----

----

|   |   |                                                                                     |
|--------|--------|------------------------------------------------------------------------------------------|
| [X]    |   | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. |

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

|                                                                                      |   |                                       |
|-------------------------------------------------------------------------------------------|--------|--------------------------------------------|
| British Columbia(State or other jurisdiction ofincorporation or organization)             |   | 98-0434111(IRS EmployerIdentification No.) |
|                                                                                      |   |                                       |
| 4415 Caribou Road P.O. Box 653Nederland, Colorado(Address of principal executive offices) |   | 80466-0653(Zip Code)                       |

----

|                                 |                                                                                                 | Page     |
|--------------------------------------|------------------------------------------------------------------------------------------------------|----------|
| Part I – Financial Information |                                                                                                 |
|                                 | Item 1. Financial Statements.                                                                        | 3        |
|                                 | Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |  13 |
|                                 | Item 3. Quantitative and Qualitative Disclosures About Market Risk.                                  | 17       |
|                                 | Item 4. Controls and Procedures.                                                                     | 17       |
|                                 |                                                                                                 |     |
| Part II – Other Information    |                                                                                                 |
|                                 | Item 1. Legal Proceedings.                                                                           | 19       |
|                                 | Item 1A. Risk Factors.                                                                               | 20       |
|                                 | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                                  | 20       |
|                                 | Item 3.  Defaults Upon Senior Securities.                                                  | 20       |
|                                 | Item 4. (Removed and Reserved).                                                                      | 20       |
|                                 | Item 5. Other Information.                                                                           | 20       |
|                                 | Item 6. Exhibits.                                                                                    | 21       |
|                                 |                                                                                                 |     |
|                                 | Signatures                                                                                           | 22       |

----

|                                                                                                                                                                      |   | As of       |                      |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------|---------------------------|
|                                                                                                                                                                      |   | 2/28/2011   |                      |   | 5/31/2010 |   |
| ASSETS                                                                                                                                                                    |   | (unaudited) |                      |   |   |   |
| Current Assets                                                                                                                                                            |   |        |                      |   |   |   |
| Cash and cash equivalents                                                                                                                                                 |   | $           | 775,615                   |   |   | $ | 27,919 |   |
| Prepaid expenses and other assets                                                                                                                                         |   |        | 52,628                    |   |   |   | 15,063 |   |
| Total current assets                                                                                                                                                      |   |        | 828,243                   |   |   |   | 42,982 |   |
|                                                                                                                                                                      |   |        |                      |   |   |   |   |   |
| Restricted cash                                                                                                                                                           |   |        | 15,400                    |   |   |   | 15,400 |   |
| Note receivable                                                                                                                                                           |   |        | 60,000                    |   |   |   | 60,000 |   |
| Fixed assets, net                                                                                                                                                         |   |        | 5,264                     |   |   |   | -     |   |
| Total assets                                                                                                                                                              |   | $           | 908,907                   |   |   | $ | 118,382 |   |
|                                                                                                                                                                      |   |        |                      |   |   |   |   |   |
| LIABILITIES                                                                                                                                                               |   |        |                      |   |   |   |   |   |
| Current Liabilities                                                                                                                                                       |   |        |                      |   |   |   |   |   |
| Accounts payable and accrued liabilities                                                                                                                                  |   | $           | 1,548,193                 |   |   | $ | 2,669,242 |   |
| Convertible debentures                                                                                                                                                    |   |        | 731,069                   |   |   |   | 4,809,649 |   |
| Convertible debentures - employee                                                                                                                                         |   |        | -     |   |   |   | 45,500 |   |
| Notes payable                                                                                                                                                             |   |        | 10,253,878                |   |   |   | 10,253,878 |   |
| Total current liabilities                                                                                                                                                 |   |        | 12,533,140                |   |   |   | 17,778,269 |   |
|                                                                                                                                                                      |   |        |                      |   |   |   |   |   |
| Royalty interest                                                                                                                                                          |   |        | 150,000                   |   |   |   | 150,000 |   |
| Environmental remediation liabilities                                                                                                                                     |   |        | 50,000                    |   |   |   | 50,000 |   |
| Total liabilities                                                                                                                                                         |   |        | 12,733,140                |   |   |   | 17,978,269 |   |
|                                                                                                                                                                      |   |        |                      |   |   |   |   |   |
| Shareholders' Deficit                                                                                                                                                     |   |        |                      |   |   |   |   |   |
| Common stock, no par value, unlimited shares authorized, 140,991,134, and 76,278,142 shares issued and outstanding as of February 28, 2011 and May 31, 2010, respectively |   |        | 35,061,079                |   |   |   | 29,299,883 |   |
| Deficit accumulated in the development stage                                                                                                                              |   |        | (46,636,899               | ) |   |   | (45,781,468 | ) |
| Accumulated other comprehensive loss                                                                                                                                      |   |        | (248,413                  | ) |   |   | (1,378,302 | ) |
| Total Shareholders' Deficit                                                                                                                                               |   |        | (11,824,233               | ) |   |   | (17,859,887 | ) |
| Total Liabilities and Shareholders' Deficit                                                                                                                               |   | $           | 908,907                   |   |   | $ | 118,382 |   |

----

|                                                                         |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   | December 30, 1986 |                      |
|------------------------------------------------------------------------------|--------|---------------------------------|---------------------------|--------|--------------------------------|--------|---------------------------|---------------------|--------|--------|---------------------------|--------|--------|-------------------|---------------------------|
|                                                                         |   | Three Months Ended February 28, |                      |   | Nine Months Ended February 28, |   |                      | (inception) through |   |
|                                                                         |   | 2011                            |                      |   | 2010                           |   |                      | 2011                |   |   | 2010                      |   |   | February 28, 2011 |                      |
|                                                                         |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |
| Expenses                                                                     |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |
| General and administrative expense                                           |   | $                               | 1,034,855                 |   |                           | $      | 228,003                   |                |   | $      | 1,668,883                 |   |   | $                 | 824,797                   |   |   | $ | 11,832,889 |   |
| Exploration and business development expenses                                |   |                            | 61,871                    |   |                           |   | 15,481                    |                |   |   | 120,047                   |   |   |              | 52,126                    |   |   |   | 12,337,914 |   |
| Depreciation and amortization expense                                        |   |                            | 100                       |   |                           |   | -     |                |   |   | 199                       |   |   |              | -     |   |   |   | 202,602 |   |
| Total operating expenses                                                     |   |                            | 1,096,826                 |   |                           |   | 243,484                   |                |   |   | 1,789,129                 |   |   |              | 876,923                   |   |   |   | 24,373,405 |   |
|                                                                         |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |   |   |   |   |   |
| Other income and expenses                                                    |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |   |   |   |   |   |
| Loss on impairment                                                           |   |                            | -     |   |                           |   | -     |                |   |   | -     |   |   |              | -     |   |   |   | 9,808,572 |   |
| (Gain) loss on settlement of debts                                           |   |                            | (2,614,853                | )      |                           |   | (359,992                  | )                   |   |   | (2,927,784                | )      |   |              | (314,528                  | ) |   |   | (3,388,741 | ) |
| Interest and financing fees                                                  |   |                            | 203,227                   |   |                           |   | 1,276,603                 |                |   |   | 626,649                   |   |   |              | 1,968,915                 |   |   |   | 14,230,224 |   |
| Foreign currency transaction loss                                            |   |                            | 1,368,064                 |   |                           |   | -     |                |   |   | 1,368,174                 |   |   |              | -     |   |   |   | 1,368,174 |   |
| Other (income) expense                                                       |   |                            | (581                      | )      |                           |   | -     |                |   |   | (737                      | )      |   |              | 356,090                   |   |   |   | 245,265 |   |
| Total other (income) and expenses                                            |   |                            | (1,044,143                | )      |                           |   | 916,611                   |                |   |   | (933,698                  | )      |   |              | 2,010,477                 |   |   |   | 22,263,494 |   |
|                                                                         |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |   |   |   |   |   |
| Loss before income taxes                                                     |   |                            | (52,683                   | )      |                           |   | (1,160,095                | )                   |   |   | (855,431                  | )      |   |              | (2,887,400                | ) |   |   | (46,636,899 | ) |
| Income tax expense (benefit)                                                 |   |                            | -     |   |                           |   | -     |                |   |   | -     |   |   |              | -                         |   |   |   | -     |   |
| Net loss                                                                     |   | $                               | (52,683                   | )      |                           | $      | (1,160,095                | )                   |   | $      | (855,431                  | )      |   | $                 | (2,887,400                | ) |   | $ | (46,636,899 | ) |
|                                                                         |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |   |   |   |   |   |
| Other comprehensive loss (income) - foreign currency translation adjustments |   |                            | (1,296,172                | )      |                           |   | 7,148                     |                |   |   | (1,129,889                | )      |   |              | 135,550                   |   |   |   | 248,413 |   |
|                                                                         |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |   |   |   |   |   |
| Comprehensive income (loss)                                                  |   | $                               | 1,243,489                 |   |                           | $      | (1,167,243                | )                   |   | $      | 274,458                   |   |   | $                 | (3,022,950                | ) |   | $ | (46,885,312 | ) |
|                                                                         |   |                            |                      |   |                           |   |                      |                |   |   |                      |   |   |              |                      |   |   |   |   |   |
| Basic and diluted weighted-average number of common shares outstanding       |   |                            | 137,426,187               |   |                           |   | 65,174,884                |                |   |   | 107,627,924               |   |   |              | 61,222,618                |   |   |   |   |   |
| Basic and diluted loss per common share                                      |   | $                               | (0.00                     | )      |                           | $      | (0.02                     | )                   |   | $      | (0.01                     | )      |   | $                 | (0.05                     | ) |   |   |   |   |

----

|                                                                        |   | Nine Months Ended February 28, |                      |   | Nine Months Ended February 28, |   |                      | December 30, 1986 (inception) through |   |
|-----------------------------------------------------------------------------|--------|--------------------------------|---------------------------|--------|--------------------------------|--------|---------------------------|---------------------------------------|--------|
|                                                                        |   | 2011                           |                      |   | 2010                           |   |                      | February 28, 2011                     |   |
|                                                                        |   |                           |                      |   |                           |   |                      |                                  |   |
| Cash flows from operating activities:                                       |   |                           |                      |   |                           |   |                      |                                  |   |
| Net loss                                                                    |   | $                              | (855,431                  | )      |                           | $      | (2,887,400                | )                                     |   | $ | (46,636,899 | ) |
| Adjustments to reconcile net loss to net cash used in operating activities: |   |                           |                      |   |                           |   |                      |                                  |   |
| Accretion expense                                                           |   |                           | -     |   |                           |   | -     |                                  |   |   | 105,655 |   |
| Amortization of deferred financing costs                                    |   |                           | -     |   |                           |   | -     |                                  |   |   | 3,369,936 |   |
| Depreciation and depletion                                                  |   |                           | 199                       |   |                           |   | -     |                                  |   |   | 200,935 |   |
| Non-cash interest expense                                                   |   |                           | 613,907                   |   |                           |   | 845,717                   |                                  |   |   | 11,633,137 |   |
| Loss on impairment of mineral properties                                    |   |                           | -     |   |                           |   | -     |                                  |   |   | 8,824,989 |   |
| Loss on impairment of investment                                            |   |                           | -     |   |                           |   | -     |                                  |   |   | 983,583 |   |
| Common shares issued in connection with trust deed modification             |   |                           | -     |   |                           |   | -     |                                  |   |   | 90,000 |   |
| Common shares issued in connection with debt settlement                     |   |                           | -     |   |                           |   | 1,102,597                 |                                  |   |   | 1,102,597 |   |
| Common shares issued for services                                           |   |                           | 753,092                   |   |                           |   | 170,000                   |                                  |   |   | 1,524,441 |   |
| Warrants cancelled for services                                             |   |                           | -     |   |                           |   | -     |                                  |   |   | (18,173 | ) |
| Warrants issued in connection with debt restructure                         |   |                           | -     |   |                           |   | -     |                                  |   |   | 155,007 |   |
| Losses (gains) recognized in connection with debt settlement                |   |                           | (2,927,785                | )      |                           |   | (314,528                  | )                                     |   |   | (3,388,742 | ) |
| Gain on sale of property, plant and equipment                               |   |                           | -     |   |                           |   | -     |                                  |   |   | 4,873 |   |
| Loss on disposal of property, plant and equipment                           |   |                           | -     |   |                           |   | -     |                                  |   |   | 8,040,143 |   |
| Loss on abandonment of mineral properties                                   |   |                           | -     |   |                           |   | -     |                                  |   |   | 300,600 |   |
| Loss on default of exploration development agreement                        |   |                           | -     |   |                           |   | 456,090                   |                                  |   |   | 456,090 |   |
| Loss on foreign exchange                                                    |   |                           | 1,296,172                 |   |                           |   | -     |                                  |   |   | 1,614,942 |   |
| Environmental remediation liability                                         |   |                           | -     |   |                           |   | -     |                                  |   |   | 50,000 |   |
| Changes in operating assets and liabilities:                                |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| (Increase) decrease in prepaid expenses                                     |   |                           | (37,565                   | )      |                           |   | (9,759                    | )                                     |   |   | (95,915 | ) |
| Increase (decrease) in accounts payable and other current liabilities       |   |                           | (225,542                  | )      |                           |   | 535,582                   |                                  |   |   | 2,585,768 |   |
| (Increase) decrease in other operating assets and liabilities               |   |                           | 17,840                    |   |                           |   | 63,016                    |                                  |   |   | 98,254 |   |
|                                                                        |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Net cash (used in) operating activities                                     |   |                           | (1,365,113                | )      |                           |   | (38,685                   | )                                     |   |   | (8,998,779 | ) |
|                                                                        |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Cash flows from investing activities:                                       |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Purchase of mineral properties & equipment                              |   |                           | -     |   |                           |   | -     |                                  |   |   | (17,481,692 | ) |
| Dispositions of equipment                                                   |   |                           | -     |   |                           |   | -     |                                  |   |   | 161,352 |   |
| Net additions to equipment                                                  |   |                           | (5,464                    | )      |                           |   | -     |                                  |   |   | (173,393 | ) |
| Deferred exploration expenditures                                           |   |                           | -     |   |                           |   | -     |                                  |   |   | (143,071 | ) |
| Deposit on equipment                                                        |   |                           | -     |   |                           |   | -     |                                  |   |   | (17,880 | ) |
| Acquisition of shares of subsidiary                                         |   |                           | -     |   |                           |   | -     |                                  |   |   | (715,932 | ) |
| Advance to subsidiary                                                       |   |                           | -     |   |                           |   | -     |                                  |   |   | (177,875 | ) |
| Payable under option agreement                                              |   |                           | -     |   |                           |   | -     |                                  |   |   | 716,481 |   |
| Refundable deposit on purchase of shares of subsidiary                      |   |                           | -     |   |                           |   | -     |                                  |   |   | (73,847 | ) |
| Net cash provided by (used in) investing activities                         |   |                           | (5,464                    | )      |                           |   | -     |                                  |   |   | (17,905,857 | ) |

----

|                                                                                             |   | Nine Months Ended February 28, |                      |   | Nine Months Ended February 28, |   |                      | December 30, 1986 (inception) through |   |
|--------------------------------------------------------------------------------------------------|--------|--------------------------------|---------------------------|--------|--------------------------------|--------|---------------------------|---------------------------------------|--------|
|                                                                                             |   | 2011                           |                      |   | 2010                           |   |                      | February 28, 2011                     |   |
|                                                                                             |   |                           |                      |   |                           |   |                      |                                  |   |
| Cash flows from financing activities:                                                            |   |                           |                      |   |                           |   |                      |                                  |   |
| Proceeds from sale of common shares                                                              |   | $                              | 2,342,500                 |   |                           | $      | 72,500                    |                                  |   | $ | 21,055,079 |   |
| Proceeds from sale of private equity                                                             |   |                           | -     |   |                           |   | -     |                                  |   |   | 345,000 |   |
| Proceeds from borrowings long term-debt                                                          |   |                           | -     |   |                           |   | -     |                                  |   |   | 17,029,960 |   |
| Proceeds from borrowing on shareholder note                                                      |   |                           | -     |   |                           |   | -     |                                  |   |   | 282,000 |   |
| Repayments of long term debt                                                                     |   |                           | -     |   |                           |   | -     |                                  |   |   | (11,902,794 | ) |
| Repayments of debt - convertible debentures                                                      |   |                           | (224,227                  | )      |                           |   | (30,750                   | )                                     |   |   | (445,153 | ) |
| Advances to affiliated companies, shareholders and directors                                     |   |                           | -     |   |                           |   | -     |                                  |   |   | (106,730 | ) |
| Restricted cash                                                                                  |   |                           | -     |   |                           |   | -     |                                  |   |   | (31,789 | ) |
| Share subscriptions received in advance                                                          |   |                           | -     |   |                           |   | -     |                                  |   |   | 518,415 |   |
|                                                                                             |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Net cash provided by financing activities                                                        |   |                           | 2,118,273                 |   |                           |   | 41,750                    |                                  |   |   | 26,743,988 |   |
|                                                                                             |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Effect of foreign exchange                                                                       |   |                           | -     |   |                           |   | -     |                                  |   |   | 936,263 |   |
|                                                                                             |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Net change in cash and cash equivalents                                                          |   |                           | 747,696                   |   |                           |   | 3,065                     |                                  |   |   | 775,615 |   |
| Cash at beginning of period                                                                      |   |                           | 27,919                    |   |                           |   | -     |                                  |   |   | -     |   |
| Cash at end of period                                                                            |   | $                              | 775,615                   |   |                           | $      | 3,065                     |                                  |   | $ | 775,615 |   |
|                                                                                             |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
|                                                                                             |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Supplemental Cash Flow Information                                                               |   |                           |                      |   |                           |   |                      |                                  |   |   |   |   |
| Interest expense paid in cash                                                                    |   | $                              | -     |   |                           | $      | -     |                                  |   | $ | 1,188,233 |   |
| Interest received                                                                                |   | $                              | -     |   |                           | $      | -     |                                  |   | $ | 3,999 |   |
| Debt restructuring - warrants issued                                                             |   | $                              | -     |   |                           | $      | -     |                                  |   | $ | 412,407 |   |
| Common shares issued in connection with debt restructuring and settlement of accrued liabilities |   | $                              | 2,665,604                 |   |                           | $      | 1,308,370                 |                                  |   | $ | 4,931,489 |   |
| Common shares issued for acquisition of property                                                 |   | $                              | -     |   |                           | $      | -     |                                  |   | $ | 32,500 |   |
| Shares issued for mineral  property development                                        |   | $                              | -     |   |                           | $      | -     |                                  |   | $ | 96,315 |   |
| Shares issued for repayment of shareholder advances                                              |   | $                              | -     |   |                           | $      | -     |                                  |   | $ | 9,240,146 |   |

----

----

|  NOTE 3 – RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
|----------------------------------------------------------------|

| The Company has recently adopted the following new accounting standards: |
|--------------------------------------------------------------------------|

----

|                     |   | As of             |                      |
|--------------------------|--------|-------------------|---------------------------|
|                     |   | February 28, 2011 |                      |   | May 31, 2010 |   |
| Debentures (a)           |   | $                 | 731,069                   |   |   | $ | 4,809,649 |   |
| Debentures (b)           |   |              | -     |   |   |   | 45,500 |   |
| Total debentures payable |   |              | 731,069                   |   |   |   | 4,855,149 |   |
| Less: Current portion    |   |              | (731,069                  | ) |   |   | (4,855,149 | ) |
| Long-term portion        |   | $                 | -     |   |   | $ | -     |   |

----

| ·      | In June 2010, we issued 9,500,000 shares of our common stock valued at $0.08 per share or $760,000 to our Directors as compensation for their services. These amounts had been previously accrued in our balance sheet as accrued salaries and wages. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In August 2010, we sold 650,000 shares of our common stock at $0.08 per share to the wife of our current Chief Executive Officer (“CEO”) for net proceeds of $52,000 as part of a private placement. |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In June 2010, we issued 1,000,000 shares of our common stock at $0.05 per share for accounting services provided in May 2010 totaling $50,000. |
|---------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In June and August 2010, we issued a total of 1,500,000 shares of our common stock at $0.05 per share in connection with the payment of $76,539 in accounts payable. |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·      | In September 2010, we issued 4,500,000 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $270,000.  In October 2010, we issued 5,753,334 shares of our common stock at $0.06 per share to accredited investors for net cash proceeds of $345,200. |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In October 2010, we issued 2,270,420 shares of our common stock at $0.10 per share to our Company President in connection with settlement of accrued liabilities owed to him. We have recorded a gain in the amount of $227,042 in connection with this issuance. In addition we issued 2,000,000 shares of our common stock at $.0762 per share to our former CFO in connection with the settlement of accrued liabilities owed to him of $152,468. We have not recorded any gain or loss in connection with this settlement. |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In November 2010, we issued 1,066,666 shares of our common stock at $0.075 to accredited investors for net cash proceeds of $80,000.  In addition we issued 17,651,667 shares of our common stock at $0.06 per share for net cash proceeds of $1,059,100. |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In December 2010, we issued 9,550,368 shares of our common stock at $0.15 per share in connection with the settlement of four convertible debentures totaling $1,432,555. |
|---------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In December 2010, we issued 536,666 shares of our common stock at $0.06 per share for net cash proceeds of $32,200.  In addition we issued 2,666,666 shares of our common stock at $.08 per share for net cash proceeds of $200,000. In January 2011, we issued 66,666 shares of our common stock at $0.06 per share for net cash proceeds of $4,000. In February 2011, we issued 1,764,706 shares of our common stock for $0.17 per share for net cash proceeds of $300,000. |
|---------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In December 2010, we issued 2,102,500 shares of our common stock at $0.17 per share in connection with fundraising and consulting services valued at $357,425. In January 2011, we issued 2,033,333 shares of our common stock at $0.17 per share valued at $345,667 in connection with fundraising and consulting activities. |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | In December 2010, we issued 100,000 shares of our common stock at $0.17 per share in connection with the settlement of previously accrued liabilities. |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                | Number of Warrants Outstanding | Weighted Average Exercise Price | Number Exercisable |
|-------------------------------------|-------------------------------------|---------------------------------|--------------------|
| Outstanding as of May 31, 2010      | 28,498,196                          | $0.16                           | 28,498,196         |
| Issued                              | -                                   |                            |               |
| Expirations                         | (4,000,000)                         | $0.25                           |               |
| Outstanding as of February 28, 2011 | 24,498,196                          | $0.13                           | 24,498,196         |

----

| ·      | In June 2010, we issued 9,500,000 shares of our common stock valued at $0.08 per share or $760,000 to our Directors as compensation for their services.  These amounts had been previously accrued in our balance sheet as accrued salaries and wages. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | On August 24, 2010, we sold 650,000 shares of our common stock at $0.08 per share to the wife of our current CEO for $52,000. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------|

| ·      | In October 2010, we issued 2,270,420 shares of our common stock at $0.10 per share to our Company President in connection with settlement of accrued liabilities owed to him.  We have recorded a gain in the amount of $227,042 in connection with this issuance.  In addition, we issued 2,000,000 shares of our common stock at $0.0762 per share to our former CFO in connection with the settlement of accrued liabilities owed to him of $152,468.  We have not recorded any gain or loss in connection with this settlement. |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | Our notes payable balance as of February 28, 2011 consisted of one note payable to Brigus Gold Corp. (“Brigus”). When this note was consummated in February 2010, the counterparty to this note was Apollo Gold Corp., a predecessor of Brigus.  Our now-current CEO, R. David Russell, was the CEO of Apollo Gold Corp. at that time. |
|---------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | From time to time our President and Vice President of Corporate Development incur expenses on behalf of the Company and are reimbursed by us.  As of February 28, 2011, included in accounts payable are amounts due to the officers as reimbursement. These amounts are not considered to be material. |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      |  8,040,000 shares issued for cash proceeds of $752,400 |
|---------------------------------|------------------------------------------------------------------|

| ·      | 193,852 shares issued in connection with the settlement of previously accrued liabilities |
|---------------------------------|-------------------------------------------------------------------------------------------|

----

| · our ability to execute against our plans;                                                                                            |
|--------------------------------------------------------------------------------------------------------------------------------------------------|
| · our ability to continue as a going concern;                                                                                          |
| · the possible loss of our interest in our Caribou properties if we do not meet our debt obligations;                                  |
| · the potential that we will not obtain good title to our Manhattan project;                                                           |
| · the volatility and low trading volume of our common stock;                                                                           |
| · our ability to secure additional capital;                                                                                            |
| · the possibility we may never achieve any mineral production;                                                                         |
| · the future dilution to our shareholders from future capital-raising activities and payments to employees, directors and consultants; |
| · the possibility our Board of Directors may issue authorized and unissued shares of common stock and preferred stock;                 |
| · the effects the penny stock rules may have on the trading of our stock;                                                              |
| · our dependence on a few key employees;                                                                                               |
| · the influence of a few large shareholders on our business;                                                                           |
| · risks associated with our incorporation in Canada;                                                                                   |
| · our lack of experience in mining and selling minerals;                                                                               |
| · operational end environmental risks associated with the mining industry;                                                             |
| · the effect of government regulations on our business;                                                                                |
| · lack of clear title to our mineral prospects;                                                                                        |
| · the fact our mineral interests are not yet proven; and                                                                               |
| · fluctuation in the prices of gold and silver.                                                                                        |

----

| ·      |  650,000 shares for cash proceeds of $52,000 |
|---------------------------------|--------------------------------------------------------|

| ·      | 1,000,000 shares for consulting services |
|---------------------------------|------------------------------------------|

| ·      | 9,500,000 shares to directors for services |
|---------------------------------|--------------------------------------------|

| ·      | 1,500,000 shares related to  the payment of trade accounts payable |
|---------------------------------|------------------------------------------------------------------------------|

| ·      | 28,971,667 shares for cash proceeds of $1,754,300. |
|---------------------------------|----------------------------------------------------|

| ·      | 4,270,420  shares in connection with the settlement of accounts payable and accrued wages payable to our Company President and former CFO |
|---------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | 5,034,704 shares for cash proceeds of $536,200 |
|---------------------------------|------------------------------------------------|

| ·      | 9,650,368  shares in connection with the settlement of four convertible notes payable and accrued liabilities |
|---------------------------------|-------------------------------------------------------------------------------------------------------------------------|

----

| ·      | 4,135,833 shares in connection with consulting and fund raising activities. |
|---------------------------------|-----------------------------------------------------------------------------|

----

|                                      |   | 2011   |       |    | 2010   |   |
|-------------------------------------------|--------|--------|------------|---------|--------|--------|
| Net cash used in operating activities     |   | $      | (1,365,113 | )  |   | $      | (38,685 | )  |
| Net cash used in investing activities     |   |   | (5,464     | )  |   |   | -     |   |
| Net cash provided by financing activities |   | $      | 2,118,273  |    |   | $      | 41,750 |   |

----

| ·      | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets; |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·      | 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. |
|---------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | We have not consistently recorded transactions in our accounting records. |
|---------------------------------|---------------------------------------------------------------------------|

| ·      | The non-cash components of certain debt and equity transactions were not properly accounted for. |
|---------------------------------|--------------------------------------------------------------------------------------------------|

| ·      | We rely on external consultants for the preparation of our financial statements and reports.  As a result, our management may not be able to identify errors and irregularities in the financial statements and reports. |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | We relied on one of our officers for oversight of the financial reporting process and therefore there was an inherent lack of segregation of duties with certain aspects of the financial reporting process, and a limited independent governing board. |
|---------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·      | We relied on an external consultant for the administration functions, some of which did not have standard procedures in place for formal review by the one officer who was providing financial oversight for us. |
|---------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | • |   | Mr. Harvey and Calais agreed on a more precise definition of Calais’ right (which expires August 31, 2011) to repurchase the interest of AAI in the Caribou properties, including the price payable for the reacquisition (a total of Cdn$747,728) and AAI’s right to convert that debenture before it is paid; |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • |   | Further defining Calais’ right to borrow against, enter in and upon those properties, construct buildings and mines on those properties, and remove and sell minerals from those properties for Calais’ own account;                                                                                                      |

|   | • |   | Mr. Harvey and his related entities agreed to assign their interests in the Manhattan prospect to Calais and completed this assignment in July 2004.  In addition, Mr. Harvey and his related entities also agreed to convey to Calais (not later than December 31, 2005) the entire right, title and interest in the Manhattan prospect from all parties (“marketable title”).  To our knowledge, Mr. Harvey and his related entities have not commenced the work necessary to obtain marketable title.  Upon receipt of marketable title, Calais agreed to pay one of Mr. Harvey’s related entities 250,000 shares of Calais restricted stock.  Calais agreed to undertake certain drilling obligations after receiving good title, and to issue 2,500,000 shares of common stock to Argus Resources, Inc., one of Mr. Harvey’s related entities, if Calais identifies gold or gold equivalent mineral resources (as determined in accordance with Canadian standards) exceeding 2,000,000 ounces. |
|--------|---------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • |   | Mr. Harvey and his related entities agreed to comply with their shareholder filing obligations in the United States and Canada (if any) not later than April 30, 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|   |    |   | Mr. Harvey also agreed to return a stock option agreement to Calais which evidenced the option to acquire 82,500 shares of Calais common stock granted to him in November 2002. That option expired on November 15, 2004, and had an exercise price of US$0.80 per share. Mr. Harvey did not comply with this obligation. |
|--------|---------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • |   | Calais agreed to propose to its shareholders at its next shareholder meeting that the conversion price of the debentures be repriced from Cdn$1.23 to US$0.55.  This proposal was defeated by the shareholder vote held at the shareholder meeting on November 10, 2004.                                                       |

|   | • |   | Calais agreed to retain Mr. Harvey as a consultant for one year at US $3,000 per month. Mr. Harvey resigned as a consultant as of June 1, 2004. |
|--------|---------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|         |                     |                |            | Warrants           |               |
|--------------|--------------------------|---------------------|-----------------|--------------------|--------------------|
| Date of Sale |   Name of Purchaser | Title of Securities | Shares of Stock | Number of Warrants | Exercise Price ($) | Expiration Date | Consideration ($) |   |
|         |                     |                |            |               |               |   |   |   |
| 12/10        | 6 accredited investors   | Common Stock        | 3,203,332       |               |               |   | 232,200 | (a) |
| 12/10        | 2 accredited investors   | Common Stock        | 2,102,500       |               |               |   | 357,425 | (b) |
| 12/10        | 3 accredited investors   | Common Stock        | 9,550,368       |               |               |   | 1,432,555 | (c) |
| 01/11        | 1 accredited investor    | Common Stock        | 66,666          |               |               |   | 4,000 | (a) |
| 01/11        | 3 accredited investors   | Common Stock        | 1,433,334       |               |               |   | 243,667 | (b) |
| 02/11        | 3 accredited investors   | Common Stock        | 1,764,706       |               |               |   | 300,000 | (a) |
| 02/11        | 1 accredited investor    | Common Stock        | 700,000         |               |               |   | 119,000 | (b) |

----

| ExhibitNumber |   | Description                                                                                                                                                                                                                     |
|---------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|          |   |                                                                                                                                                                                                                            |
| 31            |   | Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act. |
| 32            |   | Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act.                                             |

----

|         | CALAIS RESOURCES INC. |                               |
|--------------|-----------------------|------------------------------------|
|         |                  |                               |   |
| May 26, 2011 | By:                   | /s/ David K. Young            |   |
|         |                  | David K. Young                     |   |
|         |                  | President, Chief Operating Officer |   |
|         |                  | and Acting Chief Financial Officer |   |

----

----