment provisions on the available- for- sale financial assets in 2011and 2010. The fair value of quoted securities is based on published market prices. The fair value of the unquoted securities is based on fair value assessments including comparable private share offerings to arms-length parties.  Focus
Ventures
Ltd.Fortuna
Silver Mines
Inc.Wesgold
Minerals
Inc.(1)Solomon
Resources
LimitedRackla
Metals
Inc.(2)Portfolio
InvestmentsTotalBalance, January 1, 2010$1,037,628$               -$     11,000$ 130,000$              -$     537,022$  1,715,650Acquisition of shares-20,574180,00016,000--216,574Disposition of investments-----(535,610)(535,610)Net change in fair value recorded in other comprehensive income(513,777)16,772109,000(14,000)--(402,005)Balance, December 31, 2010523,85137,346300,000132,000-1,412994,609Acquisition of shares-29,794-22,500--52,294Transferred on distribution of assets (Note 8)--(600,000)(48,750)--(648,750)Disposition of investments-----(1,412)(1,412)Net change in fair value recorded in other comprehensive income(322,370)14,301300,000(105,750)358,785-244,966Balance, December 31, 2011$   201,481$     81,441$               -$             -$  358,785$                 -$     641,707  (1) Wesgold completed a public offering on October 12, 2010 and began trading on the TSX-V. Prior to this, Wesgolds share were unquoted securities.  (2) Rackla warrants traded on the TSX-V.    - 74 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  7. PROPERTY AND EQUIPMENT


| |                            |                        |                |                    |                         |                       |                      |               
| | -------------------------- | ---------------------- | -------------- | ------------------ | ----------------------- | --------------------- | -------------------- | --------------
| |                            | Leasehold improvements | Trucks         | Computer equipment | Furniture and equipment | Geophysical equipment | Field
equipment      | Total         
| | Cost                       |                        |                |                    |                         |                       |                      |               
| | Balance, January 1, 2010   | $          17,730      | $     299,597  | $     173,178      | $        31,558         | $          36,178     | $                  - | $      558,241
| | Additions                  | 3,598                  | -              | 18,240             | 11,894                  | 55,316                | 2,480                | 91,528        
| | Disposals                  | -                      | (39,679)       | -                  | -                       | -                     | -                    | (39,679)      
| | Balance, December 31, 2010 | 21,328                 | 259,918        | 191,418            | 43,452                  | 91,494                | 2,480                | 610,090       
| | Additions                  | 30,565                 | 23,504         | 51,433             | 9,415                   | -                     | -                    | 114,917       
| | Disposals                  | -                      | (24,477)       | -                  | -                       | (7,900)               | -                    | (32,377)      
| | Balance, December 31, 2011 | $          51,893      | $     258,945  | $     242,851      | $        52,867         | $          83,594     | $          2,480     | $      692,630
| |                            |                        |                |                    |                         |                       |                      |               
| | Accumulated amortization   |                        |                |                    |                         |                       |                      |               
| | Balance, January 1, 2010   | $          16,044      | $     209,055  | $     117,200      | $        12,330         | $          23,008     | $                 -  | $      377,637
| | Additions                  | 1,202                  | 4,463          | 19,514             | 4,578                   | 8,166                 | 372                  | 38,295        
| | Disposals                  | -                      | (25,550)       | -                  | -                       | -                     | -                    | (25,550)      
| | Balance, December 31, 2010 | 17,246                 | 187,968        | 136,714            | 16,908                  | 31,174                | 372                  | 390,382       
| | Additions                  | 4,401                  | 9,663          | 26,364             | 6,109                   | 12,592                | 632                  | 59,761        
| | Disposals                  | -                      | (8,613)        | -                  | -                       | -                     | -                    | (8,613)       
| | Balance, December 31, 2011 | $          21,647      | $     189,018  | $     163,078      | $        23,017         | $          43,766     | $          1,004     | $      441,530
| |                            |                        |                |                    |                         |                       |                      |               
| | Carrying amounts           |                        |                |                    |                         |                       |                      |               
| | At January 1, 2010         | $            1,686     | $       90,542 | $       55,978     | $        19,228         | $          13,170     | $                 -  | $      180,604
| | At December 31, 2010       | $            4,082     | $       71,950 | $       54,704     | $        26,544         | $          60,320     | $          2,108     | $      219,708
| | At December 31, 2011       | $          30,246      | $       69,927 | $       79,773     | $        29,850         | $          39,828     | $          1,476     | $      251,100

- 75 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  8. INVESTMENT IN ASSOCIATE  Spin-out transaction  Rackla Metals Inc. (Rackla) was incorporated pursuant to a plan of arrangement (the Arrangement) with the Company completed on December 8, 2011.  As part of the Arrangement, the Companys interest in the Scarlet property, Sixty Mile Area properties, Ten Mile Creek property, Rivier property, and other staked Yukon properties (collectively, the Projects) were transferred to Rackla, together with $1.0 million in cash, and available-for-sale investments consisting of 750,000 common shares of Solomon Resources Limited (Solomon) and 600,000 common shares of Wesgold Minerals Inc. (Wesgold).  Under the Arrangement, each shareholder of the Company received one common share and one full share purchase warrant in Rackla for every three common shares of the Company held by the shareholder, thereby splitting the Companys exploration and evaluation assets in Canada from non-Canadian exploration and evaluation assets remaining with the Company.  Each share purchase warrant entitles the holder to purchase one common share of Rackla at $0.30 until June 8, 2013.  On December 8, 2011, the Company received the requisite shareholder approval for the Arrangement which resulted in the Company retaining 7,175,700 common shares and share purchase warrants of Rackla, representing 19.9% of Racklas outstanding common shares and share purchase warrants in exchange for the assets distributed to Rackla.  Rackla meets the definition of an associate and has been equity accounted for in the consolidated financial statements.  The major assets distributed to Rackla on December 8, 2011, which gave rise to a gain on distribution of $4,807,443 are as follows:  December 8, 2011Cash and cash equivalents$         1,000,000Available for sale investments648,750Evaluation and exploration cost and expenditures4,527,717Net assets distributed to Rackla$         6,176,467  In accordance with IFRIC 17 Distribution of Non-Cash Assets to Owners, a gain was recognized on the difference between the fair value and the carrying value of the net assets distributed to Rackla, calculated as follows:  December 8, 2011Fair value of common shares on distribution$       7,574,201Net assets distributed to Rackla(6,176,467)Unrealized gain on distribution of assets to Rackla1,397,734Plus: recovered expended exploration expenditures3,409,709Unrealized gain on distribution of assets to Rackla$       4,807,443  The fair value of the common shares distributed was based on the share price of Rackla on December 9, 2011, its first day of trading, of $0.21 multiplied by the total number of the 36,067,626 shares in issue. The distribution of the 80.1% of the common shares amounting to $6,067,304 was recorded through deficit.  The unrealized gain on distribution of assets is not re-measured on changes in share price of Rackla. The Company notes that the gain was not realized by the Company. A total of $289,313 was expensed in connection with this plan of arrangement.    - 76 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  8. INVESTMENT IN ASSOCIATE (contd)  On the same date of distribution, the Company lost control in Rackla and recorded its retained interest in Rackla at fair value, being 19.9% of the fair value of Racklas common shares on distribution. See table below showing the continuity of the Companys interest in Rackla for the year ended December 31, 2011.  December 31, 2011Initial fair value of investment in associate$        1,506,897Less: share of losses in associate(6,250)Ending, investment in associate$        1,500,647  Included in the initial fair value of investment in associate is a premium of approximately $280,000 which is the excess of the value of the investment above the fair value of the Companys share of net assets distributed to Rackla.  9. EXPLORATION AND EVALUATION ASSETS  Acquisition costsGuatemalaNicaraguaCanadaTotalBalance, January 1, 2010$   4,020,864$      82,482$         68,246$    4,171,592Shares--111,300111,300Cash--717,544717,544Acquisition costs recovered--(90,701)(90,701)Balance, December 31, 20104,020,86482,482806,3894,909,735Shares--119,700119,700Cash--266,919266,919Acquisition costs recovered--(75,000)(75,000)Distribution of exploration and evaluation
assets on spin-out transaction (Note 8)--(1,118,008)(1,118,008)Balance, December 31, 2011$   4,020,864$      82,482$                   -$    4,103,346  Title to mineral properties involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history, characteristic of many mineral properties. The Company has investigated title to all of its mineral properties and, to the best of its knowledge, title to all of its properties are in good standing.  Canada (Properties distributed to Rackla- Note 8)  Pursuant to the Arrangement, on December 8, 2011, the Company assigned to Rackla all of its rights and obligations relating to the Yukon and Alaska properties described below.  Total exploration and evaluation asset acquisition costs were reduced by $1,118,008 and has been recorded  as a distribution to Rackla.  i) Scarlet Property  Yukon Territory  The Scarlet Property consists of 728 claims which were located in the Mayo Mining District.  Exploration and evaluation asset acquisition costs were reduced by $184,977 and have been recorded as a distribution to Rackla.    - 77 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  9. EXPLORATION AND EVALUATION ASSETS (contd)  Canada (Properties distributed to Rackla - Note 8) (contd)  ii) Sixty Mile Area  Yukon Territory & Alaska  The Sixty Mile Property straddles the Yukon/Alaska border and consists of 945 claims, of which 670 claims were acquired by the Company by staking or purchase from third parties.  640 of the claims are located in the Yukon and 30 claims in Alaska.  In 2009 and 2010, the Company entered into agreements with various landowners whereby it had the option to acquire a 100% interest in 275 of the Yukon claims in consideration of cash payments and share issuances.  Up to the date of the Arrangement, the Company had made option payments totaling $368,800 (December 31, 2010: $253,600) cash and issued 332,021 (December 31, 2010: 197,509) shares with a fair value of $192,000 (December 31, 2010: $91,800), and the Company completed its earn-in to acquire 18 of the optioned claims.  Exploration and evaluation asset acquisition costs were reduced by $652,144 and have been recorded as a distribution to Rackla.  iii) Rivier Property  Yukon Territory  The Rivier Property consists of 116 claims located in the Watson Lake Mining District, of which 100 claims (the Hulstein Claims) are owned by Roger Hulstein. On July 18, 2010, the Company was granted the option to earn a 100% interest in the Hulstein Claims.  On September 10, 2010, the Company acquired the other 16 Rivier claims by staking. Up to the date of the Arrangement, the Company had paid $35,000 (December 31, 2010: $25,000) and issued 50,000 (December 31, 2010: 25,000) shares to Roger Hulstein.  Pursuant to an agreement dated September 1, 2011, the Company granted to Voyager Gold Corp. (Voyager) the option (the Rivier Option) to acquire a 60% interest in the Property.  Exploration and evaluation asset acquisition costs were reduced by $74,160 and have been recorded as a distribution to Rackla.  iv) Ten Mile Creek Property  Yukon Territory  The Ten Mile Creek Property is comprised of 323 claims located in the Dawson Mining District, of which 269 claims were acquired by the Company in April 2009 by staking, and 54 claims (the Optioned Claims) were optioned to the Company in June 2009.  The Company had the option to earn a 100% interest in the Optioned Claims.  Up to the date of the Arrangement, the Company had paid $150,000 to the property owner according to the following schedule:  In September 2009, the Company granted to Solomon Resources Limited (Solomon) the option (the Solomon Option) to acquire a 51% interest in the Ten Mile Creek Property.  Up to the date of the Arrangement, Solomon had paid $250,000 and issued 750,000 shares to the Company.  There were no exploration or evaluation asset acquisition costs to be reduced.  v) Snowcap Property  Yukon Territory  In 2009, the Company staked 198 claims in the Whitehorse Mining District known as the Snowcap Property. By an agreement dated November 8, 2009, as amended, the Company granted to Wesgold the option to acquire a 60% interest in the Property.  Prior to terminating the option agreement in September 2011, Wesgold had issued 600,000 common shares to the Company.  There were no exploration or evaluation asset acquisition costs to be reduced.    - 78 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  9. EXPLORATION AND EVALUATION ASSETS (contd)  Canada (Properties distributed to Rackla - Note 8) (contd)  vi) Face Property  Yukon Territory  The Face Property is comprised of 270 claims in the Dawson Mining District which were staked by the Company.  Exploration and evaluation asset acquisition costs were reduced by $44,262 and have been recorded as a distribution to Rackla.  vii) Newt Property  Yukon Territory  The Newt Property is comprised of 462 claims in the Dawson Mining District where were staked by the Company.  Exploration and evaluation asset acquisition costs were reduced by $141,943 and have been recorded as a distribution to Rackla.  viii) Iola Property  Yukon Territory  The Iola Property is comprised of 80 claims in the Whitehorse Mining District which were staked by the Company.  Exploration and evaluation asset acquisition costs were reduced by $20,522 and have been recorded as a distribution to Rackla.  Guatemala  i) Tambor  The Tambor Project consists of  six concessions (one granted exploitations, four exploitation applications and one exploration application) located in south-central Guatemala covering a total of 6,117 hectares.  In June 2008, the Company signed a binding Letter of Intent with Kappes, Cassiday & Associates (KCA) whereby KCA can earn a 51% interest in the Tambor Project by incurring exploration expenditures on the property totaling US$6,500,000 over 4 years, or by putting the property into commercial production within 4 years.  If KCA earns its 51% interest, a joint venture will be formed between KCA and the Company.  Once commercial production has been achieved, KCA will receive preferential payback of 75% (the Company 25%) of after-tax cash flow from initial production until KCA receives an amount equal to its investment, less US$2,000,000.  At that point, the Company will receive 75% of the after-tax cash flow (KCA 25%) until the Company receives the amount of preferential cash flow received by KCA, after which revenues will be split 51% KCA / 49% the Company.  A schedule of minimum annual required expenditures by KCA is as follows:  a) US$1,000,000 by June 2, 2009; b) US$1,500,000 by June 2, 2010; c) US$1,500,000 by June 2, 2011; and d) US$2,500,000 by June 2, 2012.  As of December 31, 2011, the KCA option is in good standing.    - 79 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  9. EXPLORATION AND EVALUATION ASSETS (contd)  Guatemala (contd)  ii) Southern Guatemala (formerly called Banderas)  The Companys 100% owned land holdings in southeast Guatemala, as at December 31, 2011, consist of one active exploration license and pending reconnaissance, exploration, and exploitation license applications filed with the Guatemala Ministry of Energy and Mines (MEM) covering a total of 179,017 hectares.  iii) Geothermal Permits  In 2010, the Company submitted applications for provisional use permits for a number of geothermal systems in Guatemala. Provisional use permits have been granted on 81,000 hectares and 29,300 hectares remain under application.  In November 2010, the Company entered into a letter of intent with Molten Power Corp. (Molten) to grant Molten an option to earn 100% interest in the geothermal permits.  After an extensive review of the permit process and determining its property investment goals, Molten advised the Company in 2011 that it will not proceed with its proposed option.  iv) Regional Exploration  During 2011 and 2010, the Company conducted property investigation work on other properties.  Nicaragua  i) Natividad (El Pavon)  The Company owns a 100% interest in the Natividad Project which consists of one granted exploration concession covering 1,301 hectares.  ii) Trebol  The Company owns a 100% interest in the Trebol Project which consists of three granted exploration concessions covering a total of 57,698 hectares.  iii) San Jose (formerly called San Pedro)  The Company owns a 100% interest in the San Jose Project which consists of two granted exploration concessions covering a total of 26,132 hectares.  Option to B2Gold Corp  In June 2009, the Company granted B2Gold Corp. (B2Gold) an option to acquire an interest in the Companys mineral property portfolio in Nicaragua.   The agreement with B2Gold consists of three parts:  1. Natividad, Trebol, and San Jose Properties (the Properties)  B2Gold has the right to acquire a 60% interest in the Properties by expending a total of US$4 million on exploration at any one or more of the Properties within 4 years from the date of the agreement.  When B2Gold has spent the US$4,000,000, it will own a 60% interest in all of the Properties and a joint venture will be formed in which each party will contribute its prorated share of the exploration costs.    - 80 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  9. EXPLORATION AND EVALUATION ASSETS (contd)  Nicaragua (contd)  Option to B2Gold Corp (contd)  2. Production from the Pavon Resource Property  In 2005 Meridian Gold completed a 2 stage exploration drill program at the Pavon vein system within the Natividad Project (the Pavon Resource Property). B2Gold has the right to review the conceptual gold resource outlined by Meridian Gold.  If B2Gold feels that there is potential to mine any or all of the resource, it may put the property into production within 3 years.  After production is achieved, 100% ownership of the Pavon Resource Property will be transferred to B2Gold and the Company will receive 40% of the net cash flow generated from the operation.  3. The Regional Exploration Projects  The Company has assembled an extensive data base of regional geological, geochemical and geophysical data covering much of Nicaragua and has agreed to provide this data to B2Gold, on an exclusive basis.  If, as a result of reviewing the regional data, B2Gold identifies a prospect or project for acquisition and exploration on ground that is not covered by an existing concession, the Company will apply for a concession over the area and that area will then be designated a project area.  Following the granting of a concession, B2Gold will have the option to earn a 70% interest in any such designated project area by expending US$2 million on exploration on it within 3 years from the date of the granting of the concession.  Once B2Gold has spent US$2 million exploring the designated project, it will be vested with a 70% interest in the project and a joint venture between the Company and B2Gold will be formed.  Subsequent to year end, the Company entered into a significant transaction with B2Gold. See Note 19.  Mexico  i) Tlacolula Property  The Company owns a 100% interest in the Tlacolula Property which consists of one granted exploration concession covering 12,642 hectares.  In September 2009, the Company granted to Fortuna the option to earn a 60% interest in the Tlacolula Property by spending US$2 million on exploration of the Property, which includes a commitment to drill 1,500 meters within 3 years, and making staged annual payments of US$250,000 cash and US$250,000 in common stock according to the following schedule:  a) US$20,000 cash and $20,000 cash equivalent in shares upon regulatory approval (received); b) US$30,000 cash and $30,000 cash equivalent in shares by the first year anniversary (received); c) US$50,000 cash and $50,000 cash equivalent in shares by the second year anniversary (received subsequent to December 31, 2011); d) US$50,000 cash and $50,000 cash equivalent in shares by the third year anniversary; and e) US$100,000 cash and $100,000 cash equivalent in shares by the fourth year anniversary.  The Company and Fortuna have two common directors.    - 81 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  10. OTHER LIABILITY  Other liabilities include the liability portion of the flow-through shares issued.  The following is a continuity schedule of the liability portion of the flow-through share issuances:  Due dateIssued on
May 27,
2010Issued on December 3, 2010TotalBalance at January 1, 2010$                  -$                 -$                 -Liability incurred on flow-shares issued504,553522,0001,026,553Settlement of flow-through share liability on
incurring expenditures(388,799)-(388,799)Balance at December 31, 2010115,754522,000637,754Liability incurred on flow-shares issued---Settlement of flow-through share liability on
incurring expenditures(115,754)(522,000)(637,754)Balance at December 31, 2011$                  -$                 -$                 -  Other liabilities arise on the issuance of flow-through shares when the value of each flow-through share exceeds the value of each other common share issued at the same time.  On May 27, 2010, the Company closed a private placement by issuing 5,606,143 flow-through shares, at a price of $0.45 per share.  On December 3, 2010, the Company closed a private placement by issuing 5,800,000 flow-through shares, at a price of $0.65 per share.  As at December 31, 2011, the Company had fulfilled its commitment to incur exploration expenditures in relation to the May 27, 2010 and December 3, 2010 flow-through share financings and recorded Part XII.6 of $18,180 in the statement of comprehensive loss.  11. COMMITMENT  The Company has entered into operating lease agreements for its office premises.  The Company also sub leases rental space to other companies related by common directors and officers on a month to month basis which are netted against rental expense; however, there are no commitments from these companies and thus the amounts presented below are the gross commitments.  The annual commitments under the leases are as follows:  2012$            293,3892013295,0502014299,0762015301,5742016226,9202017192,1672018192,1732019192,179$         1,992,528    - 82 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  12. SHARE CAPITAL AND RESERVES  a) Common Shares  The Company is authorized to issue an unlimited number of common shares without par value.  During the year ended December 31, 2011, as part of option payments relating to portions of the Sixty Mile Property, the Company issued 34,246 shares on May 11, 2011 and 100,266 shares on August 16, 2011  The Company issued 25,000 shares on July 27, 2011 as part of the option payments due on the Rivier Property.  During the year ended December 31, 2010, as part of option payments relating to portions of the Sixty Mile Property, the Company issued 50,633 shares on March 16, 2010, 79,309 shares on August 26, 2010 and 67,567 shares on September 10, 2010.  The Company issued 25,000 shares on September 8, 2010 as part of the option payments due on the Rivier Property.  On July 4, 2011, the Company closed a private placement of 6,100,000 units at $0.60 per unit for gross proceeds of $3,660,000.  The proceeds on the sale of units are allocated all to share capital and none to warrants. The Company paid $52,350 cash, 199,250 units and 286,499 warrants as finders fees in connection with the financing.  Each private placement unit consists of one common share and one-half of a share purchase warrant.  The 99,624 warrants issued as part of the finders fee units and the additional 286,499 warrants issued as finders fees entitle the holder to purchase an additional common share exercisable for one year at a price of $0.75.  The fair value of the 286,499 finders fee warrants was $33,261 and was recorded as share issuance costs and an offset to other equity reserve.  The fair value of each finders fee warrant has been estimated as of the date of the issuance using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.24%, dividend yield of 0%, volatility of 79% and expected life of one year.  On December 3, 2010, the Company closed a private placement of 5,800,000 flow-through common shares at $0.65 per share for gross proceeds of $3,770,000. The Company issued 194,422 common shares and 259,230 share purchase warrants and paid $42,125 cash as finders fees in connection with the financing.  All warrants issued entitle the holder to purchase an additional common share exercisable for one and a half years at a price of $0.70.  The fair value of the warrants issued for finders fees was $109,515 and was recorded as share issuance costs and an offset to other equity reserve.  The fair value of each finders fee warrant has been estimated as of the date of the issuance using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.62%, dividend yield of 0%, volatility of 87% and expected life of one and a half years.  On June 17, 2010, the Company closed a private placement of 13,000,000 units at $0.35 per unit for gross proceeds of $4,550,000.  The proceeds on the sale of units are all allocated to share capital and none to warrants. The Company paid $15,857 cash, 525,766 units and 571,071 warrants as finders fees in connection with the financing.  Each private placement unit consists of one common share and one-half of a share purchase warrant.  The warrants issued as part of the private placement unit entitle the holder to purchase an additional common share exercisable for two years at a price of $0.50.  The 571,071 warrants issued as finders fees entitle the holder to purchase an additional common share exercisable for one year at a price of $0.55.  The fair value of the 571,071 finders fee warrants was $30,919 and was recorded as share issuance costs and an offset to other equity reserve.  The fair value of each finders fee warrant has been estimated as of the date of the issuance using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.76%, dividend yield of 0%, volatility of 84% and expected life of one year.  On May 27, 2010, the Company closed a private placement of 5,606,143 flow-through common shares at $0.45 per share for gross proceeds of $2,522,764. The Company issued 233,361 common shares and 233,361 share purchase warrants as finders fees in connection with the financing.  All warrants issued entitle the holder to purchase an additional common share exercisable for one year at a price of $0.50.  The fair value of the warrants issued for finders fees was $18,694 and was recorded as share issuance costs and an offset to other equity reserve.  The fair value of each finders fee warrant has been estimated as of the date of the issuance using the Black-Scholes pricing model with the following assumptions: risk-free interest rate of 1.60%, dividend yield of 0%, volatility of 87% and expected life of one year.    - 83 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  12. SHARE CAPITAL AND RESERVES (contd)  a) Common Shares  (contd)  During the year ended December 31, 2011, 105,000 stock options were exercised for gross proceeds of $37,250.  The Company reallocated the fair value of these options previously recorded in the amount of $33,213 from other equity reserve to capital stock.  During the year ended December 31, 2010, 460,000 stock options were exercised for gross proceeds of $187,100.  The Company reallocated the fair value of these options previously recorded in the amount of $137,282 from other equity reserve to capital stock.  During the year ended December 31, 2011, 384,316 share purchase warrants were exercised for gross proceeds of $195,448. The Company reallocated the fair value of those share purchase warrants previously recorded in the amount of $22,252 from other equity reserve to capital stock.  During the year ended December 31, 2010, 136,850 share purchase warrants were exercised for gross proceeds of $68,650. The Company reallocated the fair value of these share purchase warrants previously recorded in the amount of $243 from other equity reserve to capital stock.  b) Share Purchase Warrants  The following is a summary of changes in warrants from January 1, 2010 to December 31, 2011:  Number of warrantsWeighted average exercise priceBalance, January 1, 2010-$      -Issued7,826,546$0.51Exercised (1)(136,850)$0.50Balance, December 31, 20107,689,696$0.51Forfeited / Expired(500,766)$0.55Issued3,436,123$0.75Exercised (1)(384,316)$0.51Balance, December 31, 201110,240,737$0.59  (1) The average share price was $0.72 (2010: $0.71) at the time the warrants were exercised.  As at December 31, 2011, the following share purchase warrants were outstanding:  Expiry DateNumber of warrantsExercise
priceJune 2, 2012259,230$0.70June 16, 20126,545,384$0.50July 3, 20123,436,123$0.7510,240,737    - 84 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)   12. SHARE CAPITAL AND RESERVES (contd)  c) Nature and Purpose of Equity and Reserves  The reserves recorded in equity on the Companys balance sheet include Other equity reserve, Deficit and Accumulated Other Comprehensive Loss/Income.  Other equity reserve is used to recognize the value of stock option grants and share purchase warrants prior to exercise.  Deficit is used to record the Companys change in deficit from earnings from period to period.  Accumulated other comprehensive loss/income comprises of available-for-sale reserve.  This reserve is used to recognize fair value changes on available-for-sale investments.  13. SHARE-BASED PAYMENTS  a) Option Plan Details  The Company has a formal stock option plan in accordance with the policies of the TSX Venture Exchange (TSX-V) under which it is authorized to grant options up to 10% of its outstanding shares to officers, directors, employees and consultants.  The exercise price of each option is not less than the closing market price of the Companys stock on the trading day prior to the date of grant.  Outstanding options vest ranging from a four month period to one year from the date of grant. Options granted to investor relations personnel vest in accordance with TSX-V regulation.  The options are for a maximum term of ten years.  The following is a summary of changes in options for the year ended December 31, 2011:  During the yearGrant dateExpiry dateExercise priceOpening balanceGrantedExercisedForfeitedClosing balanceVested and exercisableFeb 22, 2006Feb 21, 2011$0.701,110,000--(1,110,000)--Apr 17, 2007Apr 16, 2012$0.52595,000--(30,000)565,000565,000Sep 06, 2007Sep 5, 2012$0.56850,000---850,000850,000May 06, 2008May 5, 2013$0.26615,000-(40,000)-575,000575,000Jan 08, 2010Jan 7, 2020$0.291,640,000-(45,000)-1,595,0001,595,000May 26, 2010May 25, 2020$0.36100,000---100,000100,000Sep 24, 2010Sep 23, 2020$0.691,620,000-(20,000)(30,000)1,570,0001,570,000Nov 18, 2010Nov 17, 2020$0.6975,000---75,00075,000Jul 04, 2011Jul 3, 2021$0.60-55,000--55,00055,000Jul 27, 2011Jul 26, 2021$0.81-320,000--320,000320,0006,605,000375,000(105,000)(1,170,000)5,705,0005,705,000Weighted average exercise price$0.52$0.78$0.35$0.70$0.50$0.50    - 85 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  13. SHARE-BASED PAYMENTS (contd)  a) Option Plan Details  (contd)  The following is a summary of changes in options for the year ended December 31, 2010:  During the yearGrant dateExpiry dateExercise priceOpening balanceGrantedExercisedForfeitedClosing balanceVested and exercisableUnvestedFeb 22, 2006Feb 21, 2011$0.701,870,000--(760,000)1,110,0001,110,000-Apr 17, 2007Apr 16, 2012$0.52835,000-(240,000)-595,000595,000-Jun 01, 2007May 31, 2012$0.6250,000--(50,000)---Sep 06, 2007Sep 5, 2012$0.56850,000---850,000850,000-May 06, 2008May 5, 2013$0.26665,000-(50,000)-615,000615,000-Jan 08, 2010Jan 7, 2020$0.29-1,810,000(170,000)-1,640,0001,590,00050,000May 26, 2010May 25, 2020$0.36-100,000--100,00050,00050,000Sep 24, 2010Sep 23, 2020$0.69-1,620,000--1,620,0001,488,750131,250Nov 18, 2010Nov 17, 2020$0.69-75,000--75,00075,000-4,270,0003,605,000(460,000)(810,000)6,605,0006,373,750231,250Weighted average exercise price$0.57$0.48$0.41$0.70$0.52$0.51$0.53  The average share price was $0.80 (2010: $0.76) at the time the options were exercised.  c) Fair Value of Options Issued During the Year  The weighted average fair value at grant date of options granted during the year ended December 31, 2011 was $0.67 per option (year ended December 31, 2010: $0.46).  The weighted average remaining contractual life of the options outstanding at December 31, 2011 is 5.81 years.  Options Issued to Employees  The fair value at grant date is determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date, the expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.  Options Issued to Non-Employees  Options issued to non-employees are measured based on the fair value of the goods or services received, at the date of receiving those goods or services.  If the fair value of the goods or services received cannot be estimated reliably, the options are measured by determining the fair value of the options granted using the Black-Scholes option pricing model.    - 86 -   Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  13. SHARE-BASED PAYMENTS (contd)  c) Fair Value of Options Issued During the Year  (contd)  The model inputs for options granted during the years ended December 31, 2011 and 2010 included:  Grant
dateExpiry
dateShare price at
grant dateExercise
priceRisk-free
interest rateExpected lifeVolatility
factorDividend
yield07/27/1107/26/21$0.81$0.812.88%10 years90%0%07/04/1107/03/21$0.55$0.603.08%10 years89%0%11/18/1011/17/20$0.59$0.693.12%10 years89%0%09/24/1009/23/20$0.74$0.692.86%10 years90%0%05/26/1005/25/20$0.36$0.363.25%10 years89%0%01/08/1001/07/20$0.35$0.293.59%10 years89%0%  The expected volatility is based on the historical volatility (based on the remaining life of the options), adjusted for any expected changes to future volatility due to publicly available information. The risk free rate of return is the yield on a zero-coupon Canadian Treasury Bill of a term consistent with the assumed option life. The expected average option term is the average expected period to exercise, based on the historical activity patterns for each individually vesting tranche.  Option pricing models require the input of highly subjective assumptions, including the expected price volatility.  Changes in these assumptions can materially affect the fair value estimate and, therefore, the existing models do not necessarily provide a reliable single measure of the fair value of the Companys stock options.  b) Expenses Arising from Share-based Payment Transactions  Total expenses arising from the share-based payment transactions recognized during the year as part of share-based compensation expense were $306,915 (December 31, 2010: $1,612,792).  As of December 31, 2011 there was no amount (December 31, 2010: $56,697) of total unrecognized compensation cost related to unvested share-based compensation awards.  c) Amounts Capitalized Arising from Share-based Payment Transactions  Total expenses arising from the share-based payment transactions that were capitalized during the year as part of exploration and evaluation asset acquisition costs were $119,700 (December 31, 2010: $111,300).    - 87 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  14. INCOME TAXES  Taxation in the Company and its subsidiaries operational jurisdictions is calculated at the rates prevailing in the respective jurisdictions.  The difference between tax expense for the year and the expected income taxes based on the statutory tax rate arises as follows:  December 31,
2011December 31,
2010Loss before income taxes$     (2,884,131)$    (4,936,707)Tax charge/(recovery) based on the statutory rate of 26.5% (2010: 28.5%)(764,000)(1,407,000)Non-deductible expenses(1,095,000)551,000Different tax rates in other jurisdictions298,00098,000Non-taxable portion of capital gains(671,000)(21,000)Expiry of loss carry forward-503,000Flow-through shares renunciation449,00097,000Spin out impact1,250,000-Other(75,000)(24,000)Changes in unrecognized deferred tax assets(108,000)(155,000)Total income tax expense / (recovery)$      (716,000)$      (358,000)  Effective January 1, 2011, the Canadian Federal corporate tax rate decreased from 18% to 16.5% and the British Columbia provincial tax decreased from 10.5% to 10%.  The tax rate of 0.0% represents the federal statutory rate applicable for the 2011 taxation year for the Cayman Islands, 30.0% for Mexico, 5.0% for Guatemala and 30.0% for Nicaragua.  No deferred tax asset has been recognized in respect of the following losses and temporary differences as it is not considered probable that sufficient future taxable profit will allow the deferred tax asset to be recovered:  December 31,
2011December 31,
2010Loss carry forwards$        640,000$     1,083,000Property and equipment82,00067,000Mineral Properties565,000133,000Other deductible temporary differences23,000135,000Unrecognized tax assets(1,310,000)(1,418,000)$                    -$                    -  As at December 31, 2011, the Company has estimated non-capital losses for Canadian income tax purposes that may be carried forward to reduce taxable income derived in future years. Non-capital Canadian tax losses expiring as follows:  Year of expiryTaxable losses2026$          67,00020271,009,0002028653,0002030831,000Total$     2,560,000    - 88 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  15. RELATED PARTY TRANSACTIONS  The Companys related parties with transactions during the year ended December 31, 2011 consist of directors, officers and companies with common directors as follows:  Related PartyNature of TransactionsRackla Metals Inc. (Associate)Shared general and administrative expensesMill Street Services Ltd.Management feesRical Mining Ltd.Expense reimbursementFortuna Silver Mines Ltd.Shared general and administrative expensesFocus Ventures Ltd.Shared general and administrative expensesIron Creek Capital Corp.Shared general and administrative expensesEmerick Resources Corp.Shared general and administrative expensesWestern Pacific Resources Corp.Shared general and administrative expensesWesgold Minerals Inc.Shared general and administrative expensesVoyager Gold Corp.Shared general and administrative expenses  In addition to related party transactions disclosed elsewhere in the consolidated financial statements (Note 8 and 9), the Company incurred the following expenditures charged by officers and companies which have common directors with the Company in the year ended December 31, 2011:  20112010Expenses:Management fees$             60,000$            60,000Consulting10,00030,000Mineral property costs:Geological consulting fees-3,170$             70,000$            93,170  These expenditures were measured by the exchange amount which is the amount agreed upon by the transacting parties.  Advances and other receivables include $75,329 (December 31, 2010: $26,384, January 1, 2010: $12,836) due from directors and officers of the Company. These were funds advanced for Company expenses and any balance owed will be repaid in the normal course of business.  Due from related parties of $541,889 (December 31, 2010: $176,508, January 1, 2010: $152,948) are amounts due from companies which have a common director with the Company and arose from shared administrative costs.  Accounts payable and accrued liabilities include $76,517 (December 31, 2010: $19,356, January 1, 2010: $17,363) payable to a former officer of the Company for general administrative and Yukon camp maintenance and exploration expense reimbursements and to an officer of the Company for management fees.  Key management compensation  Key management personnel are persons responsible for planning, directing and controlling the activities of an entity, and include executive directors. Key management compensation comprises:  20112010Salaries and wages and fees$            94,155$         109,052Share-based payments105,128828,280$          199,283$         937,332    - 89 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  16. SEGMENTED INFORMATION  Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance.  All of the Companys operations are within the mining sector relating to precious metals exploration.  Due to the geographic and political diversity, the Companys exploration operations are decentralized whereby exploration managers are responsible for business results and regional corporate offices provide support to the exploration programs in addressing local and regional issues.  The Companys operations are therefore segmented on a district basis.  The Companys assets are located in Canada, Caymans, Guatemala, Nicaragua, Peru, and Mexico. Details of identifiable assets by geographic segments are as follows:  Year ended December 31, 2011CanadaGuatemalaNicaraguaOtherConsolidatedExploration expenditures$  4,954,479$   1,387,041$       29,899$        18,634$    6,390,053Exploration and evaluation assets
Distributed (Note 8)1,118,008---1,118,008Interest income61,397---61,397Amortization44,1195,3046,8032,10858,334Profit/(loss) before income taxes(1,485,743)(1,423,545)(33,034)58,191(2,884,131)Capital expenditures*441,22329,748--470,971Year ended December 31, 2010CanadaGuatemalaNicaraguaOtherConsolidatedExploration expenditures$  2,016,987$     753,900$       55,992$        11,511$   2,838,390Exploration and evaluation
assets written off-----Interest income34,275---34,275Amortization30,5624,95010,0022,48648,000Profit/(loss) before income taxes(4,195,847)(757,195)(92,242)108,577(4,936,707)Capital expenditures*917,7851,596991-920,372*Capital expenditures consists of additions of property and equipment and exploration and evaluation assetsAs at December 31, 2011CanadaGuatemalaNicaraguaOtherConsolidatedTotal current assets$  3,692,139$     347,633$       13,876$      371,991$    4,425,639Total non-current assets1,616,3314,172,136137,051-5,925,518Total assets$  5,308,470$  4,519,769$     150,927$      371,991$  10,351,157Total liabilities$     759,362$            163$       11,405$          4,509$       775,439As at December 31, 2010CanadaGuatemalaNicaraguaOtherConsolidatedTotal current assets$  8,595,193$     181,337$       30,302$      623,894$  9,430,726Total non-current assets831,0964,163,828154,8643,5365,153,324Total assets$  9,426,289$  4,345,165$    185,166$     627,430$14,584,050Total liabilities$  1,181,079$        1,769$        1,800$         1,084$ 1,185,732    - 90 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT  The Company is exposed to the following financial risks:  · Market Risk · Credit Risk · Liquidity Risk  In common with all other businesses, the Company is exposed to risks that arise from its use of financial instruments.  This note describes the Companys objectives, policies and processes for managing those risks and the methods used to measure them.  Further quantitative information in respect of these risks is presented throughout these financial statements.  General Objectives, Policies and Processes  The Board of Directors has overall responsibility for the determination of the Companys risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Companys finance function.  The Board of Directors receive periodic reports through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.  The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Companys competitiveness and flexibility.  Further details regarding these policies are set out below.  a) Market Risk  Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices.  Market prices are comprised of three types of risk: foreign currency risk, interest rate risk, and equity price risk.  Foreign Currency Risk  Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.  The Company is exposed to fluctuations in foreign currencies through its operations in foreign countries.  The Company monitors this exposure, but has no hedge positions.  As at December 31, 2011, cash totalling $255,717 (December 31, 2010: $252,026) was held in US dollars, $2,441 (December 31, 2010: $3,773) in Nicaragua Cordoba, $8,091 (December 31, 2010: $15,220) in Guatemala Quetzal, $21,859 (December 31, 2010: $10,096) in Mexican Pesos and $696 (December 31, 2010: $837) in Peruvian Sols. Based on the above net exposures at December 31, 2011, a 10% depreciation or appreciation of the above currencies against the Canadian dollar would approximately result in a $29,000 increase or decrease in the Companys after tax net earnings, respectively.  Interest Rate Risk  Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.  The Company does not have any borrowings.  Interest rate risk is limited to potential decreases on the interest rate offered on cash held with chartered Canadian financial institutions.  The Company considers this risk to be limited.  Equity Price Risk  Equity price risk is the uncertainty associated with the valuation of assets arising from changes in equity markets.  The Companys available-for-sale investments are exposed to significant equity price risk due to the potentially volatile and speculative nature of the businesses in which the investments are held.  The available-for-sale investments held in Focus, Rackla Warrants and Fortuna, and previously held in Solomon and Wesgold, are monitored by Management with decisions on sale taken at Board level.  A 10% decrease in fair value of the shares would approximately result in a $64,000 decrease in equity.    - 91 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  17. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (contd)  b) Credit Risk  Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.  The Companys credit risk is primarily attributable to its cash and cash equivalents, marketable securities and advances and other receivables.  The Company limits exposure to credit risk by maintaining its cash and cash equivalents with large financial institutions.  The Company does not have cash and cash equivalents or marketable securities that are invested in asset based commercial paper.  For advances and other receivables, the Company estimates, on a continuing basis, the probable losses and provides a provision for losses based on the estimated realizable value.  c) Liquidity Risk  Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.  The Companys approach to managing liquidity risk is to provide reasonable assurance that it will have sufficient funds to meet liabilities when due.  The Company manages its liquidity risk by forecasting cash flows required by operations and anticipated investing and financing activities.  At December 31, 2011, the Company had working capital of $3.6million (December 31, 2010: $8.2 million) available to apply against short-term business requirements.  All of the Companys financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms.  Determination of Fair value  Fair values have been determined for measurement and/or disclosure purposes based on the following methods.  When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.  The Statement of Financial Position carrying amounts for cash, due from related parties, advances and other receivables, deposits, accounts payables and accrued liabilities, and due to related parties approximates fair value due to their short-term nature.  Due to the use of subjective judgments and uncertainties in the determination of fair values these values should not be interpreted as being realizable in an immediate settlement of the financial instruments.  Fair Value Hierarchy  Financial instruments that are measured subsequent to initial recognition at fair value are grouped in Levels 1 to 3 based on the degree to which the fair value is observable:  Level 1Unadjusted quoted prices in active markets for identical assets or liabilities;Level 2Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); andLevel 3Inputs for the asset or liability that are not based on observable market data (unobservable inputs).  The available-for-sale investments for Focus, Fortuna, Rackla, Wesgold and Solomon are based on quoted prices and are therefore considered to be Level 1. Wesgold moved from Level 2 to Level 1 on October 2010 following a public offering.    - 92 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  18. CAPITAL MANAGEMENT  The Companys objectives when managing capital are to safeguard the Companys ability to continue as a going concern in order to advance its mineral properties. In order to facilitate the management of its capital requirements, the Company prepares periodic budgets that are updated as necessary. The Company manages its capital structure and makes adjustments to it to effectively support the acquisition and exploration of mineral properties. The properties in which the Company currently has an interest are in the exploration stage; as such the Company is dependent on external financing to fund its activities. In order to carry out the planned exploration and pay for general administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so.  Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company monitors its cash, common shares, warrants and stock options as capital. There were no changes in the Company's approach to capital management during the year ended December 31, 2011. The Companys investment policy is to hold cash in interest bearing bank accounts, which pay comparable interest rates to highly liquid short-term interest bearing investments with maturities of one year or less and which can be liquidated at any time without penalties.  Neither the Company nor its subsidiaries are subject to externally imposed capital requirements and do not have exposure to asset-backed commercial paper or similar products. The Company expects its current capital resources to be sufficient to carry out its planned exploration programs and operating costs for the next twelve months.  19. EVENTS AFTER THE REPORTING DATE  Subsequent to the year end, the following events which have not been disclosed elsewhere in these consolidated financial statements have occurred:  i) On April 5, 2012, the Company and B2Gold Corp. (B2Gold) entered into a binding letter agreement pursuant to which B2Gold has agreed, among other things, to acquire a 100% interest in the Trebol and El Pavon gold properties in Nicaragua in consideration of C$20 million, payable in common shares of B2Gold at a price per share equal to the volume weighted average price of B2Golds common shares on the Toronto Stock Exchange (TSX) for the ten trading days immediately preceding the date of the letter agreement. In addition, B2Gold has agreed to make contingent payments to the Company of US$10 per ounce of gold on 40% of any proven and probable mineral reserves in excess of 500,000 ounces (on a 100% basis). Based on a previous joint venture agreement with the Company, B2Gold had earned a 60% interest in the Trebol and Pavon properties by expending a total of US$4 million on exploration, resulting in a 60% - 40% B2Gold  the Company joint venture.  The completion of the transaction is subject to a number of conditions, including the completion by B2Gold of satisfactory due diligence by May 6, 2012, the negotiation and execution of a definitive purchase agreement and the approval of all relevant regulatory authorities, including the approval of the TSX for the listing of the common shares of B2Gold to be issued in connection with the transaction.  B2Gold and the Company have also agreed to enter into a joint venture agreement on 60% - 40% basis with respect to each of the Companys San Jose and B2Golds La Magnolia properties in Nicaragua and continue jointly exploring the properties with B2Gold and the Company contributing 60% and 40% respectively, of the exploration expenditures of each joint venture.  In connection with the proposed transaction, B2Gold and the Company will terminate all other aspects of the existing option and joint venture arrangements entered into between the parties in December 2009 in respect of the Trebol, El Pavon and San Jose exploration properties.  ii) On April 16, 2012, 565,000 options exercisable at $0.52 expired unexercised    - 93 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  19. EVENTS AFTER THE REPORTING DATE (contd)  iii) On February 6, 2012, the exercise prices for outstanding warrants were reduced to 73% of their original exercise price as a result of the Spin-Out. Warrants that were adjusted were comprised of:  Number of warrantsOriginal
exercise
priceAdjusted
exercise
priceExpiry date259,230$0.70$0.51June 2, 20126,545,384$0.50$0.37June 16, 20123,436,123$0.75$0.55July 3, 201210,240,737  No other adjusting or significant non-adjusting events have occurred between the reporting date and the date these financial statements were authorized for issue.    - 94 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  20. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS  The Companys consolidated financial statements for the year-ending December 31, 2011 are the first annual consolidated financial statements prepared in accordance with IFRS.  IFRS 1, First Time Adoption of International Financial Reporting Standards (IFRS 1), requires that comparative financial information be provided.  As a result, the first date at which the Company has applied IFRS was January 1, 2010 (the Transition Date).  IFRS 1 requires first-time adopters to retrospectively apply all effective IFRS standards as of the reporting date, which for the Company is December 31, 2011.  Therefore, the consolidated financial statements for the year-ended December 31, 2011, the comparative information presented in these consolidated financial statements for the year-ended December 31, 2010 and the opening IFRS statement of financial position at January 1, 2010 are prepared in accordance with IFRS standards effective at the reporting date.  However, IFRS 1 also provides for certain optional exemptions and certain mandatory exceptions for first time IFRS adopters.  Prior to transition to IFRS, the Company prepared its financial statements in accordance with pre-changeover Canadian GAAP.  In preparing the opening IFRS consolidated financial statements, the Company has adjusted amounts reported previously in the consolidated financial statements prepared in accordance with pre-changeover Canadian GAAP.  An explanation of how the transition from pre-changeover Canadian GAAP to IFRS has affected the Companys financial position, financial performance and cash flows is set out in the following notes and tables:  a) Optional Exemptions  Share-based payments  IFRS 1 permits the application of IFRS 2 Share Based Payments only to equity instruments granted after November 7, 2002 that had not vested by the date of transition to IFRS. The Company has applied this exemption and will apply IFRS 2 for equity instruments granted after November 7, 2002 that had not vested by January 1, 2010.  Business Combinations  The Company has elected not to retrospectively apply IFRS 3 Business Combinations to any business combinations that may have occurred prior to its Transition Date and such business combinations have not been restated.  Compound Financial Instruments  The Company has elected not to retrospectively separate the liability and equity components of compound instruments for which the liability component is no longer outstanding at the date of transition to IFRS.  b) Mandatory Exception  Estimates  The estimates previously made by the Company under pre-changeover Canadian GAAP were not revised for the application of IFRS except where necessary to reflect any difference in accounting policy or where there was objective evidence that those estimates were in error.  As a result, the Company has not used hindsight to revise estimates.  Derecognition of Financial Assets and Liabilities  The Company has applied the derecognition requirements in IAS 39 Financial Instruments: Recognition and Measurement prospectively from the Transition Date.  As a result any non-derivative financial assets or non-derivative financial liabilities derecognized prior to the Transition Date in accordance with pre-changeover Canadian GAAP have not been reviewed for compliance with IAS 39.    - 95 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  20. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS  (contd)  c) Reconciliations  IFRS 1 requires an entity to reconcile equity, comprehensive income and cash flows for prior periods.  The adoption of IFRS has resulted in changes to the Companys reported financial position and results of operations.  The Companys adoption of IFRS did not have an impact on the total operating, investing or financing cash flows and as such no reconciliation of the statement of cash flows has been prepared. In order to allow the users of the financial statements to better understand these changes, the financial statements previously presented under Canadian GAAP have been reconciled to IFRS. For a description of the changes, see the discussion in Notes to the IFRS Reconciliations below.  The January 1, 2010 Canadian GAAP Consolidated Statement of Financial Position has been reconciled to IFRS as follows:  Canadian
GAAPEffect of
transition to
IFRSIFRSSub NoteASSETSCurrent assets$       2,542,344$                     -$       2,542,344Non-current assetsLong-term deposits23,881-23,881Property and equipment183,220(2,616)180,604(i)Exploration and evaluation assets4,293,592(122,000)4,171,592Total non-current assets4,500,693(124,616)4,376,077TOTAL ASSETS$       7,043,037$      (124,616)$       6,918,421LIABILITIES and SHAREHOLDERS' EQUITYCurrent liabilityAccounts payable and accrued liabilities$          246,549$                     -$          246,549Non-current liabilityDeferred income tax liability122,000(122,000)-(ii)Total liabilities368,549(122,000)246,549Shareholders' equityShare capital42,587,194-42,587,194Other equity reserve4,332,232-4,332,232Deficit(41,157,211)657,384(40,499,827)(i)(ii)(iv)Accumulated other comprehensive income912,273(660,000)252,273(iv)Total shareholders' equity6,674,488(2,616)6,671,872TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY$       7,043,037$        (124,616)$       6,918,421    - 96 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  20. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (contd)  The December 31, 2010 Canadian GAAP Consolidated Statement of Financial Position has been reconciled to IFRS as follows:  Canadian
GAAPEffect of
transition to
IFRSIFRSSub
NoteASSETSCurrent assets$       9,430,726$                     -$       9,430,726Non-current assetsLong-term deposits23,881-23,881Property and equipment226,469(6,761)219,708(i)Exploration and evaluation assets5,031,735(122,000)4,909,735Total non-current assets5,282,085(128,761)5,153,324TOTAL ASSETS$     14,712,811$        (128,761)$     14,584,050LIABILITIES and SHAREHOLDERS' EQUITYCurrent liabilityAccounts payable and accrued liabilities$          547,978$                     -$          547,978Other liabilities-637,754637,754(iii)Total current liabilities547,978637,7541,185,732Non-current liabilityDeferred income tax liability122,000(122,000)-(ii)Total liabilities669,978515,7541,185,732Shareholders' equityShare capital53,657,762(1,026,553)52,631,209(iii)Other equity reserve5,966,627-5,966,627Deficit(46,280,912)1,202,911(45,078,001)(i)(ii)(iii)(iv)Accumulated other comprehensive loss699,356(820,873)(121,517)(iv)Total shareholders' equity14,042,833(644,515)13,398,318TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY$     14,712,811$         (128,761)$     14,584,050    - 97 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  20. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (contd)  The Canadian GAAP Consolidated Statement of Comprehensive Loss for the year ended December 31, 2010 has been reconciled to IFRS as follows:  Canadian GAAPEffect of
transition to
IFRSIFRSSub
NoteLoss before income taxes$     (5,093,435)$        156,728$     (4,936,707)(i)Deferred income tax recovery (expense)(30,266)388,799358,533(iii)Net loss for the year(5,123,701)545,527(4,578,174)Deficit, beginning of the year(41,157,211)657,384(40,499,827)Deficit, end of the year$   (46,280,912)$     1,202,911$   (45,078,001)  Notes to the IFRS reconciliations:  i) Website costs  Under Canadian GAAP, Radius capitalized costs relating to the development of its website. Under IFRS, where the website has been developed solely or primarily for promoting or advertising the entitys products and services, the entity will be unable to demonstrate that such a web site will generate future economic benefits, and costs incurred on the development of the website are expensed as incurred. On adoption of the IFRS requirements, the Company recorded a $6,761 decrease to property and equipment and an increase to deficit.  ii) Deferred income taxes  Under Canadian GAAP, a $122,000 deferred income tax liability was recognized on the acquisition of Guatemalan mineral property assets. Under IFRS, the tax liability would not have been recognized, either on acquisition or subsequently. On adoption of the IFRS requirements, the Company recorded a $122,000 decrease to deferred tax liability and a decrease to exploration and evaluation assets.  iii) Flow-through shares  Under Canadian GAAP, share capital is recorded at net proceeds less the deferred tax liability related to the renounced expenditures. Under the IFRS framework, the increase to share capital when flow-through shares are issued is measured based on the current market price of common shares. The incremental proceeds, or "premium", are recorded as a deferred charge. When expenditures are renounced, a deferred tax liability is recognized and the deferred charge is reversed. The net amount is recognized as deferred tax expense. On adoption of the IFRS requirements, the Company recorded a $1,026,553 decrease to share capital, a premium liability of $637,754 and a deferred income tax recovery of $388,799 as at and for the year ended December 31, 2010. There was no impact on the transition date statement of financial position.    - 98 -    Radius Gold Inc. (An Exploration Stage Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2011 (Expressed in Canadian Dollars)  20. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (contd)  Notes to the IFRS reconciliations: (contd)  iv) Related party transactions at carry amounts  Under Canadian GAAP, related party transactions not in the normal course of operations should be measured at the carrying amount.  Any excess between the carrying amounts of the items exchanged and consideration received should be included as a charge or credited to equity. Under the IFRS framework, related party transactions are to be measured at fair value with any difference between value received and consideration paid being recorded through the statement of comprehensive loss.  On adoption of the IFRS requirements, the Company recorded a $660,000 decrease to net loss and charge to accumulated other comprehensive income of $660,000 as at January 1, 2010. As at December 31, 2010, an adjustment of $820,873, which includes $660,000 on transition and $160,873 for year ended December 31, 2010 transactions was required in connection with related party transactions at fair value through. For the year ended December 31, 2010, the Company recorded a $160,873 decrease to net loss, $660,000 decrease to opening deficit and charge to accumulated other comprehensive income of $820,873 as at January 1, 2010.     - 99 -      SIGNATURE PAGE  Pursuant to the requirements of Section 12g of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.   Dated: May 14, 2012 By  /s/ Simon Ridgway Simon Ridgway, Chief Executive Officer      - 100 -