UNITED
STATES SECURITIES AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM 10-Q





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





For the
quarterly period ended June 30, 2009





o TRANSITION REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT





For the
transition period from  ________________________
to ________________________





Commission
File Number 333-129347





WHITE
MOUNTAIN TITANIUM CORPORATION


(Name
of small business issuer in its charter)





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





Enrique
Foster Sur 20, Piso 19


Las
Condes, Santiago


Chile


(Address
of principal executive offices)





(56 2)
231-5780


(Issuer’s
telephone number)





Indicate by check mark whether the
registrant (1) has filed all reports required to be filed under Section 13 or
15(d) of the Exchange Act during the past 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. YesxNo ̈




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





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





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


Yes  ̈ No
x





34,404,042
shares of the issuer’s common stock, $.001 par value, were outstanding at July
20, 2009.





PART
I. FINANCIAL INFORMATION





Item 1.  Financial
Statements





WHITE
MOUNTAIN TITANIUM CORPORATION


(An
Exploration Stage Company)


Consolidated
Balance Sheet


(US
Funds)





June
      30,
                  
                  
                  December
      31,2009
                  
                  
                  2008UnauditedAssetsCurrentCash
      and cash equivalents
                  
                  $
                  1,586,727
                  
                  
                  $
                  1,475,460Prepaid
      expenses
                  
                  
                  52,822
                  
                  
                  
                  54,530Receivables
                  
                  
                  18,176
                  
                  
                  
                  15,646Total
      Current Assets
                  
                  
                  1,657,725
                  
                  
                  
                  1,545,636Property and Equipment (Note
      3)
                  
                  
                  64,516
                  
                  
                  
                  86,019Mineral
      Properties
                  
                  
                  651,950
                  
                  
                  
                  651,950Total
      Assets
                  
                  $
                  2,374,191
                  
                  
                  $
                  2,283,605LiabilitiesCurrentAccounts
      payable and accrued liabilities
                  
                  $
                  28,000
                  
                  
                  $
                  35,777Total
      Current Liabilities and Total Liabilities
                  
                  
                  28,000
                  
                  
                  
                  35,777Stockholders’
      EquityCapital Stock(Note
4)Preferred Stock and Paid-in
      Capital in Excess  of $0.001 Par Value20,000,000  Shares
      authorized 625,000  Shares issued and
outstanding
                  
                  
                  500,000
                  
                  
                  
                  500,000Common Stock and Paid-in
      Capital in Excess of $0.001 Par
      Value100,000,000  Shares
      authorized 34,404,042  (December 31, 2008 – 32,004,042) shares
      issued and outstanding
                  
                  
                  20,106,332
                  
                  
                  
                  17,930,947Deficit
      Accumulated During the Exploration Stage
                  
                  
                  (18,260,141
                  )
                  
                  
                  (16,183,119
                  )Total
      Stockholders’ Equity
                  
                  
                  2,346,191
                  
                  
                  
                  2,247,828Total
      Liabilities and Stockholders’ Equity
                  
                  $
                  2,374,191
                  
                  
                  $
                  2,283,605




See notes
to the unaudited consolidated condensed financial
statements


2


WHITE
MOUNTAIN TITANIUM CORPORATION


(An
Exploration Stage Company)


Consolidated
Condensed Statement of Operations


(US
Funds)





Three
      months ended
                              June
      30
                            
                            
                            Six
      months ended
                              June
      302009
                              Unaudited
                            
                            
                            2008
                              Unaudited
                            
                            
                            2009
                              Unaudited
                            
                            
                            2008
                              Unaudited
                            
                            
                            Cumulative
                              From
      Inception
                              November
      13,
                              2001
      through
                              June
      30, 2009
                              UnauditedExpensesAdvertising and
      promotion
                            
                            $
                            2,555
                            
                            
                            $
                            9,992
                            
                            
                            $
                            17,651
                            
                            
                            $
                            26,699
                            
                            
                            $
                            198,613Amortization
                            
                            
                            5,173
                            
                            
                            
                            6,483
                            
                            
                            
                            11,561
                            
                            
                            
                            11,488
                            
                            
                            
                            107,141Bank charges and
      interest
                            
                            
                            617
                            
                            
                            
                            1,454
                            
                            
                            
                            1,701
                            
                            
                            
                            3,211
                            
                            
                            
                            24,504Consulting fees
                            
                            
                            255,947
                            
                            
                            
                            47,114
                            
                            
                            
                            294,438
                            
                            
                            
                            113,704
                            
                            
                            
                            2,225,060Consulting fees – directors and
      officersofficers
                            
                            
                            310,945
                            
                            
                            
                            120,492
                            
                            
                            
                            563,980
                            
                            
                            
                            196,192
                            
                            
                            
                            3,441,023Exploration
                            
                            
                            82,335
                            
                            
                            
                            651,137
                            
                            
                            
                            215,963
                            
                            
                            
                            952,898
                            
                            
                            
                            4,358,596Filing fees
                            
                            
                            2,591
                            
                            
                            
                            -
                            
                            
                            
                            3,988
                            
                            
                            
                            2,499
                            
                            
                            
                            51,855Insurance
                            
                            
                            18,030
                            
                            
                            
                            16,340
                            
                            
                            
                            26,718
                            
                            
                            
                            31,980
                            
                            
                            
                            219,183Investor relations
                            
                            
                            694,875
                            
                            
                            
                            -
                            
                            
                            
                            694,875
                            
                            
                            
                            -
                            
                            
                            
                            768,673Licenses and taxes
                            
                            
                            8,619
                            
                            
                            
                            38,183
                            
                            
                            
                            18,206
                            
                            
                            
                            95,082
                            
                            
                            
                            379,558Management fees
                            
                            
                            34,800
                            
                            
                            
                            34,800
                            
                            
                            
                            69,600
                            
                            
                            
                            69,600
                            
                            
                            
                            1,465,990Office
                            
                            
                            3,900
                            
                            
                            
                            10,344
                            
                            
                            
                            8,533
                            
                            
                            
                            18,564
                            
                            
                            
                            158,021Professional fees
                            
                            
                            40,164
                            
                            
                            
                            93,903
                            
                            
                            
                            64,891
                            
                            
                            
                            131,253
                            
                            
                            
                            1,436,120Rent
                            
                            
                            18,102
                            
                            
                            
                            22,582
                            
                            
                            
                            34,681
                            
                            
                            
                            52,778
                            
                            
                            
                            352,687Telephone
                            
                            
                            2,876
                            
                            
                            
                            6,127
                            
                            
                            
                            5,886
                            
                            
                            
                            11,990
                            
                            
                            
                            79,985Transfer agent
fees
                            
                            
                            825
                            
                            
                            
                            21
                            
                            
                            
                            1,465
                            
                            
                            
                            1,353
                            
                            
                            
                            12,688Travel and vehicle
                            
                            
                            17,929
                            
                            
                            
                            58,124
                            
                            
                            
                            54,555
                            
                            
                            
                            88,163
                            
                            
                            
                            919,588Loss before other
      items
                            
                            
                            (1,500,283
                            )
                            
                            
                            (1,117,096
                            )
                            
                            
                            (2,088,692
                            )
                            
                            
                            (1,807,454
                            )
                            
                            
                            (16,199,285
                            )Gain
      (loss) on sale of marketable securities
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            87,217Adjustment to market for
      marketable securities
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (67,922
                            )Gain on Foreign
      exchange
                            
                            
                            11,170
                            
                            
                            
                            (16,978
                            )
                            
                            
                            18,123
                            
                            
                            
                            16,467
                            
                            
                            
                            (178,851
                            )Loss
      on sale of assets
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (7,465
                            )
                            
                            
                            -
                            
                            
                            
                            (19,176
                            )Dividend income
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            4,597Interest income
                            
                            
                            638
                            
                            
                            
                            8,306
                            
                            
                            
                            1,012
                            
                            
                            
                            27,116
                            
                            
                            
                            346,387Financing agreement
      penalty
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (330,000
                            )Net
      loss and comprehensive loss for the period
                            
                            
                            (1,488,475
                            )
                            
                            
                            (1,125,768
                            )
                            
                            
                            (2,077,022
                            )
                            
                            
                            (1,763,871
                            )
                            
                            
                            (16,357,033
                            )Preferred stock
      dividends
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (1,537,500
                            )Net Loss Available for
      Distribution
                            
                            $
                            (1,488,475
                            )
                            
                            $
                            (1,125,768
                            )
                            
                            $
                            (2,077,022
                            )
                            
                            $
                            (1,763,871
                            )
                            
                            $
                            (17,894,533
                            )Loss per Common
    Share
                            
                            $
                            (0.05
                            )
                            
                            $
                            (0.04
                            )
                            
                            $
                            (0.06
                            )
                            
                            $
                            (0.06
                            )
                            
                            
                            -Weighted
      average number of Common SharesOutstanding
                            
                            
                            33,626,262
                            
                            
                            
                            29,189,133
                            
                            
                            
                            32,971,999
                            
                            
                            
                            29,189,133
                            
                            
                            
                            -





See notes
to the unaudited consolidated condensed financial statements




3





WHITE
MOUNTAIN TITANIUM CORPORATION


(An
Exploration Stage Company)


Consolidated
Condensed Statements of Stockholders’ Equity


(US
Funds)





Shares
                                  
                                  
                                  Common
      Stock
                                    and
      Paid-In
                                    Capital
      in
                                    Excess
      of
                                    Par
      Value
                                  
                                  
                                  Shares
      of
                                    Preferred
      Stock
                                  
                                  
                                  Preferred
      Stock
                                    and
      Paid-in
                                    Capital
      in
                                    Excess
      of
                                    Par
      Value
                                  
                                  
                                  Subscriptions
                                    Receivable
                                  
                                  
                                  Subscriptions
                                    Received
                                  
                                  
                                  Accumulated
                                    Deficit
                                  
                                  
                                  Total
                                    Stockholders’
                                    EquityBalance,
      December 31, 2007
                                  
                                  
                                  29,189,133
                                  
                                  
                                  $
                                  15,918,522
                                  
                                  
                                  
                                  625,000
                                  
                                  
                                  $
                                  500,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (13,007,211
                                  )
                                  
                                  $
                                  3,411,311Stock-based
      compensation
                                  
                                  
                                  -
                                  
                                  
                                  
                                  45,339
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  45,339Shares
      issued for cashPrivate
      placement
                                  
                                  
                                  2,814,909
                                  
                                  
                                  
                                  1,967,086
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  1,967,086Net
      loss for the year
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  (3,175,908
                                  )
                                  
                                  
                                  (3,175,908
                                  )Balance,
      December 31, 2008
                                  
                                  
                                  32,004,042
                                  
                                  
                                  $
                                  17,930,947
                                  
                                  
                                  
                                  625,000
                                  
                                  
                                  $
                                  500,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (16,183,119
                                  )
                                  
                                  $
                                  2,247,828Stock-based
      compensation
                                  
                                  
                                  
                                  
                                  
                                  
                                  1,011,585
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  1,011,585Warrants
      exercised
                                  
                                  
                                  2,000,000
                                  
                                  
                                  
                                  999,800
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  999,800Bonus
      shares
                                  
                                  
                                  400,000
                                  
                                  
                                  
                                  164,000
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  164,000Net
      loss for the period
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  
                                  (2,077,022
                                  )
                                  
                                  
                                  (2,077,022
                                  )Balance,
      June 30, 2009
                                  
                                  
                                  34,404,042
                                  
                                  
                                  $
                                  20,106,332
                                  
                                  
                                  
                                  625,000
                                  
                                  
                                  $
                                  500,000
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  -
                                  
                                  
                                  $
                                  (18,260,141
                                  )
                                  
                                  $
                                  2,346,191




See notes
to the unaudited consolidated condensed financial statements
  4


WHITE
MOUNTAIN TITANIUM CORPORATION


(An
Exploration Stage Company)


Consolidated
Condensed Statements of Cash Flows


(US
Funds)





CumulativeFrom
      InceptionNovember
      13,2001
      throughSix
      months ended June 30
                                                              
                                                              
                                                              June
      302009
                                                              
                                                              
                                                              2008
                                                              
                                                              
                                                              2009Unaudited
                                                              
                                                              
                                                              Unaudited
                                                              
                                                              
                                                              UnauditedOperating
      ActivitiesNet
      loss for period
                                                              
                                                              $
                                                              (2,077,022
                                                              )
                                                              
                                                              $
                                                              (1,763,871
                                                              )
                                                              
                                                              $
                                                              (16,357,033
                                                              )Items
      not involving cashAmortization
                                                              
                                                              
                                                              11,561
                                                              
                                                              
                                                              
                                                              11,488
                                                              
                                                              
                                                              
                                                              107,141Stock-based
      compensation
                                                              
                                                              
                                                              1,011,585
                                                              
                                                              
                                                              
                                                              42,792
                                                              
                                                              
                                                              
                                                              3,175,674Common
      stock issued for services
                                                              
                                                              
                                                              164,000
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              2,121,630Financing
      agreement penalty
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              330,000Adjustment
      to market – securities
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              67,922Gain
      on sale of marketable securities
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (87,217
                                                              )Loss
      on sale of assets
                                                              
                                                              
                                                              7,465
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              19,176Non-cash
      resource property expenditures
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              600,000Changes
      in Non-Cash Working CapitalReceivables
                                                              
                                                              
                                                              (2,530
                                                              )
                                                              
                                                              
                                                              (23,657
                                                              )
                                                              
                                                              
                                                              (18,176
                                                              )Marketable
      securities
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              19,295Accounts
      payable and accrued liabilities
                                                              
                                                              
                                                              1,708
                                                              
                                                              
                                                              
                                                              385,100
                                                              
                                                              
                                                              
                                                              (52,822
                                                              )Prepaid
      expenses
                                                              
                                                              
                                                              (7,777
                                                              )
                                                              
                                                              
                                                              (7,648
                                                              )
                                                              
                                                              
                                                              28,000Cash
      Used in Operating Activities
                                                              
                                                              
                                                              (891,010
                                                              )
                                                              
                                                              
                                                              (1,355,796
                                                              )
                                                              
                                                              
                                                              (10,046,410
                                                              )Investing
      ActivitiesAddition
      to property and equipment
                                                              
                                                              
                                                              (4,153
                                                              )
                                                              
                                                              
                                                              (79,666
                                                              )
                                                              
                                                              
                                                              (197,463
                                                              )Mineral
      property acquisition costs
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              (651,950
                                                              )Cash
      Used in Investing Activities
                                                              
                                                              
                                                              (4,153
                                                              )
                                                              
                                                              
                                                              (79,666
                                                              )
                                                              
                                                              
                                                              (849,413
                                                              )Financing
      ActivitiesRepayment
      of long-term debt
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              (100,000
                                                              )Issuance
      of Preferred Stock
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              
                                                              5,000,000Issuance
      of common stock
                                                              
                                                              
                                                              999,800
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              7,344,749Stock
      subscriptions received
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              104,030
                                                              
                                                              
                                                              
                                                              120,000Stock
      subscriptions receivable
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              111,000Sale
      of surplus assets
                                                              
                                                              
                                                              6,630
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              6,630Working
      capital acquired on acquisition
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              -
                                                              
                                                              
                                                              
                                                              171Cash
      Provided by Financing Activities
                                                              
                                                              
                                                              1,006,430
                                                              
                                                              
                                                              
                                                              104,030
                                                              
                                                              
                                                              
                                                              12,482,550(Outflow)
      Inflow of Cash and equivalents
                                                              
                                                              
                                                              111,267
                                                              
                                                              
                                                              
                                                              (1,331,432
                                                              )
                                                              
                                                              
                                                              1,586,727Cash
      and equivalents, begining of period
                                                              
                                                              
                                                              1,475,460
                                                              
                                                              
                                                              
                                                              2,678,652
                                                              
                                                              
                                                              
                                                              -Cash
      and Cash Equivalents, End of Period
                                                              
                                                              $
                                                              1,586,727
                                                              
                                                              
                                                              $
                                                              1,347,220
                                                              
                                                              
                                                              $
                                                              1,586,727Supplemental
      Cash Flow InformationIncome
      tax paid
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -Interest
      paid
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -Shares
      Issued forWarrants
      exercised
                                                              
                                                              $
                                                              999,800
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              999,800Settlement
      of debt
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              830,000Services
                                                              
                                                              $
                                                              164,000
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              2,121,630Penalty
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              -
                                                              
                                                              
                                                              $
                                                              187,500





See notes
to the unaudited consolidated condensed financial
statements


5


1.
            NATURE
      OF BUSINESS AND BASIS OF
PRESENTATION





White
Mountain Titanium Corporation (the “Company”) currently has no ongoing
operations.  Its principal business is to advance exploration and
development activities on the Cerro Blanco rutile (titanium dioxide) property
(“Cerro Blanco”) located in Region III of northern Chile.  The Company
is considered an exploration stage company and its financial statements are
presented in a manner similar to a development stage company as defined in
Statement of Financial Accounting Standards (“SFAS”) No. 7.





The
accompanying financial statements have been prepared by the Company without
audit.  In the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at June 30, 2009 and 2008 and for
the periods then ended have been made.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with accounting principles generally accepted in the United States of America
have been condensed or omitted.  It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company’s December 31, 2008 audited
financial statements included in the Company’s 2008 annual report on Form 10-K
filed with the SEC.  The results of operations for the periods ended June
30, 2009 and 2008 are not necessarily indicative of the operating results for
the full year.





2.
            RECENT
      ACCOUNTING CHANGES





In April
2009, the FASB issued three FASB Staff Positions (FSP’s) that are intended to
provide additional application guidance and enhance disclosures about fair value
measurements and impairments of securities. FSP No. 157-4, “Determining Fair
Value When the Volume and Level of Activity for the Asset or Liability Have
Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP
157-4), clarifies the objective and method of fair value measurement even when
there has been a significant decrease in market activity for the asset being
measured. FSP No. 115-2 and FSP No. 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments”, (FSP 115-2 and FSP 124-2), establish a new
model for measuring other-than-temporary impairments for debt securities,
including criteria for when to recognize a write-down through earnings versus
other comprehensive income. FSP No. 107-1 and APB 28-1, “Interim Disclosures
About Fair Value of Financial Instruments”, expand the fair value disclosures
required for all financial instruments within the scope of SFAS, No. 107,
“Disclosures about Fair Value of Financial Instruments” (FSP 107-1 and APB 28-1)
to interim periods. All of these FSP’s are effective for interim and annual
periods ending after June 15, 2009, our quarter ended June 30, 2009. The
adoption of these FSP’s will not have a material impact on our consolidated
results of operations and financial condition. However, adoption of FSP 107-1
and APB 28-1 during the quarter ended June 30, 2009 resulted in increased
disclosures in our consolidated financial statements.





In May
2009, The Financial Accounting Standards Board (“FASB”) issued Statement of
Financial Accounting Standard (“SFAS”) No. 165, Subsequent Events (“SFAS
165”). This Statement establishes the accounting for, and disclosure of,
material events that occur after the balance sheet date, but before the
financial statements are issued. In general, these events will be recognized if
the condition existed at the date of the balance sheet, and will not be
recognized if the condition did not exist at the balance sheet date. Disclosure
is required for nonrecognized events if required to keep the financial
statements from being misleading. The guidance in this Statement is very similar
to current guidance provided in auditing literature and, therefore, will not
result in significant changes in practice. Subsequent events have been evaluated
through the date our interim financial statements were issued—the filing time
and date of our second-quarter 2009 Quarterly Report on Form 10-Q.





In June
2009, the FASB issued SFAS No. 168, “The Hierarchy of Generally Accepted
Accounting Principles”. The new standard replaces SFAS 162 and establishes the
“FASB Accounting Standards Codification” as the source of authoritative
accounting principles recognized by the FASB to be applied by non-governmental
entities in the preparation of financial statements in conformity with US GAAP.
The Statement shall be effective for financial statements issued for interim and
annual periods ending after September 15, 2009.


6





3.
            PROPERTY
      AND EQUIPMENT





June
      30, 2009
                                UnauditedAccumulatedCost
                              
                              
                              Amortization
                              
                              
                              NetVehicles
                              
                              $
                              54,153
                              
                              
                              $
                              34,624
                              
                              
                              $
                              19,530Office
      furniture
                              
                              
                              2,704
                              
                              
                              
                              2,068
                              
                              
                              
                              636Office
      equipment
                              
                              
                              5,417
                              
                              
                              
                              3,274
                              
                              
                              
                              2,143Computer
      equipment
                              
                              
                              8,197
                              
                              
                              
                              4,396
                              
                              
                              
                              3,801Computer
      software
                              
                              
                              1,142
                              
                              
                              
                              549
                              
                              
                              
                              593Field
      equipment
                              
                              
                              60,340
                              
                              
                              
                              22,526
                              
                              
                              
                              37,814$
                              131,953
                              
                              
                              $
                              67,437
                              
                              
                              $
                              64,516




December
      31, 2008AccumulatedCost
                              
                              
                              Amortization
                              
                              
                              NetVehicles
                              
                              $
                              70,534
                              
                              
                              $
                              32,050
                              
                              
                              $
                              38,484Office
      furniture
                              
                              
                              2,704
                              
                              
                              
                              1,846
                              
                              
                              
                              858Office
      equipment
                              
                              
                              5,417
                              
                              
                              
                              2,829
                              
                              
                              
                              2,588Computer
      equipment
                              
                              
                              7,553
                              
                              
                              
                              3,631
                              
                              
                              
                              3,922Computer
      software
                              
                              
                              1,142
                              
                              
                              
                              436
                              
                              
                              
                              706Field
      equipment
                              
                              
                              62,419
                              
                              
                              
                              22,958
                              
                              
                              
                              39,461$
                              149,769
                              
                              
                              $
                              63,750
                              
                              
                              $
                              86,019




7





4.
            CAPITAL
      STOCK





(a)
            Common
    stock





The
Company’s authorized:


i) Common stock with a par value of
$0.001 is 100,000,000 shares.


ii) Preferred stock with a par value of
$0.001 is 20,000,000 shares.





(b)
            Stock
      options





During
the six months ended June 30, 2009, no stock options were
granted.  The portion of the 165,000 stock options granted in the
second quarter of 2008 to two new independent directors vested.  As a
result, $23,271 of unrecognized stock-based compensation related to unvested
options was recognized during the current period. During the quarter ended June
30, 2009, 250,000 options were cancelled.





The
Black-Scholes option pricing model  calculated compensation based on
the following assumptions:





2009
                        
                        
                        2008Expected
      life (years)
                        
                        
                        N/A
                        
                        
                        
                        5Interest
      rate
                        
                        
                        N/A
                        
                        
                        
                        3.52
                        %Volatility
                        
                        
                        N/A
                        
                        
                        
                        57.12
                        %Dividend
      yield
                        
                        
                        N/A
                        
                        
                        
                        0
                        %




Period
      endedJune
      30, 2009
                                Unaudited
                              
                              
                              December
      31, 2008Weighted
                              
                              
                              
                              
                              
                              WeightedAverage
                              
                              
                              
                              
                              
                              AverageNumber
                              
                              
                              Exercise
                              
                              
                              Number
                              
                              
                              Exerciseof
      Options
                              
                              
                              Price
                              
                              
                              of
      Options
                              
                              
                              PriceOutstanding
      - beginning of period
                              
                              
                              3,140,000
                              
                              
                              $
                              0.57
                              
                              
                              
                              2,975,000
                              
                              
                              $
                              0.50Granted
                              
                              
                              -
                              
                              
                              $
                              0.00
                              
                              
                              
                              165,000
                              
                              
                              $
                              1.00Cancelled
                              
                              
                              (250,000
                              )
                              
                              $
                              0.50
                              
                              
                              
                              -
                              
                              
                              
                              -Outstanding
      – end of period
                              
                              
                              2,890,000
                              
                              
                              $
                              0.58
                              
                              
                              
                              3,140,000
                              
                              
                              $
                              0.57Exercisable  -
      end of period
                              
                              
                              2,869,375
                              
                              
                              $
                              0.58
                              
                              
                              
                              3,078,125
                              
                              
                              $
                              0.57





At the
quarter ended June 30, 2009, the following director and consultant stock options
were outstanding:




Exercise
                                    
                                    
                                    June
      30, December 31,Expiry
      Date
                                    
                                    Price
                                    
                                    
                                    2009
                                    
                                    
                                    2008August
      1, 2009
                                    
                                    $
                                    2.00
                                    
                                    
                                    
                                    100,000
                                    
                                    
                                    
                                    100,000April
      5, 2010
                                    
                                    $
                                    0.50
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    250,000January
      31, 2011
                                    
                                    $
                                    0.50
                                    
                                    
                                    
                                    400,000
                                    
                                    
                                    
                                    400,000May
      31, 2011
                                    
                                    $
                                    0.50
                                    
                                    
                                    
                                    600,000
                                    
                                    
                                    
                                    600,000August
      1, 2011
                                    
                                    $
                                    0.50
                                    
                                    
                                    
                                    200,000
                                    
                                    
                                    
                                    200,000August
      31, 2011
                                    
                                    $
                                    0.50
                                    
                                    
                                    
                                    350,000
                                    
                                    
                                    
                                    350,000August
      31, 2012
                                    
                                    $
                                    0.50
                                    
                                    
                                    
                                    1,075,000
                                    
                                    
                                    
                                    1,075,000June
      23, 2013
                                    
                                    $
                                    1.00
                                    
                                    
                                    
                                    165,000
                                    
                                    
                                    
                                    165,0002,890,000
                                    
                                    
                                    
                                    3,140,000




8





4.
            CAPITAL
      STOCK





(b)
            Stock options
      (continued)





The
shares under option at June 30, 2009 were in the following exercise price
ranges:





Options
      OutstandingExercise
      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
                                      
                                      
                                      $
                                      28,750
                                      
                                      
                                      
                                      2.28$
                                      1.00
                                      
                                      $
                                      1.00
                                      
                                      
                                      
                                      165,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      3.98$
                                      2.00
                                      
                                      $
                                      2.00
                                      
                                      
                                      
                                      100,000
                                      
                                      
                                      
                                      -
                                      
                                      
                                      
                                      0.08$
                                      0.58
                                      
                                      
                                      
                                      2,890,000
                                      
                                      
                                      $
                                      28,750
                                      
                                      
                                      
                                      2.42




Options
      ExercisableExercise
      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
                                        
                                        
                                        $
                                        28,750
                                        
                                        
                                        
                                        2.28$
                                        1.00
                                        
                                        $
                                        1.00
                                        
                                        
                                        
                                        144,375
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        3.98$
                                        2.00
                                        
                                        $
                                        2.00
                                        
                                        
                                        
                                        100,000
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        0.08$
                                        0.58
                                        
                                        
                                        
                                        2,869,375
                                        
                                        
                                        $
                                        28,750
                                        
                                        
                                        
                                        2.45





(c)
            Stock-based
      compensation





During
the six months ended June 30, 2009, the total stock-based compensation
recognized under the fair value method was $1,011,585.





Stock
based compensation was reported in the first quarter with respect to 400,000
shares issued two officers and directors of the Company upon attaining
previously determined milestones as established by the Compensation
committee.  A fair value of $164,000 (2008: $nil) was attributed to
these shares based on a fair market value of $0.41 per share and was charged to
Consulting fees – directors and officers.





During
the six months ended June 30, 2009, $216,310 was charged to consulting/directors
and officers fees (2008: $42,792), and $77,130 (2008: $nil) related to the
warrants issued during the period (note 4(d)), and $694,875 (2008: $nil) was
charged to investor relations as a result of an extension of the expiry date of
4,250,000 warrants (Note 4(d)).  All amounts were determined using the
Black-Scholes option pricing model (Note 4 (b)).  During the six
months ended June 30, 2009, $23,271 (2008: $45,339) was charged to Consulting
fees in relation to unvested stock options issued in a prior period (note
4(b)).





The total
stock-based compensation recognized under the fair value method to various
parties was as follows:





June
      30,
                            
                            
                            Dec
      31,
                            
                            
                            Dec.
      31,2009
                            
                            
                            2008
                            
                            
                            2007Investor
      relations
                            
                            $
                            694,874
                            
                            
                            $
                            -
                            
                            
                            $
                            -Consulting
      fees-
      directors  and officers
                            
                            
                            239,581
                            
                            
                            
                            45,339
                            
                            
                            
                            359,227Consulting
      fees
                            
                            
                            77,130
                            
                            
                            
                            -
                            
                            
                            
                            248,507Management
      fees
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            110,450Compensation
      - options
                            
                            $
                            1,011,585
                            
                            
                            $
                            45,339
                            
                            
                            $
                            718,184





The total
compensation cost related to non-vested options not yet recognized is
$12,537.


9





4.
            CAPITAL
      STOCK





(d)
            Warrants





Details
of stock purchase warrant activity is as follows:





June
      30, 2009
                                    (Unaudited)
                                  
                                  
                                  December
      31, 2008
                                    (Audited)Number
                                    of
      Shares
                                  
                                  
                                  Weighted
                                    Average
                                    Exercise
                                    Price
                                  
                                  
                                  Number
                                    of
      Shares
                                  
                                  
                                  Weighted
                                    Average
                                    Exercise
                                    PriceOutstanding
      - beginning of period
                                  
                                  
                                  13,022,600
                                  
                                  
                                  $
                                  0.54
                                  
                                  
                                  
                                  13,022,600
                                  
                                  
                                  $
                                  0.54Issued
                                  
                                  
                                  485,000
                                  
                                  
                                  $
                                  0.58
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Exercised
                                  
                                  
                                  (2,000,000
                                  )
                                  
                                  $
                                  0.50
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Expired
                                  
                                  
                                  -
                                  
                                  
                                  $
                                  0.00
                                  
                                  
                                  
                                  -
                                  
                                  
                                  
                                  -Outstanding
      - end of period
                                  
                                  
                                  11,507,600
                                  
                                  
                                  $
                                  0.55
                                  
                                  
                                  
                                  13,022,600
                                  
                                  
                                  $
                                  0.54





During
the quarter ended June 30, 2009, two million warrants were exercised by a
European institutional investor.  The balance of 4.25 million warrants
held by the investor had their expiry date extended from July 11, 2009 to April
1, 2011.  A cashless exercise provision was added to the warrants in
the event the Company fails to reasonably maintain an effective registration
statement for the shares issuable upon exercise of the warrants.





Also
during the quarter 150,000 warrants having an exercise price of $0.75 and an
expiry date of June 30, 2011 we issued to a consultant for
services.  An additional 335,000 warrants having an exercise price of
$0.50 and an expiry date of June 30, 2012 were issued to two independent
directors in lieu of stock options.  Stock based compensation totaling
$293,440 was recorded with respect to these issuances.





As at
June 30, 2009 the following share purchase warrants were
outstanding:





Expiry
      Date
                            
                            Exercise
      Price
                            
                            
                            June
      30, 2009
                            
                            
                            December
      31, 2008July
      11, 2009
                            
                            $
                            0.50
                            
                            
                            
                            300,000
                            
                            
                            
                            6,550,000April
      1, 2011
                            
                            $
                            0.50
                            
                            
                            
                            4,250,000
                            
                            
                            
                            -September
      7, 2009
                            
                            $
                            0.50
                            
                            
                            
                            625,000
                            
                            
                            
                            625,000August
      10, 2010
                            
                            $
                            0.60
                            
                            
                            
                            5,847,600
                            
                            
                            
                            5,847,600June
      30, 2011
                            
                            $
                            0.75
                            
                            
                            
                            150,000
                            
                            
                            
                            -June
      30, 2012
                            
                            $
                            0.50
                            
                            
                            
                            335,000
                            
                            
                            
                            -11,507,600
                            
                            
                            
                            13,022,600




10





5.
            FAIR
      VALUE OF FINANCIAL INSTRUMENTS





The
Company’s financial instruments consist of cash, accounts receivable AND
accounts payable. The carrying amounts of these instruments approximate their
respective fair values because of the short maturities of those
instruments





6.
            SUBSEQUENT
      EVENTS





Subsequent
events have been evaluated through August 10, 2009, the date these financial
statements were issued.  No events required
disclosure.


11


Item 2. Management’s
Discussion and Analysis





The
following discussion should be read in conjunction with our unaudited
consolidated financial statements and related notes thereto as filed with this
report.





Background





We are a
mineral exploration company.  We hold mining concessions composed of
33 registered mining exploitation concessions, and 5 exploration concessions,
over approximately 8,225 hectares located approximately 39 kilometers west of
the City of Vallenar in the Atacama, or Region III, geographic region of
northern Chile (hereinafter referred to as “Cerro Blanco”).  We are in
the exploration stage, which means we are engaged in the search for mineral
deposits or reserves which could be economically and legally extracted or
recovered.  Our primary expenditures at this stage consist of
acquisition and exploration costs and general and administration
expenses.  We have produced no revenues, have achieved losses since
inception, have no operations, and currently rely upon the sale of our
securities to fund our operations.





Plan
of Operation





We
completed the acquisition of an undivided interest in Cerro Blanco in September
2005.  Exploration drilling by us and the previous owner has defined
rutile mineralization.  Metallurgical test work performed by Lakefield
Research has demonstrated that this mineralization can be concentrated to a
level meeting buyer specifications and can be produced using a conventional
milling and flotation process.





Over the
next twelve to twenty-four months we have two principal objectives: to advance
the project towards a final engineering feasibility level and to secure off-take
contracts for the planned rutile concentrate output.  We also continue
to investigate the commercial viability of producing a feldspar
co-product.  The feldspar could find applications in the glass and
ceramics industries.





Marketing





We
commenced a marketing and market awareness program in 2007 directed at potential
buyers of rutile, and have engaged a consultant with extensive experience in the
international pigments business, to evaluate and advise on the
market.  The marketing program includes provision for testing of
samples of Cerro Blanco rutile concentrates at the buyers’ operations and,
subject to technical acceptability, will end with the negotiation of off-take
contracts.





In April
2008 executive management and our marketing team attended the Industrial
Minerals Conference in Athens Greece.  At this event we also met with
buyers of high grade rutile concentrate.  We received considerable
interest in our projects, with questions concentrating on tonnage as opposed to
pricing, a major change in perspective from past conferences.





In March
2009, the Company’s marketing consultant attended the Intertech Titanium
Conference held in Rome.  He advised management that the consensus
view held by most titanium industry experts is that the combination of firm
demand together with limited new supply of high quality titanium ores such as
natural and synthetic rutile will result in ore prices continuing to firm. This
is a significant reversal to the view held 5 years ago that largely as a
consequence of increasing quantities of chloride slag from several new Southern
African producers, titanium ores would be in oversupply and that ore prices
would weaken.  Over the last 5 years, chloride slag has grown at a
slower rate, several new projects have been cancelled or deferred and existing
operations, rationalised.  In contrast titanium pigment production has
grown steadily and metal manufacture has taken off, leading to a tightening
market for titanium ores and rising prices.  For example, one major
pigment producer at the conference indicated that for 2009 they expect their
average price for rutile to increase by in excess of 6% to US$ 525-550 per tonne
for bulk tonnage deliveries, and US$ 650-700 for smaller volumes. Our consultant
concluded that titanium pigment producers are now demanding and buyers are
paying premium prices for high quality ores, particularly those with a high
concentration of TiO2 and low
levels of radioactivity.





During
the quarter, several one kilogram samples of the high grade titanium concentrate
obtained as a result of Stage 1 of the pilot plant program were sent to various
potential customers for evaluation.





Based on
these discussions and preliminary marketing results, we continue to believe that
demand for our products will meet or exceed the planned capacity of the
currently anticipated proposed physical plant.  The market for
TiO2feedstock, particularly high grade rutile, appears to be entering a
growth period, with increased demand coming not only from the paint and pigment
industries, but also from welding rod manufacturers and metal
producers.  Our ability to enter this market, however, is subject to
significant risk factors, including our ability to raise sufficient funds to
meet the engineering plans noted above, as well as the successful completion of
pilot plant operations which produce product that meets purchaser’s
specifications.


12


Geology
and Engineering





Geology
and Mineralization





Management
believes the Cerro Blanco property contains a large and possibly unique type of
titanium mineralization.  Nevertheless, we are still in the
exploration stage of development and there are no known reserves on the
property.  The titaniferous mineral located on the property is clean
red-brown and black rutile which occurs disseminated with the tonalitic suite of
an alkalic diorite-gabbro-pyroxenite intrusive.  Its uniformly
disseminated nature and associated alteration endow it with strong similarities
to porphyry copper deposits.  Natural rutile concentrates such as
found on this property would be the preferred feed stock for both titanium metal
and pigment grade titanium dioxide production.





Exploration
and Project Development Plans





In
January, 2008 the Company retained Thomas A. Henricksen, PhD. and a qualified
person under Canadian National Instrument 43-101 to prepare a NI 43-101
compliant technical report on the Cerro Blanco property (the “Technical
Report”).  The Technical Report, which was dated February 25, 2008,
was based on extensive geological mapping, surface sampling, 14,078 meters of
drilling and a geological model developed by the Company.  In his
report, Dr. Henricksen confirmed a current estimate of rutile resources under
CIM classifications at the Las Carolinas and La Cantera prospects of measured
and indicated resources of 32.9 million tonnes grading 2.23% TiO2.





Following
completion of the Technical Report, the Company retained Dr. Henricksen to
compile a NI 43-101 compliant preliminary assessment of the Cerro Blanco project
(the “Assessment”). The Assessment, which was dated May 30, 2008, incorporated
by reference the Technical Report as well as reports prepared for the Company by
other independent experts in their fields.  The latter reports include
preliminary process engineering and costing report prepared by AMEC-Cade dated
March, 2008, a preliminary pit design report prepared by NCL Ingenieria y
Construccion dated May 2008, various metallurgical reports prepared by SGS
Lakefield, an environmental base line study prepared by Arcadis Geotecnica dated
December 2004 and titanium marketing information provided by the Company’s
marketing consultant.





For
engineering design purposes, the Assessment adopted a base case set of
assumptions, the major assumptions being the construction of an open pit mine,
processing plant and ancillary facilities capable of producing 100,000 tonnes
per year of high grade rutile concentrate grading plus 94.5% TiO2 at start
up, scaling to 130,000 tonnes per year in production Year 4 at an assumed
undiluted head grade to the plant of 2.3% TiO2.  Mining
would commence on the Las Carolinas prospect and feed would be conveyed downhill
to a processing plant located less than two kilometers to the
northeast.  Within the plant, the process flow sheet consisted of a
semi-autogenous grinding mill, gravity pre-concentration and column flotation
circuits and high intensity magnetic separation with process water sourced from
a desalination plant constructed at the port of Huasco. AMEC-Cade assumed that
mining would be done under contract at a cost of US$1.20 per tonne mined and
that the price of high grade rutile concentrates would be US$500 per tonne FOB
port.





Based on
these assumptions AMEC-Cade, our internationally recognized engineering
contractor, designed a processing plant with an initial operating capacity of
approximately 5.1 million tonnes per year, increasing to approximately 6.1
million tonnes per year by Year 4.  They estimated a cost to construct
the plant and ancillary facilities of US$117 million in direct costs and US$42
million in indirect costs, for a total of US$159 million.  To this
figure, and as this was a preliminary study, AMEC-Cade added a 20% contingency
to arrive at a total estimated cost of US$190 million. With respect to
processing plant operating costs, AMEC-Cade estimated site and transportation
costs to port of US$3.60 per tonne processed (US$184 per tonne of rutile
concentrate) in Year 1, dropping to US$3.50 per tonne processed (US$180 per
tonne of rutile concentrate) in Year 4. The anticipated reduction in operating
costs is attributed to increased volumes as well as increased efficiencies from
the gravity pre-concentration circuit.  Electric power consumption was
the highest single cost item, comprising approximately 31% of the total
estimated unit operating costs. AMEC-Cade recommended that the Company proceed
to the pilot stage and investigate two possibilities for reducing capital costs:
the use of sea water rather than desalinated water in the processing plant and
siting the plant elsewhere on the property to lower the installed cost of the
conveyor. Two alternate sites were identified.




On April
8, 2009 we reported the completion of Stage 1 of the pilot plant program.
Following the extraction of approximately 500 tonnes of mineralized rock
representative of the Cerro Blanco Las Carolinas deposit (the “bulk sample”),
our engineering team undertook Stage 1 with the assistance of technical
consultants Centro de Investigacion Minera y Metalurgica Tecnologia y Servicios,
Cytec Chile Limitada  and AMEC-Cade.  The objective of the
program was to produce a high grade titanium concentrate from small quantities
of the bulk sample, using a conventional metallurgical flow sheet comprised of
gravity pre-concentration followed by flotation.




Stage 1
succeeded in producing a high grade rutile concentrate even without high
intensity magnetic separation. Process recovery was over 92% and concentrate
grade, over 94% TiO2 . This
result was obtained using normal water, at a neutral pH
(acidity).  Tests with sea water returned equally good product grades,
but the process recoveries were lower.  Test work on the use of sea
water as the aqueous medium in flotation is on-going.


13




On July
8, 2009 we entered into an agreement with SGS Lakefield ("SGS") to complete the
Stage 2 pilot plant test work program.  A 280 tonne bulk
representative sample from the Las Carolinas deposit of the Company's Cerro
Blanco titanium project was bagged for container transport to Lakefield,
Ontario.  As of the date of this report, the shipment had just left
Chile by container ship, and is expected arrive in Canada in approximately four
weeks time with test work scheduled to be completed three months from receipt of
the sample. Under the agreed scope of work, for Stage 2 SGS will process the
bulk sample in a series of runs, each continuous and based on variations of a
flow sheet developed in Stage 1 test work.  The main steps in the flow
sheet involve grinding, gravity pre-concentration, flotation and final product
purification using magnetic separation.




Management
believes the Stage 2 piloting will provide valuable process data, which will be
incorporated in the final feasibility study.  Using the rutile
concentrate from the bulk sampling, our marketing team intends to supply
potential customers with bulk material for evaluation in commercial chlorinators
for pigment use and for titanium sponge metal applications.  We are
also evaluating the economics of feldspar production and its potential impact on
the project.




We now
have a considerable body of engineering design and process engineering work
completed, both by us and previous owners, for the development of a large open
pit mine and milling operation.  The extent to which this engineering
work could be incorporated into a feasibility study will depend on factors such
as optimal plant sizing and configuration based on product volumes and
specifications set out in off-take contracts and process design, the latter to
be determined by refinements coming out of this year’s planned metallurgical
test work and pilot scale testing.  With off-take contracts in hand,
we would undertake a program of drilling to provide data for mine planning and
design, for an environmental impact assessment and permitting program, and to
commission a feasibility study.  As some of these activities would be
undertaken in tandem, we believe a feasibility study could be completed within
twelve to fourteen months of us receiving off-take contracts, subject to the
availability of funds, personnel and equipment.  We estimate the cost
to take the project to the point of commissioning a final engineering
feasibility study at approximately $3,408,000.  This figure includes a
20 per cent contingency but excludes general and administrative
expenses.  As of August **, 2009, our cash position was approximately
$1,***,000.  We currently do not have sufficient capital to complete
this plan and estimate that we will require additional financing to do
so.





Also, as
an exploration stage company, our work is highly speculative and involves unique
and greater risks than are generally associated with other
businesses.  We cannot know if our mining concessions contain
commercially viable ore bodies or reserves until additional exploration work is
done and an evaluation based on such work concludes that development of and
production from the ore body is technically, economically, and legally
feasible.





If we
proceed to development of a mining operation, our mining activities could be
subject to substantial operating risks and hazards, including environmental
hazards, industrial accidents, labor disputes, encountering unusual or
unexpected geologic formations or other geological or grade problems,
encountering unanticipated ground or water conditions, pit-wall failures,
flooding, rock falls, periodic interruptions due to inclement weather conditions
or other unfavorable operating conditions and other acts of God.  Some
of these risks and hazards are not insurable or may be subject to exclusion or
limitation in any coverage which we obtain or may not be insured due to economic
considerations.





Results
of Operations





We
recorded a loss for the three months ended June 30, 2009 of $1,488,475 ($0.05)
per weighted average common share outstanding compared to a loss of $1,125,768 (
($0.04) per share) for the comparable interim period in 2008.  On a
year to date basis, for the six months ended June 30, 2009 the loss was
$2,077,022 ($0.06 per share) compared to $1,763,871 ($(0.06) per share) for the
comparable period in 2008.





Generally
most expenses continue to be comparable or lower this quarter than in the
comparable quarter of 2008 and on a year to date basis due to our ongoing cost
control efforts.  The most significant items are:





·
            The
      32% increase in the current quarter compared to the same quarter last year
      is a direct result of $694,875 (2008: $NIL) of stock based compensation,
      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.





·
            Excluding
      the above stock based compensation, we had a 28% decrease in loss in the
      current quarter primarily attributable to lower exploration expense of
      $82,335 (2008: $651,137).  This was due primarily to the ongoing
      transition from field work and drilling last year to laboratory analysis
      utilizing consultants as we progress with our piloting program this
      year.





·
            As
      anticipated last quarter, consulting expense rose in the current quarter
      to $255,947 (YTD - $294,438) compared to $47,114 (YTD - $113,704) in 2008
      primarily due to the payment of the first installment on Stage 2 of the
      piloting program.  There will be additional expenditures in this
      area in the coming quarters.





·
            Consulting
      fees – directors and officers was $310,945 (YTD - $563,980) compared to
      2008 expense of $120,492 (YTD -
$196,192).





·
            Interest
      revenue at $638 (YTD - $1,012) was down significantly from 2008 at $8,306
      (YTD - $27,116) due to lower funds on deposit and much lower US dollar
      denominated deposit interest
rates.


14





Recent
Accounting Pronouncements





In
September 2006, FASB issued SFAS No. 157, “Fair Value
Measurements”.  SFAS No. 157 provides guidance for using fair
value to measure assets and liabilities.  It clarifies that for items
that are not actively traded, such as certain kinds of derivatives, fair value
should reflect the price in a transaction with a market participant, including
adjustment for risk, not just the company’s mark-to-model
value.  Statement No. 157 also requires expanded disclosure of the
effect on earnings for items measured using unobservable data.  Fair
value refers to the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants in
the market in which the reporting entity transacts.   Statement
No. 157 is effective for financial statements issued for fiscal years beginning
after November 15, 2007.  The Company performed a detailed analysis of
the assets and liabilities and determined it has no instruments that are subject
to SFAS No. 157.





In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” (SFAS
141(R)), which replaces SFAS 141. SFAF 141(R) requires assets and liabilities
acquired in a business combination, contingent consideration and certain
acquired contingencies to be measured at their fair values as of the date of
acquisition. SFAS 141(R) also requires that acquisition-related costs and
restructuring costs be recognized separately from the business combination. SFAS
141(R) is effective for fiscal years beginning after December 15, 2008 and is
effective for business combinations entered into after January 1,
2009.  There is no impact on the Company’s consolidated financial
statements.





In May
2009, the FASB issued SFAS No. 165, “Subsequent Events”. The new standard
establishes general standards of accounting for disclosure of events that occur
after the balance sheet date but before the financial statements are issued or
are available to be issued. The Statement is applicable to interim or annual
financial periods ending after June 15, 2009.





In June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets”. The new standard is intended to improve the relevance, representational
faithfulness and comparability of the information that a reporting entity
provides in its financial statements about a transfer of financial assets; the
effects of a transfer on its financial position, financial performance, and cash
flows; and a transferor’s continuing involvement, if any, in transferred
financial assets. This standard addresses the practices that developed since the
issuance of FASB Statement No. 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities”, that are not consistent
with the original intent and key requirements of that Statement and the concerns
of financial statement users that many of the financial assets (and related
obligations) that have been de-recognized should continue to be reported in the
financial statements of transferors. The Statement must be applied as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009 for interim periods within that first annual reporting
period and for interim and annual reporting periods thereafter.





In June
2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R)”. The new standard is to improve financial reporting by enterprises
involved with variable interest entities. SFAS 167 addresses the effects on
certain provisions of FASB Interpretation No. 46, “Consolidation of Variable
Interest Entities” (“Interpretation 46(R)”), as a result of the elimination of
the qualifying special-purpose entity concept in FASB Statement No. 166,
“Accounting for Transfers of Financial Assets”, and constituent concerns about
the application of certain key provisions of Interpretation 46(R), including
those in which the accounting and disclosures under the Interpretation do not
always provide timely and useful information about an enterprise’s involvement
in a variable interest entity. The Statement shall be effective as of the
beginning of each reporting entity’s first annual reporting period that begins
after November 15, 2009, for interim periods within that first annual reporting
period, and for interim and annual reporting periods thereafter.





In June
2009, the FASB issued SFAS No. 168, “The Hierarchy of Generally Accepted
Accounting Principles”. The new standard replaces SFAS 162 and establishes the
“FASB Accounting Standards Codification” as the source of authoritative
accounting principles recognized by the FASB to be applied by non-governmental
entities in the preparation of financial statements in conformity with US GAAP.
The Statement shall be effective for financial statements issued for interim and
annual periods ending after September 15, 2009. The Company is currently
evaluating the impact of adoption of SFAS 168 but does not expect adoption to
have a material impact on results of operations, cash flows or financial
position.


15





Forward
Looking Statements





The
statements contained in this report that are not historical facts are
forward-looking statements that represent management’s beliefs and assumptions
based on currently available information.  Forward-looking statements
include the information concerning our possible or assumed future results of
operations, business strategies, need for financing, competitive position,
potential growth opportunities, potential operating performance improvements,
ability to retain and recruit personnel, the effects of competition and the
effects of future legislation or regulations.  Forward-looking
statements include all statements that are not historical facts and can be
identified by the use of forward-looking terminology such as the words
“believes,” “intends,” “may,” “will,” “should,” “anticipates,” “expects,”
“could,” “plans,” or comparable terminology or by discussions of strategy or
trends.  Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we cannot give any assurances that
these expectations will prove to be correct.  Such statements by their
nature involve risks and uncertainties that could significantly affect expected
results, and actual future results could differ materially from those described
in such forward-looking statements.  Among the factors that could
cause actual future results to differ materially are the risks and uncertainties
discussed in this report.  While it is not possible to identify all
factors, we continue to face many risks and uncertainties including, but not
limited to, the cyclicality of the titanium dioxide industry, global economic
and political conditions, global productive capacity, customer inventory levels,
changes in product pricing, changes in product costing, changes in foreign
currency exchange rates, competitive technology positions and operating
interruptions (including, but not limited to, labor disputes, leaks, fires,
explosions, unscheduled downtime, transportation interruptions, war and
terrorist activities).  Mining operations are subject to a variety of
existing laws and regulations relating to exploration and development,
permitting procedures, safety precautions, property reclamation, employee health
and safety, air and water quality standards, pollution and other environmental
protection controls, all of which are subject to change and are becoming more
stringent and costly to comply with.  Should one or more of these
risks materialize (or the consequences of such a development worsen), or should
the underlying assumptions prove incorrect, actual results could differ
materially from those expected.  We disclaim any intention or
obligation to update publicly or revise such statements whether as a result of
new information, future events or otherwise.





Item 3. Quantitative and
Qualitative Disclosures About Market Risk





As a
smaller reporting company, we have elected not to provide the disclosure
required by this item.





Item 4. Controls and
Procedures





Disclosure
Controls and Procedures





Our
principal executive officer, Michael P. Kurtanjek, and principal financial
officer, Charles E. Jenkins, have concluded, based on their evaluation, as of
the end of the period covered by this report, that our disclosure controls and
procedures (as defined in Rule 15d-15(e) under the Exchange Act) are
(1) effective to ensure that material information required to be disclosed
by us in reports filed or submitted by us under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in
the  rules and forms of the Securities and Exchange Commission, and
(2) effective to ensure that information required to be disclosed by us in such
reports filed or submitted by the Company under the Exchange Act is accumulated
and communicated to management of the Company, including the principal executive
officer, to allow timely decisions regarding required disclosure.





Changes
in Internal Control Over Financial Reporting





There
were no changes in our internal control over financial reporting (as defined in
Rule 15d-15(f) under the Exchange Act) that occurred during our most recent
quarter ended June 30, 2009, that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting.





It should
be noted that any system of controls, however well designed and operated, can
provide only reasonable and not absolute assurance that the objectives of the
system will be met. In addition, the design of any control system is based in
part upon certain assumptions about the likelihood of future
events.  Because of these and other inherent limitations of control
systems, there is only reasonable assurance that our controls will succeed in
achieving their stated goals under all potential future
conditions.


16


PART
II.  OTHER INFORMATION





Item
2. Unregistered Sales of Equity Securities and Use of Proceeds





On June
30, 2009, the Compensation Committee and the Board of Directors approved the
issuance of warrants to KirkCapital Asset Management, Inc., an entity controlled
by David Kirkingberg, to purchase 150,000 shares of our common stock at $0.75
per share at any time prior to June 30, 2011.  These warrants were
issued in connection with financial consulting services to be provided by Mr.
Kirkingberg’s company.  The warrants will vest as
follows:  (i) 37,500 of the warrants vested on June 30, 2009; (ii)
18,750 of the warrants will vest on July 31, 2009; and (iii) 18,750 of the
warrants will vest on the last day of each month thereafter until all warrants
are fully vested or the consulting services are terminated.  The
warrants were issued without registration under the Securities Act by reason of
the exemption from registration afforded by Section 4(2) of the
Act.  KirkCapital Asset Management, Inc. was an accredited investor at
the time of the grant.  It delivered appropriate investment
representations with respect to the warrant issuance and consented to the
imposition of restrictive legends upon the warrant form.  Mr.
Kirkingberg’s entity did not enter into the consulting agreement with us as a
result of or subsequent to any advertisement, article, notice, or other
communication published in any newspaper, magazine, or similar media or
broadcast on television or radio, or presented at any seminar or meeting and had
a preexisting relationship with persons representing our company at the time of
the transaction.  Mr. Kirkingberg represented that he had been
afforded the opportunity to ask questions of our management and to receive
answers concerning the terms and conditions of the warrant
issuance.  No underwriting discounts or commissions were paid in
connection with the transaction.





On June
30, 2009, the Compensation Committee and the Board of Directors approved and the
Company issued warrants to purchase 117,500 common shares each to John J. May
and Wei Lu for accepting appointment to the Board of Directors.  We
also issued warrants to purchase 100,000 common shares to Cesar Lopez for
services as one of our directors.  These three-year warrants are
exercisable at $0.50 per share and are fully vested.  The warrants
were issued without registration under the Securities Act by reason of the
exemption from registration afforded by the provisions of Regulation
S.  Each of the directors was a non-U.S. person at the time of the
grant.  The issuance of the warrants was made in an offshore
transaction and no directed selling efforts were made in the U.S. by us or
anyone acting on our behalf.  The offering restrictions required
pursuant to Regulation S were also implemented.  No underwriting
discounts or commissions were paid in connection with the issuance of the
warrants.





Item 6.
Exhibits





The
following exhibits are furnished with this report:





31.1
                Rule
      15d-14(a) Certification by Principal Executive Officer31.2
                Rule
      15d-14(a) Certification by Chief Financial Officer32.1
                Section
      1350 Certification of Principal Executive Officer32.2
                Section
      1350 Certification of Chief Financial Officer10.1
                Warrant
      Agreement dated June 30, 2009, with John J. May10.2
                Warrant
      Agreement dated June 30, 2009, with Wei Lu10.3
                Warrant
      Agreement dated June 30, 2009, with Cesar
Lopez




SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.





White
      Mountain Titanium CorporationDate:  August
      10, 2009
                    By
                    /s/  Michael P.
      KurtanjekMichael
      P. Kurtanjek, President(Principal
      Executive Officer)Date:  August
      10, 2009
                    By
                    /s/ Charles E. JenkinsCharles
      E. Jenkins, Chief Financial Officer(Principal Financial Officer)




17