Exhibit
99.2

















SEABRIDGE
GOLD INC.
























MANAGEMENT’S
DISCUSSION AND ANALYSIS









FOR
THE YEAR ENDED DECEMBER 31, 2009









SEABRIDGE
GOLD INC.




Management’s
Discussion and Analysis




The
following is a discussion of the results of operations and financial condition
of Seabridge Gold Inc. and its subsidiary companies for the years ended December
31, 2009, 2008 and 2007. This report is dated March 18, 2010 and should be read
in conjunction with the audited consolidated financial statements for the years
ended December 31, 2009, 2008 and 2007, the Company’s Annual Information Form
filed on SEDAR at www.sedar.com, and
the Annual Report on Form 40-F filed on EDGAR at www.sec.gov/edgar.shtml.  Other
corporate documents are also available on SEDAR and EDGAR as well as the
Company’s website www.seabridgegold.net.  As
the Company has no operating project at this time, its ability to carry out its
business plan rests with its ability to sell projects or to secure equity and
other financings.  All amounts contained in this document are stated
in Canadian dollars unless otherwise disclosed.




Company
Overview


Seabridge
Gold Inc. is a development stage company engaged in the acquisition and
exploration of gold properties located in North America.  The Company
is designed to provide its shareholders with exceptional leverage to a rising
gold price.  The Company’s business plan is to increase its gold
ounces in the ground but not to go into production on its own.  The
Company will either sell projects or participate in joint ventures towards
production with major mining companies.  During the period 1999
through 2002, when the price of gold was lower than it is today, Seabridge
acquired 100% interests in eight advanced-stage gold projects situated in North
America. Subsequently, the Company acquired a 100% interest in the Noche Buena
project in Mexico.  As the price of gold has moved higher over the
past several years, Seabridge has commenced exploration activities and
engineering studies at several of its projects.  The Company sold the
Noche Buena project for US$25 million ($30,842,000) in December
2008.  Seabridge’s principal projects include the Courageous Lake
property located in the Northwest Territories and the KSM
(Kerr-Sulphurets-Mitchell) property located in British Columbia. Seabridge’s
common shares trade in Canada on the Toronto Stock Exchange under the symbol
“SEA” and in the United States on the NYSE Amex stock exchange under the symbol
“SA”.




Selected
Annual Information


Summary operating results($)
            
            2009
            
            2008
            
            2007Interest
      income
            
            478,000
            
            621,000
            
            823,000Gain
      on sale of Noche Buena project
            
            -
            
            19,891,000
            
            -Operating
      costs
            
            5,067,000
            
            5,216,000
            
            6,984,000Profit
      (Loss)
            
            (4,678,000)
            
            10,290,000
            
            (5,542,000)Basic
      Profit (Loss) per share
            
            (0.12)
            
            0.28
            
            (0.15)Diluted
      Profit (Loss) per Share
            
            (0.12)
            
            0.27
            
            (0.15)








Summary balance sheets
      ($)
            
            2009
            
            2008
            
            2007Current
      assets
            
            10,550,000
            
            39,323,000
            
            25,698,000Mineral
      interests
            
            91,214,000
            
            69,029,000
            
            62,668,000Total
      assets
            
            103,401,000
            
            109,802,000
            
            89,862,000Total
      long-term liabilities
            
            2,393,000
            
            1,999,000
            
            2,436,000




Results
of Operations


Year
Ended December 31, 2009 Compared to Year Ended December 31, 2008


The net
loss for the year ended December 31, 2009 was $4,678,000 or $0.12 per share
compared to a net profit of $10,290,000 or $0.28 per share for
2008.  In December 2008, the Company sold the Noche Buena project for
gross proceeds of US$25 million ($30,842,000) and recorded a net gain of
$19,891,000 before income taxes of $5,593,000.  In 2009, the Company
recorded income tax expense of $171,000 compared to a 2008 income tax expense of
$5,593,000 net of an income tax recovery amounting to $587,000. The 2009 amount
was calculated to recognize the difference in unused income tax pools between
the federal and Ontario provincial balances as the province moved to a combined
federal regime.  The 2008 recovery amount relates to the renouncing of
Canadian Exploration Expenses to the investors of flow-through financings. The
Company’s interest income from cash investments was down in 2009, at $478,000
compared with $621,000 in 2008 with lower cash balances to invest and lower
interest rates. Corporate and general expenses were lower in 2009 compared to
2008, due to stock option expenses being $371,000 less along with other smaller
expense reductions.  In 2008, the Company reported a gain on foreign
exchange of $378,000 compared to a loss in 2009 of $18,000 as the US dollar and
Mexican peso moved favourably compared to the Canadian dollar in 2008 when there
were significant transactions in those currencies.




1




Year
Ended December 31, 2008 Compared to Year Ended December 31, 2007


The net
profit for the year ended December 31, 2008 was $10,290,000 or $0.28 per share
compared to a net loss of $5,542,000 or $0.15 per share for 2007.  In
December 2008, the Company sold the Noche Buena project for gross proceeds of
US$25 million ($30,842,000) and recorded a net gain of $19,891,000 before income
taxes of $5,593,000.  For both years, income tax recoveries ($587,000
in 2008 and $620,000 in 2007) were reported relating to the renouncing of
Canadian Exploration Expenses to the investors of flow-through financings. The
Company’s interest income from cash investments was down in 2008, at $621,000
compared with $823,000 in 2007 with lower cash balances to invest and lower
interest rates. Corporate and general expenses were lower in 2008 compared to
2007, as stock option expenses were $1,852,000 compared to $2,830,000 and bonus
grants were higher in 2007.  In 2008, the Company reported a gain on
foreign exchange of $378,000 compared to a loss in 2007 of $296,000 as the US
dollar and Mexican peso moved favourably compared to the Canadian dollar when
there were significant transactions in those currencies.




Quarterly
Information


Selected
financial information for each of the last eight quarters ended December 31,
2009 is as follows (unaudited):




4th
      Quarter Ended December 31, 2009
              
              
              3rd
      Quarter Ended September 30, 2009
              
              
              2nd
      Quarter Ended
                June
      30, 2009
              
              
              1st
      Quarter Ended
                March
      31, 2009Revenue
              
              $
              Nil
              
              
              $
              Nil
              
              
              $
              Nil
              
              
              $
              NilProfit
      (Loss) for period
              
              $
              (1,269,000
              )
              
              $
              (1,135,000
              )
              
              $
              (1,278,000
              )
              
              $
              (997,000
              )Basic
      profit (loss) per share
              
              $
              (0.03
              )
              
              $
              (0.03
              )
              
              $
              (0.03
              )
              
              $
              (0.03
              )Diluted
      profit (loss) per share
              
              $
              (0.03
              )
              
              $
              (0.03
              )
              
              $
              (0.03
              )
              
              $
              (0.03
              )
  4th
      Quarter Ended December 31, 2008
              
              
              3rd
      Quarter Ended September 30, 2008
              
              
              2nd
      Quarter Ended
                June
      30, 2008
              
              
              1st
      Quarter Ended
                March
      31, 2008Revenue
              
              $
              Nil
              
              
              $
              Nil
              
              
              $
              Nil
              
              
              $
              NilProfit
      (Loss) for period
              
              $
              13,396,000
              
              
              $
              (895,000
              )
              
              $
              (1,305,000
              )
              
              $
              (906,000
              )Basic
      profit (loss) per share
              
              $
              0.35
              
              
              $
              (0.02
              )
              
              $
              (0.03
              )
              
              $
              (0.02
              )Diluted
      profit (loss) per share
              
              $
              0.34
              
              
              $
              (0.02
              )
              
              $
              (0.03
              )
              
              $
              (0.02
              )




The
significant profit for the fourth quarter of 2008 was due to the $19.9 million
gain from the sale of the Noche Buena project in Mexico net of an income tax
provision of $5.6 million.




Mineral
Interest Activities


During
the year ended December 31, 2009, the Company incurred expenditures of
$23,178,000 on mineral interests compared to $14,789,000 in the year ended
December 31, 2008.  In 2009, expenditures were mainly for the
continued exploration drilling program and engineering, environmental and
metallurgical studies at the KSM project. In 2009, the Company released an
updated Preliminary Assessment on the KSM project and the 2009 drilling resulted
in new mineral resources being announced in early 2010.




2




The
Company also had recoveries of cash and shares amounting to $992,000 in 2009
compared to $14,000 in 2008. In 2008, the Company also had a gain of $19,891,000
before income taxes from the sale of the Noche Buena project.  The
recoveries in 2009 were from the optioning of the Hog Ranch project and initial
payments on the possible sale of the Nevada properties including Castle Black
Rock.




During
2010,   a pre-feasibility study will be completed for the KSM
project by early in the second quarter and drilling and engineering and
environmental studies will continue.  At Courageous Lake, the Company
will undertake a drilling program to upgrade and expand resources and commence
studies with the intention of upgrading the project potentially to the
pre-feasibility stage.




Liquidity
and Capital Resources




In March
2010, the Company completed a base shelf prospectus financing in the United
States and Canada and raised gross proceeds of US$65,837,500 through the
issuance of 2,875,000 common shares. During 2010, the Company plans to continue
to advance its two major gold projects, KSM and Courageous Lake in order to
either sell them or joint venture them towards production with major mining
companies.  In addition, it is in the process of selling off its other
properties. At December 31, 2009, the Company’s working capital position was
$9.1 million which along with the 2010 financing will allow the Company to
continue its major development plans and continue ongoing operating activities
for several years.





Year
Ended December 31, 2009


The
Company’s working capital position, at December 31, 2009, was $9,128,000 down
from $30,628,000 at the end of 2008.  In 2009, the Company received
$967,000 from the exercise of stock options. Cash in 2009 was used for
expenditures on exploration principally the KSM project and for corporate and
administrative expenses.




Cash and
short-term deposits at December 31, 2009 totalled $9,287,000 down from
$38,995,000 at December 31, 2008.  Operating activities used
$8,533,000 in 2009, including the payment of $5,326,000 in Mexican income taxes,
compared to $2,552,000 in the prior year, while cash expenditures on mineral
interests were $21,667,000 compared to $14,706,000 cash expenditures in
2008.




Contractual
      Obligations ($,000)
            
            
            Payments
      due by periodTotal
            2010
            2011-13
            2014-15
            After
      2015Mineral
      interests
            
            9,626
            1,196
            4,138
            2,861
            1,431Reclamation
      liabilities
            
            2,256
            -
            288
            -
            1,968Business
      premises operating lease
            
            264
            113
            151
            -
            -12,146
            1,309
            4,577
            2,861
            3,399





Amounts
shown for mineral interests include option payments and mineral lease payments
that are required to maintain the Company’s interest in the mineral
projects.





Outlook


During
2010, the Company plans to continue to advance its two major gold projects, KSM
and Courageous Lake in order to either sell them or joint venture them towards
production with major mining companies.  In addition, it will continue
to sell off its other properties while at the same time ensuring that funding is
available for its project development plans, holding costs and corporate
requirements.




Disclosure
Controls and Procedures


Disclosure
controls and procedures are designed to provide reasonable assurance that all
relevant information is gathered and reported to management, including the Chief
Executive Officer (CEO) and the Chief Financial Officer (CFO), on a timely basis
so that appropriate decisions can be made regarding public disclosure. As at
December 31, 2009, the Company's management, with the participation of the CEO
and CFO, has evaluated the effectiveness of the Company's disclosure controls
and procedures as defined in National Instrument 52-109 of the Canadian
Securities Administrators and has concluded that such controls and procedures
are effective.




3




Internal
Controls Over Financial Reporting


The
Company’s management, under the supervision of the CEO and the CFO, are
responsible for establishing and maintaining the Company’s internal controls
over financial reporting.   Management conducted an evaluation of
internal controls over financial reporting based on the framework established in
“Internal Control – Integrated Framework”  issued by the Committee of
Sponsoring Organizations of the Treadway Commission.  Based on this
evaluation, management concluded that the Company’s internal controls over
financial reporting were effective as at December 31, 2009.




Shares
Issued and Outstanding


At March
18, 2010, the issued and outstanding common shares of the Company totalled
40,535,185.  In addition, there were 1,751,000 stock options granted
and outstanding (of which 595,000 were unexercisable).  On a fully
diluted basis there would be 42,286,185 common shares issued and
outstanding.




Related
Party Transactions


During
the year ended December 31, 2009, a private company controlled by a director of
the Company was paid $39,000 (2008 - $14,800) for technical services provided by
his company related to mineral properties; a private company controlled by a
second director was paid $200,000 (2008 - $250,000) for corporate consulting
services rendered; and a third director was paid $18,200 (2008 - $16,600) for
geological consulting.  These transactions were in the normal course
of operations and were measured at the exchange amount, which is the amount of
consideration established and agreed to by the related parties.




Changes
in Accounting Policies


The
Company has adopted the following new accounting policies for the 2009 year as
issued by the Canadian Institute of Chartered Accountants (“CICA”):




Goodwill
and Intangible Assets


In
February 2008, the CICA issued Handbook Section 3064 Goodwill and Intangible
Assetswhich is
required to be adopted for fiscal years beginning on or after October 1,
2008.  This section establishes standards for the recognition,
measurement, presentation and disclosure of goodwill and intangible assets
subsequent to their initial recognition by profit-oriented enterprises. The
adoption of this new standard did not have a material effect on the financial
statements.




Credit
Risk and the Fair Value of Financial Assets and Financial
Liabilities


On
January 20, 2009, the Canadian Accounting Standards Board ("AcSB") issued
EIC-173, Credit Risk and the Fair Value of Financial Assets and Financial
Liabilities which was adopted retrospectively, without restatement. This EIC
provides guidance on how to take into account credit risk of an entity and
counterparty when determining the fair value of financial assets and financial
liabilities, including derivative instruments. The adoption of EIC-173 did not
have a material effect on the financial statements.




Mining
Exploration Costs


On March
27, 2009, the AcSB issued EIC-174, Mining Exploration Costs which provides
guidance to mining enterprises related to the measurement of exploration costs
and the conditions that a mining enterprise should consider when determining the
need to perform an impairment review of such costs.  The accounting
treatments provided in EIC-174 have been applied in the preparation of the
financial statements and did not have an impact on the valuation of the
Company’s mineral properties.




4




Changes
in Accounting Standards Not Yet Adopted


International
Financial Reporting Standards (“IFRS”)


In
February 2008, the Canadian Institute of Chartered Accountants announced that
GAAP for publicly accountable enterprises will be replaced by International
Financial Reporting Standards (“IFRS”) for interim and annual financial
statements for fiscal years beginning on or after January 1, 2011.The standard
also requires that comparative figures for 2010 be based on IFRS. As at December
31, 2009 the Company has begun assessing the adoption of IFRS for 2011, and the
identification of the new standards and their impact on financial reporting.
Management has analyzed existing financial reporting, prepared a preliminary
assessment of the potential impact the new standards will have on the Company
and developed a changeover plan.  The Company believes that the
accounting for impairment of assets, foreign exchange, exploration costs, asset
retirement obligations, stock-based compensation and income taxes under IFRS may
be different than Canadian GAAP, and may impact the financial statements. The
Company has not yet determined the full financial impact of the transition to
IFRS.  In addition, the Company anticipates a significant increase in
disclosure requirements under IFRS and such requirements are also being
evaluated along with the necessary system changes required to gather, process
and review such disclosure.




Business
Combinations, Consolidated Financial Statements, Non-controlling
Interests


The CICA
issued Handbook Sections 1582 Business Combinations, 1601 Consolidated Financial
Statements and 1602 Non-controlling Interests all of which are effective for
years beginning on or after January 1, 2011.  These Handbook Sections
replace 1581 Business Combinations and 1600 Consolidated Financial Statements
and establish a new Section for accounting for non-controlling interest in
subsidiaries.  The Company is currently evaluating the impact of these
new standards.




Risks
and Uncertainties


The following discussion on risks and
uncertainties should be read in conjunction with documentation contained in the
Company’s Annual Information Form filed on SEDAR atwww.sedar.com, and the Annual Report on Form 40-F
filed on EDGAR atwww.sec.gov/edgar.shtml.




Metal
Prices


Factors
beyond the control of the Company affect the price and marketability of any gold
or other minerals discovered.  Metal prices have fluctuated widely,
particularly in recent years and are affected by numerous factors beyond the
Company's control, including international, economic and political trends,
expectations of inflation, currency exchange fluctuations, interest rates, faith
in paper currencies, global or regional consumption patterns, speculative
activities and worldwide production levels.  The effect of these
factors cannot accurately be predicted.  However, as the Company is
highly leveraged to the price of gold, fluctuations in the gold price should
have an even greater impact on the price of the Company's shares.




Uncertainty
of Mineral Resources


The
statements of mineral resources disclosed by the Company are estimates only and
no assurance can be given that the anticipated tonnages and grades will be
achieved or that the indicated level of recovery will be
realized.  Such estimates necessarily include presumptions of
continuity of mineralization which may not actually be
present.  Market fluctuations and the prices of metals may render
mineral resources uneconomic.  Mineral resources are not mineral
reserves and do not have demonstrated economic viability.




The
Company’s mineral projects are in various stages of development, but in no case
do any projects contain mineral reserves.  Until they are categorized
as "mineral reserves", the known mineralization at these projects is not
determined to be able to be mined economically.  The Company’s ability
to put these properties into production will be dependent upon the results of
further drilling and evaluation.  There is no certainty that
expenditure made in the exploration of the Company’s mineral properties will
result in identification of commercially recoverable quantities of ore or that
ore reserves will be mined or processed profitably.  Greater assurance
will require completion of final comprehensive feasibility studies and,
possibly, further associated exploration and other work that concludes a
potential mine at each of these projects is likely to be economic, but such
studies remain subject to the same risks and uncertainties.




5




Exploration
and Development Risks


The
business of exploring for minerals and mining involves a high degree of
risk.  Few properties that are explored are ultimately developed into
producing mines.  At present, none of the Company’s properties have a
known body of commercial ore.  Major expenses may be required to
establish mineral reserves, to develop metallurgical processes and to construct
mining and processing facilities at a particular site.  It is
impossible to ensure that the current development programs planned by the
Company will result in a profitable commercial mining
operation.  Unusual or unexpected formations, formation pressures,
fires, power outages, labour disruptions, flooding, explosions, cave-ins, land
slides and the inability to obtain suitable or adequate machinery, equipment or
labour are other risks involved in the operation of mines and the conduct of
exploration programs.  The Company has limited experience in the
development and operation of mines and in the construction of facilities
required to bring mines into production.  The Company has relied and
may continue to rely upon consultants for development and operating
expertise.  The economics of developing mineral properties are
affected by many factors including the cost of operations, variations of the
grade of ore mined and fluctuations in the price of minerals
produced.  Depending on the price of minerals produced, the Company
may determine that it is impractical to commence or continue commercial
production.  Although precautions to minimize risk will be taken,
processing operations are subject to hazards such as equipment failure or
failure of retaining dams around tailings disposal areas which may result in
environmental pollution and consequent liability.




Mineral
Deposits and Production Costs


Mineral
deposits and production costs are affected by such factors as environmental
permitting regulations and requirements, weather, environmental factors,
unforeseen technical difficulties, unusual or unexpected geological formations
and work interruptions.  In addition, the grade of any ore ultimately
mined may differ from that indicated by drilling results.  Short-term
factors relating to ore reserves, such as the need for orderly development of
ore bodies or the processing of new or different grades, may also have an
adverse effect on mining operations and on the results of
operations.  There can be no assurance that any gold, copper or other
minerals recovered in small scale laboratory tests will be duplicated in large
scale tests under on-site conditions or in production scale heap
leaching.




Currency
Exchange Rate Fluctuation


The
minerals present in the Company's projects are sold in U.S. dollars and
therefore projected revenue of its projects is in U.S. dollars.  The
Company’s material properties are located in Canada and therefore its projected
expenses for developing its projects are in Canadian dollars.  The
preliminary assessments on the Courageous Lake and KSM Projects use a U.S.
dollar value for all projected expenses by converting projected Canadian dollar
expenses into U.S. dollars at the exchange rate of CDN$1 =
US$0.92.  To the extent the actual Canadian dollar to U.S. dollar
exchange rate is less than or more than this amount, the profitability of the
projects will be more than or less than that estimated in the preliminary
assessments, respectively (if the other assumptions are realized).




Financing
Risks


The
Company has limited financial resources, has no operating cash flow and has no
assurance that sufficient funding will be available to it for further
exploration and development of its projects or to fulfill its obligations under
any applicable agreements.  The exploration of the Company’s mineral
properties is, therefore, dependent upon the Company’s ability to obtain
financing through the sale of projects, joint venturing of projects, or equity
financing or other means.  Such sources of financing may not be
available on acceptable terms, if at all.  Failure to obtain such
financing may result in delay or indefinite postponement of exploration work on
the Company’s mineral properties, as well as the possible loss of such
properties.  Any transaction involving the issuance of previously
authorized but unissued shares of common or preferred stock, or securities
convertible into common stock, could result in dilution, possibly substantial,
to present and prospective holders of common stock.  These financings
may be on terms less favorable to the Company than those obtained
previously.  The Company has stated that its business plan is to
increase gold ounces in the ground but not to go into production on its
own.




Uninsurable
Risks


In the
course of exploration, development and production of mineral properties, certain
risks, and in particular, unexpected or unusual geological operating conditions
including rock bursts, cave-ins, fires, flooding and earthquakes may
occur.  It is not always possible to fully insure against such risks
and the Company may decide not to take out insurance against such risks as a
result of high premiums or other reasons.  Should such liabilities
arise, they could reduce or eliminate any future profitability and result in
increasing costs and a decline in the value of the securities of the
Company.




Competition


The
mineral 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 concessions,
claims, leases and other mineral interests as well as for the recruitment and
retention of qualified employees.




6




Environmental
and other Regulatory Requirements


The
Company's potential mining and processing operations and explora­tion
activities are subject to various laws and regulations governing land use, the
protection of the environ­ment, prospecting, development, production,
exports, taxes, labour standards, occupational health, waste disposal, toxic
substances, mine safety and other matters.  Such operations and
exploration activities are also subject to substantial regulation under these
laws by governmental agencies and may require that the Company obtain permits
from various governmental agencies.  Companies engaged in the
development and operation of mines and related facilities generally experience
increased costs, and delays in production and other schedules as a result of the
need to comply with applicable laws, regulations and permits.  The
Company believes it is in substantial compliance with all material laws and
regulations which currently apply to its activities.  There can be no
assurance, however, that all permits which the Company may require for
construction of mining facilities and conduct of mining operations will be
obtainable on reasonable terms or that such laws and regulations would not have
an adverse effect on any mining project which the Company might
undertake.




Additional
permits and studies, which may include environmental impact studies conducted
before permits can be obtained, are necessary prior to operation of properties
in which the Company has interests and there can be no assurance that the
Company will be able to obtain or maintain all necessary permits that may be
required to commence construction, development or operation of mining facilities
at these properties on terms which enable operations to be conducted at
economically justifiable costs.




Failure
to comply with applicable laws, regulations, and permitting requirements may
result in enforcement actions there under, including orders issued by regulatory
or judicial authorities causing operations to cease or be curtailed, and may
include corrective measures requiring capital expenditures, installation of
additional equipment, or remedial actions.  Parties engaged in mining
operations may be required to compensate those suffering loss or damage by
reason of the mining activities and may have civil or criminal fines or
penalties imposed for violations of applicable laws or regulations and, in
particular, environmental laws.




Amendments
to current laws, regulations and permits governing operations and activities of
mining companies, or more stringent implementation thereof, could have a
material adverse impact on the Company and cause increases in capital
expenditures or production costs or reduction in levels of production at
producing properties or require abandonment or delays in development of new
mining properties.




To the
best of the Company's knowledge, the Company is operating in compliance with all
applicable environmental regulations.




Political
Risk


Properties
in which the Company has, or may acquire, an interest are, or may be, located in
areas of Canada or the United States which may be of particular interest or
sensitivity to one or more interest groups, including aboriginal groups claiming
title to land.  The Company’s material properties are in British
Columbia and the Northwest Territories of Canada and are in areas with a First
Nations presence.  Consequently, mineral exploration and mining
activities in those areas may be affected in varying degrees by political
uncertainty, expropriations of property and changes in applicable government
policies and regulation such as tax laws, business laws, environmental laws,
native land claims entitlements or procedures and mining laws, affecting the
Company’s business in those areas.  Any changes in regulations or
shifts in political conditions are beyond the control or influence of the
Company and may adversely affect its business, or if significant enough, may
result in the impairment or loss of mineral concessions or other mineral rights,
or may make it impossible to continue its mineral exploration and mining
activities.  In many cases mine construction and commencement of
mining activities is only possible with the consent of the local First Nations
group and many companies have secured such consent by committing to take
measures to limit the adverse impact to, and ensure some of the economic
benefits of the construction and mining activity will be enjoyed by, the local
First Nations group.




Foreign
Operations


The
Company presently has interests in certain properties located in the United
States and in Mexico.  Foreign properties, operations and investments
may be adversely affected by local political and economic developments,
including exchange controls, currency fluctuations, changes in taxation laws or
policies as well as by-laws and policies of the United States, Mexico and Canada
affecting foreign trade, investment and taxation.




7




Limited
Operating History: Losses


The Company to date has limited
experience in mining or processing of metals.  The Company has
experienced, on a consolidated basis, losses in most years of its
operations.  All activities have been of an exploration and
development nature.  There can be no assurance that the Company will
generate profits inthe
future.





Critical
Accounting Estimates


Critical
accounting estimates used in the preparation of the consolidated financial
statements include the Company’s estimate of recoverable value of its mineral
properties and related deferred exploration expenditures as well as the value of
stock-based compensation.  Both of these estimates involve
considerable judgment and are, or could be, affected by significant factors that
are out of the Company’s control.





The
factors affecting stock-based compensation include estimates of when stock
options and compensation warrants might be exercised and the stock price
volatility.  The timing for exercise of options is out of the
Company’s control and will depend upon a variety of factors, including the
market value of the Company’s shares and financial objectives of the stock-based
instrument holders.  The Company used historical data to determine
volatility in accordance with the Black-Scholes model. However, the future
volatility is uncertain and the model has its limitations.




The
recoverability of the carrying value of mineral properties and associated
deferred exploration expenses is based on market conditions for minerals,
underlying mineral resources associated with the properties and future costs
that may be required for ultimate realization through mining operations or by
sale.  The Company is in an industry that is dependent on a number of
factors including environmental, legal and political risks, the existence of
economically recoverable reserves, the ability of the Company and its
subsidiaries to obtain necessary financing to complete the development, and
future profitable production or the proceeds of disposition
thereof.




Forward
Looking Statements




These
consolidated financial statements and management’s discussion and analysis
contain certain forward-looking statements relating but not limited to the
Company’s expectations, intentions, plans and beliefs. Forward-looking
information can often be identified by forward-looking words such as
“anticipate”, “believe”, “expect”, “goal”, “plan”, “intend”, “estimate”, “may”
and “will” or similar words suggesting future outcomes, or other expectations,
beliefs, plans, objectives, assumptions, intentions or statements about future
events or performance. Forward-looking information may include reserve and
resource estimates, estimates of future production, unit costs, costs of capital
projects and timing of commencement of operations, and is based on current
expectations that involve a number of business risks and uncertainties. Factors
that could cause actual results to differ materially from any forward-looking
statement include, but are not limited to, failure to establish estimated
resources and reserves, the grade and recovery of ore which is mined varying
from estimates, capital and operating costs varying significantly from
estimates, delays in obtaining or failures to obtain required governmental,
environmental or other project approvals, inflation, changes in exchange rates,
fluctuations in commodity prices, delays in the development of projects and
other factors. Forward-looking statements are subject to risks, uncertainties
and other factors that could cause actual results to differ materially from
expected results.




Potential
shareholders and prospective investors should be aware that these statements are
subject to known and unknown risks, uncertainties and other factors that could
cause actual results to differ materially from those suggested by the
forward-looking statements. Shareholders are cautioned not to place undue
reliance on forward-looking information. By its nature, forward-looking
information involves numerous assumptions, inherent risks and uncertainties,
both general and specific, that contribute to the possibility that the
predictions, forecasts, projections and various future events will not occur.
The Company undertakes no obligation to update publicly or otherwise revise any
forward-looking information whether as a result of new information, future
events or other such factors which affect this information, except as required
by law.