---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-Q

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

For the quarterly period ended March 31, 2011

OR

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

For the transition period from ________________to
________________

Commission File No. 333-139037

| | **Resources Corp.**
| | -------------------

(Exact name of registrant as specified in its charter)

|NEVADA                          | 91-1956240         
|------------------------------- | -------------------
|(State or other jurisdiction of | (I.R.S. Employer   
|incorporation or organization)  | Identification No.)

360 BAY STREET  SUITE 301TORONTO, ONTARIO  M5H
2V6  CANADA(Address of principal executive offices)

(416) 366-4227(Registrants telephone number,
including area code)

Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to the
filing requirements for the past 90 days.

[X] Yes [  ] No

Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-T during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).

[X] Yes [  ] No

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

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

Indicate by check mark whether the registrant is a shell
company (as defined in Rule 12b-2 of the Exchange Act): [ ] Yes [X] No

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date.

|Class                           | Outstanding as at May 12, 2011
|------------------------------- | ------------------------------
|Common stock - $0.001 par value | 43,661,179                    

---

TABLE OF CONTENTS

|        |                                                                                                            | Page
|------- | ---------------------------------------------------------------------------------------------------------- | ----
|PART I  | FINANCIAL INFORMATION                                                                                      |     
|        |                                                                                                            |     
|Item 1  | Financial Statements
      (Unaudited)                                                                     |     
|        | Consolidated Balance Sheets as of March 31,
      2011 and December 31, 2010                               | 1   
|        | Consolidated Statements of
      Operations for the three months ended March 31, 2011 and 2010             | 2   
|        | Consolidated Statements of Cash Flows for the
      three months ended March 31, 2011 and 2010             | 3   
|        | Consolidated Statements of
      Changes in Stockholders Equity for the three months ended March 31, 2011 | 5   
|        | Notes to the Consolidated Financial Statements                                                             | 7   
|Item 2  | Managements Discussion and
      Analysis of Financial Conditions and Results of Operations               | 22  
|Item 3  | Quantitative and Qualitative Disclosures about
      Market Risk                                           | 30  
|Item 4  | Controls and Procedures                                                                                    | 30  
|        |                                                                                                            |     
|PART II | OTHER INFORMATION                                                                                          |     
|        |                                                                                                            |     
|Item 1  | Legal Proceedings                                                                                          | 31  
|Item 1A | Risk Factors                                                                                               | 32  
|Item 2  | Unregistered Sales of Equity
      Securities and Use of Proceeds                                          | 32  
|Item 3  | Defaults upon Senior Securities                                                                            | 32  
|Item 4  | [Removed and Reserved]                                                                                     | 32  
|Item 5  | Other Information                                                                                          | 32  
|Item 6  | Exhibits                                                                                                   | 32  

---

PART I  FINANCIAL INFORMATION

Item
1.           FINANCIAL
STATEMENTS

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) CONSOLIDATED BALANCE SHEETS(Expressed in U.S. Dollars)
(unaudited) AS AT

|                                                                                                                      |   | March 31,   |   |   | December 31, |  
|--------------------------------------------------------------------------------------------------------------------- | - | ----------- | - | - | ------------ | -
|                                                                                                                      |   | 2010        |   |   | 2010         |  
|                                                                                                                      |   | (unaudited) |   |   |              |  
|ASSETS                                                                                                                |   |             |   |   |              |  
|Current                                                                                                               |   |             |   |   |              |  
|Cash and
      cash equivalents                                                                                       | $ | 9,283,801   |   | $ | 10,096,122   |  
|Investment in
      trading securities, at fair value (cost of $531,396 (December 31, 2010 -
      $78,318)) (Note 4) |   | 524,633     |   |   | 129,141      |  
|Receivables and other assets                                                                                          |   | 368,111     |   |   | 125,354      |  
|Total current
      assets                                                                                            |   | 10,176,545  |   |   | 10,350,617   |  
|Restricted cash(Note
      10)                                                                                        |   | 220,961     |   |   | 220,000      |  
|Equipment(Note 5)                                                                                                     |   | 932,605     |   |   | 735,426      |  
|Deferred financing costs(Note 6)                                                                                      |   |            |   |   |             |  
|Oil and gas investment(Note 7)                                                                                        |   |            |   |   |             |  
|Mineral properties(Note 8)                                                                                            |   | 1,302,422   |   |   | 1,713,862    |  
|TOTAL ASSETS                                                                                                          | $ | 12,632,533  |   | $ | 13,019,905   |  
|LIABILITIES AND
      STOCKHOLDERS EQUITY                                                                            |   |             |   |   |              |  
|Current                                                                                                               |   |             |   |   |              |  
|Accounts
      payable and accrued liabilities                                                                        | $ | 540,857     |   | $ | 517,236      |  
|Convertible debentures
      (Note 9)                                                                                 |   |            |   |   |             |  
|Total current
      liabilities                                                                                       |   | 540,857     |   |   | 517,236      |  
|Asset retirement obligation(Note 10)                                                                                  |   | 159,395     |   |   | 155,395      |  
|Total
      liabilities                                                                                               |   | 700,252     |   |   | 672,631      |  
|Stockholders equity                                                                                                  |   |             |   |   |              |  
|Capital
      stock (Note 11)                                                                                         |   |             |   |   |              |  
|Authorized                                                                                                            |   |             |   |   |              |  
|250,000,000 common shares with a par value of $0.001                                                                  |   |             |   |   |              |  
|Issued and outstanding                                                                                                |   |             |   |   |              |  
|42,986,179 common shares (December 31, 2010  42,961,179 common
      shares)                                         |   | 42,986      |   |   | 42,961       |  
|Additional paid in
      capital                                                                                      |   | 26,148,589  |   |   | 26,089,803   |  
|Deficit                                                                                                               |   | (1,427,764  | ) |   | (1,427,764   | )
|Deficit accumulated
      during the exploration stage                                                                |   | (12,752,827 | ) |   | (12,321,365  | )
|Total
      Xtra-Gold Resources Corp. stockholders equity                                                            |   | 12,010,984  |   |   | 12,383,635   |  
|Non-controlling interest                                                                                              |   | (78,703     | ) |   | (36,361      | )
|Total
      stockholders equity                                                                                      |   | 11,932,281  |   |   | 12,347,274   |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                            | $ | 12,632,533  |   | $ | 13,019,905   |  

History and organization of the Company(Note 1)
Contingency and commitments(Note 15) Subsequent events
(Note 16)

The accompanying notes are an integral part of these
consolidated financial statements.

- 1 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company)CONSOLIDATED STATEMENTS OF OPERATIONS(Expressed
in U.S. Dollars) (unaudited)

|                                                                                  |   | Cumulative       |            |   |                |            |   |                |  
|--------------------------------------------------------------------------------- | - | ---------------- | ---------- | - | -------------- | ---------- | - | -------------- | -
|                                                                                  |   | amounts from     |            |   |                |            |   |                |  
|                                                                                  |   | the beginning of |            |   |                |            |   |                |  
|                                                                                  |   | the exploration  |            |   |                |            |   |                |  
|                                                                                  |   | stage on         |            |   | 3 Month Period |            |   | 3 Month Period |  
|                                                                                  |   | January 1, 2003  |            |   | Ended          |            |   | Ended          |  
|                                                                                  |   | to March 31,     |            |   | March 31,      |            |   | March 31,      |  
|                                                                                  |   | 2011             |            |   | 2011           |            |   | 2010           |  
|                                                                                  |   |                  |            |   |                |            |   |                |  
|EXPENSES                                                                          |   |                  |            |   |                |            |   |                |  
|Amortization                                                                      | $ | 330,832          |            | $ | 30,402         |            | $ | 10,753         |  
|Exploration                                                                       |   | 16,606,321       |            |   | 1,568,978      |            |   | 181,907        |  
|General and
      administrative                                                  |   | 6,585,778        |            |   | 255,345        |            |   | 234,193        |  
|Write-off
      of mineral property                                               |   | 26,000           |            |   |               |            |   |               |  
|                                                                                  |   |                  |            |   |                |            |   |                |  
|LOSS BEFORE OTHER
      ITEMS                                                     |   | (23,548,931      | )          |   | (1,854,725     | )          |   | (426,853       | )
|                                                                                  |   |                  |            |   |                |            |   |                |  
|OTHER ITEMS                                                                       |   |                  |            |   |                |            |   |                |  
|Foreign exchange gain                                                             |   | 657,899          |            |   | 107,247        |            |   | 44,913         |  
|Interest
      expense                                                            |   | (241,936         | )          |   |               |            |   | (641           | )
|Realized gains on sales
      of trading securities                               |   | 194,002          |            |   |               |            |   | 83,199         |  
|Net
      unrealized gain (loss) on trading securities                            |   | (184,372         | )          |   | (19,509        | )          |   | 152,285        |  
|Other income                                                                      |   | 868,186          |            |   | 11,350         |            |   | 17,991         |  
|Recovery
      of gold                                                            |   | 9,092,134        |            |   | 1,021,775      |            |   |               |  
|Gain on disposal of
      property or equipment                                   |   | 356,488          |            |   | 260,058        |            |   |               |  
|Write-off
      of investment in trading securities                               |   | (25,000          | )          |   |               |            |   |               |  
|                                                                                  |   |                  |            |   |                |            |   |                |  
|                                                                                  |   | 10,717,401       |            |   | 1,380,921      |            |   | 297,747        |  
|                                                                                  |   |                  |            |   |                |            |   |                |  
|Consolidated loss for the
      period                                            |   | (12,831,530      | )          |   | (473,804       | )          |   | (129,106       | )
|                                                                                  |   |                  |            |   |                |            |   |                |  
|Net loss attributable to
      non-controlling interest                           |   | 78,703           |            |   | 42,342         |            |   | 16,908         |  
|                                                                                  |   |                  |            |   |                |            |   |                |  
|Net loss attributable to Xtra-Gold Resources Corp.                                | $ | (12,752,827      | )          | $ | (431,462       | )          | $ | (112,198       | )
|                                                                                  |   |                  |            |   |                |            |   |                |  
|Basic and diluted loss attributable to common
      shareholders per common share |   |                  |            | $ | (0.01          | )          | $ | (0.00          | )
|                                                                                  |   |                  |            |   |                |            |   |                |  
|Basic and diluted weighted average number of
      common shares outstanding      |   |                  | 42,964,831 |   |                | 33,342,096 |  

The accompanying notes are an integral part of these
consolidated financial statements.

- 2 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in U.S.
Dollars) (unaudited)

|                                                          |   | Cumulative       |   |   |                |   |   |                |  
|--------------------------------------------------------- | - | ---------------- | - | - | -------------- | - | - | -------------- | -
|                                                          |   | amounts from     |   |   |                |   |   |                |  
|                                                          |   | the beginning of |   |   |                |   |   |                |  
|                                                          |   | the exploration  |   |   |                |   |   |                |  
|                                                          |   | stage on         |   |   | 3 Month Period |   |   | 3 Month Period |  
|                                                          |   | January 1, 2003  |   |   | Ended          |   |   | Ended          |  
|                                                          |   | to March 31,     |   |   | March 31,      |   |   | March 31,      |  
|                                                          |   | 2011             |   |   | 2011           |   |   | 2010           |  
|                                                          |   |                  |   |   |                |   |   |                |  
|CASH FLOWS FROM OPERATING
      ACTIVITIES                |   |                  |   |   |                |   |   |                |  
|Loss for the period                                       | $ | (12,831,530      | ) | $ | (473,804       | ) | $ | (129,106       | )
|Items not
      affecting cash:                           |   |                  |   |   |                |   |   |                |  
|Amortization                                              |   | 330,832          |   |   | 30,402         |   |   | 10,753         |  
|Amortization of deferred financing costs                  |   | 46,202           |   |   |               |   |   | 1,283          |  
|Accretion
      of asset retirement obligation            |   | 28,262           |   |   | 4,000          |   |   | 1,798          |  
|Shares issued for services                                |   | 202,365          |   |   |               |   |   |               |  
|Stock-based
      compensation                            |   | 1,500,000        |   |   | 21,311         |   |   | 24,075         |  
|Unrealized foreign exchange gain                          |   | (470,570         | ) |   | (3,561         | ) |   | (39,297        | )
|Realized
      gain on sale of trading securities         |   | (194,002         | ) |   |               |   |   | (83,199        | )
|Purchase of trading securities                            |   | (11,564,690      | ) |   |               |   |   |               |  
|Proceeds on
      sale of trading securities              |   | 11,916,697       |   |   |               |   |   | 875,254        |  
|Unrealized loss (gain) loss on trading securities         |   | 184,372          |   |   | 19,509         |   |   | (152,285       | )
|Gain on
      disposal of property or equipment           |   | (355,400         | ) |   | (260,058       | ) |   |               |  
|Write-off of mineral property                             |   | 26,000           |   |   |               |   |   |               |  
|Expenses
      paid by stockholders                       |   | 2,700            |   |   |               |   |   |               |  
|Write-off of investment in trading securities             |   | 25,000           |   |   |               |   |   |                |  
|                                                          |   |                  |   |   |                |   |   |                |  
|Changes
      in non-cash working capital items:          |   |                  |   |   |                |   |   |                |  
|Increase in
      receivables and other                   |   | (359,736         | ) |   | (242,757       | ) |   | (18,225        | )
|Increase in accounts payable and accrued liabilities      |   | 530,165          |   |   | 23,621         |   |   | 20,380         |  
|Increase in
      due to related party                    |   | 50,000           |   |   |               |   |   |               |  
|                                                          |   |                  |   |   |                |   |   |                |  
|Net cash provided by (used in) operating
      activities |   | (10,933,333      | ) |   | (881,337       | ) |   | 511,431        |  
|                                                          |   |                  |   |   |                |   |   |                |  
|CASH FLOWS FROM FINANCING ACTIVITIES                      |   |                  |   |   |                |   |   |                |  
|Proceeds
      from issuance of convertible debentures    |   | 900,000          |   |   |               |   |   |               |  
|Deferred financing costs                                  |   | (46,202          | ) |   |               |   |   |               |  
|Repurchase of capital stock                               |   | (165,000         | ) |   |               |   |   | (108,000       | )
|Issuance of capital
      stock, net of financing costs   |   | 20,654,736       |   |   | 37,500         |   |   | 99,950         |  
|                                                          |   |                  |   |   |                |   |   |                |  
|Net cash provided by
      financing activities           |   | 21,343,534       |   |   | 37,500         |   |   | (8,050         | )

- continued -

The accompanying notes are an integral part of these
consolidated financial statements.

- 3 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) CONSOLIDATED STATEMENTS OF CASH FLOWS(Expressed in U.S.
Dollars) (unaudited)

|                                                            |   | Cumulative       |   |   |            |   |   |           |  
|----------------------------------------------------------- | - | ---------------- | - | - | ---------- | - | - | --------- | -
|                                                            |   | amounts from     |   |   |            |   |   |           |  
|                                                            |   | the beginning of |   |   |            |   |   |           |  
|                                                            |   | the exploration  |   |   | 3 Month    |   |   | 3 Month   |  
|                                                            |   | stage on         |   |   | Period     |   |   | Period    |  
|                                                            |   | January 1, 2003  |   |   | Ended      |   |   | Ended     |  
|                                                            |   | to March 31,     |   |   | March 31,  |   |   | March 31, |  
|                                                            |   | 2011             |   |   | 2011       |   |   | 2010      |  
|                                                            |   |                  |   |   |            |   |   |           |  
|Continued                                                   |   |                  |   |   |            |   |   |           |  
|                                                            |   |                  |   |   |            |   |   |           |  
|CASH FLOWS FROM INVESTING
      ACTIVITIES                  |   |                  |   |   |            |   |   |           |  
|Acquisition of equipment                                    |   | (1,143,696       | ) |   | (255,523   | ) |   | (124,081  | )
|Deposit
      on equipment                                  |   | (151,506         | ) |   |           |   |   |          |  
|Restricted cash                                             |   | (220,961         | ) |   | (961       | ) |   |          |  
|Oil and
      gas property expenditures                     |   | (250,137         | ) |   |           |   |   |          |  
|Acquisition of cash on
      purchase of subsidiary         |   | 11,510           |   |   |           |   |   |          |  
|Acquisition of subsidiary                                   |   | (25,000          | ) |   |           |   |   |          |  
|Option payment received                                     |   | 25,000           |   |   |           |   |   |          |  
|Proceeds
      on disposal of assets                        |   | 628,390          |   |   | 288,000    |   |   |          |  
|                                                            |   |                  |   |   |            |   |   |           |  
|Net cash
      provided by (used in) investing activities   |   | (1,126,400       | ) |   | 31,516     |   |   | (124,081  | )
|                                                            |   |                  |   |   |            |   |   |           |  
|Change in cash and cash
      equivalents during the period |   | 9,283,801        |   |   | (812,321   | ) |   | 379,300   |  
|                                                            |   |                  |   |   |            |   |   |           |  
|Cash and cash equivalents,
      beginning of the period    |   |                 |   |   | 10,096,122 |   |   | 622,670   |  
|                                                            |   |                  |   |   |            |   |   |           |  
|Cash and cash equivalents, end of the period                | $ | 9,283,801        |   | $ | 9,283,801  |   | $ | 1,001,970 |  

Supplemental disclosure with respect to cash flows (Note
13)

The accompanying notes are an integral part of these
consolidated financial statements.

- 4 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Expressed in
U.S. Dollars) (unaudited)

Common Stock
    
    
    
    
    
    
    
    
    
    
    
    DeficitAccumulatedAdditional
    
    
    
    
    
    Non-
    
    
    During theNumber
    
    
    
    
    
    Paid in
    
    
    
    
    
    Controlling
    
    
    Explorationof Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Interest
    
    
    Stage
    
    
    TotalBalance, December 31,
      2009
    
    33,231,477
    
    $
    33,231
    
    $
    14,771,222
    
    $
    (1,427,764
    )
    $
    (76,629
    )
    $
    (9,304,452
    )
    $
    3,995,608February, 2010  Conversion
      of debenture at $1.00 per share
    
    250,000
    
    
    250
    
    
    249,750
    
    
    
    
    
    
    
    
    
    
    
    250,000March, 2010  Repurchase and cancellation of
      shares at $1.33 per share
    
    (80,891
    )
    
    (80
    )
    
    (107,920
    )
    
    
    
    
    
    
    
    
    
    
    (108,000
    )April, 2010  Private
      placement at $1.00 per unit
    
    838,000
    
    
    838
    
    
    837,162
    
    
    
    
    
    
    
    
    
    
    
    838,000June, 2010  Private placement at $1.00 per
      unit
    
    250,000
    
    
    250
    
    
    249,750
    
    
    
    
    
    
    
    
    
    
    
    250,000August, 2010  Conversion of
      warrants at $1.00 per share
    
    360,000
    
    
    360
    
    
    359,640
    
    
    
    
    
    
    
    
    
    
    
    360,000November, 2010  Initial public offering at
      CAD$1.35 (USD$1.33) per share
    
    8,092,593
    
    
    8,092
    
    
    10,744,621
    
    
    
    
    
    
    
    
    
    
    
    10,752,713December, 2010  Conversion
      of warrants at $1.50 per share
    
    20,000
    
    
    20
    
    
    29,980
    
    
    
    
    
    
    
    
    
    
    
    30,000Share issuance costs
    
    
    
    
    
    
    
    (1,455,909
    )
    
    
    
    
    
    
    
    
    
    
    (1,455,909
    )Stock-based compensation
    
    
    
    
    
    
    
    411,507
    
    
    
    
    
    
    
    
    
    
    
    411,507Loss (income) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,268
    
    
    (3,016,913
    )
    
    (2,976,645
    )Balance, December 31, 2010
    
    42,961,179
    
    $
    42,961
    
    $
    26,089,803
    
    $
    (1,427,764
    )
    
    (36,361
    )
    
    (12,321,365
    )
    $
    12,347,274


The accompanying notes are an integral part of these
consolidated financial statements.

- 5 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (Expressed in
U.S. Dollars) (unaudited)

Continued
      ...Common Stock
    
    
    
    
    
    
    
    
    
    
    
    DeficitAccumulatedAdditional
    
    
    
    
    
    Non-
    
    
    During theNumber
    
    
    
    
    
    Paid in
    
    
    
    
    
    Controlling
    
    
    Explorationof Shares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Interest
    
    
    Stage
    
    
    TotalBalance, December 31,
      2010
    
    42,961,179
    
    $
    42,961
    
    $
    26,089,803
    
    $
    (1,427,764
    )
    $
    (36,361
    )
    $
    (12,321,365
    )
    $
    12,347,274March, 2011  Exercise of
      warrants at $1.50 per share
    
    25,000
    
    
    25
    
    
    37,475
    
    
    
    
    
    
    
    
    
    
    
    37,500Stock-based compensation
    
    
    
    
    
    
    
    21,311
    
    
    
    
    
    
    
    
    
    
    
    21,311Loss (income) for the year
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42,342
    )
    
    (431,462
    )
    
    (473,804
    )Balance, March 31, 2011
    
    42,986,179
    
    $
    42,986
    
    $
    26,148,589
    
    $
    (1,427,764
    )
    $
    (78,703
    )
    $
    (12,752,827
    )
    $
    11,932,281


The accompanying notes are an integral part of these
consolidated financial statements.

- 6 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|1. | HISTORY AND ORGANIZATION OF THE COMPANY                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Silverwing Systems Corporation (the Company), a Nevada
      corporation, was incorporated on September 1, 1998. On June 23, 1999, the
      Company completed the acquisition of Advertain On-Line Canada Inc.
      (Advertain Canada), a Canadian company operating in Vancouver, British
      Columbia, Canada. The Company changed its name to Advertain On-Line Inc.
      (Advertain) on August 19, 1999. Advertain Canadas business was the
      operation of a web site, Advertain.com, whose primary purpose was to
      distribute entertainment advertising on the Internet.         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In May 2001, the Company, being unable to continue its
      funding of Advertain Canadas operations, decided to abandon its interest
      in Advertain Canada. On June 15, 2001, the Company sold its investment in
      Advertain Canada back to Advertain Canadas original shareholder. On June
      18, 2001, the Company changed its name from Advertain to RetinaPharma
      International, Inc. (RetinaPharma) and became inactive.                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In 2003, the Company became a resource exploration
      company. On October 31, 2003, the Company acquired 100% of the issued and
      outstanding common stock of Xtra-Gold Resources, Inc. (XGRI). XGRI was
      incorporated in Florida on October 24, 2003. On December 19, 2003, the
      Company changed its name from RetinaPharma to Xtra-Gold Resources
    Corp.                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | In 2004, the Company acquired 100% of the issued and
      outstanding capital stock of Canadiana Gold Resources Limited
      (Canadiana) and 90% of the issued and outstanding capital stock of
      Goldenrae Mining Company Limited (Goldenrae). Both companies are
      incorporated in Ghana and the remaining 10% of the issued and outstanding
      capital stock of Goldenrae is held by the Government of Ghana.                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On October 20, 2005, XGRI changed its name to Xtra Energy
      Corp. (Xtra Energy).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On October 20, 2005, the Company incorporated Xtra Oil
      & Gas Ltd. (XOG) in Alberta, Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On December 21, 2005, Canadiana changed its name to
      Xtra-Gold Exploration Limited (XG Exploration).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On January 13, 2006, Goldenrae changed its name to
      Xtra-Gold Mining Limited (XG Mining).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | On March 2, 2006, the Company incorporated Xtra Oil &
      Gas (Ghana) Limited (XOGG) in Ghana.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|2. | CONTINUANCE OF OPERATIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company is in the exploration stage with respect to
      its resource properties, incurred a loss of $473,804 for the three- month
      period ended March 31, 2011 and has accumulated a deficit during the
      exploration stage of $12,752,827. The ability of the Company to continue
      as a going concern is dependent on the Companys ability to raise
      additional capital and implement its business plan. The financial
      statements do not include any adjustments that might be necessary if the
      Company is unable to continue as a going concern.                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Management of the Company (Management) is of the
      opinion that sufficient financing will be obtained from external financing
      and further share issuances to meet the Companys obligations. At March
      31, 2011, the Company has working capital of $9,635,688, which is
      sufficient to fund operations for a period greater than 12
  months.                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|3. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Generally accepted accounting principles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The accompanying unaudited financial statements have been
      prepared by the Company in conformity with accounting principles generally
      accepted in the United States of America applicable to interim financial
      information and with the rules and regulations of the United States
      Securities and Exchange Commission. Accordingly, certain information and
      note disclosures normally included in financial statements prepared in
      accordance with generally accepted accounting
principles have been condensed, or omitted, pursuant to such rules and
      regulations.

- 7 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|3. | SIGNIFICANT ACCOUNTING POLICIES(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | In the opinion of management the unaudited interim
      financial statements include all adjustments necessary for the fair
      presentation of the results of the interim periods presented. All
      adjustments are of a normal recurring nature, except as otherwise noted
      below. These financial statements should be read in conjunction with the
      Companys audited consolidated financial statements and notes thereto for
      the year ended December 31, 2010, included in the Companys Form 10-K,
      filed with the Securities and Exchange Commission. The results of
      operations for the interim periods are not necessarily indicative of the
      results of operations for any other interim period or for a full fiscal
      year.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | These consolidated financial statements include the
      accounts of the Company, its wholly owned subsidiaries, Xtra Energy (from
      October 31, 2003), XG Exploration (from February 16, 2004), XOG (from
      October 20, 2005) and XOGG (from March 2, 2006) and its 90% owned
      subsidiary, XG Mining (from December 22, 2004). All significant
      intercompany accounts and transactions have been eliminated on
      consolidation.                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Use of estimates                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The preparation of consolidated financial statements in
      conformity with US GAAP requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of revenues and expenses
      during the reporting period. Actual results could differ from those
      estimates. The amounts which involve significant estimates include asset
      retirement obligations and stock-based compensation.                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company considers highly liquid investments with
      original maturities of three months or less to be cash equivalents. At
      March 31, 2011 and December 31, 2010, cash and cash equivalents consisted
      of cash held at financial institutions.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | No allowance for doubtful accounts has been provided.
      Management has evaluated all receivables and believes they are all
      collectible.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Recovery of gold                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Recovery of gold and other income is recognized when
      title and the risks and rewards of ownership to delivered bullion and
      commodities pass to the buyer and collection is reasonably
  assured.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Trading securities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Companys trading securities are reported at fair
      value, with unrealized gains and losses included in earnings.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Non-Controlling Interest                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The consolidated financial statements include the
      accounts of XG Mining (from December 22, 2004). All intercompany accounts
      and transactions have been eliminated upon consolidation. The Company
      records a non-controlling interest which reflects the 10% portion of the
      earnings (loss) of XG Mining allocable to the holders of the minority
      interest.                                                                                                                                                                                                                                                                                                                                                                                       

- 8 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|3. | SIGNIFICANT ACCOUNTING POLICIES(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Oil and natural gas properties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | The Company follows the full cost method of accounting
      for oil and natural gas operations. Under this method, all costs
      associated with the acquisition of, exploration for and development of oil
      and gas reserves are capitalized in cost centers on a country-by-country
      basis. Such costs include property acquisition costs, geological and
      geophysical studies, carrying charges on non-producing properties, costs
      of drilling productive wells, and overhead expenses directly related to
      these activities.                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Depletion is calculated for producing properties by using
      the unit-of-production method based on estimated proved reserves, before
      royalties, as determined by management of the Company or independent
      consultants. Sales or dispositions of oil and gas properties are credited
      to the respective cost centers and a gain or loss is recognized when all
      properties in a cost center have been disposed of, unless such sale or
      disposition significantly alters the relationship between capitalized
      costs and proved reserves of oil and gas attributable to the cost center.
      Costs of abandoned properties are accounted for as adjustments of
      capitalized costs and written off to expense.                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Undeveloped properties are excluded from the depletion
      calculation until the quantities of proved reserves can be
    determined.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | A ceiling test is applied to the proven properties for
      each cost center and for the aggregate of all cost centers by comparing
      the net capitalized costs to the estimated future net revenues from
      production of estimated proved reserves without discount, plus the costs
      of unproved properties net of impairment. Any excess capitalized costs are
      written off to expense. Further, the ceiling test for the aggregate of all
      cost centers is required to include the effects of future removal and site
      restoration costs, general and administrative expenses, financing costs
      and income taxes. The calculation of future net revenues is based upon
      prices, costs and regulations in effect at each year end.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Unproved properties are assessed for impairment on an
      annual basis by applying factors that rely on historical experience. In
      general, the Company may write off any unproved property under one or more
      of the following conditions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| | (a) | there are no firm plans for further drilling on the
      unproved property;                                     
| | --- | -----------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                  
| | (b) | negative results were obtained from studies of the
      unproved properties;                                    
| |     |                                                                                                                  
| | (c) | negative results were obtained from studies conducted in
      the vicinity of the unproved property; or         
| |     |                                                                                                                  
| | (d) | the remaining term of the unproved property does not
      allow sufficient time for further studies or
drilling.

Equipment

Equipment is recorded at cost and is
being amortized over its estimated useful lives using the declining balance
method at the following annual rates:

| | Furniture and equipment | 20% | 
| | ----------------------- | --- | 
| |                         |     | 
| | Computer equipment      | 30% | 
| |                         |     | 
| | Vehicles                | 30% | 
| |                         |     | 
| | Mining equipment        | 20% | 

Deferred financing costs

Deferred financing costs consist of
expenses incurred to obtain funds pursuant to the issuance of the convertible
debentures and are being amortized straight-line over the term of the
debentures.

- 9 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|3. | SIGNIFICANT ACCOUNTING POLICIES(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Mineral properties and exploration and development
      costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The costs of acquiring mineral rights are capitalized at
      the date of acquisition. After acquisition, various factors can affect the
      recoverability of the capitalized costs. If, after review, management
      concludes that the carrying amount of a mineral property is impaired, it
      will be written down to estimated fair value. Exploration costs incurred
      on mineral properties are expensed as incurred. Development costs incurred
      on proven and probable reserves will be capitalized. Upon commencement of
      production, capitalized costs will be amortized using the
      unit-of-production method over the estimated life of the ore body based on
      proven and probable reserves (which exclude non-recoverable reserves and
      anticipated processing losses). When the Company receives an option
      payment related to a property, the proceeds of the payment are applied to
      reduce the carrying value of the exploration asset.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Long-lived assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Long-lived assets held and used by the Company are
      reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of an asset may not be recoverable. For
      purposes of evaluating the recoverability of long- lived assets, the
      recoverability test is performed using undiscounted net cash flows related
      to the long-lived assets. If such assets are considered to be impaired,
      the impairment recognized is measured by the amount by which the carrying
      amount of the assets exceeds the fair value of the assets. Assets to be
      disposed of are reported at the lower of the carrying amount or fair value
      less costs to sell.                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Asset retirement obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company records the fair value of an asset retirement
      obligation as a liability in the period in which it incurs a legal
      obligation associated with the retirement of tangible long-lived assets
      that result from the acquisition, construction, development, and/or normal
      use of the long-lived assets. The Company also records a corresponding
      asset which is amortized over the life of the asset. Subsequent to the
      initial measurement of the asset retirement obligation, the obligation is
      adjusted at the end of each period to reflect the passage of time
      (accretion expense) and changes in the estimated future cash flows
      underlying the obligation (asset retirement cost).                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company accounts for share-based compensation under
      the provisions of ASC 718, Compensation-Stock Compensation. Under the
      fair value recognition provisions, stock-based compensation expense is
      measured at the grant date for all stock-based awards to employees and
      directors and is recognized as an expense over the requisite service
      period, which is generally the vesting period. The Black-Scholes option
      valuation model is used to calculate fair value.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company accounts for stock compensation arrangements
      with non-employees in accordance with ASC 718 which require that such
      equity instruments are recorded at their fair value on the measurement
      date. The measurement of stock- based compensation is subject to periodic
      adjustment as the underlying equity instruments vest. Nonemployee
      stock-based compensation charges are amortized over the vesting period on
      a straight-line basis. For stock options granted to non- employees, the
      fair value of the stock options is estimated using a Black-Scholes
      valuation model.                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company accounts for income taxes under the asset and
      liability method. Deferred tax assets and liabilities are recognized for
      the future tax consequences attributable to differences between the
      financial statement carrying amounts of existing assets and liabilities
      and their respective tax bases. Deferred tax assets and liabilities are
      measured using enacted tax rates expected to apply to taxable income in
      the years in which those temporary differences are expected to be
      recovered or settled. Under the asset and liability method the effect on
      deferred tax assets and liabilities of a change in tax rates is recognized
      in income in the period that includes the enactment date. A valuation
      allowance is recognized if it is more likely than not that some portion or
      all of the deferred tax asset will not be
recognized.                                                                           

- 10 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|3. | SIGNIFICANT ACCOUNTING POLICIES(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Loss per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Basic loss per common share is computed using the
      weighted average number of common shares outstanding during the year. To
      calculate diluted loss per share, the Company uses the treasury stock
      method and the if convertedmethod. As of March 31, 2011, there
      were 2,414,320 warrants (December 31, 2010  2,439,320); 1,989,000 stock
      options (December 31, 2010  1,788,000), none of which have been included
      in the weighted average number of common shares outstanding as these were
      anti-dilutive.                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Foreign exchange                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Companys functional currency is the U.S. dollar. Any
      monetary assets and liabilities that are in a currency other than the U.S.
      dollar are translated at the rate prevailing at period end. Revenue and
      expenses in a foreign currency are translated at rates that approximate
      those in effect at the time of translation. Gains and losses from
      translation of foreign currency transactions into U.S. dollars are
      included in current results of operations.                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Financial instruments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Companys financial instruments consist of cash and
      cash equivalents, trading securities, receivables, restricted cash, and
      accounts payable and accrued liabilities. It is managements opinion that
      the Company is not exposed to significant interest, currency or credit
      risks arising from its financial instruments. The fair values of these
      financial instruments approximate their carrying values unless otherwise
      noted. The Company has its cash primarily in government or bank guaranteed
      deposit certificates, or in cash on account at one commercial bank in
      Toronto, Ontario, Canada.                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Fair value of financial assets and
    liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company measures the fair value of financial assets
      and liabilities based on US GAAP guidance which defines fair value,
      establishes a framework for measuring fair value, and expands disclosures
      about fair value measurements. Effective January 1, 2008, the Company
      adopted the provisions for financial assets and liabilities, as well as
      for any other assets and liabilities that are carried at fair value on a
      recurring basis. Effective January 1, 2009, the Company adopted the
      provisions for non-financial assets and liabilities that are required to
      be measured at fair value.                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | The Company classifies financial assets and liabilities
      as held-for-trading, available-for-sale, held-to-maturity, loans and
      receivables or other financial liabilities depending on their nature.
      Financial assets and financial liabilities are recognized at fair value on
      their initial recognition, except for those arising from certain related
      party transactions which are accounted for at the transferors carrying
      amount or exchange amount.                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Financial assets and liabilities classified as
      held-for-trading are measured at fair value, with gains and losses
      recognized in net income (loss). Financial assets classified as
      held-to-maturity, loans and receivables, and financial liabilities other
      than those classified as held-for-trading are measured at amortized cost,
      using the effective interest method of amortization. Financial assets
      classified as available-for-sale are measured at fair value, with
      unrealized gains and losses being recognized as other comprehensive income
      (loss) until realized, or if an unrealized loss is considered other than
      temporary, the unrealized loss is recorded in income (loss).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   | Financial instruments, including cash and cash
      equivalents, receivables, restricted cash, and accounts payable and
      accrued liabilities and convertible debentures are carried at cost, which
      management believes approximates fair value due to the short term nature
      of these instruments. Investments in trading securities are classified as
      held for trading, with unrealized gains and losses being recognized in
      income.                                                                                                                                                                                                                                                                                 

- 11 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|3. | SIGNIFICANT ACCOUNTING POLICIES(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | Fair value of financial assets and liabilities(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   | The following table presents information about the assets
      that are measured at fair value on a recurring basis as of March 31, 2011,
      and indicates the fair value hierarchy of the valuation techniques the
      Company utilized to determine such fair value. In general, fair values
      determined by Level 1 inputs utilize quoted prices (unadjusted) in active
      markets for identical assets. Fair values determined by Level 2 inputs
      utilize data points that are observable such as quoted prices, interest
      rates and yield curves. Fair values determined by Level 3 inputs are
      unobservable data points for the asset or liability, and included
      situations where there is little, if any, market activity for the
      asset:

| |                           |   |               |  |   | Significant   |  |   |              | 
| | ------------------------- | - | ------------- |  | - | ------------- |  | - | ------------ | 
| |                           |   | Quoted Prices |  |   | Other         |  |   | Significant  | 
| |                           |   | in Active     |  |   | Observable    |  |   | Unobservable | 
| |                           |   | Markets       |  |   | Inputs        |  |   | Inputs       | 
| |                           |   | **(Level 1)** |  |   | **(Level 2)** |  |   | (Level 3)    | 
| |                           |   |               |  |   |               |  |   |              | 
| | Assets:                   |   |               |  |   |               |  |   |              | 
| | Cash and cash equivalents | $ | 9,283,801     |  | $ |              |  | $ |             | 
| | Restricted cash           |   | 220,961       |  |   |              |  |   |             | 
| | Marketable securities     |   | 524,633       |  |   |              |  |   |             | 
| | Total                     | $ | 10,029,395    |  | $ |              |  | $ |             | 

The fair values of cash and cash
equivalents, restricted cash and marketable securities are determined through
market, observable and corroborated sources.

Concentration of credit risk

The financial instrument which
potentially subjects the Company to concentration of credit risk is cash and
cash equivalents and restricted cash. The Company maintains cash in bank
accounts that, at times, may exceed federally insured limits. As of March 31,
2011 and December 31, 2010, the Company has exceeded the federally insured
limit. The Company has not experienced any losses in such accounts and believes
it is not exposed to any significant risks on its cash in bank accounts.

Recent accounting pronouncements

In April 2010, the FASB issued ASU
2010-13, Compensation  Stock Compensation (Topic 718), amending ASC 718. ASU
2010-13 clarifies that a share-based payment award with an exercise price
denominated in the currency of a market in which the entity's equity securities
trade should not be classified as a liability if it otherwise qualifies as
equity. ASU 2010-13 also improves GAAP by improving consistency in financial
reporting by eliminating diversity in practice. ASU 2010-13 is effective for
interim and annual reporting periods beginning after December 15, 2010 (January
1, 2011 for the Company). The Company does not expect its adoption to have a
material impact on the Company's financial reporting and disclosures.

In December 2010, the FASB issued ASU
2010-29, which contains updated accounting guidance to clarify the acquisition
date that should be used for reporting pro forma financial information when
comparative financial statements are issued. This update requires that a company
should disclose revenue and earnings of the combined entity as though the
business combination(s) that occurred during the current year had occurred as of
the beginning of the comparable prior annual reporting period only. This update
also requires disclosure of the nature and amount of material, nonrecurring pro
forma adjustments. The provisions of this update, which are to be applied
prospectively, are effective for business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2010, with early adoption permitted. The impact of this
update on the Company's consolidated financial statements will depend on the
size and nature of future business combinations.

- 12 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|4. | INVESTMENTS IN TRADING SECURITIES                                                                                                                                                                                                                                                                                
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                  
|   | At March 31, 2011, the Company held investments
      classified as trading securities, which consisted of various equity
      securities. All trading securities are carried at fair value. As of March
      31, 2011, the fair value of trading securities was $524,633 (December 31,
      2010  $129,141).
|   |                                                                                                                                                                                                                                                                                                                  
|5. | EQUIPMENT                                                                                                                                                                                                                                                                                                        

March 31, 2011
    
    
    December 31, 2010Accumulated
    
    
    Net Book
    
    
    
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    Value
    
    
    Cost
    
    
    Amortization
    
    
    ValueFurniture and equipment
    $
    8,358
    
    $
    4,771
    
    $
    3,587
    
    $
    8,358
    
    $
    4,179
    
    $
    4,179Computer equipment
    
    20,274
    
    
    15,103
    
    
    5,171
    
    
    20,274
    
    
    13,844
    
    
    6,430Exploration equipment
    
    990,400
    
    
    192,261
    
    
    798,139
    
    
    781,126
    
    
    185,464
    
    
    595,662Vehicles
    
    155,325
    
    
    29,617
    
    
    125,708
    
    
    155,325
    
    
    26,170
    
    
    129,155$
    1,174,357
    
    $
    241,752
    
    $
    932,605
    
    $
    965,083
    
    $
    229,657
    
    $
    735,426


|6. | DEFERRED FINANCING
COSTS
|-- | ------------------------

| |                              |   | March 31, 2011 |  |   | December 31, 2010 |  
| | ---------------------------- | - | -------------- |  | - | ----------------- | -
| | Balance, beginning of period | $ | Nil            |  | $ | 1,283             |  
| |                              |   |                |  |   |                   |  
| | Amortization                 |   | Nil            |  |   | (1,283            | )
| | Balance, end of
      period | $ | Nil            |  | $ |                  |  

|7. | OIL AND GAS INVESTMENT                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | In April 2008, XOG purchased an 18.9% participating
      interest in a petroleum and natural gas lease at an Alberta Crown Land
      sale. The lease has a five year term, but may be held by continuous
      production of petroleum and natural gas commencing prior to the expiry of
      the five year term. During the year ended December 31, 2010, the Company
      sold its 18.9% participating interest for $40,000.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                   
|8. | MINERAL PROPERTIES                                                                                                                                                                                                                                                                                                                                                                                                                

| |                                       |   | March 31, 2011 |   |   | December 31, 2010 |  
| | ------------------------------------- | - | -------------- | - | - | ----------------- | -
| |                                       |   |                |   |   |                   |  
| | Acquisition costs                     | $ | 1,607,729      |   | $ | 1,607,729         |  
| | Asset retirement obligation (Note 10) |   | 131,133        |   |   | 131,133           |  
| | Option payments received              |   | (436,440       | ) |   | (25,000           | )
| | Total                                 | $ | 1,302,422      |   | $ | 1,713,862         |  

- 13 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|8. | MINERAL PROPERTIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Kibi, Kwabeng and Pameng Projects                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company holds an individual mining lease over the
      lease area of each of the Kibi Project, the Kwabeng Project and the Pameng
      Project, all of which are located in Ghana. Each of these mining leases
      grant the Company mining rights to produce gold in the respective lease
      areas until July 26, 2019 with respect to the Kwabeng and Pameng Projects,
      and until December 17, 2015 with respect to the Kibi Project (formerly
      known as the Apapam Project), the latter of which can be renewed for up to
      a further 30 year term on application and payment of applicable fees to
      the Minerals Commission of Ghana (Mincom). All gold production will be
      subject to a production royalty of the net smelter returns (NSR) payable
      to the Government of Ghana.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Banso and Muoso Projects                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | During the year ended December 31, 2010, to secure its
      interest in the Banso and Muoso Projects located in Ghana, the Company
      made an application to Mincom to convert a single prospecting license
      (PL) to a mining lease covering the lease area of each of these
      Projects. This application was approved by Mincom who subsequently made
      recommendation to the Minister of Lands, Forestry and Mines to grant an
      individual mining lease for each Project. Subsequent to the year ended
      December 31, 2010, the Government of Ghana granted two mining leases for
      these Projects dated January 6, 2011. These mining leases grant the
      Company mining rights to produce gold in the respective lease areas until
      January 5, 2025 with respect to the Banso Project and until January 5,
      2024 with respect to the Muoso Project. These mining leases supersede the
      PL previously granted to the Company. Among other things, both mining
      leases require that the Company (i) pay the Government of Ghana a fee of
      $30,000 in consideration of granting of each lease (paid); (ii) pay annual
      ground rent of GH¢260.00 (USD$167) for the Banso Project and GH¢280.00
      (USD$180) for the Muoso Project (paid); and (iii) commence commercial
      production of gold within two years from the date of the mining leases;
      and (iv) pay a production royalty to the Government of Ghana.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company executed a letter of intent with Verbina
      Resources Inc., which later changed its named to Buccaneer Gold Corp.
      (Buccaneer) on July 21, 2010 whereby Buccaneer could acquire an
      undivided 55% interest in the Companys interest in the mineral rights of
      the Companys Banso and Muoso concessions (Concessions) upon completion
      by Buccaneer of (i) a cash payment to the Company of $100,000 upon the
      date of execution of a definitive binding agreement to be entered into
      between the parties (the Effective Date); (ii) a cash payment to the
      Company of $200,000 within 90 days of the Effective Date; (iii) the
      issuance by Buccaneer to the Company of 1,000,000 fully paid and
      non-assessable common shares upon the Effective Date; and (iv) Buccaneer
      incurring $4,500,000 in exploration expenditures (Expenditures) on the
      Concessions within five years of the Effective Date, as to (A) $500,000
      being incurred in the first year from the Effective Date; and (B)
      $1,000,000 being incurred in each year thereafter. Buccaneer shall have
      the right to accelerate the Expenditures at any time. This letter of
      intent was superceded by the letter of intent with Buccaneer on January
      21, 2011 (the 2011 LOI).                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company is to be paid a further $50,000 by Buccaneer
      on the Effective Date whereby Buccaneer will acquire an immediate 55%
      interest in the alluvial rights to the Concessions, such purchase being
      subject to a definitive agreement to be entered into between the parties
      on or before the Effective Date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The Company entered into the 2011 LOI with Buccaneer on
      January 21, 2011 which adjusted the terms of the agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Pursuant to the 2011 LOI, Buccaneer can acquire a 55%
      legal and beneficial interest in the Companys interest in the mineral
      rights of the Concessions upon the following terms whereby Buccaneer shall
      (i) provide the Company, by February 28, 2011, with notice of its
      satisfactory completion of due diligence of the Concessions, provided on
      January 21, 2011, and receipt of regulatory acceptance by the TSX Venture
      Exchange of the 2011 LOI, received on February 16, 2011 (the Effective
      Date); (ii) make a cash payment to the Company of $425,000 consisting of
      $100,000 upon the Effective Date, which payment is pending, and $325,000
      within 90 days of the Effective Date; (iii) issue 1,000,000 fully paid and
      non-assessable common shares of Buccaneer to the Company upon the
      Effective Date; (iv) incur a total of $4,425,000 in exploration
      expenditures on the Concessions within five (5) years of the Effective
      Date with $500,000 to be incurred in the first year from the
    Effective                                                                                                                                                                                                                                                                                                                                                                                         

- 14 -

---

XTRA-GOLD RESOURCES CORP.(An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|8. | MINERAL PROPERTIES(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | Date and $1,000,000 in each year thereafter, except that
      in the final year the exploration expenditures shall be a minimum of
      $925,000; and (v) pay to the Company $300,000 in connection with a
      Versatile Time-domain Electromagnetic (VTEM), Magnetic and Radiometric
      survey to be flown over the Concessions by the Company, which payment
      shall be credited toward the $500,000 in exploration expenditures referred
      to above in subparagraph (iv).
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | A definitive binding option agreement shall be entered
      into between the Company and Buccaneer which agreement will require
      approval from the Minister of Lands, Forestry and Mines.                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   | The status of each Buccaneer commitment to the Company in
      the 2011 LOI is as follows:                                                                                                                                                                                                                                                                                                                                                                                                  

| | Item  | Description                                           | Status                           
| | ----- | ----------------------------------------------------- | ---------------------------------
| | (i)   | Complete due diligence                                | Done                             
| |       | Obtain TSXV acceptance of the 2011 LOI                | Done                             
| | (ii)  | Pay $100,000 to the Company                           | Paid subsequent to March 31, 2011
| |       | Pay a further $325,000 to the Company                 | Paid subsequent to March 31, 2011
| | (iii) | Issue 1,000,000 Buccaneer shares to
      the Company | Done                             
| | (iv)  | Spend $4,425,000 on the properties over 5 years       | In Progress                      
| | (v)   | Pay $300,000 to the Company for a
      VTEM survey   | Paid subsequent to March 31, 2011

The 1,000,000 Buccaneer shares received
were valued at $411,440 at the date of receipt of the shares. This value reduced
the mineral properties value on the balance sheet. The shares are included in
the investments account on the balance sheet and marked to market at the end of
each reporting period. Further cash payments received will reduce the carrying
value of the Muoso and Banso properties on the balance sheet.

Option agreement on Edum Banso
Project

In October, 2005, XG Exploration
entered into an option agreement (the Option Agreement) with Adom Mining
Limited (Adom) to acquire 100% of Adoms right, title and interest in and to a
prospecting license on the Edum Banso concession (the Edum Banso Project)
located in Ghana. Adom further granted XG Exploration the right to explore,
develop, mine and sell mineral products from this concession. The renewal date
of the prospecting license expired on December 1, 2010 and Mincom subsequently
approved a further one year renewal that will commence from the date of Mincoms
letter confirming the renewal (pending).

The consideration paid for the Option
Agreement was $15,000 with additional payments of $5,000 to be paid on the
anniversary date of the Option Agreement in each year during the term which term
has been extended to November 11, 2013. Upon the commencement of gold
production, an additional $200,000 is to be paid, unless proven and probable
reserves are less than 2,000,000 ounces, in which case the payment shall be
reduced to $100,000.

Upon successful transfer of title from
Adom to XG Exploration, a production royalty (the Royalty) of 2% of the net
smelter returns shall be paid to Adom; provided, however that in the event that
less than 2,000,000 ounces of proven and probable reserves are discovered, then
the Royalty shall be 1%. The Royalty can be purchased by XG Exploration for
$2,000,000; which will be reduced to $1,000,000 if proven and probable reserves
are less than 2,000,000 ounces.

Mining lease and prospecting license
commitments

The Company is committed to expend,
from time to time fees to Mincom for an extension of an expiry date of a
prospecting license (currently $15,000 for each occurrence) or a mining lease
and the Environmental Protection Agency of Ghana (EPA) for processing and
certificate fees with respect to EPA permits, an aggregate of less than $500 in
connection with annual ground rent and mining permits to enter upon and gain
access to the areas covered by the Companys mining leases and prospecting
licenses.

- 15 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|9.  | CONVERTIBLE DEBENTURES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    | During the year ended December 31, 2005, the Company
      completed a convertible debenture financing for gross proceeds of
      $900,000. The debentures bore interest at 7% per annum, payable quarterly,
      and the principal balance was repayable by June 30, 2010. Debenture
      holders had the option to convert any portion of the outstanding principal
      into common shares at the conversion rate of $1 per share. During the year
      ended December 31, 2008, convertible debentures totaling $650,000 were
      converted into 650,000 common shares. In February 2010, the convertible
      debenture of $250,000 was converted into 250,000 common shares.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|10. | ASSET RETIREMENT
OBLIGATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

| |                              |   | March 31, 2011 |  |   | December 31, 2010 | 
| | ---------------------------- | - | -------------- |  | - | ----------------- | 
| |                              |   |                |  |   |                   | 
| | Balance, beginning of period | $ | 155,395        |  | $ | 71,906            | 
| | Increase in obligation       |   |               |  |   | 76,298            | 
| | Accretion expense            |   | 4,000          |  |   | 7,191             | 
| | Balance, end of
      period | $ | 159,395        |  | $ | 155,395           | 

|    | The Company has a legal obligation associated with its
      mineral properties for clean up costs when work programs are
    completed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The undiscounted amount of cash flows, required over the
      estimated reserve life of the underlying assets, to settle the obligation,
      adjusted for inflation, is estimated at $220,000 (2010 - $220,000). The
      obligation was calculated using a credit- adjusted risk free discount rate
      of 10% and an inflation rate of 2%. It is expected that this obligation
      will be funded from general Company resources at the time the costs are
      incurred. The Company has been required by the Ghanaian government to post
      a bond of $220,961 which has been recorded in restricted cash with accrued
      interest.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|11. | CAPITAL STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Cancellation of shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In May 2005, 47,000,000 common shares owned by two former
      directors were returned to treasury and cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In June 2006, 10,000 common shares were returned to the
      Company in settlement of a dispute and cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In May 2009, 200,000 common shares were repurchased for
      $50,000 and cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In March 2010, 80,891 common shares were repurchased for
      $108,000 and cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Issuance of shares for services                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In December 2008, an aggregate of 131,243 common shares
      were issued to three vendors of the Companys subsidiary, XG Mining to
      settle outstanding accounts for services at a value of $1.50 per
    share.                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Private placements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | In June 2010, the Company issued 250,000 units at $1.00
      per unit for gross proceeds of $250,000. Each unit consisted of one common
      share and one half of one share purchase warrant. One whole warrant
      enables the holder to acquire an additional common share at a price of
      $1.50 expiring 18 months from the date of issue. The Company also issued
      finders warrants                                                                                                                                                                                                                                                

- 16 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|11. | CAPITAL STOCK(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Private placement(contd)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | enabling the holders to acquire up to 25,000 common
      shares at the same terms as the unit warrants. The fair value of the
      finders warrants was $15,091 calculated using the Black-Scholes valuation
      method. The assumptions used were 1.5 years of expected life, risk free
      interest rate of 1.82%, volatility of 99.78% and a dividend rate of
    0%.                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In April 2010, the Company issued 838,000 units at $1.00
      per unit for gross proceeds of $838,000. Each unit consisted of one common
      share and one half of one share purchase warrant. One whole warrant
      enables the holder to acquire an additional common share at a price of
      $1.50 expiring 18 months from the date of issue. The Company also issued
      finders warrants enabling the holders to acquire up to 73,800 common
      shares at the same terms as the unit warrants. The fair value of finders
      warrants was $40,516 calculated using the Black-Scholes valuation method.
      The assumptions used were 1.5 years of expected life, risk free interest
      rate of 2.05%, volatility of 116.59% and a dividend rate of 0%.       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In December 2009, the Company issued 706,000 units at
      $1.00 per unit for gross proceeds of $706,000. Each unit consisted of one
      common share and one half of one share purchase warrant. One whole warrant
      enables the holder to acquire an additional common share at a price of
      $1.50 expiring eighteen months from the date of issue. The Company also
      issued finders warrants enabling the holders to acquire up to 50,600
      common shares at the same terms as the unit warrants. The fair value of
      finders warrants was $20,098 calculated using the Black-Scholes valuation
      method. The assumptions used were 1.5 years of expected life, risk free
      interest rate of 2.05%, volatility of 109% and a dividend rate of
  0%
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In August 2009, the Company issued 376,875 units at $0.80
      per unit for gross proceeds of $301,500. Each unit consisted of one common
      share and one half of one share purchase warrant. One whole warrant
      enables the holder to acquire an additional common share at a price of
      $1.00 expiring two year from the date of issue.                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In April and May 2009, the Company issued 1,018,000 units
      at $0.70 per unit for gross proceeds of $712,600. Each unit consisted of
      one common share and one share purchase warrant enabling the holder to
      acquire an additional common share at a price of $1.00 expiring two years
      from the date of issue.                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Initial Public Offering                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | In November 2010, the Company completed an initial public
      offering in Canada (the IPO) and issued 8,092,593 common shares at
      CAD$1.35 per share (USD$1.33) for gross cash proceeds of CAD$10,925,001
      (USD$10,752,713). The Company also issued 566,482 broker warrants with a
      strike price of CAD$1.35 (US$1.33) per warrant and a two-year term to
      maturity. The Company valued the warrants at $364,248 using the
      Black-Scholes model with a 90% volatility, 0% dividend and 1.5% interest
      rate.                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Escrow Shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | A total of (a) 267,500 shares (the Escrow Shares) were
      deposited into escrow at the time of listing of the Companys shares on
      the Toronto Stock Exchange on November 23, 2010 (the Listing Date),
      following completion of the IPO. The Escrow Shares are released from
      escrow as to (a) 1/4 of the Escrow Shares on the Listing Date; (b) 1/3 of
      the remaining Escrow Shares, six months after the Listing Date; (c) 1/2 of
      the remaining Escrow Shares, 12 months after the Listing Date; and (d) the
      remaining Escrow Shares, 18 months after the Listing Date. As of March 31,
      2011 a total of 200,625 Escrow Shares were held in escrow (December 31,
      2010  200,625).                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Acquisition of subsidiary                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | Effective December 22, 2004, the Company acquired 90% of
      the outstanding shares of XG Mining in exchange for 2,698,350 shares of
      common stock. In connection with this acquisition, 47,000,000 shares owned
      by two former officers and directors of the Company were returned to
      treasury and cancelled.                                                                                                                                                                                                                                                                                                                                                                                                                                                       

- 17 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|11. | CAPITAL STOCK(contd...)                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | The number of shares reserved for issuance under the
      Companys equity compensation option plan is 3,000,000. The terms and
      conditions of any options granted, including the number and type of
      options, the exercise period, the exercise price and vesting provisions,
      are determined by the Compensation Committee who makes recommendation to
      the board of directors for their approval. The maximum term of options
      granted cannot exceed 10 years.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | Stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    | At March 31, 2011, the following stock options were
      outstanding:                                                                                                                                                                                                                                                                                                                                                                                                                     

| | Number of |  | Exercise |  | Expiry Date        
| | --------- |  | -------- |  | -------------------
| | Options   |  | Price    |  |                    
| |           |  |          |  |                    
| | 324,000   |  | $0.70    |  | May 1, 2013        
| | 540,000   |  | $0.75    |  | May 1, 2013        
| | 110,000   |  | $1.00    |  | February 12, 2012  
| | 108,000   |  | $1.00    |  | January 1, 2013    
| | 216,000   |  | $1.00    |  | February 1, 2013   
| | 270,000   |  | $1.00    |  | May 1, 2013        
| | 130,000   |  | $1.05    |  | May 1, 2013        
| | 90,000    |  | $1.15    |  | July 1, 2013       
| | 56,000    |  | $1.98    |  | February 15, 2011  
| | 145,000   |  | $1.95    |  | March
      1, 2011

Stock option transactions and the
number of stock options outstanding are summarized as follows:

| |                                  |  | March 31, 2011 |  |   | December 31, 2010 | 
| | -------------------------------- |  | -------------- |  | - | ----------------- | 
| |                                  |  | Number of      |  |   | Weighted Average  | 
| |                                  |  | Options        |  |   | Exercise Price    | 
| | Outstanding, beginning of period |  | 1,788,000      |  |   |                   | 
| | Granted                          |  | 201,000        |  | $ | 0.88              | 
| | Exercised                        |  |               |  |   | 0.96              | 
| | Cancelled/Expired                |  |               |  |   |                  | 
| | Outstanding, end of period       |  | 1,989,000      |  | $ | 0.99              | 
| |                                  |  |                |  |   |                   | 
| | Exercisable, end of period       |  | 1,538,000      |  | $ | 0.86              | 

The aggregate intrinsic value for
options vested as of March 31, 2011 is approximately $1,686,824 (December 31,
2010 - $1,312,200) and for total options outstanding is approximately $1,918,198
(December 31, 2010 - $2,447,200).

Stock-based compensation

The fair value of stock options granted
during the period ended March 31, 2011 totaled $245,685 (December 31, 2010 -
$594,388). A stock-based compensation expense of $21,311 has been included in
general and administrative expense for the three-month period ended March 31,
2011, of which $5,723 related to option grants in 2011. The remaining $239,962
(December 31, 2010 - $182,877) will be expensed in future periods.

- 18 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|11. | CAPITAL STOCK(contd...)                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                    
|    | Stock-based compensation(contd)                                                                                                                                                  
|    |                                                                                                                                                                                    
|    | The following assumptions were used for the Black-Scholes
      valuation of stock options granted or extended during the periods ended
      March 31, 2011 and December 31, 2010:

| |                         |  | March 31, 2011 |  |  | December 31, 2010 | 
| | ----------------------- |  | -------------- |  |  | ----------------- | 
| |                         |  |                |  |  |                   | 
| | Risk-free interest rate |  | 1.75%          |  |  | 1.73%             | 
| | Expected life           |  | 3 years        |  |  | 3 years           | 
| | Annualized volatility   |  | 95.00%         |  |  | 94.28%            | 
| | Forfeiture rate         |  | 0%             |  |  | 0%                | 
| | Dividend rate           |  |               |  |  |                  | 

The weighted average fair value of
options granted was $1.42 (December 31, 2010 - $0.63) .

Warrants

At March 31, 2011, the following
warrants were outstanding:

| | Number of
      Warrants |  | Exercise Price |  | Expiry Date      
| | ------------------------ |  | -------------- |  | -----------------
| |                          |  |                |  |                  
| | 350,000                  |  | $1.00          |  | April 1, 2011    
| | 308,000                  |  | $1.00          |  | May 19, 2011     
| | 188,438                  |  | $1.00          |  | August 5, 2011   
| | 403,600                  |  | $1.50          |  | June 16, 2011    
| | 447,800                  |  | $1.50          |  | October 19, 2011 
| | 150,000                  |  | $1.50          |  | December 11, 2011
| | 566,482                  |  | $1.33          |  | November 23, 2013

Warrant transactions and the number of
warrants outstanding are summarized as follows:

| |                                  |  |                |   |   |                   | 
| | -------------------------------- |  | -------------- | - | - | ----------------- | 
| |                                  |  | March 31, 2011 |   |   | December 31, 2010 | 
| |                                  |  | Number of      |   |   | Weighted Average  | 
| |                                  |  | Warrants       |   |   | Exercise Price    | 
| | Outstanding, beginning of period |  | 2,439,320      |   | $ | 1.13              | 
| | Issued                           |  |               |   |   |                  | 
| | Exercised                        |  | (25,000        | ) |   | 1.50              | 
| | Expired                          |  |               |   |   |                  | 
| | Exercisable, end of period       |  | 2,414,320      |   | $ | 1.13              | 

|12. | RELATED PARTY TRANSACTIONS                                                                                                                                   
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                              
|    | During the three-month periods ended March 31, 2011 and
      March 31, 2010, the Company entered into the following transactions with
      related parties:

- 19 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|12. | RELATED PARTY TRANSACTIONS(contd)
|--- | -----------------------------------

| |                                                                      |   | Three months   |  |   | Three months   | 
| | -------------------------------------------------------------------- | - | -------------- |  | - | -------------- | 
| |                                                                      |   | March 31, 2011 |  |   | March 31, 2010 | 
| |                                                                      |   |                |  |   |                | 
| | Consulting fees paid or accrued to officers
      or their companies | $ | 100,299        |  | $ | 35,271         | 
| | Directors fees                                                      |   | 8,605          |  |   | 8,169          | 
| |                                                                      |   |                |  |   |                | 
| | Stock option grants to officers and directors                        |   | 115,000        |  |   | 108,000        | 
| | Stock option grant price range                                       | $ | 1.95           |  | $ | 1.00           | 

The amounts charged to the Company for
the services provided have been determined by negotiation among the parties.
These transactions were in the normal course of operations and were measured at
the exchange value, which represented the amount of consideration established
and agreed to by the related parties.

|13. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH
      FLOWS
|--- | --------------------------------------------------------

| |                                  |   | Cumulative amounts    |  |   |                |  |   |                | 
| | -------------------------------- | - | --------------------- |  | - | -------------- |  | - | -------------- | 
| |                                  |   | from the beginning of |  |   |                |  |   |                | 
| |                                  |   | the exploration stage |  |   |                |  |   |                | 
| |                                  |   | on January 1, 2003 to |  |   |                |  |   |                | 
| |                                  |   | March 31, 2011        |  |   | March 31, 2011 |  |   | March 31, 2010 | 
| |                                  |   |                       |  |   |                |  |   |                | 
| | Cash paid during the period for: |   |                       |  |   |                |  |   |                | 
| | Interest                         | $ | 187,362               |  | $ |               |  | $ |               | 
| | Income taxes                     | $ |                      |  | $ |               |  | $ |               | 

The significant non-cash transactions
during the three month period ended March 31, 2011 were the receipt of 1,000,000
Buccaneer common shares per the 2011 LOI (Note 8) valued at $411,440.

The significant non-cash transaction
during the three months ended March 31, 2010 was the conversion of $250,000 of a
convertible debenture into 250,000 common shares.

|14. | SEGMENTED INFORMATION                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                        
|    | The Company has one reportable segment, being the
      exploration and development of resource properties. Geographic information
      is as follows:

| |                                |   | March 31, 2011 |  |   | December 31, 2010 | 
| | ------------------------------ | - | -------------- |  | - | ----------------- | 
| |                                |   |                |  |   |                   | 
| | Cash and restricted cash:      |   |                |  |   |                   | 
| | Canada                         | $ | 8,539,032      |  | $ | 9,950,180         | 
| | Ghana                          |   | 965,730        |  |   | 365,942           | 
| | Total cash and restricted cash |   | 9,504,762      |  |   | 10,316,122        | 
| |                                |   |                |  |   |                   | 
| | Capital assets:                |   |                |  |   |                   | 
| | Canada                         | $ | 8,758          |  | $ | 10,609            | 
| | Ghana                          |   | 2,321,037      |  |   | 2,438,679         | 
| | Total capital assets           |   | 2,329,795      |  |   | 2,449,288         | 
| | Total                          | $ | 11,834,557     |  | $ | 12,765,410        | 

- 20 -

---

XTRA-GOLD RESOURCES CORP. (An Exploration Stage
Company) NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in
U.S. Dollars) March 31, 2011 (unaudited)

|15. | CONTINGENCY AND COMMITMENTS
|--- | ---------------------------
|    |                            
|    | a)                         
|    |                            
|    | b)                         
|    |                            
|    | c)                         
|    |                            
|    | d)                         
|    |                            
|    | e)                         
|    |                            
|16. | SUBSEQUENT EVENTS          
|    |                            
|    | a)                         
|    |                            
|    | b)                         

- 21 -

---

Item 2. MANAGEMENTS
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

The following discussion and analysis of the consolidated
financial statements and results of operations of Xtra-Gold Resources Corp.
(Xtra-Goldor our company) for the three months ended March
31, 2011 and 2010 should be read in conjunction with the consolidated financial
statements and the related notes to our companys consolidated financial
statements and other information presented elsewhere in this Report. The
following discussion contains forward-looking statements that reflect
Xtra-Golds plans, estimates and beliefs. Our companys actual results could
differ materially from those discussed in the forward-looking statements set out
herein. Factors that could cause or contribute to such differences include, but
are not limited to those discussed below and as contained elsewhere in this
Report. Our companys consolidated unaudited financial statements are stated in
United States Dollars and are prepared in accordance with United States
Generally Accepted Accounting Principles.

Highlights

- On February 21, 2011, reported 58 metres at 2.46 g/t gold in our Kibi
  Project.
- Used $812,321 cash in the quarter. Cash of $9,283,801 at March 31, 2011.
- Reported net gold sales in the quarter of $1,021,775 from our companys
  share of placer gold operations.
- Completed an agreement for exploration of our Banso and Muoso Projects
  with Verbina Resources Inc. (name changed to Buccaneer Gold Corp. in April
  2011) which allows Buccaneer to explore these projects while our company
  maintains a 45% interest in the projects.

Plan of Operations

We are a gold exploration company engaged in the exploration of
gold properties in the Republic of Ghana, West Africa. Our mining portfolio
currently consists of 246.47 sq km comprised of 33.65 sq km for our Kibi
Project, 51.67 sq km for our Banso Project, 55.28 sq km for our Muoso Project,
44.76 sq km for our Kwabeng Project, 40.51 sq km for our Pameng Project and
20.60 sq km for our Edum Banso Project, or 60,969 acres, pursuant to the leased
and licensed areas set forth in our respective mining leases, prospecting
licenses and/or option agreement.

Our strategic plan is, with respect to our mineral projects:
(i) to focus our efforts and dedicate our financial resources toward the
potential to drill out a resource and, perhaps ultimately, a reserve of our Kibi
Project located on the Kibi Gold Belt; (ii) to define a resource and, perhaps
ultimately, a reserve on our other exploration projects; (iii) to enter into
negotiations with independent Ghanaian contract miners and operators to assume
our recovery of gold operations at our Kwabeng Project with a view to these
contractors conducting recovery of placer gold operations for fixed payments to
our company; and (iv) to acquire further interests in gold mineralized projects
that fall within the criteria of providing a geological basis for development of
drilling initiatives that can enhance shareholder value by demonstrating the
potential to define reserves.

As part of our current business strategy, we plan to continue
engaging technical personnel under contract where possible as our management
believes that this strategy, at its current level of development, provides the
best services available in the circumstances, leads to lower overall costs, and
provides the best flexibility for our business operations.

We anticipate that our ongoing efforts will continue to be
focused on the exploration and development of our Projects and completing
acquisitions in strategic areas.

In October 2008, we temporarily suspended our operations at our
Kwabeng Project while our management considered a more economic and efficient
manner in which to extract and process the gold recovered from the mineralized
material at this Project. As at the date of this Report, we have not planned to
resume operations at our Kwabeng Project. During the next 12 months, we plan to
(i) enter into negotiations to contract out the recovery of placer gold
operations at this Project, as noted above; (ii) advance the development of our
Kibi Project by continuing to carry out the 2011 Drill Program; and (iii)
acquire further interests in mineral projects by way of acquisition or joint
venture participation.

We anticipate that, during 2011, we will spend an aggregate of
approximately $6,000,000comprised of $5,000,000 for exploration expenses
in connection with our 2011 Drill Program of our Kibi Project located on the
Kibi Gold Belt to identify a potential resource and approximately $1,000,000 for
general and administrative expenses (which includes approximately $500,000 in
non-cash expenses).

- 22 -

---

Our company has historically relied on equity and debt
financings to finance its ongoing operations. Existing working capital, possible
debt instruments, anticipated warrant exercises, further private placements and
anticipated cash flow are expected to be adequate to fund our companys
operations over the next year. During the future years, subsequent to 2011, we
require additional capital to implement our plan of operations. We anticipate
that these funds primarily will be raised through equity and debt financing or
from other available sources of financing. If we raise additional funds through
the issuance of equity or convertible debt securities, it may result in the
dilution in the equity ownership of investors in our common stock. There can be
no assurance that additional financing will be available upon acceptable terms,
if at all. If adequate funds are not available or are not available on
acceptable terms, we may be unable to take advantage of prospective new
opportunities or acquisitions, which could significantly and materially restrict
our operations, or we may be forced to discontinue our current projects.

Trends

In 2010, many commodity and stock market indices experienced
historically high levels of volatility in the face of the global economic
crisis. Financial market conditions continued to improve during the year as
global credit markets started to return to a more normal position, investor
confidence improved and most economies experienced positive growth.

During the year, the US dollar was generally in decline,
primarily from concerns about the level of US government borrowings and the
growing US deficit and from the low interest rates offered on US dollar
deposits. The EURO also weakened against the Canadian dollar as a result of low
interest rates, concerns about the solvency of certain European economies and
the level of sovereign debt in those countries.

Gold price volatility in 2010 remained high with the price
reaching a record level of US$1,424 per ounce. During the first quarter of 2011
the gold price continued to increase and to be volatile, reaching a high of
$1,447 per ounce in February of the March 2011 quarter and $1,541 per ounce in
May 2011 before its recent decline. The average market price for the first
quarter of 2011 was $1,402 per ounce and for 2010 was US$1,227 per ounce. The
tone for the precious metals market in the remainder of 2011 will depend on
whether the US dollar will be supported, and if the central banks will continue
to maintain interest rates at low levels to support economic growth. The
continued global easing of monetary policy could lead to higher inflation and
further US dollar depreciation in the coming years. This dollar depreciation
could have a positive impact on gold prices in the future and the longterm
upward trend in prices may continue. Conversely, subdued inflation rates and the
recovering global economy could put downward pressure on the gold price in the
future. Additionally, recent events in North Africa and the Middle East could
continue to have a positive effect on the gold price.

Overall, a lower US dollar should lead to higher costs in US
dollar terms to identify and explore for gold but could be more than offset by
higher gold prices, resulting in greater interest in gold exploration companies.
Conversely, if the US dollar strengthens, interest in the gold exploration
sector could be reduced.

Summary of Quarterly Results

Basic and Diluted
    IncomeNet Income (Loss)
    
    
    (Loss) Per ShareThree Months Ended
    
    **$**
    
    
    **$**March 31, 2011
    $
    (431,462
    )
    $
    (0.01
    )December 31, 2010
    
    (1,454,847
    )
    
    (0.04
    )September 30,
      2010
    
    (563,501
    )
    
    (0.02
    )June 30, 2010
    
    (886,367
    )
    
    (0.03
    )March 31, 2010
    
    (112,198
    )
    
    (0.00
    )December 31, 2009
    
    (433,872
    )
    
    (0.01
    )September 30,
      2009
    
    (425,971
    )
    
    (0.01
    )June
      30, 2009
    
    94,337
    
    
    0.00


Results of Operations for the Three Months Ended March
31, 2011 Compared to the Three Months Ended March 31, 2010

Our companys
loss for the three months ended March 31, 2011 was $431,462 as compared to a net
loss of $112,198 for the three months ended March 31, 2010, an increase of
$319,264. Increased exploration spending was significantly offset by gold
recovery in the comparative quarters while the gain on disposition of equipment
in the first quarter of 2011 mostly offset the gains on sale of investment
portfolio assets in the first quarter of 2010.

Our companys basic and diluted loss per share for the three
months ended March 31, 2011 was $0.01 compared to net loss of $0.00 per share
for the three months ended March 31, 2010. The weighted average number of shares
outstanding was 42,964,831 at March 31, 2011 compared to 33,342,096 for the
three months ended March 31, 2010. The increase in the weighted average number
of shares outstanding can be mostly attributed to the issuance of 8,092,593
shares in the November 2010 placement.

- 23 -

---

Exploration spending for the three months ended March 31, 2011
was $1,568,978 as compared to $181,904 for the three months ended March 31,
2010, an increase of $1,387,074. Exploration spending in 2011 reflected the
funds available from the November 2010 financing while spending in 2010
reflected conservation of cash available at that time.

Exploration work was focused primarily on the Kibi Project in
the quarter. We drilled 5,010 metres, trenched approximately 1,010 metres, and
submitted 6,932 samples to the lab for assay in the quarter.

General and administrative expense for the three months ended
March 31, 2011 was $255,345 as compared to $234,193 for the three months ended
March 31, 2010, an increase of $21,152. Most of the 2011 spending reflects
travel and promotional spending of $123,347 to attend trade shows and visit our
projects. Consulting and director fees were $69,514, including a non-cash stock
based compensation expense of $21,311. The balance of the general and
administrative expense of $62,844 related to legal, auditor, regulatory and
rental fees.

Amortization for the three months ended March 31, 2011 was
$30,402 as compared to $10,753 for the three months ended March 31, 2010, an
increase of $19,649. We added an excavator, bulldozer and two vehicles to the
assets, which increased the comparative expense in 2011.

During the three months ended March 31, 2011, we received 871
ounces of gold from our share of the placer gold operations. These placer gold
operations have been contracted to local Ghanaian groups which pay a portion of
their gold receipts to us for the right to work on our projects. We pay all
government royalties due on all of the production. This method promotes the
local economy while avoiding illegal workings on our projects. Our gold
receipts, after royalties, were sold for $1,021,775.

Realized and unrealized investment portfolio losses for the
three months ended March 31, 2011 were $19,509 as compared to a gain of $235,484
for the three months ended March 31, 2010, a decrease of $254,993. Most of the
unrealized loss in 2011 related to changes in the shares held from December 31,
2010. The decrease in gains in 2011 comparative to 2010 resulted from the sale
of much of the investment portfolio during 2010, leaving very little in the
account at December 31, 2010.

During the three months ended March 31, 2011, we sold a placer
gold recovery plant with book value $27,942 for $288,000 for a net gain of
$260,058. Our decision to use local Ghanaian contractors for placer gold
operations made the plant a non-core asset to us. Most of the cash received was
used to purchase a bulldozer and excavator which we will use in our continuing
exploration efforts.

Liquidity and Capital Resources

Our activities, principally the exploration and acquisition of
properties for gold and other metals, may be financed through joint ventures or
through the completion of equity transactions such as equity offerings and the
exercise of stock options and warrants. In November 2010, our company issued
8,092,593 common shares for proceeds of $10.8 million in conjunction with our
IPO on to the TSX. We issued 566,482 broker warrants related to the November
2010 financing.

At March 31, 2011, accounts payable and accrued liabilities
increased to $540,857 (December 31, 2010 - $517,236), due to general business
payables. Our cash and cash equivalents as at March 31, 2011 was sufficient to
pay these liabilities.

At March 31, 2011, we had total cash of $9,283,801 (December
31, 2010 - $10,096,122). Working capital as of March 31, 2011 was $9,635,688
(December 31, 2010 - $9,833,381). The decrease in cash mostly reflects
exploration and administrative spending net of gold recovery. Proceeds from the
sale of equipment were mostly absorbed by the purchase of other equipment.

Subsequent to March 31, 2011, Buccaneer closed its financing
and paid us $425,000 which was due as an option fee on our Banso and Muoso
concessions and a further $300,000 for exploration work done on these projects
to date.

We are an exploration company focused on gold and associated
commodities and do not have operating revenues; and therefore, we must utilize
our current cash reserves, income from placer gold sales, income from
investments, funds obtained from the exercise of stock options and warrants and
other financing transactions to maintain our capacity to meet the planned
exploration programs, or to fund any further development activities. There is no
certainty that future financing will be available to us in the amounts or at the
times desired on terms acceptable to us, if at all.

Our common shares, warrants and stock options outstanding as at
May 12, 2011, March 31, 2011, and December 31, 2010 were as follows:

May 12, 2011
    March 31, 2011
    December 31, 2010Common shares
    43,661,179
    42,986,179
    42,961,179Warrants
    1,739,320
    2,414,320
    2,439,320Stock Options
    1,989,000
    1,989,000
    1,788,000Fully diluted
    47,389,499
    47,389,499
    47,188,499


- 24 -

---

As of the date of this report, the full exercise of all
warrants and options would raise approximately $4.3 million. Exercise of these
warrants and options is not anticipated until the market value of our common
shares increases in value.

We remain debt free and our credit and interest rate risk is
limited to interest-bearing assets of cash and bank or government guaranteed
investment vehicles. Accounts payable and accrued liabilities are short-term and
non-interest bearing.

Our liquidity risk with financial instruments is minimal as
excess cash is invested with a Canadian financial institution in
government-backed securities or bank-backed guaranteed investment
certificates.

Our fiscal 2011 budget is approximately $6.0 million as
disclosed above under the heading Plan of Operations. As of the date of this
MD&A, our total cash position is sufficient to meet our current budgetary
requirements for 2011. These expenditures are subject to change if management
decides to scale back or accelerate operations.

We expect to be adequately capitalized to fund ongoing
operations at the current level in the short-term for fiscal 2011. Thereafter
from 2012, we will require additional funds from equity sources to maintain the
current momentum on our projects.

Recent Capital Raising Transactions

During November 2010, we raised $10.8 million from the issuance
of 8,092,593 common shares.

Material Commitments

Mineral Property Commitments

Save and except for fees payable from time to time to (i) the
Minerals Commission for an extension of an expiry date of a prospecting license
(current consideration fee payable is $15,000) or mining lease or annual
operating permits; (ii) the EPA for the issuance of permits prior to the
commencement of any work at a particular concession or the posting of a bond in
connection with any mining operations undertaken by our company; and (iii) a
legal obligation associated with our mineral properties for clean up costs when
work programs are completed, we are committed to expend an aggregate of less
than $500 in connection with annual or ground rent and mining permits to enter
upon and gain access to the following concessions and such other financial
commitments arising out of any approved exploration programs in connection
therewith:

| | (i)   | the Apapam concession (Kibi Project);            
| | ----- | -------------------------------------------------
| |       |                                                  
| | (ii)  | the Kwabeng concession (Kwabeng Project);        
| |       |                                                  
| | (iii) | the Pameng concession (Pameng Project);          
| |       |                                                  
| | (iv)  | the Banso Concession (Banso Project);            
| |       |                                                  
| | (v)   | the Muoso Concession (Muoso Project); and        
| |       |                                                  
| | (vi)  | the Edum Banso Concession (Edum Banso
  Project).

Upon and following the commencement of gold production at any
of our Projects, a royalty of the net smelter returns is payable quarterly to
the Government of Ghana as prescribed by legislation.

With respect to the Edum Banso Project:

| | (a) | $5,000 is payable to Adom Mining Limited (Adom)
      on the anniversary date of the Option Agreement in each year that we hold
      an interest in the agreement;                                                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                   
| | (b) | $200,000 is payable to Adom when the production of gold
      is commenced (or $100,000 in the event that less than 2 million ounces of
      proven and probable reserves are discovered on our project at this
      concession; and                                                                                            
| |     |                                                                                                                                                                                                                                                                                                                                   
| | (c) | an aggregate production royalty of 2% of the net smelter
      returns (NSR) from all ores, minerals and other products mined
      and removed from the project, except if less than 2 million ounces of
      proven and probable reserved are discovered in or at the Project, then the
      royalty shall be 1% of the NSR.

- 25 -

---

Repayment of Convertible Debentures and Accrued Interest

We issued Convertible Debentures aggregating the face value of
$900,000 in July 2005 under which interest was calculated at 7% per annum.
Interest only payments were payable quarterly on the last days of September,
December, March and June in each year of the term or until such time that the
principal was repaid in the full. The Convertible Debenture holders were
entitled, at their option, to convert, at any time and from time to time, until
payment in full of their respective Convertible Debentures, all or any part of
the outstanding principal amount of the Convertible Debenture, plus the Accrued
Interest, into shares (the Conversion Shares) of our common stock at
the conversion price of $1.00 per share (the Conversion Price). Each
Convertible Debenture provided for the automatic conversion of the outstanding
principal amount and all accrued but unpaid interest, into shares of our common
stock, at the Conversion Price, in the event that our common stock traded for 20
consecutive trading days (a) with a closing bid price of at least $1.50 per
share and (b) a cumulative trading volume during such twenty (20) trading day
period of at least 1,000,000 shares.

In June 2008, we provided notice of the automatic conversion of
the Convertible Debentures and in July 2008 we converted $650,000 of the
aggregate principal of $900,000 of the Convertible Debentures by way of the
issuance of 650,000 Conversion Shares. In February 2010 we converted the
outstanding principal of $250,000 owing under one remaining Convertible
Debenture by way of the issuance of 250,000 Conversion Shares.

Purchase of Significant Equipment

We consider the availability of equipment to conduct our
exploration activities. Due to demand from the mining and exploration industry,
at this time it is difficult to source resources for exploration work in Ghana,
including drills, excavators and bulldozers. We will consider the further
acquisition of equipment pieces to allow work to expand on our projects.

Off Balance Sheet Arrangements

Our company has no off balance sheet arrangements.

Significant Accounting Applications

Application of Critical Accounting Policies

We believe the following critical accounting policies affect
our more significant judgments and estimates used in the preparation of our
financial statements.

Generally accepted accounting principles

These consolidated financial statements have been prepared in
conformity with generally accepted accounting principles of the United States of
America (US GAAP).

Principles of consolidation

These consolidated financial statements include the accounts of
our company, our wholly-owned subsidiaries, Xtra Energy (from October 31, 2003),
XGEL (from February 16, 2004), XOG (from October 20, 2005) and XOGG (from March
2, 2006) and our 90% owned subsidiary, XG Mining (from December 22, 2004). All
significant intercompany accounts and transactions have been eliminated on
consolidation.

Use of estimates

The preparation of consolidated financial statements in
conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

Cash and cash equivalents

Our company considers highly liquid investments with original
maturities of three months or less to be cash equivalents. At March 31, 2011 and
December 31, 2010, cash and cash equivalents consisted of cash held at financial
institutions.

- 26 -

---

Receivables

No allowance for doubtful accounts has been provided.
Management has evaluated all receivables and believes they are all collectible.

Recovery of gold

Recovery of gold and other income is recognized when title and
the risks and rewards of ownership to delivered bullion and commodities pass to
the buyer and collection is reasonably assured.

Trading securities

Our companys trading securities are reported at fair value,
with unrealized gains and losses included in earnings.

Non-Controlling Interest

Our consolidated financial statements include the accounts of
XG Mining (from December 22, 2004). All intercompany accounts and transactions
have been eliminated upon consolidation. Our company records a non-controlling
interest which reflects the 10% portion of the earnings (loss) of XG Mining
allocable to the holders of the non-controlling interest.

Oil and natural gas properties

During the year ended December 31, 2010, our company sold its
oil and gas interests. Our company follows the full cost method of accounting
for oil and natural gas operations. Under this method, all costs associated with
the acquisition of, exploration for and development of oil and gas reserves are
capitalized in cost centers on a country-by-country basis. Such costs include
property acquisition costs, geological and geophysical studies, carrying charges
on non-producing properties, costs of drilling productive wells, and overhead
expenses directly related to these activities.

Depletion is calculated for producing properties by using the
unit-of-production method based on estimated proved reserves, before royalties,
as determined by management of our company or independent consultants. Sales or
dispositions of oil and gas properties are credited to the respective cost
centers and a gain or loss is recognized when all properties in a cost center
have been disposed of, unless such sale or disposition significantly alters the
relationship between capitalized costs and proved reserves of oil and gas
attributable to the cost center. Costs of abandoned properties are accounted for
as adjustments of capitalized costs and written off to expense.

Undeveloped properties are excluded from the depletion
calculation until the quantities of proved reserves can be determined.

A ceiling test is applied to the proven properties for each
cost center and for the aggregate of all cost centers by comparing the net
capitalized costs to the estimated future net revenues from production of
estimated proved reserves without discount, plus the costs of unproved
properties net of impairment. Any excess capitalized costs are written off to
expense. Further, the ceiling test for the aggregate of all cost centers is
required to include the effects of future removal and site restoration costs,
general and administrative expenses, financing costs and income taxes. The
calculation of future net revenues is based upon prices, costs and regulations
in effect at each year end.

Unproved properties are assessed for impairment on an annual
basis by applying factors that rely on historical experience. In general, our
company may write off any unproved property under one or more of the following
conditions:

| | (a) | there are no firm plans for further drilling on the
      unproved property;                                     
| | --- | -----------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                  
| | (b) | negative results were obtained from studies of the
      unproved properties;                                    
| |     |                                                                                                                  
| | (c) | negative results were obtained from studies conducted in
      the vicinity of the unproved property; or         
| |     |                                                                                                                  
| | (d) | the remaining term of the unproved property does not
      allow sufficient time for further studies or
drilling.

Equipment

Equipment is recorded at cost and is being amortized over its
estimated useful lives using the declining balance method at the following
annual rates:

|Furniture and equipment | 20% | 
|----------------------- | --- | 
|Computer equipment      | 30% | 
|Vehicles                | 30% | 
|Mining equipment        | 20% | 

- 27 -

---

Deferred financing costs

Deferred financing costs consist of expenses incurred to obtain
funds pursuant to the issuance of the convertible debentures and are being
amortized straight-line over the term of the debentures.

Mineral properties and exploration and development costs

The costs of acquiring mineral rights are capitalized at the
date of acquisition. After acquisition, various factors can affect the
recoverability of the capitalized costs. If, after review, our management
concludes that the carrying amount of a mineral property is impaired, it will be
written down to estimated fair value. Exploration costs incurred on mineral
properties are expensed as incurred. Development costs incurred on proven and
probable reserves will be capitalized. Upon commencement of production,
capitalized costs will be amortized using the unit-of-production method over the
estimated life of the ore body based on proven and probable reserves (which
exclude non-recoverable reserves and anticipated processing losses). When our
company receives an option payment related to a property, the proceeds of the
payment are applied to reduce the carrying value of the exploration asset.

Long-lived assets

Long-lived assets held and used by our company are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. For purposes of evaluating
the recoverability of long-lived assets, the recoverability test is performed
using undiscounted net cash flows related to the long-lived assets. If such
assets are considered to be impaired, the impairment recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell.

Asset retirement obligations

Our company records the fair value of an asset retirement
obligation as a liability in the period in which it incurs a legal obligation
associated with the retirement of tangible long-lived assets that result from
the acquisition, construction, development, and/or normal use of the long-lived
assets. Our company also records a corresponding asset which is amortized over
the life of the asset. Subsequent to the initial measurement of the asset
retirement obligation, the obligation is adjusted at the end of each period to
reflect the passage of time (accretion expense) and changes in the estimated
future cash flows underlying the obligation (asset retirement cost).

Stock-based compensation

Our company accounts for share-based compensation under the
provisions of ASC 718, Compensation-Stock Compensation. Under the fair value
recognition provisions, stock-based compensation expense is measured at the
grant date for all stock-based awards to employees and directors and is
recognized as an expense over the requisite service period, which is generally
the vesting period. The Black-Scholes option valuation model is used to
calculate fair value.

Our company accounts for stock compensation arrangements with
non-employees in accordance with ASC 718 which require that such equity
instruments are recorded at their fair value on the measurement date. The
measurement of stock-based compensation is subject to periodic adjustment as the
underlying equity instruments vest. Nonemployee stock-based compensation charges
are amortized over the vesting period on a straight-line basis. For stock
options granted to non-employees, the fair value of the stock options is
estimated using a Black-Scholes valuation model.

Income taxes

Our company accounts for income taxes under the asset and
liability method, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. Under the
asset and liability method the effect on deferred tax assets and liabilities of
a change in tax rates is recognized in income in the period that includes the
enactment date. A valuation allowance is recognized if it is more likely than
not that some portion or all of the deferred tax asset will not be recognized.

Loss per share

Basic loss per common share is computed using the weighted
average number of common shares outstanding during the year. To calculate
diluted loss per share, our company uses the treasury stock method and the if
converted method. As of March 31, 2011, there were 2,414,320 warrants
(December 31, 2010  2,439,320) and 1,989,000 stock options (December 31, 2010 
1,788,000) exercisable into common shares (December 31, 2010  Nil)
outstanding, none of which have been included in the weighted average number of
common shares outstanding as these were anti-dilutive.

- 28 -

---

Foreign exchange

Our companys functional currency is the U.S. dollar. Any
monetary assets and liabilities that are in a currency other than the U.S.
dollar are translated at the rate prevailing at period end. Revenue and expenses
in a foreign currency are translated at rates that approximate those in effect
at the time of translation. Gains and losses from translation of foreign
currency transactions into U.S. dollars are included in current results of
operations.

Financial instruments

Our companys financial instruments consist of cash and cash
equivalents, trading securities, receivables, and accounts payable and accrued
liabilities. It is our managements opinion that our company is not exposed to
significant interest, currency or credit risks arising from its financial
instruments. The fair values of these financial instruments approximate their
carrying values unless otherwise noted. Our company has its cash primarily in
government or bank guaranteed deposit certificates or in cash on account at one
commercial bank in Toronto, Ontario, Canada.

Fair value of financial assets and liabilities

Our company measures the fair value of financial assets and
liabilities based on GAAP guidance which defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair value
measurements. Effective January 1, 2008, our company adopted the provisions for
financial assets and liabilities, as well as for any other assets and
liabilities that are carried at fair value on a recurring basis. Effective
January 1, 2009, our company adopted the provisions for non-financial assets and
liabilities that are required to be measured at fair value.

Our company classifies financial assets and liabilities as
held-for-trading, available-for-sale, held-to-maturity, loans and receivables or
other financial liabilities depending on their nature. Financial assets and
financial liabilities are recognized at fair value on their initial recognition,
except for those arising from certain related party transactions which are
accounted for at the transferors carrying amount or exchange amount.

Financial assets and liabilities classified as held-for-trading
are measured at fair value, with gains and losses recognized in net income.
Financial assets classified as held-to-maturity, loans and receivables, and
financial liabilities other than those classified as held-for-trading are
measured at amortized cost, using the effective interest method of amortization.
Financial assets classified as available-for-sale are measured at fair value,
with unrealized gains and losses being recognized as other comprehensive income
until realized, or if an unrealized loss is considered other than temporary, the
unrealized loss is recorded in income.

Financial instruments, including cash and cash equivalents,
receivables, restricted cash, and accounts payable and accrued liabilities are
carried at cost, which management believes approximates fair value due to the
short term nature of these instruments. Investments in trading securities are
classified as held for trading, with unrealized gains and losses being
recognized in income.

The following table presents information about the assets that
are measured at fair value on a recurring basis as of December 31, 2010, and
indicates the fair value hierarchy of the valuation techniques our company
utilized to determine such fair value. In general, fair values determined by
Level 1 inputs utilize quoted prices (unadjusted) in active markets for
identical assets. Fair values determined by Level 2 inputs utilize data points
that are observable such as quoted prices, interest rates and yield curves. Fair
values determined by Level 3 inputs are unobservable data points for the asset
or liability, and included situations where there is little, if any, market
activity for the asset:

SignificantQuoted Prices
    
    
    Other
    
    
    Significantin Active
    
    
    Observable
    
    
    UnobservableMarch 31,
    
    
    Markets
    
    
    Inputs
    
    
    Inputs2011
    
    
    **(Level 1)**
    
    
    **(Level 2)**
    
    
    **(Level 3)**Assets:Cash and cash equivalents
    $
    9,283,801
    
    $
    9,283,801
    
    $
    -
    
    $
    -Restricted cash
    
    220,961
    
    
    220,961
    
    
    -
    
    
    -Marketable securities
    
    524,633
    
    
    524,633
    
    
    -
    
    
    -Total
    $
    10,029,395
    
    $
    10,029,395
    
    $
    -
    
    $
    -


The fair values of cash and cash equivalents and marketable
securities are determined through market, observable and corroborated sources.

- 29 -

---

Concentration of credit risk

The financial instrument which potentially subjects our company
to concentration of credit risk is cash. Our company maintains cash in bank
accounts that, at times, may exceed federally insured limits. As of March 31,
2011and December 31, 2010, our company has exceeded the federally insured limit.
Our company has not experienced any losses in such accounts and believes it is
not exposed to any significant risks on its cash in bank accounts.

Recent Accounting Pronouncements

In April 2010, the Financial Accounting Standards Board
(FASB) issued ASU 2010-13, Compensation  Stock Compensation (Topic
718), amending ASC 718. ASU 2010-13 clarifies that a share-based payment award
with an exercise price denominated in the currency of a market in which the
entity's equity securities trade should not be classified as a liability if it
otherwise qualifies as equity. ASU 2010-13 also improves GAAP by improving
consistency in financial reporting by eliminating diversity in practice. ASU
2010-13 is effective for interim and annual reporting periods beginning after
December 15, 2010 (January 1, 2011 for our company). Our company does not expect
its adoption to have a material impact on our company's financial reporting and
disclosures.

In December 2010, the FASB issued ASU 2010-29, which contains
updated accounting guidance to clarify the acquisition date that should be used
for reporting pro forma financial information when comparative financial
statements are issued. This update requires that a company should disclose
revenue and earnings of the combined entity as though the business
combination(s) that occurred during the current year had occurred as of the
beginning of the comparable prior annual reporting period only. This update also
requires disclosure of the nature and amount of material, nonrecurring pro forma
adjustments. The provisions of this update, which are to be applied
prospectively, are effective for business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning
on or after December 15, 2010, with early adoption permitted. The impact of this
update on our company's consolidated financial statements will depend on the
size and nature of future business combinations.

Forward Looking Statements

The information in this quarterly report contains
forward-looking statements. These forward-looking statements involve risks and
uncertainties, including statements regarding Xtra-Golds financial condition,
results of operations, business prospects, plans, objectives, goals, strategies,
expectations, future events, capital expenditure and exploration efforts. Any
statements contained herein that are not statements of historical facts may be
deemed to be forward-looking statements. In some cases, forward-looking
statements can be identified by terminology such as anticipates, expects,
intends, plans, forecasts, projects, budgets, believes, seeks,
estimates, could, might, should may, will, predict, potential or
continue, the negative of such terms or other comparable terminology. Actual
events or results may differ materially. In evaluating these statements, you
should consider various factors, including the risks outlined from time to time,
in other reports that Xtra-Gold files with the Securities and Exchange
Commission. These factors may cause our companys actual results to differ
materially from any forward-looking statement. Our company disclaims any
obligation to publicly update these statements, or disclose any difference
between its actual results and those reflected in these statements. The
information constitutes forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995.

Item 3.     QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Xtra-Gold is a smaller reporting company, as defined by Rule
12b-2 of the Exchange Act and, as such, is not required to provide the
information required under this item.

Item 4.     CONTROLS AND
PROCEDURES

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and our
Chief Financial Officer, evaluated the effectiveness of our disclosure controls
and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the
period covered by this Report.

Based on that evaluation, our management has concluded that as
of the end of the period covered by this Report our disclosure controls and
procedures were effective such that the information required to be disclosed in
our Securities and Exchange Commission reports (i) is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms; and (ii) is accumulated and communicated to our management to allow
timely decisions regarding required disclosure.

Our management does not expect that our disclosure controls and
procedures or our internal controls will prevent all error and all fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their costs. Due to
the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within our company have been detected.

- 30 -

---

Managements Report on Internal Control over Financial
Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control
over financial reporting is designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles. Our internal control over financial reporting includes
those policies and procedures that:

- pertain to the maintenance of records that, in reasonable detail,
  accurately and fairly reflect the transactions and dispositions of our assets;
- provide reasonable assurance that transactions are recorded as necessary
  to permit preparation of financial statements in accordance with generally
  accepted accounting principles, and that our receipts and expenditures are
  being made only in accordance with authorizations of our management and
  directors; and
- provide reasonable assurance regarding prevention or timely detection of
  unauthorized acquisition, use or disposition of our assets that could have a
  material effect on the financial statements.

Because of the inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal
control over financial reporting as of March 31, 2011. In making this
assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal
Control-Integrated Framework. Management's assessment included an evaluation of
the design of our internal control over financial reporting and testing of the
operational effectiveness of these controls. Based on this assessment, our
management has concluded that as of March 31, 2011, our internal control over
financial reporting was effective to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with U.S. generally accepted accounting
principles.

Changes in Internal Controls over Financial Reporting

During the fourth quarter of 2010, we hired a Chief Financial
Officer. Throughout the fourth quarter of 2010, our Chief Financial Officer
began building the accounting and finance team and began putting the necessary
procedures and system controls in place to strengthen our internal controls.
During the fourth quarter of 2010, we also hired additional staff which allowed
us to more effectively implement policies and checklists setting forth
procedures for accounting and financial reporting with respect to the
requirements and application of U.S. GAAP and SEC disclosure requirements. These
changes specifically addressed our internal control over preparation of the
financial statements and implementing a greater level of review and oversight
over our internal controls over financial reporting. During the first quarter of
2011 internal control of the financial statement preparation was further
strengthened as the compilation of the financial statements by external
consultants was terminated and we prepared the statements ourselves. Other than
these changes, there were no changes in our internal control over financial
reporting identified in connection with our evaluation that occurred during our
quarter ended March 31, 2011 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.

PART II  OTHER INFORMATION

Item 1.     LEGAL PROCEEDINGS

Our company was party to a lawsuit for the sum of $121,336.66
filed in the Ghanaian courts pertaining to payment for excavation services
provided by a subcontractor. We believed that the debt had previously been
discharged through the transfer of our shares to the subcontractor in 2008.
During the quarter ended March 31, 2010, we settled the lawsuit by paying the
subcontractor $108,000 in return for the shares previously issued which we
subsequently cancelled.

Except for the foregoing, neither our company nor any of our
subsidiaries was a party or of which any of our property was the subject in any
material pending legal proceedings that exceeds 10% of our current assets and
our subsidiaries on a consolidated basis during the quarter ended March 31,
2011.

- 31 -

---

Item 1A.     RISK FACTORS

Xtra-Gold is a smaller reporting company, as defined by Rule
12b-2 of the Exchange Act and, as such, our company is not required to provide
the information required by this item.

Item 2.     UNREGISTERED SALES OF
EQUITY SECURITIES AND USE OF PROCEEDS

There were no unregistered sales of equity securities during
the quarter ended March 31, 2011.

Item 3.     DEFAULTS UPON SENIOR
SECURITIES

There has been no material default, during the period covered
by this Report, in the payment of principal, interest, a sinking or purchase
fund installment, or any other material default not cured within 30 days with
respect to any indebtedness of our company or any of our significant
subsidiaries exceeding 5% of our total assets and our consolidated subsidiaries.

Item 4.     [REMOVED AND
RESERVED] Item 5. OTHER INFORMATION None.

Item 6. EXHIBITS

Exhibits

The following documents are included as exhibits to this
Report. Exhibits incorporated by reference are so indicated.

|Exhibit No. | Description of Document                                                    
|----------- | ---------------------------------------------------------------------------
|31.1        | Rule 13a-14(a)/15d-14(a)
      Certification of Principal Executive Officer
|31.2        | Rule 13a-14(a)/15d-14(a) Certification of
      Principal Financial Officer
|32.1        | Section 1350 Certification of
      Principal Executive Officer            
|32.2        | Section 1350 Certification of Principal
      Financial Officer            

- 32 -

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.

|Date:May 12, 2011 | XTRA-GOLD RESOURCES CORP.
|----------------- | -------------------------
|                  | (Registrant)             
|                  |                          
|                  | By                       
|                  |                          
|                  |                          
|                  |                          
|                  | By                       
|                  |                          
|                  |                          

- 33 -

---