|   | MINCO GOLD CORPORATION                                                   |
|--------|--------------------------------------------------------------------------|
|   |                                                                     |
|   | (An exploration stage enterprise)                                        |
|   |                                                                     |
|   | Consolidated Financial Statements                                        |
|   | (Expressed in Canadian dollars)                                          |
|   |                                                                     |
|   | December 31, 2008 and 2007                                               |
|   |                                                                     |
|   |                                                                     |
|   | Index                                                                    |
|   |                                                                     |
|   | Auditors' Report                                                         |
|   |                                                                     |
|   | Consolidated Balance Sheets                                              |
|   |                                                                     |
|   | Consolidated Statements of Operations and Comprehensive Loss and Deficit |
|   |                                                                     |
|   | Consolidated Statements of Cash Flows                                    |
|   |                                                                     |
|   | Notes to Consolidated Financial Statements                               |

 

 

 

 

 

 

 

----

| Ken Cai           | Ellen Wei                       |
|-------------------|---------------------------------|
| President and CEO | Interim Chief Financial Officer |
|              |                            |
| Vancouver, Canada |                            |
| April 14,2009     |                            |

----

|   |               |                       |   |
|--------|--------------------|-----------------------|--------|
|   |               |                  |   |
|   | Vancouver, Canada, |                  |   |
|   | April 14,2009.     | Chartered Accountants |   |

----

|   |               |                       |   |
|--------|--------------------|-----------------------|--------|
|   |               |                  |   |
|   | Vancouver, Canada, |                  |   |
|   | April 14, 2009.    | Chartered Accountants |   |

----

| MINCO GOLD CORPORATION                                                                      |
|---------------------------------------------------------------------------------------------|
| (An exploration stage enterprise)Consolidated Balance Sheets(Expressed in Canadian Dollars) |

| [See Nature of Operations and GoingConcern Uncertainty- Note 1] |   | December 31, 2008 |        | December 31, 2007 |   |
|-----------------------------------------------------------------|--------|-------------------|-------------|-------------------|--------|
| ASSETS                                                          |   |              |        |              |   |   |   |
|                                                            |   |              |        |              |   |   |   |
| Current assets                                                  |   |              |        |              |   |   |   |
| Cash and cash equivalents                                       |   |              | 2,604,411   |              |   | 1,302,483 |   |
| Short-term investments (Note 4)                                 |   |              | 922,559     |              |   | 6,149,044 |   |
| Receivables                                                     |   |              | 896,731     |              |   | 319,337 |   |
| Due from Minco Silver (Note 14(b))                              |   |              | 1,246,282   |              |   | 4,639,788 |   |
| Due from Minco Base Metals (Note 14(b))                         |   |              | 506,569     |              |   | 271,999 |   |
| Prepaid expenses and deposits                                   |   |              | 129,113     |              |   | 103,672 |   |
| Assets of discontinued operations (Note 10)                     |   |              | -           |              |   | 5,838 |   |
|                                                            |   |              | 6,305,665   |              |   | 12,792,161 |   |
|                                                            |   |              |        |              |   |   |   |
| Long-term rental deposit                                        |   |              | 51,523      |              |   | 51,277 |   |
| Long-term marketable securities (Note 5)                        |   |              | 12,600      |              |   | - |   |
| Mineral interests (Note 6)                                      |   |              | -           |              |   | 358,500 |   |
| Plant, property and equipment (Note 7)                          |   |              | 513,521     |              |   | 499,710 |   |
| Equity investment in Minco Silver (Note 8)                      |   |              | 3,675,116   |              |   | 3,079,412 |   |
| Assets of discontinued operations (Note 10)                     |   |              | -           |              |   | 4,461 |   |
| Total assets                                                    |   |              | 10,558,425  |              |   | 16,785,521 |   |
|                                                            |   |              |        |              |   |   |   |
| LIABILITIES                                                     |   |              |        |              |   |   |   |
|                                                            |   |              |        |              |   |   |   |
| Current liabilities                                             |   |              |        |              |   |   |   |
| Accounts payable and accrued liabilities (Note 6(i))            |   |              | 5,671,434   |              |   | 889,863 |   |
| Loan payable (Note 11)                                          |   |              | 2,881,237   |              |   | - |   |
| Due to Minco Silver (Note 14(b))                                |   |              | -           |              |   | 1,929,893 |   |
| Tax payable (Note 13)                                           |   |              | 136,136     |              |   | - |   |
| Liabilities of discontinued operations (Note 10)                |   |              | -           |              |   | 38,549 |   |
|                                                            |   |              |        |              |   |   |   |
| Total current liabilities                                       |   |              | 8,688,807   |              |   | 2,858,305 |   |
| Commitments and contingencies (Notes 6(i) and 16)               |   |              |        |              |   |   |   |
|                                                            |   |              |        |              |   |   |   |
| Non-controlling interest (Note 9)                               |   |              | -           |              |   | 82,685 |   |
|                                                            |   |              |        |              |   |   |   |
| SHAREHOLDERS' EQUITY                                            |   |              |        |              |   |   |   |
| Share capital (Note 12(a))                                      |   |              | 34,021,922  |              |   | 33,941,510 |   |
| Contributed surplus (Note 12(c))                                |   |              | 4,930,097   |              |   | 3,721,117 |   |
| Deficit                                                         |   |              | (37,082,401 | )                 |   | (23,818,096 | ) |
| Total shareholders' equity                                      |   |              | 1,869,618   |              |   | 13,844,531 |   |
|                                                            |   |              |        |              |   |   |   |
| Total liabilities and shareholders' equity                      |   |              | 10,558,425  |              |   | 16,785,521 |   |

| On behalf of the Board | "Malcolm Clay"       |   | "Robert Callander"       |
|------------------------|----------------------|--------|--------------------------|
|                   | Malcolm ClayDirector |   | Robert CallanderDirector |

----

| M1NCO GOLD CORPORATION                                                   |
|--------------------------------------------------------------------------|
| (An exploration stage enterprise)                                        |
| Consolidated Statements of Operations and Comprehensive Loss and Deficit |
| (Expressed in Canadian Dollars)                                          |

|                                                                                                                    |   |   | Year ended December 31, 2008 |   |   | Year ended December 31, 2007 |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------|--------|--------|------------------------------|--------|
| Exploration permit (Note 6)                                                                                             |   |   | 6,611,918                    |   |   | 842,788                      |   |
| Exploration costs (Note 6)                                                                                              |   |   | 3,934,589                    |   |   | 2,078,346                    |   |
|                                                                                                                    |   |   |                         |   |   |                         |   |
| Administrative expenses (Note 14)                                                                                       |   |   | 10,546,507                   |   |   | 2,921,134                    |   |
| Accounting and audit                                                                                                    |   |   | 184,294                      |   |   | 122,020                      |   |
| Amortization                                                                                                            |   |   | 100,754                      |   |   | 54,668                       |   |
| Consulting                                                                                                              |   |   | 284,006                      |   |   | 76,368                       |   |
| Directors' fees                                                                                                         |   |   | 48,000                       |   |   | 62,500                       |   |
| Foreign exchange loss                                                                                                   |   |   | 991,029                      |   |   | 417,813                      |   |
| Investor relations                                                                                                      |   |   | 353,862                      |   |   | 579,498                      |   |
| Legal                                                                                                                   |   |   | 49,231                       |   |   | 47,408                       |   |
| Regulatory and filing                                                                                                   |   |   | 105,838                      |   |   | 91,948                       |   |
| Meals and entertainment                                                                                                 |   |   | 75,845                       |   |   | 51,104                       |   |
| Office and miscellaneous                                                                                                |   |   | 169,644                      |   |   | 201,038                      |   |
| Property investigation                                                                                                  |   |   | 88,353                       |   |   | 218,672                      |   |
| Rent                                                                                                                    |   |   | 222,044                      |   |   | 233,011                      |   |
| Salaries and benefits                                                                                                   |   |   | 562,138                      |   |   | 693,436                      |   |
| Stock-based compensation (Note 12(d))                                                                                   |   |   | 1,242,953                    |   |   | 2,022,850                    |   |
| Telephone                                                                                                               |   |   | 28,165                       |   |   | 16,322                       |   |
| Interest expense (Note 6)                                                                                               |   |   | 211,402                      |   |   | -                            |   |
| Travel and transportation                                                                                               |   |   | 109,691                      |   |   | 127,380                      |   |
|                                                                                                                    |   |   | 4,827,249                    |   |   | 5,016,036                    |   |
| Operating loss                                                                                                          |   |   | (15,373,756                  | )      |   | (7,937,170                   | )      |
| Other income (loss)                                                                                                     |   |   |                         |   |   |                         |   |
| Gain on sale of exploration permit (Note 6)                                                                             |   |   | 425,632                      |   |   | -                            |   |
| Share of loss from equity investment in Minco Silver (Note 8)                                                           |   |   | (948,750                     | )      |   | (3,239,898                   | )      |
| Dilution gain (Note 8)                                                                                                  |   |   | 1,544,454                    |   |   | 191,000                      |   |
| Write down of marketable securities                                                                                     |   |   | (75,600                      | )      |   | (232,546                     | )      |
| Gain on sale of Minco Silver shares (Note 8)                                                                            |   |   | -                            |   |   | 2,978,034                    |   |
| Write down of mineral interests                                                                                         |   |   | (358,500                     | )      |   | -                            |   |
| Gain on sale of commercial notes                                                                                        |   |   | 3,790                        |   |   | -                            |   |
| Rental income                                                                                                           |   |   | 68,109                       |   |   | 58,761                       |   |
| Sundry income                                                                                                           |   |   | 150,000                      |   |   | -                            |   |
| Interest income                                                                                                         |   |   | 138,250                      |   |   | 248,010                      |   |
| Loss for the year before discontinued operations, non-controlling interest and tax expenses                             |   |   | (14,426,371                  | )      |   | (7,933,809                   | )      |
| Tax expenses (Note 13)                                                                                                  |   |   | (85,349                      | )      |   | -                            |   |
| Loss for the year before discontinued operations and non-controlling interest                                           |   |   | (14,511,720                  | )      |   | (7,933,809                   | )      |
| Non-controlling interest (Note 9)                                                                                       |   |   | 82,685                       |   |   | 429,442                      |   |
| Loss for the year from continuing operations                                                                            |   |   | (14,429,035                  | )      |   | (7,504,367                   | )      |
| Earnings (loss) for the year from discontinued operations (Note 10)                                                     |   |   | 1,164,730                    |   |   | (75,864                      | )      |
| Loss and comprehensive loss for the year                                                                                |   |   | (13,264,305                  | )      |   | (7,580,231                   | )      |
|                                                                                                                    |   |   |                         |   |   |                         |   |
| Deficit, beginning of year                                                                                              |   |   | (23,818,096                  | )      |   | (16,231,366                  | )      |
| Share buy back cost in excess of book value                                                                             |   |   | -                            |   |   | (6,499                       | )      |
|                                                                                                                    |   |   |                         |   |   |                         |   |
| Deficit, end of year                                                                                                    |   |   | (37,082,401                  | )      |   | (23,818,096                  | )      |
|                                                                                                                    |   |   |                         |   |   |                         |   |
| Loss per share from continuing operations -basic                                                                        |   |   | (0.34                        | )      |   | (0.18                        | )      |
| Earnings per share from discontinued operations -basic                                                                  |   |   | 0.03                         |   |   | -                            |   |
| Earnings per share from discontinued operations -diluted                                                                |   |   | 0.03                         |   |   | (0.00                        | )      |
|                                                                                                                    |   |   |                         |   |   |                         |   |
| Loss per share - basic and diluted                                                                                      |   |   | (0.30                        | )      |   | (0.18                        | )      |
|                                                                                                                    |   |   |                         |   |   |                         |   |
| Weighted average number of common shares outstanding - basic and diluted                                                |   |   | 42,970,813                   |   |   | 42,908,809                   |   |
|           See accompanying notes to consolidated financial statements |

----

| MINCO GOLD CORPORATION                |
|---------------------------------------|
| (An exploration stage enterprise)     |
| Consolidated Statements of Cash Flows |
| (Expressed in Canadian Dollars)       |

|                                                                                                                    |   |   | Year ended December 31, 2008 |   |   | Year ended December 31, 2007 |   |
|-------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------|--------|--------|------------------------------|--------|
| Cash flows (used in) operating activities                                                                               |   |   |                         |   |   |                         |   |
| Net loss from continuing operations for the year                                                                        |   |   | (14,429,035                  | )      |   | (7,504,367                   | )      |
| Adjustment to reconcile net loss from continuing operations to cash provided by (used in) operating activities:         |   |   |                         |   |   |                         |   |
| - amortization of equipment                                                                                             |   |   | 100,754                      |   |   | 54,668                       |   |
| - equity loss on investment in Minco Silver                                                                             |   |   | 948,750                      |   |   | 3,239,898                    |   |
| - dilution gain                                                                                                         |   |   | (1,544,454                   | )      |   | (191,000                     | )      |
| - stock-based compensation                                                                                              |   |   | 1,242,953                    |   |   | 2,022,850                    |   |
| - gain on sale of exploration permit (Note 6)                                                                           |   |   | (425,632                     | )      |   | -                            |   |
| - foreign exchange loss                                                                                                 |   |   | 991,029                      |   |   | 417,813                      |   |
| - non-controlling interest in loss                                                                                      |   |   | (82,685                      | )      |   | (429,442                     | )      |
| - write down of marketable securities                                                                                   |   |   | 75,600                       |   |   | 232,546                      |   |
| - write down of mineral interests                                                                                       |   |   | 358,500                      |   |   | -                            |   |
| - gain on sale of Minco Silver shares                                                                                   |   |   | -                            |   |   | (2,978,034                   | )      |
| Change in non-cash working capital items:                                                                               |   |   |                         |   |   |                         |   |
| - increase in receivables                                                                                               |   |   | (87,111                      | )      |   | (41,783                      | )      |
| - due from Minco Base Metals                                                                                            |   |   | (234,570                     | )      |   | (271,999                     | )      |
| - decrease (increase) in prepaid expenses and deposits                                                                  |   |   | (25,687                      | )      |   | 81,134                       |   |
| - increase in accounts payable and accrued liabilities                                                                  |   |   | 1,693,433                    |   |   | 483,224                      |   |
| - increase in tax payable                                                                                               |   |   | 85,349                       |   |   | -                            |   |
| Cash used for operating activities of continuing operations                                                             |   |   | (11,332,806                  | )      |   | (4,884,492                   | )      |
| Cash provided by operating activities of discontinued operations (Note 10)                                              |   |   | 677,004                      |   |   | 1,756                        |   |
|                                                                                                                    |   |   | (10,655,802                  | )      |   | (4,882,736                   | )      |
| Cash flows from (used in) financing activities                                                                          |   |   |                         |   |   |                         |   |
| Proceeds from issuance of shares in Minco Gold                                                                          |   |   | 46,439                       |   |   | 105,808                      |   |
| Movement in loan payable                                                                                                |   |   | 2,881,237                    |   |   | -                            |   |
| Cost of share buyback                                                                                                   |   |   | -                            |   |   | (44,451                      | )      |
| Non-controlling interest (Note 9)                                                                                       |   |   | -                            |   |   | 512,128                      |   |
|                                                                                                                    |   |   | 2,927,676                    |   |   | 573,485                      |   |
| Cash from (used) in investing activities of continuing operations                                                       |   |   |                         |   |   |                         |   |
| Acquisition of equipment                                                                                                |   |   | (114,565                     | )      |   | (245,978                     | )      |
| Decrease in short-term investments                                                                                      |   |   | 5,138,285                    |   |   | 4,745,616                    |   |
| Proceeds from sales of mineral interest                                                                                 |   |   | 425,632                      |   |   | -                            |   |
| Proceeds from sale of Minco Silver shares (Note 8)                                                                      |   |   | -                            |   |   | 3,248,416                    |   |
| (Increase) decrease in Due from Minco Silver (Notes 14)                                                                 |   |   | 3,393,506                    |   |   | (1,903,602                   | )      |
| Cash from investing activities of continuing operations                                                                 |   |   | 8,842,858                    |   |   | 5,844,452                    |   |
| Cash from investing activities of discontinued operations                                                               |   |   | 4,461                        |   |   | -                            |   |
|                                                                                                                    |   |   | 8,847,319                    |   |   | 5,844,452                    |   |
| Effect of exchange rate changes on cash and cash equivalents                                                            |   |   | 182,735                      |   |   | (417,814                     | )      |
| Increase in cash and cash equivalents                                                                                   |   |   | 1,301,928                    |   |   | 1,117,387                    |   |
| Cash and cash equivalents, beginning of period                                                                          |   |   | 1,302,483                    |   |   | 185,096                      |   |
|                                                                                                                    |   |   |                         |   |   |                         |   |
| Cash and cash equivalents, end of period                                                                                |   |   | 2,604,411                    |   |   | 1,302,483                    |   |
| Interest income received during the year                                                                                |   |   | 138,250                      |   |   | 248,010                      |   |
|           See accompanying notes to consolidated financial statements |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 1. | Nature of Operations and Going Concern Uncertainty |
|----|----------------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 2. | Change in Accounting Policy |
|----|-----------------------------|

| 3. | Significant Accounting Policies |
|----|---------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

| Computer Equipment             | 30% per year declining-balance  |
|--------------------------------|---------------------------------|
| Mining Equipment               | 30% per year declining-balance  |
| Office Equipment and Furniture | 20% per year declining-balance  |
| Motor Vehicles                 | 30% per year declining -balance |
| Leasehold Improvement          | 5 years straight line           |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 3. | Significant Accounting Policies (continued) |
|----|---------------------------------------------|

| 4. | Short-term Investments |
|----|------------------------|

| 5. | Marketable Securities |
|----|-----------------------|

| 6. | Mineral Interests |
|----|-------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 6. | Mineral Interests (continued) |
|----|-------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 6. | Mineral Interests (continued) |
|----|-------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 6. | Mineral Interests (continued) |
|----|-------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 6. | Mineral Interests (continued) |
|----|-------------------------------|

|                                         |   |         |       |         |   |         |   |   |       |   |
|----------------------------------------------|--------|--------------|------------|--------------|--------|--------------|--------|--------|------------|--------|
|                                         |   | Costs        |       | Costs        |   | Cumulative   |   |
|                                         |   | Incurred     |       | Incurred     |   | Costs        |   |
|                                         |   | January 1 to |       | January 1 to |   | Incurred to  |   |
|                                         |   | December 31, |       | December 31, |   | December 31, |   |
|                                         |   | 2008         |       | 2007         |   | 2008         |   |
| Currently active properties:                 |   |         |       |         |   |         |   |   |       |   |
| Gansu                                        |   |         |       |         |   |         |   |   |       |   |
| - Minco-Qinqi                                |   |         |       |         |   |         |   |   |       |   |
| (formerly West Extension of Yangshan) *      |   | $            | -          |         | $      | (163,008     | )      | $      | 278,576    |   |
| - Yangshan (Anba) *                          |   |         | -          |         |   | 12,941       |   |   | 490,422    |   |
| - Longnan                                    |   |         | 1,414,127  |         |   | 886,375      |   |   | 2,797,887  |   |
| Inner Mongolia                               |   |         |       |         |   |         |   |   |       |   |
| - Gobi Gold                                  |   |         | 270,532    |         |   | 214,319      |   |   | 1,983,542  |   |
| - BYC **                                     |   |         | -          |         |   | 34,098       |   |   | 869,535    |   |
| Guangdong                                    |   |         |       |         |   |         |   |   |       |   |
| - Changkeng                                  |   |         | 8,351,719  |         |   | 176,365      |   |   | 9,054,802  |   |
| Hunan                                        |   |         |       |         |   |         |   |   |       |   |
| - Gold Bull Mountain                         |   |         | 98,948     |         |   | 655,858      |   |   | 2,157,540  |   |
| Henan Zhongjia                               |   |         |       |         |   |         |   |   |       |   |
| - Xiaoshan                                   |   |         | 411,181    |         |   | 1,131,000    |   |   | 1,542,181  |   |
| Total                                        |   |         | 10,546,507 |         |   | 2,947,948    |   |   | 19,174,485 |   |
| Exploration cost recoveries                  |   |         | -          |         |   | 163,008      |   |   | (956,903   | )      |
| Expensed mining license costs                |   |         | (358,500   | )            |   | -            |   |   | (358,500   | )      |
| Expensed exploration permits                 |   |         | (6,611,918 | )            |   | (842,788     | )      |   | (9,203,512 | )      |
| Expensed exploration costs                   |   |         | (3,934,589 | )            |   | (2,268,168   | )      |   | (8,655,570 | )      |
| Capitalized (write off) mining license costs |   | $            | (358,500   | )            | $      | -            |   | $      | -          |   |

| 7. | Plant, Property and Equipment |
|----|-------------------------------|

|                           |   |              |      |         |   |     |   |   |    |   |
|--------------------------------|--------|-------------------|-----------|--------------|--------|----------|--------|--------|---------|--------|
|                           |   | December 31, 2008 |      |
|                           |   |              |      | Accumulated  |   | Net Book |   |
|                           |   | Cost              |      | Amortization |   | Value    |   |
|                           |   |              |      |         |   |     |   |   |    |   |
| Computer equipment             |   | $                 | 235,885   |         | $      | 152,958  |   | $      | 82,927  |   |
| Leasehold improvements         |   |              | 66,044    |         |   | 46,916   |   |   | 19,128  |   |
| Mining equipment               |   |              | 358,909   |         |   | 213,067  |   |   | 145,842 |   |
| Motor vehicles                 |   |              | 386,859   |         |   | 148,409  |   |   | 238,450 |   |
| Office equipment and furniture |   |              | 134,597   |         |   | 107,423  |   |   | 27,174  |   |
|                           |   | $                 | 1,182,294 |         | $      | 668,773  |   | $      | 513,521 |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 7. | Plant, Property and Equipment |
|----|-------------------------------|

|                           |   |              |      |         |   |     |   |   |    |   |
|--------------------------------|--------|-------------------|-----------|--------------|--------|----------|--------|--------|---------|--------|
|                           |   | December 31, 2007 |      |
|                           |   |              |      | Accumulated  |   | Net Book |   |
|                           |   | Cost              |      | Amortization |   | Value    |   |
|                           |   |              |      |         |   |     |   |   |    |   |
| Computer equipment             |   | $                 | 193,843   |         | $      | 120,867  |   | $      | 72,976  |   |
| Leasehold improvements         |   |              | 63,980    |         |   | 38,683   |   |   | 25,296  |   |
| Mining equipment               |   |              | 306,142   |         |   | 197,697  |   |   | 108,445 |   |
| Motor vehicles                 |   |              | 368,874   |         |   | 109,766  |   |   | 259,107 |   |
| Office equipment and furniture |   |              | 132,055   |         |   | 98,170   |   |   | 33,886  |   |
|                           |   |              | 1,064,894 |         |   | 565,183  |   |   | 499,710 |   |
| Discontinued operations        |   |              | 7,296     |         |   | 2,835    |   |   | 4,461   |   |
|                           |   | $                 | 1,072,190 |         | $      | 568,018  |   | $      | 504,171 |   |

| 8. | Equity Investment in Minco Silver Corporation |
|----|-----------------------------------------------|

|                                          |   |   |      |   |   |       |   |
|-----------------------------------------------|--------|--------|-----------|--------|--------|------------|--------|
|                                          |   | 2008   |      | 2007   |   |
| Dilution gain in Minco Silver                 |   | $      | 1,544,454 |   | $      | 191,000    |   |
| Equity loss of Minco Silver Corporation       |   | $      | (948,750  | )      | $      | (3,239,898 | )      |
|                                          |   |   |      |   |   |       |   |
| Income (loss) from investment in Minco Silver |   | $      | 595,704   |   | $      | (3,048,898 | )      |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 8. | Equity Investment in Minco Silver Corporation (continued) |
|----|-----------------------------------------------------------|

|                                                      |   | December 31, 2008 |       | December 31, 2007 |   |
|-----------------------------------------------------------|--------|-------------------|------------|-------------------|--------|
|                                                      |   |              |       |              |   |
| Investment in Minco Silver Corporation on an equity basis |   | $                 | 3,675,116  |              | $      | 3,079,412 |   |
|                                                      |   |              |       |              |   |   |   |
| Market value of Minco Silver shares                       |   | $                 | 18,460,000 |              | $      | 38,740,000 |   |

| 9. | Non-Controlling Interest ("NCI") |
|----|----------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 10. | Discontinued Operations |
|-----|-------------------------|

| Minco Base Metals CorporationBalance Sheet(Expressed in Canadian Dollars) |   |              |     |   |
|---------------------------------------------------------------------------|--------|-------------------|----------|--------|
|                                                                      |   | November 14, 2007 |     |
|                                                                      |   |              |     |
| ASSETS                                                                    |   |              |     |   |
|                                                                      |   |              |     |   |
| Current assets                                                            |   |              |     |   |
| Cash                                                                      |   | $                 | 5,082    |   |
| Receivables                                                               |   |              | 4,504    |   |
| Current assets of discontinued operations                                 |   |              | 9,586    |   |
|                                                                      |   |              |     |   |
| Plant, property and equipment                                             |   |              | 16,534   |   |
| Total assets of discontinued operations                                   |   |              | 26,120   |   |
|                                                                      |   |              |     |   |
| LIABILITIES                                                               |   |              |     |   |
|                                                                      |   |              |     |   |
| Current liabilities                                                       |   |              |     |   |
| Accounts payable and accrued liabilities                                  |   |              | 138,794  |   |
| Total liabilities of discontinued operations                              |   |              | 138,794  |   |
|                                                                      |   |              |     |   |
| Net liabilities of Minco Base Metals disposed                             |   | $                 | (112,674 | )      |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 10. | Discontinued Operations (continued) |
|-----|-------------------------------------|

| Minco Base Metals CorporationStatement of Operations and Comprehensive Loss and Deficit(Expressed in Canadian Dollars) |   |                                             |    |   |
|------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|--------|
|                                                                                                                   |   | Period from January 1, 2007 to November 14, 2007 |    |
|                                                                                                                   |   |                                             |    |
| Exploration costs                                                                                                      |   | $                                                | 9,172   |   |
| Administration expenses                                                                                                |   |                                             | 30,424  |   |
|                                                                                                                   |   |                                             |    |   |
| Net loss from discontinued operations                                                                                  |   | $                                                | (39,596 | )      |

| Minco Base Metals CorporationStatement of Cash Flows(Expressed in Canadian Dollars) |   |                                             |   |   |
|-------------------------------------------------------------------------------------|--------|--------------------------------------------------|--------|--------|
|                                                                                |   | Period from January 1, 2007 to November 14, 2007 |   |
|                                                                                |   |                                             |   |   |
| Cash used by operating activities of discontinued operations                        |   | $                                                | (4,240 | )      |
| Cash used in investing activities of discontinued operations                        |   |                                             | -      |   |
| Cash provided by (used in) financing activities of discontinued operations          |   |                                             | 7.820  |   |
|                                                                                |   |                                             |   |   |
| Increase (decrease) in cash                                                         |   |                                             | 3,580  |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 10. | Discontinued Operations (continued) |
|-----|-------------------------------------|

|   |
|--------|

| Inner Mongolia Huayu-Minco Mining Co., LtdBalance Sheets(Expressed in Canadian Dollars) |   |              |   |              |   |   |   |
|-----------------------------------------------------------------------------------------|--------|-------------------|--------|-------------------|--------|--------|--------|
|                                                                                    |   | December 31, 2008 |   | December 31, 2007 |   |
|                                                                                    |   |              |   |              |   |
| ASSETS                                                                                  |   |              |   |              |   |   |   |
|                                                                                    |   |              |   |              |   |   |   |
| Current assets                                                                          |   |              |   |              |   |   |   |
| Cash                                                                                    |   | $                 | -      |              | $      | 5,409  |   |
| Receivables                                                                             |   |              | -      |              |   | 67     |   |
| Prepaid                                                                                 |   |              | -      |              |   | 362    |   |
| Current assets of discontinued operations                                               |   |              | -      |              |   | 5,838  |   |
|                                                                                    |   |              |   |              |   |   |   |
| Plant, property and equipment                                                           |   |              | -      |              |   | 4,461  |   |
| Total assets of discontinued operations                                                 |   |              | -      |              |   | 10,299 |   |
|                                                                                    |   |              |   |              |   |   |   |
| LIABILITIES                                                                             |   |              |   |              |   |   |   |
|                                                                                    |   |              |   |              |   |   |   |
| Current liabilities                                                                     |   |              |   |              |   |   |   |
| Accounts payable and accrued liabilities                                                |   |              | -      |              |   | 137    |   |
| Total liabilities of discontinued operations                                            |   |              | -      |              |   | 137    |   |
|                                                                                    |   |              |   |              |   |   |   |
| Net assets of Huayu-Minco disposed                                                      |   | $                 | -      |              | $      | 10,162 |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 10. | Discontinued Operations (continued) |
|-----|-------------------------------------|

| Inner Mongolia Huayu-Minco Mining Co., LtdStatements of Operations and Comprehensive Loss and Deficit(Expressed in Canadian Dollars) |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                 |   | Period from January 1, 2008 to October 31, 2008 |   | Year Ended December 31, 2007 |   |
| Exploration costs                                                                                                                    |   | $ | 6,875 |   | $ | 26,814 |   |
| Administration expenses                                                                                                              |   |   | 24,077 |   |   | 9,454 |   |
| Loss from discontinued operations                                                                                                    |   |   | (30,952 | ) |   | (36,268 | ) |
|                                                                                                                                 |   |   |   |   |   |   |   |
| Gain on disposition (net of tax -$35,268)                                                                                            |   |   | 1,195,682 |   |   | - |   |
|                                                                                                                                 |   |   |   |   |   |   |   |
| Earnings from discontinued operations                                                                                                |   |   | 1,164,730 |   |   | - |   |
|                                                                                                                                 |   |   |   |   |   |   |   |
| Earnings (loss) for the year from discontinued operations                                                                            |   | $ | 1,164,730 |   | $ | (36,268 | ) |

| Inner Mongolia Huayu-Minco Mining Co., LtdStatements of Cash Flows(Expressed in Canadian Dollars) |   |
|---------------------------------------------------------------------------------------------------|--------|
|                                                                                              |   |   | Period from January 1, 2008 to October 31, 2008 |   |   | Year Ended December 31, 2007 |   |
|                                                                                              |   |   |   |   |   |   |   |
| Cash provided by operating activities of discontinued operations                                  |   |   | 641,736 |   |   | 3,258 |   |
| Cash provided by investing activities of discontinued operations                                  |   |   | 4,461 |   |   | - |   |
|                                                                                              |   |   |   |   |   |   |   |
| Increase in cash and cash equivalents                                                             |   |   | 646,197 |   |   | 3,258 |   |

| 11. | Loans payable |
|-----|---------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 11. | Loans payable (continued) |
|-----|---------------------------|

| 12. | Share Capital |
|-----|---------------|

|                                                                                                                                                   |   |   |       |   |   |       |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
| Balance, December 31, 2006                                                                                                                             |   |   | 42,865,219 |   | $      | 33,809,903 |   |
| Stock options exercised ranging from $0.55 to $1.35 per share, including $63,750 contributed surplus attributed to stock-based compensation recognized |   |   | 111,166    |   |   | 169,558    |   |
|                                                                                                                                                   |   |   |       |   |   |       |   |
| Purchased and cancelled pursuant to normal course issuer bid                                                                                           |   |   | (48,000    | )      |   | (37,951    | )      |
| Balance, December 31, 2007                                                                                                                             |   |   | 42,928,385 |   |   | 33,941,510 |   |
|                                                                                                                                                   |   |   |       |   |   |       |   |
| Stock options exercised at $0.79 per share, including $33,973 contributed surplus attributed to stock-based compensation recognized                    |   |   | 60,666     |   |   | 80,412     |   |
| Balance, December 31, 2008                                                                                                                             |   |   | 42,989,051 |   | $      | 34,021,922 |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 12. | Share Capital (continued) |
|-----|---------------------------|

|                                                   |   |   |      |   |
|--------------------------------------------------------|--------|--------|-----------|--------|
| Balance at December 31, 2006                           |   | $      | 1,649,343 |   |
| 2007 stock-based compensation                          |   |   | 2,022,850 |   |
| Transfer to share capital on exercise of stock options |   |   | (63,750   | )      |
| Transfer of net liabilities to Minco Base Metals       |   |   | 112,674   |   |
| Balance at December 31, 2007                           |   |   | 3,721,117 |   |
| 2008 stock-based compensation                          |   |   | 1,242,953 |   |
| Transfer to share capital on exercise of stock options |   |   | (33,973   | )      |
| Balance at December 31, 2008                           |   | $      | 4,930,097 |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 12. | Share Capital (continued) |
|-----|---------------------------|

|                                     |   |   |       |                            |   |   |   |
|------------------------------------------|--------|--------|------------|---------------------------------|--------|--------|--------|
|                                     |   | Number |       | Weighted Average Exercise Price |   |
| Options outstanding at December 31, 2006 |   |   | 2,945,334  |                            | $      | 1.61   |   |
| Granted                                  |   |   | 3,865,000  |                            |   | 1.07   |   |
| Exercised                                |   |   | (111,166   | )                               |   | 0.95   |   |
| Cancelled and Forfeited                  |   |   | (1,197,501 | )                               |   | 1.71   |   |
| Expired                                  |   |   | (265,000   | )                               |   | 1.50   |   |
| Options outstanding at December 31, 2007 |   |   | 5,236,667  |                            | $      | 1.21   |   |
| Granted                                  |   |   | 767,500    |                            |   | 1.03   |   |
| Exercised                                |   |   | (60,666    | )                               |   | 0.79   |   |
| Cancelled and Forfeited                  |   |   | (1,217,667 | )                               |   | 1.48   |   |
| Options outstanding at December 31, 2008 |   |   | 4,725,834  |                            | $      | 1.11   |   |

|                    |   |   |                |   |   |                                            |   |   |                            |   |   |               |   |   |                            |   |
|-------------------------|--------|--------|---------------------|--------|--------|-------------------------------------------------|--------|--------|---------------------------------|--------|--------|--------------------|--------|--------|---------------------------------|--------|
| Options Outstanding     |   |   | Options Exercisable |   |
| Range of ExercisePrices |   |   | Number Outstanding  |   |   | Weighted Average Remaining Contractual Life (yr | )      |   | Weighted Average Exercise Price |   |   | Number Exercisable |   |   | Weighted Average Exercise Price |   |
| $0.00-$1.06             |   |   | 2,682,167           |   |   | 3.82                                            |   | $      | 0.80                            |   |   | 1,610,328          |   | $      | 0.85                            |   |
| $1.07-$1.63             |   |   | 1,181,667           |   |   | 3.49                                            |   | $      | 1.32                            |   |   | 808,335            |   | $      | 1.31                            |   |
| $1.64-$2.54             |   |   | 762,000             |   |   | 1.84                                            |   | $      | 1.69                            |   |   | 762,000            |   | $      | 1.69                            |   |
| $2.55-$3.00             |   |   | 100,000             |   |   | 2.33                                            |   | $      | 2.55                            |   |   | 100,000            |   | $      | 2.55                            |   |
|                    |   |   | 4,725,834           |   |   | 3.39                                            |   | $      | 1.11                            |   |   | 3,280,663          |   | $      | 1.21                            |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 12. | Share Capital (continued) |
|-----|---------------------------|

|                       |        |          |         |
|----------------------------|-------------|---------------|--------------|
|                       | 2008        | 2007          | 2006         |
| Risk-free interest rate    | 1.69%-3.10% | 3.95% - 4.59% | 3.83% - 4.5% |
| Dividend yield             | 0%          | 0%            | 0%           |
| Volatility                 | 64% - 77%   | 86%-104%      | 114%-134%    |
| Approximate expected lives | 5 years     | 5 years       | 5 years      |

| 13. | Income Taxes |
|-----|--------------|

|                                                             |   |   |        |   |   |       |   |
|------------------------------------------------------------------|--------|--------|-------------|--------|--------|------------|--------|
|                                                             |   |   | 2008        |   |   | 2007       |   |
|                                                             |   |   |        |   |   |       |   |
| Loss before discontinued operations and non-controlling interest |   | $      | (14,426,371 | )      | $      | (7,933,809 | )      |
|                                                             |   |   | 31          | %      |   | 34.12      | %      |
|                                                             |   |   |        |   |   |       |   |
| Income tax recovery at statutory rates                           |   | $      | (4,472,175  | )      | $      | (2,707,016 | )      |
| Non-taxable capital gain                                         |   |   | -           |   |   | (553,530   | )      |
| Non-taxable dilution gain                                        |   |   | (92,334     | )      |   | 520,313    |   |
| Non-deductible expenses                                          |   |   | (1,298,184  | )      |   | 734,677    |   |
| Difference in foreign tax rates                                  |   |   | 1,043,006   |   |   | 145,999    |   |
| Impact of federal tax rate change                                |   |   | 179,848     |   |   | 637,268    |   |
| Expiry of non-capital loss carry forward                         |   |   | 196,776     |   |   | 356,895    |   |
| Business tax/China withholding tax                               |   |   | 85,349      |   |   | -          |   |
| Change in valuation allowance                                    |   |   | 4,181,504   |   |   | 865,394    |   |
| Others                                                           |   |   | 261,559     |   |   | -          |   |
| Provision for tax expenses                                       |   | $      | 85,348      |   | $      | -          |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 13. | Income Taxes (continued) |
|-----|--------------------------|

|                              |   |   |       |   |   |       |   |
|-----------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                              |   |   | 2008       |   |   | 2007       |   |
|                              |   |   | 26.00      | %      |   | 27.00      | %      |
| Future income tax assets:         |   |   |       |   |   |       |   |
| Non-capital losses                |   | $      | 4,050,990  |   | $      | 2,576,597  |   |
| Unclaimed resource expenditures   |   |   | 4,365,041  |   |   | 1,744,282  |   |
| Capital assets                    |   |   | 175,827    |   |   | 142,273    |   |
| Marketable securities             |   |   | 87         |   |   | -          |   |
| Equity investment in Minco Silver |   |   | 97,254     |   |   | -          |   |
| Share issue costs                 |   |   | 8,970      |   |   | 53,514     |   |
|                              |   |   | 8,698,169  |   |   | 4,516,666  |   |
| Future income tax liabilities:    |   |   |       |   |   |       |   |
| Less: valuation allowance         |   |   | (8,698,169 | )      |   | (4,516,666 | )      |
| Net future income tax assets      |   | $      | -          |   | $      | -          |   |

|   |   |                      |      |   |
|--------|--------|---------------------------|-----------|--------|
|   |   | Non-Capital Losses Canada |      |
| 2009   |   | $                         | 774,000   |   |
| 2010   |   |                      | 857,000   |   |
| 2015   |   |                      | 117,000   |   |
| 2026   |   |                      | 1,442,000 |   |
| 2027   |   |                      | 1,530,000 |   |
| 2028   |   |                      | 1,122,000 |   |
|   |   | $                         | 5,842,000 |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 13. | Income Taxes (continued) |
|-----|--------------------------|

| 14. | Related Party Transactions |
|-----|----------------------------|

| a. | The Company earned the rental income and incurred the following fees to its directors or corporations controlled by its directors: |
|----|------------------------------------------------------------------------------------------------------------------------------------|

|                   |   |   | 2008    |   |   | 2007    |   |
|------------------------|--------|--------|---------|--------|--------|---------|--------|
| Rental Income          |   | $      | 68,100  |   | $      | 58,761  |   |
|                   |   |   |    |   |   |    |   |
|                   |   |   | 2008    |   |   | 2007    |   |
| Exploration costs      |   | $      | 85,937  |   | $      | 80,625  |   |
| Management fees        |   |   | 42,135  |   |   | 17,344  |   |
| Property investigation |   |   | 6,979   |   |   | 21,094  |   |
| Investor relations     |   |   | 8,177   |   |   | -       |   |
| Director's fees        |   |   | 48,000  |   |   | 62,500  |   |
|                   |   |   |    |   |   |    |   |
|                   |   | $      | 191,228 |   | $      | 181,563 |   |

| b. | Receivables of $166,872 (2007 - $239,260) are due from four companies related by two common directors. |
|----|--------------------------------------------------------------------------------------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 14. | Related Party Transactions (continued) |
|-----|----------------------------------------|

| 15. | Capital Risk Management |
|-----|-------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 16. | Commitments and Contingencies |
|-----|-------------------------------|

| (a) | The Company has commitments in  respect of office leases requiring  minimum payments of $1,451,329 as follows: |
|-----|------------------------------------------------------------------------------------------------------------------------------------|

| 2009   |   | $      | 200,174   |   |
|--------|--------|--------|-----------|--------|
| 2010   |   |   | 205,533   |   |
| 2011   |   |   | 219,393   |   |
| 2012   |   |   | 226,323   |   |
| 2013   |   |   | 240,183   |   |
| 2014   |   |   | 247,113   |   |
| 2015   |   |   | 112,613   |   |
|   |   |   |      |   |
|   |   | $      | 1,451,329 |   |

|   | The Company has entered into sub-lease agreements for a portion of its leased premises. |
|--------|-----------------------------------------------------------------------------------------|

| 17. | Geographic Information |
|-----|------------------------|

|                |   |             |      |             |   |       |   |
|---------------------|--------|------------------|-----------|------------------|--------|------------|--------|
|                |   | December 31 2008 |      | December 31 2007 |   |
| Current Assets      |   |             |      |             |   |       |   |
| Canada              |   | $                | 1,945,475 |             | $      | 7,932,446  |   |
| China               |   |             | 4,360,190 |             |   | 4,859,715  |   |
|                |   | $                | 6,305,665 |             | $      | 12,792,161 |   |
|                |   |             |      |             |   |       |   |
|                |   | December 31 2008 |      | December 31 2007 |   |
| Long-term Assets    |   |             |      |             |   |       |   |
| Canada              |   | $                | 3,813,628 |             | $      | 3,119,479  |   |
| China               |   |             | 439,132   |             |   | 873,881    |   |
|                |   | $                | 4,252,760 |             | $      | 3,993,360  |   |
|                |   |             |      |             |   |
|                |   | December 31 2008 |      | December 31 2007 |   |
| Current Liabilities |   |             |      |             |   |       |   |
| Canada              |   | $                | 192,831   |             | $      | 2,344,007  |   |
| China               |   |             | 8,495,976 |             |   | 514,298    |   |
|                |   | $                | 8,688,807 |             | $      | 2,858,305  |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 17. | Geographic Information (continued) |
|-----|------------------------------------|

|                     |   |   |        |   |   |       |   |
|--------------------------|--------|--------|-------------|--------|--------|------------|--------|
|                     |   |   | 2008        |   |   | 2007       |   |
|                     |   |   |        |   |   |       |   |
| Loss for the year        |   |   |        |   |   |       |   |
| Canada *                 |   | $      | (2,411,563  | )      | $      | (3,959,788 | )      |
| China                    |   |   | (10,850,742 | )      |   | (3,620,443 | )      |
|                     |   | $      | (13,264,305 | )      | $      | (7,580,231 | )      |
|                     |   |   |        |   |   |       |   |
|                     |   |   | 2008        |   |   | 2007       |   |
|                     |   |   |        |   |   |       |   |
| Tax expense for the year |   | $      | -           |   | $      | -          |   |
| Canada *                 |   |   |        |   |   |       |   |
| China                    |   |   | (85,348     | )      |   | -          |   |
|                     |   | $      | (85,348     | )      | $      | -          |   |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 18. | Earnings (Loss) per Share |
|-----|---------------------------|

|                                                                        |   |   |       |   |   |       |   |
|-----------------------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                                                        |   |   | 2008       |   |   | 2007       |   |
|                                                                        |   |   |       |   |   |       |   |
| Loss per share from continuing operations                                   |   |   |       |   |   |       |   |
| Basic                                                                       |   |   | (0.34      | )      |   | (0.18      | )      |
| Diluted                                                                     |   |   | (0.34      | )      |   | (0.18      | )      |
|                                                                        |   |   |       |   |   |       |   |
| Earnings per share from discontinued operations                             |   |   |       |   |   |       |   |
| Basic                                                                       |   |   | 0.03       |   |   | -          |   |
| Diluted                                                                     |   |   | 0.03       |   |   | -          |   |
|                                                                        |   |   |       |   |   |       |   |
| Loss per share                                                              |   |   |       |   |   |       |   |
| Basic                                                                       |   |   | (0.30      | )      |   | (0.18      | )      |
| Diluted                                                                     |   |   | (0.30      | )      |   | (0.18      | )      |
|                                                                        |   |   |       |   |   |       |   |
| Weighted average number of shares outstanding Effect of dilutive securities |   |   | 42,970,813 |   |   | 42,908,809 |   |
|                                                                        |   |   |       |   |   |       |   |
| Stock options                                                               |   |   | 50,640     |   |   | -          |   |
|                                                                        |   |   |       |   |   |       |   |
| Diluted weighted average number of shares outstanding                       |   |   | 43,021,453 |   |   | 42,908,809 |   |

| 19. | Financial Risk Management |
|-----|---------------------------|

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 19. | Financial Risk Management (continued) |
|-----|---------------------------------------|

|   | Financial Assets             |                                |
|--------|------------------------------|-------------------------------------|
|   |                         |                                |
|   | Held for trading $3,539,570* | Loans/other receivable $2,649,582** |

----

| MINCO GOLD CORPORATION                     |
|--------------------------------------------|
| (An exploration stage enterprise)          |
| Notes to Consolidated Financial Statements |
| December 31, 2008 and 2007                 |
| (Expressed in Canadian Dollars)            |

| 19. | Financial Risk Management (continued) |
|-----|---------------------------------------|

| 20. | Subsequent Events |
|-----|-------------------|

----

| Index                                                                             | Paqe   |
|-----------------------------------------------------------------------------------|--------|
|                                                                              |   |   |
| Auditors'          Report                                                         |   | 3 |
|                                                                              |   |   |
| Consolidated          Balance Sheets                                              |   | 4 |
|                                                                              |   |   |
| Consolidated          Statements of Operations and Comprehensive Loss and Deficit |   | 5 |
| Consolidated          Statements of Cash Flows                                    |   | 6 |
|                                                                              |   |   |
| Notes          to Consolidated Financial Statements                               |   | 7          - 34 |

----

| Dr.          Ken Cai                              | Paul          Zhang, C.A.   |
|---------------------------------------------------|-----------------------------|
| President          and CEO                        | CFO          and VP Finance |
|                                              |                        |
| Vancouver,          CanadaMarch          29, 2010 |                        |

----

|   |   |                                  |
|--------|--------|---------------------------------------|
|   |   |                                  |
|   |   | PricewaterhouseCoopers          LLP   |
|   |   | Chartered          Accountants        |
|   |   | PricewaterhouseCoopers          Place |
|   |   | 250          Howe Street, Suite 700   |
|   |   | Vancouver,          British Columbia  |
|   |   | Canada          V6C 3S7               |
|   |   | Telephone+1          604 806 7000     |
|   |   | Facsimile+          1 604 806 7806    |

----

| MINCO          GOLD CORPORATION            |
|--------------------------------------------|
|                                       |
| (An          exploration stage enterprise) |
| Consolidated          Balance Sheets       |
|                                       |
| (in          Canadian dollars)             |
|                                       |

|                                                     |   | December          31, 2009 |        | December          31, 2008 |   |
|----------------------------------------------------------|--------|----------------------------|-------------|----------------------------|--------|
| ASSETS                                                   |   |                       |        |                       |   |   |   |
|                                                     |   |                       |        |                       |   |   |   |
| Current          assets                                  |   |                       |        |                       |   |   |   |
| Cash          and cash equivalents                       |   | $                          | 3,508,917   |                       | $      | 2,553,531 |   |
| Short-term          investments (Note 3)                 |   |                       | 2,475,936   |                       |   | 922,559 |   |
| Marketable          securities (Note 4)                  |   |                       | 35,700      |                       |   | 12,600 |   |
| Receivables                                              |   |                       | 371,576     |                       |   | 895,840 |   |
| Due          from Minco Silver (Note 13(c))              |   |                       | 2,109,285   |                       |   | 1,246,282 |   |
| Due          from Minco Base Metals (Note 13(d))         |   |                       | 120,576     |                       |   | 506,569 |   |
| Prepaid          expenses and deposits                   |   |                       | 85,731      |                       |   | 129,113 |   |
| Assets          of discontinued operations (Note 9)      |   |                       | -           |                       |   | 51,771 |   |
|                                                     |   |                       | 8,707,721   |                       |   | 6,318,265 |   |
|                                                     |   |                       |        |                       |   |   |   |
| Long-term          deposit                               |   |                       | 51,764      |                       |   | 51,523 |   |
| Plant,          property and equipment (Note 6)          |   |                       | 341,245     |                       |   | 468,650 |   |
| Equity          investment in Minco Silver (Note 7)      |   |                       | 5,494,836   |                       |   | 3,675,116 |   |
| Assets          of discontinued operations (Note 9)      |   |                       | -           |                       |   | 44,871 |   |
|                                                     |   | $                          | 14,595,566  |                       | $      | 10,558,425 |   |
|                                                     |   |                       |        |                       |   |   |   |
| LIABILITIES                                              |   |                       |        |                       |   |   |   |
|                                                     |   |                       |        |                       |   |   |   |
| Current          liabilities                             |   |                       |        |                       |   |   |   |
| Accounts          payable and accrued liabilities        |   | $                          | 5,203,844   |                       | $      | 5,783,711 |   |
| Loan          payable (Note 10)                          |   |                       | -           |                       |   | 2,667,295 |   |
| Liabilities          of discontinued operations (Note 9) |   |                       | -           |                       |   | 237,800 |   |
|                                                     |   |                       | 5,203,844   |                       |   | 8,688,807 |   |
|                                                     |   |                       |        |                       |   |   |   |
| Non-Controlling          Interest (Note 10)              |   |                       | 2,493,427   |                       |   | - |   |
|                                                     |   |                       |        |                       |   |   |   |
| SHAREHOLDERS'          EQUITY                            |   |                       |        |                       |   |   |   |
|                                                     |   |                       |        |                       |   |   |   |
| Share          capital (Note 11 (a))                     |   |                       | 38,553,755  |                       |   | 34,021,922 |   |
|                                                     |   |                       |        |                       |   |   |   |
| Contributed          surplus (Note 11 (a))               |   |                       | 5,627,841   |                       |   | 4,930,097 |   |
|                                                     |   |                       |        |                       |   |   |   |
| Deficit                                                  |   |                       | (37,283,301 | )                          |   | (37,082,401 | ) |
|                                                     |   |                       |        |                       |   |   |   |
|                                                     |   |                       | 6,898,295   |                       |   | 1,869,618 |   |
|                                                     |   | $                          | 14,595,566  |                       | $      | 10,558,425 |   |

| On          behalf of the Board | "Malcolm          Clay"        |   | "Robert          Callander"        |
|---------------------------------|--------------------------------|--------|------------------------------------|
|                            | Malcolm          Clay Director |   | Robert          Callander Director |

----

| MINCO          GOLD CORPORATION                                                                                             |
|-----------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                        |
| (An          exploration stage enterprise)                                                                                  |
| Consolidated          Statements of Operations and Comprehensive Loss and Deficit For the          Years ended December 31, |
|                                                                                                                        |
| (in          Canadian dollars)                                                                                              |
|                                                                                                                        |

|                                                                                                                                                      |   |   | 2009        |   |   | 2008        |   |   | 2007        |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
|                                                                                                                                                      |   |   |        |   |   |        |   |   |        |   |
| Exploration          permit (Note 5)                                                                                                                      |   |   | (1,205,298  | )      | $      | 6,611,918   |   | $      | 842,788     |   |
| Exploration          costs, net of recoveries (Note 5)                                                                                                    |   |   | 1,446,534   |   |   | 3,581,361   |   |   | 1,002,462   |   |
|                                                                                                                                                      |   |   | 241,236     |   |   | 10,193,279  |   |   | 1,845,250   |   |
| Administrative          expenses (Note 13)                                                                                                                |   |   |        |   |   |        |   |   |        |   |
| Accounting          and audit                                                                                                                             |   |   | 228,514     |   |   | 183.990     |   |   | 121,458     |   |
| Amortization                                                                                                                                              |   |   | 190,111     |   |   | 95,905      |   |   | 52,588      |   |
| Consulting                                                                                                                                                |   |   | 282,515     |   |   | 284,006     |   |   | 76,368      |   |
| Directors'          fees                                                                                                                                  |   |   | 49,000      |   |   | 48,000      |   |   | 62,500      |   |
| Foreign          exchange (gain) loss                                                                                                                     |   |   | (561,597    | )      |   | 1,015,022   |   |   | 406,376     |   |
| Interest          expense                                                                                                                                 |   |   | 792         |   |   | 211,402     |   |   | -           |   |
| Investor          relations                                                                                                                               |   |   | 119,578     |   |   | 353,862     |   |   | 577,138     |   |
| Legal                                                                                                                                                     |   |   | (3,900      | )      |   | 49,231      |   |   | 47,408      |   |
| Meals          and entertainment                                                                                                                          |   |   | 82,790      |   |   | 71,422      |   |   | 44,449      |   |
| Office          and miscellaneous                                                                                                                         |   |   | 117,545     |   |   | 160,472     |   |   | 195,135     |   |
| Property          investigation                                                                                                                           |   |   | 104,760     |   |   | 88,353      |   |   | 218,672     |   |
| Regulatory          and filing                                                                                                                            |   |   | 112,119     |   |   | 105,838     |   |   | 91,948      |   |
| Rent                                                                                                                                                      |   |   | 260,311     |   |   | 216,986     |   |   | 230,723     |   |
| Salaries          and benefits                                                                                                                            |   |   | 591,758     |   |   | 534,512     |   |   | 685,492     |   |
| Stock-based          compensation (Note 11(b))                                                                                                            |   |   | 750,510     |   |   | 1,242,953   |   |   | 2,022,850   |   |
| Telephone                                                                                                                                                 |   |   | 33,895      |   |   | 26,485      |   |   | 15,430      |   |
| Travel          and transportation                                                                                                                        |   |   | 122,439     |   |   | 101,247     |   |   | 116,772     |   |
|                                                                                                                                                      |   |   | 2,481,140   |   |   | 4,789,686   |   |   | 4,965,307   |   |
| Operating          loss                                                                                                                                   |   |   | (2,722,376  | )      |   | (14,982,965 | )      |   | (6,810,557  | )      |
| Other          income (loss)                                                                                                                              |   |   |        |   |   |        |   |   |        |   |
| Gain          on sale of exploration permit                                                                                                               |   |   | -           |   |   | 425,632     |   |   | -           |   |
| Unrecognized          gain (loss) on marketable securities                                                                                                |   |   | 23,100      |   |   | (75,600     | )      |   | (232,546    | )      |
| Gain          on sale of Minco Silver shares                                                                                                              |   |   | -           |   |   | -           |   |   | 2,978,034   |   |
| Write          down of mineral interests                                                                                                                  |   |   | -           |   |   | (358,500    | )      |   | -           |   |
| Interest          and other income                                                                                                                        |   |   | 123,052     |   |   | 363,361     |   |   | 299.354     |   |
| Loss          for the year before discontinued operations, non-controlling interest,          tax expenses, loss from equity investment and dilution gain |   |   | (2,576,224  | )      |   | (14,628,072 | )      |   | (3,765,715  | )      |
| Tax          expenses (Note 12)                                                                                                                           |   |   | -           |   |   | (85,349     | )      |   | -           |   |
| Share          of loss from equity investment in Minco Silver (Note 7)                                                                                    |   |   | (1,659,280  | )      |   | (948.750    | )      |   | (3,239,898  | )      |
| Dilution          gain (Note 7)                                                                                                                           |   |   | 3,479,000   |   |   | 1,544,454   |   |   | 191,000     |   |
| Non-controlling          interest (Note 8)                                                                                                                |   |   | -           |   |   | -           |   |   | 97,114      |   |
| Loss          for the year from continuing operations                                                                                                     |   |   | (756,504    | )      |   | (14,117,717 | )      |   | (6,717.499  | )      |
| Earnings          (loss) for the year from discontinued operations (Note 9)                                                                               |   |   | 555,604     |   |   | 853,412     |   |   | (862.732    | )      |
| Loss          and comprehensive loss for the year                                                                                                         |   |   | (200,900    | )      |   | (13,264,305 | )      |   | (7,580,231  | )      |
| Deficit,          beginning                                                                                                                               |   |   | (37,082,401 | )      |   | (23,818,096 | )      |   | (16,231,366 | )      |
| Share          buy-back cost in excess of book value                                                                                                      |   |   | -           |   |   | -           |   |   | (6,499      | )      |
| Deficit,          ending                                                                                                                                  |   | $      | (37,283,301 | )      |   | (37,082,401 | )      | $      | (23,818,096 | )      |
|                                                                                                                                                      |   |   |        |   |   |        |   |   |        |   |
| Loss          per share from continuing operations - basic and diluted                                                                                    |   | $      | (0.02       | )      | $      | (0.33       | )      | $      | (0.16       | )      |
| Earnings          (loss) per share from discontinued operations - basic and diluted                                                                       |   | $      | 0.01        |   | $      | 0.02        |   | $      | (0.02       | )      |
| Loss          per share - basic and diluted                                                                                                               |   | $      | (0.00       | )      | $      | (0.31       | )      | $      | (0.18       | )      |
| Weighted          average number of common shares outstanding - basic and diluted                                                                         |   |   | 43,148,525  |   |   | 42,970,813  |   |   | 42,908,809  |   |

----

| MINCO          GOLD CORPORATION                                                  |
|----------------------------------------------------------------------------------|
|                                                                             |
| (An          exploration stage enterprise) Consolidated Statements of Cash Flows |
| For          the Years ended December 31,                                        |
| (in          Canadian dollars)                                                   |

|                                                                                                                              |   | 2009   |           | 2008   |   | 2007        |   |
|-----------------------------------------------------------------------------------------------------------------------------------|--------|--------|----------------|--------|--------|-------------|--------|
| Cash          flows from operating activities                                                                                     |   |   |           |   |   |        |   |   |   |   |
| Loss          for the year from continuing operations                                                                             |   | $      | (756,504       | )      | $      | (14,117,717 | )      | $ | (6,717,499 | ) |
| Adjustment          to reconcile net loss from continuing operations to cash provided by          (used in) operating activities: |   |   |           |   |   |        |   |   |   |   |
| -          amortization of equipment                                                                                              |   |   | 190,111        |   |   | 95,905      |   |   | 52,588 |   |
| -          equity loss on investment in Minco Silver                                                                              |   |   | 1,659,280      |   |   | 948,750     |   |   | 3,239,898 |   |
| -          dilution gain                                                                                                          |   |   | (3,479,000     | )      |   | (1,544,454  | )      |   | (191,000 | ) |
| -          stock-based compensation                                                                                               |   |   | 750,510        |   |   | 1,242,953   |   |   | 2,022,850 |   |
| -          foreign exchange loss                                                                                                  |   |   | -              |   |   | 1,015,022   |   |   | 406,376 |   |
| -          non-controlling interest                                                                                               |   |   | -              |   |   | (761,770    | )      |   |   |   |
| -          unrecognized (gain)/loss on marketable securities                                                                      |   |   | (23,100        | )      |   | 75,600      |   |   | 232,546 |   |
| -          write down of mineral interests                                                                                        |   |   | -              |   |   | 358,500     |   |   | - |   |
| -          gain on sale of Minco Silver shares                                                                                    |   |   | -              |   |   | -           |   |   | (2,978,034 | ) |
| -          gain on sale of Exploration permit                                                                                     |   |   | -              |   |   | (425,632    | )      |   | - |   |
| Change          in non-cash working capital items:                                                                                |   |   |           |   |   |        |   |   |   |   |
| -decrease          (increase) in receivables                                                                                      |   |   | 524,266        |   |   | (87,963     | )      |   | (40,039 | ) |
| -          due from Minco Base Metals                                                                                             |   |   | 385,993        |   |   | (234,570    | )      |   | (271,999 | ) |
| -          due from Minco Silver                                                                                                  |   |   | (863,004       | )      |   | -           |   |   | - |   |
| -          decrease (increase) in prepaid expenses and deposits                                                                   |   |   | 43,139         |   |   | (28,070     | )      |   | 83,517 |   |
| -(decrease)          increase in accounts payable and accrued liabilities                                                         |   |   |  (754,541 | )      |   | 1,791,095   |   |   |  (578,685 | ) |
| -          increase in tax payable                                                                                                |   |   | -              |   |   | 85,349      |   |   | - |   |
| Cash          flows from operating activities of continuing operations                                                            |   |   | (2,322,851     | )      |   | (10,825,232 | )      |   | (5,501,251 | ) |
| Cash          flows from financing activities of discontinued operations (Note          9)                                        |   |   | 319,502        |   |   | 169,430     |   |   | 618,515 |   |
|                                                                                                                              |   |   | (2,003,349     | )      |   | (10,655,802 | )      |   | (4,882,736 | ) |
| Cash          flows from financing activities                                                                                     |   |   |           |   |   |        |   |   |   |   |
| Proceeds          from issuance of shares                                                                                         |   |   | 4,479,067      |   |   | 46,439      |   |   | 105,808 |   |
| Movement          in loan payable                                                                                                 |   |   | -              |   |   | 2,667,295   |   |   | - |   |
| Cost          of share buyback                                                                                                    |   |   | -              |   |   | -           |   |   | (44,451 | ) |
| Non-controlling          interest (Note 8)                                                                                        |   |   | -              |   |   | -           |   |   | 412,803 |   |
| Cash          flows from financing activities of continuing operations                                                            |   |   | 4,479,067      |   |   | 2,713,734   |   |   | 474,160 |   |
| Cash          flows from financing activities of discontinued operations (Note          9)                                        |   |   | -              |   |   | 213,942     |   |   | 99,325 |   |
|                                                                                                                              |   |   | 4,479,067      |   |   | 2,927,676   |   |   | 573,485 |   |
| Cash          flows from investing activities                                                                                     |   |   |           |   |   |        |   |   |   |   |
| Acquisition          of equipment                                                                                                 |   |   | (62,707        | )      |   | (110,392    | )      |   | (205,279 | ) |
| (Increase)          decrease in short-term investments                                                                            |   |   | (1,553,377     | )      |   | 5,138,285   |   |   | 4,745,616 |   |
| Proceeds          from sales of mineral interest                                                                                  |   |   | -              |   |   | 425,632     |   |   | - |   |
| Decrease          (increase) in Due from Minco Silver                                                                             |   |   | -              |   |   | 3,393,506   |   |   | (1,903,602 | ) |
| Proceeds          from investment in Minco Silver                                                                                 |   |   | -              |   |   | -           |   |   | 3,248,416 |   |
| Cash          flows from investing activities of continuing operations                                                            |   |   | (1,616,084     | )      |   | 8,847,031   |   |   | 5,885,151 |   |
| Cash          from flows investing activities of discontinued operations                                                          |   |   | 44,871         |   |   | 288         |   |   | (40,699 | ) |
|                                                                                                                              |   |   | (1,571,213     | )      |   | 8,847,319   |   |   | 5,844,452 |   |
| Effect          of exchange rate changes on cash and cash equivalents                                                             |   |   | -              |   |   | 182,735     |   |   | (417,814 | ) |
| Increase          in cash and cash equivalents                                                                                    |   |   | 904,506        |   |   | 1,301,928   |   |   | 1,117,387 |   |
| Cash          and cash equivalents, beginning                                                                                     |   |   | 2,604,411      |   |   | 1,302,483   |   |   | 185,096 |   |
| Cash          and cash equivalents, ending                                                                                        |   | $      | 3,508,917      |   | $      | 2,604,411   |   |   | $1,302,483 |   |
| -          Cash and cash equivalents, ending - continuing operations                                                              |   |   | 3,508,917      |   |   | 2,553,531   |   |   | 972,942 |   |
| -          Cash and cash equivalents, ending - discontinued operations                                                            |   |   | -              |   |   | 50,880      |   |   | 329,541 |   |
| Major          non-cash transaction                                                                                               |   |   |           |   |   |        |   |   |   |   |
| Minority          shareholder's loan converted to capital (Note 10)                                                               |   |   | 2,493,427      |   |   | -           |   |   | - |   |

----

| MINCO          GOLD CORPORATION                     |
|-----------------------------------------------------|
|                                                |
| (An          exploration stage enterprise)          |
| Notes          to Consolidated Financial Statements |
| December          31, 2009, 2008 and 2007           |
| (in          Canadian dollars)                      |

| 1.     | Nature          of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Minco          Gold Corporation (the "Minco Gold" or the "Company") was          incorporated in 1982 under the laws of British Columbia, Canada as          Caprock Energy Ltd. Following a number of name changes the Company          became Minco Gold in 2007. The principal business activities include          the acquisition, exploration and development of gold properties. Minco          Gold is exploring and evaluating gold mineral properties and projects          in the People's Republic of China ("China") with the aim of          bringing these properties to production. The ability of the Company to          meet its commitments as they become payable, the exploration and          development of mineral properties and projects, and the underlying          value of the mineral properties are entirely dependent upon the          existence of economically recoverable reserves, the ability of the          Company to arrange appropriate financing to complete the exploration          and development of its properties, the receipt of necessary permits          and upon achieving future profitable production or receiving proceeds          from the disposition of the properties. The timing of such events          occurring, if at all, is not yet determinable. The Company is          considered to be an exploration stage enterprise as it has not yet          generated any revenue from operations. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 2.     | Significant          Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Basis          of Presentation and Consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | These          consolidated financial statements have been prepared in accordance          with Canadian generally accepted accounting principles. The          consolidated financial statements include the accounts of Minco Gold,          its wholly-owned Chinese subsidiaries Minco Mining (China) Corporation          ("Minco China"), Yuanling Minco Mining Ltd. ("Yuanling Minco")          and Huaihua Tiancheng Mining Ltd. ("Huaihua Tiancheng"); its          wholly owned British Virgin Island subsidiary Triple Eight Mineral          Corporation ("Temco"); its 65% interest in Inner Mongolia Damo          Mining Co. Ltd. ("Damo"); and its 51% interest in Guangzhou          Mingzhong Mining Co., Ltd. ("Mingzhong").                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Effective        October 31, 2008, the Company sold its 75% interest in Inner Mongolia        Huayu-Minco Mining Co., Ltd. ("HYMK") in an arms length transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Effective        June 30, 2009, the Company sold its 70% interest in Henan Zhongjia Minco        Mining Co., in an arms length transaction.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | As        at December 31, 2009, Minco Gold beneficially owns 13,000,000 shares of        Minco Silver Corporation ("Minco Silver"), which represents        approximately 32.01% (2008 -40.48%) of Minco Silver's share capital.        The Company uses the equity method to account for the investment in        Minco Silver (see note 7).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | All          inter-company accounts and transactions have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

----

| MINCO          GOLD CORPORATION                     |
|-----------------------------------------------------|
|                                                |
| (An          exploration stage enterprise)          |
| Notes          to Consolidated Financial Statements |
| December          31, 2009, 2008 and 2007           |
| (in          Canadian dollars)                      |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.     | Significant          Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Use          of Estimates and measurement uncertainty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The          preparation of consolidated financial statements in conformity with          Canadian generally accepted accounting principles requires management          to make estimates and assumptions that affect the reported amount of          assets and liabilities at the date of the consolidated financial          statements and expenses during the period reported. Significant areas          of estimate include asset and loan valuation, income taxes and          contingencies. By their nature, these estimates are subject to          uncertainty and the effect on the consolidated financial statements of          changes in these estimates in future periods could be significant.                                                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Stock          Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The          Company grants stock options to directors, officers, employees and          service providers. The Company applies the fair-value method of          accounting for stock-based awards. Stock- based compensation for          employees is determined based on the grant date fair value of the          stock options calculated using the Black-Scholes option pricing model.          The expense is charged to earnings over the vesting period. For          non-employees, stock-based compensation is determined based on the          fair value of the options on the earliest of the date at which the          counterparty's performance is complete, a performance commitment is          reached, the equity instrument are granted if they are fully vested          and non-forfeitable at that date. If the stock options are ultimately          exercised, the applicable amounts of contributed surplus are          transferred to share capital. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Acquisition,          Exploration and Development of Mineral Interests                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Exploration          expenditures other than direct acquisition costs are expensed before a          mineral resource is identified as having economic potential.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | The          Company's policy is to capitalize mineral property acquisition costs          and to commence capitalization of mineral property exploration and          development costs when a mineral resource is identified as having          economic potential on a property.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | Where          a specific mineral interest property is identified as having a mineral          resource with economic potential, costs specific to the development of          the particular project are capitalized as development costs and          carried at cost until the properties to which they relate are placed          into commercial production, sold, abandoned or determined by          management to be impaired in value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|   | A          mineral resource is considered to have economic potential when it is          expected that documented resources can be legally and economically          developed considering long-term metal prices. Therefore, prior to          capitalizing such costs, management determines that the following          conditions have been met:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

|   |   |                                                                                              |
|--------|--------|---------------------------------------------------------------------------------------------------|
|   | i.     | There          is a probable future benefit that will contribute to future cash          inflows; |
|   | ii.    | The          Company can obtain the benefit and control access to it; and                         |
|   | iii.   | The          transaction or event giving rise to the benefit has already occurred.                |

----

| MINCO        GOLD CORPORATION                     |
|---------------------------------------------------|
| (An        exploration stage enterprise)          |
| Notes        to Consolidated Financial Statements |
| December        31, 2009, 2008 and 2007           |
| (in        Canadian dollars)                      |

| 2.     | Significant          Accounting Policies (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Costs          relating to any producing mineral interest would be amortized on a          unit-of-production basis over the estimated ore reserves. Costs          incurred after a property is placed into production that increase          production volume or extend the life of a mine are capitalized. The          recoverability of the amount capitalized for the capitalized mineral          interests is dependent upon the determination of economically          recoverable ore reserves, confirmation of the Company's interest in          the underlying mineral claims, the ability to farm-out its resource          properties, the ability to obtain the necessary financing to complete          their development and future profitable production or proceeds from          the disposition thereof. |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Property,          Plant and Equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   | Property,          plant and equipment are recorded at cost less accumulated          amortization, depreciation and depletion. Amortization is calculated          using the straight-line method based on the assets' estimated useful          lives:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

|   |                                    | Estimated          useful life |
|--------|-----------------------------------------|--------------------------------|
|   | Computer          Equipment             | 5          year                |
|   | Leasehold          Improvements         | Remaining          lease term  |
|   | Mining          Equipment               | 5          year                |
|   | Motor          Vehicles                 | 10          year               |
|   | Office          Equipment and Furniture | 5          year                |

|   | Impairment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The          carrying values of mineral interests and property, plant and equipment          are reviewed when changes in circumstances suggest their carrying          value may be impaired. Management considers assets to be impaired if          the carrying value exceeds the estimated undiscounted future projected          cash flows from the use of the asset or mineral interests and its          eventual disposition. If impairment is deemed to exist, the assets or          development property will be written down to fair value with a charge          to operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | Asset          Retirement Obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The          Company recognizes the fair value of liabilities for asset retirement          obligations in the period in which they are incurred and in which a          reasonable estimate of such costs can be made. The asset retirement          obligation is recorded as a liability with a corresponding increase to          the carrying amount of the related asset and depreciated over the life          of the asset. Over time, the liability is increased to reflect an          interest element (accretion expenses) considered in its initial          measurement at fair value. The amount of liability will be adjusted          for changes in amounts and time of cash flows at each reporting          period. It is possible that the Company's estimates of its ultimate          reclamation and closure liabilities could change as a result of          changes in regulations, the extent of environmental remediation          required, and the means of reclamation or cost estimates. Changes in          estimates are accounted for prospectively from the period the estimate          is revised. |

----

| MINCO          GOLD CORPORATION                     |
|-----------------------------------------------------|
| (An          exploration stage enterprise)          |
| Notes          to Consolidated Financial Statements |
| December          31, 2009, 2008 and 2007           |
| (in          Canadian dollars)                      |

| 2. | Significant          Accounting Policies (continued) |
|----|------------------------------------------------------|

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 2. | Significant          Accounting Policies (continued) |
|----|------------------------------------------------------|

----

| MINCO          GOLD CORPORATION                                                              |
|----------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                   |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                               |

| 2.     | Significant          Accounting Policies (continued) |
|--------|------------------------------------------------------|
|   |                                                 |
|   | New          Accounting Pronouncements               |

| 3. | Short-term          Investments |
|----|---------------------------------|

| 4. | Marketable          Securities |
|----|--------------------------------|

| 5. | Mineral          Interests |
|----|----------------------------|

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 5. | Mineral          Interests (continued) |
|----|----------------------------------------|

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 5.     | Mineral          Interests (continued) |
|--------|----------------------------------------|
|   |                                   |
|   | d)        Hunan - Gold Bull Mountain   |

|                                                      |   |   |       |   |   |      |   |   |     |   |
|-----------------------------------------------------------|--------|--------|------------|--------|--------|-----------|--------|--------|----------|--------|
|                                                      |   |   |       |   |   |      |   |
| Year          ended December 31,                          |   | 2009   |       | 2008   |   | 2007      |   |
| Gansu                                                     |   |   |       |   |   |      |   |   |     |   |
| -          Yangshan, Anba (a) $- $- $12,941               |   |   |       |   |   |      |   |   |     |   |
| -          Minco-Qinqi (a)                                |   |   | -          |   |   | -         |   |   | (163,088 | )      |
| -          Longnan                                        |   |   | 1,336,083  |   |   | 1,414,127 |   |   | 886,375  |   |
| Inner          Mongolia                                   |   |   |       |   |   |      |   |   |     |   |
| -          Gobi Gold                                      |   |   | (8,003     | )      |   | 270,532   |   |   | 214,319  |   |
| -          BYC (b)                                        |   |   | -          |   |   | -         |   |   | 34,098   |   |
| Guangdong                                                 |   |   |       |   |   |      |   |   |     |   |
| -Changkeng                                                |   |   | (1,090,981 | )      |   | 8,351,719 |   |   | 149,551  |   |
| Hunan                                                     |   |   |       |   |   |      |   |   |     |   |
| -          Gold Bull Mountain                             |   |   | 4,137      |   |   | 98,948    |   |   | 655,858  |   |
| Henan          Zhongjia                                   |   |   |       |   |   |      |   |   |     |   |
| -          Xiaoshan (b)                                   |   |   | -          |   |   | 57,953    |   |   | 55,196   |   |
| Total  $241,236          $10,193,279 $1,845,250 |   |   |       |   |   |      |   |   |     |   |

|                                    |   |   |      |                              |   |                    |   |   |    |   |
|-----------------------------------------|--------|--------|-----------|-----------------------------------|--------|-------------------------|--------|--------|---------|--------|
|                                    |   |   |      | December          31, 2009        |   |
|                                    |   | Cost   |      | Accumulated          Amortization |   | Net          Book Value |   |
| Computer          equipment             |   | $      | 222,193   |                              | $      | 193,202                 |   | $      | 28,991  |   |
| Leasehold          improvements         |   |   | 68,318    |                              |   | 60,580                  |   |   | 7,738   |   |
| Mining          equipment               |   |   | 363,570   |                              |   | 286,033                 |   |   | 77,537  |   |
| Motor          vehicles                 |   |   | 405,534   |                              |   | 183,470                 |   |   | 222,064 |   |
| Office          equipment and furniture |   |   | 140,514   |                              |   | 135,599                 |   |   | 4,915   |   |
|                                    |   | $      | 1,200,129 |                              | $      | 858,884                 |   | $      | 341,245 |   |

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 6. | Plant,          Property and Equipment (continued) |
|----|----------------------------------------------------|

|                                    |   |   | December          31, 2008 |                              |
|-----------------------------------------|--------|--------|----------------------------|-----------------------------------|
|                                    |   | Cost   |                       | Accumulated          Amortization |   | Net          Book Value |   |
|                                    |   |   |                       |                              |   |   |   |   |   |   |
| Computer          equipment             |   | $      | 222,226                    |                              | $ | 151,522 |   | $ | 70,704 |   |
| Leasehold          improvements         |   |   | 66,044                     |                              |   | 46,916 |   |   | 19,128 |   |
| Mining          equipment               |   |   | 358,909                    |                              |   | 213,067 |   |   | 145,842 |   |
| Motor          vehicles                 |   |   | 348,718                    |                              |   | 142,916 |   |   | 205,802 |   |
| Office          equipment and furniture |   |   | 134,597                    |                              |   | 107,423 |   |   | 27,174 |   |
|                                    |   |   | 1,130,494                  |                              |   | 661,844 |   |   | 468,650 |   |
| Discontinued          operations        |   |   | 51,800                     |                              |   | 6,929 |   |   | 44,871 |   |
|                                    |   | $      | 1,182,294                  |                              | $ | 668,773 |   | $ | 513,521 |   |

| 7. | Equity          Investment in Minco Silver Corporation |
|----|--------------------------------------------------------|

|                                                   |   | 2009   |       | 2008   |   | 2007      |   |
|--------------------------------------------------------|--------|--------|------------|--------|--------|-----------|--------|
|                                                   |   |   |       |   |   |      |   |   |   |   |
| Dilution          gain in Minco Silver                 |   | $      | 3,479,000  |   | $      | 1,544,454 |   | $ | 191,000 |   |
| Equity          loss of Minco Silver                   |   |   | (1,659,280 | )      |   | (948,750  | )      |   | (3,239,898 | ) |
|                                                   |   |   |       |   |   |      |   |   |   |   |
| Income          (loss) from investment in Minco Silver |   | $      | 1,819,720  |   | $      | 595,704   |   | $ | (3,048,898 | ) |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

| 7.     | Equity          Investment in Minco Silver Corporation (continued)                                                   |
|--------|----------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                 |
|   | The          carrying value and market value of the Minco Silver shares held by the          Company are as follows: |

|                                                  |   | December          31, 2009 |       | December          31, 2008 |   |
|-------------------------------------------------------|--------|----------------------------|------------|----------------------------|--------|
|                                                  |   |                       |       |                       |   |   |   |
| nvestment          in Minco Silver on an equity basis |   | $                          | 5,494,836  |                       | $      | 3,675,116 |   |
|                                                  |   |                       |       |                       |   |   |   |
| Market          value of Minco Silver shares          |   | $                          | 24,050,000 |                       | $      | 18,460,000 |   |

| 8.     | Non-controlling          Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The          non-controlling interest represents the interest of minority          shareholders in Zhongjia, prior to disposal, and the interest of the          minority shareholders in Mingzhong.                                                                                                                                                                                                                                                                                                                                                                                                     |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| 9.     | Discontinued          Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | The          following information summarizes the financial information for the          Company's discontinued operations:                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | a)          Minco          Base Metal Corporation ("MBM")                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|   | On          November 15, 2007, the Company effected the reorganization and          spin-off of MBM, including its interest in Gansu Keyin Mining Co. Ltd.          and the White Silver Mountain project. The Company issued 1 common          share in MBM for every 5 common shares of the Company (the assets          disposed of consisted primarily of cash, receivables and payables).          The 2007 loss of MBM prior to disposition was $39,596. The net          liabilities of $112,674 of MBM as of November 14, 2007 were credited          to the Contributed Surplus of the Company. |

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 9.     | Discontinued          Operations (continued)                                                                                                                                                                                                                                                                                                                                                          |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | b)                    Inner          Mongolia Huayu-Minco Mining Co.,Ltd. ("HYMK")                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | On          July 18, 2008, the Company entered into a sale agreement to dispose of          its interest in HYMK. After completion of all legal requirements and          approvals, the Company relinquished all managerial involvement and          control to the purchaser on October 31, 2008. Gross proceeds on          disposal were RMB 7.0 million (approximately $1.2 million).            |
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | c)                    Henan Zhongjia Co. Ltd (Zhongjia)                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | On          April 26, 2009, the Company entered into a sale agreement to dispose          of its interest in Zhongjia .After completion of all legal          requirements and approvals, the Company relinquished all managerial          involvement and control to the purchaser on June 30, 2009. Gross          proceeds on disposal were RMB 2.46 million (approximately $0.4          million) |
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | Operating          Results for Discontinued Operations                                                                                                                                                                                                                                                                                                                                                |
|   |                                                                                                                                                                                                                                                                                                                                                                                                  |
|   | The          net earnings (loss) from discontinued operations summarized in the          consolidated statements of operations comprised the following:                                                                                                                                                                                                                                               |

|                                                  |   | Years          Ended December 31 |     |
|-------------------------------------------------------|--------|----------------------------------|----------|
|                                                  |   |                             | 2009     |   |   | 2008 |   |   | 2007 |   |
| Loss          from MBM                                |   | $                                |     |   | $ | - |   | $ | (39,596 | ) |
| Loss          from HYMK-                              |   |                             | -        |   |   | (30,952 | ) |   | (36,268 | ) |
| Gain          on sale of HYMK (net of tax $35,268)    |   |                             | -        |   |   | 1,195,682 |   |   | - |   |
| Loss          from Zhongjia                           |   |                             | (309,003 | ) |   | (311,318 | ) |   | (786,868 | ) |
| Gain          on sale of Zhongjia                     |   |                             | 864,607  |   |   | - |   |   | - |   |
|                                                  |   |                             |     |   |   |   |   |   |   |   |
| Earnings          (loss) from discontinued operations |   | $                                | 555,604  |   | $ | 853,412 |   | $ | (862,732 | ) |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

| 9. | Discontinued          Operations (continued) |
|----|----------------------------------------------|

|                                                |   | December          31, |   |
|-----------------------------------------------------|--------|-----------------------|--------|
|                                                |   | 2009                  |   | 2008 |   |
| Cash                                                |   | $                     | -      |   | $ | 50,880 |   |
| Receivables                                         |   |                  | -      |   |   | 891 |   |
| Plant,          propery and equipment               |   |                  | -      |   |   | 44,871 |   |
| Accounts          payable and accrued liabilities   |   |                  | -      |   |   | (237,800 | ) |
| Net          liabilities of discontinued operations |   | $                     | -      |   | $ | (141,158 | ) |

|                                                                      |   |   |    |   |   |     |   |
|---------------------------------------------------------------------------|--------|--------|---------|--------|--------|----------|--------|
|                                                                      |   | 2009   |    | 2008   |   | 2007     |   |
| Cash          provided by operating activities of discontinued operations |   |   |    |   |   |     |   |   |   |   |
| -MBM                                                                      |   | $      | -       |   | $      | -        |   | $ | (4,240          - | ) |
| HYMK                                                                      |   |   | -       |   |   | 677,004  |   |   | 5,996          - |   |
| Zhongjia                                                                  |   |   | 583,517 |   |   | (507,574 | )      |   | 616,759 |   |
|                                                                      |   |   | 583,517 |   |   | 169,430  |   |   | 618,515 |   |
| Cash          provided by financing activities of discontinued operations |   |   |    |   |   |     |   |   |   |   |
| -Zhongjia                                                                 |   |   | -       |   |   | 213,942  |   |   | 99,325 |   |
|                                                                      |   |   | -       |   |   | 213,942  |   |   | 99,325 |   |
|                                                                      |   |   |    |   |   |     |   |   |   |   |
| Cash          provided by financing activities of discontinued operations |   |   |    |   |   |     |   |   |   |   |
| -MBM                                                                      |   |   | -       |   |   | -        |   |   | - |   |
| -HYMK                                                                     |   |   | -       |   |   | 4,461    |   |   | - |   |
| -Zhongjia                                                                 |   |   | 44,871  |   |   | (4,173)  |   |   | (40,699) |   |
|                                                                      |   |   | 44,871  |   |   | 288      |   |   | (40,699) |   |
| Increase          in cash                                                 |   | $      | 628,388 |   | $      | 383,660  |   | $ | 677,141 |   |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

| 10.    | Loans          payable                                                                                                                                                                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                               |
|   | Mingzhong          signed loan agreements with its shareholders on December 10, 2008 for          RMB 30 million ($5.53 million). As at December 31, 2008, the Company          recorded a loan payable of $2,667,296 to the minority shareholders'          loans in Mingzhong.   |
|   |                                                                                                                                                                                                                                                                               |
|   | On          May 20, 2009, the loan of RMB 30 million ($5.53 million) was converted          to share capital of Mingzhong. Accordingly, $2,493,427 was          reclassified to minority interests, and the translation difference is          recognized in the income statement. |
|   |                                                                                                                                                                                                                                                                               |
| 11.    | Share          Capital                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                               |
|   | (a)                    Common          Stock and Contributed Surplus                                                                                                                                                             |

|                                                                |   |   |       |                   |   |                         |   |   |      |   |
|---------------------------------------------------------------------|--------|--------|------------|------------------------|--------|------------------------------|--------|--------|-----------|--------|
|                                                                |   | Shares |       | Share          Capital |   | Contributed          Surplus |   |
| Balance-December          31,2007                                   |   |   | 42,928,385 |                   | $      | 33,941,510                   |   | $      | 3,721,117 |   |
| Stock-based          compensation                                   |   |   | -          |                   |   | -                            |   |   | 1,242,953 |   |
| Stock          options exercised                                    |   |   | 60,666     |                   |   | 80,412                       |   |   | (33,973   | )      |
| Balance-December          31, 2008                                  |   |   | 42,989,051 |                   | $      | 34,021,922                   |   | $      | 4,930,097 |   |
| Private          placement (net of share issuance costs of $10,260) |   |   | 5,000,000  |                   |   | 4,389,740                    |   |   | -         |   |
|                                                                |   |   |       |                   |   |                         |   |   |      |   |
| Stock-based          compensation                                   |   |   | -          |                   |   | -                            |   |   | 750,510   |   |
| Common          shares sold                                         |   |   | 16,500     |                   |   | 13,106                       |   |   | 649       |   |
| Stock          options exercised                                    |   |   | 152,231    |                   |   | 128,988                      |   |   | (53,415   | )      |
| Balance-December          31, 2009                                  |   |   | 48,157,782 |                   | $      | 38,553,756                   |   | $      | 5,627,841 |   |

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
|                                                                                 |
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 11. | Share          Capital (continued) (b) Stock Options |
|-----|------------------------------------------------------|

|                                              |   | Number |               | Weighted          Average Exercise Price |   |
|---------------------------------------------------|--------|--------|--------------------|------------------------------------------|--------|
| Options          outstanding at December 31,2007  |   |   | 5          236 667 |                                     | $      | 1          21 |   |
| Granted                                           |   |   | 767,500            |                                     |   | 1.03 |   |
| Exercised                                         |   |   | (60,666            | )                                        |   | 0.79 |   |
| Forfeited                                         |   |   | (1,217,667         | )                                        |   | 1.48 |   |
| Options          outstanding at December 31, 2008 |   |   | 725          834   |                                     | $      | 1          11 |   |
| Granted                                           |   |   | 1,907,000          |                                     |   | 0.56 |   |
| Exercised                                         |   |   | (152,231           | )                                        |   | 0.50 |   |
| Forfeited                                         |   |   | (668,502           | )                                        |   | 1.08 |   |
| ExP'red                                           |   |   | (150,000           | )                                        |   | 1.80 |   |
| Options          outstanding at December 31,2009  |   |   | 5,662,101          |                                     | $      | 0.93 |   |

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 11. | Share          Capital (continued) |
|-----|------------------------------------|

|                             |   |                          |      |                                                      |   |
|----------------------------------|--------|-------------------------------|-----------|-----------------------------------------------------------|--------|
|                             |   | Options          Outstandinq  |      | Options          Exercisable                              |   |
| Range          of Exercise Price |   | Number  Outstanding |      | Weighted          Average Remaining Contractual Life (yr) |   | Weighted          Average Exercise Price |   | Number          Exercisable |   | Weighted          Average Exercise Price |   |
|                             |   |                          |      |                                                      |   |   |   |   |   |   |   |   |   |   |   |   |
| $0.00-$1.06                      |   |                          | 3,903,434 |                                                      |   | 3.28 |   | $ | 0.68 |   |   | 2,933,436 |   | $ | 0.77 |   |
| $1.07-$1.63                      |   |                          | 1,091,667 |                                                      |   | 2.90 |   | $ | 1.27 |   |   | 741,667 |   | $ | 1.31 |   |
| $1.64-$2.54                      |   |                          | 567,000   |                                                      |   | 1.24 |   | $ | 1.67 |   |   | 567,000 |   | $ | 1.67 |   |
| $2.55-$3.00                      |   |                          | 100,000   |                                                      |   | 1.33 |   | $ | 2.55 |   |   | 100,000 |   | $ | 2.55 |   |
| 5,662,101                        |   |                          | 2.97      |                                                      | $      | 0.93 |   |   | 4,342,103 |   | $ | 1.02 |   |   |   |   |

|                                |                    |                   |                   |
|-------------------------------------|-------------------------|------------------------|------------------------|
|                                | 2009                    | 2008                   | 2007                   |
| Risk-free          interest rate    | 1.58%          - 2.61 % | 1.69%          - 3.10% | 3.95%          - 4.59% |
| Dividend          yield             | 0%                      | 0%                     | 0%                     |
| Volatility                          | 75%-90%                 | 64%          - 77%     | 86%-104%               |
| Approximate          expected lives | 5          years        | 5          years       | 5          years       |

----

| MINCO          GOLD CORPORATION                                                      |
|--------------------------------------------------------------------------------------|
|                                                                                 |
| (An          exploration stage enterprise)                                           |
| Notes          to Consolidated Financial Statements December 31, 2009, 2008 and 2007 |
| (in          Canadian dollars)                                                       |

| 11. | Share          Capital (continued) |
|-----|------------------------------------|

| 12. | Income          Taxes |
|-----|-----------------------|

|                                              |   | 2009   |     | 2008   |   | 2007        |   |
|---------------------------------------------------|--------|--------|----------|--------|--------|-------------|--------|
|                                              |   |   |     |   |   |        |   |   |   |   |
| Loss          before discontinued operations      |   |   | (756,502 | )      | $      | (14,032,368 | )      | $ | (6,717,499 | ) |
|                                              |   |   | 30       | %      |   | 31          | %      |   | 34 | % |
| Income          tax recovery at statutory rates   |   | $      | (226,951 | )      | $      | (4,350,034  | )      | $ | (2,283,950 | ) |
| Non-taxable          capital gain                 |   |   | -        |   |   |        |   |   | (553,530 | ) |
| Non-taxable          dilution loss (gain)         |   |   | -        |   |   | (92,334     | )      |   | 520,313 |   |
| Non-deductible          expenses                  |   |   | 226,360  |   |   | (1,298,184  | )      |   | 734,677 |   |
| Difference          in foreign tax rates          |   |   | 90,937   |   |   | 1,043,006   |   |   | 145,999 |   |
| Impact          of federal tax rate change        |   |   | (256,454 | )      |   | 179,848     |   |   | 637,268 |   |
| Expiry          of non-capital loss carry forward |   |   | 232,160  |   |   | 196,776     |   |   | 356,895 |   |
| Business          tax/China withholding tax       |   |   | -        |   |   | 85,349      |   |   | - |   |
| Change          in valuation allowance            |   |   | (119,235 | )      |   | 4,181,504   |   |   | 865,394 |   |
| Other                                             |   |   | 53,183   |   |   | 139,418     |   |   | (423,066 | ) |
| Provision          for tax expenses               |   | $      | -        |   | $      | 85,349      |   | $ |          - |   |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                       |
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

| 12. | Income          Taxes (continued) |
|-----|-----------------------------------|

|                                                          |   |   |       |   |   |       |   |
|---------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                                          |   |   | 2009       |   |   | 2008       |   |
|                                                          |   |   | 25         | %      |   | 26         | %      |
| Future          income tax assets:                            |   |   |       |   |   |       |   |
| Non-capital          losses                                   |   | $      | 4,102,025  |   | $      | 4,050,990  |   |
|                                                          |   |   |       |   |   |       |   |
| Resource          expenditures                                |   |   | 4,433,969  |   |   | 4,365,041  |   |
| Capital          assets                                       |   |   | 177,644    |   |   | 175,827    |   |
| Marketable          securities                                |   |   | -          |   |   | 87         |   |
| Equity          investment in Minco Silver                    |   |   | (133,952   | )      |   | 97,254     |   |
| Share          issue costs                                    |   |   | 2,052      |   |   | 8,970      |   |
|                                                          |   |   | 8,581,738  |   |   | 8,698,169  |   |
|                                                          |   |   |       |   |   |       |   |
| Future          income tax liabilities: Marketable securities |   |   | (2,804     | )      |   | -          |   |
| Less:          valuation allowance                            |   |   | (8,578,934 | )      |   | (8,698,169 | )      |
| Net          future income tax assets                         |   | $      | -          |   | $      | -          |   |

|   |   |                               |      |   |
|--------|--------|------------------------------------|-----------|--------|
|   |   | Non-Capital          Losses Canada |      |
| 2010   |   | $                                  | 812,495   |   |
| 2015   |   |                               | 1,156,750 |   |
| 2026   |   |                               | 1,442,234 |   |
| 2028   |   |                               | 1,582,716 |   |
|   |   | $                                  | 4,994,195 |   |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

|                            |   |   |    |   |   |    |   |   |    |   |
|---------------------------------|--------|--------|---------|--------|--------|---------|--------|--------|---------|--------|
|                            |   | 2009   |    | 2008   |   | 2007    |   |
| Rental          Income          |   |   | 75,547  |   | $      | 68,100  |   | $      | 58,761  |   |
|                            |   |   |    |   |   |    |   |   |    |   |
|                            |   |   | 2008    |   |   | 2009    |   |   | 2007    |   |
| Exploration          costs      |   |   | 59,813  |   | $      | 85,937  |   | $      | 80,625  |   |
| Management          fees        |   |   | 37,927  |   |   | 42,135  |   |   | 17,344  |   |
| Property          investigation |   |   | 2,979   |   |   | 6,979   |   |   | 21,094  |   |
| Investor          relations     |   |   | 9,281   |   |   | 8,177   |   |   | -       |   |
| Directors'fees                  |   |   | 49,000  |   |   | 48,000  |   |   | 62,500  |   |
|                            |   | $      | 159,000 |   | $      | 191,228 |   | $      | 181,563 |   |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

| 14. | Commitments |
|-----|-------------|

|   |   |   |    |   |
|--------|--------|--------|---------|--------|
| 2010   |   | $      | 115,490 |   |
| 2011   |   |   | 128,911 |   |
| 2012   |   |   | 151,850 |   |
| 2013   |   |   | 165,710 |   |
| 2014   |   |   | 172,640 |   |
| 2015   |   |   | 57,547  |   |
|   |   | $      | 792,148 |   |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

| 15. | Geographic          Information |
|-----|---------------------------------|

|                         |   |   |                      |   |   |                      |   |
|------------------------------|--------|--------|---------------------------|--------|--------|---------------------------|--------|
|                         |   |   | December          31,2009 |   |   | December          31,2008 |   |
| Current          Assets      |   |   |                      |   |   |                      |   |
|                         |   |   |                      |   |   |                      |   |
| Canada                       |   | $      | 5,199,706                 |   | $      | 1,958,075                 |   |
| China                        |   |   | 3,508,016                 |   |   | 4,360,190                 |   |
|                         |   | $      | 8,707,722                 |   | $      | 6,318,265                 |   |
|                         |   |   |                      |   |   |                      |   |
|                         |   |   | December          31,2009 |   |   | December          31,2008 |   |
| Long-          term Assets   |   |   |                      |   |   |                      |   |
| Canada                       |   | $      | 5,508,346                 |   | $      | 3,801,028                 |   |
| China                        |   |   | 379,499                   |   |   | 439,132                   |   |
|                         |   | $      | 5,887,845                 |   | $      | 4,240,160                 |   |
|                         |   |   |                      |   |   |                      |   |
|                         |   |   | December          31,2009 |   |   | December          31,2008 |   |
| Current          Liabilities |   |   |                      |   |   |                      |   |
|                         |   |   |                      |   |   |                      |   |
| Canada                       |   | $      | 165,494                   |   | $      | 192,831                   |   |
| China                        |   |   | 5,038,350                 |   |   | 8,495,976                 |   |
|                         |   | $      | 5,203,844                 |   | $      | 8,688,807                 |   |

|                            |   |   |       |   |   |        |   |   |       |   |
|---------------------------------|--------|--------|------------|--------|--------|-------------|--------|--------|------------|--------|
|                            |   |   | 2009       |   |   | 2008        |   |   | 2007       |   |
| (Loss)          for the year    |   |   |       |   |   |        |   |   |       |   |
|                            |   |   |       |   |   |        |   |   |       |   |
| Canada*                         |   | $      | 758,271    |   | $      | (2,399,860  | )      | $      | (3,959,788 | )      |
| China                           |   |   | (1,514,775 | )      |   | (11,704,154 | )      |   | (2,767,068 | )      |
| Discontinued          operation |   |   | 555,604    |   |   | 839,709     |   |   | (853,375   | )      |
|                            |   | $      | (200,900   | )      | $      | (13,264,305 | )      | $      | (7,580,231 | )      |

----

| MINCO          GOLD CORPORATION                                                                                            |
|----------------------------------------------------------------------------------------------------------------------------|
| (An          exploration stage enterprise)                                                                                 |
| Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |

| 16. | Earnings          (Loss) per Share |
|-----|------------------------------------|

|                                                           |   |   | 2009       |   |   | 2008       |   |   | 2007       |   |
|----------------------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|--------|------------|--------|
| Loss          per share from continuing operations             |   |   |       |   |   |       |   |   |       |   |
| Basic                                                          |   | $      | (0.02      | )      | $      | (0.33      | )      | $      | (0.16      | )      |
| Diluted                                                        |   | $      | (0.02      | )      | $      | (0.33      | )      | $      | (0.16      | )      |
|                                                           |   |   |       |   |   |       |   |   |       |   |
| Earnings          per share from discontinued operations       |   |   |       |   |   |       |   |   |       |   |
| Basic                                                          |   | $      | 0.01       |   | $      | 0.02       |   | $      | 0.02       |   |
| Diluted                                                        |   | $      | 0.01       |   | $      | (0.02      | )      | $      | (0.02      | )      |
|                                                           |   |   |       |   |   |       |   |   |       |   |
| Loss          per share                                        |   |   |       |   |   |       |   |   |       |   |
| Basic                                                          |   | $      | (0.01      | )      | $      | (0.30      | )      | $      | (0.18      | )      |
| Diluted                                                        |   | $      | (0.01      | )      | $      | (0.30      | )      | $      | (0.18      | )      |
|                                                           |   |   |       |   |   |       |   |   |       |   |
| Weighted          average number of shares outstanding         |   |   | 43,148,525 |   |   | 42,970,813 |   |   | 42,908,809 |   |
| Effect          of dilutive securities                         |   |   | -          |   |   | 50,640     |   |   | -          |   |
| Stock          options                                         |   |   |       |   |   |       |   |   |       |   |
|                                                           |   |   |       |   |   |       |   |   |       |   |
| Diluted          weighted average number of shares outstanding |   |   | 43,148,525 |   |   | 43,021,453 |   |   | 42,908,809 |   |

| 17. | Financial          Risk Management |
|-----|------------------------------------|

----

| MINCO          GOLD CORPORATION(An          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| i      | Cash          and cash equivalents - In order to manage credit and liquidity risk          the Company places its short-term investment funds into government and          Canadian bank debt securities with terms of 90 days or less when          acquired. At December 31, 2009, the balance of $3.5million was placed          with three institutions. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                         |
| ii.    | Short          term investments -These are investment grade bonds and guaranteed          investment certificates with maturities of greater than 90 days when          acquired. At December 31, 2009, these totalled $2.5 million and were          placed with one institution. The yields on these investments were          0.65% to 0.80%.             |

----

| MINCO            GOLD CORPORATION(An            exploration stage enterprise)Notes            to Consolidated Financial StatementsDecember            31, 2009, 2008 and 2007(in            Canadian dollars) |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                              |   |   | December          31, 2009 |   |   | December          31, 2008 |   |
|-------------------------------------------------------------------|--------|--------|----------------------------|--------|--------|----------------------------|--------|
| Consolidated          Balance Sheets                              |   |   |                       |   |   |                       |   |
| Total          assets under Canadian GAAP                         |   | $      | 14,595,566                 |   | $      | 10,558,425                 |   |
| Adjustment          for investment in Minco Silver                |   |   | (2,898,576                 | )      |   | (2,160,438                 | )      |
| Total          assets under US GAAP                               |   | $      | 11,696,990                 |   | $      | 8,397,987                  |   |
| Shareholders'equity          under Canadian GAAP                  |   | $      | 6,898,295                  |   | $      | 1,869,618                  |   |
| Difference          in equity loss in Minco Silver (Note a)       |   |   | (3,608,625                 | )      |   | (2,160,438                 | )      |
| Difference          in the dilution gain in Minco Silver (Note a) |   |   | 710,049                    |   |   | -                          |   |
| Non-Controlling          interest (Note c)                        |   |   | 2,493,427                  |   |   | -                          |   |
| Total          shareholders'equity under US GAAP                  |   | $      |  6,493,146            |   | $      | (290,820                   | )      |

----

| MINCO          GOLD CORPORATION(An          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Consolidated          Statements ofOperations          and Comprehensive lossfor          the Year ended December,  31, |   |   | 2009            |   |   | 2008               |   |   | 2007              |   |
|------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------|--------|--------|--------------------|--------|--------|-------------------|--------|
|                                                                                                                         |   |   |            |   |   |               |   |   |              |   |
| Losses          for the year Under Canadian GAAP                                                                             |   | $      | (200,900        | )      | $      | (13,264,305        | )      | $      | (7,580,231        | )      |
| Difference          in equity loss in Minco Silver (Note a)                                                                  |   |   | (1,448,187)     |   |   | (2,160,438)        |   |   | -                 |   |
| Difference          in the dilution gain in Minco Silver (Note a)                                                            |   |   | 710,049         |   |   | (1,544,454)        |   |   | (191,000)         |   |
| Unrealized          (gain)/loss on available-for-sale securities (Note b)                                                    |   |   | (23,100)        |   |   | 75,600             |   |   | 189,000           |   |
| Loss          for the year under US GAAP                                                                                     |   | $      |  (962,138) | )      | $      | (16,893,597        | )      | $      | (7,582,231        |   |
| Weighted          average number of shares outstanding                                                                       |   |   | 43,148,525      |   |   | 42,970,813         |   |   | 42,908,809        |   |
| Loss          per share - basic and diluted under US GAAP                                                                    |   | $      | (0.02           | )      | $      | (0.39)             |   | $      |  (0.18)      |   |
| Loss          for the year Under US GAAP                                                                                     |   | $      | (962,138        | )      | $      | (16,893,597        | )      | $      | (7,582,231)       |   |
| Unrealized          (gain)/loss on available-for-sale securities (Note b)                                                    |   |   | 23,100          |   |   | (75,600)           |   |   | (298,947)         |   |
| Comprehensive          (loss) under US GAAP                                                                                  |   | $      |  (939,038) |   | $      |  (16,969,197) |   | $      |  (7,881,178) |   |

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| MINCO          GOLD CORPORATION(An          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |
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| 1)     | In          June 2009, the FASB issued Accounting Standards Codification ("ASC")          Topic 105, "Generally Accepted Accounting Principles." ASC Topic          105 establishes the FASB Accounting Standards Codification ("Codification")          as the source of authoritative accounting principles recognized by the          FASB to be applied by non governmental entities in the preparation of          financial statements in conformity with US GAAP for the Securities and          Exchange Commission ("SEC") registrants. All guidance contained in          the Codification carries an equal level of authority. The Codification          supersedes all existing non-SEC accounting and reporting standards.          The FASB will no longer issue new standards in the form of Statements,          FASB Staff Positions or Emerging Issues Task Force Abstracts. The FASB          will instead issue new standards in the form of Accounting Standards          Updates ("ASU"). The FASB will not consider ASUs as authoritative          in their own right and ASUs will serve only to update the          Codification, provide background information about the guidance and          provide the basis for conclusions on changes in Codification. These          changes and the Codification itself do not change US GAAP. The          adoption of these changes has only impacted the manner in which new          accounting guidance under US GAAP is referenced. It did not impact the          Company's consolidated financial statements. |
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| 2)     | In          September 2006, the FASB issued an amendment included in ASC 820 Fair          Value Measurements and Disclosures (formerly SFAS 157, Fair Value          Measurements), which defines fair value, establishes a framework for          measuring fair value and expands fair value disclosures. The standard          does not require any new fair value measurements. The effective date          for certain non-financial assets and non-financial liabilities was          deferred to years beginning after November 15, 2008, and interim          periods within those years. The Company adopted the standard on          January 1, 2009 without significant effect on the Company's          financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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| MINCO          GOLD CORPORATION(An          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |
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| 3)     | In          December 2007, the FASB issued an amendment to ASC 805 "Business          Combinations" (formerly SFAS 141(R), "Business Combinations"),          which retains the fundamental requirements that the acquisition method          of accounting be used for all business combinations and for an          acquirer to be identified for each business combination. The standard          applies prospectively to business combinations for which the          acquisition date is on or after the beginning of the first annual          reporting period beginning on or after December 15, 2008. The Company          adopted the standard on January 1, 2009 without significant effect on          the Company's financial statements.                                                                                                                                                                                                                                                                                                                                                                           |
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| 4)     | In          December 2007, the FASB issued an amendment to ASC 810 "Consolidations"          (formerly SFAS 160, "Non-controlling Interests in Consolidated          Financial Statements," which amended ARB 51) to establish accounting          and reporting standards for a non-controlling interest in a subsidiary          and for deconsolidation of a subsidiary. The standard applies          prospectively to business combinations for which the acquisition date          is on or after the beginning of the first annual reporting period          beginning on or after December 15, 2008. The Company adopted the          standard on January 1, 2009 without significant effect on the Company's          financial statements.                                                                                                                                                                                                                                                                                                                                                                              |
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| 5)     | In          March 2008, the FASB issued an amendment to ASC 815, "Derivatives          and Hedging" (formerly FASB Statement No. 161, Disclosure about          Derivative Instruments and Hedging Activities - an amendment of FASB          Statement No. 133") which provides revised guidance for enhanced          disclosures about how and why an entity uses derivative instruments,          how derivative instruments and the related hedged items are accounted          for under ASC 815, and how derivative instruments and the related          hedged items affect an entity's financial position, financial          performance and cash flows. The Company adopted the standard on          January 1, 2009 without significant effect on the Company's          financial statements.                                                                                                                                                                                                                                                                                                                        |
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| 6)     | In          April 2008, the FASB issued an amendment to ASC 350, "Intangibles -          Goodwill and Other" (formerly FSP No. FAS 142-3, "Determination of          the Useful Life of Intangible Assets") which amends the factors that          should be considered in developing renewal or extension assumptions          used to determine the useful life of a recognized intangible asset          under ASC 350. The intent of this amendment is to improve consistency          between the useful life of a recognized intangible asset under ASC 350          and the period of expected cash flows used to measure the fair value          of the asset under ASC 805, "Business Combinations" (formerly FASB          Statement No. 141, "Business Combinations"). The amendment is          effective for the Company's fiscal year beginning January 1, 2009          and has been applied prospectively to intangible assets acquired after          the effective date. The Company adopted the standard on January 1,          2009 without significant effect on the Company's financial          statements |

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| MINCO          GOLD CORPORATION(An          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |
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| 7)     | In          April 2009, an amendment was issued to ASC 815, "Derivatives and          Hedging" which addresses whether an equity-linked financial          instrument (or embedded feature) is indexed to an entity's own          stock, an important consideration in determining the instrument's          accounting classification. The amendment is effective for annual          periods beginning after December 15, 2008. The Company adopted the          standard on January 1, 2009 with no impact on the Company's          financial statements.                                                  |
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| 8)     | In          May 2009, the FASB issued ASC 855, "Subsequent Events" which          establishes general standards of accounting for and disclosure of          events that occur after the balance sheet date but before financial          statements are issued. The standard is based on similar principles as          those that previously existed in the auditing standard. The standard          is effective for interim and annual periods ending after June 15,          2009. The Company has adopted the standard for the annual period ended          December 31, 2009 without significant effect. |

| 1)     | In          June 2009, the FASB issued an amendment to ASC 820, "Fair Value          Measurements and Disclosures" (formerly SFAS 166, "Accounting for          Transfers of Financial Assets," which amends FAS 140, "Accounting          for Transfers and Servicing of Financial Assets and Extinguishing of          Liabilities") significantly changing how companies account for          transfers of financial assets. The standard provides revised guidance          in a number of areas including the elimination of the qualifying          special purpose entity concept, the introduction of a new "participating          interest" definition that must be met for transfers of portions of          financial assets to be eligible for sale accounting, clarification and          amendments to the derecognition criteria for a transfer to be          accounted for as a sale when beneficial interests are received by the          transferor, and extensive new disclosures. The provisions are to be          applied to transfers of financial assets occurring in years beginning          after November 15, 2009. The Company is currently evaluating the          potential effect of adopting this standard on its financial statements          and disclosures. |
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| 2)     | In          June 2009, the FASB issued an amendment to ASC 810, "Consolidation"          (formerly SFAS 167, "Amendments to FASB Interpretation No. 46 (R),"          which amends the consolidation guidance for VIE under FIN 46(R), "Consolidation          of Variable Interest Entities"). The changes include the elimination          of the exemption for qualifying special purpose entities and a new          approach for determining who should consolidate a variable interest          entity. In addition, changes to when it is necessary to reassess who          should consolidate a VIE have also been made. In determining the          primary beneficiary, or entity required to consolidate a VIE,          quantitative analysis of who absorbs the majority of the VIE's          expected losses or receives a majority of the VIEs expected residual          returns or both is no longer required. Under the amendment, an entity          is required to assess whether its variable interest or interests in an          entity give it a controlling financial interest in the VIE, which          involves more qualitative analysis. Additional disclosures will be          required under                                                                      |

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| MINCO          GOLD CORPORATION(An          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2009, 2008 and 2007(in          Canadian dollars) |
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 Minco  Gold Corporation(an  exploration stage enterprise)   Consolidated  Financial StatementsDecember  31, 2010, 2009 and 2008(Canadian  dollars)         Management's  Responsibility for Financial Reporting   The  consolidated financial statements and the information contained in the annual  report are the responsibility of the Board of Directors and management. The  consolidated financial statements have been prepared by management in  accordance with Canadian generally accepted accounting principles and include  certain estimates that reflect management's best judgments on information  currently available. In the opinion of management, the accounting practices  utilized are appropriate in the circumstances and the consolidated financial  statements fairly reflect the financial position and results of operations of  the Company within reasonable limits of materiality.   The  Audit Committee of the Board of Directors is composed of three Directors and  meets periodically with management and the independent auditors to review the  scope and results of the annual audit and to review the consolidated financial  statements and related financial reporting matters prior to submitting the  consolidated financial statements to the Board of Directors for approval.   The  consolidated financial statements have been audited by PricewaterhouseCoopers  LLP, Chartered Accountants, who were appointed by the shareholders. The  auditors' report outlines the scope of their examination and their opinion  on the consolidated financial statements.   Dr.          Ken Cai Paul          Zhang, C.A.President          and CEO CFO          and VP Finance   Vancouver,          Canada  March          28, 2011                   PricewaterhouseCoopers          LLP  Chartered          Accountants  PricewaterhouseCoopers          Place  250          Howe Street, Suite 700  Vancouver,          British Columbia  Canada          V6C 3S7  Telephone          +1 604 806 7000March          28, 2011 Facsimile          +1 604 806 7806 Independent  Auditor's Report   To  the Shareholders of Minco Gold Corporation   We  have audited the accompanying consolidated financial statements of Minco Gold  Corporation ("Minco Gold" or the "Company"), which comprise the  consolidated balance sheets as at December 31, 2010 and 2009 and the  consolidated statements of operations, comprehensive loss and deficit and cash  flows for the years then ended, and the related notes including a summary of  significant accounting policies.   Management's  responsibility for the consolidated financial statementsManagement  is responsible for the preparation and fair presentation of these consolidated  financial statements in accordance with Canadian generally accepted accounting  principles and for such internal control as management determines is necessary  to enable the preparation of consolidated financial statements that are free  from material misstatement, whether due to fraud or error.   Auditor's  responsibilityOur  responsibility is to express an opinion on these consolidated financial  statements based on our audits. We conducted our audits in accordance with  Canadian generally accepted auditing standards and the standards of the Public  Company Accounting Oversight Board (United States). Those standards require  that we plan and perform the audit to obtain reasonable assurance about  whether the consolidated financial statements are free from material  misstatement. Canadian generally accepted auditing standards require that we  comply with ethical requirements.   An  audit involves performing procedures to obtain audit evidence about the  amounts and disclosures in the consolidated financial statements. The  procedures selected depend on the auditor's judgment, including the  assessment of the risks of material misstatement of the consolidated financial  statements, whether due to fraud or error. We were not engaged to perform an  audit of the Company's internal control over financial reporting. Our audits  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 evaluating the appropriateness of  accounting policies used and the reasonableness of accounting estimates made  by management, as well as evaluating the overall presentation of the  consolidated financial statements.   We  believe that the audit evidence we have obtained in our audits is sufficient  and appropriate to provide a basis for our audit opinion.   "PricewaterhouseCoopers"  refers to PricewaterhouseCoopers LLP, an Ontario limited liability  partnership, which is a member firm of PricewaterhouseCoopers International  Limited, each member firm of which is a separate legal entity.            OpinionIn  our opinion, the consolidated financial statements present fairly, in all  material respects, the financial position of the Company as at December 31,  2010 and 2009 and the results of its operations and cash flows for the years  then ended in accordance with Canadian generally accepted accounting  principles.   (signed)  PricewaterhouseCoopers LLP   Chartered  Accountants         Minco          Gold Corporation(an          exploration stage enterprises)Consolidated          Balance SheetsAs          at December 31, 2010 and 2009 (Canadian          dollars)  2010  2009   $  $ Assets        Current          assets        Cash          and cash equivalents  6,003,832   3,505,268 Short-term          investments (note 3)  293,770   2,475,936 Marketable          securities (note 4)  25,200   35,700 Receivables  57,387   370,767 Loan          receivable (note 5)  9,074,136   - Due          from Minco Silver (note 13(a)  839,305   2,109,285 Due          from Minco Base Metals (note 13(b))  -   120,576 Prepaid          expenses and deposits  116,477   85,572 Assets          of discontinued operations (note 9)  -   4,617    16,410,107   8,707,721 Long-term          deposit  64,512   51,764 Property,          plant and equipment (note 7)  260,170   297,660 Equity          investment in Minco Silver (note 8)  7,125,366   5,494,836 Assets          of discontinued operations (note 9)  -   43,585    23,860,155   14,595,566 Liabilities        Current          liabilities        Due          to Minco Base Metals (note 13(d))  7,638,806   - Advanced          from minority shareholder (note 6(a))  764,345   - Accounts          payable and accrued liabilities (note 6(a))  5,066,688   5,201,594 Liabilities          of discontinued operations (note 9)  -   2,250    13,469,839   5,203,844 Non-controlling          interest (note 10)  2,444,005   2,493,427 Shareholders'          Equity        Share          capital (note 11(a))  40,335,033   38,553,755 Contributed          surplus (note 11(a))  5,407,352   5,627,841 Deficit  (37,796,074)  (37,283,301)   7,946,311   6,898,295    23,860,155   14,595,566    Commitments          (note 14)Subsequent          events (notes 5 and 20) Approved          by the Board of Directors (signed)          Malcolm Clay Director (signed)          Robert Callander Director       See  accompanying notes to consolidated financial statements.         Minco          Gold Corporation(an          exploration stage enterprise)Consolidated          Statements of Operations, Comprehensive Loss and DeficitFor          the years ended December 31, 2010, 2009 and 2008 (Canadian          dollars)  2010  2009  2008   $  $  $ Exploration          permit (note 6)  -   (1,205,298)  6,611,918 Exploration          costs - net of recoveries (note 6)  1,467,641   1,460,987   3,407,568    1,467,641   255,689   10,019,486 Administration          expenses (note 13)            Accounting          and audit  140,176   227,269   182,774 Amortization  81,371   181,062   87,173 Consulting  143,350   282,515   284,006 Directors'          fees  43,500   49,000   48,000 Foreign          exchange (gain) loss  (114,763)  (468,561)  880,322 Interest  15,203   792   211,402 Investor          relations  256,853   119,578   353,771 Legal  8,628   (3,900)  49,231 Meals          and entertainment  62,492   79,944   64,694 Office          administration  140,332   115,976   156,100 Property          investigation  210,416   104,760   88,353 Regulatory          and filing  85,176   112,119   105,838 Rent  250,445   256,902   213,940 Salaries          and benefits  500,677   568,335   523,237 Stock-based          compensation (note 11(b))  528,900   750,510   1,242,953 Telephone  31,412   33,199   24,934 Travel          and transportation  85,701   116,587   91,795    2,469,869   2,526,087   4,608,523 Loss          before other income  (3,937,510)  (2,781,776)  (14,628,009)Other          income (loss)            Gain          on sale of exploration permit  -   -   425,632 Unrecognized          (loss) gain on marketable securities  (10,500)  23,100   (75,600)Write-down          of mineral interests  -   -   (358,500)Interest          and other incomer  147,755   123,048   363,201 Loss          before discontinued operations, non-controlling interest, tax            expenses,          loss from equity investment and dilution gain  (3,800,255)  (2,635,628)  (14,273,276)Income          tax expenses (note 12)  -   -   (85,349)Share          of loss from equity investment in Minco Silver (note 8)  (1,214,470)  (1,659,280)  (948,750)Dilution          gain (note 8)  2,845,000   3,479,000   1,544,454            - Non-controlling          interest  49,651   -   - Loss          from continuing operations  (2,120,074)  (815,908)  (13,762,921)Earnings          for the year from discontinued operations (note 9)  1,607,301   615,008   498,616 Loss          and comprehensive loss for the year  (512,773)  (200,900)  (13,264,305)Deficit          - Beginning of year  (37,283,301)  (37,082,401)  (23,818,096)Deficit          - End of year  (37,796,074)  (37,283,301)  (37,082,401)Loss          per share from continuing operations - basic and diluted  (0.04)  (0.02)  (0.31)Earnings          per share from discontinued operations -            basic          and diluted  0.03   0.01   0.01 Loss          per share - basic and diluted  (0.01)  (0.00)  (0.31)Weighted          average number of common shares outstanding -            basic          and diluted  48,582,347   43,148,525   42,970,873  See  accompanying notes to consolidated financial statements.         Minco          Gold Corporation(an          exploration stage enterprise)Consolidated          Statements of Cash FlowsFor          the years ended December 31, 2010, 2009 and 2008 (Canadian          dollars)  2010  2009  2008   $  $  $ Cash          flows from operating activities            Loss          for year from continuing operations  (2,120,074)  (815,908)  (13,762,921)Adjustment          to reconcile net loss from continuing operations to cash            provided          by (used in) operating activities            Amortization  81,371   181,062   87,173 Equity          loss on investment in Minco Silver  1,214,470   1,659,280   948,750 Dilution          gain  (2,845,000)  (3,479,000)  (1,544,454)Stock-based          compensation  528,900   750,510   1,242,953 Foreign          exchange loss  (60,323)  -   1,015,022 Non-controlling          interest  (49,422)  -   - Unrecognized          (gain) loss on marketable securities  10,500   (23,100)  75,600 Write-down          of mineral interest  -   -   356,500 Gain          on sale of exploration permit  -   -   (425,632)   (3,239,578)  (1,727,156)  (12,007,009)Changes          in non-cash working capital items            Decrease          (increase) in receivables  313,380   523,957   (87,180)Due          from Minco Base Metals  197,603   385,993   (234,570)Due          from Minco Silver  1,269,980   (863,004)  - (Increase)          decrease in prepaid expenses and deposits  (43,654)  40,478   (25,250)(Decrease)          increase in accounts payable and accrued liabilities  (84,144)  (749,213)  1,835,730 Increase          in tax payable  -   -   (269,773)Cash          flows from operating activities of continuing operations  (1,586,413)  (2,388,945)  (10,788,052)Cash          flows from activities of discontinued operations (note 9)  1,649,604   385,598   (224,872)   63,191   (2,003,347)  (11,012,924)Cash          flows from financing activities            Advanced          from minority shareholders  768,693   -   - Proceeds          from issuance of shares  1,045,126   4,479,067   46,439 Advanced          from Minco Base Metals  7,601,904   -   - Movement          in loan payable  -   -   2,667,295 Cash          flows from financing activities of continuing operations  9,415,723   4,479,067   2,713,734 Cash            flows from financing activities of discontinued operations (note            9)  -   -   213,942    9,415,723   4,479,067   2,927,676 Cash          flows from investing activities            Acquisition          of equipment  (43,881)  (62,707)  (111,988)Decrease          (increase) in short-term investments  2,182,166   (1,553,377)  5,138,285 Loan          receivable (note 5)  (9,122,284)  -   - Proceeds          from sales of mineral interest  -   -   425,632 Decrease          in due from Minco Silver  -   -   3,393,506 Cash          flows from investing activities of continuing operations  (6,983,999)  (1,616,084)  8,845,435 Cash          flows from investing activities of discontinued operations  -   44,871   1,884    (6,983,999)  (1,571,213)  8,847,319 Effects          of exchange rate changes on cash and cash equivalents  -   -   182,735 Increase          in cash and cash equivalents  2,494,915   904,507   944,806 Cash          and cash equivalents - Beginning of year  3,508,917   2,604,411   1,302,483 Cash          and cash equivalents -End of year  6,003,832   3,508,918   2,247,289 Cash          and cash equivalents - Ending - continuing operations  6,003,832   3,505,268   2,550,947 Cash          and cash equivalents - Ending - discontinued operations  -   3,649   53,462 Major          non-cash transaction            Minority          shareholder's loan converted to capital (note 10)  -   2,493,427   -  See  accompanying notes to consolidated financial statements.         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   1Nature            of operations   Minco  Gold Corporation ("Minco Gold" or the "Company") was incorporated in  1982 under the laws of British Columbia, Canada as Caprock Energy Ltd.  Following a number of name changes the Company became Minco Gold in 2007. The  principal business activities include the acquisition, exploration and  development of gold properties.   Minco  Gold is exploring and evaluating gold mineral properties and projects in the  People's Republic of China ("China") with the aim of bringing these  properties to production. The ability of the Company to meet its commitments  as they become payable, the exploration and development of mineral properties  and projects, and the underlying value of the mineral properties are entirely  dependent upon the existence of economically recoverable reserves, the ability  of the Company to arrange appropriate financing to complete the exploration  and development of its properties, the receipt of necessary permits and upon  achieving future profitable production or receiving proceeds from the  disposition of the properties. The timing of such events occurring, if at all,  is not yet determinable. The Company is considered to be an exploration stage  enterprise as it has not yet generated any revenue from operations.   These  consolidated financial statements have been prepared on a going concern basis,  which assumes that the Company will continue to realize its assets and  discharge its liabilities and commitments in the normal course of business.  The Company does not generate revenues and has accumulated losses since  inception and is unlikely to generate earnings in the immediate future. The  continuation of the Company as a going concern is dependent upon the continued  financial support from its shareholders, the ability of the Company to obtain  necessary equity financing to achieve its operating and development  objectives, confirmation of the Company's interests in the underlying  properties and the attainment of profitable operations.   2Significant            accounting policies   Basis  of presentation and consolidation   These  consolidated financial statements have been prepared in accordance with  Canadian generally accepted accounting principles. The consolidated financial  statements include the accounts of Minco Gold, its wholly-owned Chinese  subsidiaries Minco Mining (China) Corporation ("Minco China"), Yuanling  Minco Mining Ltd. ("Yuanling Minco") and Huaihua Tiancheng Mining Ltd. ("Huaihua  Tiancheng"); its wholly owned British Virgin Island subsidiary Triple Eight  Mineral Corporation ("Temco"); and its 51% interest in Guangzhou Mingzhong  Mining Co., Ltd. ("Mingzhong").   Effective  October 31, 2008, the Company sold its 75% interest in Inner Mongolia  Huayu-Minco Mining Co., Ltd. ("HYMK") in an arm's length transaction.   Effective  June 30, 2009, the Company sold its 70% interest in Henan Zhongjia Minco  Mining Co., in an arm's length transaction.   (1)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   2Significant            accounting policies (continued)   Effective  June 30, 2010, the Company sold its 65% interest in Inner Mongolia Damo Mining  Co. Ltd. ("Damo"), in an arm's length transaction.   As  at December 31, 2010, Minco Gold beneficially owns 13,000,000 shares of Minco  Silver Corporation ("Minco Silver"), which represents approximately 26.20%  (2009 - 32.01%) of Minco Silver's share capital. The Company uses the equity  method to account for the investment in Minco Silver (see note 8).   All  material inter-company accounts and transactions have been eliminated upon  consolidation.   Use  of estimates and measurement uncertainty   The  preparation of consolidated financial statements in conformity with Canadian  generally accepted accounting principles requires management to make estimates  and assumptions that affect the reported amount of assets and liabilities at  the date of the consolidated financial statements and expenses during the  period reported. Significant areas of estimate include asset and loan  valuation, income taxes and contingencies. By their nature, these estimates  are subject to uncertainty and the effect on the consolidated financial  statements of changes in these estimates in future periods could be  significant.   Stock-based  compensation   The  Company grants stock options to directors, officers, employees and service  providers. The Company applies the fair-value method of accounting for  stock-based awards. Stock-based compensation for employees is determined based  on the grant date fair value of the stock options calculated using the  Black-Scholes option pricing model. The expense is charged to earnings over  the vesting period. For non-employees, stock-based compensation is determined  based on the fair value of the options on the earliest of the date at which  the counterparties' performance is complete, a performance commitment is  reached and the equity instruments are granted if they are fully vested and  non-forfeitable at that date. If the stock options are ultimately exercised,  the applicable amounts of contributed surplus are transferred to share  capital.   Acquisition,  exploration and development of mineral interests   Exploration  expenditures other than direct acquisition costs are expensed before a mineral  resource is identified as having economic potential.   The  Company's policy is to capitalize mineral property acquisition costs and to  commence capitalization of mineral property exploration and development costs  when a mineral resource is identified as having economic potential on a  property.   Where  a specific mineral interest property is identified as having a mineral  resource with economic potential, costs specific to the development of the  particular project are capitalized as development costs and carried at cost  until the properties to which they relate are placed into commercial  production, sold, abandoned or determined by management to be impaired in  value.   (2)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   2Significant            accounting policies (continued)   A  mineral resource is considered to have economic potential when it is expected  that documented resources can be legally and economically developed  considering long-term metal prices. Therefore, prior to capitalizing such  costs, management determines that the following conditions have been met:   a)  There is a probable future benefit that will contribute to future cash  inflows;   b)  The Company can obtain the benefit and control access to it; and   c)  The transaction or event giving rise to the benefit has already occurred.   Costs  relating to any producing mineral interest would be amortized on a  unit-of-production basis over the estimated ore reserves. Costs incurred after  a property is placed into production that increase production volume or extend  the life of a mine are capitalized.   The  recoverability of the amount capitalized for the capitalized mineral interests  is dependent upon the determination of economically recoverable ore reserves,  confirmation of the Company's interest in the underlying mineral claims, the  ability to farm-out its resource properties, the ability to obtain the  necessary financing to complete their development and future profitable  production or proceeds from the disposition thereof.   Property,  plant and equipment   Property,  plant and equipment are recorded at cost less accumulated amortization,  depreciation and depletion.   Amortization  is calculated using the straight-line method based on the assets' estimated  useful lives:   Computer          equipment5          yearsLeasehold          improvementsremaining          lease termMining          equipment5          yearsMotor          vehicles10          yearsOffice          equipment and furniture5          years Impairment   The  carrying values of mineral interests and property, plant and equipment are  reviewed when changes in circumstances suggest their carrying value may be  impaired. Management considers assets to be impaired if the carrying value  exceeds the estimated undiscounted future projected cash flows from the use of  the asset or mineral interests and its eventual disposition. If impairment is  deemed to exist, the assets or development property will be written down to  fair value with a charge to operations.   (3)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   2Significant            accounting policies (continued)   Asset  retirement obligations   The  Company recognizes the fair value of liabilities for asset retirement  obligations in the period in which they are incurred and in which a reasonable  estimate of such costs can be made. The asset retirement obligation is  recorded as a liability with a corresponding increase to the carrying amount  of the related asset and depreciated over the life of the asset. Over time,  the liability is increased to reflect an interest element (accretion expenses)  considered in its initial measurement at fair value. The amount of liability  will be adjusted for changes in amounts and time of cash flows at each  reporting period.   It  is possible that the Company's estimates of its ultimate reclamation and  closure liabilities could change as a result of changes in regulations, the  extent of environmental remediation required, and the means of reclamation or  cost estimates. Changes in estimates are accounted for prospectively from the  period the estimate is revised.   As  at December 31, 2010 and 2009, the Company did not have any asset retirement  obligations.   Financial  instruments   The  Company's financial instruments consist of cash and cash equivalents,  short-term investments, marketable securities, receivables, accounts payable  and accrued liabilities and loan payable. a)  Cash          and cash equivalents   Cash  and cash equivalents comprise cash at banks and on hand and guaranteed  investment certificates with initial maturities of less than three months.  Cash and cash equivalents have been classified as held for trading and are  recorded at fair value.   b)  Short-term          investments   Short-term  investments comprise guaranteed investment certificates with initial  maturities of greater than three months. Such investments have been classified  as held for trading and are recorded at fair value.   c)  Marketable          securities   Marketable  securities are classified as held for trading and recorded at fair value.   d)  Receivables   Receivables  are classified as loans and receivables and accordingly are recorded initially  at fair value, plus transaction costs incurred, and subsequently at amortized  cost using the effective interest rate method.   (4)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   2Significant            accounting policies (continued)     e) Loan receivable The  loan receivable is classified as loans and receivables and accordingly is  recorded initially at fair value, and subsequently at amortized cost using the  effective interest rate method   The  Company assesses at each balance sheet date whether there is any objective  evidence that the loan receivable is impaired. Evidence of impairment may  include indications that the debtor is experiencing significant financial  difficulty, default or delinquency in interest or principal payments, the  probability that the debtor will enter bankruptcy or other financial  reorganization, and where observable data indicates that there is a measurable  decrease in the estimated future cash flows, such as changes in arrears or  economic conditions that correlate with defaults   When  loans are identified as impaired, their carrying amounts are reduced to their  estimated realizable amounts. Estimated realizable amounts are measured by  discounting the expected future cash flows at the original effective interest  rate inherent in the loans. When the amounts and timing of future cash flows  cannot be estimated with reasonable reliability, estimated realizable amounts  may be measured at either:   a)  the          fair value of any security underlying the loans, net of expected costs          of realization and any amounts legally required to be paid to the          borrowers; or   b)  observable          market prices for the loans.   Accounts  payable and loan payable   Accounts  payable and loan payable are classified as other financial liabilities and are  recognized initially at fair value, net of transaction costs incurred, and are  subsequently stated at amortized cost.   Income  taxes   The  Company follows the liability method of accounting for income taxes. Future  income taxes are recognized for the future tax consequences attributable to  differences between the carrying values of assets and liabilities and their  respective income tax bases on the balance sheet date. Future income tax  assets and liabilities are measured using substantially enacted income tax  rates expected to apply in the period in which temporary differences are  expected to be recovered or settled. The effect on future tax assets and  liabilities of a change in substantially enacted rates is included in  operations. A future income tax asset is only recorded to the extent it is  more likely than not to be realized.(5)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   2Significant            accounting policies (continued)   Loss  per share   Basic  loss per share is computed using the weighted average number of common shares  outstanding during the year. Diluted loss per share amounts are calculated  giving effect to the potential dilution that would occur if securities or  other contracts to issue common shares were exercised or converted to common  shares using the treasury stock method. If the Company incurred net losses in  a fiscal year, basic and diluted loss per share are the same.   Translation  of foreign currencies   The  Company's measurement currency is the Canadian dollar. The Company follows  the temporal method of accounting for the translation of its integrated  foreign operations and for foreign currency transactions. Under this method,  transactions denominated in foreign currencies are translated into Canadian  dollars at the exchange rates prevailing at the transaction dates. At  year-end, monetary assets and liabilities are re-measured at the year-end  exchange rates, and non-monetary assets and liabilities denominated in foreign  currencies are translated to Canadian dollars at their historical exchange  rates. Exchange gains and losses on translation are charged to operations.   3Cash            and short-term investments   As  at December 31, 2010, Cash and cash equivalents consisted of short-term  deposits with a maturity term of seven days and can be renewed automatically.  The yield on the short-term deposit was 1.7%.   As  at December 31, 2010, short-term investments consisted of $293,770 of cashable  guaranteed investment certificates with terms of greater than ninety days but  less than one year (2009 - $2,475,936).   4Marketable            securities   As  at December 31, 2010, the Company held 420,000 (2009 - 420,000) common shares  of Nanika Resources Inc.   5Loan            receivable   Minco  China, has entered into a Joint Venture Agreement in December 2010 (the "JV  Agreement") with the 208 Exploration Team (the "208 Team"), a subsidiary  of China National Nuclear Corporation (the "CNNC"), to acquire 51% equity  interest in the Tugurige Gold Project located in Inner Mongolia, China.(6)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   5Loan            receivable (continued)   Under  the terms of the JV Agreement, the 208 Team will set up a new entity (the  "JV Co") and transfer its 100% interest in the Tugurige Gold Project  into the JV Co, Minco China has the right to contribute a total of RMB 250  million (approximately $37 million) (the "Earn-In Amount") to earn a 51%  equity interest in the JV Co, with RMB 180 million (approximately $27 million)  to be contributed upon conclusion of the JV agreement. The Earn-In Amount is  subject to an independent evaluation of the value of the Tugurige Project.   To  secure the project, Minco China has provided RMB 60 million (approximately $9  million) in the form of a secured short-term loan to the Tugurige Gold Mine.  The loan matured on March 24, 2011 and was repaid subsequently on March 25,  2011 in full with interest. The loan is secured by all the assets of the mine  and guaranteed by the 208 Team. Minco China has the right to convert the loan  into its contribution to the Earn-In Amount upon appropriate approvals being  obtained.   The  JV Agreement is subject to the approvals of various Chinese government  agencies. The Company will pay a finder's fee to a non-arm's length third  party upon all approvals being obtained and successful conclusion of the  transaction.   6Mineral            interests   a)  Guangdong          - Changkeng   Minco  China is the controlling shareholder in Guangzhou Mingzhong Mining Co., Ltd. ("Mingzhong")  with 51% interest.   Mingzhong  signed an exploration permit transfer agreement with No. 757 Exploration Team  of Guangdong Geological Bureau ("757 Exploration Team") and on January 5,  2008 Mingzhong received the Changkeng exploration permit, which expires in  September 2011. The value of the exploration permit was RMB 48 million  (approximately $7.3 million). As at December 31, 2008, the first payment for  the Chankeng Exploration Permit to 757 Exploration Team was made in an amount  of RMB 19 million (approximately $2.87 million).   In  order to pay the remaining RMB 29 million (approximately $4.4 million),  shareholders of Mingzhong agreed to inject capital of RMB 29 million. As of  December 31, 2010, Minco China paid RMB 16.30 million ($2.47 million) and two  out of the five minority shareholders paid RMB 5.05 million ($0.76 million).  The remaining minority shareholders are yet to complete their respective  shares of the capital injection.   In  China, the capital contributions require government authorization which may or  may not be granted.   As  the capital injection into Mingzhong was incomplete and had not received local  government approval as of December 31, 2010, funds received from the two  minority shareholders are classified as a current liability.   (7)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   6Mineral            interests (continued)   The  remaining amount payable are for the Chankeng Exploration Permit is also  classified as a current liability as of December 31, 2010.   Changkeng  Silver Mineralization   Pursuant  to the terms of an agreement with Minco Silver, the Company has assigned its  right to earn a 51% interest in the Changkeng Silver Mineralization to Minco  Silver. As a result, Minco Silver is responsible for 51% of the total costs in  relation to the Changkeng Silver Mineralization.   In  the year ended December 31, 2009, $207,710 was recorded as an exploration cost  recovery, which represents costs incurred on the Changkeng Silver  Mineralization and paid on Minco Silver's behalf by the Company. Minco  Silver paid this amount to the Company.   In  2009, the Company and Minco Silver entered into an agreement under the terms  of which Minco Silver will pay 30% of the Company's 51% of the cost of the  Changkeng permit. Accordingly, in the year ended December 31, 2009, the  Company recorded an exploration permit cost recovery of $1,205,298. In the  year ended December 31, 2010, such amount has been received by the Company.   b)    Gansu  - Longnan   Minco  China holds twelve exploration permits in the Longnan region of south Gansu  province in China. The Longnan region is within the southwest Qinling gold  field.   The  Longnan project has been divided into three sub-projects according to their  geographic distribution, type and potential of mineralization:   i)  Yangshan:          including five exploration permits located in the northeast extension          of the Yangshan gold belt and its adjacent area;   ii)  Yejiaba:          including four exploration permits adjacent to the Guojiagou          exploration permit;   iii)  Xicheng          East: including three exploration permits to the east extension of the          Xicheng Pb-Zn mineralization belt.   The  Company has spent a cumulative total of $6.2 million to December 31, 2010  (2009 - $4.9 million) on exploration costs.   c)     Hunan - Gold Bull Mountain   Minco  China's wholly owned subsidiary Yuanling Minco owns the Gold Bull Mountain  Mining License. Yuanling Minco is in the process of renewing this license.   (8)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   6Mineral            interests (continued)   The  following is a summary of exploration costs, net of recoveries, incurred by  the Company:     2010  2009  2008   $  $  $ Gansu            Longnan  1,330,745   1,336,083   1,414,127 Inner          Mongolia            Gobi          Gold (note 9(c))  -   6,450   96,739 Guangdong            Changkeng  135,727   (1,090,981)  8,351,719 Hunan            Gold          Bull Mountain  1,169   4,137   98,948 Henan          Zhongjia            Xiaoshan          (note 9(b))  -   -   57,953    1,467,641   255,689   10,019,486    7Property,            plant and equipment           2010                Accumulated      Cost  amortization  Net   $  $  $              Computer          equipment  213,604   208,116   5,488 Leasehold          improvements  68,318   68,318   - Mining          equipment  407,660   300,878   106,782 Motor          vehicles  325,335   178,059   147,276 Office          equipment and furniture  141,957   141,333   624                 1,156,874   896,704   260,170  (9)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   7Property,            plant and equipment (continued)           2009                Accumulated      Cost  amortization  Net   $  $  $              Computer          equipment  222,193   193,202   28,991 Leasehold          improvements  68,318   60,580   7,738 Mining          equipment  363,570   286,033   77,537 Motor          vehicles  405,534   183,470   222,064 Office          equipment and furniture  140,514   135,599   4,915                 1,200,129   858,884   341,245 Discontinued          operations  87,101   43,516   43,585                 1,113,028   815,368   297,660    8Equity            investment in Minco Silver Corporation   As  at December 31, 2010 the Company owns 13,000,000 common shares of Minco Silver  (2009 and 2008 -13,000,000 common shares) that were acquired in 2004 in  exchange for the transfer of the Fuwan property and the silver interest in the  Changkeng property.   The  Company has not participated in Minco Silver's private placement and  issuance of shares upon exercise of options and warrants and as a result, its  ownership interest has decreased to 26.20% at December 31, 2010.   The  Company is equity accounting for its investment in Minco Silver.   Dilution  gains and equity losses on the investment in Minco Silver are as follows:  2010  2009  2008   $  $  $              Dilution          gain in Minco Silver  2,845,000   3,479,000   1,544,454 Equity          loss of Minco Silver  (1,214,470)  (1,659,280)  (948,750)             Income          from investment in Minco Silver  1,630,530   1,819,720   595,704  (10)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   8Equity            investment in Minco Silver Corporation (continued)   The  carrying value and market value of the Minco Silver shares held by the Company  are as follows:     2010  2009   $  $          Investment          in Minco Silver on an equity basis  7,125,366   5,494,836          Market          value of Minco Silver shares  82,550,000   24,050,000  As  at December 31, 2010, Minco Silver had current assets of $29,879,451,  non-current assets of $13,617,042 (including $12,960,162 in capitalized  mineral interest), current liabilities of $1,360,712, shareholders' equity  of $42,135,781, Minco Silver incurred exploration costs of $nil,  administration costs of $5,889,401and a loss of $4,309,983 during the year  ended December 31, 2010.   As  of December 31, 2009, Minco Silver had current assets of $11,526,006,  non-current assets of $17,494,393 (including $9,000,902 in capitalized mineral  interest), current liabilities of $2,405,152, shareholders' equity of  $26,615,247, Minco Silver incurred exploration costs of $1,413,008,  administration costs of $3,274,557 and a loss of $4,246,398 during the year  ended December 31, 2009.   9Discontinued            operations   The  following information summarizes the financial information for the Company's  discontinued operations:   a)     Inner Mongolia Huayu-Minco Mining Co.,Ltd. ("HYMK")   On  July 18, 2008, the Company entered into a sale agreement to dispose of its  interest in HYMK. After completion of all legal requirements and approvals,  the Company relinquished all managerial involvement and control to the  purchaser on October 31, 2008. Gross proceeds on disposal were RMB 7.0 million  (approximately $ 1.2 million).   b)     Henan Zhongjia Co. Ltd ("Zhongjia")   On  April 26, 2009, the Company entered into a sales agreement to dispose of its  interest in Zhongjia. After completion of all legal requirements and  approvals, the Company relinquished all managerial involvement and control to  the purchaser on June 30, 2009. Gross proceeds on disposal were RMB 2.46  million (approximately $0.4 million).   (11)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   9Discontinued            operations (continued) c) Inner Mongolia Damo Mining Co. Ltd.            ("Damo")   On  May 24 2010, the Company entered into a sale agreement to dispose of its  interest in Damo. Damo has an interest in the Gobi Gold project located in the  Inner Mongolia Autonomous Region. After completion of all legal requirements  and approvals, the Company relinquished all managerial involvement and control  to the purchaser on September 30, 2010. Net proceeds on disposal were RMB  10.75 million (approximately $1.67 million) which represents the difference  between the gross proceeds of RMB 13.5 million (approximately $2.10 million)  and a commission of RMB 2.75 million (approximately $0.43 million) paid to an  arm's length party for consulting services relates to the disposition.   Operating  results for discontinued operations   The  net earnings from discontinued operations summarized in the consolidated  statements of operations comprise the following:     2010  2009  2008   $  $  $              Loss          from HYMK  -   -   (30,952)Gain          on sale of HYMK - net of tax            $35,268  -   -   1,195,682 Loss          from Zhongjia  -   (309,003)  (311,318)Gain          on sale of Szhongjia  -   864,607   - Loss          from Damo  (37,747)  -   (354,796)Gain          on sale of Damo  1,645,048   59,404   -              Earnings          from discontinued operations  1,607,301   615,008   498,616  Assets  and liabilities of discontinued operations   The  assets and liabilities related to Damo included in the consolidated balance  sheets of Minco Gold comprise the following:     2010  2009   $  $          Cash  -   3,649 Receivables  -   809 Prepaid          expenses and deposit  -   159 Property,          plant and equipment  -   43,585 Accounts          payable and accrued liabilities  -   (2,250)            -   45,952  (12)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   9Discontinued            operations (continued)   Cash  flow of discontinued operations   The  cash flows related to HYMK, Zhongjia and Damo are included in the consolidated  statements of cash flows of Minco Gold and comprise the following:     2010  2009  2008   $  $  $              Cash            provided by operating activities of discontinued operations            HYMK  -   -   677,004 Zhongjia  -   319,502   (507,574)Damo  1,649,604   66,096   (394,302)                1,649,604   385,598   (224,872)             Cash            provided by investing activities of discontinued operations            Zhongjia  -   -   213,942              Cash            provided by financing activities of discontinued operations            HYMK  -   -   4,461 Zhongjia  -   44,871   (4,173)Damo  -   -   1,596                 -   44,871   1,884                 1,649,604   430,469   (9,046)   10Non-controlling            interest   Mingzhong  signed loan agreements with its shareholders on December 10, 2008 for RMB 30  million ($5.53 million). On May 20, 2009, the loan of RMB 30 million ($5.53  million) was converted to share capital of Mingzhong. Accordingly, $2,493,427  was reclassified to minority interests. As at December 31, 2010, the  non-controlling interest was $2,444,005.(13)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   11Share            capital   a)  Common          shares and contributed surplus   Authorized100,000,000  common shares without par value   Issued        Contributed   Shares  Share          capital  surplus   $  $  $              Balance          - December 31, 2008  42,989,051   34,021,922   4,930,097              Private          placement - net of share            issuance          costs of $10,260  5,000,000   4,389,740   - Stock-based          compensation  -   -   750,510 Common          shares sold  16,500   13,106   649 Stock          option exercised  152,231   128,987   (53,415)             Balance          - December 31, 2009  48,157,782   38,553,755   5,627,841              Stock-based          compensation  -   -   528,900 Stock          options exercised  1,357,100   1,781,277   (749,389)             Balance          - December 31, 2010  49,514,882   40,335,032   5,407,352  On  October 22, 2009, the Company closed a non-brokered private placement  financing. The financing placed 5,000,000 common shares at a price of $0.88  per share for gross proceeds of $4,400,000.   b)  Stock          options   Minco  Gold may grant options to its directors, officers, employees and consultants  under its stock option plan. The Board of Directors grants such options for  periods of up to five years, with vesting periods determined at its sole  discretion and at prices equal to or greater than the closing market price on  the day preceding the date the option granted.   Stock  option compensation is expensed over the vesting period of each option. During  the year ended December 31, 2010, the Company granted 75,000 stock options at  a price of $1.24 and 100,000 stock options at a price of $0.93 to its  consultants.   The  number of common shares reserved for issuance is 4,145,000 based upon options  granted and not exercised. The maximum number of common shares reserved for  issuance is 15% of the issued and outstandingshares.(14)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   11Share            capital (continued)   Minco  Gold recorded $0.5 million in stock-based compensation expense in 2010 (2009 -  $0.8 million).   A  summary of the status of options granted by Minco Gold is as follows:        Weighted   Number  average   outstanding  exercise          price      $         Options          outstanding at December 31, 2008  4,725,834   1.11          Granted  1,907,000   0.56 Exercised  (152,231)  0.50 Forfeited  (668,502)  1.08 Expired  (150,000)  1.80          Options          outstanding at December 31, 2009  5,662,101   0.93          Granted  175,000   1.06 Exercised  (1,357,100)  0.77 Cancelled/forfeited  (268,334)  0.91 Expired  (66,667)  1.08          Options          outstanding at December 31, 2010  4,145,000   0.99  The  weighted average exercise price of options granted by Minco Gold during the  year ended December 31, 2010 was $0.99. Each option entitles the holder to  purchase one common share.(15)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   11Share            capital (continued)   Options          outstanding Options          exercisable               Weighted          average          remaining Weighted   Weighted    contractual average   averageRange          of exercise Number life exercise Number exerciseprices outstanding (years) price exercised price$     $   $           0.48          - 0.70 990,000 3.06 0.48 965,000 0.480.71          - 0.90 1,180,000 1.74 0.79 1,180,000 0.790.91          - 1.20 900,000 2.57 1.01 716,666 1.021.21          - 1.60 520,000 2.11 1.43 482,500 1.451.61          - 2.60 455,000 0.30 1.68 455,000 1.682.01          - 2.55 100,000 0.33 2.55 100,000 2.55             4,145,000 2.09 0.99 3,899,166 0.98 The  Company used the Black-Scholes option pricing model to determine the fair  value of the options with the following assumptions:     2010 2009 2008  $ $ $       Risk-free          interest rate 1.89%          - 2.30% 1.58%          - 2.61% 1.69%          - 3.10%Dividend          yield 0% 0% 0%Volatility 84%          - 90% 75%          - 90% 64%          - 77%Approximate          expected lives 5          years 5          years 5          years Option  pricing models require the use of highly subjective estimates and assumptions  including the expected stock price volatility. Changes in the underlying  assumptions can materially affect the fair value estimates and therefore, in  management's opinion, existing models do not necessarily provide a reliable  measure of the fair value of the Company's stock options.   c)  Capital          risk management   The  Company's objectives in managing its liquidity and capital are to safeguard  the Company's ability to continue as a going concern and provide financial  capacity to meet its strategic objectives. The capital structure of the  Company consists of equity attributable to common shareholders, comprising  issued share capital, contributed surplus and accumulated deficit.(16)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   11Share            capital (continued)   The  Company manages the capital structure and makes adjustments to it in light of  changes in economic conditions and the risk characteristics of the underlying  assets. To maintain or adjust the capital structure, the Company may attempt  to issue new shares, issue new debt, acquire or dispose of assets. To  facilitate the management of its capital requirements, the Company prepares  annual expenditure budgets that are updated as necessary depending upon  various factors, including successful capital deployment and general industry  conditions. The annual and updated budgets are approved by the Board of  Directors.   The  Company expects that its current capital resources will be sufficient to carry  on a limited development and exploration business plan and support the basic  operational expenses. In the event the Company exercise its right to earn 51%  equity interest in the JV Co (see note 5), the Company will require additional  capital. The Company plans to either raise additional financing or liquidate  its assets to fulfil this capital requirement.   12Income            taxes   Income  tax expense differs from the amount that would result from applying the  Canadian federal and provincial income tax rates to loss before income taxes.  These differences result from the following items:     2010  2009  2008   $  $  $              Loss          before discontinued operations  (2,120,074)  (756,502)  (14,032,368)                28.5%  30%  31%             Income          tax recovery at statutory rates  (604,221)  (226,951)  (4,350,034)Non-taxable          dilution gain  -   -   (92,334)Non-deductible          expenses  152,252   226,360   (1,298,184)Difference          in foreign tax rates  34,426   90,937   1,043,006 Impact          of federal tax rate change  (231,570)  (256,454)  179,848 Expiry          of non-capital loss carry forward  231,561   232,160   196,776 Business          tax/China withholding tax  -   -   85,349 Change          in valuation allowance  240,785   (119,235)  4,181,504 Other  176,767   53,183   139,418              Provision          for tax expenses  -   -   85,349  (17)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   12Income            taxes (continued)   Future  income taxes arise from temporary differences in the recognition of income and  expenses for financial reporting and tax purposes. The significant components  of future income tax assets and liabilities at December 31, 2010 are as  follows:     2010  2009   $  $          Future          income tax assets        Non-capital          loss  4,146,578   4,102,025 Resource          expenditures  4,801,097   4,433,969 Capital          assets  209,764   177,644 Equity          investment in Minco Silver  (337,768)  (133,952)Share          issue costs  1,539   2,052             8,821,210   8,581,738          Future          income tax liabilities        Marketable          securities  (1,490)  (2,804)Less:          Valuation allowance  (8,819,720)  (8,578,934)         Net          future income tax assets  -   -  No  future income tax asset has been recognized as realization is not considered  more likely than not, due to the uncertainty of future taxable income.   The  Company has Canadian non-capital loss carry forwards of approximately  $5,460,265 that may be available for tax purposes. The expiry for Canadian  non-capital loss carry forwards is as follows:     Non-capital   losses   Canada   $      2015  1,156,750 2026  1,442,234 2028  1,582,716 2030  1,278,565         5,460,265  The  Company has approximately $11.1million of operating losses and approximately  $15.1 million of unclaimed exploration expenses for Chinese income tax  purposes. Operating losses incurred in a year can be carried forward for five  years, while unclaimed exploration expenses will be amortized to match with  future sales.   (18)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   13Related            party transactions   a)  At          December 31, 2010, the Company has $839,305 due from Minco Silver          (2009 - $2,109,285) in relation to expenditures on shared office          expenses. The amount due from Minco Silver is unsecured, non-interest          bearing and repayable on demand.   b)  At          December 31, 2010, the Company has $77,027 due to Minco Base Metals ("MBM")          (2009 - $120,576) in relation to expenditures on the White Silver          Mountain project and shared office expenses. The Company is related to          Minco Base Metals through two common directors and two common          officers.   c)  In          the year ended December 31, 2010, the Company paid consulting fees          totalling $392,938 (2009 -$303,082) to companies controlled by the          Chief Executive Officer, Chief Financial Officer, and Vice President,          Exploration of the Company.   d)  In          connection to Minco China's loan of RMB 60 million (approximately $9          million) to the Tugurige Gold Mine as disclosed in note 5, Minco Gold          and MBM entered a loan agreement whereby Minco Gold borrowed          $7,561,779 million (RMB 50 million) in December 2010. The loan is          repayable in full on or before June 30, 2011 and bears interest at the          rate of 10% per annum, calculated and compounded monthly. The loan is          secured by 3 million Minco Silver shares held by Minco Gold.   The  funds were advanced to Minco China by Beijing Zhongjia Kailong Technology  Development Co. Ltd. ("Zhongjia"), the trustee of MBM's cash in China.  Zhongjia is related to Minco China by common management.   e)  The          above transactions were conducted in the normal course of business and          are measured at the exchange amount, which is the amount of          consideration established and agreed to by the parties.   14Commitments   The  Company has commitments in respect of office leases requiring minimum payments  of $670,742 as follows:     $      2011  150,862 2012  148,922 2013  155,037 2014  161,403 2015  54,518         670,742  The  Company has entered into sub-lease agreements for a portion of its leased  premises.   (19)       Minco  Gold Corporation(an  exploration stage enterprise)Notes  to Consolidated Financial StatementsDecember  31, 2010, 2009 and 2008   (Canadian  dollars)   15Geographic            information   The  Company's business has one operating segment, mineral exploration and  development. The Company conducts operations only in Canada and in China;  therefore, segregates its financial results by geographical division. The  Company's total assets, liabilities and operating loss are as follows:     2010  2009   $  $          Current          assets        Canada  809,923   5,199,706 China  15,600,184   3,508,015             16,410,107   8,707,721          Long-term          assets        Canada  7,189,878   5,508,346 China  260,170   379,499             7,450,048   5,887,845          Current          liabilities        Canada  341,231   165,494 China  13,128,608   5,038,350             13,469,839   5,203,844   2010  2009  2008   $  $  $              Loss          for the year            Canada  (530,735)  758,271   (2,399,860)China  (1,589,339)  (1,514,775)  (11,704,154)Discontinued          operation  1,607,301   555,604   839,709                 (512,773)  (200,900)  (13,264,305) (20)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   16Earnings            (loss) per share   The  table below calculates the basic and diluted earnings and loss per share.     2010  2009  2008   $  $  $              Loss          per share from continuing operations            Basic  (0.04)  (0.02)  (0.33)Diluted  (0.04)  (0.02)  (0.33)             Earnings          per share from discontinued            operations            Basic  0.03   0.01   0.02 Diluted  0.03   0.01   0.02              Loss          per share            Basic  (0.01)  (0.01)  (0.31)Diluted  (0.01)  (0.01)  (0.31)             Weighted          average number of shares outstanding  48,582,347   43,148,525   42,970,873  Stock  options are excluded from the computation of diluted earnings per share when  the exercise price exceeds the average market value of the common shares or  has created an anti-dilutive effect. (21)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   17Financial            risk management   The  Company's operations consist of the acquisition, exploration and development  of properties in China. The Company examines the various financial risks to  which it is exposed and assesses the impact and likelihood of occurrence.  These risks may include credit risk, liquidity risk, currency risk and  interest rate risk. Management reviews these risks on a monthly basis, and  when material, they are reviewed and monitored by the Board of Directors.   Credit  risk   Counterparty  credit risk is the risk that the financial benefits of contracts with a  specific counterparty will be lost if the counterparty defaults on its  obligations under the contract. This includes any cash amounts owed to the  Company by these counterparties, less any amounts owed to the counterparty by  the Company where a legal right of set-off exists and also includes the fair  value contracts with individual counterparties that are recorded in the  consolidated financial statements. The Company considers the following  financial assets to be exposed to credit risk:   a)     Cash and cash equivalents   In  order to manage credit and liquidity risk the Company places its short-term  investment funds into government and Canadian bank debt securities with terms  of 90 days or less when acquired. At December 31, 2010, the balance of $ 1.0  million was placed with three institutions.   b)     Short term investments   These  are guaranteed investment certificates with maturities of greater than 90 days  when acquired. At December 31, 2010, these totalled $ 5.3 million and were  placed with one institution. The yields on these investments were 0.65% to  1.35%.   c)     Loan receivable   The  loan receivable is secured by the Tugurige Gold Mine and is guaranteed by the  208 Team, a subsidiary of CNNC (see Note 5).   Liquidity  risk   Liquidity  risk includes the risk that the Company cannot meet its financial obligations  as they fall due. The Company has in place a planning and budgeting process to  help determine the funds required to support the Company's normal operating  requirements and its exploration and development plans. The annual budget is  approved by the Board of Directors. The Company insures that there are  sufficient cash balances to meet its short-term business requirements. At  December 31, 2010, the Company has positive working capital of approximately  $3 million and therefore has sufficient funds to meet its basic operating and  exploration obligations. In the event the Company exercises its right to earn  51% equity interest in the JV Co (see note 5),   (22)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   17Financial            risk management (continued)   The  Company will require additional capital. The Company plans to either raise  additional financing or liquidate its assets to fulfil this capital  requirement.   Currency/foreign  exchange risk   The  Company's functional currency is the Canadian dollar and therefore the  Company's net earnings are impacted by fluctuations in foreign currencies.  The Company raises funds in Canadian dollars and lends either Canadian dollar  or US dollar amounts to support the Chinese operations. As the Company  operates in China and many of its exploration expenditures are payable in  either US dollars or the Chinese currency RMB, there exists foreign currency  risks arising from changes in exchange rates with the Canadian dollar. The  Company maintains its excess cash in Canadian based assets. The Company does  not hedge its foreign currency fluctuations. A 10% strength in the Canadian  dollar against the Chinese RMB will have a before tax effect of a $347,448  loss on the financial results.   Interest  rate risk   The  effective interest rate on financial liabilities (accounts payable) ranged up  to 1%. The interest rate risk is the risk that the fair value of future cash  flows of a financial instrument fluctuates because of changes in market  interest rates. Cash and short-term investments entered into by the Company  bear interest at a fixed rate thus exposing it to the risk of changes in fair  value arising from interest rate fluctuations. Short-term investments are  invested in high grade, highly liquid instruments and the Company exposes  itself to variable interest rate fluctuations. A 1% increase in the interest  rate in Canada will have a net (before tax) income effect of $62,976, assuming  the foreign exchange rate remains constant.   Fair  value measurement   It  is required that the fair value measurement uses a fair value hierarchy that  reflects the significance of the inputs used in making the measurements,  including the following levels:   Level  1 - quoted prices in active markets for identical assets or liabilities,   Level  2 - valuation methods that make use of directly or indirectly observable  inputs, and   Level  3 - valuation methods that make use of unobservable market data used as  inputs.   The  fair value of the Company's cash and cash equivalents and short-term  investments is their carrying value (level 2). The marketable securities are  measured at their fair value based on quoted market price (level 1). The fair  value of the Company's receivables and payables approximates their carrying  value given their short-term nature.(23)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   18Reconciliation            of Canadian and United States generally accepted accounting            principles   These  consolidated financial statements have been prepared in accordance with  generally accepted accounting principles in Canada ("Canadian GAAP").  These consolidated financial statements also conform, in all material  respects, with generally accepted accounting principles in the United States  of America ("United States GAAP") with respect to recognition, measurement  and presentation except as described and quantified below.     2010  2009   $  $ Consolidated          balance sheets        Total          assets under Canadian GAAP  23,860,155   14,595,566 Adjustment          for investment in Minco Silver  (3,343,132)  (2,898,576)Total          assets under US GAAP  20,517,023   11,696,990 Shareholders'          equity under Canadian GAAP  7,946,311   6,898,295 Difference          in equity loss in Minco Silver (a)  (4,760,967)  (3,608,625)Difference          in the dilution gain in Minco Silver (a)  1,417,835   710,049 Non-controlling          interest (c)  49,422   2,493,427 Total          shareholders' equity under US GAAP  4,652,601   6,493,146  Consolidated  statements of operations and comprehensive loss:     2010  2009  2008   $  $  $ Loss          for the year            Under          Canadian GAAP  (512,773)  (200,900)  (13,264,305)Difference          in equity loss in Minco Silver (a)  (1,152,343)  (1,448,187)  (2,160,438)Difference          in the dilution gain in Minco            Silver          (a)  707,786   710,049   (1,544,454)Unrealized          (gain) loss on available-for-sale            securities          (b)  10,500   (23,100)  75,600 Loss          for the year under US GAAP  (946,830)  (962,138)  (16,893,597)Weighted          average number of shares            outstanding  48,582,347   43,148,525   42,970,813 Loss          per share - basic and diluted under US            GAAP  (0.02)  (0.02)  (0.39)Loss          for the year            Under          US GAAP  (946,830)  (962,138)  (16,893,597)Unrealized          (gain) loss on available-for-sale            securities          (b)  (10,500)  23,100   (75,000)Comprehensive          loss under US GAAP  (957,330)  (939,038)  (16,968,597) (24)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   18Reconciliation            of Canadian and United States generally accepted accounting            principles(continued)   There  were no reconciliation items for the consolidated statements of cash flows.   a)     Equity investment in Minco Silver   Under  Canadian and US GAAP, the Company accounts for its investment in Minco Silver  using the equity method of accounting.   Under  Canadian GAAP, Minco Silver capitalizes mineral property development costs  upon the establishment of a mineral resource. For US GAAP purposes, all  exploration and development costs are expensed until proven and probable  reserves have been established by way of a bankable feasibility study.   With  the decrease of the Company's equity interest in Minco Silver (see note 8),  the Company recognized dilution gains under Canadian GAAP for the years ended  December 31, 2010, 2009 and 2008. Under US GAAP, prior to the application of  EITF 08-6, "Equity Method Accounting Consideration" effective January 1,  2009, such transactions were considered capital transactions and the resulting  dilution gains are excluded from net income and included in contributed  surplus. From January 1, 2009 dilution gains or losses are recognized in net  income under both US and Canadian GAAP.   b)     Comprehensive income (loss)   Under  Canadian GAAP, the Company classifies all its short-term investments as  held-for-trading.   Under  US GAAP, the Company classified the short-term investments as available for  sale prior to January 1, 2007. Beginning January 1, 2007, the Company changed  the classification for all new short-term investments to held-for-trading.  Securities acquired prior to January 1, 2007 and still held as at the date of  the balance sheets remain classified as available for sale.   Unrealized  holding gains and losses on these securities are excluded from income and  charged to accumulated other comprehensive income as a separate component of  shareholders' equity until realized.   c)  Under US GAAP, the non-controlling interest is classified to shareholders'  equity in accordance with Accounting Standards Codification 810 "Consolidations",  effective from January 1, 2009.   19Recent            pronouncements   Starting  January 1, 2011, the Company will adopt International Financial Reporting  Standard ("IFRS") and future US GAAP pronouncements will not affect the  Company's consolidated financial statements.(25)         Minco          Gold Corporation(an          exploration stage enterprise)Notes          to Consolidated Financial StatementsDecember          31, 2010, 2009 and 2008 (Canadian          dollars)   20Subsequent            events   Effective  January 14, 2011, the Company granted options of over 2,100,000 common shares  to various employees, directors, and contractors at an exercise price of $2.14  that vest over an 18-month period from the issue date and expire in January  2016.   On  March 25, 2011, the RMB 60 million (approximately $9 million) loan provided to  the Tugurige Gold Mine was repaid in full with interest.(26)