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

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

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|                                                                                                | Page |
|-----------------------------------------------------------------------------------------------------|------|
| PART I. FINANCIAL INFORMATION                                                                       | 3    |
| Item 1.  Financial Statements                                                             | 3    |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15   |
| Item 3.  Quantitative and Qualitative Disclosures About Market Risk                       | 19   |
| Item 4.  Controls and Procedures                                                          | 19   |
| PART II.  OTHER INFORMATION                                                               | 20   |
| Item 6. Exhibits                                                                                    | 20   |
| SIGNATURES                                                                                          | 20   |

----

|                                                                            |   |           |        |   |              |   |
|---------------------------------------------------------------------------------|--------|----------------|-------------|--------|-------------------|--------|
|                                                                            |   | March 31, 2011 |        |   | December 31, 2010 |   |
|                                                                            |   | (Unaudited)    |        |   |              |   |
|                                                                            |   |           |        |   |              |   |
| Assets                                                                          |   |           |        |   |              |   |
| Current                                                                         |   |           |        |   |              |   |
|   Cash and cash equivalents                                           |   | $              | 4,204,110   |   |              | $      | 3,766,959 |   |
|   Prepaid expenses                                                    |   |           | 65,610      |   |              |   | 64,209 |   |
|   Receivables                                                         |   |           | 14,087      |   |              |   | 47,342 |   |
| Total Current Assets                                                            |   |           | 4,283,807   |   |              |   | 3,878,510 |   |
| Property and Equipment (Note 2)                                                 |   |           | 47,991      |   |              |   | 56,383 |   |
| Mineral Properties                                                              |   |           | 651,950     |   |              |   | 651,950 |   |
| Technology Rights                                                               |   |           | 2,644,444   |   |              |   | 2,722,222 |   |
|                                                                            |   |           |        |   |              |   |   |   |
| Total Assets                                                                    |   | $              | 7,628,192   |   |              | $      | 7,309,065 |   |
|                                                                            |   |           |        |   |              |   |   |   |
| Liabilities                                                                     |   |           |        |   |              |   |   |   |
| Current                                                                         |   |           |        |   |              |   |   |   |
|   Accounts payable and accrued liabilities                            |   | $              | 157,182     |   |              | $      | 493,814 |   |
| Total Current Liabilities                                                       |   |           | 157,182     |   |              |   | 493,814 |   |
| Other Liabilities – Warrants (Note 3(d))                                  |   |           | -           |   |              |   | 2,006,850 |   |
|                                                                            |   |           |        |   |              |   |   |   |
| Total Liabilities                                                               |   |           | 157,182     |   |              |   | 2,500,664 |   |
|                                                                            |   |           |        |   |              |   |   |   |
| Stockholders’ Equity                                                      |   |           |        |   |              |   |   |   |
| Common Stock and Paid-in Capital in Excess                                      |   |           |        |   |              |   |   |   |
| of $0.001 Par Value (Note 3(a))                                                 |   |           |        |   |              |   |   |   |
| 100,000,000  shares authorized                                        |   |           |        |   |              |   |   |   |
| 55,816,635 (December 31, 2010 – 49,766,636) shares issued and outstanding |   |           | 36,991,136  |   |              |   | 30,834,680 |   |
| Subscription Receivable                                                         |   |           | -           |   |              |   | (32,500 | ) |
| Deficit Accumulated During the Exploration Stage                                |   |           | (29,520,126 | )      |              |   | (25,993,779 | ) |
|                                                                            |   |           |        |   |              |   |   |   |
| Total Stockholders’ Equity                                                |   |           | 7,471,010   |   |              |   | 4,808,401 |   |
|                                                                            |   |           |        |   |              |   |   |   |
| Total Liabilities and Stockholders’ Equity                                |   | $              | 7,628,192   |   |              | $      | 7,309,065 |   |
|                                                                            |   |           |        |   |              |   |   |   |

----

|                                                       |   |               |       |   |                                           |   |       |           |   |
|------------------------------------------------------------|--------|--------------------|------------|--------|------------------------------------------------|--------|------------|----------------|--------|
|                                                       |   | Three Months Ended |       |   | Cumulative From Inception on November 13, 2001 |   |
|                                                       |   | March 31,          |       |   | Through                                        |   |
|                                                       |   | 2011               |       |   | 2010                                           |   |       | March 31, 2011 |   |
| Expenses                                                   |   |               |       |   |                                           |   |       |           |   |
| Advertising and promotion                                  |   | $                  | 39,699     |   |                                           | $      | 4,587      |           |   | $ | 357,946 |   |
| Amortization                                               |   |               | 86,171     |   |                                           |   | 6,896      |           |   |   | 334,170 |   |
| Bank charges and interest                                  |   |               | 9,378      |   |                                           |   | 2,468      |           |   |   | 47,754 |   |
| Consulting fees (Note 3(c))                                |   |               | 130,884    |   |                                           |   | 102,829    |           |   |   | 2,319,174 |   |
| Consulting fees – directors and officers (Note 3(c)) |   |               | 662,430    |   |                                           |   | 521,130    |           |   |   | 5,578,269 |   |
| Engineering consulting                                     |   |               | (26,606    | )      |                                           |   | -          |           |   |   | 711,029 |   |
| Exploration                                                |   |               | 990,613    |   |                                           |   | 75,288     |           |   |   | 6,322,786 |   |
| Filing fees                                                |   |               | 1,527      |   |                                           |   | 4,892      |           |   |   | 76,849 |   |
| Insurance                                                  |   |               | 24,740     |   |                                           |   | 10,477     |           |   |   | 322,902 |   |
| Investor relations, net                                    |   |               | 32,180     |   |                                           |   | -          |           |   |   | 802,504 |   |
| Licenses, taxes and filing fees, net                       |   |               | (3,911     | )      |                                           |   | (2,415     | )         |   |   | 376,036 |   |
| Management fees (Note 3(c))                                |   |               | 537,476    |   |                                           |   | 329,820    |           |   |   | 2,693,755 |   |
| Office (Note 3(c))                                         |   |               | 73,865     |   |                                           |   | 48,218     |           |   |   | 381,576 |   |
| Professional fees                                          |   |               | 65,517     |   |                                           |   | 24,971     |           |   |   | 1,827,261 |   |
| Research and development                                   |   |               | 88,071     |   |                                           |   | -          |           |   |   | 254,873 |   |
| Rent                                                       |   |               | 19,195     |   |                                           |   | 20,716     |           |   |   | 486,958 |   |
| Telephone                                                  |   |               | 5,315      |   |                                           |   | 3,414      |           |   |   | 113,142 |   |
| Transfer agent fees                                        |   |               | 2,591      |   |                                           |   | 921        |           |   |   | 23,157 |   |
| Travel and vehicle                                         |   |               | 55,822     |   |                                           |   | 23,692     |           |   |   | 1,197,377 |   |
|                                                       |   |               |       |   |                                           |   |       |           |   |   |   |   |
| Loss before other items                                    |   |               | (2,794,957 | )      |                                           |   | (1,177,904 | )              |   |   | (24,227,518 | ) |
|                                                       |   |               |       |   |                                           |   |       |           |   |   |   |   |
| Gain on sale of marketable securities                      |   |               | -          |   |                                           |   | -          |           |   |   | 87,217 |   |
| Loss on sale of assets                                     |   |               | -          |   |                                           |   | -          |           |   |   | *19,176 |   |
| Adjustment to market for marketable securities             |   |               | -          |   |                                           |   | -          |           |   |   | (67,922 | ) |
| Foreign exchange loss                                      |   |               | (189,170   | )      |                                           |   | (9,189     | )              |   |   | (424,537 | ) |
| Dividend income                                            |   |               | -          |   |                                           |   | -          |           |   |   | 4,597 |   |
| Interest income                                            |   |               | 930        |   |                                           |   | 3,014      |           |   |   | 349,321 |   |
| Change in fair value of warrants (Note 3(d))               |   |               | (543,150   | )      |                                           |   | 970,700    |           |   |   | (2,748,999 | ) |
| Change in fair value of preferred stock                    |   |               | -          |   |                                           |   | 180,000    |           |   |   | (240,000 | ) |
| Financing agreement penalty                                |   |               | -          |   |                                           |   | -          |           |   |   | (330,000 | ) |
|                                                       |   |               |       |   |                                           |   |       |           |   |   |   |   |
| Net loss and comprehensive loss for the period             |   |               | (3,526,347 | )      |                                           |   | (33,379    | )              |   |   | (27,617,017 | ) |
|   Preferred stock dividends                      |   |               | -          |   |                                           |   | -          |           |   |   | (1,537,500 | ) |
|                                                       |   |               |       |   |                                           |   |       |           |   |   |   |   |
| Net Loss Available for Distribution                        |   | $                  | (3,526,347 | )      |                                           | $      | (33,379    | )              |   | $ | (29,154,517 | ) |
|                                                       |   |               |       |   |                                           |   |       |           |   |   |   |   |
| Basic and Diluted Loss Per Share (Note 4)             |   | $                  | (0.07      | )      |                                           | $      | (0.00      | )              |   |   |   |   |
|                                                       |   |               |       |   |                                           |   |       |           |   |   |   |   |
| Weighted Average Number of Common Shares Outstanding       |   |               | 51,308,969 |   |                                           |   | 36,752,972 |           |   |   |   |   |

----

|                                                                        |   | Three Months Ended March 31, |       |   | Cumulative Periodfrom Inceptionon November 13, 2001 ThroughMarch 31, |   |
|-----------------------------------------------------------------------------|--------|------------------------------|------------|--------|----------------------------------------------------------------------|--------|
|                                                                        |   | 2011                         |       |   | 2010                                                                 |   |   | 2011 |   |
| Operating Activities                                                        |   |                         |       |   |                                                                 |   |   |   |   |
|   Net loss for period                                             |   | $                            | (3,526,347 | )      |                                                                 | $      | (33,379 | ) |   | $ | (27,617,017 | ) |
|   Items not involving cash                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Amortization                                                                |   |                         | 86,171     |   |                                                                 |   | 6,896 |   |   |   | 334,171 |   |
| Stock-based compensation                                                    |   |                         | 65,456     |   |                                                                 |   | - |   |   |   | 4,535,076 |   |
| Loss on sale of assets                                                      |   |                         | -          |   |                                                                 |   | - |   |   |   | 19,176 |   |
| Fair value of common stock issued for services                              |   |                         | 1,161,000  |   |                                                                 |   | 828,000 |   |   |   | 3,504,030 |   |
| Change in fair value of warrants                                            |   |                         | 543,150    |   |                                                                 |   | (970,700 | ) |   |   | 2,748,999 |   |
|       Change in fair value of preferred stock |   |                         | -          |   |                                                                 |   | (180,000 | ) |   |   | 240,000 |   |
| Financing agreement penalty                                                 |   |                         | -          |   |                                                                 |   | - |   |   |   | 330,000 |   |
|  Adjustment to market on marketable securities                    |   |                         | -          |   |                                                                 |   | - |   |   |   | 67,922 |   |
| Gain on sale of marketable securities                                       |   |                         | -          |   |                                                                 |   | - |   |   |   | (87,217 | ) |
| Non-cash resource property expenditures                                     |   |                         | -          |   |                                                                 |   | - |   |   |   | 600,000 |   |
|   Changes in non-cash working capital                             |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Prepaid expenses                                                            |   |                         | (1,402     | )      |                                                                 |   | (113,858 | ) |   |   | (74,912 | ) |
| Receivables                                                                 |   |                         | 33,255     |   |                                                                 |   | (5,109 | ) |   |   | (6,805 | ) |
| Marketable securities                                                       |   |                         | -          |   |                                                                 |   | - |   |   |   | 19,295 |   |
| Accounts payable and accrued liabilities                                    |   |                         | (336,632   | )      |                                                                 |   | (134,540 | ) |   |   | 91,335 |   |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash Used in Operating Activities                                           |   |                         | (1,975,349 | )      |                                                                 |   | (602,690 | ) |   |   | (15,295,947 | ) |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Investing Activities                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
|   Additions to property and equipment, net                        |   |                         | -          |   |                                                                 |   | (1,471 | ) |   |   | (232,000 | ) |
|   Additions to mineral property                                   |   |                         | -          |   |                                                                 |   | - |   |   |   | (651,950 | ) |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash Used in Investing Activities                                           |   |                         | -          |   |                                                                 |   | (1,471 | ) |   |   | (883,950 | ) |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Financing Activities                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
|   Repayment of long-term debt                                     |   |                         | -          |   |                                                                 |   | - |   |   |   | (100,000 | ) |
|   Issuance of preferred stock for cash                            |   |                         | -          |   |                                                                 |   | - |   |   |   | 5,000,000 |   |
|   Issuance of common stock for cash                               |   |                         | 2,380,000  |   |                                                                 |   | - |   |   |   | 15,230,171 |   |
|   Stock subscriptions received                                    |   |                         | 32,500     |   |                                                                 |   | 60,000 |   |   |   | 263,500 |   |
|   Working capital acquired on acquisition                         |   |                         | -          |   |                                                                 |   | - |   |   |   | 171 |   |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash Provided by Financing Activities                                       |   |                         | 2,412,500  |   |                                                                 |   | 60,000 |   |   |   | 20,393,842 |   |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
|  Foreign Exchange Effect on Cash                                       |   |                         | -          |   |                                                                 |   | - |   |   |   | (9,835 | ) |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Inflow (Outflow) of Cash and CashEquivalents                                |   |                         | 437,151    |   |                                                                 |   | (544,161 | ) |   |   | 4,204,110 |   |
| Cash and Cash Equivalents,                                                  |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
|   Beginning of Period                                             |   |                         | 3,766,959  |   |                                                                 |   | 1,343,994 |   |   |   | - |   |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Cash and Cash Equivalents, End of Period                                    |   | $                            | 4,204,110  |   |                                                                 | $      | 799,833 |   |   | $ | 4,204,110 |   |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Supplemental Cash Flow Information                                          |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
|   Income tax paid                                                 |   | $                            | -          |   |                                                                 | $      | - |   |   | $ | - |   |
|   Interest paid                                                   |   | $                            | -          |   |                                                                 | $      | - |   |   | $ | - |   |
|                                                                        |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
| Shares Issued for                                                           |   |                         |       |   |                                                                 |   |   |   |   |   |   |   |
|   Settlement of debt                                              |   | $                            | -          |   |                                                                 | $      | - |   |   | $ | 830,000 |   |
|   Services                                                        |   | $                            | 1,161,000  |   |                                                                 | $      | 164,000 |   |   | $ | 2,785,630 |   |
|   Mineral properties                                              |   | $                            | -          |   |                                                                 | $      | - |   |   | $ | 600,000 |   |
|   Issuance of common stock on conversion of preferred shares      |   | $                            | -          |   |                                                                 | $      | - |   |   | $ | 500,000 |   |

----

|                                                                    |   | Shares ofCommon Stock |       |   | Common Stockand Paid-InCapital inExcess ofPar Value |   |       | Shares ofPreferred Stock |   |   | Preferred Stockand Paid-inCapital inExcess ofPar Value |   |   | Share Subscriptions Received/ Obligation to Issue Shares |   |   | AccumulatedDeficit |   |    |   TotalStockholders’Equity (Deficit) |   |
|-------------------------------------------------------------------------|--------|-----------------------|------------|--------|-----------------------------------------------------|--------|------------|--------------------------|--------|--------|--------------------------------------------------------|--------|--------|---------------------------------------------------------------|--------|--------|--------------------|--------|---------|------------------------------------------------------|--------|
|                                                                    |   |                  |       |   |                                                |   |       |                     |   |   |                                                   |   |   |                                                          |   |   |               |   |    |                                                 |   |
| Balance, December 31, 2009                                              |   |                  | 36,400,972 |   |                                                | $      | 21,660,100 |                     |   |   | 625,000                                                |   |   | $                                                             | -      |   |               | $      | -       |                                                 |   | $ | (23,747,499 | ) |   | $ | (2,087,399 | ) |
| Stock-based compensation (Note 3(c))                                    |   |                  | -          |   |                                                |   | 120,409    |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 120,409 |   |
| Obligation to issue shares                                              |   |                  | -          |   |                                                |   | -          |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | (32,500 | )                                                    |   |   | - |   |   |   | (32,500 | ) |
| Warrants exercised (Note3(d))                                           |   |                  | 2,193,040  |   |                                                |   | 1,315,824  |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 1,315,824 |   |
| Options exercised (Note 3(b))                                           |   |                  | 50,000     |   |                                                |   | 25,000     |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 25,000 |   |
| Private placement (Note 3(b))                                           |   |                  | 5,384,624  |   |                                                |   | 3,186,947  |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 3,186,947 |   |
| Shares issued for services                                              |   |                  | 738,000    |   |                                                |   | 986,400    |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 986,400 |   |
| Shares issued for technology                                            |   |                  | 4,000,000  |   |                                                |   | 2,800,000  |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 2,800,000 |   |
| Shares issued upon conversion of preferred shares                       |   |                  | 1,000,000  |   |                                                |   | 740,000    |                     |   |   | (625,000                                               | )      |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 740,000 |   |
| Net loss for the year                                                   |   |                  | -          |   |                                                |   | -          |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | (2,246,280 | ) |   |   | (2,246,280 | ) |
| Balance, December 31, 2010                                              |   |                  | 49,766,636 |   |                                                |   | 30,834,680 |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | (32,500 | )                                                    |   |   | (25,993,779 | ) |   |   | 4,808,401 |   |
| Stock-based compensation (Note 3(c))                                    |   |                  | -          |   |                                                |   | 65,456     |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 65,456 |   |
| Obligation to issue shares                                              |   |                  | -          |   |                                                |   | -          |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | 32,500  |                                                 |   |   | - |   |   |   | 32,500 |   |
| Common stock issued for services (Note 3(c))                            |   |                  | 1,290,000  |   |                                                |   | 1,161,000  |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 1,161,000 |   |
| Additional paid in capital recognized on warrant conversion (Note 3(d)) |   |                  | -          |   |                                                |   | 2,550,000  |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 2,550,000 |   |
| Warrants exercised (Note3(d))                                           |   |                  | 4,250,000  |   |                                                |   | 2,125,000  |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 2,125,000 |   |
| Options exercised (Note 3(b))                                           |   |                  | 509,999    |   |                                                |   | 255,000    |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | - |   |   |   | 255,000 |   |
| Net loss for the period                                                 |   |                  | -          |   |                                                |   | -          |                     |   |   | -                                                      |   |   |                                                          | -      |   |               |   | -       |                                                 |   |   | (3,526,347 | ) |   |   | (3,526,347 | ) |
| Balance, March 31, 2011 (Unaudited)                                     |   |                  | 55,816,635 |   |                                                | $      | 36,991,136 |                     |   |   | -                                                      |   |   | $                                                             | -      |   |               | $      | -       |                                                 |   | $ | (29,520,126 | ) |   | $ | 7,471,010 |   |

----

| 1.   | NATURE OF BUSINESS AND BASIS OF PRESENTATION |
|----------------|----------------------------------------------|

| 2.   | PROPERTY AND EQUIPMENT |
|----------------|------------------------|

|               |   |           |    |   |
|--------------------|--------|----------------|---------|--------|
|               |   | March 31, 2011 |    |
|               |   |           | Cost    |   |   |   | AccumulatedAmortization |   |   |   | Net |   |
| Vehicles           |   | $              | 54,153  |   |   | $ | 47,055 |   |   | $ | 7,098 |   |
| Office furniture   |   |           | 18,268  |   |   |   | 6,928 |   |   |   | 11,340 |   |
| Office equipment   |   |           | 11,903  |   |   |   | 9,021 |   |   |   | 2,882 |   |
| Computer equipment |   |           | 8,197   |   |   |   | 7,251 |   |   |   | 946 |   |
| Computer software  |   |           | 1,541   |   |   |   | 1,009 |   |   |   | 532 |   |
| Field equipment    |   |           | 70,287  |   |   |   | 45,094 |   |   |   | 25,193 |   |
|               |   |           |    |   |   |   |   |   |   |   |   |   |
|               |   | $              | 164,349 |   |   | $ | 116,358 |   |   | $ | 47,991 |   |

|               |   | December 31, 2010 |    |
|--------------------|--------|-------------------|---------|
|               |   |              | Cost    |   |   |   | AccumulatedAmortization |   |   |   | Net |   |
| Vehicles           |   | $                 | 54,153  |   |   | $ | 45,080 |   |   | $ | 9,073 |   |
| Office furniture   |   |              | 18,268  |   |   |   | 5,689 |   |   |   | 12,579 |   |
| Office equipment   |   |              | 11,903  |   |   |   | 6,168 |   |   |   | 5,735 |   |
| Computer equipment |   |              | 8,197   |   |   |   | 6,842 |   |   |   | 1,355 |   |
| Computer software  |   |              | 1,541   |   |   |   | 933 |   |   |   | 608 |   |
| Field equipment    |   |              | 70,287  |   |   |   | 43,254 |   |   |   | 27,033 |   |
|               |   |              |    |   |   |   |   |   |   |   |   |   |
|               |   | $                 | 164,349 |   |   | $ | 107,966 |   |   | $ | 56,383 |   |

----

| 3.   | CAPITAL STOCK |
|----------------|---------------|

| (a)   | Common stock |
|-----------------|--------------|

| ·   | 1,290,000 shares of common stock were issued for services with a fair value of $1,161,000 Note 3(c)); |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | 4,250,000 shares of common stock were issued upon the exercise of warrants (Note 3(d)); and |
|--------------------|--------------------------------------------------------------------------------------------------|

| ·   | 509,999 shares of common stock were issued upon the exercise of stock options (Note 3(b)). |
|--------------------|--------------------------------------------------------------------------------------------|

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

----

| 3.   | CAPITAL STOCK (continued) |
|----------------|---------------------------|

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

|                              |   | March 31, 2011   |      |   | December 31, 2010             |   |
|-----------------------------------|--------|------------------|-----------|--------|-------------------------------|--------|
|                              |   | Number of Shares |      |   | Weighted AverageExercisePrice |   |   | Number of Shares |   |   | Weighted AverageExercisePrice |   |
|                              |   |             |      |   |                          |   |
| Outstanding - beginning of period |   |             | 2,740,000 |   |                          | $      | 0.53 |   |   |   | 2,790,000 |   |   | $ | 0.53 |   |
| Expired                           |   |             | (1        | )      |                          | $      | 0.50 |   |   |   | - |   |   |   | - |   |
| Exercised                         |   |             | (509,999  | )      |                          | $      | 0.50 |   |   |   | (50,000 | ) |   | $ | 0.50 |   |
|                              |   |             |      |   |                          |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding – end of period |   |             | 2,230,000 |   |                          | $      | 0.54 |   |   |   | 2,740,000 |   |   | $ | 0.53 |   |
| Exercisable – end of period |   |             | 2,230,000 |   |                          | $      | 0.54 |   |   |   | 2,740,000 |   |   | $ | 0.53 |   |

|             |   | Exercise |   |   | March 31, |   |      | December 31, |   |
|------------------|--------|----------|--------|--------|-----------|--------|-----------|--------------|--------|
| Expiry Date      |   | Price    |   |   | 2011      |   |      | 2010         |   |
|             |   |     |   |   |      |   |      |         |   |
| January 31, 2011 |   | $        | 0.50   |   |      |   | -         |         |   |   | 400,000 |   |
| May 31, 2011     |   | $        | 0.50   |   |      |   | 600,000   |         |   |   | 600,000 |   |
| August 1, 2011   |   | $        | 0.50   |   |      |   | 200,000   |         |   |   | 200,000 |   |
| August 31, 2011  |   | $        | 0.50   |   |      |   | 190,000   |         |   |   | 300,000 |   |
| August 31, 2012  |   | $        | 0.50   |   |      |   | 1,075,000 |         |   |   | 1,075,000 |   |
| June 23, 2013    |   | $        | 1.00   |   |      |   | 165,000   |         |   |   | 165,000 |   |
|             |   |     |   |   |      |   |      |         |   |   |   |   |
|             |   |     |   |   |      |   | 2,230,000 |         |   |   | 2,740,000 |   |

| Weighted Average Exercise Price |   |   | Number of Shares under Option |   |      | Aggregate Intrinsic Value |   |   | Weighted Average Remaining Contractual Life in Years |   |
|---------------------------------|--------|--------|-------------------------------|--------|-----------|---------------------------|--------|--------|------------------------------------------------------|--------|
|                            |   |   |                          |   |      |                      |   |   |                                                 |   |
| $                               | 0.50   |   |                          |   | 2,065,000 |                      |   | $      | 1,259,650                                            |   |   |   | 0.83 |   |
| $                               | 1.00   |   |                          |   | 165,000   |                      |   |   | 18,150                                               |   |   |   | 2.23 |   |
|                            |   |   |                          |   |      |                      |   |   |                                                 |   |   |   |   |   |
| $                               | 0.54   |   |                          |   | 2,230,000 |                      |   | $      | 1,277,800                                            |   |   |   | 0.93 |   |

----

| 3.   | CAPITAL STOCK (continued) |
|----------------|---------------------------|

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

|                                     |   | March 31, |      |   | March 31, |   |
|------------------------------------------|--------|-----------|-----------|--------|-----------|--------|
|                                     |   | 2011      |      |   | 2010      |   |
|                                     |   |      |      |   |      |   |
| Consulting fees                          |   | $         | 90,000    |   |      | $      | 62,100 |   |
| Consulting fees - directors and officers |   |      | 576,000   |   |      |   | 434,700 |   |
| Management fees                          |   |      | 497,456   |   |      |   | 289,800 |   |
| Office                                   |   |      | 63,000    |   |      |   | 41,400 |   |
|                                     |   |      |      |   |      |   |   |   |
|                                     |   | $         | 1,226,456 |   |      | $      | 828,000 |   |

----

| 3.   | CAPITAL STOCK (continued) |
|----------------|---------------------------|

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

|                              |   | March 31, 2011    |       |   | December 31, 2010            |   |
|-----------------------------------|--------|-------------------|------------|--------|------------------------------|--------|
|                              |   | Numberof Warrants |       |   | WeightedAverageExercisePrice |   |   | Numberof Warrants |   |   | WeightedAverageExercisePrice |   |
|                              |   |              |       |   |                         |   |   |   |   |
| Outstanding - beginning of period |   |              | 8,515,111  |   |                         | $      | 0.78 |   |   |   | 10,587,385 |   |   | $ | 0.56 |   |
| Issued                            |   |              | -          |   |                         |   | - |   |   |   | 3,775,326 |   |   | $ | 1.10 |   |
| Exercised                         |   |              | (4,250,000 | )      |                         | $      | 0.50 |   |   |   | (2,193,040 | ) |   | $ | 0.60 |   |
| Expired                           |   |              | -          |   |                         |   | - |   |   |   | (3,654,560 | ) |   | $ | 0.60 |   |
|                              |   |              |       |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding - end of period       |   |              | 4,265,111  |   |                         | $      | 1.05 |   |   |   | 8,515,111 |   |   | $ | 0.78 |   |

| Expiry Date             |   | Exercise Price |   |   | March 31, 2011 |   |      | December 31, 2010 |   |
|-------------------------|--------|----------------|--------|--------|----------------|--------|-----------|-------------------|--------|
|                    |   |           |   |   |           |   |      |              |   |
| April 1, 2011           |   | $              | 0.50   |   |           |   | -         |              |   |   | 4,250,000 |   |
| April 15, 2011 (note 6) |   | $              | 0.90   |   |           |   | 104,785   |              |   |   | 104,785 |   |
| June 30, 2011           |   | $              | 0.75   |   |           |   | 150,000   |              |   |   | 150,000 |   |
| June 30, 2012           |   | $              | 0.50   |   |           |   | 235,000   |              |   |   | 235,000 |   |
| June 30, 2012           |   | $              | 0.65   |   |           |   | 1,775,326 |              |   |   | 1,775,326 |   |
| December 31, 2015       |   | $              | 1.50   |   |           |   | 2,000,000 |              |   |   | 2,000,000 |   |
|                    |   |           |   |   |           |   |      |              |   |   |   |   |
|                    |   |           |   |   |           |   | 4,265,111 |              |   |   | 8,515,111 |   |

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

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

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

----

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

----

| 4.   | LOSS PER SHARE |
|----------------|----------------|

|                                                                                                       |   | Three Months EndedMarch 31, |
|------------------------------------------------------------------------------------------------------------|--------|-----------------------------|
|                                                                                                       |   | 2011                        |   |   | 2010 |   |
|                                                                                                       |   |                        |   |   |   |   |
| Net loss for period                                                                                        |   | $                           | (3,526,347 | ) |   | $ | (33,379 | ) |
|                                                                                                       |   |                        |   |   |   |   |   |   |
| Net loss available for distribution                                                                        |   | $                           | (3,526,347 | ) |   | $ | (33,379 | ) |
|                                                                                                       |   |                        |   |   |   |   |   |   |
| Allocation of undistributed loss                                                                           |   |                        |   |   |   |   |   |   |
|                                                                                                       |   |                        |   |   |   |   |   |   |
|   Common shares (100%, 2010 – 100.00 %)                                                    |   |                        | (3,526,347 | ) |   |   | (33,379 | ) |
|                                                                                                       |   |                        |   |   |   |   |   |   |
|                                                                                                       |   | $                           | (3,526,347 | ) |   | $ | (33,379 | ) |
| Basic loss per share amounts  Undistributed amounts    loss per common share |   | $                           | (0.07 | ) |   | $ | (0.001 | ) |

|                                                         |   | Three Months EndedMarch 31, |       |
|--------------------------------------------------------------|--------|-----------------------------|------------|
|                                                         |   | 2011                        |       |   | 2010 |   |
|                                                         |   |                        |       |   |   |   |
| Weighted average number of shares for undistributed amounts: |   |                        |       |   |   |   |
|     Common stock                         |   |                        | 51,308,969 |   |   |   | 36,752,972 |   |

----

| 5.   | FAIR VALUE MEASUREMENTS |
|----------------|-------------------------|

| (i)   | Level 1 - | quoted prices (unadjusted) in active markets for identical assets or liabilities;                                                                                                    |
|-------|-----------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (ii)  | Level 2 - | inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and |
| (iii) | Level 3 - | inputs for the asset or liability that are not based on observable market data (unobservable inputs).                                                                                |

| March 31, 2011            |   | Level 1 |      |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|---------------------------|--------|---------|-----------|--------|---------|--------|--------|---------|--------|--------|-------|--------|
| Cash and cash equivalents |   | $       | 4,204,110 |   |    | $      | -      |    |   | $      | -     |   |   | $ | 4,204,110 |   |

| December 31, 2010                  |   | Level 1 |      |   | Level 2 |   |      | Level 3 |   |   | Total |   |
|------------------------------------|--------|---------|-----------|--------|---------|--------|-----------|---------|--------|--------|-------|--------|
| Cash and cash equivalents          |   | $       | 3,766,959 |   |    | $      | -         |    |   | $      | -     |   |   | $ | 3,766,959 |   |
| Other liabilities – warrants |   | $       | -         |   |    | $      | 2,006,850 |    |   | $      | -     |   |   | $ | 2,006,850 |   |

| 6.   | SUBSEQUENT EVENT |
|----------------|------------------|

|   | · | On April 15, 2011, 94,306 broker warrants were exercised at a price of $0.90 per share for proceeds of $84,875. A further 10,479 warrants expired unexercised (Note 3(d)). |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

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

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

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

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

----

| ·   | During the quarter, stock-based compensation of $1,226,456  (2010: $828,000) was recognized as follows: |
|--------------------|-------------------------------------------------------------------------------------------------------------------|

|                                     |   |      |      |   |      |   |
|------------------------------------------|--------|-----------|-----------|--------|-----------|--------|
|                                     |   | March 31, |      |   | March 31, |   |
|                                     |   | 2011      |      |   | 2010      |   |
|                                     |   |      |      |   |      |   |
| Consulting fees                          |   | $         | 90,000    |   |      | $      | 62,100 72,900 |   |
| Consulting fees - directors and officers |   |      | 576,000   |   |      |   | 434,700 |   |
| Management fees                          |   |      | 497,456   |   |      |   | 298,800 |   |
| Office                                   |   |      | 63,000    |   |      |   | 41,400 |   |
|                                     |   |      |      |   |      |   |   |   |
|                                     |   | $         | 1,226,456 |   |      | $      | 828,000 |   |

| ·   | Advertising and Promotion of 39,699 (2010: 4,587), Investor relations of $32,180 (2010: $nil), and Travel of $55,822 (2010: 23,692) were all up significantly as the Company engaged outside advisors to provide market awareness and information dissemination services; |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Amortization of $86,171 (2010: $6,896) reflects normal amortization of  fixed assets plus the amortization of the technology rights which commenced in late 2010; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Engineering consulting reflects a significant refund received in the quarter from a supplier; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | Exploration of $990,613 (2010:$75,288) reflects the drilling program underway in the quarter; |
|--------------------|-----------------------------------------------------------------------------------------------|

| ·   | Professional fees of $65,517 (2010: $24,971) are as a result of 2010 audit and tax preparation fees in excess of accruals in 2010; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Research and development of $88,071 (2010: $nil) is the total of payments in the quarter to further our technology; |
|--------------------|---------------------------------------------------------------------------------------------------------------------|

----

----

----

|   |         | White Mountain Titanium Corporation |
|--------|--------------|-------------------------------------|
|   |         |                                |   |   |
|   |         |                                |   |   |
| Date:  | May 13, 2011 | By                                  | /s/ M. P. Kurtanjek |   |
|   |         |                                | Michael P. Kurtanjek, President |
|   |         |                                | (Principal Executive Officer) |
|   |         |                                |   |   |
|   |         |                                |   |   |
|   |         |                                |   |   |
| Date:  | May 13, 2011 | By                                  | /s/   C.E. Jenkins |   |
|   |         |                                | Charles E. Jenkins, Chief Financial Officer |
|   |         |                                | (Principal Financial Officer) |

----