| NEVADA                                   |   | 87-0577390                    |
|-----------------------------------------------|--------|-------------------------------|
| (State      of incorporation or organization) |   | (IRS Identification      No.) |

| Large Accelerate      Filer o |                                               | Accelerated Filer      o         |
|-------------------------------|----------------------------------------------------|----------------------------------|
|                          |                                               |                             |
| Non-Accelerated      Filer o  | (Do not check if a      smaller reporting company) | Smaller Reporting      Company x |

----

|                                                                                    |   | June      30, 2010 |        |   | December      31, 2009 |   |
|-----------------------------------------------------------------------------------------|--------|--------------------|-------------|--------|------------------------|--------|
|                                                                                    |   | (Unaudited)        |        |   |                   |   |
| Assets                                                                                  |   |               |        |   |                   |   |
| Current                                                                                 |   |               |        |   |                   |   |
|   Cash      and cash equivalents                                              |   | $                  | 1,063,637   |   |                   | $      | 1,343,994 |   |
|   Prepaid      expenses                                                       |   |               | 81,555      |   |                   |   | 57,546 |   |
|   Receivables                                                                 |   |               | 24,391      |   |                   |   | 50,443 |   |
| Total      Current Assets                                                               |   |               | 1,169,583   |   |                   |   | 1,451,983 |   |
| Property and Equipment      (Note      2)                                               |   |               | 61,588      |   |                   |   | 73,927 |   |
| Mineral      Properties                                                                 |   |               | 651,950     |   |                   |   | 651,950 |   |
|                                                                                    |   |               |        |   |                   |   |   |   |
| Total      Assets                                                                       |   | $                  | 1,883,121   |   |                   | $      | 2,177,860 |   |
|                                                                                    |   |               |        |   |                   |   |   |   |
| Liabilities                                                                             |   |               |        |   |                   |   |   |   |
| Current                                                                                 |   |               |        |   |                   |   |   |   |
|   Accounts      payable and accrued liabilities                               |   | $                  | 19,522      |   |                   | $      | 188,534 |   |
| Total      Current Liabilities                                                          |   |               | 19,522      |   |                   |   | 188,534 |   |
| Other Liabilities – Warrants      (Note      3(d))                                |   |               | 1,731,875   |   |                   |   | 2,956,725 |   |
|                                                                                    |   |               |        |   |                   |   |   |   |
| Total      Liabilities                                                                  |   |               | 1,751,397   |   |                   |   | 3,145,259 |   |
|                                                                                    |   |               |        |   |                   |   |   |   |
| Stockholders’      Equity (Deficit)                                               |   |               |        |   |                   |   |   |   |
| Preferred      Stock and Paid-in Capital in Excess                                      |   |               |        |   |                   |   |   |   |
| of $0.001 Par Value(Note      3(a))                                                     |   |               |        |   |                   |   |   |   |
| 20,000,000  Shares      authorized                                            |   |               |        |   |                   |   |   |   |
| 625,000      (December 31, 2009 – 625,000) shares issued andoutstanding           |   |               | 500,000     |   |                   |   | 500,000 |   |
|                                                                                    |   |               |        |   |                   |   |   |   |
| Common      Stock and Paid-in Capital in Excess                                         |   |               |        |   |                   |   |   |   |
| of $0.001 Par Value      (Note      3(a))                                               |   |               |        |   |                   |   |   |   |
| 100,000,000  Shares      authorized                                           |   |               |        |   |                   |   |   |   |
| 37,120,972      (December 31, 2009 – 36,400,972) shares issued and    outstanding |   |               | 22,579,776  |   |                   |   | 21,660,100 |   |
| Obligation to Issue Shares      (Note      3(e))                                        |   |               | 660,000     |   |                   |   | - |   |
| Deficit      Accumulated During the Exploration Stage                                   |   |               | (23,608,052 | )      |                   |   | (23,127,499 | ) |
|                                                                                    |   |               |        |   |                   |   |   |   |
| Total      Stockholders’ Equity (Deficit)                                         |   |               | 131,724     |   |                   |   | (967,399 | ) |
|                                                                                    |   |               |        |   |                   |   |   |   |
| Total      Liabilities and Stockholders’ Equity (Deficit)                         |   | $                  | 1,883,121   |   |                   | $      | 2,177,860 |   |

----

|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   | Cumulative      From Inception |       |
|--------------------------------------------------------------------|--------|-------------------------------------|------------|--------|-----------------------------------------|--------|------------|--------------------------------|--------|--------|-------------|--------|--------|--------------------------------|------------|
|                                                               |   | Three      Months EndedJune      30 |       |   | Six      Months Ended      June      30 |   |       | November 13, 2001      Through |   |
|                                                               |   | 2010                                |       |   | 2009                                    |   |       | 2010                           |   |   | 2009        |   |   | June 30, 2010                  |       |
|                                                               |   | (Unaudited)                         |       |   | (Unaudited)                             |   |       | (Unaudited)                    |   |   | (Unaudited) |   |   | (Unaudited)                    |       |
| Expenses                                                           |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
| Advertising      and promotion                                     |   | $                                   | 27,253     |   |                                    | $      | 2,555      |                           |   | $      | 31,840      |   |   | $                              | 17,651     |   |   | $ | 258,504 |   |
| Amortization                                                       |   |                                | 6,907      |   |                                    |   | 5,173      |                           |   |   | 13,803      |   |   |                           | 11,561     |   |   |   | 154,908 |   |
| Bank      charges and interest                                     |   |                                | 2,743      |   |                                    |   | 617        |                           |   |   | 5,211       |   |   |                           | 1,701      |   |   |   | 32,779 |   |
| Consulting      fees (Note      3(c))                              |   |                                | 50,965     |   |                                    |   | 79,719     |                           |   |   | 153,794     |   |   |                           | 118,210    |   |   |   | 2,135,579 |   |
| Consulting      fees – directors and officers (Note    3(c)) |   |                                | 86,430     |   |                                    |   | 310,945    |                           |   |   | 607,560     |   |   |                           | 563,980    |   |   |   | 4,667,379 |   |
| Engineering      consulting                                        |   |                                | -          |   |                                    |   | 176,228    |                           |   |   | -           |   |   |                           | 176,228    |   |   |   | 694,836 |   |
| Exploration                                                        |   |                                | 60,796     |   |                                    |   | 82,335     |                           |   |   | 136,084     |   |   |                           | 215,963    |   |   |   | 4,656,608 |   |
| Filing      fees                                                   |   |                                | 17,344     |   |                                    |   | 2,591      |                           |   |   | 22,236      |   |   |                           | 3,988      |   |   |   | 75,113 |   |
| Insurance                                                          |   |                                | 12,472     |   |                                    |   | 18,030     |                           |   |   | 22,949      |   |   |                           | 26,718     |   |   |   | 269,171 |   |
| Investor      relations, net (Note      3(c))                      |   |                                | -          |   |                                    |   | 694,875    |                           |   |   | -           |   |   |                           | 694,875    |   |   |   | 769,989 |   |
| Licenses,      taxes and filing fees, net                          |   |                                | (4,726     | )      |                                    |   | 8,619      |                           |   |   | (7,141      | )      |   |                           | 18,206     |   |   |   | 372,806 |   |
| Management      fees (Note      3(c))                              |   |                                | 131,696    |   |                                    |   | 34,800     |                           |   |   | 461,516     |   |   |                           | 69,600     |   |   |   | 1,997,106 |   |
| Office      (Note      3(c))                                       |   |                                | 6,367      |   |                                    |   | 3,900      |                           |   |   | 54,585      |   |   |                           | 8,533      |   |   |   | 241,120 |   |
| Professional      fees                                             |   |                                | 60,174     |   |                                    |   | 40,164     |                           |   |   | 85,145      |   |   |                           | 64,891     |   |   |   | 1,630,059 |   |
| Rent                                                               |   |                                | 19,719     |   |                                    |   | 18,102     |                           |   |   | 40,435      |   |   |                           | 34,681     |   |   |   | 431,532 |   |
| Telephone                                                          |   |                                | 3,524      |   |                                    |   | 2,876      |                           |   |   | 6,938       |   |   |                           | 5,886      |   |   |   | 96,744 |   |
| Transfer      agent fees                                           |   |                                | 1,007      |   |                                    |   | 825        |                           |   |   | 1,928       |   |   |                           | 1,465      |   |   |   | 16,446 |   |
| Travel      and vehicle                                            |   |                                | 24,135     |   |                                    |   | 17,929     |                           |   |   | 47,827      |   |   |                           | 54,555     |   |   |   | 1,051,456 |   |
|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
| Loss before other      items                                       |   |                                | (506,806   | )      |                                    |   | (1,500,283 | )                              |   |   | (1,684,710  | )      |   |                           | (2,088,692 | ) |   |   | (19,552,135 | ) |
|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
| Gain on sale of marketable      securities                         |   |                                | -          |   |                                    |   | -          |                           |   |   | -           |   |   |                           | -          |   |   |   | 87,217 |   |
| Loss on sale of    assets                                          |   |                                | -          |   |                                    |   | -          |                           |   |   | -           |   |   |                           | (7,465     | ) |   |   | (19,176 | ) |
| Adjustment to market for      marketable securities                |   |                                | -          |   |                                    |   | -          |                           |   |   | -           |   |   |                           | -          |   |   |   | (67,922 | ) |
| Foreign exchange gain      (loss)                                  |   |                                | (17,493    | )      |                                    |   | 11,170     |                           |   |   | (26,682     | )      |   |                           | 18,123     |   |   |   | (249,782 | ) |
| Dividend income                                                    |   |                                | -          |   |                                    |   | -          |                           |   |   | -           |   |   |                           | -          |   |   |   | 4,597 |   |
| Interest income                                                    |   |                                | 2,975      |   |                                    |   | 638        |                           |   |   | 5,989       |   |   |                           | 1,012      |   |   |   | 353,132 |   |
| Change in fair value of      warrants (Note      3(d))             |   |                                | 254,150    |   |                                    |   | (1,994,150 | )                              |   |   | 1,224,850   |   |   |                           | (1,901,462 | ) |   |   | (1,930,874 | ) |
| Financing agreement      penalty                                   |   |                                | -          |   |                                    |   | -          |                           |   |   | -           |   |   |                           | -          |   |   |   | (330,000 | ) |
|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
| Net loss and comprehensive loss      for the period                |   |                                | (267,174   | )      |                                    |   | (3,482,625 | )                              |   |   | (480,553    | )      |   |                           | (3,978,484 | ) |   |   | (21,704,943 | ) |
|   Preferred stock      dividends                         |   |                                | -          |   |                                    |   | -          |                           |   |   | -           |   |   |                           | -          |   |   |   | (1,537,500 | ) |
|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
| Net Loss Available for      Distribution                           |   | $                                   | (267,174   | )      |                                    | $      | (3,482,625 | )                              |   | $      | (480,553    | )      |   | $                              | (3,978,484 | ) |   | $ | (23,242,443 | ) |
|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
| Basic and Diluted Loss Per      Common Share (Note 4)         |   | $                                   | (0.007     | )      |                                    | $      | (0.10      | )                              |   | $      | (0.01       | )      |   | $                              | (0.12      | ) |   |   | - |   |
|                                                               |   |                                |       |   |                                    |   |       |                           |   |   |        |   |   |                           |       |   |   |   |   |   |
| Weighted      Average Number of Common Shares      Outstanding     |   |                                | 37,120,972 |   |                                    |   | 33,626,262 |                           |   |   | 36,937,989  |   |   |                           | 32,971,999 |   |   |   | - |   |

----

|                                                     |   |        Six      Months Ended      June 30, |       |   | Cumulative      Periodfrom      Inception(November      13, 2001)      Through June      30, |   |
|----------------------------------------------------------|--------|-------------------------------------------------|------------|--------|----------------------------------------------------------------------------------------------|--------|
|                                                     |   | 2010                                            |       |   | 2009                                                                                         |   |   | 2010 |   |
|                                                     |   | (Unaudited)                                     |       |   | (Unaudited)                                                                                  |   |   | (Unaudited) |   |
| Operating      Activities                                |   |                                            |       |   |                                                                                         |   |   |   |   |
|   Net      loss for period                     |   | $                                               | (480,553   | )      |                                                                                         | $      | (3,978,484 | ) |   | $ | (21,704,943 | ) |
|   Items      not involving cash                |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Amortization                                             |   |                                            | 13,803     |   |                                                                                         |   | 11,561 |   |   |   | 143,197 |   |
| Stock-based      compensation                            |   |                                            | 91,676     |   |                                                                                         |   | 1,011,585 |   |   |   | 3,279,887 |   |
| Loss on sale of      assets                              |   |                                            | -          |   |                                                                                         |   | 7,465 |   |   |   | 19,176 |   |
| Fair value of common stock      issued for services      |   |                                            | 828,000    |   |                                                                                         |   | 164,000 |   |   |   | 3,345,630 |   |
| Change in fair value of      warrants                    |   |                                            | (1,224,850 | )      |                                                                                         |   | 1,901,462 |   |   |   | 1,930,874 |   |
| Financing agreement      penalty                         |   |                                            | -          |   |                                                                                         |   | - |   |   |   | 330,000 |   |
| Adjustment to market on      marketable                  |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
|   securities                                   |   |                                            | -          |   |                                                                                         |   | - |   |   |   | 67,922 |   |
| Gain on sale of marketable      securities               |   |                                            | -          |   |                                                                                         |   | - |   |   |   | (87,217 | ) |
| Non-cash resource property      expenditures             |   |                                            | -          |   |                                                                                         |   | - |   |   |   | 600,000 |   |
|   Changes      in non-cash working capital     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Prepaidexpenses                                          |   |                                            | (24,009    | )      |                                                                                         |   | (7,777 | ) |   |   | 164,525 |   |
| Receivables                                              |   |                                            | 26,052     |   |                                                                                         |   | (2,530 | ) |   |   | (24,391 | ) |
| Marketable      securities                               |   |                                            | -          |   |                                                                                         |   | - |   |   |   | 19,295 |   |
| Accounts payable and accrued      liabilities            |   |                                            | (169,012   | )      |                                                                                         |   | 1,708 |   |   |   | (226,558 | ) |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Cash      Used in Operating Activities                   |   |                                            | (938,893   | )      |                                                                                         |   | (891,010 | ) |   |   | (12,142,603 | ) |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Investing      Activities                                |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
|   Addition      to property and equipment, net |   |                                            | (1,464     | )      |                                                                                         |   | 2,477 |   |   |   | (223,961 | ) |
|   Addition      to mineral property            |   |                                            | -          |   |                                                                                         |   | - |   |   |   | (651,950 | ) |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Cash      Provided by (Used in) Investing Activities     |   |                                            | (1,464     | )      |                                                                                         |   | 2,477 |   |   |   | (875,911 | ) |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Financing      Activities                                |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
|   Repayment      of long-term debt             |   |                                            | -          |   |                                                                                         |   | - |   |   |   | (100,000 | ) |
|   Issuance      of preferred stock for cash    |   |                                            | -          |   |                                                                                         |   | - |   |   |   | 5,000,000 |   |
|   Issuance      of common stock for cash       |   |                                            | -          |   |                                                                                         |   | 999,800 |   |   |   | 8,290,980 |   |
|   Stock      subscriptions received            |   |                                            | 660,000    |   |                                                                                         |   | - |   |   |   | 780,000 |   |
|   Stock      subscriptions receivable          |   |                                            | -          |   |                                                                                         |   | - |   |   |   | 111,000 |   |
|   Working      capital acquired on acquisition |   |                                            | -          |   |                                                                                         |   | - |   |   |   | 171 |   |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Cash      Provided by Financing Activities               |   |                                            | 660,000    |   |                                                                                         |   | 999,800 |   |   |   | 14,082,151 |   |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Inflow      (Outflow) of Cash and Cash Equivalents       |   |                                            | (280,357   | )      |                                                                                         |   | 111,267 |   |   |   | 1,063,637 |   |
| Cash      and Cash Equivalents,                          |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
|   Beginning      of Period                     |   |                                            | 1,343,994  |   |                                                                                         |   | 1,475,460 |   |   |   | - |   |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Cash      and Cash Equivalents, End of Period            |   | $                                               | 1,063,637  |   |                                                                                         | $      | 1,586,727 |   |   | $ | 1,063,637 |   |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Supplemental      Cash Flow Information                  |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
|   Income      tax paid                         |   | $                                               | -          |   |                                                                                         | $      | - |   |   | $ | - |   |
|   Interest      paid                           |   | $                                               | -          |   |                                                                                         | $      | - |   |   | $ | - |   |
|                                                     |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
| Shares      Issued for                                   |   |                                            |       |   |                                                                                         |   |   |   |   |   |   |   |
|   Settlement      of debt                      |   | $                                               | -          |   |                                                                                         | $      | - |   |   | $ | 830,000 |   |
|   Services                                     |   | $                                               | 828,000    |   |                                                                                         | $      | 164,000 |   |   | $ | 2,785,630 |   |

----

|                                                                          |   | Shares      ofCommon      Stock |       |   | Common      Stockand      Paid-InCapital      inExcess      ofPar      Value |   |       | Shares      ofPreferred      Stock |   |   | Preferred      Stockand      Paid-inCapital      inExcess      ofPar      Value |   |   | Share      Subscriptions Received/ Obligation to Issue Shares |    |   | AccumulatedDeficit |   |    | TotalStockholders’Equity      (Deficit) |   |
|-------------------------------------------------------------------------------|--------|---------------------------------|------------|--------|------------------------------------------------------------------------------|--------|------------|------------------------------------|--------|--------|---------------------------------------------------------------------------------|--------|--------|---------------------------------------------------------------|---------|--------|--------------------|--------|---------|-----------------------------------------------|--------|
| Balance,      December 31, 2008                                               |   |                            | 32,004,042 |   |                                                                         | $      | 17,930,947 |                               |   |   | 625,000                                                                         |   |   | $                                                             | 500,000 |   |               | $      | -       |                                          |   | $ | (16,183,119 | ) |   | $ | 2,247,828 |   |
| Stock-based compensation (Note      3(c))                                     |   |                            | -          |   |                                                                         |   | 1,024,122  |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | - |   |   |   | 1,024,122 |   |
| Warrants exercised (Note3(d))                                                 |   |                            | 2,100,000  |   |                                                                         |   | 1,045,340  |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | - |   |   |   | 1,045,340 |   |
| Private placement (Note      3(b))                                            |   |                            | 1,496,930  |   |                                                                         |   | 900,691    |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | - |   |   |   | 900,691 |   |
| Reduction      in warrant liability on exercise of 2,000,000 warrants         |   |                            | -          |   |                                                                         |   | 199,000    |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | - |   |   |   | 199,000 |   |
| Common stock issued for services (Note      3(c))                             |   |                            | 800,000    |   |                                                                         |   | 560,000    |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | - |   |   |   | 560,000 |   |
| Cumulative effect of change in accounting principle      (Note      5)        |   |                            | -          |   |                                                                         |   | -          |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | (1,084,375 | ) |   |   | (1,084,375 | ) |
| Net      loss for the year                                                    |   |                            | -          |   |                                                                         |   | -          |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | (5,860,005 | ) |   |   | (5,860,005 | ) |
| Balance,      December 31, 2009                                               |   |                            | 36,400,972 |   |                                                                         |   | 21,660,100 |                               |   |   | 625,000                                                                         |   |   |                                                          | 500,000 |   |               |   | -       |                                          |   |   | (23,127,499 | ) |   |   | (967,399 | ) |
| Stock-based compensation (Note      3(c))                                     |   |                            | -          |   |                                                                         |   | 91,676     |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | - |   |   |   | 91,676 |   |
| Shares issued for services (Note      3(c))                                   |   |                            | 720,000    |   |                                                                         |   | 828,000    |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | - |   |   |   | 828,000 |   |
| Share subscriptions received/obligation to issue      shares (Note      3(e)) |   |                            | -          |   |                                                                         |   | -          |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | 660,000 |                                          |   |   | - |   |   |   | 660,000 |   |
| Net      loss for the period                                                  |   |                            | -          |   |                                                                         |   | -          |                               |   |   | -                                                                               |   |   |                                                          | -       |   |               |   | -       |                                          |   |   | (480,553 | ) |   |   | (480,553 | ) |
| Balance,      June 30, 2010 (Unaudited)                                       |   |                            | 37,120,972 |   |                                                                         | $      | 22,579,776 |                               |   |   | 625,000                                                                         |   |   | $                                                             | 500,000 |   |               | $      | 660,000 |                                          |   | $ | (23,608,052 | ) |   | $ | 131,724 |   |

----

|                    |   | June      30, 2010 |    |
|-------------------------|--------|--------------------|---------|
|                    |   | Cost               |    |   | AccumulatedAmortization |   |   | Net |   |
|                    |   | (Unaudited)        |    |
| Vehicles                |   | $                  | 54,154  |   |   | $ | 41,415 |   |   | $ | 12,739 |   |
| Office      furniture   |   |               | 18,287  |   |   |   | 5,232 |   |   |   | 13,055 |   |
| Office      equipment   |   |               | 11,311  |   |   |   | 5,203 |   |   |   | 6,108 |   |
| Computer      equipment |   |               | 8,197   |   |   |   | 6,008 |   |   |   | 2,189 |   |
| Computer      software  |   |               | 1,542   |   |   |   | 778 |   |   |   | 764 |   |
| Field      equipment    |   |               | 62,814  |   |   |   | 36,081 |   |   |   | 26,733 |   |
|                    |   | $                  | 156,305 |   |   | $ | 94,717 |   |   | $ | 61,588 |   |

|                    |   | December      31, 2009 |    |
|-------------------------|--------|------------------------|---------|
|                    |   |                   |    |   | Accumulated |   |   |   |   |
|                    |   | Cost                   |    |   | Amortization |   |   | Net |   |
| Vehicles                |   | $                      | 54,153  |   |   | $ | 38,031 |   |   | $ | 16,122 |   |
| Office      furniture   |   |                   | 17,712  |   |   |   | 3,189 |   |   |   | 14,523 |   |
| Office      equipment   |   |                   | 10,828  |   |   |   | 4,139 |   |   |   | 6,689 |   |
| Computer      equipment |   |                   | 8,197   |   |   |   | 5,192 |   |   |   | 3,005 |   |
| Computer      software  |   |                   | 1,142   |   |   |   | 664 |   |   |   | 478 |   |
| Field      equipment    |   |                   | 62,814  |   |   |   | 29,704 |   |   |   | 33,110 |   |
|                    |   | $                      | 154,846 |   |   | $ | 80,919 |   |   | $ | 73,927 |   |

----

| (a) | Common and Preferred      stock |
|-----|---------------------------------|

| (b) | Stock      options |
|-----|--------------------|

|                                   |   | June      30, 2010         |      |   | December      31, 2009             |   |
|----------------------------------------|--------|----------------------------|-----------|--------|------------------------------------|--------|
|                                   |   | Number      of      Shares |      |   | Weighted      AverageExercisePrice |   |   | Number      of      Shares |   |   | Weighted      AverageExercisePrice |   |
|                                   |   | (Unaudited)                |      |   |                               |   |   |   |   |
| Outstanding      - beginning of period |   |                       | 2,790,000 |   |                               | $      | 0.53 |   |   |   | 3,140,000 |   |   | $ | 0.57 |   |
| Expired                                |   |                       | -         |   |                               |   | - |   |   |   | (100,000 | ) |   | $ | 2.00 |   |
| Forfeited                              |   |                       | -         |   |                               |   | - |   |   |   | (250,000 | ) |   | $ | 0.50 |   |
|                                   |   |                       |      |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding      – end of period |   |                       | 2,790,000 |   |                               | $      | 0.53 |   |   |   | 2,790,000 |   |   | $ | 0.53 |   |
| Exercisable      – end of period |   |                       | 2,790,000 |   |                               | $      | 0.53 |   |   |   | 2,790,000 |   |   | $ | 0.53 |   |

----

| (b) | Stock options      (continued) |
|-----|--------------------------------|

|                  |   | Exercise |         |   | June      30, |   |      | December      31, |   |
|-----------------------|--------|----------|--------------|--------|---------------|--------|-----------|-------------------|--------|
| Expiry      Date      |   | Price    |         |   | 2010          |   |      | 2009              |   |
|                  |   |     |         |   | (Unaudited)   |   |      |              |   |
| January      31, 2011 |   | $        | 0.50         |   |          |   | 400,000   |              |   |   | 400,000 |   |
| May      31, 2011     |   | $        | 0.50         |   |          |   | 600,000   |              |   |   | 600,000 |   |
| August      1, 2011   |   | $        | 0.50         |   |          |   | 200,000   |              |   |   | 200,000 |   |
| August      31, 2011  |   | $        | 0.50         |   |          |   | 350,000   |              |   |   | 350,000 |   |
| August      31, 2012  |   | $        | 0.50         |   |          |   | 1,075,000 |              |   |   | 1,075,000 |   |
| June      23, 2013    |   | $        | 1.00         |   |          |   | 165,000   |              |   |   | 165,000 |   |
|                  |   |     |    |   |          |   | 2,790,000 |              |   |   | 2,790,000 |   |

|                |   |   | Options      Exercisable and Outstanding |   |
|---------------------|--------|--------|------------------------------------------|--------|
| Exercise      Price |   |   | Weighted      Average Exercise Price     |   |   | Number      of Shares under Option |   |   | Aggregate      Intrinsic Value |   |   | Weighted      Average Remaining Contractual Life in Years |   |
| $                   | 0.50   |   |                                     | $      | 0.50 |   |   |   | 2,625,000 |   |   | $ | 1,155,000 |   |   |   | 1.43 |   |
| $                   | 1.00   |   |                                     | $      | 1.00 |   |   |   | 165,000 |   |   |   | - |   |   |   | 2.98 |   |
|                |   |   |                                     | $      | 0.53 |   |   |   | 2,790,000 |   |   | $ | 1,155,000 |   |   |   | 1.52 |   |

| (c) | Stock-based      compensation |
|-----|-------------------------------|

----

| (c) | Stock-based compensation      (continued) |
|-----|-------------------------------------------|

|                                          |   | June      30, |    |   | December      31 |   |
|-----------------------------------------------|--------|---------------|---------|--------|------------------|--------|
|                                          |   | 2010          |    |   | 2009             |   |   | 2009 |   |   | 2008 |   |
|                                          |   | (Unaudited)   |    |   |             |   |   |   |   |
| Consulting      fees                          |   | $             | 62,100  |   |             | $      | 77,130 |   |   | $ | 77,130 |   |   | $ | - |   |
| Consulting      fees - directors and officers |   |          | 434,700 |   |             |   | 403,581 |   |   |   | 252,117 |   |   |   | 45,339 |   |
| Investor      relations                       |   |          | -       |   |             |   | 694,874 |   |   |   | 694,875 |   |   |   | - |   |
| Management      fees                          |   |          | 381,476 |   |             |   | - |   |   |   | - |   |   |   | - |   |
| Office                                        |   |          | 41,400  |   |             |   | - |   |   |   | - |   |   |   | - |   |
|                                          |   | $             | 919,676 |   |             | $      | 1,175,585 |   |   | $ | 1,024,122 |   |   | $ | 45,339 |   |

| (d) | Warrants |
|-----|----------|

|                                   |   | June      30, 2010     |       |   | December      31, 2009       |   |
|----------------------------------------|--------|------------------------|------------|--------|------------------------------|--------|
|                                   |   | Numberof      Warrants |       |   | WeightedAverageExercisePrice |   |   | Numberof      Warrants |   |   | WeightedAverageExercisePrice |   |
|                                   |   | (Unaudited)            |       |   |                         |   |   |   |   |
| Outstanding      - beginning of period |   |                   | 10,587,385 |   |                         | $      | 0.56 |   |   |   | 13,022,600 |   |   | $ | 0.54 |   |
| Issued                                 |   |                   | 2,000,000  |   |                         |   | 1.50 |   |   |   | 589,785 |   |   | $ | 0.63 |   |
| Exercised                              |   |                   | (1,100,000 | )      |                         |   | 0.60 |   |   |   | (2,100,000 | ) |   | $ | 0.50 |   |
| Expired                                |   |                   | -          |   |                         |   | - |   |   |   | (925,000 | ) |   | $ | 0.50 |   |
| Outstanding      - end of period       |   |                   | 11,487,385 |   |                         | $      | 0.72 |   |   |   | 10,587,385 |   |   | $ | 0.56 |   |

----

| (d) | Warrants      (continued) |
|-----|---------------------------|

| Expiry      Date              |   | Exercise      Price |   |   | June      30, 2010 |   |       | December      31, 2009 |   |
|-------------------------------|--------|---------------------|--------|--------|--------------------|--------|------------|------------------------|--------|
|                          |   |                |   |   | (Unaudited)        |   |       |                   |   |
| August      10, 2010 (note 6) |   | $                   | 0.60   |   |               |   | 4,747,600  |                   |   |   | 5,847,600 |   |
| April      1, 2011            |   | $                   | 0.50   |   |               |   | 4,250,000  |                   |   |   | 4,250,000 |   |
| June      30, 2011            |   | $                   | 0.75   |   |               |   | 150,000    |                   |   |   | 150,000 |   |
| June      30, 2012            |   | $                   | 0.50   |   |               |   | 235,000    |                   |   |   | 235,000 |   |
| June      30, 2013            |   | $                   | 0.90   |   |               |   | 104,785    |                   |   |   | 104,785 |   |
| December      31, 2015        |   | $                   | 1.50   |   |               |   | 2,000,000  |                   |   |   | - |   |
|                          |   |                |   |   |               |   | 11,487,385 |                   |   |   | 10,587,385 |   |

| (i) | If      on or before June 30, 2011, the closing price of the common stock of the      Company is at least $2.00 per share for 5 consecutive trading      days, |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii) | If      on or before December 31, 2012, the closing price of the common stock of      the Company is at least $2.50 per share for 5 consecutive trading      days, |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | If      on or before December 31, 2015, the closing price of the common stock of      the Company is at least $3.00 per share for 5 consecutive trading      days. |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (e) | Obligation to issue      shares |
|-----|---------------------------------|

|                                                              |   | Three      Months EndedJune      30, |     |   | Six      Months endedJune      30, |   |
|-------------------------------------------------------------------|--------|--------------------------------------|----------|--------|------------------------------------|--------|
|                                                              |   | 2010                                 |     |   | 2009                               |   |   | 2010 |   |   | 2009 |   |
|                                                              |   | (Unaudited)                          |     |   | (Unaudited)                        |   |   | (Unaudited) |   |   | (Unaudited) |   |
| Net      loss for period                                          |   | $                                    | (267,174 | )      |                               | $      | (3,482,625 | ) |   | $ | (480,553 | ) |   | $ | (3,978,484 | ) |
| Preferred      stock dividends                                    |   |                                 | -        |   |                               |   | - |   |   |   | - |   |   |   | - |   |
| Net      loss available for distribution                          |   | $                                    | (267,174 | )      |                               | $      | (3,482,625 | ) |   | $ | (480,553 | ) |   | $ | (3,978,484 | ) |
|                                                              |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
| Allocation      of undistributed loss                             |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   Preferred      shares (1.67%, 2009 - 1.80%)           |   | $                                    | (4,424   | )      |                               | $      | (62,687 | ) |   | $ | (7,996 | ) |   | $ | (71,613 | ) |
|   Common      shares (98.33%,  2009 - 98.20%) |   |                                 | (262,750 | )      |                               |   | (3,419,938 | ) |   |   | (472,557 | ) |   |   | (3,906,871 | ) |
|                                                              |   | $                                    | (267,174 | )      |                               | $      | (3,482,625 | ) |   | $ | (480,553 | ) |   | $ | (3,978,484 | ) |
| Basic      loss per share amounts                                 |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|   Undistributed      amounts                            |   |                                 |     |   |                               |   |   |   |   |   |   |   |   |   |   |   |
|     Loss      per preferred share             |   | $                                    | (0.007   | )      |                               | $      | (0.10 | ) |   | $ | (0.010 | ) |   | $ | (0.12 | ) |
|     Loss      per common share                |   | $                                    | (0.007   | )      |                               | $      | (0.10 | ) |   | $ | (0.010 | ) |   | $ | (0.12 | ) |

|                                                                   |   | June      30, |       |
|------------------------------------------------------------------------|--------|---------------|------------|
|                                                                   |   | 2010          |       |   | 2009 |   |
|                                                                   |   | (Unaudited)   |       |   | (Unaudited) |   |
| Weighted      average number of shares for undistributed amounts       |   |          |       |   |   |   |
|     Preferred      stock (common stock equivalent) |   |          | 625,000    |   |   |   | 625,000 |   |
|     Common      stock                              |   |          | 37,120,972 |   |   |   | 33,626,262 |   |

----

| · | Level      1 - quoted      prices in active markets for identical assets or      liabilities |        |
|--------|----------------------------------------------------------------------------------------------|--------|
|   |                                                                                         |   |

| · | Level      2 - other      significant observable inputs for the assets or liabilities through      corroboration with market data at the measurement    date |        |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |                                                                                                                                                         |   |

| · | Level      3 - significant      unobservable inputs that reflect management’s best estimate of what market      participants would use to price the assets or liabilities at the      measurement date. |  |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|

|                                          |   | Level      1 |      |   | Level      2 |   |      | Level      3 |   |   | Total |   |
|-----------------------------------------------|--------|--------------|-----------|--------|--------------|--------|-----------|--------------|--------|--------|-------|--------|
| Cash      and cash equivalents                |   | $            | 1,063,637 |   |         | $      | -         |         |   | $      | -     |   |   | $ | 1,063,637 |   |
| Receivables                                   |   | $            | 24,391    |   |         | $      | -         |         |   | $      | -     |   |   | $ | 24,391 |   |
| Accounts      payable and accrued liabilities |   | $            | 19,522    |   |         | $      | -         |         |   | $      | -     |   |   | $ | 19,522 |   |
| Other      liabilities - warrants             |   | $            | -         |   |         | $      | 1,731,875 |         |   | $      | -     |   |   | $ | 1,731,875 |   |

|  | · | 1,100,000      shares recorded as an obligation to issue securities, as a result of      warrants exercised, were issued from treasury (Note 3(e)) Additional      warrants for 1,093,040 shares were exercised at a price of $0.60 per share      prior to their expiry on August 10, 2010 (Note 3(d)).  Overall      gross proceeds from warrants exercised before and after the quarter end      were $1,315,824.  The remaining balance of 3,654,560 warrants      expired unexercised; |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Options      for 50,000 shares exercisable at $0.50 per share were exercised (Note      3(b)); and |
|--|--------|----------------------------------------------------------------------------------------------------|

----

|  | · | On      July 20, 2010 the Company announced a Letter of Intent with respect to      licensing a new titanium metal technology developed by Chinuka Limited plc      (“Chinuka” or the “Chinuka Process”).  Subject to executing a      non-exclusive, sublicensing agreement, the Company will gain access to the      Chinuka Process for the Cerro Blanco project and La Serena Technologies      Ltd. (“La Serena”) will execute the sublicensing agreement as holder of      the Chinuka Process master license.  As consideration for the      sublicense, the terms of the agreement between the Company and La Serena      will provide for: |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        | · | The      issuance of 4,000,000 restricted common shares to Chinuka and La Serena      (800,000 to Chinuka and 3,200,000 to La Serena).  These shares      are issuable over 24 months with 500,000 shares released to each Chinuka      and La Serena on closing and the balance released from escrow at the end      of each subsequent fiscal quarter on the basis of 37,500 to Chinuka and      337,500 to La Serena.  The Company may cancel the sublicense      agreement (and related escrow share releases) at any time following the      initial release of shares; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |

|        | · | The      expenditure of $5,000,000 by the Company within five years of closing to      advance development of the Chinuka Process towards      commercialization; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |

|        | · | A      2% gross royalty payment to La Serena on any revenue generated by the      Cerro Blanco project, which is attributable to the Chinuka Process, and to      make advance minimum royalty payments to La Serena of $200,000 per year      commencing 5 years after closing; and |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |

|  | · | Commercial      production of titanium metal using the Chinuka Process and feed stock      derived from the Cerro Blanco project within nine years after      closing. |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|        | · | The      issuance of 4 million White Mountain restricted common shares to Chinuka      and La Serena (800,000 to Chinuka and 3,200,000 to La      Serena).  These shares are issuable over 24 months with 500,000      shares released to each Chinuka and La Serena on closing and the balance      released from escrow at the end of each subsequent fiscal quarter on the      basis of 37,500 to Chinuka and 337,500 to La Serena.  We may      cancel the sublicense agreement (and related escrow share releases) at      anytime following the initial release of shares; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |

|        | · | The      expenditure of $5,000,000 by the Company within 5 years of closing to      advance development of the Chinuka Process towards      commercialization; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |

|        | · | 2%      gross royalty payments to La Serena on any revenue generated by the Cerro      Blanco project which is attributable to the Chinuka Process and to make      advance minimum royalty payments to La Serena of $200,000 per year      commencing 5 years after closing; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |

|  | · | Commercial      production of titanium metal using the Chinuka Process and feed stock      derived from the Cerro Blanco project within 9 years after      closing. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | The      adoption of EITF 07-5 effective January 1, 2009 resulted in a cumulative      adjustment of $1,084,375 to accumulated deficit as of January 1, 2009 and      a fair value change of $1,994,150 for the second quarter of 2009      ($1,901,462 year to date).  The comparable effects in 2010 were      a gain of $254,150 in the second quarter ($1,224,850 year to date). See      Note 3(d) for a more detaileddiscussion. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | During      the second quarter of 2010, stock-based compensation of $91,676 was      recognized as management fees expense (note 3(c).  During the      same quarter of 2009, $694,875 of stock based compensation was recognized      as investor relations expense, resulting from the extension of warrants      held by the European institutional investor who exercised two million      warrants during the quarter. There was no such charge in the second      quarter of 2010.  In 2009 the Board of Directors approved an      employee benefit plan for officers, directors, and employees to increase      stockholder value and the success of the company by motivating members of      management to provide services to the company and perform to the best of      their abilities, to achieve the company’s objectives, and to allow us to      minimize the cash component of compensation.  The pool consists      of up to 1% of the outstanding shares at the end of each      year.  During the first quarter or 2010 we issued 720,000 shares      at a fair value of $828,000.  This expense was allocated to      Consulting fees, Consulting fees – directors and officers, Management fees      and office (see note 3(c) of the quarterly financial      statements).  There was no such expense in the current      quarter. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | During      the first quarter of 2010 we commenced a brokered offering of shares to      raise up to $6 million. After discussions with our advisors during the      second quarter, we elected to withdraw this offering based on market      conditions.  As a result, we wrote off deferred offering costs      of approximately $80,000 to Advertising ($3,000), Consulting ($30,000),      Filing fees ($17,000) and Professional fees  ($30,000). |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | Advertising      and Promotion was $27,253 in the quarter, including the $3,000 mentioned      above (year to date $31,840) compared to $2,555 and $17,651 respectively      for 2009.  This was a result of increased news releases and      filings, and attendance atconferences |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | During      the current quarter we incurred lower exploration expense of $60,796 (YTD:      $136,084) (2009: $82,335 and $215,963), as our work was primarily      restricted to planning for upcoming drilling and final feasibility      activities. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | In      the second quarter of 2009, engineering consulting expense was $176,228      due to payments on Stage 2 of the piloting program.  There were      no such expenditures during the currentquarter. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 31.1                    |   | Rule      15d-14(a) Certification by Principal Executive Officer |
|------------------------------|--------|------------------------------------------------------------------|
|                         |   |                                                             |
| 31.2     |   | Rule      15d-14(a) Certification by Chief Financial Officer     |
|                         |   |                                                             |
| 32.1                         |   | Section      1350 Certification of Principal Executive Officer   |
|                         |   |                                                             |
| 32.2                         |   | Section      1350 Certification of Chief Financial  Officer      |

----

|                                   | White      Mountain Titanium Corporation |                                 |
|----------------------------------------|------------------------------------------|--------------------------------------|
|                                   |                                     |                                 |   |
| Date:      August 13, 2010   | By                                       | /s/      Michael P. Kurtanjek        |   |
|                                   |                                     | Michael      P. Kurtanjek, President |   |
|                                   |                                     | (Principal      Executive Officer)   |   |

|                       |   |                                             |   |
|----------------------------|--------|--------------------------------------------------|--------|
| Date:      August 13, 2010 | By     | /s/   Charles      E. Jenkins     |   |
|                       |   | Charles      E. Jenkins, Chief Financial Officer |   |
|                       |   | (Principal      Financial Officer)               |   |

----