UNITED STATES




SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549




FORM 10-K/A


Amendment No. 1


(Mark One)




[X]

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.


For the fiscal year ended May 31, 2010


[   ]

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


For the transition period from _______ to ______




Commission file number: 0-29392




CALAIS RESOURCES INC.


(Exact name of registrant as specified in its charter)


British Columbia

(State or other jurisdiction of

incorporation or organization)

98-0434111

(IRS Employer

Identification No.)4415 Caribou Road, P.O. Box 653

Nederland, Colorado

(Address of principal executive offices)

80466-0653

(Zip Code)




Registrant’s telephone number, including area code: (303) 258-3806






Securities registered pursuant to Section 12(b) of the Exchange Act:


Title of each class

Name of each exchange on which registeredN/A

N/A




Securities registered pursuant to Section 12(g) of the Act:


Common Shares, no par value(Title of class)






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





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





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





Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T





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(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes[  ]  No [X]





Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§232.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]





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


Large accelerated filer [  ]  Accelerated filer [  ]   Non-accelerated filer [  ]  Smaller reporting company [X]





Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).


Yes [  ]  No [X]




State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as the last business day of the registrant’s most recently completed second fiscal quarter: $14,624,436 as of November 30, 2010.




As of May 2, 2011, the registrant had 141,990,902 shares of common stock outstanding.





EXPLANATORY NOTE
 
 The information contained in this Annual Report on Form 10-K/A amends Items 1 and 2 of Part I, Item 7 of Part II, and Item 13 of Part III to label certain information for 2005, 2006, 2007, and 2008 as being audited, and amends the disclosure in Item 14 of Part III of the originally filed Annual Report on Form 10-K filed with the SEC on May 9, 2011 (the “Original Report”). Currently dated certifications are filed as exhibits to this amended report.
 
 This Annual Report on Form 10-K/A does not reflect all events occurring after the original filing of the Original Report or modify or update all the disclosures affected by subsequent events.  Information not modified or updated herein reflects the disclosures made at the time of the filing of the Original Report on May 9, 2011.  Accordingly, this Form 10-K/A should be read in conjunction with all of our periodic filings, including our amended filings on Form 10-K/A in relation to the fiscal years ending May 31, 2005 through 2007, 2008 and 2009, filed with the SEC in conjunction with the filing of this report.
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ITEM 1. BUSINESS.




Glossary





The following is a glossary of geological and technical terms used in this report:





ac - acres





Adits - An underground mine tunnel with only one end daylighting.





Breccia - A rock in which angular fragments are surrounded by a mass of fine-grained minerals.





Chalcopyrite-copper bearing sulphide





CNI 43-101 – NI 43-101 is a national instrument for the ''Standards of Disclosure for Mineral Projects'' within Canada. The Instrument is a codified set of rules and guidelines for reporting and displaying information related to mineral properties owned by, or explored by, companies which report these results on stock exchanges within Canada. This includes foreign-owned mining entities who trade on trading markets overseen by the Canadian securities administrators.





Cretaceous - The geologic time that is part of the Mesozoic era covering the period from 144 to 66 million years ago.





Epithermal - refers to the process of near surface ore deposition by fluids from an intrusive source; said of a mineral deposit formed within about 1 km of the earth's surface and in the temperature range 50 - 200 degrees C, occurring mainly as veins. Also said of that environment.





Exploration stage – Includes all issuers engaged in the search for mineral deposits (reserves) which are not in either the development or production stage.





Galena - Lead sulfide mineral.





Gneiss - A common and widely distributed type of rock formed by high-grade regional metamorphic processes from pre-existing formations that were originally either igneous or sedimentary rocks. Gneissic rocks are coarsely foliated and largely recrystallized but do not carry large quantities of micas, chlorite or other platy minerals.





ha – hectares




Mineral Resource - Is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction.  The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.




Inferred Mineral Resource - Is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity.  The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes.




Indicated Mineral Resource - Is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration and testing information gathered through




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Measured Mineral Resource  Is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit.  The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough to confirm both geological and grade continuity.




Mineral Reserve - Is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study – based on CNI 43-101 requirements.  This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.  A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.





NSR – Net smelter royalty





Phyllite - A metamorphic rock, intermediate in grade between slate and mica schist.





Probable Mineral Reserve - Reserves for which quantity and grade and/or quality are computed form information similar to that used for proven (measure) reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven (measured) reserves, is high enough to assume continuity between points of observation.




Proven Mineral Reserve - Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.




Mesothermal - Refers to a mineral deposit formed at moderate depth hence at "moderate" temperature and pressures: said of a hydrothermal mineral deposit formed at considerable depth and in the temperature range of 200 - 300 degrees C. Also said of that environment.





Metamorphism – The process by which the form or structure of rocks is changed by heat and pressure.





Monzonites – Rock that contains abundant and approximately equal amounts of plagioclase and potash feldspar; it also contains subordinate amounts of biotite and hornblende, and sometimes minor quantities of orthopyroxene.





Patented Mining Claim - A mineral claim originally staked on land owned by in the United States Government, where all its associated mineral rights have been secured by the claimant from the U.S. Government in compliance with the laws and procedures relating to such claims, and title to the surface of the claim and the minerals beneath the surface have been transferred from the U.S. Government to the claimant. Annual mining claim assessment work is not required, and the patented claim is taxable real estate. Mining claims located on State of Alaska lands cannot be patented.





Pegmatite - A very coarse-grained, intrusive igneous rock composed of interlocking grains usually larger than 2.5 cm in size.





Precambrian - Noting or pertaining to the earliest era of earth history, ending 570 million years ago, during which the earth's crust formed and life first appeared in the seas.





Pyrite – A yellow iron sulphide mineral, normally of little value. It is sometimes referred to as “fool’s gold”.





Quartz – Common rock-forming mineral consisting of silicon and oxygen.








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Schist –Medium-grained to coarse-grained metamorphic rock composed of laminated, often flaky parallel layers of chiefly micaceous minerals.




Shear or sheared – The deformation of rocks by lateral movement along innumerable parallel planes, generally resulting from pressure and producing such metamorphic structures as cleavage and schistosity.
 
 Sphalerite - zinc bearing sulphide.


st –short tons.





stpy– short tons per year





Sulphide – A compound of sulphur and some other element.





t - ton





Tailings - Fine grained or ground up material rejected from a mill after more of the recoverable valuable minerals have been extracted. Can also mean the waste material resulting from placer mining.





Tertiary - Relating to the first period of the Cenozoic era, about 65 to 1.64 million years ago.





tpy – tons per year





Unpatented Mining Claim - A mineral claim staked on federal, state or, in the case of severed mineral rights, private land to which a deed from the U.S. Government or other mineral title owner has not been received by the claimant. Unpatented claims give the claimant the exclusive right to explore for and to develop the underlying minerals and use the surface for such purpose. However, the claimant does not own title to either the minerals or the surface, and the claim is subject to annual assessment work requirements and the payment of annual rental fees which are established by the governing authority of the land on which the claim is located. The claim may or may not be subject to production royalties payable to that governing authority although at this time there are no royalties payable on unpatented mining claims




General Information




We are a mineral exploration company engaged directly and indirectly through subsidiaries, in the acquisition of properties and the exploration for minerals and metals, primarily gold and silver.  Our business is currently in the exploratory or exploration stage as defined by Accounting Standards Codification (“ASC”) 915-10 and SEC Industry Guide 7 and, to date, our activities have not included development or mining operations.  Our primary property is the Caribou project (advanced exploration stage) located in Nederland, Colorado; however, we also have properties in Nye County, Nevada.




During the fiscal years ended May 31, 2010, 2009, 2008, 2007, 2006 and 2005, we experienced significant financial difficulties that left us substantially without cash, full-time employees or an ability to fund operations.  While we were able to acquire some cash through equity and debt financing transactions, this cash was used primarily to provide operating funds, pay trade creditors and maintain our operating permits, properties and mineral interests. There is no assurance that we will be able to obtain additional funding when needed, or that such funding, if available, can be obtained on terms acceptable to us or at all.  If we are unable to obtain additional funds we may be forced to curtail or case our activities.  Equity financing, if available, may result in substantial dilution to existing stockholders.




Currently, under U.S. GAAP, we have not completed sufficient and appropriate exploration work to determine if a viable mineral deposit or reserve exists in any of our properties.  Although we previously reported the existence of measured, indicated and inferred mineral resources on our Caribou project, these types of mineral resource estimates do not meet the current requirements of National Instrument 43-101 – Standards of Disclosure of Mineral Projectsissued by the Canadian Securities Commission. Investors are advised that while terms such as “measured,”








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“indicated” and “inferred” mineral resources are recognized and required by Canadian regulations and Canadian GAAP, under which we previously reported, these terms are not recognized by the U.S. Securities and Exchange Commission.  Accordingly, we will not know whether a commercially viable mineral deposit or a reserve exists on our properties until sufficient and appropriate exploration work is done and a comprehensive evaluation of such work concludes economic and legal feasibility.  The estimation of measured, indicated and inferred mineral resources involves greater uncertainty as to their existence and economic feasibility than the estimation of proven and probable reserves.  U.S. investors are cautioned (i) not to assume that measured or indicated resources will be converted into reserves and (ii) not to assume that estimates of inferred mineral resources exist, are economically minable, or will be upgraded into measured or indicated mineral resources.  It cannot be assumed that the Company will identify any viable mineral resources on its properties or that any mineral reserves, if any, can be recovered profitably, if at all. We will require additional funds in the event any of the Company’s properties are capable of being advanced beyond the exploration stage.




All of the Company's property interests are in the exploration stage and do not contain any  "reserves",  as that term is defined in Industry Guide 7 adopted by the SEC. The term “reserves" is defined in Industry  Guide 7 as "that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination."  Industry Guide 7 is available from the SEC's website at:





http://www.sec.gov/about/forms/industryguides.pdf.





Mineral exploration involves significant risk and few properties that are explored are ultimately developed into producing mines.  The probability of an individual prospect ever having reserves that meet the requirements of Industry Guide 7 is extremely remote.  The Company’s property interests,   in all probability, do not contain any reserves and any funds spent on exploration of the Company’s property interests will probably be lost. If any of the Company's exploration programs are successful, the Company will require additional funds to advance the property beyond the exploration stage.  Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining.  If the Company is unable to secure additional funding, the Company may lose its interest in one or more of its mineral claims and/or may be required to cease all activities.





The address of our principal executive offices and our telephone and facsimile numbers at that address are:




Calais Resources Inc.


4415 Caribou Rd  (PO Box 653)


Nederland, Colorado 80466-0653


Telephone No.: (303) 258-3806


Facsimile No.: (303) 258-0402




Our legal name is Calais Resources Inc.  We were incorporated under the laws of British Columbia, Canada, on December 30, 1986 under the name “Millennium Resources Inc.”  We changed our name to Calais Resources Inc. on March 19, 1992.  Our Common Shares trade on the Pink Sheets under trading symbol “CAAUF.PK”.  Our fiscal year ends May 31st.






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Inter-corporate Relati onships





Organization Chart









Calais Resources Inc., a British Columbia corporation, owns 100% of the common shares of Calais Resources Colorado, Inc., a Nevada corporation, and Calais Resources Nevada, Inc., a Nevada corporation.


Calais Resources Colorado, Inc. owns our interests in the Caribou prospect.  Calais Resources Nevada, Inc., a Nevada corporation, owns the Company’s interest in mineral prospects in Nevada (the “Manhattan prospect”).




Business of Calais




We are in the business of researching, acquiring, and exploring for minerals on our prospects, with the goal of producing minerals on our prospects.  Our corporate philosophy has been to seek out and acquire other potential gold prospects.




If we identify prospects, we endeavor to acquire the rights to the prospect and surrounding claims. During the acquisition process, we also proceed through a due diligence period to the commencement of a full scientific analysis of the district, followed by an exploration program. Suitable results at each step in the process are a prerequisite to further exploration.  Upon suitable identification of a mineral deposit and reserve, of which there can be no assurance, we will then make the decision to either proceed with the development and mining thereof, to joint venture with another mining or exploration company, or to sell the prospect outright.




Exploration of mineral resources can be expensive.  Through the years, we have accomplished limited exploration activities with funds provided through debt and equity investment.  We have been using, and expect to continue to use, the net proceeds from periodic capital raising activities to expand our exploration operations on our Caribou project in Colorado and to commence exploration operations on the Manhattan prospect in Nevada.




If we reach the development and mining stages for any of our prospects, which cannot be assured, we plan to seek additional capital through equity and/or debt financing, and we may have to sell an interest in our prospects, enter into joint venture or other arrangements, or otherwise dilute our interest in our mineral properties in order to attract third-party financing.  We will likely only be able to attract interest in our mineral prospects on commercially-reasonable terms if we are able to show positive results from our exploration programs and our other work, such as core drilling sufficient to attract third-party financing or industry participants.  There are no assurances we will be able to obtain any additional funding or, if we do obtain such funding, that it will be on terms acceptable to us.




Our activities on our mineral interests are not significantly affected by seasonality. See “Item 2. Properties.”




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The raw materials that we need for our mineral exploration activities consist of readily available consumables such as fuel and equipment.  We also contract with third parties for some of these activities and, at this time, we believe there is no shortage of these materials or contractors available at reasonable prices, although the prices and availability of these materials or services can be volatile.




Since we have not yet produced any gold or silver for sale, we have not developed any marketing channels.  If we do produce precious metals, which cannot be assured, we believe there are numerous outlets for the sale of any production.




Our operations and our prospective operations are not dependent on any intellectual property patents or licenses, industrial, commercial, or financial contracts, or new manufacturing processes.




Government Regulations and Rules




The prospects which we are exploring are subject to various federal, state and local laws and regulations governing prospecting, exploration, development, production, labor standards, occupational health, mine safety, control of toxic substances, and other matters involving environmental protection and taxation. U.S. and foreign environmental protection laws address, among other things, the maintenance of air and water quality standards, the preservation of threatened and endangered species of wildlife and vegetation, the preservation of certain archaeological sites, reclamation, and limitations on the generation, transportation, storage and disposal of solid and hazardous wastes.  There can be no assurance that all the required permits and governmental approvals necessary for any mining project with which we may be associated can be obtained on a timely basis, or maintained as required by the operator of the




We are not aware of any proposed or existing United States regulations pertaining to environmental matters which might have a material impact on our future financial performance. Nevertheless, the applicable governmental bodies can change the current rules and regulations in accordance with their procedural requirements, and certain governmental employees may interpret existing rules and regulations in a manner that we do not believe is consistent with the intent of those rules or regulations.  Should the regulations or their interpretation change, the changes may have a material adverse impact on our operations. See also “Item 3. Legal Proceedings – Nevada Environmental Issues.”




On July 21, 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law.  Section 1503 of the Dodd-Frank Act requires issuers that either directly or indirectly through a subsidiary operate a “coal or other mine,” as defined in the Federal Mine Safety and Health Act of 1977 (the “Mine Safety Act”), to disclose, in each periodic report filed with the SEC, certain mine safety information relating to the period covered by such report.  However, because we are in the exploratory stage, we do not meet the definitions put forth by the Mine Safety Act and, therefore, are exempt from the Dodd-Frank Act Section 1503 disclosures.  We are committed to providing a safe and healthy work environment and, upon meeting the Mine Safety Act definitions, will provide mining safety disclosures as required by the Dodd-Frank Act.




Conflict minerals, as defined by the Dodd-Frank Act, are not necessary to the functionality or production of our products.




Competition




There are a large number of other companies in the United States and abroad that are engaged in the exploration and development of prospects for gold and silver.  Many of these companies have achieved production and therefore have cash flow and have financial strength that exceeds our financial strength.  While we compete with these companies in attempting to locate and acquire mineral properties, the market for our possible future production of minerals tends to be commodity-oriented, rather than company- or brand-oriented.  Additionally, readily available markets exist worldwide for the sale of mineral products.  Therefore, we will likely be able to sell any mineral products that we identify and produce.




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We expect to compete by keeping our production costs low through judicious selection of which portions of the property to develop, if development is warranted, and by keeping overhead charges within industry standards.   There can be no assurance that our current mineral interests or any additional mineral resource properties we may acquire in the future will yield reserves or result in commercial mining operations.




Property Exploration and Maintenance Activities




Our property exploration and drilling activities were severely limited during the fiscal years ended May 31, 2010, 2009, 2008, 2007, 2006 and 2005 due to working capital shortages as described previously.  The following discussion describes our exploration and maintenance activities during those periods.




During our 2004 fiscal year, we commenced a drilling program on our Caribou project which was intended to expand the mineral resources we had already identified on this property. During September and October 2003, we drilled two core holes at a cost of approximately $250,000, and subsequently drilled an additional four holes at a cost of approximately $500,000. We also have updated all of the geologic information about the Caribou project in a three-dimensional program which we expect will assist us in determining future exploration activities and whether additional development drilling is warranted. We have not identified any reserves or determined whether commencement of commercial production is warranted.  Subject to receipt of adequate funding, a pilot scale underground mining program and additional exploration drilling program are expected to commence in the summer of 2011 to further identify potential mining areas and confirm mining methods and operating costs.  The results of these programs will be used to further evaluate the Caribou project.  We have continuously maintained all of our permits, including exploration, operating, water discharge, air quality control, and explosive licenses.  We have also commissioned technical reports on our assets.  These Canadian National Instrument 43 – 101 Technical Reports were completed in February 2011 and were filed on SEDAR.  We did not conduct any additional exploration work on our Nevada prospect during the years ended May 31, 2010, 2009, 2008, 2007, 2006 and 2005 due to the aforementioned working capital shortages, but we continue to fund a significant amount of work to ascertain the status of title to the Nevada prospect.  Furthermore, we obtained an agreement from Marlowe Harvey (a significant shareholder, former officer and director of the Company, and the person who has agreed to transfer a significant portion of the Manhattan prospect to Calais) pursuant to which he recognized his responsibility to provide us evidence of good title to the mineral interests in Nevada.  Mr. Harvey and certain affiliates have assigned the title they hold in the Nevada properties to us, but there are other title conflict issues that must be resolved.  Although we believe we have enforceable contractual rights to acquire title to the disputed mineral interests in Nevada, at the present time issues surrounding the ownership of those mineral interests remain. See “Item 2. Properties – Manhattan Prospect; Nevada, USA: Gold Exploration.”  We have been assigned only portions of the ownership interest in these properties, and have located 56 of our own unpatented claims in the area.  We have recorded notice of our joint venture agreement concerning the prospect, and the 2004 Settlement Agreement with Argus Resources, Inc. (“Argus”), Nevada Manhattan Mining, Inc. (“NMMI”) and Moran Holdings, Ltd., in Nye County, Nevada.




During the fiscal year ended May 31, 2005, we sent a team to Panama to explore our Panamanian mineral concessions in the Faja de Oro District due, in part, to performance obligations stipulated in an agreement between us and our partners in Panama dated September 2005.  It was later determined that the concession applications and the concession originally issued for the original exploitation concession were not of a status with the Panamanian government that exploration could be pursued without further processing of the cession applications in Panama and the official re-issuance of the exploitation concession.  The issuance of these documents was the responsibility of the Panama companies, and the Panama companies were unable to produce written evidence of such issuance, in violation of our agreement with them.  After extensive correspondence with the Panama companies regarding these concessions, management determined that it was unable to conduct exploration activities in Panama absent the formal issuance of these concessions by the Panamanian government.  In 2007, the Panama companies declared us to be in default; we protested and declared the Panama companies to be in default.  We have since initiated arbitration with the International Center of Dispute Resolution (“ICDR”), the international division of the American Arbitration Association, seeking damages of $995,000.  There can be no assurance of a positive outcome for this arbitration and, in the event the outcome is positive, there can be no assurance as to the collectability of assets pursuant to a judgment.  We do not intend to pursue any further exploration activities in Panama.




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During the fiscal years ended May 31, 2010, 2009, 2008, 2007, 2006 and 2005 we incurred exploration and business development and general and administrative expenses as follows:




Fiscal Year Ended May 31,2010
2009
2008
2007
2006
2005Exploration and Business Development Expenses
$64,541
$61,979
$107,164
$80,263
$84,207
$334,658General and Administrative Expenses
$1,060,289
$1,013,858
$1,374,817
$1,069,686
$860,332
$918,131




Exploration and business development expenses consist of filing fees, legal agreement expense, subcontractor fees associated with exploration activities, salaries, wages and benefits associated with exploration activities, asset retirement costs, and other miscellaneous expenses directly related to exploration activities.  General and administrative expenses during this time consisted primarily of accounting and consulting fees, legal fees, administrative salaries, wages and benefits, travel and other general office costs.




Title of Mining Claims in the United States




It has been our practice to obtain policies of title insurance upon our patented mining claims as they have been acquired.  However, title insurance has generally been acquired in the amount of the purchase price of the mineral interests acquired.  Such coverage would not afford adequate protection against the loss of mineral values, or the expenditure of funds on exploration should a title defect create a loss.  If commercial mineral deposits were discovered on our patented mining claims, the value of such deposits would almost certainly greatly exceed the original purchase price of those mineral interests, as the purchase price which was often predicated on then current




There are unavoidable risks in holding unpatented mining claims located under the United States General Mining Law, including potential challenges to the validity of any claimed discovery, a challenge as to whether claimed discoveries would satisfy the prudent man rule, potential errors in location or recording, and the risk of changes in the law or regulations.  Claims upon which no actual discovery exists are held by virtue of the doctrine of pedis possessio, which involves the occupation of claimed mining ground while engaged in a diligent search for a discovery of valuable minerals.  There can be no guarantee that pedis possessio rights would be recognized as to any or all of our unpatented mining claims in Colorado or Nevada if challenged by a third party.  There can be no guarantee that any claimed discovery on unpatented grounds would survive challenge by the federal government, if the government sought to challenge our title or right to occupy the ground.  No challenges are currently outstanding either by adverse locators, or by the Federal government.




Colorado




Calais, its predecessors and their joint venture partners, have periodically dedicated substantial time and effort to detect and to cure any title problems which have been identified concerning the patented mining claims. These past efforts have included full record title searches on key prospects.  Recently, we have worked with one of our lenders to remove additional title exceptions from the lender’s policy issued to them.  These searches have focused, however, on the Caribou Mine interests and the Cross Mine interests, which were the subject of past or historical mining activity.  The majority of the patented acreage owned or controlled by the Company is located at Caribou, Colorado, and past exploration activity has focused on both the Caribou and Cross Mine project areas. We have relied upon title insurance and title searches focusing on the period 1974 to date, and/or updating information contained in the title policies as issued or re-issued.  See also “Item 2. Properties.”




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Nevada




We have received a litigation title commitment and updated commitment on the patented properties which are a part of the Manhattan prospect in Nevada, and initial title reports, on the unpatented claims, from a qualified Nevada landman.  These reports have been utilized in the initiation of the first stages of title curative work. As described in more detail in “Item 2. Properties -  Manhattan Prospect; Nevada, USA: Gold Exploration” we cannot offer any assurance that we can obtain full and complete title to the 28 patented mining claims included in the Manhattan prospect. However, we have received record title to a percentage of such patented claims and have recorded a Settlement Agreement granting us the right to purchase NMMI’s interest in the claims, and our 24.5% venture interest, and granting Calais exclusive operational rights.  Additional title curative work must still be completed to justify a significant expenditure on exploration of the property.  Such work is now in the early stages of completion. Likewise, we cannot offer any assurance that we can obtain good title to the 28 patented mining claims that constitute a portion of the Manhattan prospect.  See also “Item 2. Properties.”




Employees




As of the end of our 2010 fiscal year, we had two full-time employees: David Young, our President and Chief Executive Officer, and Thomas Hendricks, our Vice President of Exploration and Corporate Development. We have used and continue to use independent contractors for our mineral operations and certain day-to-day business operations, as necessary.  In January 2011, R. David Russell was appointed to our Board of Directors and he assumed the position of Chief Executive Officer and David Young remains the president and was appointed the Chief Operating Officer.




ITEM 2. PROPERTIES.




Executive Offices




As of May 31, 2010 our U.S. corporate offices were located in Lakewood, Colorado. As of March 2011, our corporate offices were in Lakewood, Colorado.  We currently lease approximately 200 square feet at a rate of $262 per month for our corporate offices on a month-to-month basis from a non-affiliated third party




Caribou project, Colorado, USA: Gold/Silver Exploration




Caribou Project





Calais owns or controls 137 patented and 105 unpatented mineral claims in a 3.5 square mile area, which comprise the Consolidated Caribou District. In general, these claims can be classified as:





·
The Calais Patented Claims, which comprise the Caribou and Cross Projects. These claims include most of the currently disturbed and proposed development property at the Cross Mine (which is an underground mine). Calais owns the mineral rights to all these claims; and





·
The Caribou Property (Upper) Claims represent the majority of the Consolidated Caribou District land holdings. Aardvark Agencies, Inc. (“AAI”) is the “nominee owner” of a portion of the claims, which comprise the Caribou Property. As “nominee owner”, AAI holds record title to the parcel, however Calais retains the right to occupy, explore, mine, develop, build, and/or re-acquire the property.  AAI is controlled by Marlowe Harvey, a former officer, director and significant shareholder of the Company. Following a series of transactions between AAI, Mr. Harvey, Calais, and Mr. Hendricks, which resulted in litigation brought by Mr. Hendricks against Mr. Harvey,  AAI, Mr. Hendricks and Calais entered into a mutual release and settlement agreement effective July 18, 2000.  This agreement, which was modified in 2004, provides that we have the right to reacquire the claims held by AAI for a debenture (which we have already paid to AAI) and for a payment from Calais to AAI of “a cash amount equal to pay the capital gains triggered by the transfer” to Calais (which his ultimately deducted from the debenture).  In March 2004, Mr. Harvey and his affiliates entered into a settlement agreement with Calais which, among other things,




Page 11


included a more precise definition of Calais’ right (which expires August 31, 2011) to repurchase the interest of AAI in the Caribou prospect, including the payment of $750,000 for the reacquisition, and AAI’s right to convert that debenture before it is paid.  That agreement, also defined Calais’ right to borrow against, enter in and upon the mineral interests in the Caribou prospect owned by AAI, construct buildings and mines on those prospects, and remove and sell minerals from Caribou for Calais’ own account.




The unpatented mining claims are located on federal lands and are subject to federal as well as state jurisdiction, and the requirements of the U.S. General Mining Law. Patented and unpatented claims are listed in Exhibit 99.1 filed with this report.





We are engaged in the location of additional unpatented mining claims.  There is no guarantee that additional federal lands will remain open to location, or that the General Mining Law will not be repealed or amended. Repeated attempts have been made in Congress over recent decades to repeal or to modify the General Mining Law.





The vast majority of exploration to date on Calais’ lands has taken place on patented claims.  Under the General Mining Law, as amended, unpatented claims may only be validly located by the making of a discovery, within the meaning of that law, upon open lands within the exterior boundaries of the claims.  Though mineralization has been encountered on some of the unpatented claims, there can be no guarantee that there is a valid discovery on any of those claims.  The patenting of mining claims, done with relative ease during the period 1872-1920, is now very difficult, and most patent applications are either suspended or prohibited from being filed.  Thus, there is no


As of May 31, 2005 through May 31, 2010, we had recorded the following amounts for mineral interests and furniture, fixtures and equipment (net of depreciation and impairments) on the Caribou project:


Fiscal Year Ended May 31,2010
2009
2008
2007
2006
2005Mineral Interests
$-
$-
$495,573
$313,073
$279,956
$-Furniture Fixtures and Equipment
$-
$-
$-
$-
$-
$-





Location of Property





The Property is approximately 35 minutes from the city of Boulder, to the town of Nederland along Colorado State Highway 119. The road access from Nederland to the Project is about 15 minutes, over 4.7mi (7.6km) of County Road 128. The Project has year around access. The Project site is adjacent to the county road. See Figure 2-1.




Page 12





Figure 2-1


Caribou Project Location Map












Royalties, Agreements and Encumbrances





Calais’ 137 patented claims were acquired in approximately three dozen acquisitions over a period of 39 years. Calais has obtained a master title policy covering nearly all of the project properties, including properties in the permit area.  The major acquisitions for patented lands within the resource area and permit area are described below. Additionally, three claims are leased from the Duane Smith Trust, also discussed below.  See Exhibit 99.1 filed with this report.





Significant Patented Claim Acquisitions





Cross Property Acquisition – Dofflemyer Group





The Cross Property, consisting of 15-patented claims, were acquired in August 1987 by Hendricks Mining Co., from the Dofflemyer family by Warranty Deed.  These claims were subsequently transferred to Calais Resources Colorado, Inc. by deed dated March 30, 1998.  Twelve of theses patented claims (Cross lode, Cross No. 2, Cross mill site, Crown Point lode, Juliet lode, Mammoth lode, Protection lode, Rare Metals lode, Rare Metals mill site, Romeo lode, Syndicate lode and Tacoma lode) are located in the area of modern underground development and/or permit disturbance area.





Potosi Group Acquisition





The Potosi properties, consisting of 4-patented claims, were acquired in February 1988 by Hendricks Mining Co., from the William M. Warren and Aquarius Mining Co. by Warranty Deed.  These claims were subsequently





Page 13





transferred to Calais Resources Colorado, Inc. by deed dated March 30, 1998.  These patented claims (Alpine lode, Gold Coin lode, Potosi lode, and Worcester lode) are in located in the area of resource potential.





Wolcott Group Acquisition





The Wolcott properties, consisting of 4-patented claims, were acquired in August 1987 by Hendricks Mining Co., from the William M. Warren and Aquarius Mining Co. by Warranty Deed.  These claims were subsequently transferred to Calais Resources Colorado, Inc. by deed dated April 8, 1998.  These patented claims (5/8 interest Garfield lode, Ready Cash lode, Silver Brick lode, and Defiance lode) are located near the area of resource potential. Only the Garfield lode touches the area of resource potential.





Tallman Group





The Tall properties, consisting of 3-patented claims, were acquired in November 1987 by Hendricks Mining Co., from the Tallman family by Warranty Deed.  These claims were subsequently transferred to Calais Resources Colorado, Inc. by deed dated April 8, 1998.  Of these patented claims (3/8 interest Garfield lode, Ponderosa lode, and Monticello Chief lode) only the Garfield lode touches the resource area.





Aardvark Patented Claim Acquisitions





New York Lode and Millsite; the Brazilian lode and Millsite





The New York lode and mill site were acquired by the Company from William M. Warren and Richard A. Sigismond by Warranty Deed in October 1997 as part of a larger acquisition.  Only the New York mill site claim is within the area of resource potential and the permit area.  The Brazilian lode and Brazilian mill site claims were acquired by Aardvark Agencies, Inc. (“AAI”) by Sheriff’s deed (after assignment of the Certificate of Purchase from LNRS, LLC, the successors in title by Sheriff’s sale to the interest of Nederland Mines, Inc.) on December 17, 1998. The Brazilian lode claim is in the area of resource potential and the Brazilian mill site claim is within the permit area (a small portion is in the area of resource potential).





The New York mill site, Brazilian lode and Brazilian mill site patented claims were transferred (together with others, totaling 78 properties) to AAI as part of a larger financing transaction involving AAI.  An Agreement executed in 1999 assigned a 100% interest in 35 claims to AAI for $0.5million.  An Agreement executed in 2000 assigned a 100% interest in an additional 43 claims to AAI for $3.5 million ($1.2 million cash and $2.3 million note).  Both transfers were made subject to a recorded right to redeem and re-acquire held by the Company and further subject to a note and deed of trust in the amount of $2.3 million, held by the Company.  The Company has 10-years to redeem or re-acquire the properties.  AAI is delinquent on the $2.3 million note to the Company.  No royalties were assigned or transferred to AAI.  The Deed of Trust, recorded February 1999, from AAI to the Public Trustee of Boulder County, for the Benefit of the Company, securing an original principal indebtedness of $2.3 million affects the New York mill site, Brazilian lode and Brazilian mill site patented claims.  This Deed of Trust is purported to subordinate to the lien filed below.


In August 2003, AAI and the Company entered into deeds of trust against the Caribou property in with a loan for $4.5 million (the “Broadway Loan”) from Broadway Mortgage Corporation, Michael E. Haws, Kemp Hanley, R. Britton Colbert, Accounts Plus, Inc. and Riviera Holdings, LLC.  The Broadway Loan was acquired by Brigus Gold Corp. as part of the Company’s debt restructuring described below.





Duane Smith Trust Lease





The Duane Smith Trust has leased 3-patented claims to Hendricks Mining Co.  The claims are the Laramie County lode, Homestead lode and Gilpin County lode, totaling 9.77ac (3.95ha).  Portions of the three claims are part of the permit area.  Portions of the Smith properties are traversed by the historical mine access road, this road pre-dates the location and patent of the Smith claims.





The Smith property was originally leased by Calais’ predecessors in August 1987.  The Smith property was re-leased to Calais in 2003 for a period of 15-years, and may be extended for 3 additional five-year periods.  The lease








Page 14





specifically grants to lessee the right to haul, process, mine, transport, store, mill, treat, or transport on or across the Leased Premises supplies, ore, rock, minerals, waste, concentrates or other material from adjacent or nearby properties worked or owned by lessee and/or its assigns.  These rights shall be known as the “Cross Mining Rights”. Each party shall have the right to utilize existing, historical access roads, crossing the properties for all purposes.





The lease provides for a 3.5% NSR royalty on all minerals, ores, metals, concentrates, or other materials extracted and shipped from the Leased Premises.  As no mining has or will occur on these claims, and all activities involve historical access, no production royalties are incurred.  The lease specifies for a minimum advance royalty of $3,000/yr. for years 1 through 5, $4,000/yr. for years 6 through 10, $5,000/yr. for years 11 through 15.  The first 5-year lease extension is $7,500/yr. and then escalated thereafter.  The minimum advance royalty may be offset with paid production royalties.  The Company is responsible for all property and personal taxes on the leased property. Additionally, any severance or production taxes, levied on the leased claims, are apportioned.  We are obligated to maintain liability insurance, accidental injury or death insurance and workman’s compensation insurance for the term of the lease.  These leased claims are encumbered by the July 2003 Deed of Trust from Calais for the benefit of Broadway Mortgage Company described above.





Congo Chief Acquisition





On October 26, 2005, we acquired the 20-acre Congo Chief patented lode mining claim from the Estate of John W. Snyder for a price of $280,000.  This large, patented lode claim was in the immediate vicinity of other claims held by us and by AAI.  We acquired the claim with the assistance of our then financial partner MFPI Partners, LLC, which provided funding for the acquisition, and which holds a first deed of trust on the subject property in the amount of $258,956.  This note was originally payable on February 21, 2006, subject to any applicable extensions.  We defaulted on the note and negotiated with MFPI Partners and were unable to reach a formal resolution to the default.  In February 2010 this note was acquired by Brigus Gold as part of our debt restructure discussed below.





Royalties





Calais Patented Claims





All of the Patented Claims carry a 2% NSR royalty until January 27, 2018.  The January 1993 agreement allows repurchasing the 2% NSR royalty at any time during the term for $1.5 million.  The royalties are payable to Thomas S. Hendricks, the estate of Marjorie J. Hendricks and John R. Henderson.





The New York mill site claim carries a 2% NSR until April 2018.  The April 1998 document allows repurchasing 1% of the 2% NSR royalty at any time during the term for $0.75 million.  The royalties are payable to Thomas S. Hendricks, the Estate of Marjorie J. Hendricks and John R. Henderson.





Additionally, several of the mineral interests acquired by us or AAI are subject to royalty reservations in favor of prior owners of those interests, some of which are discussed above.  A total of nine of the patented mining claims bear net smelter return royalties in amounts varying from 1.325% to 3.5% of net smelter returns.  The terms of these royalties vary from perpetual to a lifetime interest only.




An additional royalty interest may affect 15 claims in the vicinity of the Cross Mine.  A royalty buy down which occurred in the 1980’s reduced the applicability of this 5% royalty to periods when the gold price was above $800 per ounce.  The price of gold has recently risen above this level for the first time since the buy down occurred.  On April 4, 2008, this royalty was renegotiated with the holder, Tusco Incorporated.  The new terms of the royalty agreement allow for a complete purchase of the royalty from Tusco for $150,000 payable at any time during the next 20 years (or three years after the death of the president of Tusco).  As consideration for the execution of the agreement, we issued 250,000 common shares of our stock to Tusco.  An additional payment of $1,500 per month will be made to Tusco during the term of this agreement or, if shorter, the lifetime of the president of Tusco.





The payment of royalties upon production, if it occurs, can negatively affect the economics of a prospective mining operation, and may hinder our ability to finance such operations.  As no production decision has been reached as to Calais’ mineral interests at Caribou, the impact of existing royalty agreements upon our ability to develop any mineralization discovered has not been determined.





Page 15


The Duffy Note





On August 1, 2005, the Company issued a note (the “Duffy Note”) payable to a group of shareholders, Duane A. Duffy, Glenn E. Duffy, Luke Garvey and James Ober, (collectively, the “Duffy Group”),  for $807,650, in exchange for $681,000 originally infused into the Company as Share Capital, and interest accrued from the date of each infusion totaling $126,650.  The Duffy Note was secured by a trust deed on the Caribou Townsite and Mine. By October 31, 2005, the Company was in default. Since then, the note was renegotiated and restructured several times until February, 2010 when the principal and accrued interest totaled approximately $1.1 million.





In March 2010, the Duffy Note was acquired by Brigus Gold Corp. as part of the Company’s debt restructure as described below.





Defaults





Prior to February 1, 2010, Calais was in default on approximately $10.6 million based on the following:




Note Amount

(approximate)Broadway Loan

$
7,700,000Additional Caribou Loan


1,450,000Congo Chief Note


380,000Purchase Agreement

$
9,530,000Duffy Note


1,100,000Total Debt

$
10,630,000




Brigus Gold (Apollo Gold) Transaction





On December 9, 2009, Apollo Gold Corporation (now Brigus Gold Corp. “Brigus”) entered into a letter of intent (the “New LOI”) with the Company and Elkhorn Goldfields LLC (“Elkhorn Goldfields”) pursuant to which Elkhorn Goldfields agreed to purchase all the outstanding capital stock in Montana Tunnels Mining, Inc., a wholly owned subsidiary of Brigus (“Montana Tunnels”).  Brigus agreed to sell all of the capital stock of Montana Tunnels in exchange for (i) promissory notes held by Elkhorn Goldfields and certain investors in Elkhorn Goldfields or its affiliates (the “Lenders”) from Calais and AAI with an outstanding balance of approximately $7,700,000 relating to the Broadway Loan (the “Original Notes”), (ii) Elkhorn’s and the Lenders’ rights with respect to an additional amount of approximately $1.4 million loaned to Calais, (the “Additional Caribou Loan”) and (iii) a promissory note held by Elkhorn Goldfields and the Lenders from Calais with an outstanding balance of approximately $380,000 (the “Congo Chief Note” and, together with the Original Notes and the Additional Caribou Loan, the “Notes”).  The Original Notes are secured by certain deeds of trust registered against the Caribou property.





On February 1, 2010, Brigus, Elkhorn Goldfields and Calais entered into a definitive purchase agreement (the “Purchase Agreement”).  Pursuant to terms of the Purchase Agreement, Brigus sold all of the capital stock of Montana Tunnels in exchange for the Notes.  The Elkhorn Goldfields’ and the Lenders’ security interests in the properties against which the Original Notes and the Congo Chief Note are secured were transferred to Brigus as part of the transaction.  The Original Notes matured on July 31, 2005 (although they were never repaid) and bear interest at the rate of 12.9% per annum.  The Congo Chief Note matured on February 21, 2006 (although it was never repaid) and bears interest at the rate of 12% per annum or a default rate of 18% per annum.  Pursuant to the Purchase Agreement, Brigus agreed to forebear on the Original Notes and the Congo Chief Note (each of which, as noted above, is past due) until February 1, 2011.  In connection with the Purchase Agreement, Calais agreed to execute and deliver a promissory note to Brigus evidencing the Additional Caribou Loan (the “Additional Unsecured Note”).  The Additional Unsecured Note bears interest at the rate of eight percent per annum and has a maturity date of February 1, 2011.





On March 12, 2010, Brigus, Calais, and the Duffy Group entered into a purchase agreement (the “Duffy Purchase Agreement”) pursuant to which Brigus agreed, subject to the terms and conditions contained in the Duffy Purchase Agreement, to issue 1,592,733 common shares to the Duffy Group in exchange for the assignment of their rights, title and interest in and to, among other things, the Duffy Note.





Page 16


The Duffy Group’s security interests in the property against which the Duffy Note is secured were transferred to Brigus as part of the transaction.  Pursuant to the terms of the Duffy Purchase Agreement, Calais agreed to issue common shares to the Duffy Group in payment of $435,347 of the outstanding balance of principal and accrued interest and fees of the Duffy Note (the “Calais Share Issuance”).  Immediately following the Calais Share Issuance, the outstanding balance of the Duffy Note (including accrued interest thereon) was $653,021.





The Duffy Note matured on December 31, 2009 and was not repaid.  On January 2, 2010, the Duffy Group called the Duffy Note due and payable and provided notice to Calais of the payment default on the Duffy Note.  In accordance with the terms of the Duffy Note, following an uncured default on the Duffy Note, the Duffy Note bears interest at the rate of 24%.  Pursuant to the Duffy Purchase Agreement, Brigus agreed to forebear from enforcing its right to collect principal and interest outstanding under the Duffy Note until March 12, 2011 and reduce the interest rate on the Duffy Note during that period to 8%.  In addition to the foregoing provision, the Duffy Purchase Agreement includes customary representations, warranties, covenants and indemnities for transactions of this type.





Pursuant to a Forbearance Agreement dated January 15, 2011, Brigus extended the forbearance period of the Notes and the Duffy Note from February 1, 2011 to the earlier of June 30, 2011 or the occurrence of certain events, including insolvency or bankruptcy of the Calais, the borrower.  During this extended forbearance period, the Notes will accrue interest at 8% per annum.  In connection with the Forbearance Agreement, Calais agreed that it would not undertake certain actions, including the issuance of stock, without Brigus’ prior approval.  Although, the Company has issued stock without obtaining formal written approval from Brigus, the Company has kept Brigus apprised of its activities.





Shareholder Payable





In connection with an Exploration Agreement dated December 31, 2008 (the “Exploration Agreement”) between the Company and DRDMJ, LLC, a company owned and controlled by R. David Russell, on December 20, 2008, the Company issued a one-year note payable to R. David Russell, who at the time was a shareholder of the Company and is currently the Company’s Chief Executive Officer and Chairman of the Board, in the amount of $405,410 in consideration for cash of approximately $300,000. The cash was to be used for development of the Cross Mine and processing ore at the Gold Hill mill.  In August 2009 the Company defaulted on it’s agreement with Mr. Russell and issued 5,067,650 shares of our common stock valued at $861,501 as consideration for our default under the terms of the agreement which was dissolved.  We have recorded additional expense of $456,090 in connection with this default.





Geology and Mineralization





This portion of Colorado is underlain by Precambrian basement rocks comprising the North American Craton, which has been intruded by Late Cretaceous igneous units.  The basement rocks experienced several periods of Precambrian deformation ranging from deep, ductile to more shallow brittle features.  Deeply rooted structural zones within the Precambrian rocks are linked to the development of the much younger Colorado Mineral Belt (CMB).  This belt consists of a northeast-southwest regional trend of mineralization and ore deposits that is approximately 250mi (402km) long and 80mi (129km) wide.





The Project lies near the northeast limit of the CMB.  It is hosted within the Precambrian Idaho Springs Gneiss and the Late Cretaceous Caribou Monzonite.




The origin of mineralization at the Project has been explained by two different models.  These both involve hydrothermal processes but differ as to whether the deposit was formed within a predominantly mesothermal or epithermal environment.





Mineralization is hosted within several distinct veins striking both east-west and north-northeast.  Individual veins range in width from inches to tens of feet and consist of open space fill zones containing quartz and disseminated sulfides flanked by mineralized and non-mineralized alteration zones.  Overall, the zone of mineralization and alteration has an average width of 5ft (1.5m).  Altered host rocks within and adjacent to veins show more limited sulfide mineralization due to a lesser amount of rock fracturing and open space fill.





Page 17





Precious metals grades in the Project typically run 0.05-1.0oz/st-Au (1.7-34.3g/t-Au) and 0.2-30.0oz/st-Ag (6.8-1,029g/t-Ag).  Weathering has partially oxidized sulfide minerals to all depths tested to date.  The veins are distributed within two main sets, those that strike predominately east-west and those striking north-northeast.  A large number of these veins have been outlined throughout the modern exploration history of the Project.  The major zones of mineralization and their location within the Consolidated Caribou areas are summarized in Table 2-1.





Table 2-1:  Major Zones of Mineralization


Mineralized Zone
Cross
Caribou
Congo Chief
St. Louis
Northwestern
Silver PointCrown Point Vein
XCross Vein
XRare Metals Vein
XRomeo Vein
XJuliet Stockwork
XAnaconda Vein
XApache Vein SystemSouth
XMain
X
(Golconda?)Intermediate
XNorth
XPotosi Vein
XGold Coin Vein
XNo Name Vein

X
XGolconda Vein

XNelson System VeinsEast

XIntermediate

XWest

XPoor Man Vein

XNorth Poor Man Vein

X5-30 Vein

XCaribou Park Zone

X


XPandora Mine Vein

XSt. Louis Vein



X

X





The dominant controls on gold, silver, lead and zinc mineralization at the project are structural channeling along dilatational fault and vein planes within an environment chemically favorable for the precipitation of electrum and base metal sulfides.  Deep-seated regional structures appear to have been active at the time of mineralization and have played a vital role in the structural preparation of the host rocks and channeling of the mineralizing fluids.  The fluids and their contained metals are believed to have been derived either from a deeper magmatic source rock or from deep metamorphic processes associated with the Laramide Orogeny.





Location of Mineralization





The gold and silver-bearing veins of the project are located within the Grand Island Mining District at the northern limit of the Colorado Mineral Belt. Mineralization is hosted within several distinct veins striking both east-west and north-northeast. The main vein outcroppings are located above Coon Track Creek in and around Caribou Hill. Mineralization tested to date is confined to quartz/sulfide veins hosted with Precambrian Idaho Springs Gneiss and the Tertiary Caribou Monzonite.





A large number of gold-silver veins have been outlined throughout the modern exploration history of the project.





Page 18


Future Payments





The table below summarizes our future obligations related to the prospect area. Failure to make the minimum payments as presented below might result in the loss of the mining claims, royalty interests, or leases underlying the prospect area.





2011
2012
2013
2014
2015Patented
$11,114(1)
$11,114
$11,114
$11,114
$11,114Unpatented
14,700
14,700
14,700
14,700
14,700Royalties
18,000
18,000
18,000
18,000
18,000Leases
5,200
5,200
5,200
6,200
6,200Totals
$49,014
$49,014
$49,014
$50,014
$50,014




(1) Already paid





Environmental Liabilities and Permitting





The Project holds an active mine permit under the Colorado Division of Reclamation Mining and Safety (CDRMS) Permit M1977410, issued Nov 3, 1980. This permit, which limits ore extraction to 70,000 stpy, approximately 200 stpd (63,500 tpy) and land disturbances to less than 2 ac (0.8 ha) total. Current mine disturbance is 2.0 ac (0.8 ha). A $15,400 bond is held by CDRMS for final reclamation of the property.





Required Permits and Status





The mine can currently produce run of mine (RoM) ore for shipment to a mill. The mine activities are a legal nonconforming use under the Boulder County Land Use Code. Additionally, Calais holds the following permits:


·
Explosives permit No. 5-CO-013-33-1H-00625


·
Water Quality NPDES permit CO-00322751;


·
MSHA ID 0502730;


·
Colorado Air Pollution Emissions Notice (APEN) Permit No. 09BO0439F;


·
Stormwater Plan Permit No. COR040242; and


·
County building and grading permits.




We have announced plans to expand our operations at the Cross Mine. Proposed activities include the development of a new mine access and expanded underground mine workings; construction and operation of an on-site surface mill; construction of an ore storage building; development of a new access and safety road connecting two currently disconnected mine areas; implementation of site drainage controls, and other site improvements.  An amendment to the existing CDMRS permit is required for these expansion activities, as well as an increase in the posted reclamation bond.  The permit disturbance will be increased to 9.35 ac (3.78 ha). The current CDRMS permit surface disturbance may be expanded to a maximum of less than 10 ac (4 ha).  RoM production greater than 70,000 stpy (63,500 tpy) or surface disturbance of 10 ac (4 ha) or more acres requires Calais to obtain a new permit.  Along with the amendment to the mine permit, the proposed expansion activities require a Special Use Review under the Boulder County Land Use Code.  A Special Use Review Application was submitted in April 2008 and approved in September 2008.  Management believes the proposed mine expansion can meet the applicable criteria of the County Land Use Code; however, additional county building permits, county grading permits, and amendments to existing stormwater permits, NPDES permits, and APEN permits may be required following approval of the expansion plans.





Compliance Evaluation





Management believes the Cross Mine complies with all applicable state and federal regulations as well as contemporaneous reclamation of permitted disturbed areas and surrounding historic mining disturbances.





Page 19


Seasonality





The surface exploration season begins in early May and continues through late November. Underground work can continue year around.





Surface Rights





Most of the claims which constitute the project property are patented private property owned 100% by Calais.





Power Supply





Electrical power to the mine is furnished by the Public Service Company Colorado via a 25kV, 3MW, 3-phase AC overhead line from Nederland. Current power delivery at the site is three phase 480V, 300kVA capacity.





Water Supply





Potable water is provided by a 275ft (84m) deep well drilled in front of the shop building. Calais also owns a 75% of one share of the historic Farmer’s Ditch Company. The water is adjudicated to the project. Calais also has other water rights available for lease. The portal discharges a small amount, which by Colorado law is considered to be an unregulated use of water unless it is put to beneficial use in which case, a water right must be obtained.





Buildings & Ancillary Facilities





There are several buildings located on the property. At the Cross Mine portal, a shop building incorporates an office, small warehouse, a one bay repair shop and a small mine dry housing safety equipment. A large warehouse building is located near the portal, which provides storage for drill core, the main mine air compressor and various larger mining supplies. At the Caribou site there is a large 2-story structure housing a shop, offices, dry and parts storage. At the Comstock site, there is a hoist building and a large metal warehouse. There is also a headframe at the Comstock mine. These buildings are in good condition. Two small cabins are also located nearby but these buildings are currently not in use.





Tailings Storage Area





There are no tailings on the mine property and the Company has no current plans to process any potential mineral reserves on site until the proper permits are in place.





Waste Disposal Area





Most of the underground development waste rock has been used to create valley fill platforms, which provide level surface for the mine facilities. There are no specific mine waste dumps located on the mine property – Caribou does have a large waste rock area.





Since the mine claims are located on private property and the topography is favorable, continued valley fill waste can be used to accommodate future underground development material allowing sufficient buffer zones to nearby drainages.  The recently revised Boulder County permit allows the storage of the waste rock on the site.





History





Ownership





The Project property has a 135-year history of ownership.  The mine was first discovered and developed by C.M. Carol in about 1876 during the silver boom at the nearby Caribou Mine and was reported to have been worked until about 1886.





Page 20


In 1890, George Teal, a prominent Colorado mining man, hired Ernest LeNeve Forester, to reopen the mine.  This was designed to be a test-mining program over a two-month period to evaluate the potential profitability.  At this time, the property consisted of one patented claim, the Cross Survey #518(Foster and Carrol 1890).




The next period of mine ownership began in 1918 when Teal partnered with Todd Dofflemyer, purchased the property and founded the Cross Gold Mining Company.  By 1937, the property included three patented claims, three unpatented claims and one mill site claim (Teal 1937).  By 1939, the property had grown to include 11-patented claims, two unpatented claims and two mill site claims (Burlingame 1939).  A reported disagreement between Teal and Dofflemyer forced the closure of the mine in late 1939.





The mine remained inactive and flooded until 1974 when Thomas Hendricks obtained a long-term mining lease from the Dofflemyer family, which included a 10% NSR.  Hendricks then entered a joint venture agreement with Columbine Minerals of Denver Co. who funded the dewatering and rehabilitation of the mine (Hendricks 1998).





In 1983, Hendricks entered into a joint venture agreement with Power Petroleum, a Canadian registered company, but could not re-open operations due to the prohibitively high Dofflemyer royalty.   Hendricks and Power Petroleum, therefore chose to place the mine on care and maintenance.  The Project remained on care and maintenance until 1986 when Hendricks entered into joint venture agreement with East West Minerals of Sidney, Australia.





During the East West partnership, the Dofflemyer family agreed to sell their ownership and their 10% NSR for $750,000.  All of these claims were then subject to a 5% NSR royalty, if the price of gold were to exceed $800/oz-Au and payable to Tusco (Barrett and Schuiling 1988).





By May of 1989, East West Minerals had lost a significant investment in an unrelated property and was forced to withdraw from the joint venture.  Additionally, Power Petroleum’s interest was purchased for $200,000 and the Columbine Minerals 5% NSR was purchased for $122,000.  Once East West pulled out Hendricks purchased their entire interest in the Project.





Over the next several years Hendricks’s partnered with several others and focused primarily on continued exploration and resource development.  By 1997, Hendricks entered an option  agreement with Calais for an earned ownership of the project, and in 1998, Calais completed its full acquisition of the Project.





Past Exploration and Development





Because of working capital shortages, we performed limited exploration work on the Caribou project during the fiscal years ended May 31, 2005 through 2010.   The following table sets forth the amounts spent by the Company on exploration activities on the Caribou property during those fiscal years:





Fiscal Year Ended May 31,2010
2009
2008
2007
2006
2005Exploration Expenses
$37,631
$42,470
$77,741
$36,322
$23,967
$1,351





Cross Project





The Cross Project has experienced three major phases of underground development followed by an extended period of exploration drilling.





The first phase occurred during the initial discovery and subsequent mine development from about 1876 to 1886.  The mine development during this period is described as a shaft 140ft (43m) deep with sublevels at -50ft (15m) and -100ft (30m) all located within the Cross Vein.  The -100ft (30m) level was connected to surface by a 200ft (61m) cross cut.  The ore recovered during this mining phase is believed to have been toll processed at a nearby stamp mill, which serviced several other small mines active in the area.





Page 21


A second major phase of mine development occurred between 1933 to 1939 under the ownership of the Cross Gold Mining Company.  During this period, development included an 850ft (259m) crosscut, a winze 235ft (72m) long and development on the -75ft (23m) level, the -150ft (46m) level and the -225ft (69m) level.  The Cross Gold Mining Company had developed within the Cross, Crown Point and Rare Metals Veins and mentioned underground exploration to intersect the Romeo Vein.  At this time, all mine work had focused mainly on ore development and very little actual mining had been conducted.  No mill existed on the site and development ore was shipped to the ASARCO smelter in Leadville, Colorado.


The third era began in June of 1973 and continued to 1983.  This work was focused primarily on mining of known veins as well as the development of newly discovered veins.  Several new veins were developed including the East and West Romeo Veins where much of the production was focused.  Ore was trucked to the former Allied Flourspar Mill in Boulder Co. that had been retrofitted to produce a flotation concentrate.  The precious metal concentrate was shipped to the smelters of Cominco at Trail B.C, and ASARCO smelters in East Helena, Montana and El Paso Texas.  Burdened by a 15% NSR and declining gold prices, mining was suspended in 1986.





In 1983 a new phase of exploration work began which included extensive underground sampling and drilling.  The drilling was conducted both underground and on surface.  The underground targets were the deeper and lateral extensions of the known veins and the surface targets were down dip projections of outcrop exposures and lateral continuations of known veins.





In 1988, an underground development program was begun on the newly discovered Apache Vein.  A cross cut was driven on the portal level northwest from the western end of the Rare Metals vein for 100ft (30m) where it intersected the Apache Vein.  Drifting on the Apache vein continued to the west for approximately 150ft (46m).  Within this distance three raises and one sublevel were also driven.  In 1993, the underground drifting and sampling program was reinitiated along the Apache and North Apache Veins at the portal level.  Approximately 800ft (244m) of drifts, raises and sublevels were completed.  This further expanded the known mineralization along the Apache Vein and confirmed the width and grade of the North Apache Vein.





Between late 1982 and 1998 a total of 116 drillholes were completed totaling 62,384ft (19,015m).  This entire drill core remains on site.





Currently, the Cross Project has been developed on four main levels and ten additional sub-levels.  The primary underground access is from a portal, which services a winze accessing all the lower levels.  All levels are outfitted by rail track.  The first level at the winze is the 9,693ft (2,954m) elevation and daylights to the portal.  This level has approximately 2,700ft  (823m) of drifting which access the Rare Metals, Cross, Crown Point, West Romeo, Apache and North Apache Veins.  The second level at the winze is the 9,637ft (2,937m) elevation.  This level has approximately 1,150ft (350m) of drifting which accesses the Rare Metals, North Rare Metals, Cross, Crown Point and West Romeo Veins.  The third level at the winze is the 9,575ft (2,918m) elevation.  The level has approximately 750ft (229m) of development drifting which accesses the Rare Metals, Cross, Crown Point and West Romeo Veins.  The fourth level at the winze is the 9,509ft (2,898m) elevation.  This level has approximately 740ft (226m) of drifting which accesses the Rare Metals, Cross, Crown Point, East Romeo and Hopewell Veins.  All total there are currently 5,340ft (1,628m) of drift development, approximately 52 raises and at least 12 stopes.  The underground workings were surveyed and well documented during 1988 and this information was carefully drafted on 1:20 scale level plans.  The underground was last accessible during the 1990 drilling program.  By 1993 it was flooded to the portal level as it remains today.





Caribou Project





Between 1980 and 1984 a new surface facility was constructed at the portal of the Idaho Tunnel.  The Idaho Tunnel, which is the 500ft (152m)–level of the Caribou was re-opened and re-equipped over a 4,000ft (1,219m) length to the Caribou shaft.  Included in this installation was a 4.16kV underground distribution system, including 2 substations.





The Caribou shaft was dewatered and rebuilt to the 1230ft (375m)-level.  Core drilling occurred on the 500 (152m)-level and the 1230m (375m)-level.  The Company also performed geologic mapping and sampling during this time.  Two tunnels were also driven on 500 (152m)-level, one to crosscut the North Poorman vein and the other to crosscut the Golconda vein.  However, development to the Golconda vein ended approximately 85ft (26m) from the vein.





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Historic Production





Cross Mine





Historic production from the Cross Mine (which is an underground mine) has occurred during two development/mining phases.  During the mid to late 1930s the Cross Mine experienced a sustained period of mainly development work.  At this time, the main crosscut, winze and four levels of drifting were completed.  A minor amount of stoping is noted in the literature but there are no records of actual production.  The historical records note the lack of a mill on site however, no reference of toll milling from nearby facilities is indicated.





During the period of 1973 to 1990 the Cross Mine was reopened and retrofit for small scale production.  The earliest production occurred in 1976 the when mine was producing about 10stpd (9tpd), by 1980 a production rate of 80stpd (73tpd) had been achieved and the mine employed 11 workers.  The ore was being trucked to the former Allied Flourspar Mill in Boulder Co., which had been retrofit to produce a flotation concentrate.  The precious metal concentrate was shipped to the smelters of Cominco at Trail B.C, and ASARCO smelters in East Helena, Montana and El Paso Texas.





This production was primarily from within the Cross, Crown Point, East Romeo, West Romeo, Juliet and Rare Metals Veins.  Hendricks Mining Co (1991) reports that total production between 1977 and 1986 was in the order of 27,000st (24,500t).  During that period, the mine is reported to have produced 5,000oz of gold, 125,000oz of silver and several hundred thousand pounds of lead and zinc (Barrett and Schuiling 1988)  Burdened by a 15% NSR and gold prices which had declined from $600/oz to $400/oz by 1983, the mining was suspended.





Caribou Mine





Historic production at the Caribou Mine (which is an underground mine) commenced in 1869 and continued uninterrupted until the War Closure Act of 1940.  Operations resumed in 1945 and continued until 1955 when the owner closed the mine.  Concentrate was shipped to the Caribou Consolidated smelter in Nederland until 1919, when the smelter burned down.  Subsequent production was shipped to the ASARCO smelter in Leadville, Colorado. Over the history of operations, the Caribou Mine veins produced 20Moz of silver, and a substantial amount of gold.  A total of 31 veins were mined.





Exploration Programs





Exploration work at the Project has consisted primarily of a series of development drifts and raises, surface and underground geologic mapping, rock chip and continuous channel sampling and diamond core drilling programs from surface and underground over a period of many years.





These exploration programs mapped, sampled and diamond core drilled extensions to all known veins, discovered several new veins and indicated several areas of anomalous mineralization.  A total of 181 drillholes totaling 149,102ft (45,446m) were completed over ten years by seven different drill contractors.  The exploration work described above resulted in the delineation of anomalous gold mineralization located within at least 14 veins, each of which average 3ft (1m) in true thickness along 300ft (91m) of strike length and 350ft (107m) of down dip extent.





Mineralogical Test Program





The Company had a metallurgical test program completed on the project.  The testwork included sample compositing, composite characterization, Bond’s ball millwork index determination, flotation tests, thickening and filtration studies.  The objectives of the metallurgical study were; (1) to determine if a bulk-sulfide concentrate should be produced or two separate concentrates, namely lead and zinc concentrate, should be produced, and (2) generate data for sizing major equipment for the optimum flowsheet.  This work yielded the following results:





·
The composite sample prepared from the four individual samples, assayed 17.3g/t Au, 315g/t Ag, 0.18% Cu, 1.20% Pb and 1.16% Zn;


·
The sample had a Bond’s ball mill work index of 15.29;






Page 23




·
Both bulk-sulfide flotation and sequential lead and zinc flotation schemes were evaluated.  The bulk-sulfide flotation was determined to be best for maximizing precious metals recoveries;


·
Several process variables were evaluated for the bulk-sulfide flotation scheme.  They included primary grind, pH, supplementary collectors and frothers and cleaner flotation.  The optimum process conditions were determined to be a primary grind of P80 of 100 mesh or finer, pH of 9 to 10 and reagent suite of potassium amyl xanthate and methyl isobutyl carbonyl.  Cleaner flotation resulted in significant loss of precious metals to the cleaner tailing;


·
The rougher bulk-sulfide flotation will recover approximately 11% of the weight and ±90% of gold and ±85% of silver values; and


·
Thickening and filtration tests were performed on both flotation concentrate and tailings to size thickeners and filters.  The tailings can be used for backfilling the mine.





Resource Estimation





The Caribou project is without known resources or reserves and the Company’s activities are exploratory in nature. There are no assurances that the Company will identify any economically viable mineral deposits on the Caribou project.





Exploration Programs





The mine is on “care and maintenance” until sufficient capital funding is obtained to initiate our exploration programs and potential restart of operations at the Cross Mine.  The project has remained on “care and maintenance” through May 1, 2011.




Manhattan Prospect; Nevada, USA: Gold Exploration




Property Description and Location





The property is located in the southern portion of the Toquima Mountains approximately 1mi east of the town of Manhattan, Nye County, Nevada, as shown in Figure 2-2.





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Figure 2-2


Manhattan Project Location Map









Property Ownership





In December 1994, we paid Marlowe Harvey $1,176,000 for a 51% interest in various mineral interests known as the Manhattan prospect.  We later discovered that Mr. Harvey did not own any part of the record title to any patented and unpatented claims which were a part of the Manhattan prospect.  We are attempting to determine title to these the joint venture interests, to acquire other of the joint venture interests, and to take steps to cure title to the Manhattan prospect, and to determine whether Mr. Harvey’s claimed royalty interest exists.  To this end, beginning in October 2003 with an updated review in February 2008, we received title information relating to these prospects. It has been determined that a significant number of the original unpatented claim position was lost when the owner, claiming a default, vended title to third parties.  Other claims were re-located in the name of White Caps Mines, Inc., an entity owned or controlled by Mr. Harvey, and we have since acquired record title to the re-located claims by deed.





On March 8, 2004, we entered into an agreement (the “Harvey Settlement”) with Marlowe Harvey and his related entities by which Mr. Harvey and his related entities agreed to assign their interests in the Manhattan prospect to Calais and agreed to convey to Calais (not later than December 31, 2005) the entire right, title and interest in the Manhattan prospect from all parties (“marketable title”).  We agreed to pay one of Mr. Harvey’s related entities 250,000 shares of Calais restricted stock upon receipt of marketable title.  We agreed to undertake certain drilling obligations after receiving good title, and to issue 2,500,000 shares of common stock to Argus Resources, Inc. (“Argus”), one of Mr. Harvey’s related entities, upon identification of gold or gold equivalent mineral resources (as





Page 25





determined in accordance with Canadian standards) exceeding 2,000,000 ounces.  To our knowledge, Mr. Harvey has not attempted the curative measures necessary to provide marketable title to the mineral interests to us and, even if he commences this work, we cannot offer any assurance that he will be able to do so.  We are continuing our own efforts to pursue curative action with the intent of commencing active exploration of the properties beyond mapping and surface reconnaissance.





Based on a preliminary review of this information and assignments that we received in July 2004 from Mr. and Mrs. Harvey and certain affiliated companies as a part of the Harvey Settlement (which assignments Calais has recorded in the Nye County, Nevada records), it appears that the record ownership of the various prospects is as follows:





·
The 28 patented mining claims appear to be owned by Calais (which received assignment of these claims from Argus Resources, Inc. in July 2004) as to a 60% undivided interest, and by NMMI as to a 40% undivided interest;





·
42 unpatented mining claims appear to be owned by Calais (which received assignment of these claims from White Cap Mines, Inc. (owned by Mr. Harvey) in July 2004);





·
56 unpatented mining claims appear to be owned by an individual named Anthony Selig or entities associated with Mr. Selig (the “Selig Claims”); and





·
The remaining claims appear to be owned by Calais or by Calais and NMMI in the 60-40 ratio described above for the patented claims (the “Argus Unpatented Claims”).  Our ownership of these claims was received by a July 2004 assignment from Argus Resources.





Mr. Selig has denied any obligation to convey any portion of the claims directly to us, but, has admitted an obligation to convey his interest in claims listed in a 1997 agreement between Selig and NMMI to NMMI. Selig is fully aware of the outcome of the Calais/NMMI litigation, and he and his counsel have indicated a willingness to tender the NMMI deed to the District Court in and for Nye County if properly directed to do so.  We believe that the settlement of the NMMI litigation reached in September 2000 (the “2000 Settlement Agreement”) results in NMMI being obligated to convey its interests in the prospects to Calais, subject to the terms of the settlement, including payment of royalties to NMMI from production.  These claims would also be subject to the Manhattan Project Joint Venture (“MPJV”) as discussed below.  We are currently unable to locate any person with authority to act for NMMI; management is evaluating the possible invocation of the jurisdiction of the District Court to accept the Selig deed on behalf of the joint venture, and subject to the terms of the recorded settlement.  We also plan to deposit the remaining funds due to NMMI with the registry fund of the Nye County, Nevada District Court, as NMMI itself cannot be located or contacted.




As indicated above, we have only recently been able to commence any title review of the property.  The record title consists of a number of inconsistent and incompatible documents.  Consequently, there can be no assurance that the preliminary conclusions reached above are accurate or complete.  We have been advised that a quiet title suit will be necessary in order to initiate a full exploration program, with which conclusion management has agreed.





We cannot offer any assurance that we will be able to obtain legal title to the mineral interests that we believed we acquired in December 1994 and pursuant to the Harvey Settlement and resulting deeds.  We do not intend to expend any funds on exploration of this property until the title situation has been resolved to our satisfaction.  We have begun active efforts to begin necessary curative actions sufficient to allow active exploration to commence.  There is no assurance that the curative actions will be successful.





Mineral Titles





The Project is comprised of 183 unpatented (3,370ac/1,363ha) and 28 patented (428ac/173ha) claims, 211 claims in all totaling 3,798ac (1,537ha).  See Exhibit 99.2 filed with this report.





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The mining law of 1872 established a process, which a claimant may bring a claim to patent.  When patented, ownership of the land and mineral rights transfer from the Federal Government to the claimant.  The U.S. Bureau of Land Management (BLM) and the U.S. Forest Service (USFS) manage the lands covered by unpatented claims.





To maintain unpatented mining claims in good standing, a claim holder must make annual maintenance fee payments to the BLM of $140.00 per claim, plus a $10.00 per claim process fee totaling $150 per claim.  Fees are payable in the County in which the claims are located.





We believe that all claim filings are current and that the claims are valid until August 31, 2011, when the next annual maintenance fee payments and filings are due.





The table below summarizes our future obligations related to the prospect area. Failure to make the minimum payments as presented below might result in the loss of the mining claims, underlying the prospect area.





2011
2012
2013
2014
2015Patented
$571
$581
$591
$601
$611Unpatented
25,760
26,198
26,643
27,096
27,557Totals
$26,331
$26,779
$27,234
$27,697
$28,168





Ownership of Project claims is divided into 2 areas:


·
Manhattan South Project Area (MSPA).  This areas consists of 28 patented claims and 127 unpatented claims; and


·
Manhattan North Project Area (MNPA).  This area consists of 56 unpatented claims.





The Manhattan South Project Area (MSPA)





The MSPA consists of 28 patented claims (Table 2.2.1) and 127 unpatented claims totaling 2,678ac (1,083ha) more or less.  These claims are located within an historic mining district, and as a result, some of these have been subject to numerous assignments and litigation through the years.





The Manhattan North Project Area (MNPA)





The Manhattan North project area has 56 unpatented claims totaling 1,120 acres more or less.  The claims, known as the Wild Horse claims, numbered 1-57 (no #11 claim), were located by Calais on or around Feb-Apr 2004.  The claims are located on BLM administered lands, Calais is the claimant and owns a 100% interest in these claims.





Legal Issues





Overview Regarding Unpatented Claims





As is the case for all companies in the US, there are unavoidable risks in holding unpatented mining claims located under the General Mining Law.  These include potential challenges to the validity of any claimed discovery, a challenge as to whether claimed discoveries would satisfy the prudent man rule, potential errors in location or recording, and the risk of changes in the law or regulations.  Claims upon which no actual discovery exists are held by virtue of the doctrine of pedis possessio, which involves the occupation of claimed mining ground while engaged in a diligent search for a discovery of valuable minerals.  There can be no guarantee that pedis possessio rights would be recognized as to any or all of the unpatented mining claims in Nevada if challenged by a third party.  There can be no guarantee that any claimed discovery on unpatented grounds will survive challenge by the federal government, if the government sought to challenge title or right to occupy the ground.





Royalties, Agreements and Encumbrances





Royalties





At the MSPA, there is a 2% NSR royalty payable to the MPJV on production from;




Page 27




·
All patented claims;


·
The Argus Unpatented Claims; and


·
The Surviving Selig Claims.





There are no royalties payable on the White Caps Claims.





There are no royalties associated with the Wild Horse Claims located in the MNPA.





Encumbrances





Manhattan Property Joint Venture (MPJV)





MSPA is potentially subject to the following encumbrances:





·
The Manhattan South Project Area’s origination is the Manhattan Properties Joint Venture as formed in June 1993 between NMMI, Marlowe Harvey/Maran Holding, Inc. (Harvey), and Argus Resources, Inc. (Argus).  The initial joint venture property consisted of 28 patented claims and 29 unpatented claims.


·
Concurrent with the MPJV formation, 13 of the original claims were encumbered for a $532,000 note in favor of Anthony C. Selig (Anthony Selig Note).  Selig, who was a contract purchaser of the properties, was granted the Deed of Trust for his role in allowing a 40% interest in certain of the unpatented and patented claims to be transferred from Argus to NMMI.  The Selig Entities were the original owners of the patented and unpatented mining claims comprising the Manhattan Properties, or had contracts to acquire those interests on various terms under agreements which were themselves subject to several amendments over time.  In March 1997, NMMI entered into a Sale and Purchase agreement with the Selig Entities to repurchase the Anthony Selig Note for $375,000.  NMMI (Manhattan Properties Joint Venture’s 24.5% partner) fulfilled the terms of the note with payments on March 1997 and June 1997.  Calais is in possession of this satisfied note, which has not yet been released of record.  The Selig entities have not yet released the quitclaim deed to the 1997 properties which is currently being held by Selig’s attorney.


·
In 1997, NMMI encumbered the Manhattan Property joint venture through NMMI’s 24.5% share.  NMMI entered into a Subscription Agreement with Silenus Limited on April 14, 1997.  The Subscription Agreement required NMMI to grant Silenus Limited a $2,000,000 deed of trust encompassing the Manhattan Property until the Debentures issued to Silenus are converted, redeemed or paid in full.  Further title investigation has determined that the Silenus deed of trust, executed by NMMI, has been recorded and does purport to encumber any after-acquired title of NMMI.  Calais, which was the majority interest holder in the venture at that date, questions the ability of Silenus to encumber the joint venture property and the Calais and Argus interests in those properties. All of the above Manhattan South Project Area properties (28 patented and 131 unpatented claims) may be encumbered by the Silenus lien.  The existence and status of the Silenus lien, and whether it attaches to any venture properties, is a material concern regarding title to the Manhattan South Project Area and must be resolved before a significant expenditure on exploration of the properties is undertaken.  Not all of the unpatented claims purporting to be encumbered are current claims, or, claims titled in NMMI at the time of the purported encumbrance.





·
The 2000 Settlement Agreement provides for Calais Resources and Argus Resources to pay to NMMI and Jeff Kramer (an officer of NMMI) $300,000 total plus 5% interest (four $75,000 annual payments, the first payment at closing and a payment on each anniversary of closing).  This payment was to reimburse NMMI’s payment of the Anthony Selig Note paid by NMMI in June 1997.  Four $37,500 payments were made to Jeff Kramer and only two $37,500 payments were made to NMMI, as NMMI could not be located after the initial two payments were made; Calais made tender of the funds, but all correspondence was returned as un-deliverable.  Two contractual payments, totaling $75,000, have not been made to NMMI.  NMMI has no address and no living officers or directors have been located.  Calais has resolved to deposit the remaining payments totaling $75,000 with the District Court as part of a proposed curative action.


·
The 42 unpatented claims, originally located by White Cap Mines, Inc., (and which were themselves re-locations of prior Selig claims) were conveyed to Calais Resources Nevada, Inc. in July 2004, by Quitclaim deed dated July 20, 2004, recorded August 10, 2004, between White Cap Mines, Inc. (Marlowe Harvey, President) and Calais Resources Nevada, Inc.  The 42 unpatented claims were originally located in Range 44E and are currently listed in Range 41E in the Nye County Recorders records and the BLM-LR2000






Page 28




claim reports.  Further survey work, and or claim location work may be required.  Work to correct the description of the proper range in documents recorded in Nye County and with the BLM was completed in 2008.  The claims are believed to have been properly located on the ground in Range 44E, and it is further believed that Nevada curative statutes allow correction of the error in the recorded documents.


·
WC-114, WC-115, WC-116, WC-117 unpatented claims are titled to Argus Resources, Inc.  Further curative title work is required, which may consist of a clerical error at BLM, which received a deed transferring these interests to Calais.


·
WC#14, WC#16, WC#18, WC#20, WC#106, WC#108, WC#110, WC#112 and WC# 145 are dual claimed by Calais and Selig.  Further curative title work is required.


·
Calais has also entered into the Harvey Settlement Agreement discussed above.





The Manhattan North Project Area (MNPA)





There are 2 senior claims immediately north of the common corner of Sections 4, 5, 8 and 9 of T8N, R44E.  The claims are Wild Cat and Wild Cat #1, located in 1981, currently owned by Jason and Mark Pauley.  This is the area of Wild Horse claims # 44, 47, 48, and 51.  These claims are senior to the Wild Horse claims.





There are claims contiguous to the Wild Horse claims.  While these claims do not encumber the project area, they do bound the project area.





Round Mountain (Smoky Valley Common Operation – Joint Venture between Kinross Gold Corporation and Barrick Gold Corporation) controls a large block of claims contiguous to the north, northeast and east of the Wild Horse claims.  These are the MAN claims.  Round Mountain controls claims to the south of the Wild Horse claims.  These are the SAL claims.  In addition, Round Mountain controls claims to the west of the Wild Horse claims.  These are the SEP claims.





Newcrest Resources controls claims to the south east of the Wild Horse claims, immediately adjacent to the Round Mountain claims.





Geology and Mineralization





The geology at the Manhattan project consists of a three main rock types.  The most abundant are Paleozoic age, foliated quartzites, marbles, schists and phyllites.  These are cut by Cretaceous age granitic intrusive rocks.  Both of which were subsequently cut by a Tertiary age caldera complex and its associated volcanic rocks.  Faulting of the Paleozoic age rocks related to later tectonic events add to their complexity.





There are four types of mineralization found in the Manhattan project area.  These are 1) Gold-quartz veins; 2) Folded and faulted replacement gold deposits within the meta-sedimentary rocks; 3) Disseminated gold with pyrite and arsenopyrite in limestone; 4) Gold associated with arsenic, mercury, and stibnite.  All of these styles of mineralization appear to be concentrated along faults structures and bedding.  The mineralization is believed to have occurred during three events dated at 75Ma, 45Ma, and 16Ma (Shawe et al 1986).  The main mineralization in the White Caps Mine area is the gold associated with mercury and arsenic.




Exploration





In the past, exploratory drilling was conducted in the Manhattan South area focused on defining resources within the Cambrian aged White Caps Limestone unit near the White Caps Mine.  Several exploration companies over the years have drilled mostly reverse circulation (RC) drillholes.  The most comprehensive program was conducted from 1982 through 1984 targeting a shallow, bulk tonnage open pit type mineralization.  A few of these holes encountered discrete, high-grade gold zones but wider intercepts of disseminated gold mineralization were not found.





In 1995, Calais commissioned a magnetotellurics survey over the entire property.  The results of this survey showed a series of anomalies that occur in a linear trend parallel to the general strike of the Paleozoic rocks in the Manhattan South area.  A drill program was completed in 1997 to target the magnetotellurics anomalies.  The results showed that anomalous gold mineralization is associated with some of the magnetic anomalies.





Page 29


The Manhattan North area is an exploration target that was staked in 2004.  This is an area of northwest-southeast striking veins and mineralized shear zones with anomalous gold values.





Environmental Liabilities and Permitting





There are no current activities requiring permits.  Mine tailings located on or near several of the properties have not been the subject of evaluation.  The majority of those tailings had been previously conveyed by prior owners to Anthony C. Selig.  The areas of dumps and tailings conveyed to Anthony Selig were surveyed and described prior to conveyance in several 1989 deeds.  Calais has been contacted by the State of Nevada, Division of Minerals and the United States Forest Service regarding environmental remediation on the Manhattan project.  See “Item 3. Legal Proceedings – Nevada Environmental Issues.”





Required Permits and Status





Calais has not applied for nor holds any permits for exploration or mining activities on Calais owned or controlled lands.  Calais has no posted bonds with Nevada Department of Environmental Protection (NDEP) or BLM.  The most recent exploration program was conducted in the 1997.





The BLM manages surface disturbances associated with mining activities under 45 CFR 3809 and Nevada manages the reclamation of mining activities under NRS 519A, with the intent of preventing undue and unnecessary degradation to lands in Nevada.  Prior to exploring any Calais owned or controlled lands, an Exploration Plan of Operation and Reclamation Permit Application, satisfying the requirements of the BLM and NDEP must be filed, along with appropriate permit fees and reclamation bond.





Similarly, prior to mining any Calais owned or controlled lands, a Plan of Operations, satisfying the requirements of the BLM and NDEP, describing the proposed operations, detailing operating practices that prevent undue and unnecessary degradation, and presenting the reclamation practices that will be undertaken must be filed, along with the appropriate fees and reclamation bond.  Prior to the authorization of the Plan of Operations, a National Environmental Policy Act (NEPA) analysis is typically required to describe the proposed activities and disclose potential environmental impacts.  This analysis can take the form of an environmental assessment (EA) or environmental impact statement (EIS).





Accessibility, Climate, Local Resources, Infrastructure and Physiography





Topography, Elevation and Vegetation





The Manhattan Project lies within the Basin and Range physiographic province of Central Nevada.  This province consists of northerly trending mountain ranges with 2,000 to 5,000ft (610 to 1,500m) of topographic relief above relatively broad and flat intervening valleys.  The Manhattan Project is located on the southwestern flank of the Toquima Mountain range at elevations between 7,600 to 8,000ft (2,300 to 2,400m) above mean sea level.  The topography is considered “mature” and generally of moderate-relief.  The northern boundary of the South Manhattan area is located near the headwaters of a seasonally flowing stream in Consolidated Canyon.  Vegetation is sparse consisting of Pinion Juniper and sagebrush.




Operating Season





The typical exploration season would be from mid-March through the end of November.  If snow removal equipment is used, the exploration season can be extended through the winter months.





Surface Rights





Calais’ interests cover surface rights to the 428ac (173ha) included within the 28 patented claims.  Surface access is provided to the remaining 3,370ac (1,364ha)  of federal land by the 1872 Mining Law.  Applications for exploration activities must be filed with the appropriate agencies if surface disturbance is to occur.  Calais is currently








Page 30





negotiating a land exchange, which may involve a trade of one patented claim of lesser mineral interest for a claim of greater interest and of equal or greater size.





Power and Water Supply





Currently, there is no electric service or water supply at either the White Caps or Consolidated Mines.





Buildings, Ancillary Facilities and Mines





There are no usable buildings or facilities at the property.  All mines on the prospect are underground mines.





Tailings Storage Area





There is a small tailing disposal area located at the White Caps mine site.  The tailings are dry and cover an area of about one half acre.  The runoff of the tailing area is currently uncontrolled.  There are several potential areas for valley fill type tailings disposal.  Several areas of tailings and dumps in the vicinity of several of the patented properties were previously conveyed by prior owners to Anthony C. Selig.





Waste Disposal Area





There are several small waste disposal piles at both the White Caps and Consolidated Manhattan Mines.  All are located in close proximity to the old shaft or winze openings and all combined contain approximately 250,000st (227,000tonnes) of material.  There are no obvious signs of any acid generation and sulfides are rarely visible in the piles, most of the material consists of unaltered country rock.





History




Ownership





The Manhattan Project centered on the historic White Caps Mine, which operated continuously from 1906 until 1942, and intermittently from 1942 until 1964.  The Keystone claims and the Jumbo Mine Group claims comprise the historic White Caps Mine.  After the discovery of the White Caps mine in 1905, the first formal company to own the property was the White Caps Mining Company, formed in 1915 (Gibbs 1985).  In 1925, the White Caps Mining Company sold the property to the White Caps Gold Mining Company.  The White Caps Gold Mining Company leased the property in 1931 to W.J. Fancher a former mine superintendent for the White Caps Gold Mining Company.  Between 1933 and 1934, 25 to 30 unnamed leasers operated in the White Caps Mine between the 800-level and the surface (Mining World).  Although substantial work has been done to consolidate and rationalize titles to the unpatented and patented claims, additional curative work will be necessary.





Past Exploration and Development





Exploration work on the Manhattan Project claims consists of geologic mapping, rock chip sampling, geophysical surveys, drilling and underground drifting.  The majority of the modern bedrock mapping was conducted by Shawe during the period between 1984-2004.  Shawe also conducted rock chip sampling of the quartz veins in the North Manhattan area prior to his report on the same in 1986.




Several exploration companies over the years have drilled the property mainly using reverse circulation drilling.  The most comprehensive program was conducted from 1982 through 1984 by Freeport Mineral Company.  They completed 72 drillholes near the historic mining areas to test shallow and deep-seated mineralization potential near the White Caps, Manhattan, Consolidated and Litigation Hill Mines.  A few of these holes encountered discrete high-grade gold zones but broader intercepts of disseminated gold mineralization were not found.  A significant drill intercept was encountered in drill hole WC-49.  This drillhole reported 25ft of 0.698oz/st (23.9g/t) from 465ft to 490ft (142m to 149m) in depth.





In 1986, NMMI drilled over 10 holes up to 120ft (37m) deep with a truck mounted reverse-circulation drill.  The program was targeting shallow mineralization and the results were not encouraging.  In 1988, NMMI drilled five








Page 31





more holes with a truck mounted rotary drill rig targeting deeper mineralization than previously.  These drill holes were all between 200ft-525ft (61m-160m) deep.  The results of this program encountered several intercepts of anomalous gold but no coherent zones of mineralization were established.





In September 1993, a 1,200ft (366m) decline was driven by Harrison Western for NMMI in an attempt to intercept the high-grade gold intercept identified by Freeport in drillhole WC-49.  The decline was completed in March 1994.  It was successful in locating the gold mineralization but did not encounter the high-grade intercept.  This decline could be used for future drill programs.





Historic Production





The White Caps Mine was the largest producer in the Manhattan district.  The mine operated from 1905 until 1964 and is reported to have produced approximately 120koz of gold (Anderson 1990).  Other mines within the project area include the Nevada Manhattan, the Manhattan Consolidated, the Jumbo, the Bath, and the Union Consolidated Mines.  All of these together are reported to have produced an estimated 30koz of gold (Anderson 1990).  Koschmann and Bergandahl (1968) report that a total of 280koz of gold were mined from lode claims within the Manhattan district.  However, they do not quantify exactly which mines were included within the “Manhattan District”.





Field Surveysand Expenditures





In the past, exploratory drilling focused on defining resources within the Cambrian aged limestone unit near the White Caps Mine.  Several exploration companies over the years have drilled mostly reverse circulation to test for gold and silver mineralization.  The most comprehensive program was conducted from 1982 through 1984 targeting a shallow, bulk tonnage open pit type mineralization.  A few of these holes encountered discrete high-grade gold zones but broader intercepts of disseminated gold mineralization were not found.





In 1995, Calais commissioned a magnetotellurics survey over the property.  The results of this survey showed a series of anomalies that occur in a linear trend parallel to the general strike of the Paleozoic rocks.  A drill program was completed in 1997 to target the magnetic anomalies.  The results showed that anomalous mineralization is associated with some of the anomalies.  Overall, the drilling success rate was very low with only one drillhole reaching the intended target due to poor ground conditions.





The Manhattan North area is an exploration target that was staked in 2004.  This is an area of northwest-southeast striking veins and mineralized shear zones with anomalous gold values.





The following table sets forth the amounts spent by the Company on exploration activities during fiscal 2005 through 2010 on the Manhattan prospect:





Fiscal Year Ended May 31,2010
2009
2008
2007
2006
2005Exploration Expenses
$27,076
$18,831
$36,125
$22,779
$27,702
$2,040





As of the fiscal years ended May 31, 2005 through May 31, 2010, we had recorded the following amounts for mineral interests and furniture, fixtures and equipment (net of depreciation and impairments) on the Manhattan prospect:




Fiscal Year Ended May 31,2010
2009
2008
2007
2006
2005Mineral Interests
$-
$-
$-
$-
$-
$-Furniture, Fixtures and Equipment
$-
$-
$-
$-
$-
$-





Page 32


Resource Estimation





The Manhattan project is without known resources or reserves and the Company’s activities are exploratory in nature. There are no assurances that the Company will identify any economically viable mineral deposits on the Manhattan project.





Exploration Conclusions





The Manhattan project is a historical producing gold mine with subsequent exploration drilling.  Recent attempts to define a disseminated shallow gold resource were never fully completed.  However, numerous relatively narrow and high-grade intercepts have been found.  Further efforts to define a deeper gold resource have been hampered by drilling reverse circulation from surface due to the depth of the mineralization and poor drilling conditions within the overlying rocks.





Proposed Work





We do not intend to perform any significant work on the mineral interests constituting the Manhattan prospect until (if ever) the uncertainties relating to the title to those mineral interests are resolved.  Consequently, as of the date of this report, we have not allocated an exploration budget for those prospects.




Panama Prospect: Gold Exploration




Acquisition Details




Pursuant to an agreement dated October 6, 2000, we received an option to purchase a 40,000-acre mineral concession in an historic gold producing district of Panama with Panama Mining of Golden Cycle of Panama Incorporated (“PMGC”). We acquired concessions to 61,000 acres in the eastern Veraguas district of Panama in 2001 through a five-year lease agreement with PMGC and a related company, Golden Cycle of Panama, Inc. (“GCP”).  The prior agreements were cancelled in a new Purchase Option Agreement we entered into on February 28, 2003.  As consideration for the Purchase Option Agreement, we (1) issued 200,000 shares of stock to the two owners of PMGC and GCP (Mr. and Mrs. Gary Zook as to 50% and Herbert Hendricks as to 50%) (including 100,000 shares initially issued in 2000); (2) paid $10,000 total amount to the two owners of PMGC and GCP; and (3) assumed $15,750 of the seller’s payables to third parties.  We also committed to perform certain work on the prospects. As a result of an extension agreement entered into on January 31, 2004, we had an obligation to complete a $250,000 exploration program for lode deposits by September 25, 2004, and an additional $250,000 program to explore for placer gold deposits and install a pilot placer operation. We also hired a shareholder of the sellers, Herbert Hendricks, to oversee the project, and we paid him $3,500 per month through June 2004 (when we terminated the contract) to do so.  Herbert Hendricks is the brother of our vice-president, Thomas Hendricks, but they do not share the same home; they make independent business decisions, and are not otherwise affiliated.




Subsequent to the extension agreement of January 31, 2004, it was determined that the concession applications and the concession originally issued for the original exploitation concession were not of a status with the Panamanian government that exploration could be pursued without further processing of the concession applications in Panama, and the official re-issuance of the exploitation concession.  We also determined that we were not interested in pursuing placer deposits on the concessions, in which PMGC and GCP continued to be interested.




Effective on September 15, 2005 we entered into a “Further Extension and Restatement of Purchase Option Agreement-Republic of Panama Concessions” wherein we and PMGC and GCP amended and restated all prior agreements. The parties agreed to split the hard rock portions of the concession applications (to us) and the placer portions of the concessions (to PMGC and GCP).  We surrendered our entitlement under the prior agreements to explore and develop the Panama concessions.  In addition, the responsibility of validating the Panama concessions and applications, and of recording necessary evidence of the new agreement was allocated to PMGC and GCP.  Highlights of the September 15, 2005 agreement (the “September Agreement”) are as follows:





Page 33


--we were granted a 1-year option to acquire the hard rock concessions for a price of $4.5 million US;





--we were granted the full and exclusive right to access, explore, develop and mine the hard rock portions of the concessions;





--PMGC and GCP represented and warranted that it had full title to the concessions and applications, and made additional representations and warranties regarding its ability to enter into the agreement, and to properly register the agreement, and to complete processing of the concessions and applications;





--PMGC and GCP were granted a 2% NSR royalty on production from the concessions creditable against the option purchase price;





--we undertook to make payments to PMGC and GCP of $65,000, which payments were made;





--we undertook to pay PMGC and GCP $25,000 per year beginning on September 15, 2006 and on each September 16 thereafter through 2015;





--we committed to spend $175,000 on qualified exploration expenditures prior to September 15, 2006, and $100,000 per year thereafter, with certain carryover credit provisions; and





--PMGC and GCP made extensive warranties and representations concerning the status of the concessions and applications.





Subsequent to the execution of the agreement, we engaged in extensive correspondence with PMGC and GCP concerning the status of the concessions.  We were also subjected to repeated demands by PMGC and GCP to fund environmental studies, legal costs and other matters related to the processing of the concessions, which responsibilities were allocated to PMGC and GCP under the September Agreement.





We ultimately determined that we could not pursue active exploration work on the concessions without the formal issuance of the concessions by Panamanian authorities.  We received vague and partially responsive replies to our requests for the completion of the processing of the concessions, and for status reports concerning the same.  In the spring of 2007, we received repeated requests for funding from PMGC and GCP for the purpose of “saving” and/or processing the concessions. We initially funded these requests, but became disturbed concerning the repeated demands, which appeared to be outside of the September Agreement, and ultimately refused to fund additional demands without provision of the documentation required by the September Agreement.





In late spring and early summer of 2007, PMGC and GCP declared us to be in default.  We protested the default in writing, and declared PMGC and GCP to be in default under the September Agreement.  Shortly thereafter, PMGC and GCP took the position that the Panama agreements, including the September Agreement, were void or of no legal effect in Panama, despite their own representations to the contrary in those agreements.





We have since initiated arbitration with the International Center for Dispute Resolution, the international division of the American Arbitration Association.  We are seeking a declaration concerning the currency and validity of the concessions, and, in the alterative, damages of $995,000.





The arbitration is still pending before the ICDR, and the parties are in negotiations concerning resolution of the dispute.  If negotiations fail, an arbitrator will be appointed and the arbitration will proceed.  Management has determined that it lacks confidence in PMGC and GCP concerning their performance under existing agreements, and has stated a strong preference to be bought out of its interest under the September Agreement, or to otherwise terminate its involvement with the Panama concessions and operations.





There is no guarantee of a positive outcome of the arbitration or in determining our position in the concessions under the September Agreement.  There is no guarantee, even if the outcome of the arbitration is positive, that we could recover a judgment against the assets of PMGC and/or GCP.  If we are determined to hold a valid interest in the concessions under the terms of the agreement, there is no guarantee, given the past inability of PMGC and GCP to perform their contractual obligations, that the Panama concessions and applications will be processed to the point of





Page 34





being valid and enforceable within Panama pursuant to Panamanian mining law then applicable.  In 2007, we determined that, regardless of the outcome of the arbitration, we will not undertake any exploration programs or mining operations in Panama.  Since the initiation of the arbitration, we have been able to obtain only second-hand information concerning the properties, and PMGC and GCP have been uncooperative in providing any information. We and our management have reason to believe that PMGC and GCP have continued to deal with the Panama concessions and concession applications as if our interest under the September Agreement did not exist.




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




The following discussion and analysis of the results of operations and financial condition should be read in conjunction with the accompanying Consolidated Financial Statements as well as the Note Regarding Forward-Looking Statements included elsewhere in this annual report.





OVERVIEW




Calais seeks to explore its land holdings in Colorado and Nevada for various mineral interests, primarily gold and silver. Since inception, we have not achieved any revenues from operations and we do not expect to receive any such revenues in the near future until such time, if ever, we successfully mine and produce precious metals which we can sell to market.  While we do not currently have any substantive operations on our projects, from time to time, we have secured cash from various sources in the form equity and debt investments and we have used this cash to fund our working capital needs.  At the present time, we need additional funding in order to pursue our intended activities.




Our contemplated operations on our Caribou prospect, our Nevada prospect and our Panama prospect require a significant amount of financing which is not currently available to us.  Thus, our plan of operations (to explore our mineral prospects) is entirely dependent on our ability to obtain additional financing from equity or debt placements.  At the present time, we have no commitment from any person to provide any portion of such financing and we cannot offer any assurance that we will be able to obtain such financing on reasonable terms, if at all.




Recent Events




As reported in our Form 8-K filed with the Securities and Exchange Commission on December 27, 2005, during our 2005 fiscal year, we experienced severe financial difficulties wherein we were left substantially without cash, employees or legal or audit services.  Since that time, we have made several private placements of equity securities in order to pay pressing debt obligations, including aged accounts payable and substantial sums owed to legal, accounting and audit service providers.  We also refinanced and changed the terms of our debt agreements in order to postpone payments until such time as we could secure additional financing.  Further, we ceased certain operating activities for substantially all of the six subsequent fiscal years from the fiscal year ended May 31, 2005 through the fiscal year ended May 31, 2010.  During the fiscal years ended May 31, 2010, 2009, 2008, 2007, 2006 and 2005, we generated net losses of $3.2 million, $2.9 million, $2.9 million, $2.3 million, $2.8 million, and $4.4 million, respectively, and did not generate revenue in any of these periods.  We ended the 2010 fiscal year with an accumulated deficit during the development stage of $45.8 million.




From inception through the fiscal year ended May 31, 2004, we accounted for all activities using Canadian Generally Accepted Accounting Principles (“Canadian GAAP”).  During this time, our functional currency for reporting purposes was the Canadian dollar.  Because the company’s operations, management team and land holdings exist substantially within the United States, management deemed it appropriate to change our functional reporting currency to the U.S. dollar and our basis for accounting to U.S. General Accepted Accounting Principles (“U.S. GAAP”), in accordance with ASC Topic 830.




Page 35


Results of Operations




2010




During the fiscal year ended May 31, 2010, we generated a net loss of $3.2 million.  The primary components of this loss were as follows:


General and administrative expense of $1.1 million which includes:
  ·
$0.8 million in wages and benefits expense, $325,000 of which related to officer salaries with the remaining amount arising from the pro-rated vesting of 4 million restricted shares of common stock granted to our Board of Directors as payment for services between June 1, 2005 and August 31, 2008
 ·
$0.2 million in consulting and professional fees, primarily related to fees related to investor relations services as well as ongoing legal fees
 ·
$0.1 million of other general office expense
  Exploration and business development expensesof $0.1 million which primarily consisted of property lease costs.


Other income and expensesof $2.0 million which includes:




·
$2.0 million in interest and financing fees, of which substantially all related to interest on outstanding debt instruments as well as interest arising from a February 2010 debt restructure, wherein Brigus Gold purchased substantially all of our short-term and long-term debt, as described in “Liquidity and Capital Resources” below.


·
$0.4 million loss related to default on an exploration development agreement we entered into with an investor and our now-current Chief Executive Officer.  Under the agreement, we received cash proceeds during fiscal year 2009.  Due to a substantial increase in the price of our common stock between the date of the cash contributions under the agreement and the date the stock was issued to the other parties in the agreement in fiscal year 2010, we recognized a loss of $0.4 million during our 2010 fiscal year.


·
$0.3 million gain related to debt settlements, primarily driven by gains associated with the February 2010 debt restructure, as described in “Liquidity and Capital Resources” below.


·
$0.1 million gain recognized on the sale of slag at our Nevada property.




2009




During the fiscal year ended May 31, 2009, we generated a net loss of $2.9 million.  The primary components of this loss were as follows:




General and administrative expenseof $1.0 million which includes:




·
$0.8 million in wages and benefits expense, $325,000 of which related to officer salaries with the remaining amount arising from the pro-rated vesting of 4 million restricted shares of common stock granted to our Board of Directors as payment for services between June 1, 2005 and August 31, 2008


·
$0.2 million in consulting and professional fees, primarily related to fees related to legal fees and expenses for accounting-related services




Exploration and business development expensesof $0.1 million which primarily consisted of permits and licenses and property lease costs.




Other income and expensesof $1.8 million which includes:




Page 36




·
$1.3 million in interest and financing fees, of which substantially all related to interest on outstanding debt instruments.




·
$0.5 million in impairment charges related to the write-off of mineral interests in recognition of the fact that future cash flows from these mineral interests were not likely given then-current economic facts and circumstances.




2008




During the fiscal year ended May 31, 2008, we generated a net loss of $2.9 million.  The primary components of this loss were as follows:




General and administrative expenseof $1.4 million which includes:
  ·
$0.8 million in consulting and professional fees, of which approximately $475,00 related to audit and accounting-related services as we attempted to become current with our filings with the U.S. Securities and Exchange Commission as well as the British Columbia Securities Commission (“BCSC”).  We again experienced severe financial difficulties that rendered us substantially without cash and, therefore, were unable to complete these activities.  We also experienced increased legal fees during this period as well as increased engineering consulting fees as we sought to regain compliance with the BCSC by completing a 43-101 technical report on our Nevada and Colorado properties.


·
$0.5 million in wages and benefits expense, $325,000 of which related to officer salaries with the remaining amount arising from the pro-rated vesting of 4 million restricted shares of common stock granted to our Board of Directors as payment for services between June 1, 2005 and August 31, 2008


·
$0.1 million of other general office expense




Exploration and business development expensesof $0.1 million which primarily consisted of mining claims, filing fees, and permits and licenses.




Other income and expensesof $1.4 million in interest and financing fees, of which substantially all related to interest on outstanding debt instruments




2007




During the fiscal year ended May 31, 2007, we generated a net loss of $2.3 million.  The primary drivers of this loss were as follows:




General and administrative expenseof $1.0 million which includes:




·
$0.5 million in consulting and professional fees, of which approximately half related to legal fees.  The remaining consulting and professional fees expense related to engineering consulting fees as we sought to regain compliance with the BCSC by completing a 43-101 technical report on our Nevada and Colorado properties.


·
$0.4 million in wages and benefits expense, $325,000 of which related to officer salaries with the remaining amount arising from the pro-rated vesting of 4 million restricted shares of common stock granted to our Board of Directors as payment for services between June 1, 2005 and August 31, 2008


·
$0.1 million of other general office expense




Exploration and business development expensesof $0.1 million which primarily consisted of environmental services, filing fees, and permits and licenses.




Other income and expensesof $1.1 million in interest and financing fees, of which substantially all related to interest on outstanding debt instruments.




Page 37


2006




During the fiscal year ended May 31, 2006, we generated a net loss of $2.8 million.  The primary components of this loss were as follows:




General and administrative expenseof $0.9 million which includes:




·
$0.4 million in consulting and professional fees, of which approximately half related to legal fees.  The remaining consulting and professional fees expense related partially to accounting fees and partially to engineering consulting fees as we sought to regain compliance with the BCSC by completing a 43-101 technical report on our Nevada and Colorado properties.


·
$0.3 million in wages and benefits expense, all of which related to officer salaries.


·
$0.2 million of other general office expense.





Exploration and business development expensesof $0.1 million which primarily consisted of filing fees and property lease costs.


Other income and expensesof $1.8 million in interest and financing fees, of which substantially all related to interest on outstanding debt instruments.


2005




During the fiscal year ended May 31, 2005, we generated a net loss of $4.4 million.  The primary components of this loss were as follows:




General and administrative expenseof $0.9 million which includes:




·
$0.4 million in consulting and professional fees, of which approximately half related to legal fees.  The remaining consulting and professional fees expense related partially to accounting fees and partially to engineering consulting fees as we continued exploration in Panama (early in the fiscal year) pursuant to our agreements with our partners in Panama and as we sought to regain compliance with the BCSC by completing a 43-101 technical report on our Nevada and Colorado properties.


·
$0.4 million in wages and benefits expense, all of which related to officer salaries.


·
$0.1 million of other general office expense.




Exploration and business development expensesof $0.3 million in exploration costs, which were incurred early in the year as we continued to explore our properties in Panama, Nevada and Colorado.




Other income and expensesof $3.1 million which primarily includes interest and financing fees, of which substantially all related to interest on outstanding debt instruments.




Going Concern




The report of our independent registered public accounting firm on the financial statements for the years ended May 31, 2010 and 2009, includes explanatory paragraphs that express substantial doubt or uncertainty regarding our ability to continue as a going concern.  Since inception, we have generated cumulative net losses of $45.8 million and we anticipate that we will experience losses in future periods.  Our ability to establish ourselves as a going concern is dependent upon our ability to either refinance our current outstanding obligations or obtain additional funding, or both, and there are no assurances that either of these can occur in the foreseeable future or at all.




Page 38


Liquidity and Capital Resources
  Because we have not yet commenced our intended primary operations and are not yet generating revenue from any source, our liquidity is completely reliant on our ability to generate cash through capital-raising activities, as discussed further below.  These capital-raising activities have historically provided us with cash for our limited operations and have been the source of financing for the accumulation of mineral interest properties.  However, because our liquidity is so reliant on these activities and because, to date, we have been unable to generate revenue, our current liabilities have consistently exceeded our current assets during the last six fiscal years, thereby creating working capital deficits in those years.  As of May 31, 2010, 2009, 2008, 2007, 2006 and 2005, we had working capital deficits of $17.7 million, $12.6 million, $4.0 million, $3.3 million, $2.3 million and $1.4 million, respectively.
  From time to time, we have made private placements and undertaken certain debt financing arrangements in order to fund property acquisition and mineral exploration operations.  However, these activities have not yielded sufficient funds to bring our operations to a point where we can generate revenue.  In the future, we expect that we will continue to be dependent on our financing activities to fund any and all of our operations until such time as we are able to generate revenue from the sale of minerals, mineral interests or interests in other assets that we currently own.  If we are unable to establish mineralization or reserves through our exploration activities, we may not be able to attract joint venture partners, industry partners, or other investors who will be willing to provide us the necessary capital on commercially reasonable terms or at all.




As of May 31, 2010, we had $27,919 in cash and cash equivalents, which was not sufficient to fund ongoing operations.  Net cash used in, or provided by, operating, investing and financing activities for the fiscal years ended May 31, 2010, 2009, 2008, 2007, 2006 and 2005 were as follows:




Year Ended May 31,2010


2009


2008


2007


2006


2005Net cash used in operating activities

$
(351,413
)

$
(423,308
)

$
(1,400,290
)

$
(1,085,469
)

$
(874,980
)

$
(1,037,742
)Net cash (used in) provided by investing activities

$
-


$
-


$
(32,500
)

$
(33,117
)

$
(253,456
)

$
129,032Net cash provided by financing activities

$
379,332


$
407,753


$
1,448,345


$
1,042,256


$
1,204,014


$
464,647




Net cash used in operating activities.  Net cash used in operating activities are attributable to our net income adjusted for non-cash charges as presented in the consolidated statements of cash flows and changes in working capital as discussed above.




Net cash (used in) provided by investing activities.  Net cash (used in) provided by investing activities primarily relate to purchases of mineral interests (fiscal years 2008, 2007, 2006 and 2005), and dispositions of fixed assets (2006, 2005).  The dispositions of fixed assets were non-recurring in nature and were primarily a means to provide additional cash to the company.




Net cash provided by financing activities.  Net cash provided by financing activities for each fiscal year is reflective of the net result of our capital-raising activities, as described further below.




We anticipate that we will continue to general negative cash flows from operating and investing activities for the foreseeable future.




Page 39


Capital Raising Activities




To date, the vast majority of our business operations has centered on raising capital financing sufficient to acquire mineral interests and begin exploration.  We expect to continue this focus on raising capital until such time as we are able to explore and, if warranted, exploit mineral resources on our properties and begin generating revenue from operations.  There can be no assurance that we will ever generate such revenue.




During the fiscal years ended May 31, 2010, 2009, 2008, 2007, 2006 and 2005, we have raised approximately $15.4 million through a number of private placement involving both debt and equity securities.  A summary of the capital infused into the Company is as follows:
  Year Ended May 31,2010


2009


2008


2007


2006


2005


TotalDuffy Group -S ecured note payable

$
-


$
-


$
184,084


$
-


$
-


$
241,000


$
425,084MFPI ("Mortgage") -Secured note payable


-



-



-



-



258,489



-



258,489Shareholder advances


-



-



150,000



1,020,500



-



-



1,170,500Other notes payable and capital leases


-



282,000



-



-



-



-



282,000Brigus -Secured note payable


10,253,878



-



-



-



-



-



10,253,878Other private placements -Units of common stock and warrants in exchange for cash


177,500



248,400



1,258,900



50,000



970,000



245,000



2,949,800Total capital raised

$
10,431,378


$
530,400


$
1,592,984


$
1,070,500


$
1,228,489


$
486,000


$
15,339,751
  Capital raising activities - Debt
 
 ·
On August 1, 2003, the Company issued a note payable to Broadway Mortgage Corporation (“Broadway”) for $4,500,000.  Cash proceeds from the note were $3,339,000 and non-cash proceeds representing prepaid interest on the note were $1,161,000.


·
In December 2004, the Company received $440,000 in cash from a group of shareholders (The Duffy Group (“Duffy”)), originally provided to the Company as share capital.  In June 2005, the Company received and additional $241,000 in cash from Duffy, originally provided to the Company as share capital.  On August 1, 2005, the Company issued a note payable to Duffy in exchange for $681,000 originally provided to the Company as share capital, and interest accrued from the date of each capital raise.  In December 2007, the Company restructured the Duffy note, which resulted in proceeds of $184,084 which were used to pay accrued interest on the note.


·
On December 16, 2005, the Company issued a note payable to MFPI Partners, LLC for $258,489, with the proceeds used for the purchase of the Congo Chief Lode Mining Claim.


·
In July 2006, the Company entered into an agreement with MFPI Capital Partners (“Calim”), which, among other financial transactions, provides for non-interest bearing cash advances.  During 2007, the Company received cash totaling $1,020,500 under this agreement.  During 2008, the Company received cash totalling $150,000 under this agreement.


·
On February 1, 2010, Apollo  Gold, Inc. (a subsidiary of Apollo Gold Corporation, which became Brigus Gold Corp., “Brigus”) acquired $10,253,878 of the Company’s outstanding notes, including the Broadway Loan, the Congo Chief note, and amounts owed to MFPI Capital Partners. On March 12, 2010 the Duffy Group entered into an agreement with Brigus and Calais whereby the Duffy group received shares of Calais common stock in connection with partial forgiveness of debt to Calais, and remaining amounts owed to Duffy were assigned to Brigus.





Capital raising activities - Other Private Placements of Units of Common stock and Warrants




We issued Units to a number of accredited investors, each Unit consisting of one share of restricted Common stock and a Warrant to purchase one share of Common stock.  From fiscal 2005 through 2010, the Company issued Units as follows:




Page 40




Year Ended May 31,2010

2009

2008

2007

2006

2005

TotalCash consideration
$     177,500

$     248,400

$  1,258,900

$        50,000

$     970,000

$     245,000

$  2,949,800Number of Units
3,150,000

3,105,000

15,736,250

250,000

5,469,845

1,200,000

28,911,095Unit price
$0.05 - $0.0625
$0.08

$0.08

$0.20

$0.147 - $0.20
$0.20 - $0.25Warrant exercise price
$0.20

$0.12

$0.12

$0.25

$0.25

$0.20  - $0.25Warrant expiration
08/12 - 02/13

06/13 - 08/21

11/12 - 04/13

12/07 - 12/10

06/10 - 01/20

02/10 - 03/10





Contractual Obligations
  The following table summarizes aggregate information about our contractual cash obligations as of May 31, 2010 and the periods in which payments are due:
  Payments due by periodContractual obligations

Total


Less than 1 year


1-3 years


3-5 years


More than 5 yearsLong-term debt obligations

$
10,253,878


$
10,253,878


$
-


$
-


$
-Capital lease obligations


-



-



-



-



-Operating lease obligations


509,066



23,200



46,783



46,000



393,083Purchase obligations


-



-



-



-



-Royalties


150,000



-



-



-



150,000Environmental remediation obligation


50,000



25,000



25,000



-



-Total

$
10,962,944


$
10,302,078


$
71,783


$
46,000


$
543,083
  Off-Balance Sheet Arrangements
  We do not have any off-balance sheet arrangements.




Critical Accounting Estimates




Our discussion and analysis of financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with U.S. generally accepted accounting principles.  The preparation of our financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenues and expenses as well as disclosures of contingent assets and liabilities.  We base our accounting estimates on historical experience and other factors that we believe to be reasonable under the circumstances.  However, actual results may vary materially from these estimates due to factors beyond our control or due to changes in these assumptions or conditions.  The following is a summary of our critical accounting estimates we have made in preparing our Consolidated Financial Statements.




Income Taxes




Deferred income taxes are reported for timing differences between items of income or expense in the consolidated financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes,” which requires the use of the asset/liability method of accounting for income taxes.  Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts for existing assets and liabilities and their respective taxes bases for tax loss and credit carry-forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  We provide for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.




Impairments




We evaluate long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts of an asset or group of assets may not be recoverable, pursuant to the provisions of ASC Topic 360, “Property, Plant and Equipment.”  Our evaluations take into consideration historical results, current business








Page 41





conditions and trends in order to identify situations in which the carrying value of assets may not be recoverable.  If such reviews indicate that the carrying value of such assets may not be recoverable, we estimate the undiscounted sum of the expected cash flows of such assets to determine if such sum is less than the carrying value of such assets in order to ascertain if an impairment exists. If an impairment exists, then we determine the fair value by using quoted market prices, if available for such assets, or if quoted market prices are not available, we discount the expected future cash flows of such assets.




During the fiscal year ended May 31, 2005, our cash balances declined and we began operating in a net negative cash position.  Despite several attempts to raise additional cash through the use of private placements and debt, we were unable to secure enough funding to build adequate infrastructure suitable for mining our properties and bringing minerals to market for sale.  Likewise, our mineral assets were not proven at that time and estimates of future cash flows from these mines were zero.
 
 We acquired additional mining properties during the fiscal years ended May 31, 2006 and 2007.  During those fiscal years, we were able to secure some debt and equity financing and were actively exploring these properties.  However, during our fiscal year ended May 31, 2009, we were affected by tightened credit markets and reduced availability of alternate funding resulting from a global economic downturn.  We were also operating in a net negative cash position at that time.  Accordingly, we impaired all of our remaining mining interests during the fiscal year ended May 31, 2009, resulting in an impairment charge of $495,573.
  Share-Based Compensation
  We use the Black-Scholes option pricing model and the straight-line attribution approach to determine the fair value of stock-based awards in accordance with FASB ASC 718,“Compensation.”   The option pricing model requires the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. Our expected term represents the period that stock-based awards are expected to be outstanding and is determined based on historical experience of similar awards, giving consideration to the contractual terms of the stock-based awards, vesting schedules and expectations of future employee behavior as influenced by changes to the terms of our stock-based awards. The expected stock price volatility is based on the historical prices of our common stock.




Mineral Properties




Mineral property acquisition costs are initially capitalized as tangible assets when purchased.  When facts and circumstances warrant, or at least once per fiscal year, we evaluate the carrying costs of these assets for impairment, as described previously.  Once proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method of the estimated life of the probably reserve.  Mineral property exploration costs are expensed as incurred.  Estimated future removal and site restoration costs, when determinable, are provided over the life of proven reserves on a units-of-production basis.  Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred and technology and industry standards.  Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.  As of May 31, 2010, we had not established any proven or probably reserves on our mineral properties and have incurred only acquisition and exploration costs.




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




Conflicts of Interest and Related Party Transactions





Several of the Company’s officers and directors are also directors, officers or shareholders of other companies.  Some of the directors and officers are engaged and will continue to be engaged in the search for additional business opportunities on behalf of other corporations, and situations may arise where these directors and officers will be in





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direct competition with the Company. Such associations may give rise to conflicts of interest from time to time.  Such a conflict poses the risk that the Company may enter into a transaction on terms which could place the Company in a worse position than if no conflict existed.  Conflicts, if any, will be dealt with in accordance with the relevant provisions of the Business Corporations Act(British Columbia) (the “BCBCA”).  The directors of the Company are required by law to act honestly and in good faith with a view to the best interest of the Company and to disclose any interest which they many have in any project or opportunity of the Company. However, each director has a similar obligation to other companies for which such director serves as an officer or director.





Except as set forth above, we have not adopted any other conflict of interest policy with respect to such transactions.




Consulting Fees
 
 We paid consulting fees and expense reimbursements of $58,300, $12,500, $13,750 in fiscal years 2007, 2006, and 2005, respectively, to Herbert Hendricks, the brother of Thomas Hendricks, an officer and director of the Company, as compensation for overseeing certain exploration activities in Panama and other various consulting activities.
 
 Wages and Other Payables
 
 Due to the financial difficulties we faced during the 2005 – 2010 fiscal years, we were unable to pay the wages of certain of our executive officers.  As such, we had significant amounts payable to executive officers as of May 31, as follows:
  2010


2009


2008


2007


2006


2005David K. Young (1)

$
417,833


$
279,333


$
160,416


$
106,667


$
18,154


$
-Thomas Hendricks (2)


366,820



216,820



91,821



89,321



134,321



132,321Matthew Witt (3)


127,750



127,750



127,750



127,750



127,750



127,750$
912,403


$
623,903


$
379,987


$
323,738


$
280,225


$
260,071
 (1) David K. Young has served on our Board since July 30, 2005 and as our President and Chief Executive Officer since February 10, 2006.  In January 2011, Mr. Young relinquished his CEO title and was appointed as our Chief Operating Officer.  He remains our President.  On October 27, 2010, we and Mr. Young entered into a Settlement Agreement wherein Mr. Young agreed to relinquish and waive $227,042 in wages owed to him, which constituted 50% of the total wages he was owed as of August 31, 2010.  Mr. Young agreed to accept as full payment for the remaining 50% 2,270,420 restricted shares of our common stock.  See also “Item 11. Executive Compensation – Employment and Compensation Arrangements.”
 
 (2) Subsequent to May 31, 2010, we have paid Mr. Hendricks $319,220 against both current and aged wages payable balances as well as convertible debenture balances due.  See also “Item 11. Executive Compensation – Employment and Compensation Arrangements.”
 
 (3)  Matthew Witt served as our Chief Financial Officer from August 2003 until February 7, 2005.  On March 31, 2005, we, Thomas Hendricks (an officer and director of the Company) and Mr. Witt entered into a Settlement and Release Agreement wherein, among other things, we agreed to pay Mr. Witt (a) $127,750 for all wages, including vacation, paid personal leave, bonus or otherwise, which were due, owing and accrued through February 7, 2005 and (b) all amounts owed to Mr. Witt for any of our business expenses incurred by Witt as an employee of ours (at the time, an additional $49,718), in exchange for release of certain claims and liabilities of ours.  This Settlement and Release agreement was later superseded by a Settlement Agreement entered into on October 28, 2010 (the “October Settlement”) by and between us and Mr. Witt.  Under the October Settlement, Mr. Witt agreed to accept as full payment for all amounts owed to him under the earlier Settlement and Release Agreement 2,000,000 restricted shares of our common stock and $25,000 in cash. These shares were issued and cash released in November 2010.





Debentures





As of May 31, 2005 through 2010, the Company had outstanding convertible debentures payable to shareholders, current officers, and former officers and directors of the Company as set forth below:




Page 43




2010


2009


2008


2007


2006


2005Debentures (a)

$
4,809,649


$
4,644,900


$
5,110,759


$
4,723,979


$
4,600,798


$
4,036,090Debentures (b)


45,500



105,500



225,000



225,000



250,000



250,000Total debentures payable

$
4,855,149


$
4,750,400


$
5,335,759


$
4,948,979


$
4,850,798


$
4,286,090Less: Current portion


(4,855,149
)


(105,500
)


(175,000
)


(125,000
)


(100,000
)


(50,000
)Long-term portion

$
-


$
4,644,900


$
5,160,759


$
4,823,979


$
4,750,798


$
4,236,090




(a)These debentures are unsecured, non-interest bearing, and initially matured in May 2011.  These debentures are owned by Marlowe Harvey whom was the President and a director of ours until he resigned as President in 2000 and as a director in November 2003.  Mr. Harvey is the President of Argus Resources, Inc., a holder of one of the debentures, Judy Harvey whom is Mr. Harvey’s spouse and Lynne Martin. Ms. Martin is the spouse of Melvin Martin, who was a director of ours until he resigned on July 28, 2005.  The debentures are convertible into common stock at $1.23 in Canadian Dollars at the holders’ discretion and contain no restrictive covenants.


In December, 2010, $4,306,347 of the debentures were converted into 9,550,368 shares of common stock and in exchange for $259,149 in cash as described more fully below. The remaining debenture, totaling $743,765, will mature in May 2011.
 
 Lynne Martin Settlement
 
 We entered into a Settlement Agreement with Lynne Martin regarding a debenture payable to her in the principal amount of $1,097,367.  Ms. Martin is the spouse of Melvin Martin, who was a director of ours until he resigned on July 28, 2005.  We and Ms. Martin agreed that Ms. Martin would accept as full payment for the debenture the amount of $109,781 in cash which is to be paid by us in four quarterly payments of $27,445, with the first payment due on December 15, 2010 and the three remaining payments due on March 15, 2011, June 15, 2011, and September 15, 2011.  We made the first payment on December 15, 2010 and the second payment of $27,470.59 on March 18, 2011.
 
 The Harvey Settlement
 
 We entered into a Settlement Agreement with Marlowe and Judy Harvey and Argus Resources, Inc. regarding the following three debentures:
 
 1.   Judy Harvey                     $ 2,038,840
 2.   Judy Harvey                     $    949,417
 3.   Argus Resources, Inc.     $    220,723
 
 Marlowe Harvey was the President and a director of ours until he resigned as President in 2000 and as a director in November 2003.  Mr. Harvey is the President of Argus Resources, Inc.  Judy Harvey is Mr. Harvey’s spouse. After the closing of this transaction, Mr. Harvey beneficially holds more than 5% percent of our outstanding shares.
 
 We and Judy Harvey agreed that Ms. Harvey would accept as full payment for her two debentures the total amount of $149,368 in cash and a total of 8,890,638 restricted shares of our common stock.  The cash was paid on December 15, 2010 and the shares were issued on December 20, 2010 to an escrow agent to hold the shares until the Cease Trade Order in British Columbia has been revoked.





We and Argus Resources agreed that Argus Resources would accept as full payment for its debenture 659,730 restricted shares of our common stock.  The shares were issued on December 20, 2010.





(b) This debenture is owed to Thomas S. Hendricks, an officer, director and shareholder of the Company.  The debenture is non interest-bearing, convertible into common stock at $0.85 per share in $50,000 annual increments, contains no restrictive covenants and matured on July 8, 2008.  We repaid $25,000 of this debenture in 2007,








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$119,500 in 2009, and $60,000 in 2010.  At May 31, 2010, the balance of the unpaid debenture was $45,500.  This debenture has subsequently been paid in full.





Debt





The Duffy Notes





On August 1, 2005, we issued a note payable (the “Duffy Note”) to a group of shareholders (the “Duffy Group”) The Duffy Group (Duane Duffy, Glenn Duffy, Luke Garvey and James Ober) independent qualified investors and shareholders of Calais for $807,650, in exchange for $681,000 originally accounted for as Share Capital, and interest accrued from the date of each totaling $126,650.  The Duffy Note was secured by a trust deed on the Caribou Townsite and Mine.  The Duffy Note bore interest at 15.9% and was payable in two installments: the first due on October 31, 2005 for $166,000 and the remaining principal and interest due October 31, 2006.  In addition, in consideration for the financing of the note, the Duffy Group received warrants to purchase 1,000,000 shares of our common stock for $0.40 per share in August 2005.


Initially, in the event that any scheduled payments were not made, a penalty representing 5% of the payment amount was to be added to the principal amount of the note.  In the event that the note holders provided written notification of default and the default was not cured within 10 days, the default interest rate would increase to 24% per annum on the entire principal amount and accrued interest.
  On October 31, 2005, we defaulted on our obligation to pay $166,000. Under the terms of the note, a late fee penalty of 5%, or $8,300, was added to the principal amount of the note.
  On December 15, 2005, we made a payment on the note of $169,070.
 
 On October 31, 2006, we defaulted on the payment due at the note’s maturity and, under the terms of the note, a late fee penalty of 5%, or $39,129, was added to the principal amount of the note.  In addition, the default rate under the terms of the note was increased to 24% per annum.
 
 The note was restructured on March 26, 2007.  The principal balance was set at $910,677, consisting of the original balance of the note, plus late fees and interest.  The payment terms specified an initial payment of $200,000 and payments of $75,000 per month until the note was repaid in full.  The interest rate was reset from the default rate of 24% to 15.9%.  We issued 500,000 shares of stock to the Duffy Group and extended the exercise date on warrants owned by the Duffy Group to purchase 875,000 shares of common stock from April 2008 to March 2012.
  We defaulted on the $75,000 payment due April 15, 2007.  The note was restructured again on December 31, 2007.  The principal balance of the note was set at $900,537, consisting of the principal balance established at March 26, 2007, plus additional late fees and interest.  The maturity date was extended to April 1, 2008.    Warrants to purchase 1,000,000 shares of stock at $0.40 per share, expiring April 14, 2011 and 875,000 shares of stock at $0.25, expiring March 15, 2012, owned by the Duffy Group, were modified, with the exercise price set at $0.25 and the expiration date extended to January 1, 2020.
  The note was restructured again on March 31, 2008.  The principal balance of the note was set at $948,397 consisting of the principal balance established at December 31, 2007 and interest.  The payment terms specified an initial payment of $100,000 and five monthly payments of $50,000 each beginning May 1, 2008.  The remaining principal and interest are due October 1, 2008.  We issued to the Duffy Group 1,185,496 shares of Common stock at $0.13 per share and warrants to purchase 1,185,496 shares of Common stock at $0.12 per share, expiring April 1, 2013.


In May 2008, as a result of the failure to pay scheduled interest payment in accordance with the March 31, 2008 loan modification, the note holders were issued 1,021,000 shares of Common stock at $0.15 per share and warrants to purchase 1,021,000 shares of common stock at $0.12 per share expiring in August 2013.





Page 45


In May 2009, the note holders were issued 1,249,900 shares of Common stock at $0.14 per share and warrants to purchase 1,249,900 shares of common stock at $0.12 per share expiring in May 2020 in connection with the execution of a trust deed modification.





As a result of these transactions, the Duffy Group became holders of a significant percentage of the Company’s outstanding common stock.  See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”





Debt Restructure





On February 1, 2010, we, Elkhorn Goldfields, LLC (“Elkhorn”), and Brigus Gold Corporation (“Brigus”) entered into a purchase agreement which provided for the assignment to Brigus of principal, accrued interest and penalties owed to MFPI Partners, LLC (“MFPI”) in connection with the mortgage note of $7,755,622, principal and accrued interest in the amount of $386,653 owed in connection with the Congo Chief Note, and $1,458,582 owed to MFPI. On February 19, 2010, the Duffy Group entered into an agreement with Brigus and us whereby the Duffy group received 10,306,790 shares of Calais common stock in exchange for the forgiveness of $453,347 in our debt to Duffy, the assignment to Brigus of the remaining balance of $653,021 owed by us, and the assignment by the Duffy Group of its right to title and interest to the “Caribou” loan property to Brigus. The terms of the agreement allowed for additional consideration to be conveyed to the Duffy group from a third party, Elkhorn, in consideration for the consummation of the transaction.


Immediately following the debt restructure, we owed $10,253,878 in principal accruing interest at 8% per annum to Brigus. The debt initially matured on February 1, 2011. On January 15, 2010, we received forbearance under the terms of this agreement effectively extending the maturity date of the debt through June 30, 2011. As of May 31, 2010, interest of $269,691 had been accrued on this note.
 
 At the time of the Brigus transaction, our current R. David Russell, our current Chairman, CEO and a director of the Company, was President and CEO of Apollo Gold Group, a predecessor of Brigus.  Mr. Russell also beneficially owns approximately 3.9% of our outstanding common stock. See “Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”
 
 Shareholder Note
 
 In connection with an Exploration Agreement dated December 31, 2008 (the “Exploration Agreement”) between the Company and DRDMJ, LLC, a company owned and controlled by R. David Russell, on December 20, 2008, the Company issued a one-year note payable to R. David Russell, who at the time was a shareholder of the Company and is currently the Company’s Chief Executive Officer and Chairman of the Board, in the amount of $405,410 in consideration for cash of approximately $300,000. The cash was to be used for development at the Cross Gold mine with ore processing at the Gold Hill mine.  In August 2009 the Company defaulted on it’s agreement with Mr. Russell and issued 5,067,650 shares of our common stock  valued at $861,501 as consideration for our default on the Exploration Agreement and recorded losses of $456,905 in connection with this.
 
 Stock
 
 On numerous occasions, we sold common stock to then-related parties, including our current Chief Executive Officer, R. David Russell.
 
 On July 1, 2005 we sold 750,000 common share units to David R. Russell for proceeds of $150,000.  Each unit consisted of one share of our common stock and one warrant to purchase shares of our common stock at $0.25 per share. The warrants expired in June 2010.
 
 On November 30, 2007 we sold 6,450,000 common share units to David R. Russell and parties related to him to him for proceeds of $516,000.  Each unit consisted of one share of our common stock and one warrant to purchase shares of our common stock at $0.12 per share.  The warrants expire in November 2012.


Page 46




On February 8, 2008 and again on March 24, 2008 we sold a total of 1,375,000 common share units to R. David Russell and parties related to him for proceeds of $110,000.  Each unit consisted of one share of our common stock and one warrant to purchase shares of our common stock at $0.12 per share. The warrants expire in February and March 2013.





On April 26, 2010 we sold 100,000 shares of our common stock to David Russell for proceeds of $5,000.




ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.




Principal Accountants Fees
 
 As disclosed in “Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure,” the Board has appointed StarkSchenkein, LLP (“StarkSchenkein”) as our independent registered public accounting firm to examine our financial statements for the fiscal years ending May 31, 2004, through May 31, 2011 and to perform other appropriate accounting services.  StarkSchenkein has served as our independent registered public accounting firm since March 10, 2011, and has no relationship with us other than that arising from their employment as our independent registered public accounting firm.
 
 Fees paid to StarkSchenkein with respect to our financial statements covering the fiscal years ended May 31, 2005 through 2010 are as follows:
 
 Fiscal Year
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees2005-2007
$27,382
-
-
-2008
$12,206
-
-
-2009
$14,706
-
-
-2010
$22,206
 
 To the best of our knowledge, fifty percent or less of the hours expended on the audit of our financial statements by StarkSchenkein were attributed to work performed by persons other than StarkSchenkein’s full-time permanent employees.
 
 In addition to the fees shown in the above table, fees paid to our auditors during the fiscal years ended May 31, 2005 through May 31, 2010 are as follows:
 
 Fiscal Year
Audit Firm
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees2005
KPMG LLP
$52,362
-
-
-2006
KPMG LLP
$50,690
-
-
-2007
Hein & Associates LLP
$5,000
-
-
-2008
Hein & Associates LLP
$190,000
-
-
-2009
Hein & Associates LLP
-
-
-
-2010
Hein & Associates LLP
-
-
-
-
 
 Pre-Approval Policies and Procedures
 
 Our board of directors does not currently have an audit committee and has not adopted a formal pre-approval policy. Therefore, our full board of directors is functioning as the Company’s audit committee. The Board has considered whether the provision of the non-audit services described above by an external auditor is compatible with maintaining the auditor’s independence, and determined that these non-audit services are compatible with the required independence. The Board pre-approves all services to be provided to our company by the independent auditors.  This includes the pre-approval of (i) all audit services, and (ii) any significant (i.e., not de minimis) non-audit services.  Before granting any approval, the Board gives due consideration to whether approval of the proposed service will have a detrimental impact on the auditor’s independence.  All services provided by and fees paid to StarkSchenkein with respect to our financial statements covering the fiscal years ended May 31, 2005 through May 31, 2010 were pre-approved by the Board.
 
 Page 47
 Report of Board of Directors
  The Board reviewed and discussed the audited financial statements with management and discussed with the independent auditors the matters required to be discussed by the statement on Auditing Standards No. 61, as amended.  The Board received the written disclosures and the letter from the independent accountant required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Board concerning independence, and has discussed with the independent accountant the independent accountant’s independence.  Based on the review and discussions referred to above, the Board approved the inclusion of the audited financial statements in our annual report on Form 10-K.
   Page 48


SIGNATURES






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




Calais Resources Inc.Date:  August 11, 2011
By:
/s/ David K. YoungDavid K. Young, President






Page 49


EXHIBIT INDEX
 Exhibit

Number

Title3.01

Memorandum forming Millennium Resources, Inc. dated December 22, 1986 (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).3.02

Articles of Incorporation (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).3.03

Special Resolution filed March 19, 1992 (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).10.01

Loan agreement dated August 1, 2003 by and between Calais Resources Inc., Calais Resources Colorado, Inc., Aardvark Agencies, Inc., and Broadway Mortgage Corporation (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).10.02

Option Agreement, dated November 29, 2005, by and between the Broadway Group, Calim Private Equity, LLC and Mendel Blumenfeld, LLP related to the purchase and sale of the Broadway Loan Agreement dated August 1, 2003(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.03

Allonge to Promissory Note dated December 15, 2005, related to the increase in principal amount payable under Loan Agreement with MFPI Partners, LLC.(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.04

Second Allonge to Promissory Note dated December 15, 2006, related to the increase in principal amount payable under Loan Agreement with MFPI Partners, LLC.(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.05

Letter Agreement with Calim Private Equity, LLC dated September 22, 2005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). 10.06

Letter Agreement with MFPI Partners, LLC dated July 27, 2006(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.07

Mutual Release effective July 18, 2000, between Marlowe Harvey, Aardvark Agencies, Inc., Calais Resources Colorado, Inc., Calais Resources Inc., on the one part and Thomas S. Hendricks (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).10.08

Form of convertible debentures (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).
 10.09

Purchase Option Agreement dated February 28, 2003 by and between Calais Resources Inc. and Golden Cycle of Panama, Inc. and Manama Mining of Golden Cycle, Inc. (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).10.10

Grant of Royalty Interest for Fixed Term, Modification of Prior Royalty Grants and Assignment of Royalty Buyout Rights Under Prior Grants dated March 1998 by Calais Resources Colorado Inc. in favor of Thomas S. Hendricks, Marjorie J. Hendricks, and John R. Henderson (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).10.11

Right to Redeem and Re-Acquire Agreement dated March 26, 1999 between Aardvark Agencies, Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).10.12

Right to Redeem and Re-Acquire Agreement dated July 20, 2000 between Aardvark Agencies, Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).  Page 50
  Exhibit

Number

Title
 10.13

Grant of Royalty Interest for Fixed Term by Calais Resources Colorado, Inc. and Aardvark Agencies, Inc. dated July 2000 by Calais Resources Colorado, Inc. in favor of Thomas S. Hendricks, Marjorie J. Hendricks and John R. Henderson (Incorporated herein by reference from exhibits filed with the original filing on Form 20-F for the year ended May 31, 2003, as amended).10.14

Settlement Agreement and General Mutual Release between Calais Resources Inc., Marlowe Harvey, and others, dated March 8, 2004. (Incorporated herein by reference from exhibits filed with quarterly report on Form 10-QSB for the quarter ended February 29, 2004).10.15

Purchase Option Agreement between Calais Resources Inc. and Golden Cycle of Panama, Inc. and Panama Mining of Golden Cycle, Inc., dated February 28, 2003. (Incorporated herein by reference from exhibits filed with quarterly report on Form 10-QSB for the quarter ended February 29, 2004).10.16

Extension of Purchase Option Agreement and Partial Acknowledgement of Performance by and between Calais Resources Inc., Golden Cycle of Panama, Inc. and Panama Mining of Golden Cycle, Inc. dated January 31, 2004  (Incorporated herein by reference from exhibits filed with quarterly report on Form 10-QSB for the quarter ended February 29, 2004).10.17

Further Extension and Restatement of Purchase Option Agreement between Calais Resources Inc., Panama Mining of Golden Cycle and Golden Cycle of Panama Mining dated September 15, 2005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.18

Note payable between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated August 1, 2005 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). 10.19

Grace Period Letter between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated March 13, 2007 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.20

Note and Trust Deed Modification Agreement between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated December 21, 2007 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.21

Note and Trust Deed Modification Agreement between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated June 12, 2008 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).
 10.22

Note and Trust Deed Modification Agreement of August 2008 between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated August 22, 2008 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009).10.23

Note and Trust Deed Modification Agreement of January 2009 between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated January 22, 2009 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009).10.24

Note and Trust Deed Modification Agreement of May 2009 between Calais Resources Inc., Calais Resources, Colorado, Inc., Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey dated May 26, 2009 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009).10.25

Promissory Note between MFPI Partners, LLC and Calais Resources Inc. for purchase of Congo Chief, dated December 16, 2005 (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).   Page 51
 Exhibit

Number

Title
 10.26

Vacant Land Contract to Buy and Sell Real Estate dated September 21, 2005 related to Congo Chief(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.27

Amendment and Extension Agreement by and between Calais Resources Inc. and the Estate of John W. Snyder, dated November 10, 2005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.28*

Deed of Trust from Calais Resources Inc. to MFPI Partners, LLC dated December 16, 2005.10.29

Endorsement to Promissory Note transferring rights to Apollo Gold, Inc. from Duane A. Duffy, Glenn E. Duffy, James Ober, and Luke Garvey (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.30

Assignment of Loan Property by Duane A. Duffy, Glenn E. Duffy, Luke Garvey and James Ober, and Calais Resources Inc., Calais Resources Colorado, Inc. f/b/o Apollo gold, Inc. dated March 12, 2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.31

Purchase Agreement by and among Apollo Gold Corporation, Calais Resources Colorado, Inc. Calais Resources Inc. and Duane A. Duffy, Glenn, E. Duffy, Luke Garvey and James Ober dated March 12, 2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010). 10.32

Promissory Note between Calais Resources Inc. and Walsh Environmental Scientists and Engineers, LLC dated March 23, 2009(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.33

Stock Pledge Agreement by and between Walsh Environmental Scientists and Engineers, LLC and Calais Resources Inc. dated March 23, 2009(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.34

Agreement by Calais Resources Colorado Inc. to Purchase Perpetual Independent Royalty Interest from Tusco, Incorporated dated June 1, 1988(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.35

Purchase Documents related to acquisition of land by Calais Resources Colorado, Inc. from John Spencer Folawn (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.36

Bill of Sale related to Stringtown Mill(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).
 10.37

Purchase Agreement by and among Elkhorn Goldfields, LLC, Calais Resources Inc., Calais Resources Colorado, Inc. and Apollo Gold, Inc. made as of February 1, 2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.38

Forbearance Agreement dated as of January 15, 2011 by and among Brigus Gold Corp., Brigus Gold, Inc., Calais Resources Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009).10.39

Exploration Agreement dated as of December 31, 2008 between Calais Resources Colorado, Inc. and DRDMJ, LLC.(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.40

Letter re: Payment of Promissory Note dated August 20, 2009 between Calais Resources Colorado, Inc. and R. David Russell(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).   Page 52
  Exhibit

Number

Title
 10.41

Settlement Agreement for Certain Debentures dated December 10, 2010 by and among Calais Resources Inc., Marlowe and Judy Harvey and Argus Resources Inc(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.50#

Employment Agreement with Thomas S. Hendricks, dated July 12, 2006(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.51#

Employment Agreement with David K. Young, dated July 5, 2006(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.52#

Settlement and Release Agreement by and among Calais Resources Inc., Thomas S. Hendricks, and Matthew C. Witt dated March 31, 2005(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.53#

Settlement Agreement by and between Calais Resources Inc. and Matt Witt dated October 28, 2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.54#

Settlement Agreement by and between Calais Resources Inc. and David Young dated October 27, 2010(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).10.55

Promissory Note dated February 1, 2010 between Calais Resources Inc., Calais Resources Colorado, Inc. and Apollo Gold Corporation (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009). 10.56

Extension Agreement dated as of June 8, 2011 by and among Brigus Gold Corp., Brigus Gold, Inc., Calais Resources Inc. and Calais Resources Colorado, Inc. (Incorporated herein by reference from exhibits filed with the Company’s Form 8-K dated June 8, 2011 and filed June 10, 2011).14

Code of Business Conduct and Ethics  (Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2009).21

List of subsidiaries(Incorporated herein by reference from exhibits filed with the Company’s Form 10-K for the year ended May 31, 2010).31+

Certification of Principal Executive Officer and Principal Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act.32+

Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act.
 99.1

Caribou Property Claims List99.2

Manhattan Property Claims List+ - Filed herewith.# - Compensatory arrangement.* - To be filed by amendment.