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**UNITED STATES SECURITIES AND EXCHANGE
COMMISSION**Washington, D.C. 20549FORM
10-K(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,
2010[__]TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For
the transition period from _____to _____COMMISSION FILE NUMBER000-50033IRELAND
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 codeSecurities 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]NoIndicate 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.
[__]

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: $31,960,899 as of June 30,
2010,based on an average of the closing bid of $0.36 and
the closing ask of $0.53 as quoted by the OTC Bulletin Board onthat 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 29, 2011, the Registrant had 122,434,442 shares of common
stock outstanding.

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IRELAND INC.ANNUAL REPORT ON FORM
10-KFOR THE YEAR ENDED DECEMBER 31, 2010TABLE OF
CONTENTS

|           |                                                                                                                          | PAGE
|---------- | ------------------------------------------------------------------------------------------------------------------------ | ----
|           |                                                                                                                          |     
|PART I     |                                                                                                                          | 3   
|           |                                                                                                                          |     
|ITEM 1.    | BUSINESS.                                                                                                                | 3   
|           |                                                                                                                          |     
|ITEM 1A.   | RISK FACTORS.                                                                                                            | 5   
|           |                                                                                                                          |     
|ITEM 2.    | PROPERTIES.                                                                                                              | 9   
|           |                                                                                                                          |     
|ITEM 3.    | LEGAL
      PROCEEDINGS.                                                                                                 | 21  
|           |                                                                                                                          |     
|PART II    |                                                                                                                          | 22  
|           |                                                                                                                          |     
|ITEM 5.    | MARKET FOR
      REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES | 22  
|           |                                                                                                                          |     
|ITEM 7.    | MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                              | 23  
|           |                                                                                                                          |     
|ITEM 8.    | FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA                                                                        | 30  
|           |                                                                                                                          |     
|ITEM 9.    | CHANGES IN
      AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.                              | 31  
|           |                                                                                                                          |     
|ITEM 9A.   | CONTROLS AND PROCEDURES                                                                                                  | 31  
|           |                                                                                                                          |     
|ITEM 9B.   | OTHER INFORMATION                                                                                                        | 31  
|           |                                                                                                                          |     
|PART III   |                                                                                                                          | 32  
|           |                                                                                                                          |     
|ITEM 10.   | DIRECTORS,
      EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.                                                            | 32  
|           |                                                                                                                          |     
|ITEM 11.   | EXECUTIVE
      COMPENSATION                                                                                             | 34  
|           |                                                                                                                          |     
|ITEM 12.   | SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS               | 37  
|           |                                                                                                                          |     
|ITEM 13.   | CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE                                          | 42  
|           |                                                                                                                          |     
|ITEM 14.   | PRINCIPAL
      ACCOUNTING FEES AND SERVICES                                                                             | 43  
|           |                                                                                                                          |     
|ITEM 15.   | EXHIBITS,
      FINANCIAL STATEMENT SCHEDULES.                                                                           | 43  
|           |                                                                                                                          |     
|SIGNATURES | 45                                                                                                                      

2

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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 a minerals exploration and development 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 19,738
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).

Current geologic modeling for the Columbus Project has outlined
seven mineralized zones containing a total of 343.9 million tons of material in
place with an average grade of 0.040 ounces per ton (opt) gold equivalent
(AuE) (AuE opt = Au opt + 0.013 Ag opt) (based on $900/oz Au and $12/oz Ag).
Current geologic modeling is based upon a full analysis of the technical data
generated from our 2008 and 2009 drill programs and presents a refinement of the
parameters previously used to delineate mineralized zones at 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, 2010:

Exercise of Options by Director

On October 27, 2010, we issued an aggregate of 500,000 shares
of our common stock to Mr. Steele upon the exercise of options with an exercise
price of $0.05 per share granted to Mr. Steele under our 2007 Stock Incentive
Plan. The shares were issued to Mr. Steele pursuant to the exemptions from
registration provided by Section 4(2) of the Securities Act of 1933, as
amended.

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Resignation of Director

On December 7, 2010, we received notice of Michael A. Steeles
intention to resign from our Board of Directors and Audit Committee effective
December 31, 2010. Mr. Steele stated that his current business endeavours and
demanding travel schedule did not allow him to give the time and attention
necessary to be an effective participant as a member of our Board of Directors
and Audit Committee. To the knowledge of our executive officers and remaining
directors, there were no disagreements between Mr. Steele and us relating to our
operations, policies, practices or otherwise.

Competition

We are a mineral resource exploration and development 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.                                 

Employees

As of the date of this Annual Report, other than our officers
and directors, we have 12 full-time employees and 1 part-time employee.

4

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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 likely require additional financing to complete our
exploration and development programs for our mineral projects.

We expect to spend approximately $4,320,000 on the exploration
and development of our Columbus and Red Mountain Projects and the general costs
of operating and maintaining our business and mineral properties for the twelve
months ending December 31, 2011. 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 and development programs until June 30,
2011. Thereafter, we anticipate that we will require additional financing to
complete our planned exploration and development plans. In addition, actual
costs of completing our exploration and development 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
and development 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 and development
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.

5

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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 March 1, 2010, Nevadas State Assembly and Senate
passed Assembly Bill No. 6 (AB6). AB6 has installed an additional tiered fee
that is payable in conjunction with the annual filing of an affidavit of the
work performed on or improvements made to a mining claim, or an affidavit of the
intent to hold a mining claim applied to holders of 11 or more claims. The fee
ranges from $70 per claim for holders of 11 to 199 claims up to $195 per mining
claim for holders of 1,300 or more claims as of the date of filing. AB6 was
approved by the Governor of Nevada on March 12, 2010.

In addition to these 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 and development 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.

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.

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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 and development
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
and development 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.

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.

7

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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.

8

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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 296 mining and
millsite claims which cover 43,178 acres and an additional 80 acres of private
land, for a total of 43,258 acres. We currently own a 100% stake in 149 of the
claims (which we refer to as the CSM 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.

9

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Figure 1: Location of Columbus Project



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

The CSM 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 Columbus Brine Inc. (CBI),
the former owner of CSM and the CSM claims) 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.

10

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Figure 2: Location of the CSM Claims and the DDB
Claims



We acquired our interest in the CSM Claims and the DDB Claims
from Nanominerals pursuant to an assignment by Nanominerals of its rights to
both the Columbus Project and the Red Mountain Project under the terms of two
letter agreements (the Columbus Letter Agreement and the Red Mountain Letter
Agreement, respectively). By December 2007, under the terms of the Columbus
Letter Agreement, we had earned a 15% operating interest in the Columbus
Project.

In February 2008, we increased our ownership of the Columbus
Project to 100% by merging CBI with and into our wholly owned subsidiary
incorporated for the sole purpose of acquiring CBI, CBI Acquisition, Inc.
Subsequent to the completion of the merger, CBI Acquisition, Inc.s name was
changed to Columbus Minerals Inc. To complete the merger, we issued to the
former stockholders of CBI an aggregate of 10,440,087 shares of our common stock
and share purchase warrants to acquire an additional 5,220,059 shares of our
common stock. The warrants issued are exercisable at a price of $2.39 per share
and expire on February 19, 2013. After August 19, 2010, if our common stock
trades at an average price of 150% of the exercise price of the warrants over a
period of 20 consecutive trading days, then we may accelerate the expiration
date to a date that is 30 days after the date that we send notice of our
intention to exercise the acceleration right. The warrants issued to the former
stockholders of CBI provide the holder with a cashless exercise right. In
addition, we agreed to honor the terms of an option previously granted by CBI to
one of its former stockholders, and to extend that option to June 29, 2010. As a
result, this person had an option to purchase 79,719 shares of our common stock
at a price of $1.36 per share on or before June 29, 2010. None of these options
were exercised before they expired.

After completing the acquisition of CBI, we acquired CBIs
rights under the terms of a mining lease that CBI entered into with the DDB
Syndicate in November 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 $190,000 under the terms of the DDB Agreement,
and we must pay the DDB Syndicate a rental payment of $30,000, payable on June
30, 2011 in order to maintain our lease rights. 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.                        

11

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ACCESS AND INFRASTRUCTURE

The Columbus Project contains an existing mill site with power
generator sets and an onsite fresh water 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 AND DEVELOPMENT ACTIVITIES CONDUCTED ON THE
COLUMBUS PROJECT TO DATE

Surface Sampling Program and Initial Metallurgical
Work

Near surface basin sediment samples were taken in late 2006 and
early 2007 and analyzed by Arrakis Inc. (Arrakis), an independent engineering
lab based in Denver, Colorado. 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 and development work. The Permitted Mine Area (320 acres) is
situated in the north end of this zone.

12

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Drilling Program

Figure 3: Map of 2008 and 2009 Drill Hole Locations



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 by Arrakis 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.

Encouraging results warranted a second drill program, managed
by independent consultants McEwen Geological LLC (McEwen), 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 a
maximum depth of 400. The sonic drilling resulted in continuous sample
material, therefore providing an improved representation of each drill interval.
Samples were sent to Arrakis and AuRic Metallurgical Laboratories (AuRic) for
analysis under chain of custody protocols.

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.

13

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Our most recent drilling program commenced in Q3 of 2010. The
activity was focused in 2 areas: (a) the existing production permitted area; and
(b) a five acre area in the northwest area of the Columbus Basin in the area
previously identified as Zone S North. The Zone S North area is primarily
comprised of sand material. The drilling in the production permitted area
consisted of 147 holes drilled to a depth of 40 feet with 10 foot sample
composites. The drilling in Zone S North consisted of 28 holes drilled to a
depth of 200 feet with 20 foot composite samples.

The drilling was completed in Q3 of 2010, under budget and
ahead of schedule. The samples are currently being analyzed by independent
laboratories under strict chain of custody standards. We will report results
when they are delivered to the company.

The purpose of our drill programs is to determine the grade and
tonnage consistency in the area we identified as our area of interest.

MODELING RESULTS

The following discussion is based upon geologic and
mineralization modeling prepared for us by McEwen.

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 1.423
tonnes/m3.

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.

Mineralization Model

Results from the computer generated mineralization model
developed by McEwen were used to determine zones of potentially economic metal
concentration. Seven distinct zones were identified for further evaluation.
These zones will be prioritized by us for further exploration and development
based on their spatial distribution, overall estimated metal content, and
proximity to the existing facilities. All results are reported in total Au
equivalent (AuE), calculated using the formula Au(opt)+0.013Ag(opt)=AuE(opt)
(based on $900/oz Au and $12/oz Ag). A head grade cutoff value of 0.03opt was
chosen based on recent metallurgical results from AuRic.

Zone
    Million tons (short)
    Sample Grade (AuE opt)S North
    83.5
    0.038S South
    29.5
    0.035A West
    44.5
    0.042A East
    42.0
    0.037B Central
    63.4
    0.045C West
    24.5
    0.037C East
    56.5
    0.042TOTAL
    343.9
    0.040


Of all seven zones identified to date, four are laterally
continuous and three are two dimensional. Zones S South, B Central, and C West
are two dimensional and the confidence for mineralization estimation is less
than for the other zones. The most favorable zone is the S North zone. This zone
is a mixed sand/clay zone. The assay results for the sand are for the most part
>0.02opt, with a high value of 0.055opt AuE. Zone S South is also in the sand
unit, with consistently high assay. Even though zone S South is two dimensional,
it is highly likely that these zones are contemporaneous and this southern zone
is of exploration significance.

14

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Zone A West could be thought of as an eastern extension of the
S North zone. It is comprised of clay and is two dimensional with lateral
extension to the south side. It appears that the trend of the blocks >0.03opt
dips to the east, with the anomalous values becoming deeper. This is, however, a
function of the vertical exaggeration and just an expression of the natural
topography. It is presently thought that this zone is along the trend of an
inferred northwesterly subsurface structure. This zone is distinguished from the
S North zone by the absence of sand above 100 depth.

Zone A East is laterally continuous, with a void between the
southern and northern blocks. It is of lower concentrations and shows moderate
potential. Zones B Central and C West are both two dimensional, with no lateral
extension. At this time, not enough information exists to determine if these
zones are of potentially sufficient concentration, thus placing them of lowest
priority.

Zone C East is, like A West, laterally continuous in a single
block to the north. It contains a similar average concentration, larger tonnage
potential, and is open to the east and south. This makes it of interest for
continued exploration. However, because of its location and distance from the
existing infrastructure, it is lower in priority than the A West zone.

Figure 4: Identified Mineralized Zones

______________________________________________________

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
at the Columbus Project.

15

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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 metalin-hand, at the Columbus Project.
Aqua regia and cyanide leaching tests 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 standard fire assay method on
gravity concentrates 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.

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. Both the caustic
fusion and the thiosulphate leach provide metal-in-hand and, 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
samples.

Pilot and Bench Scale Leach Test Results

In the first quarter of 2009, AuRic conducted a pilot scale
leach test on 1,738 pounds of clay material extracted from our Permitted Mine
Area by Arrakis under chain of custody protocols. No mineral processing
operations, such as screening, crushing, grinding, concentrating or drying were
performed on the sample prior to leaching. The material was analyzed using a
caustic fusion technique and reported head grades of 0.055 ounces per ton (opt)
gold (Au) and 0.520 opt silver (Ag). The material was then leached, resulting in
the extraction of 0.047 opt Au and 0.464 opt Ag into solution. The precious
metals were subsequently collected on resins and processed to produce Au and Ag
bullion, for a net extraction of 0.038 opt Au and 0.385 opt Ag. This represents
leach extraction of 86.2% of Au into solution and 69.1% of Au recovered as
metal. This also represents leach extraction of 89.2% of Ag into solution and
74% of Ag recovered as metal. The overall extraction was 0.043 opt AuE. Upon
completion of the test, the precious metal beads were delivered to us.

In the second quarter of 2009, AuRic conducted bench scale
leach tests on composite drill samples (of clay material) taken from Zone B
Central by McEwen. The tested materials were composited from previously
submitted and analyzed drill samples taken during our 2008 drilling program. The
results of these bench scale leach tests were consistent with the results
obtained from the bulk leach test conducted on the clay material extracted from
the Permitted Mine Area in the first quarter of 2009.

In the third quarter of 2009, AuRic conducted additional bench
scale leach tests and a pilot scale leach test on clay samples taken from Zone B
Central by McEwen. The bulk materials for the pilot scale test assayed 0.070 opt
Au and 0.302 opt Ag, or 0.074 opt AuE. The pilot scale leach test on this clay
material extracted 0.066 opt Au and 0.181 opt Ag, or 0.068 opt AuE. The
extracted precious metals were then collected on activated carbon and processed
to produce Au and Ag bullion for a net extraction of 0.060 opt Au and 0.168 opt
Ag, or 0.062 opt AuE. This represents leach extraction of 92.4% of AuE into
solution and 84.1% of AuE as metal in hand.

All bench scale leach tests were conducted on composite samples
taken from the Permitted Mine Area or the 2008 and 2009 drill programs. AuRic
created 5.5 pound composites for each of the mineralized intervals tested. The
composites were then assayed using a caustic fusion technique, and then leached.
The leach results indicate that the mineralogy of the clays from the Permitted
Mine Area and Zone B Central are similar to each other.

16

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Parameter / Zone
    Test Size
      (lbs)
    Head Grade (opt
      AuE)
    AuE Recovered into
      Solution (opt)
    % Recovered into
      Solution
    AuE Recovered as
      Metal (opt)1
    % Recovered as
      MetalPermitted Mine
      Area
    1,738
    0.062
    0.053
    85.9%
    0.043
    69.6%S South  S1B
      Composite
    5.5
    0.041
    0.037
    89.9%
    n/a
    n/aB Central  S9B
      Composite
    5.5
    0.074
    0.066
    89.8%
    n/a
    n/aB Central  S12B
      Composite
    5.5
    0.057
    0.046
    81.3%
    n/a
    n/aB Central  S12B
      Composite
    5.5
    0.057
    0.054
    94.0%
    n/a
    n/aB Central  S9B
    5.5
    0.074
    0.055
    74.7%
    n/a
    n/aB Central  S9B
    1.8
    0.074
    0.058
    78.7%
    n/a
    n/aB Central  S9B
    2,000
    0.074
    0.068
    92.4%
    0.062
    84.1%


Pilot Plant Installation and Surface Dredge
Operations

Our pilot production plant was installed in the Permitted Mine
Area by Arrakis in October 2008. The precious metals leach extraction circuit
was added during the first quarter of 2010 to the onsite pilot plant and has
undergone several months of leach testing on clay material mined by dredge from
the permitted mine site. The pilot production process consists of a pilot scale
production and processing circuit that we are using to test the commercial
viability of mining and extracting precious metals from the Columbus Project. We
currently have a production permit from Nevada Division of Environmental
Protection that allows us to produce calcium carbonate and extract precious
metals at the Permitted Mine Area at a rate of up to 792,000 tons per year.







__________________________1Bench Scale Tests
are too small to be recovered as metal with resins or activated carbon.

17

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Figure 5:



We are currently using a low cost surface dredge mining method
at the Permitted Mine Area. The clays are mined by dredge and handled as a
slurry throughout the production process. Once the clays have been slurried, we
use thiosulfate leaching and carbon-in-pulp for extraction of the precious
metals. This mining process has, to date, proven to be very successful and is
our preferred method of mining the clays as the cost per ton is low. The leach
extraction method uses thiosulphate to recover the precious metals from the
mined clay material. In March 2010, we completed the installation of the leach
circuit. The metallurgical data generated from operating the leach plant will be
used to determine the feasibility of this process on both the clay and sand
material.

We announced in May 2010 that the pilot plant was operational
as a thiosulphate leach carbon-in-pulp circuit. We also reported that the
primary goal of the initial test runs was to demonstrate that the pilot plant
facility could extract gold and silver from continuous runs of large tonnages of
mineralized clays. This was achieved with the extraction of 0.011 opt gold and
0.037 opt silver from an estimated 58.58 tons of low grade (0.02 opt Au, 0.39
opt Ag) head ore. This represents a weighted average recovery rate of 51% for
gold and 9.5% for silver.

To date we have completed 50 onsite bench and bulk sample
tests. As of yet we have not been able to exceed the above mentioned 0.011 opt
gold and 0.037 opt silver recovery from the clay material, even on higher grade
head material. We have discovered that the clays from the dredge pit contain
large quantities of organics which severely interfere with both leaching and
extraction of the precious metals. We have tested a variety of different methods
designed to either reduce or eliminate the organic problems, but have been
unsuccessful to date. Although testing of the clay continues, we have recently
decided to focus our efforts on the sand materials, located on the west side of
the basin, where organics are minimal and previous testing has yielded positive
results. Work is currently underway in this regard.

The 2010 drilling program was managed by McEwen, under
chain-of-custody, and focused on testing both the clays in the permitted mine
area and the sands in the north western part of the basin. The drill samples are
being assayed by AuRic using the standard caustic fusion method developed for
the Columbus clays and sands. As well, metal extraction tests are being
conducted on sand samples, both from drill hole composites and surface samples,
in order to further validate the potential commercial viability of the sands.
Results will be reported when available.

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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 60 mineral claims covering approximately 7,500
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

We acquired our rights to the Red Mountain Project on August
14, 2007, pursuant to an assignment to us by Nanominerals of its rights and
interests under the Red Mountain Letter Agreement between it and RMM.

The Red Mountain Letter Agreement provides that we are to:

| | (a) | pay $5,000 per month to RMM until December 31,
    2011;                                                                                                                
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                         
| | (b) | spend a total of $200,000 by December 31, 2008 on
      examining, testing, exploring or developing the Red Mountain Project (the
      RMP Phase 1 Expenditures); and
| |     |                                                                                                                                                                         
| | (c) | spend a total of $1,000,000 by December 31, 2011 on
      examining, testing, exploring or developing the Red Mountain Project (the
      RMP Phase 2 Expenditures).  

For each $100,000 spent by us on the RMP Phase 1 or RMP Phase 2
Expenditures, we will earn a 5% interest in the Red Mountain Project (or a
proportionate fractional interest for expenditures in denominations of less than
$100,000). We will earn a maximum 60% interest in the Red Mountain Project if we
spend the full $1,200,000 of the RMP Phase 1 and RMP Phase 2 Expenditures by the
deadlines set out above.

In addition, at any time, we may acquire a 100% interest in the
Red Mountain Project (the RM Acquisition Rights) by:

| | (a) | paying and issuing to RMM the following
    consideration:                                                                               
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                          
| |     | (i)                                                                                                                                      
| |     |                                                                                                                                          
| |     | (ii)                                                                                                                                     
| |     |                                                                                                                                          
| |     | (iii)                                                                                                                                    
| |     |                                                                                                                                          
| | (b) | if the Red Mountain Project achieves commercial
      production, paying and issuing to RMM the following additional
      consideration:

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| | (i)   | an additional $100,000 in cash;                                                                                                                                                                                                                                                        
| | ----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |       |                                                                                                                                                                                                                                                                                        
| | (ii)  | between 480,000 and 9,600,000 additional shares of our
      common stock, with the actual number of additional shares to be issued to
      be determined by dividing $2,400,000 by the Acquisition Price;
  and                                                                      
| |       |                                                                                                                                                                                                                                                                                        
| | (iii) | for every four additional shares issued under (b)(ii), we
      will be required to issue one additional share purchase warrant to acquire
      one additional share of our common stock at a price per share equal to
      125% of the Acquisition Price, for a period of two
years.

The Acquisition Price to be used to calculate the aggregate
number of shares and share purchase warrants to be issued to RMM under the terms
of the Red Mountain Letter Agreement will be the average closing price of our
common stock during the 60 days prior to the acquisition date, provided,
however, that the Acquisition Price shall not be lower than $0.25 and shall not
be greater than $5.00.

As of December 31, 2010, the date of our most recently
available financial statements, we had spent $819,499 on the Red Mountain
Project, meaning that, as of December 31, 2010, we owned a 41% interest in the
project. We are currently negotiating to extend our option rights on the Red
Mountain Project for an additional five years to December 31, 2016.

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.

Figure 6: Location of the Red Mountain Project



20

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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 had Arrakis review 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. Arrakis
reported that the grades were similar to other grades that have been reported in
the area on similar mine sites.

Based on their review of the existing reports and a field visit
to the Red Mountain Project site, Arrakis has recommended that we proceed with
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 and development program for the Red Mountain
Project currently consists of a drilling and sampling program. Currently the Red
Mountain Project is not in active development. We have set a budget of $75,000
for the Red Mountain Project for the 12 months ended December 31, 2011. 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.

ITEM 3. LEGAL PROCEEDINGS.

We are not a party to any other legal proceedings and, to our
knowledge, no other legal proceedings are pending, threatened or
contemplated.

21

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PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

MARKET INFORMATION

Quotations of our common stock are entered on the OTC Bulletin
Board under the symbol IRLD. The following is the high and low bid information
for our common stock during each fiscal quarter of our last two fiscal years.

2010
    
    
    2009High
    
    
    Low
    
    
    High
    
    
    LowFirst quarter ended March 31
    $
    1.15
    
    $
    0.45
    
    $
    0.71
    
    $
    0.21Second quarter ended June 30
    $
    0.955
    
    $
    0.25
    
    $
    0.69
    
    $
    0.41Third quarter ended September 30
    $
    0.55
    
    $
    0.32
    
    $
    0.55
    
    $
    0.30Fourth quarter ended December 31
    $
    0.55
    
    $
    0.25
    
    $
    0.51
    
    $
    0.32


Quotations entered on the OTC Bulletin Board reflect
inter-dealer prices, without retail mark-up, markdown or commission and may not
represent actual transactions.

PENNY STOCK RULES

The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document prepared by the SEC, which:

| | (a) | contains a description of the nature and level of risk in
      the market for penny stocks in both public offerings and secondary
      trading;                                                                                        
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                          
| | (b) | contains a description of the broker's or dealer's duties
      to the customer and of the rights and remedies available to the customer
      with respect to a violation of such duties or other requirements of
      securities laws;
| |     |                                                                                                                                                                                                                                          
| | (c) | contains a brief, clear, narrative description of a
      dealer market, including bid and ask prices for penny stocks and the
      significance of the spread between the bid and ask price;                                           
| |     |                                                                                                                                                                                                                                          
| | (d) | contains a toll-free telephone number for inquiries on
      disciplinary actions;                                                                                                                                                       
| |     |                                                                                                                                                                                                                                          
| | (e) | defines significant terms in the disclosure document or
      in the conduct of trading in penny stocks; and                                                                                                                             
| |     |                                                                                                                                                                                                                                          
| | (f) | contains such other information and in such form as the
      SEC shall require by rule or regulation.                                                                                                                                   

The broker-dealer also must, prior to effecting any transaction
in a penny stock, provide the customer with:

| | (a) | bid and offer quotations for the penny stock;                                                                                                                                 
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                               
| | (b) | the compensation of the broker-dealer and its salesperson
      in the transaction;                                                                                           
| |     |                                                                                                                                                                               
| | (c) | the number of shares to which such bid and ask prices
      apply, or other comparable information relating to the depth and liquidity
      of the market for such stock; and
| |     |                                                                                                                                                                               
| | (d) | monthly account statements showing the market value of
      each penny stock held in the customer's account.                                                                 

In addition, the penny stock rules require that, prior to a
transaction in a penny stock that is not otherwise exempt from those rules, the
broker-dealer must:

| | (a) | make a special written determination that the penny stock
      is a suitable investment for the purchaser; and                                      
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                      
| | (b) | receive from the purchaser his or her written
      acknowledgement of receipt of the determination and a written agreement to
      the transaction.

22

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These disclosure requirements may have the effect of reducing
the trading activity in the secondary market for our common stock and therefore
stockholders may have difficulty selling those securities.

REGISTERED HOLDERS OF OUR COMMON STOCK

As of March 29, 2011, there were 168 registered holders of
record of our common stock. We believe that a large number of stockholders hold
stock on deposit with their brokers or investment bankers registered in the name
of stock depositories.

DIVIDENDS

We have not declared any dividends on our common stock since
our inception and we do not expect to declare any dividends in the foreseeable
future. We expect to spend any funds legally available for the payment of
dividends on the development of our mineral properties. There are no dividend
restrictions that limit our ability to pay dividends on our common stock in our
Articles of Incorporation or bylaws. Chapter 78 of the Nevada Revised Statutes
(the NRS), does provide certain limitations on our ability to declare
dividends. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring
dividends where, after giving effect to the distribution of the dividend:

| | (a) | we would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                                                                                                                                                                                                                                        
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | except as may be allowed by our Articles of
      Incorporation, our total assets would be less than the sum of our total
      liabilities plus the amount that would be needed, if we were to be
      dissolved at the time of the distribution, to satisfy the preferential
      rights upon dissolution of stockholders who may have preferential rights
      and whose preferential rights are superior to those receiving the
      distribution.

RECENT SALES OF UNREGISTERED SECURITIES

Other than as previously disclosed in our Quarterly Reports on
Form 10-Q or our Current Reports on Form 8-K, we have not completed any
unregistered sales of equity securities during the fiscal year ended December
31, 2010.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.

PLAN OF OPERATION

During the next 12 months, we intend to proceed with our
exploration and development programs for the Columbus Project and the Red
Mountain Project.

The Columbus Project

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

| | (a) | Mineral Resources/Reserves: Exploration and
      development work to date has identified three different host materials
      (clay, sand, brine) each of which could potentially contain commercial
      quantities of silver and gold 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. Minimal work has been done by the Company on the brine
      zone, however previous work has shown some potential for both silver and
      gold in the brine. The Companys exploration efforts 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.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

---

The 2008 and 2009 drilling program
identified some 343 million tons of mineralized sand and/or clay material,
grading 0.040 opt gold equivalent from the surface to 100 feet depth. (AuE opt =
Au opt + 0.013 Ag opt)(based on $900/oz Au and $12/oz Ag). The boundaries of
these mineralized zones were identified at a wide drill hole spacing (about 1⁄4
mile X 1⁄2 mile). The 2010 drill program was designed to both infill drill and to
extend these previously drilled mineralized zones. All drill programs have been
conducted by independent and qualified third parties under strict
Chain-of-Custody, Quality Assurance and Quality Control standards. Samples will
continue to be assayed using caustic fusion and metal extraction methods.

The first phase of the 2010 drill
program consisted of 147 holes drilled to a depth of 40 feet (permitted
production mining depth) within the permitted 320-acre mine site area. The goal
of this drilling is to further define the mineralogy and grades within these
mineralized clays. The second phase of the 2010 drill program consisted of 28
holes to a depth of 200 feet within the clay and sand zones located in the
northwest sector of the property. These holes are designed to both infill and
extend the mineral resources in this area. The 2010 drill program was completed
in October 2010, ahead of schedule and under budget. Results will be reported as
received.

| | (b) | Feasibility Study: 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 2008-2010
      the Company has developed a dredge mine, constructed a Pilot Plant and
      began operations to develop and prove the extractive metallurgy for the
  Columbus project.                                                                                                                                                                                                                                                                                                                                                            
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | To date we have completed 50 onsite bench and bulk sample
      tests. As of yet we have not been able to exceed the above mentioned 0.011
      opt gold and 0.037 opt silver recovery from the clay material, even on
      higher grade head material. We have discovered that the clays from the
      dredge pit contain large quantities of organics which severely interfere
      with both leaching and extraction of the precious metals. We have tested a
      variety of different methods designed to either reduce or eliminate the
      organic problems, but have been unsuccessful to date. Although testing of
      the clay continues, we have recently decided to focus our efforts on the
      sand materials, located on the west side of the basin, where organics are
      minimal and previous testing has yielded positive results. Work is
      currently underway in this regard.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| |     | 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, 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 $1,950,000 on our
exploration and development program and $500,000 on our capital expenditures for
the Columbus Project from January 1, 2011 until December 31, 2011.

The Red Mountain Project

Sampling and Drilling Program: Our exploration and
development program for the Red Mountain Project currently consists of a
Drilling and Sampling program. Currently the Red Mountain Project is not in
active development. We have set a budget of $75,000 for property payments and
maintenance costs for the Red Mountain Project for the year ending December 31,
2011. 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.

24

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Cash Requirements

We have budgeted for the following cash expenditures for the
period from January 1, 2011 until December 31, 2011:

Columbus
      Project
    
    Property Payments
    
    $
    100,000
    
    Drilling
      Program and Mineralization Estimates
    
    
    425,000
    
    Pilot Plant / Project
      Feasibility
    
    
    1,425,000Total for
      Columbus Project
    
    $
    1,950,000Red Mountain Project
    
    Property
      Acquisition and Maintenance Costs
    
    $
    75,000
    
    Sampling Exploration Program
    
    
    0Total for
      Red Mountain Project
    
    $
    75,000General and AdministrationTotal for
      General and Administration
    
    $
    1,795,000Total Expected Expenses
    
    $
    3,820,000Total Expected
      Capital Expenditures
    
    $
    500,000Total Expected Cash
      Expenditures
    
    $
    4,320,000


As of December 31, 2010, we had cash in the amount of
$1,602,179 and a working capital surplus of $2,541,774. We do not currently have
sufficient financial resources to pay for our anticipated cash expenditures for
the period from January 1, 2011 until December 31, 2011. We anticipate that our
existing financial resources are sufficient only to pay for the anticipated
costs of our exploration and development programs until June 30, 2011.
Thereafter, we anticipate that we will require additional financing to complete
our planned exploration and development plans. If we are unable to obtain
sufficient financing to complete our planned exploration and development plans,
we will scale back our plans depending upon our existing financial resources. We
do not currently have any financing arrangements in place.

RESULTS OF OPERATIONS

Summary of Year End Results

|                   | Year Ended December 31,
|------------------ | -----------------------
|                   |                        
|                   |                        
|                   |                        
|Revenue            | $                      
|Operating expenses |                        
|Interest income    |                        
|Interest expense   |                        
|Income tax benefit |                        
|Net loss           | $                      

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.

25

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Expenses

The major components of our expenses for the years ended
December 31, 2010 and 2009 are outlined in the table below:

|                                                            | Year Ended December 31,
|----------------------------------------------------------- | -----------------------
|                                                            |                        
|                                                            |                        
|Mineral exploration and evaluation expenses                 | $                      
|Mineral exploration and evaluation expenses  related party |                        
|General and administrative                                  |                        
|General and administrative  related party                  |                        
|Depreciation                                                |                        
|Mineral and property holding costs                          |                        
|Total operating expenses                                    | $                      

Our operating expenses for the year ended December 31, 2010
increased as compared with our December 31, 2009 fiscal year. The increase in
operating expenses was due to increases in general and administrative expenses
and depreciation. This increase was offset by a decrease in mineral exploration
and evaluation activities.

The item Mineral exploration and evaluation expenses  related
party represents (a) amounts paid or reimbursed to Nanominerals for exploration
work conducted on the Columbus and Red Mountain Projects; and (b) amounts paid
in respect of the DDB Claims to the DDB Syndicate, an entity owned by related
parties.

During our 2010 fiscal year, we incurred fees payable to
Nanominerals of $420,000 for technical and financing related services relating
primarily to the Columbus and Red Mountain Projects. In addition, we incurred
$115,974 in respect to reimbursable expenses paid for by Nanominerals. At
December 31, 2010, we were indebted to Nanominerals in the amount of $43,657 for
unpaid fees and reimbursable expenses.

During our 2010 fiscal year, we made $30,000 in rental payments
to the DDB Syndicate under the terms of our lease agreement for the DDB Claims.
The DDB Syndicate is a mining syndicate made up of a limited liability company
controlled by Douglas D.G. Birnie (our President, Chief Executive Officer and a
member of our Board of Directors), Lawrence E. Chizmar, Jr., a former member of
our Board of Directors (and a former director of CBI), three former officers,
directors and affiliates of CBI, and three companies affiliated with
Nanominerals. The $30,000 in rental payments made to the DDB Syndicate consisted
of $3719 paid to each member of the DDB Syndicate, plus an additional $250 paid
to a company controlled by Mr. Birnie for the reimbursement of expenses related
to exploration work done on the DDB Claims.

We also had an outstanding balance for accrued compensation due
to Douglas D.G. Birnie (our President, Chief Executive Officer and a member of
our Board of Directors) in the amount of $9,375, payable to a company controlled
by Mr. Birnie.

During 2010, we incurred fees of $21,066 for services performed
by Mark Brennan, one of our independent directors, primarily for executive
search assistance.

The change in general and administrative expenses from 2010 to
2009 is primarily attributable to the expensing of consultants and directors
stock based vesting and grants. In addition, the depreciation of the site
acquisition costs and capital expenditures began, totaling $553,791 for the year
versus $45,631 in 2009.

We anticipate that our operating expenses will increase
significantly as we pursue our exploration and development programs for the
Columbus Project and the Red Mountain Project.

26

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LIQUIDITY AND CAPITAL RESOURCES

|Working Capital         |                 |           |   |   |           |   |  |                       | 
|----------------------- | --------------- | --------- | - | - | --------- | - |  | --------------------- | 
|                        | At December 31,
|                        |                 |           |   |   |           |   |  | Percentage            | 
|                        |                 | 2010      |   |   | 2009      |   |  | Increase / (Decrease) | 
|Current assets          | $               | 2,768,882 |   | $ | 3,741,299 |   |  | (26.0)%               | 
|Current liabilities     |                 | (227,138  | ) |   | (272,843  | ) |  | (16.8)%               | 
|Working capital surplus | $               | 2,541,774 |   | $ | 3,468,456 |   |  | (26.7)%               | 

|Cash Flows                              |                         |            |   |   |            |  
|--------------------------------------- | ----------------------- | ---------- | - | - | ---------- | -
|                                        | Year Ended December 31,
|                                        |                         | 2010       |   |   | 2009       |  
|Cash flows used in operating activities | $                       | (5,113,797 | ) | $ | (4,611,805 | )
|Cash flows used in investing activities |                         | (1,752,046 | ) |   | (430,572   | )
|Cash flows from financing activities    |                         | 4,817,007  |   |   | 6,127,569  |  
|Net change in cash during period        | $                       | (2,048,836 | ) | $ | 1,085,192  |  

At December 31, 2010 we had a working capital surplus of $2,541,774 as compared with a working capital surplus of $3,468,456 at December 31, 2009.  The decrease in our working capital surplus is primarily attributable to decreases in cash from operating expenses, and purchases of property and equipment.

Financing Requirements

We do not currently have sufficient financial resources to pay
for our anticipated cash expenditures for the period from January 1, 2011 until
December 31, 2011. We anticipate that our existing financial resources are
sufficient only to pay for the anticipated costs of our exploration and
development programs until June 30, 2011. Thereafter, we anticipate that we will
require additional financing to complete our planned exploration and development
plans. If we are unable to obtain sufficient financing to complete our planned
exploration and development plans, we will scale back our plans depending upon
our existing financial resources. We do not currently have any financing
arrangements in place.

During our fiscal year ended December 31, 2010, we sold an
aggregate of 11,035,000 Units at a price of $0.45 per Unit in separate private
placement offerings made to accredited and foreign investors (the 2010 US
Offering and the 2010 Foreign Offering respectively) for total proceeds of
$4,965,750. Each Unit offered was comprised of one share of our common stock and
one-half of one share purchase warrant, with each full share purchase warrant
entitling the holder to purchase an additional share of our common stock at an
exercise price of $0.75 per share, expiring June 30, 2013. We will have the
right to accelerate the expiration date of the warrants if:

| | (a) | the volume weighted average price (VWAP) for our shares
      on the principal market on which they trade is above $4.50 per share for
      twenty consecutive trading days; and                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                           
| | (b) | the average daily trading volume for our shares on the
      principal market on which they trade during those twenty consecutive
      trading days is equal to or greater than 0.2% of our free
  float.

We agreed to pay $6,300 and issue 6,000 share purchase warrants
as finders fees for the units subscribed for by foreign investors.

On October 27, 2010, we issued an aggregate of 500,000 shares
of our common stock to Michael A. Steele, a former member of our board of
directors, upon the exercise of options with an exercise price of $0.05 per
share. The options were granted to Mr. Steele under our 2007 Stock Incentive
Plan. The shares were issued to Mr. Steele pursuant to the exemptions from
registration provided by Section 4(2) of the Securities Act of 1933, as
amended.

27

---

There is no assurance that the actual costs of our exploration
and development programs will not exceed our estimates. Furthermore, we may need
additional financing to proceed beyond our current exploration and development
plans. Our ability to obtain additional 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 adjust our exploration and development plans depending upon
our existing capital resources.

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 additional capital and the success of our business
plan.

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.

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, 2010 included in this Annual Report on Form
10-K.

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.

Exploration Costs

Mineral exploration costs are expensed as incurred.

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.

28

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Reclamation and Remediation Costs (Asset Retirement
Obligation)

We accrued costs associated with environmental remediation
obligations in accordance with ASC 410-20, Asset Retirement Obligations. In
accordance with ASC 410-20-25, Asset Retirement Obligations - Recognition, we
record a liability for the present value of the estimated environmental
remediation costs in the period in which the liability is incurred and becomes
determinable, with an offsetting increase in the carrying amount of the
associated asset. The liability will be accreted and the asset will be
depreciated over the life of the related assets. As reclamation work is
performed or liabilities are otherwise settled, the recorded amount of the
liability is reduced.

We accrue costs associated with environmental remediation
obligation when it is probable that such costs will be incurred and they are
reasonably estimable. Estimates for reclamation and other closure costs are
prepared in accordance with ASC 450, Contingencies, or ASC 410-30-25, Asset
Retirement and Environmental Obligations -Recognition. Costs of future
expenditures for environmental remediation are not discounted to their present
value unless subject to a contractually obligated fixed payment schedule. Such
costs are based on managements current estimate of amounts to be incurred when
the remediation work is performed, within current laws and regulations.

Future reclamation and environmental-related expenditures are
difficult to estimate, in many circumstances, due to the early stage nature of
the exploration project, uncertainties associated with defining the nature and
extent of environmental disturbance and 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 becomes available indicating that the liabilities have
potentially changed. Changes in estimates are reflected in the statement of
operations in the period an estimate is revised.

Accruals for reclamation and environmental matters totaled
$275,338 at December 31, 2010 and December 31, 2009. We are in the exploration
stage and are unable to determine the estimated timing of expenditures relating
to these accruals at this time. It is reasonably possible 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. For additional information, see Note 15 of the
financial statements included with this Annual Report on Form 10-K.

29

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA.Index to Financial Statements:Audited financial
statements for the year ended December 31, 2010, including:

|1. | Report of Independent Registered Accounting Firm (Brown
    Armstrong Accountancy Corporation);                                                                             
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                             
|2. | Consolidated Balance Sheets as of December 31, 2010 and
    2009;                                                                                                           
|   |                                                                                                                                                                             
|3. | Consolidated Statements of Operations for the years ended
      December 31, 2010 and 2009 and the period on February 20, 2001 (date of
    inception) to December 31, 2010;
|   |                                                                                                                                                                             
|4. | Consolidated Statement of Stockholders Equity for the
      period from February 20, 2001 (date of inception) through December 31,
    2010; and                           
|   |                                                                                                                                                                             
|5. | Consolidated Statements of Cash Flows for the years ended
      December 31, 2010 and 2009 and the period on February 20, 2001 (date of
    inception) to December 31, 2010;
|   |                                                                                                                                                                             
|6. | Notes to Consolidated Financial
  Statements.                                                                                                                               

30

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BROWN ARMSTRONGACCOUNTANCY CORPORATION





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM

To the Board of Directors andStockholders of Ireland
Inc.

We have audited the accompanying consolidated balance sheets of
Ireland Inc. (An Exploration Stage Company) (the Company) as of December 31,
2010 and 2009, and the related consolidated statements of operations, including
inception cumulative data prospectively from February 20, 2001, stockholders
equity, and cash flows for each of the years in the two-year period ended, and
from inception to December 31, 2010. Ireland Inc.s management is responsible
for these financial statements. Our responsibility is to express an opinion on
these financial statements based on our audits.

We conducted our audits in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Companys internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial position of
Ireland Inc. (An Exploration Stage Company) as of December 31, 2010 and 2009,
and the results of its operations, including inception cumulative data, and its
cash flows for each of the years in the two-year period ended, and from
inception to, December 31, 2010, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying consolidated financial statements have been
prepared assuming the Company will continue as a going concern. As described in
Note 1 to the consolidated financial statements, the Companys operating losses
raise substantial doubt about its ability to continue as a going concern, unless
the Company attains future profitable operations and/or obtains additional
financing. The consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



| | BROWN ARMSTRONG        
| | -----------------------
| | ACCOUNTANCY CORPORATION
| |                        

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                       |   | December 31, 2010 |   |   | December 31, 2009 |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | - | ----------------- | - | - | ----------------- | -
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|ASSETS                                                                                                                                                                                                 |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Current assets                                                                                                                                                                                         |   |                   |   |   |                   |  
|Cash                                                                                                                                                                                                   | $ | 1,602,179         |   | $ | 3,651,015         |  
|Short-term investments                                                                                                                                                                                 |   | 878,608           |   |   | -                 |  
|Other receivables                                                                                                                                                                                      |   | 30,000            |   |   | -                 |  
|Prepaid expenses                                                                                                                                                                                       |   | 258,095           |   |   | 90,284            |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total current assets                                                                                                                                                                                   |   | 2,768,882         |   |   | 3,741,299         |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Property and equipment, net                                                                                                                                                                            |   | 4,081,820         |   |   | 3,763,118         |  
|Mineral properties                                                                                                                                                                                     |   | 31,948,053        |   |   | 31,948,053        |  
|Reclamation bonds                                                                                                                                                                                      |   | 908,368           |   |   | 908,368           |  
|Deposits                                                                                                                                                                                               |   | 22,200            |   |   | 22,200            |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total
      non-current assets                                                                                                                                                                         |   | 36,960,441        |   |   | 36,641,739        |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total assets                                                                                                                                                                                           | $ | 39,729,323        |   | $ | 40,383,038        |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|LIABILITIES AND STOCKHOLDERS'
      EQUITY                                                                                                                                                             |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Current liabilities                                                                                                                                                                                    |   |                   |   |   |                   |  
|Accounts payable                                                                                                                                                                                       | $ | 90,783            |   | $ | 133,541           |  
|Accounts payable - related
      party                                                                                                                                                                 |   | 67,190            |   |   | 101,213           |  
|Accrued payroll and related taxes                                                                                                                                                                      |   | 45,875            |   |   | 14,799            |  
|Due to related party                                                                                                                                                                                   |   | 23,290            |   |   | 23,290            |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total current
      liabilities                                                                                                                                                                        |   | 227,138           |   |   | 272,843           |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Long-term liabilities                                                                                                                                                                                  |   |                   |   |   |                   |  
|Accrued reclamation and remediation costs                                                                                                                                                              |   | 275,338           |   |   | 275,338           |  
|Deferred income taxes                                                                                                                                                                                  |   | 5,402,258         |   |   | 7,368,534         |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total long-term
      liabilities                                                                                                                                                                      |   | 5,677,596         |   |   | 7,643,872         |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total
      liabilities                                                                                                                                                                                |   | 5,904,734         |   |   | 7,916,715         |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Commitments and contingencies - Note 14                                                                                                                                                                |   | -                 |   |   | -                 |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Stockholders' equity                                                                                                                                                                                   |   |                   |   |   |                   |  
|Common stock, $0.001 par value;
      400,000,000 shares
      
                  
      authorized, 122,434,442 and 110,899,442
                  
      shares, respectively, issued and outstanding |   | 122,434           |   |   | 110,899           |  
|Additional paid-in capital                                                                                                                                                                             |   | 48,299,851        |   |   | 42,099,452        |  
|Common stock subscribed                                                                                                                                                                                |   | -                 |   |   | 162,000           |  
|Accumulated other
      comprehensive loss                                                                                                                                                             |   | (614              | ) |   | -                 |  
|Accumulated deficit during exploration stage                                                                                                                                                           |   | (14,597,082       | ) |   | (9,906,028        | )
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total stockholders' equity                                                                                                                                                                             |   | 33,824,589        |   |   | 32,466,323        |  
|                                                                                                                                                                                                       |   |                   |   |   |                   |  
|Total liabilities and
      stockholders' equity                                                                                                                                                       | $ | 39,729,323        |   | $ | 40,383,038        |  

See Accompanying Notes to these Consolidated Financial
Statements
F-2

---

|IRELAND INC.                         
|-------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)    
|CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                           |   |                    |   |   |                    |   |   | For the period from |  
|------------------------------------------------------------------------------------------ | - | ------------------ | - | - | ------------------ | - | - | ------------------- | -
|                                                                                           |   |                    |   |   |                    |   |   | February 20, 2001   |  
|                                                                                           |   |                    |   |   |                    |   |   | (date of inception) |  
|                                                                                           |   | For the Year Ended |   |   | For the Year Ended |   |   | through             |  
|                                                                                           |   | December 31, 2010  |   |   | December 31, 2009  |   |   | December 31, 2010   |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Revenue                                                                                    | $ | -                  |   | $ | -                  |   | $ | -                   |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Operating expenses                                                                         |   |                    |   |   |                    |   |   |                     |  
|Mineral exploration and
      evaluation expenses                                          |   | 2,592,912          |   |   | 3,158,132          |   |   | 9,327,154           |  
|Mineral
      exploration and evaluation 
            
      expenses - related party      |   | 535,974            |   |   | 520,831            |   |   | 2,583,119           |  
|General and administrative                                                                 |   | 2,925,358          |   |   | 1,177,632          |   |   | 6,437,974           |  
|General and
      administrative - related party                                           |   | 21,066             |   |   | -                  |   |   | 21,066              |  
|Depreciation                                                                               |   | 553,791            |   |   | 45,631             |   |   | 619,781             |  
|Mineral and
      property holding costs                                                   |   | 60,000             |   |   | 60,000             |   |   | 470,500             |  
|Mineral and property holding
      costs - 
             reimbursed to related
      party |   | -                  |   |   | -                  |   |   | 295,000             |  
|Write-off of
      mineral rights                                                          |   | -                  |   |   | -                  |   |   | 14,000              |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Total operating expenses                                                                   |   | 6,689,101          |   |   | 4,962,226          |   |   | 19,768,594          |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Loss from operations                                                                       |   | (6,689,101         | ) |   | (4,962,226         | ) |   | (19,768,594         | )
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Other income (expense)                                                                     |   |                    |   |   |                    |   |   |                     |  
|Interest income                                                                            |   | 35,830             |   |   | 17,763             |   |   | 318,890             |  
|Interest expense                                                                           |   | (3,728             | ) |   | (2,255             | ) |   | (5,983              | )
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Total other income (expense)                                                               |   | 32,102             |   |   | 15,508             |   |   | 312,907             |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Loss before income taxes                                                                   |   | (6,656,999         | ) |   | (4,946,718         | ) |   | (19,455,687         | )
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Income tax benefit                                                                         |   | 1,965,945          |   |   | 1,698,066          |   |   | 4,858,605           |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Net loss                                                                                   | $ | (4,691,054         | ) | $ | (3,248,652         | ) | $ | (14,597,082         | )
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Loss per common share - basic and diluted                                                  | $ | (0.04              | ) | $ | (0.03              | ) |   |                     |  
|                                                                                           |   |                    |   |   |                    |   |   |                     |  
|Weighted average common shares outstanding -
      
        basic and diluted              |   | 121,600,223        |   |   | 100,165,208        |   |   |                     |  

See Accompanying Notes to these Consolidated Financial
Statements 
F-3

---

|IRELAND INC.                                  
|----------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)             
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   | Accumulated |  |   | Accumulated    |   |   |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ |  | - | ---------- |  | - | --------------- | - | - | ------------- |  | - | ----------- |  | - | -------------- | - | - | ---------- | -
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   | Common        |  |   | Other       |  |   | Deficit During |   |   | Total      |  
|                                                                                                                                                                               |  | Common Stock |  |   | Additional |  |   | Stock           |   |   | Comprehensive |  |   | Exploration |  |   | Stockholders'  |  
|                                                                                                                                                                               |  | Shares       |  |   | Amount     |  |   | Paid-in Capital |   |   | Subscribed    |  |   | Loss        |  |   | Stage          |   |   | Equity     |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, February 20, 2001                                                                                                                                                     |  | -            |  | $ | -          |  | $ | -               |   | $ | -             |  | $ | -           |  | $ | -              |   | $ | -          |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash, 
      $0.001 per share                                                                                                               |  | 20,000,000   |  |   | 20,000     |  |   | (15,000         | ) |   | -             |  |   | -           |  |   | -              |   |   | 5,000      |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of common stock for
      cash, 
      $0.0025 per share                                                                                                              |  | 8,000,000    |  |   | 8,000      |  |   | 12,000          |   |   | -             |  |   | -           |  |   | -              |   |   | 20,000     |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of common stock for cash,
      
      $0.025 per share                                                                                                               |  | 1,750,000    |  |   | 1,750      |  |   | 42,000          |   |   | -             |  |   | -           |  |   | -              |   |   | 43,750     |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Net loss                                                                                                                                                                       |  | -            |  |   | -          |  |   | -               |   |   | -             |  |   | -           |  |   | (16,045        | ) |   | (16,045    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2001                                                                                                                                                     |  | 29,750,000   |  |   | 29,750     |  |   | 39,000          |   |   | -             |  |   | -           |  |   | (16,045        | ) |   | 52,705     |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Net loss                                                                                                                                                                       |  | -            |  |   | -          |  |   | -               |   |   | -             |  |   | -           |  |   | (49,313        | ) |   | (49,313    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2002                                                                                                                                                     |  | 29,750,000   |  |   | 29,750     |  |   | 39,000          |   |   | -             |  |   | -           |  |   | (65,358        | ) |   | 3,392      |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Net loss                                                                                                                                                                       |  | -            |  |   | -          |  |   | -               |   |   | -             |  |   | -           |  |   | (32,516        | ) |   | (32,516    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2003                                                                                                                                                     |  | 29,750,000   |  |   | 29,750     |  |   | 39,000          |   |   | -             |  |   | -           |  |   | (97,874        | ) |   | (29,124    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Net loss                                                                                                                                                                       |  | -            |  |   | -          |  |   | -               |   |   | -             |  |   | -           |  |   | (51,000        | ) |   | (51,000    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2004                                                                                                                                                     |  | 29,750,000   |  |   | 29,750     |  |   | 39,000          |   |   | -             |  |   | -           |  |   | (148,874       | ) |   | (80,124    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of common stock for cash,
      
      $0.025 per share                                                                                                               |  | 6,800,000    |  |   | 6,800      |  |   | 163,200         |   |   | -             |  |   | -           |  |   | -              |   |   | 170,000    |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Net loss                                                                                                                                                                       |  | -            |  |   | -          |  |   | -               |   |   | -             |  |   | -           |  |   | (54,025        | ) |   | (54,025    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2005                                                                                                                                                     |  | 36,550,000   |  |   | 36,550     |  |   | 202,200         |   |   | -             |  |   | -           |  |   | (202,899       | ) |   | 35,851     |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Net loss                                                                                                                                                                       |  | -            |  |   | -          |  |   | -               |   |   |               |  |   |             |  |   | (95,279        | ) |   | (95,279    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2006                                                                                                                                                     |  | 36,550,000   |  |   | 36,550     |  |   | 202,200         |   |   | -             |  |   | -           |  |   | (298,178       | ) |   | (59,428    | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of common stock to 
       
      Nanominerals Corp. for a deed of   assignment to the option
      interests   in the Columbus and the Red Mountain  
      projects |  | 30,000,000   |  |   | 30,000     |  |   | 195,000         |   |   | -             |  |   | -           |  |   | -              |   |   | 225,000    |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of stock options for 
       
      3,820,000 shares of common stock   to officers and consultants                                                                    |  | -            |  |   | -          |  |   | 91,441          |   |   | -             |  |   | -           |  |   | -              |   |   | 91,441     |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of common stock for cash
      
        Reg. S - Private Placement,   $0.65 per share, net of
      $106,925   commissions                                            |  | 8,188,000    |  |   | 8,188      |  |   | 5,207,088       |   |   | -             |  |   | -           |  |   | -              |   |   | 5,215,276  |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Issuance of common stock for cash
      
        Reg. D - Private Placement,   $0.65 per share, net of
      $136,728   commission                                             |  | 11,812,000   |  |   | 11,812     |  |   | 7,529,260       |   |   | -             |  |   | -           |  |   | -              |   |   | 7,541,072  |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Amortization of stock options 
       
      issued to employee over   vesting period                                                                                          |  | -            |  |   | -          |  |   | 9,876           |   |   | -             |  |   | -           |  |   | -              |   |   | 9,876      |  
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Net loss                                                                                                                                                                       |  | -            |  |   | -          |  |   | -               |   |   | -             |  |   | -           |  |   | (2,243,271     | ) |   | (2,243,271 | )
|                                                                                                                                                                               |  |              |  |   |            |  |   |                 |   |   |               |  |   |             |  |   |                |   |   |            |  
|Balance, December 31, 2007                                                                                                                                                     |  | 86,550,000   |  |   | 86,550     |  |   | 13,234,865      |   |   | -             |  |   | -           |  |   | (2,541,449     | ) |   | 10,779,966 |  

See Accompanying Notes to these Consolidated Financial
Statements 
F-4

---

|IRELAND INC.                                  
|----------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)             
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  | Accumulated |  |  | Accumulated    |   |  |            |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  |  | ---------- |  |  | --------------- | - |  | ------------- | - |  | ----------- |  |  | -------------- | - |  | ---------- | -
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  | Common        |   |  | Other       |  |  | Deficit During |   |  | Total      |  
|                                                                                                                                        |  | Common Stock |  |  | Additional |  |  | Stock           |   |  | Comprehensive |   |  | Exploration |  |  | Stockholders'  |  
|                                                                                                                                        |  | Shares       |  |  | Amount     |  |  | Paid-in Capital |   |  | Subscribed    |   |  | Loss        |  |  | Stage          |   |  | Equity     |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Issuance of common stock 
        for
      cash, $0.05 per share   from exercise of options                                            |  | 20,000       |  |  | 20         |  |  | 980             |   |  | -             |   |  | -           |  |  | -              |   |  | 1,000      |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Issuance of common stock in 
       
      connection with the acquisition   to the former shareholders of
      CBI,   $1.92 per share |  | 10,440,087   |  |  | 10,440     |  |  | 19,989,560      |   |  | -             |   |  | -           |  |  | -              |   |  | 20,000,000 |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Fair value of share purchase warrants
      
      issued in connection with the   acquisition of CBI                                   |  | -            |  |  | -          |  |  | 1,359,351       |   |  | -             |   |  | -           |  |  | -              |   |  | 1,359,351  |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Amortization of stock options 
       
      issued to employee and a director over   vesting period                                    |  | -            |  |  | -          |  |  | 58,285          |   |  | -             |   |  | -           |  |  | -              |   |  | 58,285     |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Effect of modification of stock 
       
      options issued to a nonemployee   former shareholder of CBI                              |  | -            |  |  | -          |  |  | 19,935          |   |  | -             |   |  | -           |  |  | -              |   |  | 19,935     |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Effect of stock option forfeiture                                                                                                       |  | -            |  |  | -          |  |  | (21,012         | ) |  | -             |   |  | -           |  |  | -              |   |  | (21,012    | )
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Effect of modification of stock 
       
      options issued to officers, director,   and consultant                                   |  | -            |  |  | -          |  |  | 1,417,485       |   |  | -             |   |  | -           |  |  | -              |   |  | 1,417,485  |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Net loss, December 31, 2008                                                                                                             |  | -            |  |  | -          |  |  | -               |   |  | -             |   |  | -           |  |  | (4,115,927     | ) |  | (4,115,927 | )
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Balance, December 31, 2008                                                                                                              |  | 97,010,087   |  |  | 97,010     |  |  | 36,059,449      |   |  | -             |   |  | -           |  |  | (6,657,376     | ) |  | 29,499,083 |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Amortization of stock options and warrants
      
        issued to a director, employee and   consultants over
      vesting period    |  | -            |  |  | -          |  |  | 88,323          |   |  | -             |   |  | -           |  |  | -              |   |  | 88,323     |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Issuance of stock options for 
       
      200,000 shares of common stock   to a consultant                                           |  | -            |  |  | -          |  |  | 20,000          |   |  | -             |   |  | -           |  |  | -              |   |  | 20,000     |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Issuance of common stock for cash
      
        Reg. S - Private Placement,   $0.45 per share, net of
      $243,143   financing costs |  | 8,561,111    |  |  | 8,561      |  |  | 3,600,796       |   |  | -             |   |  | -           |  |  | -              |   |  | 3,609,357  |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Issuance of common stock for cash
      
        Reg. D - Private Placement,   $0.45 per share, net of
      $61,498   financing costs  |  | 5,328,244    |  |  | 5,327      |  |  | 2,330,885       |   |  | (63,000       | ) |  | -           |  |  | -              |   |  | 2,273,212  |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Common stock subscribed                                                                                                                 |  | -            |  |  | -          |  |  | -               |   |  | 225,000       |   |  | -           |  |  | -              |   |  | 225,000    |  
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Net loss, December 31, 2009                                                                                                             |  | -            |  |  | -          |  |  | -               |   |  | -             |   |  | -           |  |  | (3,248,652     | ) |  | (3,248,652 | )
|                                                                                                                                        |  |              |  |  |            |  |  |                 |   |  |               |   |  |             |  |  |                |   |  |            |  
|Balance, December 31, 2009                                                                                                              |  | 110,899,442  |  |  | 110,899    |  |  | 42,099,452      |   |  | 162,000       |   |  | -           |  |  | (9,906,028     | ) |  | 32,466,323 |  

See Accompanying Notes to these Consolidated Financial
Statements 
F-5

---

|IRELAND INC.                                  
|----------------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)             
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   | Accumulated |   |   | Accumulated    |   |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | - | ---------- |  | - | --------------- |  | - | ------------- | - | - | ----------- | - | - | -------------- | - | - | ---------- | -
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   | Common        |   |   | Other       |   |   | Deficit During |   |   | Total      |  
|                                                                                                                                                    |  | Common Stock |  |   | Additional |  |   | Stock           |  |   | Comprehensive |   |   | Exploration |   |   | Stockholders'  |  
|                                                                                                                                                    |  | Shares       |  |   | Amount     |  |   | Paid-in Capital |  |   | Subscribed    |   |   | Loss        |   |   | Stage          |   |   | Equity     |  
|Amortization of stock options and warrants
      
        issued to directors, officers and 
      consultants over vesting periods                 |  | -            |  |   | -          |  |   | 1,153,096       |  |   | -             |   |   | -           |   |   | -              |   |   | 1,153,096  |  
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |   |   |                |   |   |            |  
|Issuance of stock options 
        to directors
      and officers                                                                                  |  | -            |  |   | -          |  |   | 79,831          |  |   | -             |   |   | -           |   |   | -              |   |   | 79,831     |  
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash 
        Reg.
      S - Private Placement, 
        $0.45 per share, net of $6,399 
        financing
      costs |  | 200,000      |  |   | 200        |  |   | 83,401          |  |   | -             |   |   | -           |   |   | -              |   |   | 83,601     |  
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |   |   |                |   |   |            |  
|Issuance of common stock for cash 
        Reg.
      D - Private Placement, 
        $0.45 per share, net of $5,344 
        financing
      costs |  | 10,835,000   |  |   | 10,835     |  |   | 4,859,571       |  |   | (162,000      | ) |   | -           |   |   | -              |   |   | 4,708,406  |  
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |   |   |                |   |   |            |  
|Issuance of common stock 
        for cash,
      $0.05 per share 
      from exercise of options                                                   |  | 500,000      |  |   | 500        |  |   | 24,500          |  |   | -             |   |   | -           |   |   | -              |   |   | 25,000     |  
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |   |   |                |   |   |            |  
|Unrealized loss on short-term investments,
      
      net of $331 deferred tax                                                                    |  | -            |  |   | -          |  |   | -               |  |   | -             |   |   | (614        | ) |   | -              |   |   | (614       | )
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |   |   |                |   |   |            |  
|Net loss, December 31, 2010                                                                                                                         |  | -            |  |   | -          |  |   | -               |  |   | -             |   |   | -           |   |   | (4,691,054     | ) |   | (4,691,054 | )
|                                                                                                                                                    |  |              |  |   |            |  |   |                 |  |   |               |   |   |             |   |   |                |   |   |            |  
|Balance, December 31, 2010                                                                                                                          |  | 122,434,442  |  | $ | 122,434    |  | $ | 48,299,851      |  | $ | -             |   | $ | (614        | ) | $ | (14,597,082    | ) | $ | 33,824,589 |  

See Accompanying Notes to these Consolidated Financial
Statements 
F-6

---

|IRELAND INC.                         
|-------------------------------------
|(AN EXPLORATION STAGE ENTERPRISE)    
|CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                |   |                    |   |   |                   |   |   | For the period from |  
|--------------------------------------------------------------------------------------------------------------- | - | ------------------ | - | - | ----------------- | - | - | ------------------- | -
|                                                                                                                |   |                    |   |   |                   |   |   | February 20, 2001   |  
|                                                                                                                |   |                    |   |   |                   |   |   | (date of inception) |  
|                                                                                                                |   | For the Year Ended |   |   | through           |  
|                                                                                                                |   | December 31, 2010  |   |   | December 31, 2009 |   |   | December 31, 2010   |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                            |   |                    |   |   |                   |   |   |                     |  
|Net loss                                                                                                        | $ | (4,691,054         | ) | $ | (3,248,652        | ) | $ | (14,597,082         | )
|Adjustments to reconcile loss
      from operating 
            to net cash used in
      operating activities: |   |                    |   |   |                   |   |   |                     |  
|Depreciation                                                                                                    |   | 553,791            |   |   | 45,631            |   |   | 619,781             |  
|Write-off of mineral rights                                                                                     |   | -                  |   |   | -                 |   |   | 14,000              |  
|Consulting accrual                                                                                              |   | -                  |   |   | -                 |   |   | 15,000              |  
|Stock based expenses                                                                                            |   | 1,232,927          |   |   | 88,323            |   |   | 2,877,325           |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Changes in operating assets and
      liabilities:                                                              |   |                    |   |   |                   |   |   |                     |  
|Other receivables                                                                                               |   | (30,000            | ) |   | 27,394            |   |   | (30,000             | )
|Prepaid expenses                                                                                                |   | (167,811           | ) |   | 51,051            |   |   | (408,170            | )
|Other assets                                                                                                    |   | -                  |   |   | -                 |   |   | (2,200              | )
|Reclamation deposit                                                                                             |   | -                  |   |   | 24,720            |   |   | (897,108            | )
|Mineral property acquisition costs                                                                              |   | -                  |   |   | -                 |   |   | (1,022,663          | )
|Accounts payable and accrued liabilities                                                                        |   | (45,705            | ) |   | 97,794            |   |   | 100,246             |  
|Deferred income taxes                                                                                           |   | (1,965,945         | ) |   | (1,698,066        | ) |   | (4,858,605          | )
|Accrued reclamation and remediation costs                                                                       |   | -                  |   |   | -                 |   |   | 275,338             |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Net cash used in operating activities                                                                           |   | (5,113,797         | ) |   | (4,611,805        | ) |   | (17,914,138         | )
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|CASH FLOW FROM INVESTING ACTIVITIES                                                                             |   |                    |   |   |                   |   |   |                     |  
|Purchase of
      property and equipment                                                                        |   | (872,493           | ) |   | (430,572          | ) |   | (3,552,553          | )
|Purchase of short-term
      investments                                                                        |   | (879,553           | ) |   | -                 |   |   | (879,553            | )
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Net cash used in investing
      activities                                                                     |   | (1,752,046         | ) |   | (430,572          | ) |   | (4,432,106          | )
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|CASH FLOW FROM FINANCING ACTIVITIES                                                                             |   |                    |   |   |                   |   |   |                     |  
|Proceeds from
      stock issuance                                                                              |   | 4,990,750          |   |   | 6,250,210         |   |   | 24,480,710          |  
|Proceeds from option issuance                                                                                   |   | -                  |   |   | 20,000            |   |   | 20,000              |  
|Stock issuance
      costs                                                                                      |   | (11,743            | ) |   | (304,641          | ) |   | (560,037            | )
|Common stock subscribed                                                                                         |   | (162,000           | ) |   | 162,000           |   |   | -                   |  
|Proceeds from
      borrowings - related party                                                                  |   | -                  |   |   | -                 |   |   | 8,290               |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Net cash
      provided by financing activities                                                                 |   | 4,817,007          |   |   | 6,127,569         |   |   | 23,948,963          |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|NET CHANGE IN CASH                                                                                              |   | (2,048,836         | ) |   | 1,085,192         |   |   | 1,602,719           |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|CASH AT BEGINNING OF PERIOD                                                                                     |   | 3,651,015          |   |   | 2,565,823         |   |   | -                   |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|CASH AT END OF PERIOD                                                                                           | $ | 1,602,179          |   | $ | 3,651,015         |   | $ | 1,602,719           |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|SUPPLEMENTAL INFORMATION                                                                                        |   |                    |   |   |                   |   |   |                     |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Interest paid                                                                                                   | $ | 3,728              |   | $ | 2,255             |   | $ | 5,983               |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Income taxes paid                                                                                               | $ | -                  |   | $ | -                 |   | $ | -                   |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Non-cash investing and
      financing activities:                                                              |   |                    |   |   |                   |   |   |                     |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Assets acquired
    for common stock and warrants issued for mineral properties                                 | $ | -                  |   | $ | -                 |   | $ | 21,584,351          |  
|                                                                                                                |   |                    |   |   |                   |   |   |                     |  
|Net deferred tax
      liability assumed                                                                        | $ | -                  |   | $ | -                 |   | $ | 10,261,194          |  

See Accompanying Notes to these Consolidated Financial
Statements 
F-7

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Basis of presentation These financial statements
      and related notes are presented in accordance with United States generally
      accepted accounting principles (GAAP) as issued by the Financial
      Accounting Standards Board (FASB). The Companys fiscal year-end is
      December 31.                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Description of business The Company is
      considered an exploration stage company since its formation and the
      Company has not yet realized any revenues from its planned operations. The
      Company is primarily focused on the acquisition and exploration of mining
      properties. Upon identification of commercially minable reserves, the
      Company expects to actively prepare the site for its extraction and enter
      the development stage.                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | History The Company was incorporated on February
      20, 2001 under the laws of the State of Nevada under the name Merritt
      Ventures Corp. On December 19, 2005, the Company changed its name to
      Ireland Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Going concern The accompanying financial
      statements have been prepared assuming the Company will continue as a
      going concern.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Since its formation, the Company has incurred
      comprehensive cumulative net losses of $14,597,696 as of December 31,
      2010. This amount is comprised of net loss from operations of $14,597,082
      and other comprehensive loss of $614. The Company has not commenced its
      commercial mining and mineral processing operations; rather, it is still
      in the exploration stage, raising substantial doubt about the Companys
      ability to continue as a going concern. The Company will seek additional
      sources of capital through the issuance of debt or equity financing, but
      there can be no assurance the Company will be successful in accomplishing
      its objectives.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The ability of the Company to continue as a going concern
      is dependent on additional sources of capital and the success of the
      Companys plan. The financial statements do not include any adjustments
      that might be necessary if the Company is unable to continue as a going
      concern.                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Principles of consolidation The consolidated
      financial statements include the accounts of the Company and its
      wholly-owned subsidiaries, Columbus Minerals Inc. (CMI) (including its
      wholly- owned single-member LLC subsidiary Columbus Salt Marsh LLC
      (CSM)) and Rand Metals LLC (Rand). Significant intercompany accounts
      and transactions have been eliminated.                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Exploration costs Mineral exploration costs are
      expensed as incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Fair value of financial instruments- Fair value
      accounting establishes a fair value hierarchy that prioritizes the inputs
      of valuation techniques used to measure fair value. The hierarchy gives
      the highest priority to unadjusted quoted prices in active markets for
      identical assets or liabilities (Level 1 measurements) and the lowest
      priority to unobservable inputs (Level 3 measurements). The three levels
      of the fair value hierarchy are described
below:                                                                                                                                                                                                            

| | Level 1 | Unadjusted quoted prices in active markets that are
      accessible at the measurement date for identical, unrestricted assets or
      liabilities;                                 
| | ------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |         |                                                                                                                                                                                       
| | Level 2 | Quoted prices in markets that are not active, or inputs
      that are observable, either directly or indirectly, for substantially the
      full term of the asset or liability; and
| |         |                                                                                                                                                                                       
| | Level 3 | Prices or valuation techniques that require inputs that
      are both significant to the fair value measurement and unobservable
      (supported by little or no market activity).  

F-8

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Companys financial instruments consist of
      investments in U.S. Treasury Notes. These investments are classified
      within Level 1 of the fair value hierarchy as their fair value is
      determined using quoted prices in active markets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Short-term investments Short-term investments
      generally have a maturity of three months to five years at the date of
      purchase. Investments with maturities beyond one year are classified as
      short- term based on their highly liquid nature. Short-term investments
      classified as available-for-sale are recorded at fair value based on
      quoted market prices with the unrealized gains and losses reflected in
      accumulated other comprehensive income until realized. Realized gains and
      losses are determined on a specific identification method and are
      recognized in the statement of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company evaluates unrealized losses, if any, in its
      investment securities for other-than temporary impairment using both
      qualitative and quantitative criteria. In the event that an investment is
      determined to be other-then-temporarily impaired, the Company recognizes
      the loss in the statement of operations. The Company generally only
      invests in debt securities.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Mineral rights The Company capitalizes
      acquisition and option costs of mineral property rights. The amount
      capitalized represents fair value at the time the mineral rights were
      acquired.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company capitalizes 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 the Company does
      not continue with exploration after the completion of the 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 to develop new ore deposits, to 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. The Company evaluates the carrying value of
      capitalized assets 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 the 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.

F-9

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Property and equipment Property and equipment
      are stated at cost less accumulated depreciation. Depreciation is provided
      principally on the straight-line method over the estimated useful lives of
      the assets, which range from 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).                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company periodically evaluates whether events and
      circumstances have occurred that may warrant revision of the estimated
      useful life of property and equipment or whether the remaining balance of
      property and equipment should be evaluated for possible impairment. If
      events and circumstances warrant evaluation, the Company uses an estimate
      of the related undiscounted cash flows over the remaining life of the
      property and equipment in measuring their recoverability.                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Impairment of long-lived assets The Company
      reviews and evaluates long-lived assets for impairment when events or
      changes in circumstances indicate that the related carrying amounts may
      not be recoverable. The assets are subject to impairment consideration
      under ASC 360-10-35-17, Measurement of an Impairment Loss, if
      events or circumstances indicate that their carrying amount might not be
      recoverable. As of December 31, 2010, exploration progress is on target
      with the Companys exploration and evaluation plan, and no events or
      circumstances have happened to indicate that the related carrying values
      of the properties may not be recoverable. When the Company determines that
      an impairment analysis should be done, the analysis will be performed
      using the rules of ASC 930-360-35, Asset Impairment, and ASC
      360-10-15-3 through 15-5, Impairment or Disposal of Long-Lived
      Assets.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Various factors could impact the Companys ability to
      achieve forecasted production schedules. Additionally, commodity prices,
      capital expenditure requirements and reclamation costs could differ from
      the assumptions the Company may use in cash flow models used to assess
      impairment. The ability to achieve the estimated quantities of recoverable
      minerals from exploration stage mineral interests involves further risks
      in addition to those factors applicable to mineral interests where proven
      and probable reserves have been identified. These additional risks are due
      to the lower level of confidence that the identified mineralized material
      can ultimately be mined economically.                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Material changes to any of these factors or assumptions
      discussed above could result in future impairment charges to
      operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Reclamation and remediation costs (asset retirement
      obligation) The Company accrues costs associated with environmental
      remediation obligations in accordance with ASC 410-20, Asset Retirement
      Obligations. The Company records a liability for the present value of
      the estimated environmental remediation costs in the period in which the
      liability is incurred and becomes determinable, with an offsetting
      increase in the carrying amount of the associated asset. The liability
      will be accreted, and the asset will be depreciated over the life of the
      related assets. As reclamation work is performed or liabilities are
      otherwise settled, the recorded amount of the liability will be
      reduced.                                                                                                                                                                                                                      

F-10

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Company accrues costs associated with environmental
      remediation obligations when it is probable that such costs will be
      incurred, and they are reasonably estimable. Estimates for reclamation and
      other closure costs are prepared in accordance with ASC 450,
      Contingencies, or ASC 410-30-25, Asset Retirement and
      Environmental Obligations - Recognition. Costs of future expenditures
      for environmental remediation are not discounted to their present value
      unless subject to a contractually obligated fixed payment schedule. Such
      costs are based on managements current estimate of amounts to be incurred
      when the remediation work is performed, within current laws and
      regulations.                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | 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 and the
      application of laws and regulations by regulatory authorities and changes
      in reclamation or remediation technology. The Company periodically reviews
      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 statement of
      operations in the period an estimate is revised.                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Accruals for reclamation and environmental matters
      totaled $275,338 at December 31, 2010 and December 31, 2009. The Company
      is in the exploration stage and is unable to determine the estimated
      timing of expenditures relating to these accruals at this time. 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. For additional information, see Note 15.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Use of estimates The preparation of financial
      statements in conformity with generally accepted accounting principles
      requires management to make estimates and assumptions that affect the
      reported amounts of assets and liabilities, the disclosure of contingent
      assets and liabilities at the date of the financial statements and the
      reported amounts of revenues and expenses for the reporting period. Actual
      results could differ from these estimates.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Earnings per share The Company follows ASC 260,
      Earnings Per Share, and ASC 480, Distinguishing Liabilities from Equity,
      which establish standards for the computation, presentation and disclosure
      requirements for basic and diluted earnings per share (EPS) for entities
      with publicly-held common shares and potential common stock issuances.
      Basic EPS is computed by dividing net income by the weighted average
      number of common shares outstanding. In computing diluted EPS, the
      weighted average number of shares outstanding is adjusted to reflect the
      effect of potentially dilutive securities, such as stock options and
      warrants. Common stock equivalent shares are excluded from the computation
      if their effect is antidilutive. The weighted average of common stock
      equivalents, which include stock options and warrants to purchase common
      stock, on December 31, 2010 and 2009 that were not included in the
      computation of diluted EPS, because the effect would be antidilutive, were
      36,925,346 and 21,094,051, respectively.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Expenses of offering Specific incremental costs
      that are directly attributable to a proposed or actual offering of
      securities are recorded as a direct charge against the gross proceeds of
      the offering.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

F-11

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Income taxes The Company accounts for its income
      taxes in accordance with ASC 740, Income Taxes, which requires
      recognition of deferred tax assets and liabilities for the future tax
      consequences attributable to differences between the financial statement
      carrying amounts of existing assets and liabilities and their respective
      tax bases and tax credit carry-forwards. Deferred tax assets and
      liabilities are measured using enacted tax rates expected to apply to
      taxable income in the years in which those temporary differences are
      expected to be recovered or settled. The effect on deferred tax assets and
      liabilities of a change in tax rates is recognized in income in the period
      that includes the enactment date.                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | For acquired properties that do not constitute a business
      as defined in ASC 805-10-55-4, Definition ofa Business, deferred income tax liability is
      recorded on GAAP basis over income tax basis using statutory federal and
      state rates. The resulting estimated future federal and state income tax
      liability associated with the temporary difference between the acquisition
      consideration and the tax basis is computed in accordance with ASC
      740-10-25-51, Acquired Temporary Differences in Certain Purchase
      Transactions that are Not Accounted for as Business Combinations. The
      amount is reflected as an increase to the total purchase price which is
      then applied to the underlying acquired assets in the absence of a
      goodwill component associated with the acquisition transactions.                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Stock-based compensation The Company accounts
      for share-based payments in accordance with ASC 718, Compensation 
      Stock Compensation, which requires all share-based payments to
      employees, including grants of employee stock options, to be recognized in
      the financial statements based on the grant date fair value of the award.
      In accordance with ASC 718-10-30-9, Measurement Objective  Fair Value
      at Grant Date, the Company estimates the fair value of the award using
      a valuation technique. For this purpose, the Company uses the Binomial
      Lattice option pricing model. The Company believes that this model
      provides the best estimate of fair value due to its ability to incorporate
      inputs that change over time, such as volatility and interest rates, and
      to allow for actual exercise behavior of option holders. The compensation
      cost is recognized over the requisite service period which is generally
      equal to the vesting period.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The fair value of performance-based stock option grants
      is determined on their grant date through use of the Binomial Lattice
      option pricing model. The total value of the award is recognized over the
      requisite service period only if management has determined that
      achievement of the performance condition is probable. The requisite
      service period is based on managements estimate of when the performance
      condition will be met. Changes in the requisite service period or the
      estimated probability of achievement can materially affect the amount of
      stock-based compensation recognized in the financial statements.                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The fair value of market-based stock option grants is
      determined on their grant date through use of an option pricing model
      which uses a combination of Monte Carlo simulation and a Trinomial Lattice
      function. The requisite service period for market-based awards is derived
      from the model. Achievement of the market condition earlier than estimated
      can materially affect the amount of stock- based compensation recognized
      in the financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

F-12

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|1. | DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF
      SIGNIFICANT POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | New accounting pronouncements From time to time,
      new accounting pronouncements are issued by the FASB that are adopted by
      the Company 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 the Companys
      consolidated financial statements upon adoption.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In January 2010, the FASB issued Accounting Standards
      Update (ASU) 2010-06, Improving Disclosures About Fair Value
      Measurements, which requires reporting entities to make new
      disclosures about recurring or nonrecurring fair-value measurements
      including significant transfers into and out of Level 1 and Level 2
      fair-value measurements and information on purchases, sales, issuances,
      and settlements on a gross basis in the reconciliation of Level 3 fair
      value measurements. ASU 2010-6 is effective for annual reporting periods
      beginning after December 15, 2009, except for Level 3 reconciliation
      disclosures which are effective for annual periods beginning after
      December 15, 2010. The Company does not have any assets or liabilities
      classified as Level 3. As the update only pertains to disclosures, its
      adoption is not expected to have an impact on the Companys financial
      position, results of operations or cash flows.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In February 2010, the FASB issued ASU 2010-09,
      Subsequent Events (Topic 855), Amendment to Certain Recognition and
      Disclosure Requirements, to remove the requirement for SEC filers to
      disclose the date through which an entity has evaluated subsequent events.
      This change removes potential conflicts with current SEC guidance and
      clarifies the intended scope of the reissuance disclosure provisions. The
      update was effective upon its date of issuance, February 24, 2010, and the
      Company has adopted the amendments accordingly. As the update only
      pertained to disclosures, it had no impact on the Companys financial
      position, results of operations or cash flows upon
  adoption.                                                                                                                                                                                                                                                                              

F-13

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|2. | SHORT-TERM INVESTMENTS                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | The Companys short-term investments are classified as
      available for sale and consist of U.S. Treasury Notes which are publicly
      traded and valued. All investments are measured at fair value on a
      recurring basis based on quoted market prices. Therefore, all investments
      are considered to be within Level 1 of the fair value hierarchy. As of
      December 31, 2010, the Companys investments were as
  follows:

Unrealized
        
        
        UnrealizedGains in
        
        
        Losses inAccumulated
        
        
        AccumulatedOther
        
        
        OtherComprehensive
        
        
        Comprehensive
        
        
        RecordedCost Basis
        
        
        Income
        
        
        Loss
        
        
        BasisAvailable for sale U.S. Treasury Notes
        $
        879,553
        
        $
        --
        
        $
        (945
        )
        $
        878,608$
        879,553
        
        $
        --
        
        $
        (945
        )
        $
        878,608


All available for sale investments
mature in July 2015. The Company did not have any investments as of December 31,
2009.

Subsequent to year end, the Bureau of
Land Management (BLM) recognized receipt of $875,000 face value treasury
security as replacement for $775,000 of cash collateral on one of the Companys
reclamation bonds. At that time, the short term investments were reclassified to
restricted investments held for reclamation bonds. The Company anticipates using
the remaining value of the treasury security for future collateral
requirements.

|3. | PREPAID EXPENSES                                                                             
|-- | ---------------------------------------------------------------------------------------------
|   |                                                                                              
|   | Prepaid expenses at December 31, 2010 and December 31,
      2009 consisted of the following:

| |                        |   | December 31, |  |   | December 31, | 
| | ---------------------- | - | ------------ |  | - | ------------ | 
| |                        |   | 2010         |  |   | 2009         | 
| |                        |   |              |  |   |              | 
| | Claims maintenance     | $ | 46,327       |  | $ | 34,166       | 
| | Insurance policies     |   | 145,292      |  |   | 49,973       | 
| | Retainers and services |   | 52,645       |  |   | 2,000        | 
| | Other                  |   | 13,831       |  |   | 4,145        | 
| |                        |   |              |  |   |              | 
| |                        | $ | 258,095      |  | $ | 90,284       | 

F-14

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|4. | PROPERTY AND EQUIPMENT                                                                                
|-- | ------------------------------------------------------------------------------------------------------
|   |                                                                                                       
|   | Property and equipment consisted of the following as of
      December 31, 2010 and December 31, 2009:

| |                               |   | December 31, |  |   | December 31, | 
| | ----------------------------- | - | ------------ |  | - | ------------ | 
| |                               |   | 2010         |  |   | 2009         | 
| |                               |   |              |  |   |              | 
| | Furniture and fixtures        | $ | 20,854       |  | $ | 8,921        | 
| | Computers and equipment       |   | 41,165       |  |   | 39,137       | 
| | Land                          |   | 30,000       |  |   | 30,000       | 
| | Site improvements             |   | 2,934,409    |  |   | 99,631       | 
| | Site equipment                |   | 1,151,578    |  |   | 231,035      | 
| | Vehicles                      |   | 23,595       |  |   | 23,595       | 
| | Building                      |   | 500,000      |  |   | --           | 
| | Construction in progress:     |   |              |  |   |              | 
| | Building                      |   | --           |  |   | 500,000      | 
| | Site improvements             |   | --           |  |   | 2,325,198    | 
| | Site equipment                |   | --           |  |   | 571,591      | 
| |                               |   |              |  |   |              | 
| |                               |   | 4,701,601    |  |   | 3,829,108    | 
| | Less accumulated depreciation |   | 619,781      |  |   | 65,990       | 
| |                               |   |              |  |   |              | 
| |                               | $ | 4,081,820    |  | $ | 3,763,118    | 

Construction in progress consisted of
capital expenditures for construction of the Companys pilot plant leach
circuit. During the second quarter of 2010, the pilot plant began operating on a
continuous basis and all of the construction in progress was placed in service.

Depreciation expense was $553,791 and
$45,631 for the years ended December 31, 2010 and 2009, respectively.

F-15

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|5. | COLUMBUS PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | As of December 31, 2007, the Company had earned a 15%
      interest in the Columbus Project by satisfying its option agreement
      requirements and had the right to merge with the corporation holding the
      remaining 85% interest in the Columbus Project in Esmeralda County,
      Nevada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | Pursuant to the option assignment agreement dated March
      30, 2007, as amended August 8, 2007, the Company granted a 5% net smelter
      return royalty to Nanominerals Corp (NMC), one of the principal
      stockholders of the Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | On February 20, 2008, the Company, through its
      wholly-owned subsidiary CMI, acquired a 100% interest in the Columbus
      Project, including an option for additional mining claims, by way of
      merger with the owner of the Columbus Project, Columbus Brine Inc.
      (CBI). Under the terms of the Merger Agreement, the Company issued an
      aggregate of 10,440,087 shares of its common stock and 5,220,059 share
      purchase warrants to the former shareholders of CBI. Each share purchase
      warrant issued by the Company entitles the holder to purchase one
      additional share of the Companys common stock at a price of $2.39 per
      share for a period of 5 years. This acquisition supersedes the option
      agreement.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | The Company believes that the acquisition of the Columbus
      Project was beneficial because it provides for 100% ownership of the
      properties and fosters greater opportunity to finance and further develop
      the project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   | This merger was treated as a statutory merger for tax
      purposes whereby CMI was the surviving merger
entity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

F-16

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|5. | COLUMBUS PROJECT(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company applied EITF 98-03 (which has been superseded
      by ASC 805-10-25-1) with regard to the acquisition of the Columbus
      Project. The Company determined that the acquisition of the Columbus
      Project did not constitute an acquisition of a business, as that term is
      defined in ASC 805- 10-55-4, and the Company recorded the acquisition as a
      purchase of assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | As required by ASC 930-805-30, Mining  Business
      Combinations  Initial Recognition, and ASC 740-10-25-49-55, Income
      Taxes  Overall  Recognition  Acquired Temporary Differences in Certain
      Purchase Transactions that are Not Accounted for as Business
      Combinations, the purchase price of $32 million was allocated to the
      assets acquired and liabilities assumed based on their respective fair
      values at the date of acquisition. The purchase price allocated to the
      real properties was based on fair market values determined using an
      independent real estate appraisal firm (Arden Salvage Company), and the
      fair value of the remaining assets acquired and liabilities assumed were
      based on managements best estimates taking into account all available
      information at the time.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Pursuant to the terms of the acquisition of CBI, the
      Company issued an aggregate of 10,440,087 shares of common stock and
      5,220,059 share purchase warrants to the former shareholders of CBI. Each
      share purchase warrant issued by the Company entitles the holder to
      purchase one additional share of the Companys common stock at a price of
      $2.39 per share for a period of 5 years. Each warrant provides the holder
      with a cashless right of exercise. If the holder chooses to utilize this
      cashless exercise right, the total number of shares that the holder will
      be entitled to exercise will be determined by the following formula: [(
      A B) C] ÷ Awhere:                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | A = the average closing price of the Companys
      common stock during the five trading days prior to exercise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | B = the exercise price of $2.39.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | C = the maximum number of shares of the Companys
      common stock issuable upon exercise of the warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | If the holder chooses to utilize the cashless exercise
      right, the holder must do so with respect to all of the unexercised
      warrants held by him.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company will have the right to accelerate the
      expiration date of the warrants at any time after August 19, 2010 if the
      average closing price of the Companys common stock over any 20
      consecutive trading days is equal to or greater than 150% of the exercise
      price. If the Company exercises this acceleration right, the expiration
      date for the warrants will be accelerated to 30 days after the Company
      sends out notice that it is exercising the acceleration right.                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The Company estimated the fair value of warrants issued
      in connection with the acquisition of CBI using the Binomial Lattice
      pricing model.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-17

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|5. | COLUMBUS PROJECT(continued)                                                                     
|-- | ------------------------------------------------------------------------------------------------
|   |                                                                                                 
|   | The following table reflects the recorded purchase
      consideration for the Columbus Project:

| | Purchase price:                           |   |            |  | 
| | ----------------------------------------- | - | ---------- |  | 
| | Common stock issued                       | $ | 20,000,000 |  | 
| | Fair value of warrants issued             |   | 1,359,351  |  | 
| | Acquisition costs                         |   | 600,000    |  | 
| |                                           |   |            |  | 
| | Total purchase price                      |   | 21,959,351 |  | 
| |                                           |   |            |  | 
| | Net deferred income tax liability assumed |   | 10,261,194 |  | 
| |                                           |   |            |  | 
| | Total                                     | $ | 32,220,545 |  | 

The following table reflects the
components of the Columbus Project:

| | Allocation of acquisition cost:                                                    |   |            |   | 
| | ---------------------------------------------------------------------------------- | - | ---------- | - | 
| | Mineral properties (including deferred tax
      liability assumed of $10,261,194) | $ | 31,948,053 |   | 
| | Property, plant and equipment                                                      |   | 202,430    |   | 
| | Deposits                                                                           |   | 44,720     |   | 
| | Cash                                                                               |   | 6,570      |   | 
| | Prepaid expenses                                                                   |   | 24,925     |   | 
| | Accounts payable                                                                   |   | (6,153     | ) | 
| |                                                                                    |   |            |   | 
| | Total                                                                              | $ | 32,220,545 |   | 

F-18

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|6. | RED MOUNTAIN PROJECT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Red Mountain Project, located in San Bernardino,
      California, is subject to an underlying option assignment agreement, as
      amended August 8, 2007. Under the terms of this agreement, to earn a 60%
      interest, the Company is required to pay $5,000 per month until December
      31, 2011 and spend an aggregate of $1,200,000 in additional qualifying
      expenditures by December 31, 2011.                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company may at any time during the life of the Red
      Mountain Project earn a 100% interest by paying $100,000, issuing shares
      of common stock with an aggregate value of $1,400,000 and issuing share
      purchase warrants to purchase up to an additional 25% of the number of
      shares of common stock to be issued. If the project achieves commercial
      production, the Company will be required to pay an additional $100,000,
      issue shares of common stock with an aggregate value of $2,400,000 and
      issue share purchase warrants to purchase up to an additional 25% of the
      number of shares of common stock to be issued.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Pursuant to the option assignment agreement, as amended
      August 8, 2007, the Company granted a 5% net smelter return royalty to
      NMC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

F-19

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|7. | ISSUANCES OF COMMON STOCK                                                              
|-- | ---------------------------------------------------------------------------------------
|   |                                                                                        
|   | For the year ended December 31, 2010, the Company issued
      common stock as follows:
|   |                                                                                        
|   | a)                                                                                     
|   |                                                                                        
|   | b)                                                                                     
|   |                                                                                        
|   | c)                                                                                     
|   |                                                                                        
|   | For the year ended December 31, 2009, the Company issued
      common stock as follows:
|   |                                                                                        
|   | a)                                                                                     

F-20

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|7. | ISSUANCES OF COMMON STOCK(continued)
|-- | ------------------------------------
|   |                                     
|   | b)                                  
|   |                                     
|   | c)                                  
|   |                                     
|   | d)                                  
|   |                                     
|   | e)                                  

F-21

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|7. | ISSUANCES OF COMMON STOCK(continued)                                                                                           
|-- | -------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                
|   | f)                                                                                                                             
|   |                                                                                                                                
|   | g)                                                                                                                             
|   |                                                                                                                                
|   | h)                                                                                                                             
|   |                                                                                                                                
|   | For the year ended December 31, 2008, the Company issued
      common stock as follows:                                        
|   |                                                                                                                                
|   | a)                                                                                                                             
|   |                                                                                                                                
|   | b)                                                                                                                             
|   |                                                                                                                                
|   | Warrants associated with the 2010, 2009 and 2008 equity
      issuances do not constitute a registration payment
  arrangement.

F-22

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|7. | COMMON STOCK ISSUANCES(continued)                                                         
|-- | ------------------------------------------------------------------------------------------
|   |                                                                                           
|   | During the year ended December 31, 2007, the Company
      issued common stock as follows:
|   |                                                                                           
|   | a)                                                                                        
|   |                                                                                           
|   | b)                                                                                        
|   |                                                                                           
|   | c)                                                                                        

F-23

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|8. | PRIVATE PLACEMENT WARRANTS                                                                                
|-- | ----------------------------------------------------------------------------------------------------------
|   |                                                                                                           
|   | A summary of investor warrant activity for the years
      ended December 31, 2010 and 2009 is as
follows:

| |                                                      |  | Number of  |  |                     | 
| | ---------------------------------------------------- |  | ---------- |  | ------------------- | 
| |                                                      |  | Shares     |  | Exercise Price      | 
| | Outstanding and exercisable, December 31,
      2008 |  | 15,380,709 |  | $ 0.75  2.39       | 
| | Granted                                              |  | 7,217,648  |  | 0.75                | 
| | Forfeited/expired                                    |  | --         |  | --                  | 
| | Outstanding and exercisable, December 31, 2009       |  | 22,598,357 |  | $ 0.75
      - 2.39 | 
| |                                                      |  |            |  |                     | 
| | Outstanding and exercisable, December 31, 2009       |  | 22,598,357 |  | $ 0.75 - 2.39       | 
| | Granted                                              |  | 5,523,500  |  | 0.75                | 
| | Forfeited/expired                                    |  | --         |  | --                  | 
| |                                                      |  |            |  |                     | 
| | Outstanding and exercisable, December 31, 2010       |  | 28,121,857 |  | $ 0.75
      - 2.39 | 

The table above does not include
warrants issued to employees, non-employee directors and consultants as they are
included under Share Based Compensation in Note 9.

Amendment of Private Placement
Warrants- On November 13, 2009, the Company made several amendments the
2009 US and Foreign Private Placement Offering warrants and the 2007 US and
Foreign Private Placement Offering warrants.

The 2009 US and Foreign Private
Placement Offering warrants were amended to extend the expiration date from June
30, 2012 to June 30, 2013 and by amending the conditions under which the Company
may exercise the expiration date acceleration rights by increasing the minimum
volume weighted average trading price threshold from $3.00 per share for 20
consecutive trading days to $4.50 per share for 20 consecutive trading days; and
by requiring that the average daily trading volume for the Companys common
stock during the 20 consecutive trading days referred to above be not less than
0.2% of the Companys free float during such 20 consecutive trading days.

The 2007 US and Foreign Private
Placement Offering warrants were amended to extend the expiration date from June
30, 2012 to June 30, 2013, reduce the exercise price from $1.00 per share to
$0.75 per share and by amending the conditions under which the Company may
exercise the expiration date acceleration rights by increasing the minimum
volume weighted average trading price threshold from $3.50 per share for 20
consecutive trading days to $4.50 per share for 20 consecutive trading days; and
by requiring that the average daily trading volume for the Companys common
stock during the 20 consecutive trading days referred to above be not less than
0.2% of the Companys free float during such 20 consecutive trading days.

On June 17, 2009, the Company extended
the expiration date for the outstanding warrants issued by the Company under its
US and Foreign Private Placement Offerings completed in 2007 to June 30, 2012.
No other changes were made with respect to the terms and conditions of the
warrants.

The Company determined that the
amendments to the private placement warrants which were originally issued as
part of equity transactions did not result in an expense to the Company. The
warrants were not a component to any debt transaction, registration agreement or
services rendered to the Company.

F-24

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|9. | SHARE BASED COMPENSATION                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | On March 27, 2007, the Board of Directors adopted the
      2007 Stock Incentive Plan (the Plan). Under the terms of the Plan,
      options to purchase up to 6,000,000 shares of the common stock of the
      Company, subject to an increase each quarter equal to 15% of the increase
      in the total number of outstanding shares during the previous quarter, may
      be granted to officers, directors, employees and eligible
    consultants.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | At December 31, 2010, the Company had options outstanding
      that vest on three different types of vesting
schedules:                                                                                                                                                                                                                                                                                                                                      

| | 1. | Service-based;        
| | -- | ----------------------
| |    |                       
| | 2. | Performance-based; and
| |    |                       
| | 3. | Market-based.         

For service-based and performance-based
stock option grants the Company utilizes the Binomial Lattice pricing model to
estimate the fair values of options and warrants granted in exchange for
services. The Company used the following assumptions to estimate the fair value
of the options granted:

| |                         |  | 2010            |  |  | 2009           |  | 
| | ----------------------- |  | --------------- |  |  | -------------- |  | 
| |                         |  |                 |  |  |                |  | 
| | Dividend yield          |  | --              |  |  | --             |  | 
| | Expected volatility     |  | 116 .8 - 118.7% |  |  | 112.9  137.0% |  | 
| | Risk-free interest rate |  | 1.69  3.33 %   |  |  | 1.27  3.33 %  |  | 
| | Expected life (years)   |  | 2.75  8.0      |  |  | 3.0  6.5      |  | 

For market-based stock option grants
the Company utilizes a combination of a Monte Carlo simulation and a Trinomial
Lattice function to estimate the fair values of options in exchange for
services. The Company used the following assumptions to estimate the fair value
of the options granted:

| |                         |  | 2010    |  | 
| | ----------------------- |  | ------- |  | 
| |                         |  |         |  | 
| | Dividend yield          |  | --      |  | 
| | Expected volatility     |  | 116 .8% |  | 
| | Risk-free interest rate |  | 2.96 %  |  | 
| | Expected life (years)   |  | 8.0     |  | 

The expected life represents the
weighted-average period the awards are expected to remain outstanding and is a
derived output of the option pricing models. The expected life is impacted by
all of the underlying assumptions and calibration of the Companys models. The
models estimate the probability of exercise as a function of these variables
based on the history of exercises and cancellations on past grants made by the
Company. The requisite service period for market-based stock option awards is a
derived output of the hybrid Monte Carlo -Trinomial Lattice model.

F-25

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|9. | SHARE BASED COMPENSATION(continued)                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                  
|   | For grants awarded during 2010 and 2009 the expected
      volatility is based on the historical volatility levels of the Companys
      common stock. The risk-free interest rate is based on the implied yield
      available on U.S. Treasury zero-coupon issues over the equivalent
      contractual lives of the options.
|   |                                                                                                                                                                                                                                                                                                                                  
|   | During the year ended December 31, 2010, the Company
      granted stock options and warrants as follows:                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                  
|   | a)                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                  
|   | b)                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                  
|   | c)                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                  
|   | d)                                                                                                                                                                                                                                                                                                                               

F-26

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|9. | SHARE BASED COMPENSATION(continued)                                                                      
|-- | ---------------------------------------------------------------------------------------------------------
|   |                                                                                                          
|   | e)                                                                                                       
|   |                                                                                                          
|   |                                                                                                          
|   |                                                                                                          
|   | f)                                                                                                       
|   |                                                                                                          
|   | g)                                                                                                       
|   |                                                                                                          
|   | h)                                                                                                       
|   |                                                                                                          
|   | i)                                                                                                       
|   |                                                                                                          
|   | During the year ended December 31, 2009, the Company
      granted stock options and warrants as follows:

| | a) | On August 11, 2009, the Company granted nonqualified
      stock options for the purchase of 250,000 shares of common stock at $0.48
      per share to a director. 50,000 of the options vested immediately and
      expire on August 10, 2014. Of the remaining 200,000 options, 50,000 vest
      on December 31, 2009, June 30, 2010, December 31, 2010 and June 30, 2011.
      The options expire five years after the vesting date.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | b) | On August 19, 2009, the Company granted nonqualified
      stock options for the purchase of 20,000 shares of common stock at $0.48
      per share to an employee. The options vested immediately and expire on
      August 19, 2014.                                                                                                                                                                                                    

F-27

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|9. | SHARE BASED COMPENSATION(continued)
|-- | -----------------------------------
|   |                                    
|   | c)                                 
|   |                                    
|   | d)                                 

Total expense for the years ended
December 31, 2010 and 2009 related to the granting and vesting of all share
based payments was $1,232,927 and $88,323, respectively. Such expenses are
included in general and administrative expense and mineral exploration and
evaluation expense.

Cash received from the exercise of
stock options amounted to $25,000 for the year ended December 31, 2010. Tax
benefits realized from the exercise of stock options amounted to $71,750 for the
year ended December 31, 2010. No stock options were exercised during the year
ended December 31, 2009.

The following table summarizes the
Companys share based compensation activity for the years ended December 31,
2010 and 2009:

| |                            |  |           |   | Weighted       | 
| | -------------------------- |  | --------- | - | -------------- | 
| |                            |  | Number of |   | Average        | 
| |                            |  | Shares    |   | Exercise Price | 
| |                            |  |           |   |                | 
| | Balance, December 31, 2008 |  | 3,954,719 |   | $ 0.15         | 
| | Options granted            |  | 770,000   |   | 0.60           | 
| | Options expired            |  | --        |   | --             | 
| | Options forfeitures        |  | --        |   | --             | 
| | Options exercised          |  | --        |   | --             | 
| |                            |  |           |   |                | 
| | Balance, December 31, 2009 |  | 4,724,719 |   | 0.23           | 
| | Options/warrants granted   |  | 5,267,197 |   | 0.72           | 
| | Options expired            |  | (79,719   | ) | 1.36           | 
| | Options forfeitures        |  | --        |   | --             | 
| | Options exercised          |  | (500,000  | ) | 0.05           | 
| |                            |  |           |   |                | 
| | Balance, December 31, 2010 |  | 9,412,197 |   | $ 0.50         | 

F-28

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|9. | SHARE BASED COMPENSATION(continued)                                                                                               
|-- | ----------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                   
|   | The following table summarizes information about options
      and warrants granted during the year ended December 31,
      2010:

| | Number of Options 
      and Warrants 
      Granted 
      During
      2010 | Exercise Price 
      Equals, Exceeds 
      or 
      is Less than Mkt. 
      Price of Stock 
      on
      Grant Date | Weighted 
      Average 
      Exercise 
      Price | Range of 
      Exercise 
      Price | Weighted 
      Average Fair 
      Value | 
| | ----------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------- | ----------------------------------------- | 
| | 567,197                                                                       | Equals                                                                                                                    | $ 0.76                                               | $ 0.75 - $0.81                        | $ 0.27                                    | 
| | 4,500,000                                                                     | Exceeds                                                                                                                   | $ 0.71                                               | $ 0.53 - $0.75                        | $ 0.37                                    | 
| | 200,000                                                                       | Less Than                                                                                                                 | $ 0.82                                               | $ 0.82                                | $ 0.56                                    | 

The following table summarizes
  information about options granted during the year ended December 31, 2009:

| | Number of Options 
      and Warrants 
      Granted 
      During
      2009 | Exercise Price 
      Equals, Exceeds 
      or 
      is Less than Mkt. 
      Price of Stock 
      on
      Grant Date | Weighted 
      Average 
      Exercise 
      Price | Range of 
      Exercise 
      Price | Weighted 
      Average Fair 
      Value | 
| | ----------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------------------- | ----------------------------------------- | 
| | 270,000                                                                       | Equals                                                                                                                    | $ 0.48                                               | $0.48                                 | $ 0.39                                    | 
| | 500,000                                                                       | Exceeds                                                                                                                   | $ 0.67                                               | $0.55 - $0.75                         | $ 0.43                                    | 
| | --                                                                            | Less Than                                                                                                                 | --                                                   | --                                    | --                                        | 

F-29

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|9. | SHARE BASED COMPENSATION(continued)                                                                                                                                                            
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                
|   | The following table summarizes the changes of the
      Companys stock options and warrants issued for stock based compensation
      subject to vesting for the year ended December 31,
2010:

| |                             |  |            |   | Weighted Average | 
| | --------------------------- |  | ---------- | - | ---------------- | 
| |                             |  | Number of  |   | Grant Date       | 
| |                             |  | Shares     |   | Fair
      Value | 
| |                             |  |            |   |                  | 
| | Unvested, December 31, 2009 |  | 540,000    |   | $ 0.46           | 
| | Granted                     |  | 4,933,333  |   | 0.38             | 
| | Vested                      |  | (2,061,667 | ) | 0.37             | 
| | Forfeited                   |  | --         |   | --               | 
| |                             |  |            |   |                  | 
| | Unvested, December 31, 2010 |  | 3,411,666  |   | $
      0.40     | 

As of December 31, 2010, there was
$954,896 of total unrecognized compensation cost related to unvested stock
options and warrants. This cost is expected to be fully recognized as follows:

|2011  | $ | 909,637 | 
|----- | - | ------- | 
|2012  |   | 45,259  | 
|      |   |         | 
|Total | $ | 954,896 | 

F-30

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|10. | WARRANTS AND OPTIONS                                                                                                                                                                                                                            
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                 
|    | The following table summarizes all of the Companys stock
      option and warrant activity for the years ended December 31, 2010 and
      2009, including private placement warrants and share based payment stock
      options and warrants:

| |                            |  |            |   | Weighted       | 
| | -------------------------- |  | ---------- | - | -------------- | 
| |                            |  | Number of  |   | Average        | 
| |                            |  | Shares     |   | Exercise Price | 
| |                            |  |            |   |                | 
| | Balance, December 31, 2008 |  | 19,335,428 |   | $ 1.07         | 
| | Options granted            |  | 7,987,648  |   | 0.74           | 
| | Options expired            |  | --         |   | --             | 
| | Options forfeitures        |  | --         |   | --             | 
| | Options exercised          |  | --         |   | --             | 
| |                            |  |            |   |                | 
| | Balance, December 31, 2009 |  | 27,323,076 |   | 0.97           | 
| | Options granted            |  | 10,790,697 |   | 0.74           | 
| | Options expired            |  | (79,719    | ) | 1.36           | 
| | Options forfeitures        |  | --         |   | --             | 
| | Options exercised          |  | (500,000   | ) | 0.05           | 
| |                            |  |            |   |                | 
| | Balance, December 31, 2010 |  | 37,534,054 |   | $ 0.92         | 

F-31

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|11. | INCOME TAXES                                                                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                   
|    | The Company is a Nevada corporation and is subject to
      federal income taxes. Nevada does not impose a corporate income
  tax.
|    |                                                                                                                                   
|    | The income tax benefit consisted of the following for the
      years ended December 31, 2010 and December 31,
2009:              

| |                                                      |   | December 31, |   |   | December 31, |  
| | ---------------------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                                      |   | 2010         |   |   | 2009         |  
| |                                                      |   |              |   |   |              |  
| | Income tax benefit based on statutory tax
      rate | $ | 2,329,950    |   | $ | 1,731,342    |  
| | Non-deductible and other                             |   | 2,792        |   |   | (2,865       | )
| | Change in valuation allowance                        |   | (366,797     | ) |   | (30,411      | )
| |                                                      |   |              |   |   |              |  
| | Income tax benefit                                   | $ | 1,965,945    |   | $ | 1,698,066    |  

Significant components of the Companys
net deferred income tax assets and liabilities at December 31, 2010 and December
31, 2009 were as follows:

| |                                             |   | December 31, |   |   | December 31, |  
| | ------------------------------------------- | - | ------------ | - | - | ------------ | -
| |                                             |   | 2010         |   |   | 2009         |  
| | Deferred income tax assets:                 |   |              |   |   |              |  
| |                                             |   |              |   |   |              |  
| | Net operating loss carryforward             | $ | 5,541,704    |   | $ | 3,698,657    |  
| | Option compensation                         |   | 940,019      |   |   | 575,539      |  
| | Property, plant & equipment                 |   | 122,898      |   |   | --           |  
| | Unrealized losses on short-term investments |   | 331          |   |   | --           |  
| | Reclamation and remediation costs           |   | 96,368       |   |   | 96,368       |  
| |                                             |   |              |   |   |              |  
| | Gross deferred income tax asset             |   | 6,701,320    |   |   | 4,370,564    |  
| | Valuation allowance                         |   | (1,036,387   | ) |   | (669,590     | )
| |                                             |   |              |   |   |              |  
| |                                             |   | 5,664,933    |   |   | 3,700,974    |  
| | Deferred income tax liabilities:            |   |              |   |   |              |  
| |                                             |   |              |   |   |              |  
| | Property, plant & equipment                 |   | --           |   |   | 2,317        |  
| | Acquisition related liabilities             |   | 11,067,191   |   |   | 11,067,191   |  
| |                                             |   |              |   |   |              |  
| | Net deferred income tax liability           | $ | 5,402,258    |   | $ | 7,368,534    |  

A valuation allowance was established
for deferred tax assets related to option compensation and accrued reclamation
and remediation costs due to the uncertainty of realizing these deferred tax
assets based on conditions existing at December 31, 2010 and December 31,
2009.

Deferred income tax liability was
recorded on GAAP basis over income tax basis using the statutory federal rate
with the corresponding increase in the purchase price allocation to the assets
acquired.

F-32

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|11. | INCOME TAXES(continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The resulting estimated future federal income tax
      liability associated with the temporary difference between the acquisition
      consideration and the tax basis is reflected as an increase to the total
      purchase price which has been applied to the underlying mineral and
      Columbus project assets in the absence of there being a goodwill component
      associated with the acquisition transactions.                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company had cumulative net operating losses of
      approximately $15,833,440 and $10,567,591 as of December 31, 2010 and
      December 31, 2009, respectively for federal income tax purposes.
      Cumulative net operating losses from December 31, 2006 and previous years
      are effectively nil due to the annual limitation imposed by the Internal
      Revenue Code of 1986 as a result of the ownership percentage change
      limitations. The net operating loss carryforwards will expire between 2027
      and 2030.                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The Company and its subsidiary file income tax returns in
      the United States. These tax returns are subject to examination by
      taxation authorities provided the years remain open under the relevant
      statues of limitations, which may result in the payment of income taxes
      and/or a decrease in the net operating losses available for carryforwards.
      The Company is no longer subject to income tax examinations by US federal
      tax authorities for years prior to 2006. While the Company believes that
      its tax filings do not include uncertain tax positions, the results of
      potential examinations or the effect of changes in tax law cannot be
      ascertained at this time. The Company currently has no tax years under
      examination.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|12. | COMPREHENSIVE LOSS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    | The components of comprehensive loss, net of tax, were as
      follows for the year ended December 31, 2010:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

| |                                                       |   | December 31, |  
| | ----------------------------------------------------- | - | ------------ | -
| |                                                       |   | 2010         |  
| | Net Loss                                              | $ | (4,691,054   | )
| | Other Comprehensive Loss, net of tax:                 |   |              |  
| | Unrealized loss on
            short-term investments |   | (614         | )
| | Comprehensive Loss                                    | $ | (4,691,668   | )

The tax effect of each component of
comprehensive loss for the year ended December 31, 2010:

| |                                   |   | December 31, |  
| | --------------------------------- | - | ------------ | -
| |                                   |   | 2010         |  
| | Unrealized holding losses         | $ | (945         | )
| | Income tax benefit                |   | 331          |  
| |                                   |   |              |  
| | Total unrealized loss, net of tax | $ | (614         | )

For the year ended December 31, 2009,
there was no other comprehensive loss recognized.

F-33

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|13. | PROPERTY RENTAL AGREEMENTS AND LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company, through its subsidiary CMI, has a lease
      agreement for mining claims with DDB Syndicate, an entity owned by related
      parties, including Douglas D.G. Birnie, Chief Executive Officer of the
      Company; Mr. Chizmar, a former director of the Company; three former
      officers and directors of CBI; Geotech Mining Inc., Jack Corp. and Wiser
      Corp. Geotech Mining Inc., Jack Corp. and Wiser Corp. are affiliates of
      Nanominerals Corp.                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The DDB Syndicate has leased the DDB Claims to CSM, a
      wholly owned subsidiary of the Company. The mining lease agreement (the
      DDB Agreement), between the DDB Syndicate and CSM, provides CSM with a
      lease, extending for approximately 5 years, with an option to purchase the
      DDB Claims at any time during the lease period. To maintain the lease
      rights, CSM paid the DDB Syndicate $130,000 by June 30, 2008, with annual
      rental payments thereafter of $30,000 per year, payable on June 30, 2009,
      2010, and 2011, respectively. CSM may exercise its option to purchase the
      DDB Claims by paying a purchase price of $400,000, less any rental
      payments made by CSM prior to exercising the option, or paying the DDB
      Syndicate $10, plus the grant of a 2% royalty of net smelter returns on
      the DDB Claims.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | The Company paid the $30,000 rental payments due on June
      30, 2010 and 2009, respectively. The payments consist of $3,651 in
      payments to each of the eight owners of DDB Syndicate including
      reimbursement of expenses of $792 to a company controlled by Douglas D.G.
      Birnie.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|14. | COMMITMENTS AND CONTINGENCIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Lease obligations The Company rents office space
      in Henderson, Nevada. The lease terms expired on September 1, 2008 and the
      Company continues to rent the existing space under month-to-month
      terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Rental expense resulting from this operating lease
      agreement was $67,650 and $55,000 for the years ended December 31, 2010
      and 2009, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Columbus Project Pursuant to the option
      assignment agreement dated March 30, 2007, as amended August 8, 2007, the
      Company granted a 5% net smelter return royalty to NMC, one of the
      principal stockholders of the Company. The Columbus Project is further
      discussed in Note 5.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Red Mountain Project Pursuant to the option
      assignment agreement, as amended August 8, 2007, the Company granted a 5%
      net smelter return royalty to NMC, one of the principal stockholders of
      the Company. The Red Mountain Project is further discussed in Note
    6.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-34

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|15. | ENVIRONMENTAL AND RECLAMATION ACTIVITIES                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                           
|    | The liabilities accrued for the reclamation and
      remediation costs at December 31, 2010 and December 31, 2009, were as
      follows:

| |                                              |   | December 31, |  |   | December 31, | 
| | -------------------------------------------- | - | ------------ |  | - | ------------ | 
| |                                              |   | 2010         |  |   | 2009         | 
| |                                              |   |              |  |   |              | 
| | Exploration properties:                      |   |              |  |   |              | 
| | Columbus                                     | $ | 275,338      |  | $ | 275,338      | 
| |                                              |   |              |  |   |              | 
| | Reclamation and remediation costs, long-term | $ | 275,338      |  | $ | 275,338      | 

The Company maintains reclamation bonds
with the BLM in the amount of $908,368 as of December 31, 2010 and December 31,
2009, respectively.

|16. | CONCENTRATION OF CREDIT RISK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Company maintains its cash accounts in financial
      institutions. Cash accounts are insured by the Federal Deposit Insurance
      Corporation (FDIC) for up to $250,000 per financial institution.
      Additionally, all non-interest bearing transactional accounts are fully
      insured by the FDIC through December 31, 2012. The Company has never
      experienced a material loss or lack of access to its cash accounts;
      however, no assurance can be provided that access to the Companys cash
      accounts will not be impacted by adverse conditions in the financial
      markets. At December 31, 2010, the Company had deposits in excess of FDIC
      insured limits in the amount of $759,120.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|17. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | Pursuant to option assignment agreements related to both
      the Columbus and Red Mountain projects, the Company granted a 5% net
      smelter return royalty to NMC. NMC is the Companys largest shareholder,
      owning approximately 33% of the Companys outstanding common stock. The
      Columbus Project is further discussed in Note 5. The Red Mountain Project
      is further discussed in Note 6.                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | During the year ended December 31, 2010, the Company
      utilized the services of NMC to provide technical assistance and financing
      related activities. These services related primarily to the Columbus
      project and the Red Mountain project.                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In addition to the above services, NMC provided dedicated
      use of its laboratory, instrumentation, milling equipment and research
      facilities. NMC provided invoices for these fees plus expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | For the year ended December 31, 2010, the Company
      incurred total fees and reimbursements of expenses to NMC of $420,000 and
      $115,974, respectively, for a total of $535,974. At December 31, 2010, the
      Company had an outstanding balance due to NMC of $43,657.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Company also had an outstanding balance for accrued
      compensation to Douglas D.G. Birnie, its executive officer, of $9,375. The
      amount is payable to a company wholly owned by Douglas D.G.
  Birnie.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The Company also had an outstanding balance for accrued
      director fees to Michael Steele of $14,158.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

F-35

---

IRELAND INC.(AN EXPLORATION STAGE ENTERPRISE)NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS

|17. | RELATED PARTY TRANSACTIONS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Accounts payable  related party totaled $67,190 as of
      December 31, 2010.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Due to related parties includes amounts due to former
      officers of the Company. At December 31, 2010, the remaining amount of due
      to related parties was $23,290.                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | As further discussed in Note 13, the Company, through its
      subsidiary CMI, has a lease agreement for mining claims with DDB
      Syndicate, an entity owned by related parties, including Douglas D.G.
      Birnie, Chief Executive Officer of the Company; Mr. Chizmar, a former
      director of the Company; three former officers and directors of CBI;
      Geotech Mining Inc., Jack Corp. and Wiser Corp. Geotech Mining Inc., Jack
      Corp. and Wiser Corp. are affiliates of NMC. Rental payments to DDB
      Syndicate were $30,000 for the year ended December 31, 2010 and 2009,
      respectively.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | For the year ended December 31, 2010, the Company
      incurred fees of $21,066 for services performed by one of its independent
      directors, Mark Brennan, primarily for executive search
  assistance.                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|18. | CONCENTRATION OF ACTIVITY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | For the year ended December 31, 2010, the Company
      purchased services from two major vendors, Boart Longyear and NMC, in
      amounts exceeding 10% of total purchases and amounted to $461,988 and
      $535,974, respectively. NMC is a related party as further discussed in
      Note 17.                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|19. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    | Subsequent to year end, the Bureau of Land Management
      (BLM) recognized receipt of $875,000 face value treasury security as
      replacement for $775,000 of cash collateral on one of the Companys
      reclamation bonds. At that time, the short term investments were
      reclassified to restricted investments held for reclamation bonds. The
      Company anticipates using the remaining value of the treasury security for
      future collateral requirements.                                                                                                                                      

F-36

---



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
  ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)
of the Exchange Act) as of December 31, 2010 (the Evaluation Date). This
evaluation was carried out under the supervision and with the participation of
our Chief Executive Officer and Chief Financial Officer. Based upon that
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective as of the Evaluation
Date.

Management's Annual Report on Internal Control Over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

Our internal control over financial reporting includes those
policies and procedures that: (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with United States generally accepted accounting principles, and that
our receipts and expenditures are being made only in accordance with
authorizations of our management and directors; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition,
use or disposition of our assets that could have a material effect on the
financial statements.

Under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, management conducted an
evaluation of the effectiveness of our internal control over financial
reporting, as of the Evaluation Date, based on the framework set forth in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on its evaluation under
this framework, management concluded that our internal control over financial
reporting was effective as of the Evaluation Date.

This annual report does not include an attestation report of
our registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by our registered
public accounting firm pursuant to rules of the Securities and Exchange
Commission that permit us to provide only management's report in this annual
report.

Changes in Internal Control Over Financial Reporting

As of the Evaluation Date, there were no changes in our
internal control over financial reporting that occurred during the fiscal year
ended December 31, 2010 that have materially affected, or that are reasonably
likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls and
Procedures

Our management, including our Chief Executive Officer and the
Chief Financial Officer, do not expect that the our controls and procedures will
prevent all potential error and fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.

ITEM 9B. OTHER INFORMATION.

None.

31

---

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.Directors and Executive Officers

|Name                    | Age | Positions                                                       
|----------------------- | --- | ----------------------------------------------------------------
|                        |     |                                                                 
|Douglas D.G. Birnie     | 40  | President, Chief Executive Officer, Secretary
      and Director
|                        |     |                                                                 
|Robert D. McDougal      | 78  | Chief Financial Officer, Treasurer and Director                 
|                        |     |                                                                 
|David Z. Strickler, Jr. | 45  | Vice President of Finance and Administration                    
|                        |     |                                                                 
|Mark H. Brennan         | 51  | Director                                                        

Douglas D.G. Birnie.Mr. Birnie was appointed as our
Chief Executive Officer, President and a member of our Board of Directors on
June 29, 2007. Mr. Birnie was also appointed as our Secretary on March 30, 2007.
Mr. Birnie was appointed as our President and Secretary, and as one of our
directors pursuant to the terms of our assignment agreement with Nanominerals.
Mr. Birnie graduated with a Bachelor of Commerce degree from the University of
British Columbia in 1994. In 1995, Mr. Birnie was a founder of Columbus Group
Communications Inc., a privately held internet solutions company. In 1998, Mr.
Birnie received the Ernst and Young Entrepreneur of the Year award and the
Business Development Bank of Canada Young Entrepreneur of the Year Award. During
his tenure at Columbus Group, Mr. Birnie held the positions of CFO and COO until
the company was acquired by TELUS Corp. in 2001. Mr. Birnie continued to work
for TELUS Corp. as Director  Strategic Planning with the e.Solutions department
until 2003.

Robert D. McDougal.Mr. McDougal was appointed as our
Chief Financial Officer on March 30, 2007 and has served as a member of our
Board of Directors since December 14, 2007. Mr. McDougal was also appointed as
our Treasurer on January 23, 2008. Mr. McDougal was appointed as our Chief
Financial Officer pursuant to the terms of our assignment agreement with
Nanominerals. Mr. McDougal is a Certified Public Accountant. He began practicing
public accounting in 1973 and established his own practice in 1981. The majority
of his practice is focused on mining and mining related clients including public
companies, private companies partnerships and individuals. Mr. McDougal was a
Director and Officer of GEXA Gold Corporation, a publicly traded mining company,
from 1985 to 2001. Mr. McDougal was one of the founders of Millennium Mining
Corporation, which was subsequently merged into Gold Summit Corporation, a
publicly traded company. He is the managing partner of GM Squared, LLC, which
holds numerous mining claims. He served on the Nevada Society of Certified
Public Accountants Committee on Natural Resources for seven years, four years as
chairman. Prior to this time Mr. McDougal spent 20 years in the United States
Air Force, retiring with the rank of Major. Mr. McDougal is currently a member
of the Board of Directors of Searchlight Minerals Corp.

David Z. Strickler, Jr. Mr. Strickler was appointed as
our Vice President of Finance and Administration on March 8, 2010. Mr. Strickler
has worked in the construction and real estate industries for 15 years with
expertise in both finance and operations. During the last 8 years, he served as
the Executive VP Finance for a leading luxury homebuilder in Las Vegas, with
operations involving between 80 and 120 employees. In addition, he owned and
operated an accounting services business and was an owner of a snowboard
manufacturing business. Mr. Strickler has a bachelor's degree in Accounting and
an MBA, with a concentration in Finance from the Pennsylvania State
University.

Mark H. Brennan.Mr. Brennan was appointed as a member
of our Board of Directors on June 24, 2009. Mr. Brennan has served as the
president of his own consulting firm, the Brennan Consulting Group, through
which he has managed a number of long-term, multi-year management and operations
consulting engagements in various business sectors. In addition to his ongoing
management consulting practice, Mr. Brennan has also founded and operated a
number of private companies beginning in the early 1990s. Mr. Brennan is the
founding chairman of the Vegas Valley Angels, a non-profit organization of
accredited investors whose purpose is to search out, invest in, mentor and
foster the development of new and developing companies located in the
southwestern United States. Mr. Brennan is also an active member of the board of
advisors for both the Nevada Center for Entrepreneurship and Technology (NCET)
and the University of Nevada Las Vegas Center for Entrepreneurship. Mr. Brennan
holds an MBA from the Harvard Business School and a MA in Management from
National University. Early in Mr. Brennans career he served his country for
eight years as a fighter pilot and instructor pilot with the United States Air
Force after earning his BS degree from the United States Air Force Academy.

32

---

TERMS OF OFFICE

Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our stockholders or until removed from
office in accordance with our bylaws. Our officers are appointed by our Board of
Directors and hold office until removed by the Board.

SIGNIFICANT EMPLOYEES AND CONSULTANTS

Nanominerals Corp.Nanominerals Corp. (Nanominerals)
is a private company controlled by its sole officer and director Dr. Charles A.
Ager. Nanominerals is our largest shareholder and acts as a consultant to us on
technical exploration and financial matters. In addition, Nanominerals owns a 5%
royalty interest on any net smelter returns from either the Columbus Project or
the Red Mountain Project.

Dr. Ager is an accomplished geophysical engineer with over
forty years experience in the mining industry, combining an extensive academic
background with international business development experience in the founding of
several successful mining enterprises. Dr. Ager earned a PhD in Geophysics and a
Master of Science (M.Sc) in Geophysics from the University of British Columbia.
Dr. Ager attended California State University in Sacramento, California for his
Bachelor of Arts in Math/Physics. He graduated with honors in 1968.

Throughout his career, Dr. Ager has been a trailblazer in the
mining industry. Dr. Ager has discovered and/or participated in the discovery of
numerous metal deposits throughout Canada and the United States. He is also the
developer and owner of a number of patents and intellectual property rights for
technological innovations in the mining field. Through Nanominerals, Dr. Ager
developed ways of using nanotechnology to discover several precious metal
deposits. Dr. Ager is also responsible for inventing the satellite/electron
microscope technology that has led to the identification of a new class of gold
deposits in the Southwestern United States. Some of the mineral deposits that
Dr. Ager was critically involved in as either developer or discoverer include
the Jamestown Gold Deposit & Mine in the Mother Lode District in Jamestown,
California; the Glendale Gold Deposits in the N. Glendale Basin in Clark County,
Nevada; the Eldorado Gold Deposit in the Eldorado Valley in Clark County,
Nevada; the Pine Tree Gold Deposit in the Mother Lode District in Mariposa
County, California; and the Rich Gulch Gold Deposit in the Mother Lode District
in Plumas County, California.

The Companys President and Chief Executive Officer, Douglas
D.G. Birnie, owns a 3.5% interest in Nanominerals.

AUDIT COMMITTEE

Our audit committee is composed of Mark H. Brennan and Robert
D. McDougal. Mr. Brennan and Mr. McDougal are audit committee financial
experts as defined by the applicable rules of the SEC. Mr. Brennan is currently
the sole independent member of our audit committee. Mr. McDougal is not
independent as he also acts as our Chief Financial Officer and Treasurer.

Michael A. Steele resigned from our audit committee, effective
December 31, 2010.

CODE OF ETHICS

We adopted a Code of Ethics applicable to our officers and
directors which is a "code of ethics" as defined by applicable rules of the SEC.
If we make any amendments to our Code of Ethics other than technical,
administrative, or other non-substantive amendments, or grant any waivers,
including implicit waivers, from a provision of our Code of Ethics to our Chief
Executive Officer, Chief Financial Officer, or certain other finance executives,
we will disclose the nature of the amendment or waiver, its effective date and
to whom it applies in a current report on Form 8-K filed with the SEC. A copy of
our Code of Ethics was attached as an exhibit to our Annual Report filed with
the SEC on September 28, 2004.

33

---

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE

Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who beneficially own more than 10% of our
equity securities (collectively, the Reporting Persons), to file reports of
ownership and changes in ownership with the SEC. Reporting Persons are required
by SEC regulation to furnish us with copies of all forms they file pursuant to
Section 16(a). Based on our review of the copies of such forms received by us,
other than as described below, no other reports were required for those
persons.

The following persons have, during our 2010 fiscal year, failed
to file, on a timely basis, the identified reports required by Section 16(a) of
the Exchange Act:

|                                  | Number of Late | Transactions Not | Known Failures to File
|--------------------------------- | -------------- | ---------------- | ----------------------
|Name and Principal
      Position | Reports        | Timely Reported  | a
      Required Form 
|David Z. Strickler, Jr.,          |                |                  |                       
|Vice President of Finance and     | 1              | 1                | 0                     
|Administration                    |                |                  |                       

ITEM 11. EXECUTIVE COMPENSATION.

COMPENSATION TO EXECUTIVE OFFICERS

The following table sets forth the total compensation paid or
accrued to our named executive officers, as that term is defined in Item
402(m)(2) of Regulation S-K during our last two completed fiscal years.

SUMMARY COMPENSATION TABLEName & Principal
      Position
    Year
    Salary
      ($)
    Bonus
      ($)
    Stock
      Awards ($)
    Option
      Awards ($)
    Non- Equity Incentive
      Plan Compen- sation ($)
    Nonqualified Deferred
      Compen- sation Earnings ($)
    All Other
      Compen- sation ($)
    Total
      ($)Douglas D.G. Birnie, CEO, President,
      Secretary, Director
    2010 2009
    $225,000(1)$108,000
    $0 $0
    $0 $0
    $58,094(2)$0
    $0 $0
    $0 $0
    $3,719 $3,719
    $286,813 $111,719Robert D. McDougal, CFO, Treasurer,
      Director
    2010 2009
    $84,000 $48,000
    $0 $0
    $0 $0
    $19,366(3)$0
    $0 $0
    $0 $0
    $0 $0
    $103,366 $48,000David Z. Strickler, Jr., Vice President of
      Finance and Administration
    2010 2009
    $115,981 $0
    $0 $0
    $0 $0
    $56,239(4)$0
    $0 $0
    $0 $0
    $0 $0
    172,220 $0


| | (1) | Represents consulting fees paid or accrued to a limited
      liability company of which Mr. Birnie is the sole member for services
      provided by Mr. Birnie as an executive officer and director of
    Ireland.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | (2) | Mr. Birnie was granted options to purchase 300,000 shares
      of our common stock at a price of $0.75 per share and options to purchase
      an additional 300,000 shares of our common stock at a price of $0.53 per
      share. The options exercisable at $0.75 per share vest and become
      exercisable at a rate of 50,000 shares every six months. 150,000 of the
      options exercisable at $0.53 per share will vest and become exercisable on
      the first date that our shares trade at or above $1.00 per share for 20
      consecutive trading days, and the remaining 150,000 options exercisable at
      $0.53 per share will vest and become exercisable upon our Board of
      Directors determining that we have made adequate and sufficient progress
      on our technical and feasibility programs for our Columbus Project. All
      600,000 options granted will immediately vest and become exercisable in
      the event of a change in control of the Company. Each option expires 5
      years after the particular grant date. Mr. Birnie is also a 1/8 owner in
      the DDB Syndicate, which owns the DDB Claims at our Columbus Project. Mr.
      Birnie receives 1/8 of any payment made to the DDB
  Syndicate.

34

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| | (3) | Mr. McDougal was granted options to purchase 100,000
      shares of our common stock at a price of $0.75 per share and options to
      purchase an additional 100,000 shares of our common stock at a price of
      $0.53 per share. The options exercisable at $0.75 per share vest and
      become exercisable in equal increments every six months. 50,000 of the
      options exercisable at $0.53 per share will vest and become exercisable on
      the first date that our shares trade at or above $1.00 per share for 20
      consecutive trading days, and the remaining 50,000 options exercisable at
      $0.53 per share will vest and become exercisable upon our Board of
      Directors determining that we have made adequate and sufficient progress
      on our technical and feasibility programs for our Columbus Project. All
      200,000 options granted will immediately vest and become exercisable in
      the event of a change in control of the Company. Each option expires 5
      years after the particular grant date.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | (4) | Mr. Strickler was granted options to purchase 200,000
      share of our common stock at a price of $0.82 per share. The options
      granted to Mr. Strickler vest at a rate of 25,000 options per fiscal
      quarter, beginning March 31, 2010 and expire 3 years after the particular
      vesting date. All 200,000 options granted will immediately vest and become
      exercisable in the event of a change of control of the
  Company.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

The following table provides information concerning unexercised
options for each of our named executive officers, as that term is defined in
Item 402(m)(2) of Regulation S-K as of our fiscal year end of December 31,
2010.

Name and
      Principal Position
    Number of
      Securities Underlying Unexercised
      Options (#) Exercisable
    Number of
      Securities Underlying Unexercised
      Options (#) Unexercisable
    Equity Incentive
      Plan Awards: Number of Securities
      Underlying Unexercised **Unearned
      Options**
    Option
      Exercise Price
    Option
      Expiration DateDouglas D.G. Birnie CEO, President, Secretary
      & Director
    2,200,000 50,000(1)50,000(1)
    -- -- -- 50,000(1)50,000(1)50,000(1)50,000(1)150,000(2)150,000(3)
    -- -- -- -- -- -- --
      -- --
    $0.05 $0.75 $0.75 $0.75 $0.75
      $0.75 $0.75 $0.53 $0.53
    March 30, 2012 June 29, 2015 December
      30, 2015 June 29, 2016 December 30,2016 June 29, 2017
      December 30, 2017 *See Note(2)*See
      Note(3)Robert D. McDougal CFO, Treasurer &
      Director
    500,000 16,667(4)16,667(4)
    -- -- --
      16,667(4)16,667(4)16,667(4)16,665(4)50,000(5)50,000(6)
    -- -- -- -- --
      -- -- -- --
    $0.05 $0.75 $0.75
      $0.75 $0.75 $0.75 $0.75 $0.53 $0.53
    March 30, 2012 June 29, 2015
      December 30, 2015 June 29, 2016 December 30,2016 June 29,
      2017 December 30, 2017 *See Note(5)*See
      Note(6)David Z. Strickler, Jr., Vice President of Finance
      and Administration
    25,000(7)25,000(7)25,000(7)25,000(7)
    -- -- -- --
      25,000(7)25,000(7)25,000(7)25,000(7)
    -- -- -- -- -- -- --
      --
    $0.82 $0.82 $0.82 $0.82 $0.82
      $0.82 $0.82 $0.82
    March 31, 2015 June 30, 2015 September
      30, 2015 December 31, 2015 March 31, 2016 June 30, 2016
      September 30, 2016 December 31, 2016


35

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Notes:

|(1) | 300,000 options granted to Mr. Birnie vest and become
      exercisable at a rate of 50,000 shares every six months commencing June
      30, 2010.                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                              
|(2) | 150,000 options will vest on the first date after the
      date that the closing price for our common stock (as quoted by the
      principal market or exchange on which such shares trade) exceeds $1.00 per
      share for 20 consecutive trading days and the options will expire 5 years
      after the vesting date.
|    |                                                                                                                                                                                                                                                                                                                              
|(3) | 150,000 options will vest upon our Board of Directors
      determining that the Issuer has made adequate and sufficient progress on
      its technical and feasibility programs for its Columbus Mineral Project,
      and the options will expire 5 years after the vesting date.                                        
|    |                                                                                                                                                                                                                                                                                                                              
|(4) | 100,000 options granted to Mr. McDougal vest and become
      exercisable in equal installments every six months commencing June 30,
      2010.                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                              
|(5) | 50,000 options will vest on the first date after the date
      that the closing price for our common stock (as quoted by the principal
      market or exchange on which such shares trade) exceeds $1.00 per share for
      20 consecutive trading days and the options will expire 5 years after the
      vesting date. 
|    |                                                                                                                                                                                                                                                                                                                              
|(6) | 50,000 options will vest upon our Board of Directors
      determining that the Issuer has made adequate and sufficient progress on
      its technical and feasibility programs for its Columbus Mineral Project,
      and the options will expire 5 years after the vesting date.                                         
|    |                                                                                                                                                                                                                                                                                                                              
|(7) | 200,000 options granted to Mr. Strickler vest at a rate
      of 25,000 options per fiscal quarter, beginning March 31,
  2010.                                                                                                                                                                                              

DIRECTOR COMPENSATION

The following table sets forth the compensation paid to our
directors during our December 31, 2010 fiscal year, other than directors who
were also named executive officers as that term is defined in Item 402(m)(2).
Compensation paid to directors who were also named executive officers during our
December 31, 2010 fiscal year is set out in the tables above.

Name
    Fees Earned
      or Paid in Cash(1) ($)
    Stock
      Awards ($)
    Option
      Awards ($)
    Non-Equity
      Incentive Plan Compensation ($)
    Nonqualified
      Deferred Compensation Earnings
      ($)
    All Other
      Compensation ($)
    Total
      ($)Mark H. Brennan
    $36,000
    $0
    $107,923(2)
    $0
    $0
    $43,996(3)
    $187,919Michael A. Steele
    $36,000
    $0
    $38,440(4)
    $0
    $0
    $0
    $74,440


| | Notes: |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (1)    | Since January 1, 2010, we have compensated our independent directors at a rate of $3,000 per month.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (2)    | We granted Mr. Brennan options to purchase 200,000 shares
      of our common stock at an exercise price of $0.53 per share. 100,000 of
      the options vested on June 30, 2010, 50,000 of the options vested on
      September 30, 2010 and an additional 50,000 options vested on December 31,
      2010. These options were granted to Mr. Brennan in addition to the cash
      compensation he is entitled to as an independent member of our Board of
      Directors. On March 3, 2010, we issued to Mr. Brennan options to purchase
      67,197 shares of our common stock at an exercise price of $0.81 per share,
      expiring March 2, 2015.
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (3)    | Other Compensation paid to Mr. Brennan consisted of the
      following: (1) $16,930 in cash payments in lieu of stock options; (2)
      $21,066 for consulting fees primarily related to executive search
      assistance; and (3) $6,000 for travel pay.                                                                                                                                                                                                                                                                                                                                                                                                  
| |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | (4)    | On December 7, 2010, Mr. Steele resigned from our Board
      of Directors effective December 31, 2010. Mr. Steele was granted options
      to purchase 200,000 shares of our common stock at an exercise price of
      $0.53 per share. 100,000 of the options vested on June 30, 2010, 50,000 of
      the options vested on September 30, 2010 and the remaining 50,000 options
      vested on December 31, 2010. Each of the options held by Mr. Steele
      automatically ceased to be exercisable under their terms 30 days after his
      resignation.                                                                                            

EMPLOYMENT CONTRACTS

On February 23, 2010, our Board of Directors approved an
increase in the compensation payable to Douglas D.G. Birnie, our Chief Executive
Officer, President and Secretary. Mr. Birnies compensation was increased from
$108,000 in 2009 to $225,000 per year, retroactive to January 1, 2010. The
compensation payable to Mr. Birnie is paid to a limited liability company of
which Mr. Birnie is the sole member. We do not have a written compensation
contract with Mr. Birnie or his limited liability company.

36

---

On February 26, 2010, our Board of Directors approved an
increase in the compensation to Robert D. McDougal, our Chief Financial Officer
and Treasurer from $48,000 in 2009 to $84,000 per year, retroactive to January
1, 2010. The Company does not have a written compensation contract with Mr.
McDougal.

David Z. Strickler, Jr.s employment contract entitles him to a
salary of $150,000 per year. In addition, we granted to Mr. Strickler options to
purchase 200,000 shares of our common stock at a price of $0.82 per share. The
options granted to Mr. Strickler vest at a rate of 25,000 options per fiscal
quarter, beginning March 31, 2010, and expire five years after the particular
vesting date.

Upon a change in control, all of the options granted to Mr.
Birnie, Mr. McDougal and Mr. Strickler in 2010 will automatically vest and
become exercisable.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

EQUITY COMPENSATION PLANS

The following table sets forth certain information concerning
all equity compensation plans previously approved by stockholders and all
previous equity compensation plans not previously approved by stockholders, as
of the most recently completed fiscal year.

Equity Compensation Plan Information

Plan Category
    Number of Securities to
      be Issued Upon Exercise of Outstanding Options, Warrants and
      Rights (a)
    Weighted-Average
      Exercise Price of Outstanding Options, Warrants and Rights
      (b)
    Number of Securities
      
      Remaining Available for Future Issuance Under Equity
      Compensation Plans (Excluding Securities Reflected in column (a))
      (c)Equity Compensation Plans Approved By Security Holders
    None
    Not Applicable
    NoneEquity
      Compensation Plans Not Approved By Security Holders
    9,412,197(1)
    $0.50
    12,757,969(2)


| | (1) | Includes options and warrants to purchase an aggregate of
      4,400,000 shares of our common stock issued to consultants outside of our
      2007 Stock Incentive Plan (see below).
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | Our 2007 Stock Incentive Plan contains provisions that
      automatically increase the number of shares available for issuance (see
      below).                                    

2007 Stock Incentive Plan

On March 27, 2007, we established our 2007 Stock Incentive Plan
(the 2007 Plan). The purpose of the 2007 Plan is to enhance the long-term
stockholder value of the Company by offering opportunities to our directors,
officers, employees and eligible consultants and any entity that directly or
indirectly is in control of or is controlled by the Company (a Related
Company) to acquire and maintain stock ownership in the Company in order to
give these persons the opportunity to participate in our growth and success, and
to encourage them to remain in our service or in the service of a Related
Company.

The 2007 Plan is administered by our Board of Directors or by a
committee of two or more directors appointed by our Board of Directors (the
"Plan Administrator"). Subject to the provisions of the 2007 Plan, the Plan
Administrator has full and final authority to grant the awards of stock options
and to determine the terms and conditions of the awards and the number of shares
to be issued pursuant thereto. The 2007 Plan authorizes the grant of options
that are intended to qualify as incentive stock options under the Internal
Revenue Code of 1986 or nonqualified stock options.

37

---

All of our employees and members of our Board of Directors are
eligible to be granted options. Individuals who have rendered or are expected to
render advisory or consulting services to us are also eligible to receive
options so long as they do not provide capital raising services or promote or
maintain a market for our securities. Upon adoption, the maximum number of
shares of our common stock with respect to which options or rights could be
granted under the 2007 Plan to any participant was 6,000,000 shares. The 2007
Plan contains an automatic adjustment provision where the number of shares
authorized to be subjected to option grants increases on the first day of each
quarter beginning with the fiscal quarter commencing July 1, 2007 by the lesser
of the following amounts: (1) 15% of the total number of outstanding shares of
the Companys Common Stock, less any shares that were previously available under
the 2007 Plan and any shares available under any other stock option plan that we
may adopt; or (2) a lesser number of shares of Common Stock as may be determined
by our Board of Directors, subject to certain adjustments to prevent dilution.

The exact terms of the option granted are contained in an
option agreement between us and the person to whom such option is granted.
Eligible employees are not required to pay anything to receive options. The
exercise price for options intending to qualify as incentive stock options must
be no less than 100% of the fair market value of our common stock on the date of
grant. The exercise price for nonqualified stock options is determined by the
Plan Administrator but may not be less than 75% of the fair market value of our
common stock on the date of the grant. Fair market value for purposes of the
2007 Plan is calculated based on the price of our common stock during the 10
trading days prior to the grant date. An option holder may exercise options from
time to time, subject to vesting. Options will vest immediately upon death or
disability of a participant and upon certain change of control events.

The Plan Administrator may amend the 2007 Plan at any time and
in any manner, however no recipient of any award may, without his or her
consent, be deprived thereof or of any of his or her rights thereunder or with
respect thereto as a result of such amendment or termination.

The 2007 Plan terminates on March 27, 2017 unless sooner
terminated by action of our Board of Directors. No option is exercisable by any
person after such expiration. If an award expires, terminates or is canceled,
the shares of our Common Stock not purchased thereunder may again be made
available for issuance under the 2007 Plan.

Options and Warrants Granted to Consultants Outside of 2007
Plan

At the end of our 2010 fiscal year, we had the following outstanding options and warrants that had been issued outside of our 2007 Plan to certain consultants in exchange for their services:

| | (a) | Options to purchase 100,000 shares of our common stock
      exercisable at a price of $1.75 per share, expiring on August 15,
    2017.                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (b) | Warrants to purchase up to 200,000 shares of our common
      stock at a price of $0.55 per share, expiring on December 17, 2012. 50,000
      of the warrants were vested at the date of grant, with the remaining
      warrants vesting at a rate of 10,000 warrants per month to March 1, 2010,
      with the remaining 120,000 warrants vesting on April 1, 2010.                                                                                                                                                                                                                   
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | (c) | Warrants to purchase up to 300,000 shares of our common
      stock exercisable at a price of $0.75 per share, expiring on December 31,
      2014. 60,000 of these warrants vested and became exercisable on December
      31, 2009. An additional 30,000 warrants will vest and become exercisable
      at the end of each of our fiscal quarters beginning with our fiscal
      quarter ending March 31, 2010 and ending with our fiscal quarter ending
      December 31, 2011. Any warrants that have not yet vested will immediately
      vest upon any of the following events:
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

38

---

Upon termination of the services
agreement, any warrants that have not vested will immediately terminate while
any vested warrants shall continue to be exercisable as set out above. We may
accelerate the expiration date of these warrants at any time after June 30, 2010
if:

| | (i)  | the volume weighted average price (VWAP) for our shares
      on the principal market on which they trade is above $4.50 per share for
      twenty consecutive trading days; and                       
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                           
| | (ii) | the average daily trading volume for our shares on the
      principal market on which they trade during those twenty consecutive
      trading days is equal to or greater than 0.2% of our free
  float.

| | (d) | Warrants to purchase up to 3,300,000 shares of our common
      stock exercisable at a price of $0.75 per share, expiring on June 30,
      2013. The warrants vest at a rate of 825,000 warrants every six months
      beginning June 30, 2010 and ending December 31, 2011, provided that the
      warrant holder continues to provide the contracted services without
      interruption through the particular vesting date. (As of the date of this
      Annual Report, only 825,000 of these warrants have vested and become
      exercisable as the consultant has not provided the contracted for services
      through the contracted vesting dates, including December 31, 2010. For
      disclosure purposes, we have treated the remaining warrants as outstanding
      but unvested.) Any warrants that have not yet vested will immediately vest
      upon any of the following events:
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | Upon termination of the services agreement, any warrants
        that have not vested will immediately terminate while any vested warrants
        shall continue to be exercisable as set out above. We may accelerate the
        expiration date of these warrants at any time after June 30, 2010
    if:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | (e) | Warrants to purchase 500,000 shares of our common stock,
      exercisable at a price of $0.75 per share and expiring on June 30, 2013.
      125,000 of the warrants granted vested and became exercisable on March 31,
      2010. An additional 125,000 warrants will vest and become exercisable at
      the end of each of our fiscal quarters beginning with our fiscal quarter
      ending June 30, 2010 and ending with our fiscal quarter ending December
      31, 2010. Any warrants that have not yet vested will immediately vest upon
      any of the following events:                                                                                                                                                                                                                                                                                                                     
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| |     | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         

39

---

Upon termination of the services
agreement, any warrants that have not vested will immediately terminate while
any vested warrants shall continue to be exercisable as set out above. We may
accelerate the expiration date of these warrants at any time after June 30, 2010
if:

| | (i)  | the volume weighted average price (VWAP) for our shares
      on the principal market on which they trade is above $4.50 per share for
      twenty consecutive trading days; and                       
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                           
| | (ii) | the average daily trading volume for our shares on the
      principal market on which they trade during those twenty consecutive
      trading days is equal to or greater than 0.2% of our free
  float.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as of March 29, 2011
by: (i) each person (including any group) known to us to own more than five
percent (5%) of any class of our voting securities, (ii) each of our directors
and each of our named executive officers (as defined under Item 402(m)(2) of
Regulation S-K), and (iii) officers and directors as a group. Unless otherwise
indicated, the shareholders listed possess sole voting and investment power with
respect to the shares shown.

Title of Class
    Name and Address
      of Beneficial Owner
    Number of Shares
      of Common Stock
    Percentage of
      Common Stock(1)DIRECTORS AND OFFICERSCommon Stock
    Douglas D.G. Birnie Chief
      Executive Officer, President, Secretary and Director
    4,450,000(2)(direct and indirect)
    3.6%Common Stock
    Robert D. McDougal Chief
      Financial Officer, Treasurer and Director
    1,733,334(3)(direct)
    1.4%Common Stock
    David Z. Strickler, Jr. Vice
      President of Finance and Administration
    132,500(4)
    *Common Stock
    Mark H. Brennan Director
    702,197(5)(direct)
    *Common Stock
    Michael Steele Former Director
    1,100,000(6)(direct and indirect)
    *Common Stock
    All Officers and Directors as a
      Group (5 persons)
    8,118,031
    6.4%5% STOCKHOLDERSCommon Stock
    Nanominerals Corp. 3500 Lakeside
      Court, Suite 206 Reno, NV 89509
    40,150,000(7)(direct)
    32.9%Common Stock
    Charles A. Ager 3500 Lakeside
      Court, Suite 206 Reno, NV 89509
    42,550,000(7)(direct and indirect)
    34.9%


* Less than 1%.

40

---

|(1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting power, which includes the power to vote, or to direct the voting of
      shares; and (ii) investment power, which includes the power to dispose or
      direct the disposition of shares. Certain shares may be deemed to be
      beneficially owned by more than one person (if, for example, persons share
      the power to vote or the power to dispose of the shares). In addition,
      shares are deemed to be beneficially owned by a person if the person has
      the right to acquire the shares (for example, upon exercise of an option)
      within 60 days of the date as of which the information is provided. In
      computing the percentage ownership of any person, the amount of shares
      outstanding is deemed to include the amount of shares beneficially owned
      by such person (and only such person) by reason of these acquisition
      rights. As a result, the percentage of outstanding shares of any person as
      shown in this table does not necessarily reflect the persons actual
      ownership or voting power with respect to the number of shares of common
      stock actually outstanding. As of March 29, 2011, there were 122,434,442
      shares of our common stock issued and outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(2) | The shares listed as beneficially owned directly by Mr.
      Birnie consists of: (i) 1,900,000 shares of our common stock held by Mr.
      Birnie; (ii) warrants to acquire 100,000 shares of our common stock at an
      exercise price of $0.75 per share; (iii) options to acquire 2,200,000
      shares of our common stock at an exercise price of $0.05 per share; and
      (iv) options to acquire 100,000 shares of our common stock at an exercise
      price of $0.75 per share. The shares listed as beneficially owned
      indirectly by Mr. Birnie consists of (i) 100,000 shares of our common
      stock held by Dosa Consulting, LLC, a company controlled by Mr. Birnie;
      and (ii) warrants held by Dosa Consulting, LLC to acquire 50,000 shares of
      our common stock at an exercise price of $0.75 per share. Mr. Birnie also
      owns a 3.5% interest in Nanominerals Corp. The shares listed as
      beneficially owned by Mr. Birnie do not include any part of the shares of
      our common stock owned by Nanominerals as Mr. Birnie does not have any
      voting or investment power over the shares owned by Nanominerals. Mr.
      Birnie also directly owns additional options to acquire: (i) 200,000
      shares of our common stock at a price of $0.75 per share, vesting at a
      rate of 50,000 shares every six months beginning June 30, 2011 and
      expiring 5 years after the particular vesting date; (ii) 150,000 shares of
      our common stock at a price of $0.53 per share that will vest on the first
      date after the date that the closing price for our common stock (as quoted
      by the principal market or exchange on which such shares trade) exceeds
      $1.00 per share for 20 consecutive trading days, expiring 5 years after
      the vesting date; and (iii) 150,000 shares of our common stock at a price
      of $0.53 per share that will vest upon our Board of Directors determining
      that we have made adequate and sufficient progress on our technical and
      feasibility programs for the Columbus Project, expiring 5 years after the
      vesting date. These options do not vest within the next 60 days and have
      not been included in the number of shares listed as being beneficially
      owned by him.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(3) | The shares listed as beneficially owned by Mr. McDougal
      consists of: (i) 1,200,000 shares of our common stock held by Mr.
      McDougal; (ii) options to acquire 500,000 shares of our common stock at an
      exercise price of $0.05 per share ; and (iii) options to acquire 33,334
      shares of our common stock at an exercise price of $0.75 per share. Mr.
      McDougal also owns additional options to acquire (i) 66,666 shares of our
      common stock at a price of $0.75 per share, vesting at a rate of 16,667
      shares every six months beginning June 30, 2011 (16,665 on December 31,
      2012) and expiring 5 years after the particular vesting date; (ii) 50,000
      shares of our common stock at a price of $0.53 per share that will vest on
      the first date after the date that the closing price for our common stock
      (as quoted by the principal market or exchange on which such shares trade)
      exceeds $1.00 per share for 20 consecutive trading days, expiring 5 years
      after the vesting date; and (iii) 50,000 shares of our common stock at a
      price of $0.53 per share that will vest upon our Board of Directors
      determining that we have made adequate and sufficient progress on our
      technical and feasibility programs for the Columbus Project, expiring 5
      years after the vesting date. These options do not vest within the next 60
      days, and have not been included in the number of shares listed as being
      beneficially owned by him.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(4) | The shares listed as beneficially owned by Mr. Strickler
      consist (i) 7,500 shares of our common stock held by Mr. Strickler; and
      (ii) options to acquire 125,000 shares of our common stock at an exercise
      price of $0.82 per share. Mr. Strickler also owns options to acquire an
      additional 75,000 shares of our common stock also at $0.82 per share.
      These options do not vest within the next 60 days, and have not been
      included in the number of shares listed as being beneficially owned by
      him.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(5) | The shares listed as beneficially owned by Mr. Brennan
      consists of: (i) 165,000 shares of our common stock held by Mr. Brennan;
      (ii) warrants to purchase 70,000 shares of our common stock at an exercise
      price of $0.75 per share; (iii) options to acquire 200,000 shares of our
      common stock at an exercise price of $0.48 per share; (iv) options to
      acquire 200,000 shares of our common stock at an exercise price of $0.53
      per share; and (v) options to acquire 67,197 shares of our common stock at
      an exercise price of $0.81 per share. Mr. Brennan also owns options to
      acquire an additional 50,000 shares of our common stock at a price of
      $0.48 per share that do not vest within the next 60 days, and have not
      been included in the number of shares listed as being beneficially owned
      by him.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|(6) | The shares listed as beneficially owned by Mr. Steele
      consists of 500,000 shares of our common stock. The shares listed as
      beneficially owned indirectly by Mr. Steele consists of (i) 400,000 shares
      held by Avonlea Ventures #2 Inc. and (ii) warrants held by Avonlea
      Ventures #2 Inc. to acquire an additional 200,000 shares at a price of
      $0.75 per share. Mr. Steele owns a 50% interest in Avonlea Ventures #2
      Inc. Mr. Steele resigned as a member of our Board of Directors effective
      December 31, 2010. All outstanding options owned by Mr. Steele expired 30
      days after his resignation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

41

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|(7) | The sole officer and director of Nanominerals is Dr.
      Charles A. Ager. In addition, pursuant to a shareholders agreement, Dr.
      Ager has control over a majority of the shareholder voting power of
      Nanominerals. As such, Dr. Ager has voting and dispositive power over the
      40,150,000 shares of our common stock listed as beneficially owned by
      Nanominerals and we have listed those shares as being indirectly
      beneficially owned by him. Individually, Dr. Ager owns 2,100,000 shares of
      our common stock. Also included in the number of shares listed as being
      indirectly beneficially owned by Dr. Ager are 300,000 shares of our common
      stock owned by Dr. Agers wife. The shares owned by Dr. Ager and Mrs. Ager
      have not been included in the shares beneficially owned by Nanominerals.
      Mr. Birnie also owns a 3.5% interest in Nanominerals Corp. The shares
      listed as beneficially owned by Mr. Birnie have not been included in the
      shares beneficially owned by Nanominerals.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

CHANGES IN CONTROL

We are not aware of any arrangement which may result in a
change in control in the future.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND
DIRECTOR INDEPENDENCE.

Except as disclosed below, none of the following parties has,
during our December 31, 2010 fiscal year, had any material interest, direct or
indirect, in any transaction with us or in any presently proposed transaction
that has or will materially affect us:

| | (a) | Any of our directors or officers;                                                                                                                                                                                                                                                                                                         
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) | Any person proposed as a nominee for election as a
      director;                                                                                                                                                                                                                                                                        
| | (c) | Any person who beneficially owns, directly or indirectly,
      more than 5% of our outstanding common stock; or                                                                                                                                                                                                                          
| | (d) | Any child, stepchild, parent, stepparent, spouse,
      sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
      brother-in-law, sister-in-law of any person listed in (a) to (c), above,
      or any person (other than a tenant or employee) who shares the household
      of any person listed in (a) to (c), above.

DDB Claims

Mr. Chizmar, a former member of our Board of Directors, and a
limited liability company controlled by Douglas D.G. Birnie, our CEO, President
and Secretary, and a member of our Board of Directors, are each the owners of a
1/8 interest in the mining syndicate known as the DDB Syndicate. The former
officers and directors of CBI (other than Mr. Chizmar), and an affiliate of one
of those former officers and directors of CBI, collectively own a 3/8 interest
in the DDB Syndicate. The remaining 3/8 interest in the DDB Syndicate is
collectively owned by affiliates of Nanominerals Corp. (Nanominerals). Mr.
Birnie is also the owner of a 3.5% interest in Nanominerals. Mr. Birnie,
Nanominerals and Nanominerals affiliates acquired their respective interests in
the DDB Syndicate and the DDB Claims prior to his and their involvement with the
Company. Mr. Birnie acquired his interest in Nanominerals prior to their
involvement with the Company. On November 30, 2007, the DDB Syndicate leased the
DDB Claims to Columbus S.M. LLC (CSM), formerly a wholly owned subsidiary of
CBI, and now a wholly owned subsidiary of the Company. To date, we have paid the
DDB Syndicate $190,000 under the terms of the DDB Agreement, and we must pay the
DDB Syndicate a rental payment of $30,000 on June 30, 2011 to maintain our lease
rights. 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 a purchase price of $400,000
      (with all previously made rental payments credited against such purchase
      price); or
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                      
| | (b) | paying the DDB Syndicate $10, plus the grant of a 2%
      royalty of net smelter returns on the DDB Claims.                                         

As the owners of a 1/8 interest each in the DDB Syndicate, Mr.
Chizmar and a limited liability company controlled by Mr. Birnie are each
entitled to 1/8 of any amounts paid by us under the DDB Agreement. During the
year ended December 31, 2010, we paid a total of $30,000 to the DDB Syndicate
under the terms of the DDB Agreement.

42

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Nanominerals Corp.

Nanominerals Corp. (Nanominerals) is the owner of 40,150,000
shares, or 32.9%, of our common stock. Nanominerals acts as a consultant to us
on technical exploration and financial matters. Mr. Birnie is the owner of a
3.5% interest in Nanominerals. Mr. Birnie acquired his interest in Nanominerals
prior to his and their involvement with our Company. During the year ended
December 31, 2010, we incurred fees totaling $420,000 due to Nanominerals for
services provided. In addition, during the year ended December 31, 2010, we
reimbursed Nanominerals a total of $115,974 in respect of expenses incurred by
Nanominerals in relation to our exploration and development activities on the
Columbus Project and the Red Mountain Project. At December 31, 2010, we had an
outstanding balance due to Nanominerals of $43,657.

Affiliates of Nanominerals are also the owners of a 3/8
interest in the DDB Syndicate, which owns the DDB Claims as described above.

DIRECTOR INDEPENDENCE

Our common stock is quoted on the OTC Bulletin Board
interdealer quotation system, which does not have director independence
requirements. In determining whether any of our directors are independent
directors, we have applied the definition for independence set out in NASDAQ
Rule 5605(a)(2). In applying this definition, we have determined that Mark H.
Brennan is an independent director. Neither of Douglas D.G. Birnie nor Robert D.
McDougal qualifies as an independent member of our Board of Directors.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The aggregate fees billed for the two most recently completed
fiscal years for professional services rendered by the principal accountant for
the audit of our annual financial statements and review of the financial
statements included in our Quarterly Reports on Form 10-Q and services that are
normally provided by the accountant in connection with statutory and regulatory
filings or engagements for those fiscal periods were as follows:

|                   | Year Ended December 31, 2010 | Year Ended December 31, 2009
|------------------ | ---------------------------- | ----------------------------
|Audit Fees         | $61,218                      | $77,824                     
|Audit-Related Fees | Nil                          | Nil                         
|Tax Fees           | Nil                          | Nil                         
|All Other Fees     | Nil                          | Nil                         
|Total              | $61,218                      | $77,824                     

Our audit committee reviewed the qualifications of Brown
Armstrong Accountancy Corporation, prior to engaging them as our auditors in
accordance with Rule 2-01(c)(7)(i)(A).

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

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

ExhibitNumber
    Description of Exhibit3.1
    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
    Assignment Agreement dated for reference as of
      March 29, 2007, among Nanominerals Corp., the Company and Lorrie
      Archibald. (4)


43

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|Exhibit |                                                                                                                                                                                                                                      
|------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibit                                                                                                                                                                                                               
|10.3    | Letter Agreement dated July 22,
      2006 among Columbus Brine Inc., Columbus S.M. LLC and Nanominerals Corp.,
      assigned to the Company by Nanominerals Corp.(11)                                                              
|10.4    | Letter Agreement dated March 15, 2007 between
      Red Mountain Mining and Nanominerals Corp., assigned to the Company by
      Nanominerals Corp. (11)                                                                             
|10.5    | Agency Agreement dated
      effective as of June 19, 2007 between the Company and S & P Investors,
      Inc. (5)                                                                                                                   
|10.6    | Amendment Agreement to Assignment Agreement
      among the Company, Nanominerals Corp. and Lorrie Archibald, dated for
      reference as of August 8, 2007.(6)                                                                     
|10.7    | Consulting Agreement between
      the Company and RJ Falkner & Company, Inc., dated for reference as of
      November 5, 2007.(7)                                                                                                  
|10.8    | Consultant Non-Qualified Stock Option Agreement
      between the Company and R. Jerry Falkner, dated effective as of November
      5, 2007.(7)                                                                                     
|10.9    | Agreement and Plan of Merger
      dated December 14, 2007 among the Company, Columbus Brine Inc., John T.
      Arkoosh, William Maghan and Lawrence E. Chizmar, Jr.(8)                                                             
|10.10   | Amendment Agreement to Agreement and Plan of
      Merger entered into on January 31, 2008 among the Company, CBI
      Acquisition, Inc., Columbus Brine Inc., John T. Arkoosh, William Maghan
      and Lawrence E. Chizmar, Jr.(9)
|10.11   | Mining Lease Agreement dated
      November 30, 2007 between DDB Syndicate and Columbus S.M., LLC.(12)                                                                                                                               
|10.12   | Non-Qualified Stock Option Agreement for Douglas D.G. Birnie.(14)                                                                                                                                                                    
|10.13   | Non-Qualified Stock Option Agreement for Robert D. McDougal. (14)                                                                                                                                                                    
|10.14   | Non-Qualified Stock Option Agreement for Michael A. Steele. (14)                                                                                                                                                                     
|10.15   | Non-Qualified Stock Option Agreement for Mark H. Brennan. (14)                                                                                                                                                                       
|10.16   | Non-Qualified Stock Option Agreement for David Z. Strickler, Jr.                                                                                                                                                                     
|14.1    | Code of Ethics. (10)                                                                                                                                                                                                                 
|21.1    | List of Subsidiaries.                                                                                                                                                                                                                
|23.1    | Consent of Brown Armstrong Accountancy
      Corporation.                                                                                                                                                                            
|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.                                                                   

|(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 June 21, 2007.                                               
|(6)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on August 14, 2007.                                             
|(7)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on November 9, 2007.                                            
|(8)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on December 20, 2007.                                           
|(9)  | Filed as an exhibit to our Current Report on Form 8-K
      filed on February 6, 2008.                                            
|(10) | Filed as an exhibit to our Annual Report on Form 10-KSB
      for the year ended December 31, 2003, filed on September 28,
  2004.
|(11) | Filed as a Schedule to Exhibit 10.2.                                                                                              
|(12) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2007 filed on March 31, 2008.         
|(13) | Filed as an exhibit to our Annual Report on Form 10-K for
      the year ended December 31, 2009 filed on April 15, 2010.         
|(14) | Filed as an exhibit to our Current Report on Form 8-K
      filed on July 28, 2010.                                               

44

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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: | March
      30, 2011 | By: | /s/
      Douglas D.G. Birnie                         
|      |                      |     | DOUGLAS D.G. BIRNIE                                   
|      |                      |     | Chief Executive Officer, President and
      Secretary
|      |                      |     | (Principal Executive Officer)                         
|      |                      |     |                                                       
|      |                      |     |                                                       
|      |                      |     |                                                       
|Date: | March
      30, 2011 | 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: | March
      30, 2011 | By: | /s/
      Douglas D.G. Birnie                         
|----- | -------------------- | --- | ------------------------------------------------------
|      |                      |     | DOUGLAS D.G. BIRNIE                                   
|      |                      |     | Chief Executive Officer, President and
      Secretary
|      |                      |     | Director                                              
|      |                      |     |                                                       
|      |                      |     |                                                       
|      |                      |     |                                                       
|Date: | March
      30, 2011 | By: | /s/
      Robert D. McDougal                          
|      |                      |     | ROBERT D. MCDOUGAL                                    
|      |                      |     | Chief Financial Officer and Treasurer                 
|      |                      |     | Director                                              
|      |                      |     |                                                       
|      |                      |     |                                                       
|      |                      |     |                                                       
|Date: | March
      30, 2011 | By: | /s/
      Mark H. Brennan                             
|      |                      |     | MARK H. BRENNAN                                       
|      |                      |     | Director                                              

---