---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-K/A
  (Amendment No. 1)

(Mark One)

[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

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

For the transition period from _____to _____

COMMISSION FILE NUMBER000-50033

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

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

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

Securities registered pursuant to Section 12(b) of the Act:
NONE.

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 Par Value Per Share.

Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined by Rule 405 of the Securities Act.[__]Yes [X] No

Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or Section 15(d) of the Act. [__]Yes
[X] No

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

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T (s. 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).[X]Yes [__]No

Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K (s229.405 of this chapter) is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]

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

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

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such
common equity, as of the last business day of the registrants most recently
completed second fiscal quarter:$39,741,507.49 as of June 30,
2011,based on an average of the closing bid of $0.21 and
the closing ask of $0.765 as quoted by the OTC Bulletin Boardon that date.

Indicate the number of shares outstanding of each of the
registrants classes of common stock, as of the latest practicable date.As of March 26, 2012, the Registrant had 137,012,641 shares of common
stock outstanding.

---

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-K/A to Ireland Inc.’s (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2011 is being filed to amend certain information with respect to the Company’s mineral properties in response to a comment letter received by the Company from the Securities and Exchange Commission.  Other than as set forth in this Amendment No.1, the information contained in the original Form 10-K remains unchanged.

IRELAND INC.

AMENDMENT NO. 1 TO ANNUAL REPORT ON FORM 10-K/AFOR THE YEAR ENDED
DECEMBER 31, 2011

TABLE OF CONTENTS

|               |                |                                                                                             | PAGE
|-------------- | -------------- | ------------------------------------------------------------------------------------------- | ----
|PART
      I   |                | 3                                                                                          
|               | ITEM
      1.  | BUSINESS.                                                                                   | 3   
|               | ITEM
      1A. | RISK
      FACTORS.                                                                         | 6   
|               | ITEM
      2.  | PROPERTIES.                                                                                 | 10  
|PART
      II  |                | 24                                                                                         
|               | ITEM
      7.  | MANAGEMENTS
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. | 24  
|PART
      III |                | 32                                                                                         
|               | ITEM
      15. | EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES.                                              | 32  
|SIGNATURES     | 34            

2

---

PART I

The information in this discussion contains forward-looking
statements. These forward-looking statements involve risks and uncertainties,
including statements regarding the Company's capital needs, business strategy
and expectations. Any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "intend," "anticipate," "believe,"
"estimate, "predict," "potential" or "continue," the negative of such terms or
other comparable terminology. Actual events or results may differ materially. In
evaluating these statements, you should consider various factors, including the
risks described below, and, from time to time, in other reports the Company
files with the United States Securities and Exchange Commission (the SEC).
These factors may cause the Company's actual results to differ materially from
any forward-looking statement. The Company disclaims any obligation to publicly
update these statements, or disclose any difference between its actual results
and those reflected in these statements.

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

|ITEM 1. | BUSINESS.
|------- | ---------

General

We were incorporated on February 20, 2001 under the laws of the State of Nevada. We are an exploration stage minerals exploration company focused on the discovery and extraction of precious metals from mineral deposits in the Southwestern United States.

In February 2008, we acquired our lead project, a prospective
gold, silver and calcium carbonate property located in Esmeralda County, Nevada,
that we call the Columbus Project. The Columbus Project consists of 25,498
acres of placer mineral claims, including a 378 acre Permitted Mine Area
(58-acre mill site and mill facility and 320-acre mine site). Our current
permits allow us to mine up to 792,000 tons per year to 40 feet in depth for the
purpose of extracting precious metals and calcium carbonate from the Permitted
Mine Area. We also have a mineral lease covering, and the option to acquire, an
additional 23,440 acres of placer mineral claims adjoining the current project
area (the DDB Claims). Our current exploration efforts are focused on the
North and South Sand Zones of the Columbus Project.

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

Recent Corporate Developments

The following significant corporate developments occurred after
the completion of our fiscal quarter ended September 30, 2011:

3

---

Extension of Options Granted to Executive Officers under
2007 Stock Incentive Plan

On December 13, 2011, our Board of Directors approved an
extension of certain options granted to the following executive officers on
March 30, 2007 as follows:

|                    |                                          | No. of    | Exercise | Previous                            | Extended   
|------------------- | ---------------------------------------- | --------- | -------- | ----------------------------------- | -----------
|Optionee            | Position                                 | Options   | Price    | Expiry Date                         | Expiry Date
|                    |                                          |           |          |                                     |            
|Douglas D.G. Birnie | Director / Chief Executive
      Officer | 2,200,000 | $0.05    | 30-Mar-2012 (orig.
      30-Mar-09) | 30-Mar-2017
|Robert D. McDougal  | Director / Chief Financial Officer       | 500,000   | $0.05    | 30-Mar-2012 (orig. 30-Mar-09)       | 30-Mar-2017

The extended options had previously been extended from their
original expiration date of March 30, 2009 to March 30, 2012.

In addition to extending the options granted to the our Chief
Executive Officer and Chief Financial Officer, our Board of Directors approved
an extension of an additional 500,000 options granted to a consultant of the
Company. The extended options were also granted on March 30, 2007, are
exercisable at a price of $0.05 per share, and have an extended expiry date of
March 30, 2017.

Testing on Gravity Concentration Circuit

In January and February 2012, we released the results for three
tests completed by our independent metallurgical consultants, AuRIC
Metallurgical Laboratories, LLC of Salt Lake City, UT using a new gravity
concentration process on bulk samples taken from the North Sand Zone. All tests
were conducted at AuRICs laboratory facilities in Salt Lake City, utilizing
modified operating parameters on the same gravity concentration process. These
test results all exceeded our 75% gold extraction rate goals for the Columbus
Project. We are continuing to work on optimizing the extraction circuit. Once we
have settled the operating parameters for the gravity concentration circuit to
our satisfaction, we will seek to upgrade our onsite pilot plant at the Columbus
Project. A more detailed description of these tests is contained under Item 2 of
this Annual Report in our description of our planned Mining and Recovery
Methodology for the Columbus Project.

In addition to demonstrating potential extraction rates for the
Columbus Project, these tests indicated that more gold was extracted by leaching
concentrates derived from large samples than was predicted by caustic fusion
assay on small head samples (approx. 5g). We believe that these results are
consistent with the nugget effect common in alluvial deposits such as those
found at the Columbus Project, and point to the need to process large samples
and the extraction of gold in hand to best determine the head grade of the
project.

Issuance of Securities under Private Placement
Offerings

In February and March 2012, we sold an aggregate of 9,560,000
units (each a "Unit") at a price of $0.50 per Unit in separate concurrent
private placement offerings for total aggregate proceeds of $4,780,000 as
described below. Each Unit was comprised of one share of our common stock and
one share purchase warrant (each a Warrant), with each Warrant entitling the
holder to purchase an additional share of our common stock at an exercise price
of $0.80 per share for a period expiring March 31, 2015. After September 30,
2012, we may accelerate the expiration date of the Warrants if the volume
weighted average price for our common stock exceeds $2.40 per share for 20
consecutive trading days.

US Private Placement:We sold an aggregate of 9,260,000
Units to U.S. persons for total gross proceeds of $4,630,000 pursuant to the
provisions of Rule 506 of Regulation D of the United States Securities Act of
1933, as amended (the Securities Act). Each U.S. subscriber except one
represented that they were an accredited investor as defined under Regulation D
of the Securities Act. The one non-accredited investor was provided with the
disclosure required by Rule 502 of Regulation D and provided representations
that investor otherwise met the requirements under Rule 506 for persons that do
not qualify as an accredited investor.

Offshore Private Placement:We sold a total of 300,000
Units to non-U.S. persons for total gross proceeds of $150,000 pursuant to the
provisions of Regulation S of the Securities Act. We did not engage in a
distribution of the Offshore Private Placement in the United States. Each of
the subscribers represented that they were not US persons as defined in
Regulation S of the Securities Act and that they were not acquiring the shares
for the account or benefit of a US person.

4

---

Finders Fees:We agreed to pay total finders fees of
$14,000 in cash and 28,000 share purchase warrants (the Finders Warrants) in
respect of Units sold under the US Private Placement and the Offshore Private
Placement. In addition, we will pay the finder an additional cash fee of 4% of
the exercise price of any warrants exercised by the subscribers introduced by
the finder. The finder is a registered broker dealer pursuant to Section 15 of
the Securities Exchange Act of 1934, as amended.

Competition

We are a mineral resource exploration company. We compete with other mineral resource exploration and development companies for the acquisition of new mineral properties, the services of contractors, equipment and financing. Many of the mineral resource exploration and development companies with whom we compete may have greater access to a limited supply of qualified technical personnel and contractors and to specialized equipment needed in the exploration, development and operation of mineral properties. This could have an adverse effect on our ability to explore and develop our properties in a timely manner. In addition, because many of our competitors are more established and have a longer operating history than us, they may have greater access to promising mineral properties.

In addition, many of our competitors have greater financial
resources than us. Accordingly, these competitors may be able to spend greater
amounts on acquisitions of mineral properties of merit, on exploration of their
mineral properties and on development of their mineral properties. In addition,
they may be able to afford greater geological expertise in the targeting and
exploration of mineral properties. This may make our competitors more attractive
to potential investors and could adversely impact our ability to obtain
additional financing if and when needed.

Government Regulations

The mining industry in the United States is highly regulated.
We intend to secure all necessary permits for the exploration of the Columbus
Project and the Red Mountain Project and, if development is warranted on the
properties, will file final plans of operation prior to starting any mining
operations. The consulting geologists that we hire are experienced in conducting
mineral exploration activities and are familiar with the necessary governmental
regulations and permits required to conduct such activities. As such, we expect
that our consulting geologists will inform us of any government permits that we
will be required to obtain prior to conducting any planned activities on the
Columbus Project and the Red Mountain Project. We are not able to estimate the
full costs of complying with environmental laws at this time since the full
nature and extent of our proposed mining activities cannot be determined until
we complete our exploration program.

If we enter into the development or production stages of any
mineral deposits found on our mineral properties, of which there are no
assurances, the cost of complying with environment laws, regulations and
permitting requirements will be substantially greater than in the exploration
phases because the impact on the project area is greater. Permits and
regulations will control all aspects of any mineral deposit development or
production program if the project continues to those stages because of the
potential impact on the environment. Examples of regulatory requirements
include:

- Water discharge will have to meet water standards;
- Dust generation will have to be minimal or otherwise remediated;
- Dumping of material on the surface will have to be recontoured and
  revegetated;
- An assessment that all material to be left on the surface will need to be
  environmentally benign;
- Ground water will have to be monitored for any potential contaminants;
- The socio-economic impact of the project will have to be evaluated and if
  deemed negative, will have to be remediated; and,
- There will have to be a report of the potential impact of the work on the
  local fauna and flora.

5

---

Employees

As of the date of this Annual Report, other than our officers
and directors, we have 10 full-time employees and 1 part-time employee.

Research and Development Expenditures

We have not incurred any research or development expenditures
since our incorporation.

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

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

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

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

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

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

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

We expect to spend approximately $5,670,000 on the exploration of our Columbus and Red Mountain Projects and the general costs of operating and maintaining our business and mineral properties during the twelve months ending December 31, 2012. We do not currently have sufficient financial resources to pay for our anticipated expenditures for that period. We anticipate that our existing financial resources are sufficient only to pay for the anticipated costs of our exploration programs until October 31, 2012. We will require additional financing to complete our planned exploration plans. In addition, actual costs of completing our exploration plans could be greater than anticipated and we may need additional financing sooner than anticipated. If we are unable to obtain sufficient financing to complete our planned exploration plans, we will scale back our plans depending upon our existing financial resources. We do not currently have any financing arrangements in place.

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

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

The most likely source of future financing presently available
to us is through the sale of shares of our common stock. The only other
anticipated alternative for the financing of further exploration would be the
offering by us of an interest in our mineral properties to be earned by another
party or parties carrying out further exploration thereof, which is not
presently contemplated. In addition, if our management decides to exercise the
right to acquire a 100% interest in the Red Mountain Project, we will be
required to issue significantly more shares of our common stock. Issuing shares
of our common stock, for financing purposes or otherwise, will dilute the
interests of our existing stockholders.

6

---

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

In order to maintain the rights to our mineral projects, we
will be required to make annual filings and pay fees with federal and state
regulatory authorities. On June 16, 2011, the Governor of Nevada approved Senate
Bill 493 (SB 493), which repealed a one-time tiered fee hike on mining claims in
Nevada. SB 493 also eliminated a number of tax deductions that had previously
been available for companies with mining operations in Nevada. However, we are
currently an exploration stage company and do not have significant mineral
extraction activities or any revenues from mining operations and do not expect
the elimination of these tax deductions to have a significant impact on our
current exploration activities or financial prospects. However, if we do, in the
future engage in significant mineral extraction operations, of which there is no
assurance, the elimination of these tax deductions could affect our future
financial results.

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

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

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

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

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

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

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

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

7

---

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

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

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

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

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

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

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

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

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

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

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

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

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

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

8

---

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

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

No assurance that forward looking assessments will be
realized.

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

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

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

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

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

9

---

|ITEM 2. | PROPERTIES.
|------- | -----------

We currently lease office space located at Suite 100, 2441 W.
Horizon Ridge Parkway, Henderson, NV 89052 at a rate of $5,975 per month. The
lease terms expired on August 31, 2008, and we continue to rent the existing
space on a month-to-month basis.

We currently own an interest in, or rights to, two mineral
projects that we refer to as the Columbus Project and the Red Mountain
Project.

THE COLUMBUS PROJECT

The Columbus Project is a sediment hosted gold and silver exploration project located in western Nevada. It is comprised of 584 unpatented placer federal mining and millsite claims on BLM land which cover 48,938 acres and an additional 80 acres of private land, for a total of 49,018 acres. It includes a permitted and operational pilot plant and mine site.  We currently own a 100% stake in 149 of the claims (which we refer to as the “CSM Claims”), a 100% stake in an additional 288 claims (which we refer to as the “Ireland Claims”), with rights to an additional 147 peripheral claims (which we refer to as the “DDB Claims”).

LOCATION

The mineral claims that make up the Columbus Project are
located in the Columbus Salt Marsh, Esmeralda County, Nevada, northwest of
Coaldale Junction, approximately 50 miles west of Tonopah (Fig. 1) halfway
between Las Vegas and Reno. Access is from the junction of US6 and Nevada
Highway 95, approximately 10 miles north of Coaldale Junction, to a gravel road
westerly to the mill site and to the remains of the town of Columbus.

The Columbus Salt Marsh is an enclosed basin and is a dry lake
bed for the majority of the year. All surface drainage from a surrounding 360
square mile area flows into the Columbus Salt Marsh.

10

---

Figure 1: Location of Columbus Project



TITLE AND OWNERSHIP RIGHTS TO THE CSM CLAIMS, IRELAND CLAIMS
AND THE DDB CLAIMS

We acquired our initial interest in the CSM Claims and the DDB Claims in 2007 from Nanominerals pursuant to an assignment by Nanominerals of its rights to the Columbus Project.  In February 2008 we acquired a 100% interest in the CSM claims by merging the previous owner of the CSM Claims, Columbus Brine Inc. (“CBI”) with and into our wholly owned subsidiary incorporated for the sole purpose of acquiring CBI, CBI Acquisition Inc.  Upon completion of the merger, CBI Acquisition Inc. changed its name to Columbus Minerals Inc.

The Ireland Claims were staked by us in September 2011, and we own a 100% interest in the Ireland Claims.

The CSM Claims and the Ireland Claims are wholly owned by Columbus S.M., LLC (“CSM”). CSM is a wholly owned subsidiary of Columbus Minerals Inc., which is a wholly owned subsidiary of Ireland Inc.  The DDB Claims are wholly owned by a mining syndicate known as the DDB Syndicate. Lawrence E. Chizmar, Jr., a former member of our Board of Directors (and a former director of CBI) and a limited liability company controlled by Douglas D.G. Birnie, our President and Chief Executive Officer, and a member of our Board of Directors, are each the owners of a 1/8 interest in the DDB Syndicate. The remaining members of the DDB Syndicate are made up of the former officers and directors of CBI, the brother of a former officer and director of CBI, and certain affiliates of Nanominerals Corp. (“Nanominerals”). Nanominerals is a significant shareholder in our Company.  Mr. Birnie also owns a 3.5% interest in Nanominerals. The DDB Claims were located by the DDB Syndicate in February 2007, prior to Mr. Birnie’s, Nanominerals’ or Mr. Chizmar’s involvement with our Company. Mr. Birnie also acquired his interest in Nanominerals prior to his involvement with our Company.

11

---

Figure 2: Columbus Project Property Map



12

---

Our rights to the DDB Claims are pursuant to the terms of a
mining lease with the DDB Syndicate dated November 30, 2007 (the DDB
Agreement). The DDB Agreement provides us with a five year lease on the DDB
Claims, ending on November 29, 2012, with an option to purchase the DDB Claims
at anytime during the lease period. To date, we have paid the DDB Syndicate
$220,000 under the terms of the DDB Agreement. Under the option rights provided
under the DDB Agreement, we may purchase the DDB Claims at any time by
either:

| | (a) | paying the DDB Syndicate the purchase price of $400,000
      (with all previously made rental payments credited against such purchase
      price); or
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                        
| | (b) | paying the DDB Syndicate $10, plus granting the DDB
      Syndicate a royalty of 2% of net smelter returns on the DDB
  Claims.                        

Current budget includes a payment to the DDB Syndicate of
$180,000 in 2012 to fulfill the purchase agreement for the DDB claims.

Each of the CSM, Ireland and DDB Claims are unpatented placer federal claims.  In order to maintain these claims, we are required to pay annual maintenance fees to the US Bureau of Land and Minerals (the “BLM”) by September 1 of each year.  The annual claim maintenance fees paid to the BLM for the 2011 claim years for the CSM and DDB Claims totaled $44,548.  The Ireland Claims were staked after the end of the 2011 claim year.  Our annual maintenance fees are expected to increase for 2012 and forward as a result of the addition of the Ireland Claims. We are responsible for paying the claim maintenance fees for the DDB Claims as well as the CSM and Ireland Claims. A summary of the Columbus Project Claims is included as an exhibit to this Annual Report.

ACCESS AND INFRASTRUCTURE

The Columbus Project contains an operational pilot plant, lab
and living facilities with power supplied by generators and water from an onsite
well. Water used for processing is available from existing wells located on the
surrounding basin (the Columbus Basin). There is also a high voltage grid
located at the Candelaria Mines, approximately three miles from the Columbus
Project.

Permits have been obtained for the extraction of precious
metals and the production of calcium carbonate from an area of interest
consisting of approximately 378 acres, including millsite, roads and mineable
acreage.

HISTORY

The Columbus area has had mining activity for over 100 years.
Silver was discovered in 1863 in the area of the Candelaria Mine, to the
northwest of the Columbus Basin. These deposits were mined intermittently by
different companies through 1999, producing large quantities of silver and minor
gold. Salt was first mined in the Columbus Salt Marsh in 1864, followed by borax
in 1871. Precious metals were thought to exist in the basin sediments as early
as the late 19thcentury but no production is documented. Mining
ceased in the Columbus Marsh around the beginning of the 20thcentury.

The Columbus Project is located in an area that has
historically been known as a well mineralized region. A silver and gold mining
operation known as the Candelaria Mine is located approximately five miles
northwest of the Columbus Project. The Round Mountain project is a gold
operation located approximately 60 miles northeast of the Columbus Project. The
Clayton Valley Brine Project, a lithium extraction project, is located
approximately 25 miles southeast of the Columbus Project.

GEOLOGY

The Columbus Project covers a flat enclosed basin with a
surface composed of salt deposits and is primarily devoid of vegetation. Older
sediments, which host the silver deposits of Candelaria, underlie several
sequences of volcanic rocks, with the youngest being the 15Ma Gilbert Andesite.
The region has undergone older thrust faulting, which hosts the Candelaria
deposits, and later extensional faulting as a result of movement along the
Walker Lane. The Columbus Basin is one of several structural basins in the
region caused by right lateral movement along the Walker Lane and the subsequent
clockwise rotation and oblique extensional down dropping of the blocks within
this structural domain.

EXPLORATION ACTIVITIES

Exploration work to date has identified three different host materials (sand, clay, brine) each of which could potentially contain commercial quantities of gold and silver mineralization within the project area. The sand zones outcrop on the western side of the Columbus basin and dip gently eastward. The clay zones also outcrop and overlay the sand zones. The brine zone occurs as an aquifer at some 400 feet depth underlying the sand/clay zones. Our exploration efforts to date have focused on drilling both the sand and clay zones within the approximately 5,000 acre Columbus Project Area of Interest outlined by previous geochemical exploration work. Our recent work has focused on the North Sand Zone.

13

---

To date, 34 holes have been drilled in the North Sand Zone. Analyses of drill samples have outlined a deposit covering approximately 0.67 square miles, to a depth of 200 feet beneath the surface of the Columbus Marsh Basin, with a weight mean average head grade of .034 opt Au and 0.179 opt Ag (.038 opt  AuE). We estimate the tonnage of sands within this zone at approximately 145 million (MM) tons. In addition, the tonnage of the sands within the South Sand Zone, to a depth of 100 feet, is currently estimated at approximately 29 MM tons with a weight mean average head grade of 0.036 opt Au and 0.182 opt Ag (0.041 opt AuE) , resulting in a total of 174MM tons. Previous drilling has indicated that the sands in both North and South Sand Zones extend below 200 feet in depth.

We have been granted the permit for our 2012 drill program,
which will consist of 31 drill holes to a depth of at least 200 feet. The drill
program will cover an additional 0.48 square miles adjacent to the North Sand
Zone. The goal of this program is to expand the boundaries of the North and
South Sand Zones. Following completion of the 2012 drill program, we will
re-evaluate the boundaries of the sand zones, the quantity of the tonnage
contained therein and the quality of the mineralization estimates within these
areas.

Figure 3: Map of North and South Sand Zones



14

---

Historical Surface Sampling Program and Drill
Programs

Near surface basin sediment samples were taken in late 2006 and early 2007.  64 surface samples, four shallow boring samples, and a bulk sample were taken and analyzed using a four acid total digestion and atomic absorption analysis.  Samples were analyzed for Au, Ag, Cu, and Fe.  This work led to the discovery of a 5,000 acre surface gold anomaly in the northwestern part of the basin.  This gold anomaly is the primary focus of current exploration work.  The Permitted Mine Area (320 acres) is situated in the north end of this zone.

2007 Drill Program

An 18-hole hollow stem auger drill program was undertaken in Q3 2007 in the Permitted Mine Area to establish mineral potential at depth.  Samples were 18” in length, taken every 10’ with a split spoon sampler.  Material was analyzed using a 3-acid modified version of aqua regia.  A split was analyzed by CBI staff at the onsite facility using a standard fire assay and it was found that standard fire assay was ineffective.  Repeated firing of the slag showed that various amounts of the metals remained in the slag after each firing.

2007 Drill Program Results

Hole ID
      Total Depth (ft)
      Average Grade (Au opt)A1
      102
      0.079A2
      92
      0.071A3
      102
      0.079A4
      102
      0.089A5
      102
      0.082A6
      102
      0.062A7
      62
      0.064A8
      82
      0.062A9
      102
      0.077A10
      102
      0.101A11
      102
      0.093A12
      102
      0.95A13
      32
      0.026A14
      52
      0.057A15
      82
      0.067A16
      102
      0.055A17
      32
      0.043A18
      102
      0.057


15

---

2008 and 2009 Drill Programs

Encouraging results from the 2007 drill program warranted a second drill program, which took place in Q2-Q3 2008, consisting of 39 widely spaced holes and a total of just less than 10,000 feet using sonic drilling technology.  25 holes were drilled in the ‘A’ program, 14 holes in the ‘B’ program.  For this program, holes were drilled to depths ranging from 200 feet to 400 feet.  The sonic drilling resulted in continuous sample material, therefore providing an improved representation of each drill interval.  Samples were sent  for analysis under chain of custody protocols.

2008 Drill Program Results

Hole ID
      Total Depth (ft)
      Average GradeAu opt
      Ag optCS-08-S1A
      195
      0.025
      0.089CS-08-S2A
      202
      0.026
      0.109CS-08-S3A
      201
      0.013
      0.044CS-08-S4A
      404
      0.024
      0.109CS-08-S5A
      201
      0.024
      0.079CS-08-S6A
      200
      0.026
      0.165CS-08-S7A
      400
      0.022
      0.134CS-08-S8A
      201
      0.049
      0.238CS-08-S9A
      404
      0.057
      0.279CS-08-S10A
      181
      0.029
      0.182CS-08-S11A
      202
      0.017
      0.089CS-08-S12A
      400
      0.032
      0.195CS-08-S13A
      200
      0.013
      0.078CS-08-S14A
      340
      0.021
      0.160CS-08-S15A
      200
      0.031
      0.237CS-08-S16A
      200
      0.030
      0.198CS-08-S17A
      200
      0.032
      0.287CS-08-S18A
      200
      0.016
      0.118CS-08-S19A
      200
      0.025
      0.170CS-08-S20A
      200
      0.013
      0.078CS-08-S21A
      200
      0.011
      0.053CS-08-S22A
      200
      0.009
      0.045CS-08-S23A
      200
      0.025
      0.175CS-08-S24A
      200
      0.015
      0.092CS-08-S25A
      200
      0.025
      0.128CS-08-S1B
      400
      0.044
      0.228CS-08-S2B
      160
      0.025
      0.135CS-08-S3B
      275
      0.029
      0.176CS-08-S4B
      200
      0.009
      0.048CS-08-S5B
      200
      0.035
      0.142CS-08-S6B
      400
      0.015
      0.086CS-08-S7B
      200
      0.037
      0.160CS-08-S8B
      350
      0.040
      0.187CS-08-S9B
      200
      0.048
      0.244CS-08-S10B
      400
      0.039
      0.228CS-08-S11B
      200
      0.030
      0.184CS-08-S12B
      200
      0.029
      0.159CS-08-S13B
      405
      0.029
      0.139CS-08-S14B
      280
      0.029
      0.151


16

---

A follow up drilling program was initiated in Q2 of 2009 to
delineate mineralized zones and further define the extent of gold and silver
mineralization potential in the project area. 58 holes, for a total of 15,270
feet, were drilled as a follow up to the ~10,000 feet drilled in 2008. Sample
intervals were changed from 10 to 20 because of the homogeneity of the sample
material. Again, the drill material was stored in polyethylene bags in the
onsite core facility. Samples were submitted to AuRIC for caustic fusion
analysis under chain of custody protocols. In addition, 211 clay samples were
taken at various depths for density determinations.

2009 Drill Program Results

Hole ID
      Total Depth (ft)
      Average
        GradeAu opt
      Ag optCS-09-S1A
      200
      0.044
      0.194CS-09-S2A
      200
      0.038
      0.171CS-09-S3A
      200
      0.037
      0.173CS-09-S4A
      200
      0.035
      0.152CS-09-S5A
      400
      0.036
      0.158CS-09-S6A
      200
      0.039
      0.263CS-09-S7A
      200
      0.036
      0.159CS-09-S8A
      350
      0.031
      0.139CS-09-S9A
      330
      0.023
      0.131CS-09-S10A
      200
      0.015
      0.083CS-09-S11A
      400
      0.025
      0.150CS-09-S12A
      200
      0.026
      0.113CS-09-S13A
      200
      0.038
      0.206CS-09-S14A
      400
      0.031
      0.121CS-09-S15A
      200
      0.039
      0.178CS-09-S16A
      400
      0.035
      0.170CS-09-S17A
      200
      0.014
      0.066CS-09-S18A
      200
      0.015
      0.077CS-09-S19A
      400
      0.020
      0.086CS-09-S20A
      200
      0.014
      0.061CS-09-S21A
      400
      0.014
      0.054CS-09-S22A
      200
      0.014
      0.059CS-09-S23A
      200
      0.010
      0.049CS-09-S24A
      400
      0.014
      0.068CS-09-S25A
      200
      0.012
      0.053CS-09-S26A
      200
      0.006
      0.022CS-09-S27A
      400
      0.008
      0.041CS-09-S1B
      200
      0.038
      0.186CS-09-S2B
      190
      0.038
      0.175CS-09-S3B
      200
      0.020
      0.073CS-09-S4B
      200
      0.017
      0.075CS-09-S5B
      400
      0.022
      0.088CS-09-S7B
      400
      0.013
      0.062CS-09-S8B
      200
      0.008
      0.033CS-09-S9B
      400
      0.020
      0.078CS-09-S10B
      200
      0.012
      0.054CS-09-S11B
      200
      0.005
      0.020CS-09-S12B
      400
      0.008
      0.032CS-09-S13B
      200
      0.022
      0.086CS-09-S14B
      200
      0.018
      0.069CS-09-S15B
      400
      0.022
      0.089CS-09-S16B
      200
      0.033
      0.174CS-09-S17B
      400
      0.034
      0.192CS-09-S18B
      200
      0.027
      0.142CS-09-S19B
      200
      0.018
      0.089CS-09-S20B
      200
      0.025
      0.119CS-09-S21B
      200
      0.025
      0.124CS-09-S22B
      400
      0.012
      0.052CS-09-S23B
      200
      0.021
      0.097CS-09-S24B
      400
      0.032
      0.154CS-09-S25B
      200
      0.017
      0.074CS-09-S26B
      200
      0.027
      0.116CS-09-S27B
      200
      0.024
      0.126CS-09-S28B
      200
      0.040
      0.233CS-09-S29B
      200
      0.033
      0.180CS-09-S30B
      200
      0.036
      0.196CS-09-S31B
      400
      0.028
      0.153


17

---

2010 Drill Program

In 2010, we drilled 28 holes in the North Sand Zone and 147
  short holes in the permitted mine clay zone. As the sand zones are the focus of
  the technical program, the samples from the clay zone drilling have been
  inventoried and will be analyzed later.

2010 Drill Program Results – North Sand Zone Only

Hole ID
      Total Depth (ft)
      Average GradeAu opt
      Ag optCS-10-S1A
      165
      0.034
      0.169CS-10-S2A
      200
      0.034
      0.131CS-10-S3A
      200
      0.051
      0.351CS-10-S4A
      200
      0.031
      0.169CS-10-S5A
      200
      0.045
      0.236CS-10-S6A
      200
      0.026
      0.122CS-10-S7A
      200
      0.027
      0.139CS-10-S8A
      200
      0.018
      0.093CS-10-S9A
      200
      0.044
      0.277CS-10-S10A
      200
      0.030
      0.126CS-10-S11A
      200
      0.026
      0.129CS-10-S12A
      200
      0.037
      0.217CS-10-S13A
      200
      0.020
      0.049CS-10-S14A
      200
      0.039
      0.216CS-10-S15A
      200
      0.037
      0.226CS-10-S16A
      200
      0.024
      0.125CS-10-S17A
      200
      0.042
      0.252CS-10-S18A
      200
      0.046
      0.288CS-10-S19A
      200
      0.031
      0.186CS-10-S20A
      200
      0.034
      0.180CS-10-S21A
      200
      0.025
      0.124CS-10-S22A
      200
      0.014
      0.067CS-10-S23A
      200
      0.038
      0.191CS-10-S24A
      200
      0.043
      0.265CS-10-S25A
      200
      0.045
      0.280CS-10-S26A
      200
      0.032
      0.193CS-10-S27A
      200
      0.019
      0.093CS-10-S28A
      200
      0.024
      0.138


18

---

To date, 34 holes have been drilled in the North Sand Zone. Analyses of drill samples have outlined a deposit covering approximately 0.67 square miles, to a depth of 200 feet beneath the surface of the Columbus Marsh Basin, with a weight mean average head grade of 0.038 opt AuE. We estimate the tonnage of sands within this zone at approximately 145 million (MM) tons. In addition, the tonnage of the sands within the South Sand Zone, to a depth of 100 feet, is currently estimated at approximately 29 MM tons of  0.041 opt AuE, resulting in a total of 174MM tons. Previous drilling has indicated that the sands in both North and South Sand Zones extend below 200 feet in depth.

Sampling Procedures

An onsite core facility was constructed for logging and sampling of the material from the drill programs. Core intervals were set up on tables for geological logging. Once logged, the intervals were sampled by taking a continuous wedge of material from the outside to the center of the core. A smaller split was taken at random intervals. These samples were placed in standard heavy duty Ziploc bags. A slice of the core was taken at depths of approximately 50’ intervals. These were weighed wet and their dimensions were taken and documented for density determination. Sample splits were then sent to an independent laboratory for analysis.

QA/QC Procedures

Quality control for the Columbus Project was established during the 2008 drill program to guarantee the quality of the analytical results for that and all subsequent drilling/sampling programs on this project. All samples were submitted in random order to monitor laboratory precision. This is done to check for instrument variation, or ‘drift’, and cross contamination during the analytical process. Duplicate samples, standard reference material (standards), and blanks were introduced at approximately 1 for every 20 samples. Duplicate samples are used to evaluate the sample variability and stability of the analytical method. The standards are comprised of material that has been subjected to analysis from numerous labs around the world and is of an accepted concentration of gold with a very slight variance. The blanks are nothing more than pulverized environmental grade silica sand and should contain negligible concentrations of metals.

2012 Drill Program

We have been granted the permit for our 2012 drill program,
which will consist of 31 drill holes to a depth of at least 200 feet. The drill
program will cover an additional 0.48 square miles adjacent to the North Sand
Zone. The goal of this program is to expand the North and South Sand Zones.
Following completion of the 2012 drill program, the Company will re-evaluate the
boundaries of the sand zones, the quantity of the tonnage contained therein and
the quality of the resource definition within these areas.

GEOLOGIC MODEL

The lakebed clay varies in color, moisture content, texture,
and organic content. Because of the wide drill hole spacing, it is not possible
to correlate between individual clay units. At present, the clay will not be
sub-classified and will be referred to as a single unit. Average dry bulk
density of the clay, taken from the 200+ samples, is 1.198 tons/yd3(1.423 tonnes/m3).

19

---

Along the western edge of the project area, alluvial material
occurs as fans which descend beneath the clay toward the center of the basin.
The depth to this sand was gridded and contoured. This information is very
useful for determining where this sand unit might be encountered during future
drilling. In general, changes in sand depth parallel the basin. The average dry
bulk density of the sands is 1.165 ton/yd3 (1.383 tonnes/m3). The sand zone
averages 91.4% -1/4 as determined from 258 screen analysis of sonic drill
samples from 0-200 ft. depth.

Results from the drill program in the North Sand Zone were used by us to estimate the tonnage of sands within this zone at approximately 145 million (MM) tons, with a weight mean average gold equivalent (AuE) head grade of 0.038 ounces per ton (opt). In addition, the tonnage of the sands within the South Sand Zone, to a depth of 100 feet, is currently estimated at approximately 29 MM tons of  0.041 opt AuE, resulting in a total of 174MM tons. Previous drilling has indicated that the sands in both North and South Sand Zones extend below 200 feet in depth.  All results are reported in total Au equivalent (AuE), calculated using the formula Au(opt)+0.025Ag(opt)=AuE(opt) (based on $/oz Au:$/oz Ag=40:1).

Zone
    Million tons (short)
    Sample Grade (AuE opt)North Sand Zone
    145
    0.038South Sand Zone
    29
    0.041TOTAL
    174
    0.039


The North Sand Zone is comprised of mostly sand, but also
contains some silt and clays. The South Sand Zone is also in the sand unit, with
consistently high assays. Even though the South Sand Zone is two dimensional, it
is highly likely that these zones are contemporaneous and this southern zone is
of exploration significance.

We had also previously identified 5 mineralized zones
totaling approximately 230 million tons of material within the clays of
the Columbus Basin. These areas are currently not the focus of our technical
program due to their high clay/carbon content and more difficult
metallurgy.

Analytical Methodology

All reported drill results were determined by caustic fusion
assay and analysis of the extracted metal for gold and silver. Sampling and
analyses were conducted by qualified independent professionals, under chain of
custody procedures, and included blind labeling of samples, the insertion of
blanks, standard reference material and repeats to ensure the quality of
results.

Independent metallurgists engaged in extensive research and
testing before they determined the best pyrometallurgical and hydrometallurgical
methodologies for extracting gold and silver from the organic carbon rich clays
and sand at the Columbus Project.

Caustic fusion is a standard pyrometallurgical method used for
rock dissolution and subsequent analysis. A caustic fusion protocol was selected
as the preferred method for head grade assays, because it has proven to be very
effective in liberating and collecting gold and silver, as metal-in-hand, from
the Columbus organic carbon rich clays. Independent work has shown that
conventional fire assaying, another standard pyrometallurgical method, extracts
extremely low gold and silver values from the Columbus Project material.

Thiosulphate leaching is a relatively new, environmentally
friendly, hydrometallurgical method for extracting gold and silver from ores.
Again, independent work has shown that thiosulphate leaching, followed by resin
or carbon extraction, has been very effective in bench and pilot scale tests for
the extraction of gold and silver, as metal-in-hand, at the Columbus Project.
Aqua regia and cyanide leaching tests of head ore proved ineffective and
resulted in extremely low gold and silver extraction. It is the thiosulphate
leach system that is currently being tested onsite to determine the feasibility
of leaching both the clay and sand deposits.

As mentioned previously, the entombment of the precious metals
in the organic carbon and clays at the Columbus Project can cause problems of
detection by many methods of analysis. In January 2010, the Nevada Bureau of
Mines and Geology (NBMG) reported they found no economically significant amounts
of gold and silver in five surface samples from the Columbus Salt Marsh
using a variety of assay methods. These results are consistent with the values
initially found by our independent consultants using similar methods. However,
further research and testing led to the development of a caustic fusion
protocol, a thiosulphate leach process and, more recently, a gravity
concentrating circuit that has extracted economically significant values of gold
and silver as metal-in-hand, from samples where conventional fire assay, aqua
regia leach and cyanide leach of head ore extracted very low values.

20

---

The best assay of any geological sample is by quantifying the
extracted metal. That is why we and our consultants rely only on extracted gold
and silver as metal-in-hand for reporting assay results. The caustic fusion
and thiosulphate leach provide metal-in-hand on head ore as do caustic fusion,
thiosulphate leach and cyanide leach on gravity concentrates. Using these assay
methods, together with the quality assurances and quality controls of the drill
program, we and our consultants are confident of the results that we have
reported from head ore and concentrate samples.

MINING AND RECOVERY METHODOLOGY

The Company currently has a production permit for the Columbus
Project. The production permit allows for the extraction of precious metals and
the production of calcium carbonate on the 378 acre site (320 acre mine site and
58-acre mill site) at a mine rate of up to 792,000 tons per year. During the
period from 2008-2011 the Company developed a dredge mine, constructed a pilot
plant and began operations to develop and prove the extractive metallurgy for
the Columbus Project. Initial metallurgical testing was primarily focused on
extracting gold and silver from the clay material. As previously reported,
problems with organic material interfered with the extraction of precious metals
from the clays, and this has led us to focus our current efforts on extraction
of the precious metals from the sands.

The Company recently announced the results of tests completed
by AuRIC Metallurgical Laboratories of Salt Lake City, Utah. AuRIC completed
three bulk tests (194 lb., 220 lb., 3,000 lb.) on sand material collected from a
single site within the North Sand Zone using a new gravity concentration
circuit. The weight mean average results on the tests were: 13:1 concentration
ratio; 121% Au recovery; and 42% Ag recovery (0.100 opt AuE2, 0.084
opt Au and 0.642 opt Ag).

The purpose of these bulk tests is to determine the net
recovery of gold and silver from the Columbus sands. The focus has been on
optimizing the new gravity concentration circuit developed specifically for
these sands. Readers are cautioned not to place undue weight on the metal
grades reported in these tests. The recent gravity concentration tests were
completed on material that was probably significantly higher in head grade than
the overall average head grade of the North Sand Zone. The area from which these
samples were taken may represent an anomaly within the North Sand Zone and may
not be representative of the entire zone.The head grade of the sands tested
has varied, and will probably continue to vary, at each sample location. The
varied head grade of the sands has little relevance, because the contained gold
and silver has the same concentrating characteristics. Based on the limited bulk
test results, to date, we can make no new assumptions or assertions regarding
the overall head grade of the North Sand Zone. Additional gravity concentration
tests on bulk samples from different sites within the North Sand Zone are
planned.

These test results all exceeded our 75% gold extraction rate
goals for the Columbus Project. These gravity concentration tests also indicated
that more gold was extracted by leaching concentrates derived from large head
samples (88,330 g  1,363,636 g) than was predicted by the many caustic fusion
assays performed on small head samples (5 g each). These results are consistent
with the nugget effect common in alluvial deposits such as those discovered at
the Columbus Project and continue to indicate the need to process large samples
and extract the gold and silver in order to best determine the head grade.

AuRIC is currently completing the metallurgical tests and
design work in support of the new gravity concentration circuit to be installed
at the on-site pilot plant at the Columbus Project. To date, the test work at
AuRIC has focused on optimization and scale-up of the capacity of the gravity
concentration circuit. The reliability of this new concentrating circuit
continues to be verified by the extraction of limited quantities of gold and
silver during the course of this work, as previously disclosed.

____________________________________2AuE opt =
Au opt + Ag/40 opt

21

---

We are currently installing the framework for upgrades to the
Columbus Project on-site pilot plant, and we will move forward with the upgrades
upon completion of AuRICs tests. After the installation and performance
assessment of the on-site gravity concentration circuit, we will commence the
bulk testing of up to 2,000 tons of sand material.

If the operation of the pilot plant proves, to our
satisfaction, that the Columbus Project is economically viable, we may seek to
expand the production permitted area, reconfigure the production process and/or
construct additional production circuits within the mill site to increase
production capacity. The production model for the Columbus Project is
anticipated to be a low cost, high volume mining operation.

Readers are cautioned that, although we believe that the
results of our exploration activities to date have been sufficiently positive to
proceed with the installation and operation of a pilot processing facility at
the Columbus Project millsite, we have not yet established any probable or
proven reserves. Additional exploration work will be required before probable or
proven reserves can be established. There are no assurances that the results of
our pre-feasibility and technical programs will result in a decision to enter
into commercial production.

THE RED MOUNTAIN PROJECT

The Red Mountain Project is a potential gold, silver and tungsten project that consists of 100 unpatented placer federal mineral claims on BLM land covering approximately 13,729 acres, all located in San Bernardino County and Kern County, California. Title to these mineral claims is currently recorded in the names of a number of individuals who, together, make up a mining syndicate known as Red Mountain Mining (“RMM”). We have been notified that some of the claims making up the Red Mountain Project may conflict with other existing mineral claims and other property rights covering the location of the project. We intend to work with RMM in order to resolve these issues.

RIGHTS TO THE RED MOUNTAIN PROJECT

On July 20, 2011, we entered into an amended and restated
option agreement for the Red Mountain Project (the Amended Red Mountain
Option). The Amended Red Mountain Option replaces the Red Mountain Letter
Agreement under which we had previously earned a 30.6% undivided interest in the
Red Mountain Project. Under the terms of the Amended Red Mountain Option, we
have the option (the Buyout Option) to buyout all of the optionors interest
in the Red Mountain Project by paying to the optionor $200,000 in cash and (i)
if the Buyout Option is exercised on or before March 31, 2012, issuing to the
optionor $2,800,000 worth of our common stock, or (ii) if the Buyout Option is
exercised after March 31, 2012, issuing to the optionor $3,800,000 worth of our
common stock. If we exercise the Buyout Option, of which there is no assurance,
we will own 100% of the Red Mountain Project. We have until December 31, 2016 to
exercise the Buyout Option.

To maintain the Buyout Option, we must (i) pay the optionor the
sum of $8,000 per month, and (ii) spend a total of $600,000 on the Red Mountain
Project. For every $2,000 that we spend on the Red Mountain Project, we will
earn an additional 0.1% undivided interest, up to an additional 29.4% undivided
interest (which would bring our total undivided interest in the Red Mountain
Project to 60.0%) . On execution of the Amended Red Mountain Option, we prepaid
$35,000 to the optionor to be applied against the monthly payment amounts.

The project acreage of all claims under the Red Mountain Option
Agreement now totals 13,729.

Each of the claims making up the Red Mountain Project are unpatented placer federal claims.  In order to maintain these claims, we are required to pay annual maintenance fees to the US Bureau of Land and Minerals (the “BLM”) by September 1 of each year.  The annual claim maintenance fees paid to the BLM for the 2011 claim years for the Red Mountain claims totaled $14,100.  We are responsible for paying the claim maintenance fees for the Red Mountain claims.  Amounts paid to maintain the claims are counted against the amounts we are obligated to spend on the project to maintain our option rights. A summary of the Red Mountain Project Claims is included as an exhibit to this Annual Report.

LOCATION AND ACCESS

The Red Mountain Project is located at the base of Red
Mountain, which is 27 miles south of Ridgecrest in San Bernardino County and
Kern County, California, approximately 75 miles northeast of Los Angeles. The
Red Mountain Project can be accessed by using a gravel road that bisects the
project from northwest to southeast.

The Red Mountain Project does not contain any useable
infrastructure other than a water well.

22

---

Figure 6: Location of the Red Mountain Project



HISTORY

The Red Mountain Project is east of and adjacent to the Rand
Mining District, initially discovered in 1894. The Rand Mining District was
mined off and on until just recently for gold, silver and tungsten. The majority
of the mines in the area consisted of small independent operations. There is
currently no commercial mining occurring on the Red Mountain Project site.

GEOLOGY

The area surrounding the Red Mountain Project is highly
mineralized with recorded production of gold, silver and tungsten.

Nanominerals reviewed the Red Mountain Project, including the existing reports on work previously done by RMM.  RMM has excavated over 100 test pits at the project site and has gravity concentrated the bulk samples taken from these pits.  The results of RMM’s tests show values ranging from less than 0.01 troy ounces of gold per ton to over 1.00 troy ounces of gold per ton.  Those test results reportedly show an average of 0.06 opt.  These grades were similar to other grades that have been reported in the area on similar mine sites.

Based on a review of the existing reports and a field visit to the Red Mountain Project site, we developed an exploration program to verify the reported gold grades in RMM’s studies and to test the recoverability in order to assess the economic viability of the Red Mountain Project.

CURRENT EXPLORATION

Our exploration program for the Red Mountain Project consists of a drilling and sampling program. The Red Mountain Project is not currently active. We have set a budget of $100,000 for the Red Mountain Project for the 12 months ending December 31, 2012.

23

---

PART II

ITEM 7.
    MANAGEMENTS DISCUSSION
      AND ANALYSIS OF FINANCIAL CONDITION
      AND **RESULTS OF OPERATION.**


The following discussion and
analysis of our financial condition and results of operations should be read in
conjunction with our financial statements and the related notes appearing
elsewhere in this report. This discussion and analysis may contain
forward-looking statements based on assumptions about our future business. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including but not
limited to those set forth under Risk Factors and elsewhere in this
report.

This discussion presents
managements analysis of our results of operations and financial condition as of
and for each of the years in the two-year period ended December 31, 2011. The
discussion should be read in conjunction with our financial statements and the
notes related thereto which appear elsewhere in this report.

Executive Overview

During the next twelve months, we intend to proceed with our exploration program for the Columbus Project, while the Red Mountain Project remains not in active development.

The Columbus Project

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

---

24

|(a) | Mineralization: Exploration  work to date has identified three different host materials (sand, clay, brine) each of which could potentially contain commercial quantities of gold and silver mineralization within the project area. The sand zones outcrop on the western side of the Columbus basin and dip gently eastward. The clay zones also outcrop and overlay the sand zones. The brine zone occurs as an aquifer at some 400 feet depth underlying the sand/clay zones. Our exploration efforts to date have focused on drilling both the sand and clay zones within the approximately 5,000 acre Columbus Project Area of Interest outlined by previous geochemical exploration work. Our recent work has focused on the North Sand Zone.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | To date, 34 holes have been drilled in the North Sand
      Zone. Analyses of drill samples have outlined a deposit covering
      approximately 0.67 square miles, to a depth of 200 feet beneath the
      surface of the Columbus Marsh Basin, with a weight mean average head grade
      of 0.038 opt AuE. We estimate the tonnage of sands within this zone at approximately 145 million (MM) tons. In
      addition, the tonnage of the sands within the
      South Sand Zone, to a depth of 100 feet, is currently estimated at
      approximately 29 MM tons of 0.041 opt AuE, resulting in a total of 174MM
      tons. Previous drilling has indicated that the sands in both
  North and South Sand Zones extend below 200 feet in depth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | We have been granted the permit for our 2012 drill
      program, which will consist of 31 drill holes to a depth of at least 200
      feet. The drill program will cover an additional 0.48 square miles
      adjacent to the North Sand Zone. The goal of this program is to expand the
      boundaries of the North and South Sand Zones. Following completion of the
      2012 drill program, the Company will re-evaluate the boundaries of the
      sand zones and the quantity of the tonnage contained therein and the
      quality of the mineralization estimates within these areas.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(b) | Feasibility Study/Mining and Recovery Methodology:
      The Company currently has a production permit for the Columbus Project.
      The production permit allows for the extraction of precious metals and the
      production of calcium carbonate on the 378 acre site (320 acre mine site
      and 58-acre mill site) at a mine rate of up to 792,000 tons per year.
      During the period from 2008-2011 the Company developed a dredge mine,
      constructed a pilot plant and began operations to develop and prove the
      extractive metallurgy for the Columbus Project. Initial metallurgical
      testing was primarily focused on extracting gold and silver from the clay
      material. As previously reported, problems with organic material
      interfered with the extraction of precious metals from the clays, and this
      has led Ireland to focus on extraction of precious metals from the
      sands.                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | We recently announced the results of tests completed by
      AuRIC Metallurgical Laboratories of Salt Lake City, Utah. AuRIC completed
      three bulk tests (194 lb., 220 lb., 3,000 lb.) of sand material collected
      from a single site within the North Sand Zone using a new gravity
      concentration circuit. These test results all exceeded our 75% gold
      extraction rate goals for the Columbus Project. The weight mean average
      results on the tests were as follows: 13:1 concentration ratio; 121% Au
      recovery; and 42% Ag recovery (0.100 opt AuE3, 0.084 opt Au
      and 0.642 opt Ag).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | The purpose of these bulk tests was to determine the net
      recovery of gold and silver from the Columbus sands. The focus has been on
      optimizing the new gravity concentration circuit developed specifically
      for these sands. Readers are cautioned not to place undue weight on the
      metal grades reported in these tests. The recent gravity concentration
      tests were completed on material that was probably significantly higher in
      head grade than the overall average head grade of the North Sand Zone.
      The area from which these samples were taken may represent an anomaly
      within the North Sand Zone and may not be representative of the entire
      zone.The head grade of the sands tested has varied, and will probably
      continue to vary, at each sample location. The varied head grade of the
      sands has little relevance, because the contained gold and silver has the
      same concentrating characteristics. Based on the limited bulk test
      results, to date, we can make no new assumptions or assertions regarding
      the overall head grade of the North Sand Zone. Additional gravity
      concentration tests on bulk samples from different sites within the North
      Sand Zone are planned.

_____________________________________3AuE opt =
Au opt + 0.025 Ag opt

25

---

These gravity concentration tests also indicated that
      more gold was extracted by leaching concentrates derived from large head
      samples (88,330 g  1,363,636 g) than was predicted by the many caustic
      fusion assays performed on small head samples
(5 g each). These results are consistent with the nugget effect common in
alluvial deposits such as those discovered at the Columbus Project and continue
to indicate the need to process large samples and extract the gold and silver in
order to best determine the head grade.

AuRIC is currently completing the
metallurgical tests and design work in support of the new gravity concentration
circuit to be installed at the on-site pilot plant at the Columbus Project. To
date, the test work at AuRIC has focused on optimization and scale-up of the
capacity of the gravity concentration circuit. The reliability of this new
concentrating circuit continues to be verified by the extraction of limited
quantities of gold and silver during the course of this work, as previously
disclosed.

We are currently installing the
framework for upgrades to the Columbus Project on-site pilot plant, and we will
move forward with the upgrades upon completion of AuRICs tests. After the
installation and performance assessment of the on-site gravity concentration
circuit, we will commence the bulk testing of up to 2,000 tons of sand
material.

If the operation of the pilot plant
proves, to our satisfaction, that the Columbus Project is economically viable,
we may seek to expand the production permitted area, reconfigure the production
process and/or construct additional production circuits within the mill site to
increase production capacity. The production model for the Columbus Project is
anticipated to be a low cost, high volume mining operation.

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

We anticipate spending approximately $5,390,000 on our exploration program and $280,000 on our capital expenditures for the Columbus Project from January 1, 2012 until December 31, 2012.

The Red Mountain Project

Sampling and Drilling Program: Our exploration program for the Red Mountain Project currently consists of a Drilling and Sampling program. The Red Mountain Project is not currently active. We have set a budget of $100,000 for property payments and maintenance costs for the Red Mountain Project for the year ending December 31, 2012. We have reallocated funds originally budgeted towards the Red Mountain Project in order to provide us with maximum flexibility in achieving our technical milestones at our lead project.

Critical Accounting Policies

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

We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations. Our significant accounting policies are
also disclosed in the notes to our audited consolidated financial statements for
the period ended December 31, 2011 included in this Annual Report on Form
10-K.

Use of estimates
The preparation of financial statements in conformity with GAAP requires us to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. By their nature, these estimates are subject to
measurement uncertainty and the effect on the financial statements of changes in
such estimates in future periods could be significant. Significant areas
requiring estimates and assumptions include the valuation of stock-based
compensation, impairment analysis of long-lived assets, accrued reclamation and
remediation costs and realizability of deferred tax assets. Actual results could
differ from those estimates.

26

---

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

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

Mineral Exploration and
Development Costs -Exploration expenditures incurred prior to entering
the development stage are expensed and included in Mineral exploration and
evaluation expenses.

Property and Equipment Property and equipment is stated at cost less accumulated depreciation.
Depreciation is principally provided on the straight-line method over the
estimated useful lives of the assets, which are generally 3 to 39 years. The
cost of repairs and maintenance is charged to expense as incurred. Expenditures
for property betterments and renewals are capitalized. Upon sale or other
disposition of a depreciable asset, cost and accumulated depreciation are
removed from the accounts and any gain or loss is reflected in other income
(expense).

Impairment of long-lived
assets We review and evaluate our long-lived assets for impairment at
each balance sheet date due to our planned exploration stage losses and document
such impairment testing. Mineral properties in the exploration stage are
monitored for impairment based on factors such as our continued right to explore
the property, exploration reports, drill results, technical reports and
continued plans to fund exploration programs on the property.

The tests for long-lived assets
in the exploration, development or producing stage that would have a value
beyond proven and probable reserves would be monitored for impairment based on
factors such as current market value of the mineral property and results of
exploration, future asset utilization, business climate, mineral prices and
future undiscounted cash flows expected to result from the use of the related
assets. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to the estimated future net undiscounted cash
flows expected to be generated by the asset, including evaluating its reserves
beyond proven and probable amounts.

Our policy is to record an
impairment loss in the period when it is determined that the carrying amount of
the asset may not be recoverable either by impairment or by abandonment of the
property. The impairment loss is calculated as the amount by which the carrying
amount of the assets exceeds its fair value. To date, no such impairments have
been identified.

Reclamation and Remediation
Costs (Asset Retirement Obligation)-For our exploration stage
properties, we accrue the estimated costs associated with environmental
remediation obligations in the period in which the liability is incurred or
becomes determinable. Until such time that a project life is established, our
records the corresponding cost as an exploration stage expense. The costs of
future expenditures for environmental remediation are not discounted to their
present value unless subject to a contractually obligated fixed payment
schedule. As reclamation work is performed or liabilities are otherwise settled,
the recorded amount of the liability will be reduced.

27

---

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

We are in the exploration stage and are unable to determine the
estimated timing of expenditures relating to reclamation accruals. It is
reasonably possible that the ultimate cost of reclamation and remediation could
change in the future and that changes to these estimates could have a material
effect on future operating results as new information becomes known.

Liquidity and Capital Resources

Our financial position was as follows at December 31, 2011:

2011
    
    
    2010Cash
    $
    521,660
    
    $
    1,602,179Short-term investments
    $
    -
    
    $
    878,608Current liabilities
    $
    214,554
    
    $
    227,138Accrued reclamation costs
    $
    572,338
    
    $
    275,338Stockholders' equity
    $
    33,899,968
    
    $
    33,824,589


During 2011, our liquidity position was affected by the
following:

- Continued exploration stage losses of $3,888,629. Significant non-cash
  expenses included depreciation of $821,891 and share based compensation of
  $1,180,667. Significant non-cash income included the income tax benefit of
  $2,590,393.
- Purchases of new equipment in the amount of $118,558.
- Purchase of restricted investments held for reclamation bonding of
  $275,285.
- Net proceeds from the completion of a private placement offering of
  $2,757,554.
- Short-term investments were reclassified to restricted investments held
  for reclamation bonds.

During 2010, liquidity position was affected by the
following:

- Continued exploration stage losses of $4,691,054. Significant non-cash
  expenses included depreciation of $553,791 and share based compensation of
  $1,232,927. Significant non-cash income included income tax benefit of
  $1,965,945.
- Purchases of new equipment in the amount of $872,493.
- Purchase of short-term investments of $879,553.
- Net proceeds from the completion of a private placement offering of
  $4,792,007.
- Proceeds for the exercise of stock options of $25,000.

28

---

Looking Forward

We have budgeted for the following cash expenditures for the
period from January 1, 2012 until December 31, 2012:

Columbus ProjectProperty Payments
    
    $
    180,000Drilling Program and
      Mineralization Estimates
    
    
    1,317,000Pilot Plant / Project Feasibility
    
    
    2,001,000Total for Columbus Project
    
    $
    3,498,000Red
      Mountain ProjectProperty Acquisition and
      Maintenance Costs
    
    $
    100,000Sampling Exploration ProgramTotal for Red Mountain Project
    
    $
    100,000General
      and AdministrationTotal for General and Administration
    
    $
    1,792,000Total
      Expected Expenses
    
    $
    5,390,000Total Expected Capital
      Expenditures
    
    $
    280,000Total Expected Cash Expenditures
    
    $
    5,670,000


In 2012, we will continue to
focus our efforts on developing the Columbus Project, resulting in the following
expectations for 2012:

- Our management anticipates that the minimum cash requirements for funding our proposed exploration programs and our continued operations through December 31, 2012 will be approximately $5,670,000.  As of March 21, 2012, we had cash reserves in the amount of approximately $4,300,000.  Our current financial resources are not expected to be sufficient to allow us to meet the anticipated cash expenditures for the year ended December 31, 2012.  We anticipate that our current financial resources will be sufficient only to pay for the anticipated costs of our exploration activities to October 31, 2012. We will require additional financing to complete our exploration plans. If we are unable to obtain additional financing, we will adjust our operating plan depending upon our existing financial resources.
- Subsequent to our fiscal year end we sold an aggregate of 9,560,000 Units
  under our US and Offshore Private Placements for total gross proceeds of
  $4,780,000. We do not have any additional financing agreements in place.
- Our 2012 budget includes capital expenditures of $280,000; however, we do
  not have any commitments for capital expenditures.

Certain key factors will affect
our future financial and operating results. These include, but are not limited
to the following:

- We have not yet earned any operational revenues since our inception. We may
  not generate sufficient revenues from our proposed business plan in the future
  to achieve profitable operations. If we are not able to achieve profitable
  operations at some point in the future, we eventually may have insufficient
  working capital to maintain our operations as we presently intend to conduct
  them or to fund our expansion plans. Our current financial resources may not
  be sufficient to allow us to meet our anticipated cash expenditures during
  2012 and we may require additional financing. We do not currently have any
  financing arrangements in place, and there are no assurances that we will be
  able to obtain additional financing in an amount sufficient to meet our needs
  or on terms that are acceptable to us.
- Obtaining additional financing is subject to a number of factors, including
  the market prices for base and precious metals, investor interest in our
  mineral projects, and the performance of equity market in general. These
  factors may make the timing, amount, terms or conditions of additional
  financing unavailable to us. If adequate funds are not available or if they
  are not available on acceptable terms, our ability to fund our business plan
  could be significantly limited and we may be required to suspend our business
  operations.

29

---

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

Results of Operations

Revenue

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

Operating Expenses

Mineral exploration and
evaluation expenses increased by 4.31% to $2,704,545 during the year ended
December 31, 2011 from $2,592,912 during the year ended December 31, 2010. The
increase was primarily the result of an increase made to the accrued reclamation
and remediation costs.

Mineral exploration and
evaluation expenses  related party decreased by 2.70% to 521,478 for the year
ended December 31, 2011 from $535,974 during the year ended December 31, 2010.
These amounts represent fees and reimbursement of expenses to Nanominerals Corp.
related to exploration work conducted on the Columbus and Red Mountain Projects.
Nanominerals Corp. is our largest shareholder.

General and administrative
expenses decreased by 18.45% to $2,385,695 during the year ended December 31,
2011 from $2,925,358 during the year ended December 31, 2010. General and
administrative expenses decreased primarily as a result of decreases in
consulting, legal, travel, liability insurance accrual, and stock based vesting
expenses.

Other Income and
Expenses. Total other income and expenses increased by 6.18% to $34,087
during the year ended December 31, 2011 from $32,102 during the year ended
December 31, 2010. The increase was primarily due to no interest expense
incurred in 2011 as a result of not financing certain insurance policies as was
done in 2010.

Income Tax Benefit.
Income tax benefit increased by 31.76% to $2,590,393 during the year ended
December 31, 2011 from $1,965,945 during the year ended December 31, 2010. The
increase was primarily a result of updating our estimate of the realization of
deferred tax assets related to stock based compensation as of December 31,
2011.

Net Loss. The
aforementioned factors resulted in a net loss of $3,888,629, or $0.03 per common
share, for the year ended December 31, 2011, as compared to a net loss of
$4,691,054, or $0.04 per common share, for the year ended December 31, 2010.

Off-Balance Sheet Arrangements

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

Recent Accounting Pronouncements

From time to time, new accounting
pronouncements are issued by the Financial Accounting Standards Board (the
FASB) that are adopted by us, as of the specified effective date. Unless
otherwise discussed, management believes that the impact of recently issued
standards did not or will not have a material impact on our consolidated
financial statements upon adoption.

30

---

In May 2011, the FASB issued
additional guidance regarding fair value measurement and disclosure
requirements. The most significant change relates to Level 3 fair value
measurements and requires disclosure of quantitative information about
unobservable inputs using a description of the valuation processes used, and a
qualitative discussion about the sensitivity of the measurements. The guidance
is effective for interim and annual periods beginning on or after December 15,
2011. We do not expect adoption of the additional fair value measurement and
disclosure requirements to have a material impact on our financial position or
results of operations.

In June 2011, the FASB issued
amended standards to increase the prominence of items reported in other
comprehensive income. These amendments eliminate the option to present
components of other comprehensive income as part of the statement of changes in
stockholders equity and require that all changes in stockholders equity,
except investments by, and distributions to, owners, be presented either in a
single continuous statement of comprehensive income or in two separate but
consecutive statements. In addition, these amendments require presentation, on
the face of the financial statements, of reclassification adjustments for items
that are reclassified from other comprehensive income to net income. These new
standards are effective beginning in the first quarter of 2012 and are to be
applied retrospectively. These amended standards will impact the presentation of
other comprehensive loss but will not impact our financial position or results
of operations.

31

---

PART III

|ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|-------- | ----------------------------------------

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

|Exhibit |                                                                                                                                                                   
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                            
|3.1     | Articles of
      Incorporation.(1)                                                                                                                               
|3.2     | Certificate of Amendment to Articles - Name Change from
      Merritt Ventures Corp. to Ireland Inc.(2)                                                           
|3.3     | Certificate of Change  4-for-1 Stock
      Split.(3)                                                                                                             
|3.4     | Bylaws.(1)                                                                                                                                                        
|10.1    | 2007 Stock Incentive Plan.(4)                                                                                                                                     
|10.2    | Consulting Agreement between the Company and RJ Falkner
      & Company, Inc., dated for reference as of November 5,
      2007.(5)                               
|10.3    | Consultant Non-Qualified Stock Option Agreement between
      the Company and R. Jerry Falkner, dated effective as of November 5,
      2007.(5)                  
|10.4    | Mining Lease Agreement dated November 30, 2007 between
      DDB Syndicate and Columbus S.M., LLC.(7)                                                             
|10.5    | Management Employment Agreement for David Z.
      Strickler.(14)                                                                                                 
|10.6    | Non-Qualified Stock Option Agreement for Douglas D.G.
      Birnie.(9)                                                                                            
|10.7    | Non-Qualified Stock Option Agreement for Robert D.
      McDougal.(9)                                                                                             
|10.8    | Non-Qualified Stock Option Agreement for Michael A.
      Steele.(9)                                                                                              
|10.9    | Non-Qualified Stock Option Agreement for Mark H.
      Brennan.(9)                                                                                                
|10.10   | Non-Qualified Stock Option Agreement for David Z.
      Strickler, Jr.(10)                                                                                        
|10.11   | Non-Qualified Stock Option Agreement dated April 8, 2011
      for Mark H. Brennan.(11)                                                                           
|10.12   | Amended and Restated Option Agreement dated July 20, 2011
      between Sierra Mineral Management Inc. and Ireland Inc.(12)                                       
|10.13   | Non-Qualified Stock Option Agreement for Douglas D.G.
      Birnie.(13)                                                                                           
|10.14   | Non-Qualified Stock Option Agreement for Robert D.
      McDougal.(13)                                                                                            
|10.15   | Non-Qualified Stock Option Agreement for David Z.
      Strickler, Jr.(13)                                                                                        
|14.1    | Code of Ethics.(6)                                                                                                                                                
|21.1    | List of Subsidiaries.(10)                                                                                                                                         
|23.1    | Consent of Brown Armstrong Accountancy
      Corporation.(14)                                                                                                     
|23.2    | Consent of AuRIC Metallurgical Laboratories, LLC.                                                                                                                 
|31.1    | Certification of Principal Executive Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.                                                     
|31.2    | Certification of Principal Financial Officer pursuant to
      Section 302 of the Sarbanes-Oxley Act of 2002.                                                     
|32.1    | Certification of Principal Executive Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
|32.2    | Certification of Principal Financial Officer pursuant to
      18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
|95.1    | Mine Safety Disclosures.(14)                                                                                                                                      
|99.1    | Columbus Project Claims Summary.                                                                                                                                  
|99.2    | Red Mountain Project Claims Summary.                                                                                                                              
|101.INS | XBRL Instance Document.(14)                                                                                                                                       
|101.SCH | XBRL Taxonomy Extension Schema.(14)                                                                                                                               
|101.CAL | XBRL Taxonomy Extension Calculation
      Linkbase.(14)                                                                                                           
|101.DEF | XBRL Taxonomy Extension Definition
      Linkbase.(14)                                                                                                            
|101.LAB | XBRL Taxonomy Extension Label Linkbase.(14)                                                                                                                       
|101.PRE | XBRL Taxonomy Extension Presentation
      Linkbase.(14)                                                                                                          

32

---

|(1)  | Filed as an exhibit to our Registration Statement on Form SB-2 originally filed on April 18, 2002, as amended.                       
|---- | -------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2005 filed on April 12, 2006.          
|(3)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 30, 2007.                                                 
|(4)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2006 filed on April 5, 2007.           
|(5)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on November 9, 2007.                                               
|(6)  | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2003 filed on September 28,
      2004.
|(7)  | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2007 filed on March 31, 2008.            
|(8)  | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2009 filed on April 15, 2010.            
|(9)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on July 28, 2010.                                                  
|(10) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2010 filed on March 30, 2011.            
|(11) | Filed as an exhibit to our Current Report on Form 8-K
      filed on April 13, 2011.                                                 
|(12) | Filed as an exhibit to our Quarterly Report on Form 10-Q
      for the period ended June 30, 2011 filed on August 19, 2011.          
|(13) | Filed as an exhibit to our Current Report on Form 8-K
      filed on August 26, 2011.                                                
|(14) | Filed as an exhibit to our original Annual Report on Form 10-K filed on March 30, 2012.                                              

33

---

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

|      |                  |  |     | IRELAND INC.                                          
|----- | ---------------- |  | --- | ------------------------------------------------------
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|Date: | January 11, 2013 |  | By: | /s/
      Douglas D.G. Birnie                         
|      |                  |  |     | DOUGLAS D.G. BIRNIE                                   
|      |                  |  |     | Chief Executive Officer, President and
      Secretary
|      |                  |  |     | (Principal Executive Officer)                         
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|Date: | January 11, 2013 |  | By: | /s/
      Robert D. McDougal                          
|      |                  |  |     | ROBERT D. MCDOUGAL                                    
|      |                  |  |     | Chief Financial Officer and Treasurer                 
|      |                  |  |     | (Principal Financial Officer)                         

Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.

|Date: | January 11, 2013 |  | By: | /s/
      Douglas D.G. Birnie                         
|----- | ---------------- |  | --- | ------------------------------------------------------
|      |                  |  |     | DOUGLAS D.G. BIRNIE                                   
|      |                  |  |     | Chief Executive Officer, President and
      Secretary
|      |                  |  |     | Director                                              
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|Date: | January 11, 2013 |  | By: | /s/
      Robert D. McDougal                          
|      |                  |  |     | ROBERT D. MCDOUGAL                                    
|      |                  |  |     | Chief Financial Officer and Treasurer                 
|      |                  |  |     | Director                                              
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|      |                  |  |     |                                                       
|Date: | January 11, 2013 |  | By: | /s/
      Mark H. Brennan                             
|      |                  |  |     | MARK H. BRENNAN                                       
|      |                  |  |     | Director                                              

---