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

| Large Accelerate Filer  ̈                                              | Accelerated Filer  ̈    |
|----------------------------------------------------------------------------|-----------------------------|
|                                                                       |                        |
| Non-Accelerated Filer  ̈ (Do not check if a smaller reporting company) | 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                       | 20     |
| Item 4.  Controls and Procedures                                                          | 20     |
|                                                                                                |   |
| PART II.  OTHER INFORMATION                                                               | 21     |
|                                                                                                |   |
| Item 6. Exhibits                                                                                    | 21     |
|                                                                                                |   |
| SIGNATURES                                                                                          | 21     |

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|                                                                            |   | June 30, 2011 |        |   | December 31, 2010 |   |
|---------------------------------------------------------------------------------|--------|-------------------------|-------------|--------|-----------------------------|--------|
|                                                                            |   | (Unaudited)             |        |   |                        |   |
|                                                                            |   |                    |        |   |                        |   |
| Assets                                                                          |   |                    |        |   |                        |   |
| Current                                                                         |   |                    |        |   |                        |   |
| Cash and cash equivalents                                                       |   | $                       | 3,473,364   |   |                        | $      | 3,766,959 |   |
| Prepaid expenses                                                                |   |                    | 57,893      |   |                        |   | 64,209 |   |
| Receivables                                                                     |   |                    | 25,747      |   |                        |   | 47,342 |   |
| Total Current Assets                                                            |   |                    | 3,557,004   |   |                        |   | 3,878,510 |   |
| Property and Equipment (Note 2)                                                 |   |                    | 68,362      |   |                        |   | 56,383 |   |
| Mineral Properties                                                              |   |                    | 651,950     |   |                        |   | 651,950 |   |
| Technology Rights (Note 3)                                                      |   |                    | 2,566,666   |   |                        |   | 2,722,222 |   |
|                                                                            |   |                    |        |   |                        |   |   |   |
| Total Assets                                                                    |   | $                       | 6,843,982   |   |                        | $      | 7,309,065 |   |
|                                                                            |   |                    |        |   |                        |   |   |   |
| Liabilities                                                                     |   |                    |        |   |                        |   |   |   |
| Current                                                                         |   |                    |        |   |                        |   |   |   |
| Accounts payable and accrued liabilities                                        |   | $                       | 18,144      |   |                        | $      | 493,814 |   |
| Total Current Liabilities                                                       |   |                    | 18,144      |   |                        |   | 493,814 |   |
| Other Liabilities – Warrants (Note 4(d))                                  |   |                    | -           |   |                        |   | 2,006,850 |   |
|                                                                            |   |                    |        |   |                        |   |   |   |
| Total Liabilities                                                               |   |                    | 18,144      |   |                        |   | 2,500,664 |   |
|                                                                            |   |                    |        |   |                        |   |   |   |
| Stockholders’ Equity                                                      |   |                    |        |   |                        |   |   |   |
| Common Stock and Paid-in Capital in Excess of $0.001 Par Value (Note 4(a))      |   |                    |        |   |                        |   |   |   |
| 100,000,000  shares authorized                                        |   |                    |        |   |                        |   |   |   |
| 56,760,941 (December 31, 2010 – 49,766,636) shares issued and outstanding |   |                    | 37,578,698  |   |                        |   | 30,834,680 |   |
| Subscription Receivable                                                         |   |                    | -           |   |                        |   | (32,500 | ) |
| Deficit Accumulated During the Exploration Stage                                |   |                    | (30,752,860 | )      |                        |   | (25,993,779 | ) |
|                                                                            |   |                    |        |   |                        |   |   |   |
| Total Stockholders’ Equity                                                |   |                    | 6,825,838   |   |                        |   | 4,808,401 |   |
|                                                                            |   |                    |        |   |                        |   |   |   |
| Total Liabilities and Stockholders’ Equity                                |   | $                       | 6,843,982   |   |                        | $      | 7,309,065 |   |

----

|                                                  |   |                         |       |   |                       |   |       |              |   |   |       |   |   | Cumulativefrom Inception |       |
|------------------------------------------------------------|--------|------------------------------|------------|--------|----------------------------|--------|------------|-------------------|--------|--------|------------|--------|--------|-------------------------------|------------|
|                                                       |   | Three Months Ended |       |   | Six Months Ended |   |       | November 13, |   |
|                                                       |   | June 30,                |       |   | June 30,              |   |       | 2001 through |   |
|                                                       |   | 2011                         |       |   | 2010                       |   |       | 2011              |   |   | 2010       |   |   | June 30, 2011       |       |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |
| Expenses                                                   |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |
| Advertising and promotion                                  |   | $                            | 3,594      |   |                       | $      | 27,253     |              |   | $      | 43,293     |   |   | $                             | 31,840     |   |   | $ | 361,540 |   |
| Amortization                                               |   |                         | 87,728     |   |                       |   | 6,907      |              |   |   | 173,899    |   |   |                          | 13,803     |   |   |   | 421,898 |   |
| Bank charges and interest                                  |   |                         | 7,688      |   |                       |   | 2,743      |              |   |   | 17,066     |   |   |                          | 5,211      |   |   |   | 55,442 |   |
| Consulting fees (Note 4(c))                                |   |                         | 55,700     |   |                       |   | 50,965     |              |   |   | 186,584    |   |   |                          | 153,794    |   |   |   | 2,374,874 |   |
| Consulting fees – directors and officers (Note 4(c)) |   |                         | 100,610    |   |                       |   | 86,430     |              |   |   | 763,040    |   |   |                          | 607,560    |   |   |   | 5,678,879 |   |
| Engineering consulting                                     |   |                         | (507       | )      |                       |   | -          |              |   |   | (27,113    | )      |   |                          | -          |   |   |   | 710,522 |   |
| Exploration                                                |   |                         | 532,775    |   |                       |   | 60,796     |              |   |   | 1,523,388  |   |   |                          | 136,084    |   |   |   | 6,855,561 |   |
| Filing fees                                                |   |                         | 3,278      |   |                       |   | 17,344     |              |   |   | 4,805      |   |   |                          | 22,236     |   |   |   | 80,127 |   |
| Insurance                                                  |   |                         | 8,214      |   |                       |   | 12,472     |              |   |   | 32,954     |   |   |                          | 22,949     |   |   |   | 331,116 |   |
| Investor relations, net                                    |   |                         | 30,118     |   |                       |   | -          |              |   |   | 62,298     |   |   |                          | -          |   |   |   | 832,622 |   |
| Licenses, taxes and filing fees, net                       |   |                         | 3,911      |   |                       |   | (4,726     | )                 |   |   | -          |   |   |                          | (7,141     | ) |   |   | 379,947 |   |
| Management fees (Note 4(c))                                |   |                         | 94,567     |   |                       |   | 131,696    |              |   |   | 632,043    |   |   |                          | 461,516    |   |   |   | 2,788,322 |   |
| Office (Note 4(c))                                         |   |                         | 7,948      |   |                       |   | 6,367      |              |   |   | 81,813     |   |   |                          | 54,585     |   |   |   | 389,524 |   |
| Professional fees                                          |   |                         | 41,572     |   |                       |   | 60,174     |              |   |   | 107,089    |   |   |                          | 85,145     |   |   |   | 1,868,833 |   |
| Research and development                                   |   |                         | 88,433     |   |                       |   | -          |              |   |   | 176,504    |   |   |                          | -          |   |   |   | 343,306 |   |
| Rent                                                       |   |                         | 21,235     |   |                       |   | 19,719     |              |   |   | 40,430     |   |   |                          | 40,435     |   |   |   | 508,193 |   |
| Telephone                                                  |   |                         | 6,885      |   |                       |   | 3,524      |              |   |   | 12,200     |   |   |                          | 6,938      |   |   |   | 120,,027 |   |
| Transfer agent fees                                        |   |                         | 1,407      |   |                       |   | 1,007      |              |   |   | 3,998      |   |   |                          | 1,928      |   |   |   | 24,564 |   |
| Travel and vehicle                                         |   |                         | 61,407     |   |                       |   | 24,135     |              |   |   | 117,229    |   |   |                          | 47,827     |   |   |   | 1,258,784 |   |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |   |   |   |   |   |
| Loss before other items                                    |   |                         | (1,156,562 | )      |                       |   | (506,806   | )                 |   |   | (3,951,519 | )      |   |                          | (1,684,710 | ) |   |   | (25,384,080 | ) |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |   |   |   |   |   |
| 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                                      |   |                         | (77,212    | )      |                       |   | (17,493    | )                 |   |   | (266,382   | )      |   |                          | (26,682    | ) |   |   | (501,749 | ) |
| Dividend income                                            |   |                         | -          |   |                       |   | -          |              |   |   | -          |   |   |                          | -          |   |   |   | 4,597 |   |
| Interest income                                            |   |                         | 1,040      |   |                       |   | 2,975      |              |   |   | 1,970      |   |   |                          | 5,989      |   |   |   | 350,361 |   |
| Change in fair value of warrants (Note 4(d))               |   |                         | -          |   |                       |   | 254,150    |              |   |   | (543,150   | )      |   |                          | 1,224,850  |   |   |   | (2,748,999 | ) |
| Change in fair value of preferred stock                    |   |                         | -          |   |                       |   | -          |              |   |   | -          |   |   |                          | -          |   |   |   | (240,000 | ) |
| Financing agreement penalty                                |   |                         | -          |   |                       |   | -          |              |   |   | -          |   |   |                          | -          |   |   |   | (330,000 | ) |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |   |   |   |   |   |
| Net loss and comprehensive loss for the period             |   |                         | (1,232,734 | )      |                       |   | (267,174   | )                 |   |   | (4,759,081 | )      |   |                          | (480,553   | ) |   |   | (28,849,751 | ) |
| Preferred stock dividends                                  |   |                         | -          |   |                       |   | -          |              |   |   | -          |   |   |                          | -          |   |   |   | (1,537,500 | ) |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |   |   |   |   |   |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |   |   |   |   |   |
| Net Loss Available for Distribution                        |   | $                            | (1,232,734 | )      |                       | $      | (267,174   | )                 |   | $      | (4,759,081 | )      |   | $                             | (480,553   | ) |   | $ | (30,387,251 | ) |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |   |   |   |   |   |
| Basic and Diluted Loss Per Share                           |   | $                            | (0.02      | )      |                       | $      | (0.007     | )                 |   | $      | (0.09      | )      |   | $                             | (0.01      | ) |   |   |   |   |
|                                                       |   |                         |       |   |                       |   |       |              |   |   |       |   |   |                          |       |   |   |   |   |   |
| Weighted Average Number of Common Shares Outstanding       |   |                         | 56,036,757 |   |                       |   | 37,120,972 |              |   |   | 53,719,349 |   |   |                          | 36,937,989 |   |   |   |   |   |

----

|                                           |   |                                          |       |   |          |   |       | Cumulative Period                     |   |
|------------------------------------------------|--------|-----------------------------------------------|------------|--------|---------------|--------|------------|--------------------------------------------|--------|
|                                           |   |                                          |       |   |          |   |       | from Inception                        |   |
|                                           |   |                                          |       |   |          |   |       | on November 13,2001 Through |   |
|                                           |   | Six Months Ended June 30, |       |   | June 30, |   |
|                                           |   | 2011                                          |       |   | 2010          |   |       | 2011                                       |   |
|                                           |   |                                          |       |   |          |   |       |                                       |   |
| Operating Activities                           |   |                                          |       |   |          |   |       |                                       |   |
| Net loss for period                            |   | $                                             | (4,759,081 | )      |          | $      | (480,553   | )                                          |   | $ | (28,849,751 | ) |
| Items not involving cash                       |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Amortization                                   |   |                                          | 173,899    |   |          |   | 13,803     |                                       |   |   | 421,898 |   |
| Stock-based compensation                       |   |                                          | 106,684    |   |          |   | 91,676     |                                       |   |   | 3,415,304 |   |
| Loss on sale of assets                         |   |                                          | -          |   |          |   | -          |                                       |   |   | 19,176 |   |
| Fair value of common stock issued for services |   |                                          | 1,161,000  |   |          |   | 828,000    |                                       |   |   | 4,665,030 |   |
| Change in fair value of warrants               |   |                                          | 543,150    |   |          |   | (1,224,850 | )                                          |   |   | 2,748,999 |   |
| Change in fair value of preferred stock        |   |                                          | -          |   |          |   | -          |                                       |   |   | 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                               |   |                                          | 6,316      |   |          |   | (24,009    | )                                          |   |   | (67,194 | ) |
| Receivables                                    |   |                                          | 21,595     |   |          |   | 26,052     |                                       |   |   | (18,465 | ) |
| Marketable securities                          |   |                                          | -          |   |          |   | -          |                                       |   |   | 19,295 |   |
| Accounts payable and accrued liabilities       |   |                                          | (475,670   | )      |          |   | (169,012   | )                                          |   |   | (47,702 | ) |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Cash Used in Operating Activities              |   |                                          | (3,222,107 | )      |          |   | (938,893   | )                                          |   |   | (16,542,705 | ) |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Investing Activities                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Additions to property and equipment, net       |   |                                          | 30,320     |   |          |   | (1,464     | )                                          |   |   | (198,488 | ) |
| Additions to mineral property                  |   |                                          | -          |   |          |   | -          |                                       |   |   | (651,950 | ) |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Cash Used in Investing Activities              |   |                                          | 30,320     |   |          |   | (1,464     | )                                          |   |   | (850,438 | ) |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Financing Activities                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Repayment of long-term debt                    |   |                                          | -          |   |          |   | -          |                                       |   |   | (100,000 | ) |
| Issuance of preferred stock for cash           |   |                                          | -          |   |          |   | -          |                                       |   |   | 5,000,000 |   |
| Issuance of common stock for cash              |   |                                          | 2,862,500  |   |          |   | 660,000    |                                       |   |   | 15,230,171 |   |
| Stock subscriptions received                   |   |                                          | 32,500     |   |          |   | -          |                                       |   |   | 32,500 |   |
| Working capital acquired on acquisition        |   |                                          | -          |   |          |   | -          |                                       |   |   | 171 |   |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Cash Provided by Financing Activities          |   |                                          | 2,895,000  |   |          |   | 660,000    |                                       |   |   | 20,876,342 |   |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Foreign Exchange Effect on Cash                |   |                                          | -          |   |          |   | -          |                                       |   |   | (9,835 | ) |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Inflow (Outflow) of Cash and Cash Equivalents  |   |                                          | (293,595   | )      |          |   | (280,357   | )                                          |   |   | 3,473,364 |   |
| Cash and Cash Equivalents,                     |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Beginning of Period                            |   |                                          | 3,766,959  |   |          |   | 1,343,994  |                                       |   |   | - |   |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Cash and Cash Equivalents, End of Period       |   | $                                             | 3,473,364  |   |          | $      | 1,063,637  |                                       |   | $ | 3,473,364 |   |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Supplemental Cash Flow Information             |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Income tax paid                                |   | $                                             | -          |   |          | $      | -          |                                       |   | $ | - |   |
| Interest paid                                  |   | $                                             | -          |   |          | $      | -          |                                       |   | $ | - |   |
|                                           |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Shares Issued for                              |   |                                          |       |   |          |   |       |                                       |   |   |   |   |
| Settlement of debt                             |   | $                                             | -          |   |          | $      | -          |                                       |   | $ | 830,000 |   |
| Services                                       |   | $                                             | 1,161,000  |   |          | $      | 828,000    |                                       |   | $ | 2,785,630 |   |
| Mineral properties                             |   | $                                             | -          |   |          | $      | -          |                                       |   | $ | 600,000 |   |

----

|                                                               |   | Shares ofCommonStock |       |   | Common Stockand Paid-InCapital inExcess ofPar Value |   |       | Shares ofPreferred Stock |   |   | Preferred Stockand Paid-inCapital inExcess ofPar Value |   |   | Share SubscriptionsReceived/ Obligation toIssue 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 4(c))                                    |   |                      | -          |   |                                                                         |   | 120,409    |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 120,409 |   |
| Obligation to issue shares                                              |   |                      | -          |   |                                                                         |   | -          |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | (32,500 | )                                                         |   |   | - |   |   |   | (32,500 | ) |
| Warrants exercised (Note 4(d))                                          |   |                      | 2,193,040  |   |                                                                         |   | 1,315,824  |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 1,315,824 |   |
| Options exercised (Note 4(b))                                           |   |                      | 50,000     |   |                                                                         |   | 25,000     |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 25,000 |   |
| Private placement (Note 4(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 4(c))                                    |   |                      | -          |   |                                                                         |   | 106,684    |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 106,684 |   |
| Obligation to issue shares                                              |   |                      | -          |   |                                                                         |   | -          |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | 32,500  |                                                      |   |   | - |   |   |   | 32,500 |   |
| Common stock issued for services (Note 4(c))                            |   |                      | 1,290,000  |   |                                                                         |   | 1,161,000  |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 1,161,000 |   |
| Additional paid in capital recognized on warrant conversion (Note 4(d)) |   |                      | -          |   |                                                                         |   | 2,550,000  |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 2,550,000 |   |
| Warrants exercised (Note 4(d))                                          |   |                      | 4,494,306  |   |                                                                         |   | 2,321,334  |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 2,321,334 |   |
| Options exercised (Note 4(b))                                           |   |                      | 1,209,999  |   |                                                                         |   | 605,000    |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | - |   |   |   | 605,000 |   |
| Net loss for the period                                                 |   |                      | -          |   |                                                                         |   | -          |                               |   |   | -                                                                               |   |   |                                                                  | -      |   |               |   | -       |                                                      |   |   | (4,759,081 | ) |   |   | (4,759,081 | ) |
| Balance, June 30, 2011 (Unaudited)                                      |   |                      | 56,760,941 |   |                                                                         | $      | 37,578,698 |                               |   |   | -                                                                               |   |   | $                                                                     | -      |   |               | $      | -       |                                                      |   | $ | (30,752,860 | ) |   | $ | 6,825,838 |   |

----

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

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

|               |   | June 30, 2011 |    |
|--------------------|--------|-------------------------|---------|
|               |   |                    |    |   | Accumulated |   |   |   |   |
|               |   | Cost                    |    |   | Amortization |   |   | Net |   |
|               |   |                    |    |   |   |   |   |   |   |   |   |   |
| Vehicles           |   | $                       | 83,738  |   |   | $ | 50,561 |   |   | $ | 33,177 |   |
| Office furniture   |   |                    | 18,859  |   |   |   | 8,106 |   |   |   | 10,753 |   |
| Office equipment   |   |                    | 11,903  |   |   |   | 7,484 |   |   |   | 4,419 |   |
| Computer equipment |   |                    | 8,197   |   |   |   | 7,666 |   |   |   | 531 |   |
| Computer software  |   |                    | 1,541   |   |   |   | 1,086 |   |   |   | 455 |   |
| Field equipment    |   |                    | 70,430  |   |   |   | 51,406 |   |   |   | 19,024 |   |
|               |   |                    |    |   |   |   |   |   |   |   |   |   |
|               |   | $                       | 194,669 |   |   | $ | 126,310 |   |   | $ | 68,359 |   |

|               |   | December 31, 2010 |    |
|--------------------|--------|-----------------------------|---------|
|               |   |                        |    |   | Accumulated |   |   |   |   |
|               |   | Cost                        |    |   | Amortization |   |   | 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. | TECHNOLOGY RIGHTS |
|----|-------------------|

|              |   | June 30, 2011 |      |
|-------------------|--------|-------------------------|-----------|
|              |   |                    |      |   | Accumulated |   |   |   |   |
|              |   |  Cost              |      |   | Amortization |   |   | Net |   |
|              |   |                    |      |   |   |   |   |   |   |
| Technology Rights |   |                    | 2,800,000 |   |   |   | 233,334 |   |   |   | 2,566,666 |   |
|              |   |                    |      |   |   |   |   |   |   |   |   |   |
|              |   | $                       | 2,800,000 |   |   | $ | 233,334 |   |   | $ | 2,566,666 |   |

|              |   | December 31, 2010 |      |
|-------------------|--------|-----------------------------|-----------|
|              |   |                        |      |   | Accumulated |   |   |   |   |
|              |   | Cost                        |      |   | Amortization |   |   |  Net |   |
|              |   |                        |      |   |   |   |   |   |   |
| Technology Rights |   |                        | 2,800,000 |   |   |   | 77,778 |   |   |   | 2,722,222 |   |
|              |   |                        |      |   |   |   |   |   |   |   |   |   |
|              |   | $                           | 2,800,000 |   |   | $ | 77,778 |   |   | $ | 2,722,222 |   |

| 4. | 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 4(c)); |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | 4,494,306 shares of common stock were issued upon the exercise of warrants (Note 4(d)) and a further 10,479 warrants expired unexercised; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 1,209,999 shares of common stock were issued upon the exercise of stock options (Note 4(b)). |
|--------|--------|----------------------------------------------------------------------------------------------|

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

----

----

| 4. | CAPITAL STOCK (continued) |
|----|---------------------------|

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

|                              |   | June 30, 2011 |       |   | December 31, 2010  |   |
|-----------------------------------|--------|-------------------------|------------|--------|------------------------------|--------|
|                              |   | Number ofShares    |       |   | WeightedAverageExercisePrice |   |   | Number ofShares |   |   | WeightedAverageExercisePrice |   |
|                              |   |                    |       |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding - beginning of period |   |                    | 2,740,000  |   |                         | $      | 0.53 |   |   |   | 2,790,000 |   |   | $ | 0.53 |   |
| Expired                           |   |                    | (1         | )      |                         | $      | 0.50 |   |   |   | - |   |   |   | - |   |
| Exercised                         |   |                    | (1,209,999 | )      |                         | $      | 0.50 |   |   |   | (50,000 | ) |   | $ | 0.50 |   |
|                              |   |                    |       |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding – end of period |   |                    | 1,530,000  |   |                         | $      | 0.93 |   |   |   | 2,740,000 |   |   | $ | 0.53 |   |
| Exercisable – end of period |   |                    | 1,530,000  |   |                         | $      | 0.55 |   |   |   | 2,740,000 |   |   | $ | 0.53 |   |

|                   |   | Exercise |   |   | June 30, |   |      | December 31, |   |
|------------------------|--------|----------|--------|--------|---------------|--------|-----------|-------------------|--------|
| Expiry Date       |   | Price    |   |   | 2011          |   |      | 2010              |   |
|                   |   |     |   |   |          |   |      |              |   |
| January 31, 2011       |   | $        | 0.50   |   |          |   | -         |              |   |   | 400,000 |   |
| May 31, 2011           |   | $        | 0.50   |   |          |   | -         |              |   |   | 600,000 |   |
| August 1, 2011(Note 6) |   | $        | 0.50   |   |          |   | 200,000   |              |   |   | 200,000 |   |
| August 31, 2011        |   | $        | 0.50   |   |          |   | 150,000   |              |   |   | 300,000 |   |
| August 31, 2012        |   | $        | 0.50   |   |          |   | 1,015,000 |              |   |   | 1,075,000 |   |
| June 23, 2013          |   | $        | 1.00   |   |          |   | 165,000   |              |   |   | 165,000 |   |
|                   |   |     |   |   |          |   |      |              |   |   |   |   |
|                   |   |     |   |   |          |   | 1,530,000 |              |   |   | 2,740,000 |   |

|  Weighted Average Exercise Price |       | Number of Sharesunder Option |   |      | Aggregate IntrinsicValue |   |   | Weighted AverageRemaining ContractualLife in Years |   |
|------------------------------------------------------|------------|----------------------------------------|--------|-----------|-------------------------------|--------|--------|-------------------------------------------------------------------|--------|
|                                                 |       |                                   |   |      |                          |   |   |                                                              |   |   |
| $                                               |  0.50 |                                   |   | 1,365,000 |                          |   | $      | 1,460,550                                                         |   |   |   | 0.90 |   |
| $                                               |  1.00 |                                   |   | 165,000   |                          |   |   | 94,050                                                            |   |   |   | 1.98 |   |
|                                                 |       |                                   |   |      |                          |   |   |                                                              |   |   |   |   |   |
| $                                               |  0.55 |                                   |   | 1,530,000 |                          |   | $      | 1,554,600                                                         |   |   |   | 1.02 |   |

----

| 4. | CAPITAL STOCK (continued) |
|----|---------------------------|

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

|                                     |   | June 30, |      |   | June 30, |   |
|------------------------------------------|--------|---------------|-----------|--------|---------------|--------|
|                                     |   | 2011          |      |   | 2010          |   |
|                                     |   |          |      |   |          |   |
| Consulting fees                          |   | $             | 90,000    |   |          | $      | 62,100 |   |
| Consulting fees - directors and officers |   |          | 576,000   |   |          |   | 434,700 |   |
| Management fees                          |   |          | 497,456   |   |          |   | 381,476 |   |
| Office                                   |   |          | 63,000    |   |          |   | 41,400 |   |
|                                     |   |          |      |   |          |   |   |   |
|                                     |   | $             | 1,291,912 |   |          | $      | 919,676 |   |

----

| 4. | CAPITAL STOCK (continued) |
|----|---------------------------|

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

|                              |   | June 30, 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                         |   |                    | (4,494,306 | )      |                         | $      | 0.50 |   |   |   | (2,193,040 | ) |   | $ | 0.60 |   |
| Expired                           |   |                    | (10,479    | )      |                         |   | 0.90 |   |   |   | (3,654,560 | ) |   | $ | 0.60 |   |
|                              |   |                    |       |   |                         |   |   |   |   |   |   |   |   |   |   |   |
| Outstanding - end of period       |   |                    | 4,010,326  |   |                         | $      | 1.09 |   |   |   | 8,515,111 |   |   | $ | 0.78 |   |

| Expiry Date       |   | Exercise Price |   |   | June 30, 2011 |   |      | December 31,2010 |   |
|------------------------|--------|---------------------|--------|--------|-------------------------|--------|-----------|-----------------------|--------|
|                   |   |                |   |   |                    |   |      |                  |   |
| April 1, 2011          |   | $                   | 0.50   |   |                    |   | -         |                  |   |   | 4,250,000 |   |
| April 15, 2011         |   | $                   | 0.90   |   |                    |   | -         |                  |   |   | 104,785 |   |
| June 30, 2011          |   | $                   | 0.75   |   |                    |   | -         |                  |   |   | 150,000 |   |
| June 30, 2012 (Note 6) |   | $                   | 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 |   |
|                   |   |                |   |   |                    |   |      |                  |   |   |   |   |
|                   |   |                |   |   |                    |   | 4,010,326 |                  |   |   | 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; (This condition has not been met as at June 30, 2011); |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (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. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4.  | CAPITAL STOCK (continued) |
|----------|---------------------------|

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

----

| 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).                                                                                |

| June 30, 2011   |   | Level 1 |      |   | Level 2 |   |   | Level 3 |   |   | Total |   |
|---------------------------|--------|--------------|-----------|--------|--------------|--------|--------|--------------|--------|--------|-------|--------|
| Cash and cash equivalents |   | $            | 3,473,364 |   |         | $      | -      |         |   | $      | -     |   |   | $ | 3,473,364 |   |

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

|   | · | 200,000 options were exercised at a price of  $0.50 for proceeds of $100,000; and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | 5,000 warrants were exercised at a price of $0.50 per share for proceeds of $2,500. |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | 200,000 shares each to two officers upon the signing of the first definitive off-take agreements; |
|--------|--------|---------------------------------------------------------------------------------------------------|

|   | · | 300,000 shares each to two officers upon the signing of the first definitive strategic alliance agreement(s) and/or arrangement of project capital; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 100,000 shares to the Chilean Project Manager upon the completion of a Final Feasibility Study; and |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | 75,000 shares to a marketing consultant upon the signing of the first definitive off-take agreements. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

----

----

|   | · | 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 six months ended June 30, 2011 and 2010, stock-based compensation of $1,226,456 (2010: $828,000) was recognized; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------|

|   | · | Advertising and Promotion of $3,594 (YTD: $43,293 (2010: 27,253 and 31,840), Investor relations of $30,118 (YTD: $62,298) (2010: $nil), and Travel of $61,407 (YTD: $117,229) (2010: $24,135 and $47,827) were all up significantly as the Company engaged outside advisors to provide market awareness and information dissemination services, and traveled significantly to meet with investors and with consultants; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Amortization of $87,728 (YTD: $173,899) (2010: $6,907 and $13,803) reflects normal amortization of  fixed assets and the amortization of the technology rights which commenced in late 2010; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Engineering consulting reflects a significant recovery of expenditures  received in the quarter from a supplier in the first quarter of 2011; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Research and development of $88,433 (YTD: $176,504) (2010: $nil) reflects payments made to further our technology; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------|

----

----

|   | 31.1 | Rule 15d-14(a) Certification by Principal Executive Officer |
|--------|------|-------------------------------------------------------------|

|   | 31.2 | Rule 15d-14(a) Certification by Chief Financial Officer |
|--------|------|---------------------------------------------------------|

|   | 32.1 | Section 1350 Certification of Principal Executive Officer |
|--------|------|-----------------------------------------------------------|

|   | 32.2 | Section 1350 Certification of Chief Financial Officer |
|--------|------|-------------------------------------------------------|

|   |            | White Mountain Titanium Corporation |
|--------|-----------------|-------------------------------------|
|   |            |                                |   |
| Date:  | August 15, 2011 | By                                  | /s/ M. P. Kurtanjek |
|   |            |                                | Michael P. Kurtanjek, President |
|   |            |                                | (Principal Executive Officer) |
|   |            |                                |   |
| Date:  | August 15, 2011 | By                                  | /s/  C.E. Jenkins |
|   |            |                                | Charles E. Jenkins, Chief Financial Officer |
|   |            |                                | (Principal Financial Officer) |

----