----

----

| “ Alfred Hills” |   | "Samuel Yik”      |
|-----------------------------|--------|-------------------------|
|                        |   |                    |
| Alfred Hills                |   | Samuel Yik              |
| President                   |   | Chief Financial Officer |

----

----

----

|                                             |   |   |        |   |   |   |
|--------------------------------------------------|--------|--------|-------------|--------|--------|--------|
|                                             |   | 2010   |        |   | 2009   |   |
| ASSETS                                           |   |   |        |   |   |   |
|                                             |   |   |        |   |   |   |
|  CURRENT ASSETS:                            |   |   |        |   |   |   |
|  Cash and cash equivalents                  |   | $      | 38,852,899  |   |   | $      | 40,911,288 |   |
|  Marketable securities (see Note 4)         |   |   | 2,084,233   |   |   |   | 5,000,900 |   |
|  Other receivables and prepaids             |   |   | 148,730     |   |   |   | 319,485 |   |
|  Due from related party (see Note 9)        |   |   | 1,359       |   |   |   | - |   |
|                                             |   |   | 41,087,221  |   |   |   | 46,231,673 |   |
|                                             |   |   |        |   |   |   |   |   |
|  EQUIPMENT (see Note 5)                     |   |   | 7,355       |   |   |   | - |   |
|  MINERAL PROPERTY INTEREST (see Note 6)     |   |   | -           |   |   |   | 28,048 |   |
|                                             |   |   |        |   |   |   |   |   |
|                                             |   | $      | 41,094,576  |   |   | $      | 46,259,721 |   |
|                                             |   |   |        |   |   |   |   |   |
|  LIABILITIES                                |   |   |        |   |   |   |   |   |
|                                             |   |   |        |   |   |   |   |   |
|  CURRENT LIABILITIES:                       |   |   |        |   |   |   |   |   |
|  Accounts payable & accrued liabilities |   | $      | 222,133     |   |   | $      | 213,818 |   |
|                                             |   |   |        |   |   |   |   |   |
|  SHAREHOLDERS' EQUITY                       |   |   |        |   |   |   |   |   |
|                                             |   |   |        |   |   |   |   |   |
|  Share Capital (see Note 7)                 |   |   | 81,325,651  |   |   |   | 81,325,651 |   |
|  Contributed Surplus (see Note 8)           |   |   | 9,450,177   |   |   |   | 8,333,185 |   |
|  Accumulated Other Comprehensive Income     |   |   | 1,474,899   |   |   |   | 4,026,983 |   |
|  Deficit                                    |   |   | (51,378,284 | )      |   |   | (47,639,916 | ) |
|                                             |   |   |        |   |   |   |   |   |
|                                             |   |   | 40,872,443  |   |   |   | 46,045,903 |   |
|                                             |   |   |        |   |   |   |   |   |
|  Nature of operations (Note 1)              |   |   |        |   |   |   |   |   |
|  Commitments (Notes 15)                     |   |   |        |   |   |   |   |   |
|  Subsequent events (Notes 16)               |   |   |        |   |   |   |   |   |
|                                             |   | $      | 41,094,576  |   |   | $      | 46,259,721 |   |

----

----

----

|                                                                  |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|-----------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
| EXPENSES                                                              |   |   |       |   |   |   |       |   |   |
| Administrative and management services                                |   | $      | -          |   |   | $      | 230,682    |   |   | $ | 268,882 |   |
| Corporate development and investor relations                          |   |   | 32,112     |   |   |   | 153,945    |   |   |   | 183,784 |   |
| Consulting                                                            |   |   | 228,030    |   |   |   | 50,000     |   |   |   | 232,000 |   |
| Depreciation                                                          |   |   | 3,678      |   |   |   | -          |   |   |   | - |   |
| Exploration (Note 6)                                                  |   |   | 400,751    |   |   |   | 165,100    |   |   |   | 1,930,325 |   |
| Office and sundry                                                     |   |   | 306,542    |   |   |   | 219,452    |   |   |   | 266,241 |   |
| Merger and acquisition costs                                          |   |   | -          |   |   |   | 401,928    |   |   |   | - |   |
| Professional fees                                                     |   |   | 178,713    |   |   |   | 294,788    |   |   |   | 234,382 |   |
| Rent, parking and storage                                             |   |   | 235,355    |   |   |   | 180,947    |   |   |   | 108,658 |   |
| Salaries and employee benefits                                        |   |   | 1,008,882  |   |   |   | 675,350    |   |   |   | 350,792 |   |
| Stock-based compensation (Note 8)                                     |   |   | 1,116,992  |   |   |   | 614,999    |   |   |   | 62,900 |   |
| Transfer agent and regulatory fees                                    |   |   | 63,485     |   |   |   | 84,184     |   |   |   | 70,731 |   |
| Travel and accomodation                                               |   |   | 22,164     |   |   |   | 66,446     |   |   |   | 69,690 |   |
|                                                                  |   |   | 3,596,704  |   |   |   | 3,137,821  |   |   |   | 3,778,385 |   |
| LOSS BEFORE UNDERNOTED ITEMS                                          |   |   | (3,596,704 | )      |   |   | (3,137,821 | )      |   |   | (3,778,385 | ) |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| OTHER INCOME (EXPENSE)                                                |   |   |       |   |   |   |       |   |   |   |   |   |
| Foreign exchange loss                                                 |   |   | (86,905    | )      |   |   | (86,441    | )      |   |   | (14,758 | ) |
| Interest income                                                       |   |   | 337,872    |   |   |   | 393,863    |   |   |   | 863,416 |   |
| Other than temporary loss on marketable securities                    |   |   | -          |   |   |   | -          |   |   |   | (474,810 | ) |
| Gain (loss) on held-for-trading investment                            |   |   | -          |   |   |   | 432,454    |   |   |   | (117,699 | ) |
| Loss from equity investment                                           |   |   | -          |   |   |   | (261,471   | )      |   |   | (68,174 | ) |
| Termination benefits and severances                                   |   |   | -          |   |   |   | (1,031,750 | )      |   |   | (711,500 | ) |
| Gain on sale of marketable securities                                 |   |   | -          |   |   |   | 11,913     |   |   |   | - |   |
| Dilution loss from equity investment                                  |   |   | -          |   |   |   | (11,357    | )      |   |   | - |   |
| Write off of mineral property interest (Note 6)                       |   |   | (28,048    | )      |   |   | -          |   |   |   | - |   |
|                                                                  |   |   | 222,919    |   |   |   | (552,789   | )      |   |   | (523,525 | ) |
| LOSS BEFORE INCOME TAXES                                              |   |   | (3,373,785 | )      |   |   | (3,690,610 | )      |   |   | (4,301,910 | ) |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| INCOME TAX (EXPENSE) / RECOVERY                                       |   |   | (364,583   | )      |   |   | 526,697    |   |   |   | - |   |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| NET LOSS FOR THE YEAR                                                 |   | $      | (3,738,368 | )      |   | $      | (3,163,913 | )      |   | $ | (4,301,910 | ) |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| BASIC AND DILUTED LOSS PER SHARE                                      |   | $      | (0.08      | )      |   | $      | (0.11      | )      |   | $ | (0.20 | ) |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF SHARES                                     |   |   | 45,967,077 |   |   |   | 27,958,434 |   |   |   | 21,721,693 |   |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| LOSS FOR THE YEAR                                                     |   | $      | (3,738,368 | )      |   | $      | (3,163,913 | )      |   | $ | (4,301,910 | ) |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| OTHER COMPREHENSIVE INCOME/(LOSS)                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Unrealized (loss)/gain on available-for-sale marketable securities    |   |   | (2,916,667 | )      |   |   | 4,553,680  |   |   |   | - |   |
| Income tax effect of unrealized gain on available for sale securities |   |   | 364,583    |   |   |   | (526,697   | )      |   |   | - |   |
|                                                                  |   |   |       |   |   |   |       |   |   |   |   |   |
| COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR                              |   | $      | (6,290,452 | )      |   | $      | 863,070    |   |   | $ | (4,301,910 | ) |

----

| For the year ended December 31, 2008                       |   |   |       |   |    |   |        | Accumulated Other |   |              |       |   |   |     |       |
|------------------------------------------------------------|--------|--------|------------|--------|---------|--------|-------------|-------------------|--------|-------------------|------------|--------|--------|----------|------------|
|                                                       |   |   |       |   |    |   |        | Comprehensive     |   |              | Common     |   |   | Warrants |       |   | Contributed |   |
|                                                       |   | Total  |       |   | Deficit |   |        | Income            |   |              | Share      |   |   | Equity   |       |   | Surplus |   |
| Beginning balance                                          |   | $      | 26,018,766 |   |    | $      | (40,174,093 | )                 |   | $                 | -          |   |   | $        | 58,753,501 |   |   | $ | 1,281,946 |   |   | $ | 6,157,412 |   |
| Net loss                                                   |   |   | (4,301,910 | )      |    |   | (4,301,910  | )                 |   |              | -          |   |   |     | -          |   |   |   | - |   |   |   |   |   |
| Stock based compensation on options granted                |   |   | 62,900     |   |    |   | -           |              |   |              | -          |   |   |     | -          |   |   |   | - |   |   |   | 62,900 |   |
| Contributed surplus reallocated on expiry of warrants      |   |   | -          |   |    |   | -           |              |   |              | -          |   |   |     | -          |   |   |   | (1,281,946 | ) |   |   | 1,281,946 |   |
| Ending balance                                             |   | $      | 21,779,756 |   |    | $      | (44,476,003 | )                 |   | $                 | -          |   |   | $        | 58,753,501 |   |   | $ | - |   |   | $ | 7,502,258 |   |
|                                                       |   |   |       |   |    |   |        |              |   |              |       |   |   |     |       |   |   |   |   |   |   |   |   |   |
| For the year ended December 31, 2009                       |   |   |       |   |    |   |        |              |   | Accumulated Other |       |   |   |     |       |   |   |   |   |
|                                                       |   |   |       |   |    |   |        |              |   | Comprehensive     |       |   | Common |     |       | Warrants |   |   | Contributed |   |
|                                                       |   | Total  |       |   | Deficit |   |        | Income            |   |              | Share      |   |   | Equity   |       |   | Surplus |   |
| Beginning balance                                          |   | $      | 21,779,756 |   |    | $      | (44,476,003 | )                 |   | $                 | -          |   |   | $        | 58,753,501 |   |   | $ | - |   |   | $ | 7,502,258 |   |
| Net Income                                                 |   |   | (3,163,913 | )      |    |   | (3,163,913  | )                 |   |              | -          |   |   |     | -          |   |   |   | - |   |   |   | - |   |
| Unrealized gains on available-for-sale securities (Note 4) |   |   | 4,553,680  |   |    |   | -           |              |   |              | 4,553,680  |   |   |     | -          |   |   |   | - |   |   |   | - |   |
| Income tax effect of unrealized gain on available-for-sale |   |   | (526,697   | )      |    |   | -           |              |   |              | (526,697   | )      |   |     | -          |   |   |   | - |   |   |   | - |   |
| securities (Note 12)                                       |   |   |       |   |    |   |        |              |   |              |       |   |   |     |       |   |   |   |   |   |   |   |   |   |
| Stock based compensation on options granted                |   |   | 614,999    |   |    |   | -           |              |   |              | -          |   |   |     | -          |   |   |   | - |   |   |   | 614,999 |   |
| Common stock issued for acquisition (Note 2)               |   |   | 22,572,150 |   |    |   | -           |              |   |              | -          |   |   |     | 22,572,150 |   |   |   | - |   |   |   | - |   |
| Exchange options and warrants (Note 2)                     |   |   | 215,928    |   |    |   | -           |              |   |              | -          |   |   |     | -          |   |   |   | - |   |   |   | 215,928 |   |
| Ending balance                                             |   | $      | 46,045,903 |   |    | $      | (47,639,916 | )                 |   | $                 | 4,026,983  |   |   | $        | 81,325,651 |   |   | $ | - |   |   | $ | 8,333,185 |   |
|                                                       |   |   |       |   |    |   |        |              |   |              |       |   |   |     |       |   |   |   |   |   |   |   |   |   |
| For the year ended December 31, 2010                       |   |   |       |   |    |   |        |              |   | Accumulated Other |       |   |   |     |       |   |   |   |   |
|                                                       |   |   |       |   |    |   |        |              |   | Comprehensive     |       |   | Common |     |       | Warrants |   |   | Contributed |   |
|                                                       |   | Total  |       |   | Deficit |   |        | Income            |   |              | Share      |   |   | Equity   |       |   | Surplus |   |
| Beginning balance                                          |   | $      | 46,045,903 |   |    | $      | (47,639,916 | )                 |   | $                 | 4,026,983  |   |   | $        | 81,325,651 |   |   | $ | - |   |   | $ | 8,333,185 |   |
| Net loss                                                   |   |   | (3,738,368 | )      |    |   | (3,738,368  | )                 |   |              | -          |   |   |     | -          |   |   |   | - |   |   |   | - |   |
| Unrealized gains on available-for-sale securities (Note 4) |   |   | (2,916,667 | )      |    |   | -           |              |   |              | (2,916,667 | )      |   |     | -          |   |   |   | - |   |   |   | - |   |
| Income tax effect of unrealized gain on available-for-sale |   |   | 364,583    |   |    |   | -           |              |   |              | 364,583    |   |   |     | -          |   |   |   | - |   |   |   | - |   |
| securities (Note 12)                                       |   |   |       |   |    |   |        |              |   |              |       |   |   |     |       |   |   |   |   |   |   |   |   |   |
| Stock based compensation on options granted                |   |   | 1,116,992  |   |    |   | -           |              |   |              | -          |   |   |     | -          |   |   |   | - |   |   |   | 1,116,992 |   |
| Ending balance                                             |   | $      | 40,872,443 |   |    | $      | (51,378,284 | )                 |   | $                 | 1,474,899  |   |   | $        | 81,325,651 |   |   | $ | - |   |   | $ | 9,450,177 |   |

----

|                                                                                     |   |   |       |   |   |   |       |   |   |
|------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                                                     |   |   |       |   |   |   |       |   |   |
|                                                                                     |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|                                                                                     |   |   |       |   |   |   |       |   |   |
| CASH PROVIDED FROM (USED FOR)                                                            |   |   |       |   |   |   |       |   |   |
|                                                                                     |   |   |       |   |   |   |       |   |   |
| OPERATING ACTIVITIES                                                                     |   |   |       |   |   |   |       |   |   |
| Net loss for the period                                                                  |   | $      | (3,738,368 | )      |   | $      | (3,163,913 | )      |   | $ | (4,301,910 | ) |
| Items not affecting cash                                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Stock-based compensation                                                                 |   |   | 1,116,992  |   |   |   | 614,999    |   |   |   | 62,900 |   |
| Depreciation                                                                             |   |   | 3,678      |   |   |   | -          |   |   |   | - |   |
| Write off of mineral property interest (Note 6)                                          |   |   | 28,048     |   |   |   | -          |   |   |   | - |   |
| Dilution loss from equity investment (Note 4)                                            |   |   | -          |   |   |   | 11,357     |   |   |   | - |   |
| Income tax expense/(recovery) (Note 12)                                                  |   |   | 364,583    |   |   |   | (526,697   | )      |   |   | - |   |
| Termination benefit                                                                      |   |   | -          |   |   |   | -          |   |   |   | 711,500 |   |
| Receipt of Navidad interest                                                              |   |   | -          |   |   |   | -          |   |   |   | 18,500,000 |   |
| Loss from equity investment (Note 4)                                                     |   |   | -          |   |   |   | 261,471    |   |   |   | 68,174 |   |
| (Gain)/Loss on marketable securities                                                     |   |   | -          |   |   |   | (11,913    | )      |   |   | 474,810 |   |
| (Gain)/Loss on held-for-trading investment                                               |   |   | -          |   |   |   | (432,454   | )      |   |   | 117,699 |   |
|                                                                                     |   |   | (2,225,067 | )      |   |   | (3,247,150 | )      |   |   | 15,633,173 |   |
| Change in non-cash working capital balances                                              |   |   | 177,711    |   |   |   | (621,235   | )      |   |   | 320,012 |   |
|                                                                                     |   |   | (2,047,356 | )      |   |   | (3,868,385 | )      |   |   | 15,953,185 |   |
|                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| INVESTING ACTIVITIES                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Acquisition of fixed assets                                                              |   |   | (11,033    | )      |   |   | -          |   |   |   | - |   |
| Expenditures on mineral properties                                                       |   |   | -          |   |   |   | (28,048    | )      |   |   | - |   |
| Cash from acquisitions (Note 2)                                                          |   |   | -          |   |   |   | 22,792,010 |   |   |   | - |   |
| Purchase of marketable securities and investments                                        |   |   | -          |   |   |   | -          |   |   |   | (1,499,800 | ) |
| Proceed from sale of marketable securities                                               |   |   | -          |   |   |   | 565,236    |   |   |   | - |   |
|                                                                                     |   |   | (11,033    | )      |   |   | 23,329,198 |   |   |   | (1,499,800 | ) |
|                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS                                         |   |   | (2,058,389 | )      |   |   | 19,460,813 |   |   |   | 14,453,385 |   |
|                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR                                            |   |   | 40,911,288 |   |   |   | 21,450,475 |   |   |   | 6,997,090 |   |
|                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| CASH AND CASH EQUIVALENTS - END OF YEAR                                                  |   | $      | 38,852,899 |   |   | $      | 40,911,288 |   |   | $ | 21,450,475 |   |
|                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| SUPPLEMENTARY CASH FLOW INFORMATION                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
|                                                                                     |   |   | 2010       |   |   |   | 2009       |   |   |   | 2008 |   |
| Change in non-cash working capital                                                       |   |   |       |   |   |   |       |   |   |   |   |   |
| Other receivables and prepaids                                                           |   | $      | 170,755    |   |   | $      | 88,263     |   |   | $ | 232,393 |   |
| Due from related party                                                                   |   |   | (1,359     | )      |   |   | -          |   |   |   | - |   |
| Recovery of deposit                                                                      |   |   | -          |   |   |   | 205,000    |   |   |   | - |   |
| Termination benefits                                                                     |   |   | -          |   |   |   | (711,500   | )      |   |   | - |   |
| Accounts payable and accrued liabilities                                                 |   |   | 8,315      |   |   |   | (202,998   | )      |   |   | 87,619 |   |
|                                                                                     |   | $      | 177,711    |   |   | $      | (621,235   | )      |   | $ | 320,012 |   |
| Non-cash transaction                                                                     |   |   |       |   |   |   |       |   |   |   |   |   |
| Acquisition of KBX and IBX for shares, being a non-cash financing and investing activity |   | $      | -          |   |   | $      | 22,788,078 |   |   | $ | - |   |

----

----

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

|                                                                     |   |   | $          |   |
|--------------------------------------------------------------------------|--------|--------|------------|--------|
| Common shares issued (58,185,516 shares)                                 |   |   | 22,572,150 |   |
| Exchange options and warrants (3,135,019 options and 1,548,934 warrants) |   |   | 215,928    |   |
|                                                                     |   |   | 22,788,078 |   |
|                                                                     |   |   |       |   |
| The assets and liabilities acquired are as follows:                      |   |
| Cash and cash equivalents                                                |   |   | 22,792,010 |   |
| Marketable securities                                                    |   |   | 1,800      |   |
| Accounts receivable and prepaids                                         |   |   | 217,741    |   |
| Accounts payable                                                         |   |   | (223,473   | )      |
| Net assets acquired                                                      |   |   | 22,788,078 |   |

----

----

| Risk-free interest rate | 1.24%     |
|-------------------------|-----------|
| Estimated volatility    | 63%       |
| Expected life           | 2.4 years |
| Expected dividend yield | 0%        |

| 3. | SIGNIFICANT ACCOUNTING POLICIES |
|----|---------------------------------|

|   | Basis of Presentation |
|--------|-----------------------|

----

----

----

----

|   | Asset                  | Basis         | Rate                                              |   |
|--------|------------------------|---------------|---------------------------------------------------|--------|
|   | Leasehold Improvements | Straight-line | Lesser of estimated useful life and term of lease |   |

----

----

| i)   | Cash and cash equivalents are classified as “Held-for-trading” and recorded at fair value with changes in fair value recorded in income. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------|

| ii)   | Marketable securities are classified as either “Available-for-sale” or “Held-for-trading”. “Available-for-sale” securities are recorded at fair value with temporary changes in fair value recorded in other comprehensive income. The fair value of marketable securities is obtained by reference to the closing quoted market price on the balance sheet date. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iii)   | Amounts receivable and deposits are classified as “Loans and Receivables” and are recorded at their amortized cost. |
|------------------|---------------------------------------------------------------------------------------------------------------------------------|

| iv)   | Accounts payable, accrued liabilities and termination benefits are classified as “Other Financial Liabilities” and are carried at their amortized cost. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

| 4.   | MARKETABLE SECURITIES AND INVESTMENT |
|----------------|--------------------------------------|

| For the Year Ended December 31, 2010 |   |            |      |   |        |   |   |       |   |   |              |   |
|--------------------------------------|--------|-----------------|-----------|--------|-------------|--------|--------|------------|--------|--------|-------------------|--------|
|                                 |   |            |      |   |        |   |   |       |   |   |              |   |
|                                 |   | January 1, 2010 |      |   | Proceeds on |   |   | Adjustment |   |   | December 31, 2010 |   |
|                                 |   | carrying        |      |   | sale of     |   |   | to Fair    |   |   | carrying          |   |
|                                 |   | value           |      |   | investment  |   |   | Value      |   |   | value             |   |
|                                 |   | $               |      |   | $           |   |   | $          |   |   | $                 |   |
| Available-for-sale investments       |   |            |      |   |        |   |   |       |   |   |              |   |   |   |   |   |
| Urodynamix Technologies Ltd.         |   | $               | 900       |   |        | $      | -      |       |   | $      | -                 |   |   | $ | 900 |   |
| Blue Sky Uranium Corp. (b)           |   |            | 5,000,000 |   |        |   | -      |       |   |   | (2,916,667        | )      |   |   | 2,083,333 |   |
| Total maketable securities           |   | $               | 5,000,900 |   |        | $      | -      |       |   | $      | (2,916,667        | )      |   | $ | 2,084,233 |   |

| For the Year Ended December 31, 2009                  |   |                           |    |   |                           |   |     |                 |   |   |                        |   |   |                                |     |   |                            |   |    |                                          |   |   |
|-------------------------------------------------------|--------|--------------------------------|---------|--------|--------------------------------|--------|----------|----------------------|--------|--------|-----------------------------|--------|--------|-------------------------------------|----------|--------|---------------------------------|--------|---------|-----------------------------------------------|--------|--------|
|                                                  |   | January 1, 2009carrying value$ |    |   | Proceeds onsale of investment$ |   |     |  Dilution loss$ |   |   | Loss fromequity investment$ |   |   | Gain on heldfor trading investment$ |     |   | Acquired onacquisition(Note 2)$ |   |    | Transfer ofinvestment fromEquity Method$ |   |   | Adjustmentto Fair Value$ |   |   | December 31, 2009Carrying Value$ |   |
| Available-for-sale investment                         |   |                           |    |   |                           |   |     |                 |   |   |                        |   |   |                                |     |   |                            |   |    |                                          |   |   |   |   |   |   |   |
| Panthera Exploration Inc. (a)                         |   |                           | 24,990  |   |                           |   | (36,903  | )                    |   |   | -                           |   |   |                                | -        |   |                            |   | 11,913  |                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Urodynamix Technologies Ltd.                          |   |                           | -       |   |                           |   | -        |                 |   |   | -                           |   |   |                                | -        |   |                            |   | -       |                                          |   |   | 1,800 |   |   |   | - |   |   |   | (900 | ) |   |   | 900 |   |
| Blue Sky Uranium Corp. (b)                            |   |                           |    |   |                           |   |     |                 |   |   |                        |   |   |                                |     |   |                            |   |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common shares                                         |   |                           | -       |   |                           |   | -        |                 |   |   | -                           |   |   |                                | -        |   |                            |   | -       |                                          |   |   | - |   |   |   | 445,420 |   |   |   | 4,554,580 |   |   |   | 5,000,000 |   |
| Held-for-trading investment                           |   |                           |    |   |                           |   |     |                 |   |   |                        |   |   |                                |     |   |                            |   |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Blue Sky Uranium Corp. (b)                            |   |                           |    |   |                           |   |     |                 |   |   |                        |   |   |                                |     |   |                            |   |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Warrants                                              |   |                           | 95,879  |   |                           |   | (528,333 | )                    |   |   | -                           |   |   |                                | -        |   |                            |   | 432,454 |                                          |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Investment accounted for under the equity method |   |                           |    |   |                           |   |     |                 |   |   |                        |   |   |                                |     |   |                            |   |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Blue Sky Uranium Corp. (b)                            |   |                           |    |   |                           |   |     |                 |   |   |                        |   |   |                                |     |   |                            |   |    |                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common shares                                         |   |                           | 718,248 |   |                           |   | -        |                 |   |   | (11,357                     | )      |   |                                | (261,471 | )      |                            |   | -       |                                          |   |   | - |   |   |   | (445,420 | ) |   |   | - |   |   |   | - |   |
| Total marketable securities                           |   |                           | 839,117 |   |                           |   | (565,236 | )                    |   |   | (11,357                     | )      |   |                                | (261,471 | )      |                            |   | 444,367 |                                          |   |   | 1,800 |   |   |   | - |   |   |   | 4,553,680 |   |   |   | 5,000,900 |   |

|   | (a) | On June 16, 2008 the Company purchased 3,570,000 units of Panthera Exploration Inc. (“Panthera”) (formerly Amera Resources Corporation), a company with directors in common at the time, for $0.14 per unit for a total of $499,800. Each unit consisted of one common share and one-half of non-transferable share purchase warrant exercisable on or before June 16, 2010 at a price of $0.18 per share. On December 23, 2008 Panthera completed a 10 for 1 rollback of its shares. This resulted in the Company holding 357,000 shares and 178,500 warrants exercisable at a price of $1.80. In the year ended December 31, 2008, an other than temporary loss of $474,810 was recognized reducing the carrying value of the investment to $24,990. On August 25, 2009 the Company sold the 357,000 shares for proceeds of $36,903 for an accounting gain of $11,913. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|   | (b) | On September 17, 2008 and October 24, 2008 the Company purchased 2,750,000 and 5,583,333 Units, respectively, of Blue Sky Uranium Corp. (“Blue Sky”), for $0.12 per Unit for a total of $1,000,000.  Each Unit consisted of one common share and one transferable share purchase warrant. Each warrant entitled the Company to purchase one additional common share at a price of $0.18 per share in year one and $0.20 per share in year two. The warrants were originally recorded at $213,578 using the Black-Scholes Option Pricing Model. On October 26, 2009 the Company sold the 8,333,333 warrants that it held of Blue Sky for proceeds of $528,333. As a result the Company recorded a gain of $432,454 for the year ended December 31, 2009. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company accounted for its investment in common shares using the equity method and classified it as long-term. On May 6, 2009, the Company’s holdings of Blue Sky were diluted from 22% to 19% as a result of Blue Sky completing a private placement to outside parties of 7,000,000 common shares. As a result, the Company recorded a dilution loss of $11,357 in the second quarter of 2009. Blue Sky was under management in common. During the period ended September 30, 2009, the Company recorded a $261,471 equity loss. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                  |   |   |   |   |         |        |   |     |     |
|-----------------------|--------|--------|--------|--------|--------------|-------------|--------|----------|----------|
|                  |   |   |   |   | Accumulated  |        |   | Net Book |     |
| December 31, 2010     |   | Cost   |   |   | Amortization |        |   | Value    |     |
|                  |   |   |   |   |         |        |   |     |     |
| Leasehold Improvement |   | $      | 11,033 |   |         | $           | (3,678 | )        |     | $ | 7,355 |   |
|                  |   |   |   |   |         |        |   |     |     |   |   |   |
|                  |   |   |   |   |         |        |   |     |     |   |   |   |
|                  |   |   |   |   |         |        |   |     |     |   |   |   |
|                  |   |   |   |   |         | Accumulated |   |     | Net Book |   |
| December 31, 2009     |   | Cost   |   |   | Amortization |        |   | Value    |     |
|                  |   |   |   |   |         |        |   |     |     |   |   |   |
| Leasehold Improvement |   | $      | -      |   |         | $           | -      |     |     | $ | - |   |
|                  |   |   |   |   |         |        |   |     |     |   |   |   |

----

----

|                            |   | 2010 Total |    |   | 2009 Total |   |     | 2008 Total |   |
|---------------------------------|--------|------------|---------|--------|------------|--------|----------|------------|--------|
|                            |   | $          |    |   | $          |   |     | $          |   |
|  Hushamu property          |   |       | 20,357  |   |       |   | 281,695  |       |   |   | 1,767,014 |   |
|  General exploration       |   |       | 427,351 |   |       |   | 219,625  |       |   |   | 163,311 |   |
|  Mineral income tax credit |   |       | (46,957 | )      |       |   | (308,172 | )          |   |   | - |   |
|                            |   |       | 400,751 |   |       |   | 193,148  |       |   |   | 1,930,325 |   |

| (a)   | Hushamu Property |
|-----------------|------------------|

----

----

| Acquisition costs:             |   | 2010   |      |   | 2009   |   |
|--------------------------------|--------|--------|-----------|--------|--------|--------|
| Balance, beginning of period   |   | $      | 28,048    |   |   | $      | - |   |
| Acquisition costs              |   |   | -         |   |   |   | 28,048 |   |
| Write off of property interest |   |   | (28,048   | )      |   |   | - |   |
| Balance, end of period         |   | $      | -         |   |   | $      | 28,048 |   |
|                           |   |   |      |   |   |   |   |   |
| Exploration expenditures:      |   |   |      |   |   |   |   |   |
| Balance, beginning of period   |   | $      | 2,020,661 |   |   | $      | 1,767,014 |   |
|                           |   |   |      |   |   |   |   |   |
| Salaries and contractors       |   |   | 10,638    |   |   |   | 171,634 |   |
| Imagery and base maps          |   |   | 123       |   |   |   | - |   |
| Office                         |   |   | 13,818    |   |   |   | 36,957 |   |
| Assays                         |   |   | 5,171     |   |   |   | 29,531 |   |
| Geotechnical                   |   |   | -         |   |   |   | 8,500 |   |
| Environmental                  |   |   | -         |   |   |   | 3,030 |   |
| Petrography                    |   |   | -         |   |   |   | 2,659 |   |
| Communications                 |   |   | -         |   |   |   | 1,336 |   |
| Transportation                 |   |   | (9,393    | )      |   |   | - |   |
|                           |   |   | 20,357    |   |   |   | 253,647 |   |
|                           |   |   |      |   |   |   |   |   |
| Balance, end of period         |   | $      | 2,041,018 |   |   | $      | 2,020,661 |   |
|                           |   |   |      |   |   |   |   |   |
| Mineral income tax credit      |   | $      | (355,129  | )      |   | $      | (308,172 | ) |
| Total                          |   | $      | 1,685,889 |   |   | $      | 1,740,537 |   |

| (b)   | Mel Property: |
|-----------------|---------------|

| (c)   | Barb Property: |
|-----------------|----------------|

----

----

|   | Authorized | -   | unlimited common shares without par value |
|--------|------------|---------------|-------------------------------------------|

| -   | 100,000,000 preferred shares without par value |
|---------------|------------------------------------------------|

| Issued - common shares                  |   | December 31, 2010 |       |   | December 31, 2009 |   |       | December 31, 2008 |   |
|-----------------------------------------|--------|-------------------|------------|--------|-------------------|--------|------------|-------------------|--------|
|                                    |   | Number            |       |   |              | $      |       |              | Number |   |   |   | $ |   |   | Number |   |   |   | $ |   |
|                                    |   |              |       |   |              |   |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year              |   |              | 45,967,077 |   |              |   | 81,325,651 |              |   |   | 52,132,064 |   |   |   | 58,753,501 |   |   |   | 52,132,064 |   |   |   | 58,753,501 |   |
|                                    |   |              |       |   |              |   |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Issued for acquisition (Note 2)         |   |              | -          |   |              |   | -          |              |   |   | 58,185,516 |   |   |   | 22,572,150 |   |   |   | - |   |   |   | - |   |
|                                    |   |              |       |   |              |   |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Share consolidation on a 2.4 to 1 basis |   |              | -          |   |              |   | -          |              |   |   | (64,350,503 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
|                                    |   |              |       |   |              |   |       |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, end of period                  |   |              | 45,967,077 |   |              |   | 81,325,651 |              |   |   | 45,967,077 |   |   |   | 81,325,651 |   |   |   | 52,132,064 |   |   |   | 58,753,501 |   |

|   | (i) | 58,185,516 shares were issued and 3,135,019 options and 1,548,934 warrants were issued in exchange for all of the outstanding securities of KBX and IBX. (See Note 2 for details.) |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | On September 30, 2009 the Company consolidated its shares on a 2.4 to 1 basis.  As a result, the number of shares consolidated was 64,350,503. The number of options was consolidated by 2,685,094 to 1,917,925 and the number of warrants was consolidated by 1,739,170 to 1,242,264. The weighted average number of shares and loss per share for the comparative periods have been restated to reflect this consolidation, which occurred on September 30, 2009 on a 2.4 to 1 basis. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                     |   | 2010    |   |   | 2009      |   |   | 2008    |   |
|--------------------------|--------|---------|--------|--------|-----------|--------|--------|---------|--------|
|                     |   |    |   |   |      |   |   |    |   |
| Risk free interest rate  |   |    | 2.00   | %      |      |   | 2.53   | %       |   |   | 3.18 | % |
| Volatility               |   |    | 110.48 | %      |      |   | 128    | %       |   |   | 125 | % |
| Expected life of options |   | 5 years |   |   | 3.4 years |   |   | 3 years |   |
| Dividend rate            |   |    | 0      | %      |      |   | 0      | %       |   |   | 0 | % |

----

----

|                                |   | Year ended        |      |   | Year Ended        |   |   | Year Ended        |   |
|-------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|--------|-------------------|--------|
|                                |   | December 31, 2010 |      |   | December 31, 2009 |   |   | December 31, 2008 |   |
|                                |   | Number of options |      |   | Weighted average  |   |   | Number of options |   |   | Weighted average |   |   | Number of options |   |   | Weighted average |   |
|                                |   | outstanding       |      |   | exercise price $  |   |   | outstanding       |   |   | exercise price $ |   |   | outstanding |   |   | exercise price $ |   |
|                                |   |              |      |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Balance, beginning of year          |   |              | 4,187,925 |   |              | $      | 2.70   |              |   |   | 2,625,000 |   |   | $ | 3.12 |   |   |   | 4,330,000 |   |   | $ | 2.72 |   |
| Granted                             |   |              | 745,000   |   |              | $      | 0.96   |              |   |   | - |   |   | $ | - |   |   |   | 250,000 |   |   | $ | 0.54 |   |
| Exercised                           |   |              | -         |   |              | $      | -      |              |   |   | - |   |   | $ | - |   |   |   | - |   |   | $ | - |   |
| Cancelled/Forfeited                 |   |              | (169,617  | )      |              | $      | 3.46   |              |   |   | (10,000 | ) |   | $ | 3.21 |   |   |   | (680,000 | ) |   | $ | 2.46 |   |
| Expired                             |   |              | (746,479  | )      |              | $      | 7.00   |              |   |   | (1,147,000 | ) |   | $ | 3.10 |   |   |   | (1,275,000 | ) |   | $ | 1.62 |   |
| Exchanged options (Note 2)          |   |              | -         |   |              | $      | -      |              |   |   | 3,135,019 |   |   | $ | 3.71 |   |   |   | - |   |   | $ | - |   |
| Share consolidation (Note 7(a)(ii)) |   |              | -         |   |              | $      | -      |              |   |   | (2,685,094 | ) |   | $ | - |   |   |   | - |   |   | $ | - |   |
|                                |   |              |      |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                |   |              | 4,016,829 |   |              | $      | 1.54   |              |   |   | 1,917,925 |   |   | $ | 4.92 |   |   |   | 2,625,000 |   |   | $ | 3.12 |   |
| Granted after share consolidation   |   |              | -         |   |              | $      | -      |              |   |   | 2,270,000 |   |   | $ | 0.82 |   |   |   | - |   |   | $ | - |   |
| Outstanding, end of year            |   |              | 4,016,829 |   |              | $      | 1.54   |              |   |   | 4,187,925 |   |   | $ | 2.70 |   |   |   | 2,625,000 |   |   | $ | 3.12 |   |
|                                |   |              |      |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Exercisable, end of year            |   |              | 3,267,729 |   |              | $      | 1.71   |              |   |   | 2,674,592 |   |   | $ | 2.49 |   |   |   | 2,625,000 |   |   | $ | 3.12 |   |

|                                                                                     |   |   |      |   |        |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------------|--------|--------|-----------|--------|-------------|-------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| The weighted average life of the options outstanding at December 31, 2010 is 3.55 years. |   |   |      |   |        |
|                                                                                     |   |   |      |   |        |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| As at September 30, 2010, the following stock options were outstanding:                  |   |   |      |   |        |              |   |   |   |
|                                                                                     |   |   |      |   |        |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   | Number |      |   | Expiry Date |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 29,167    |   |        | November 16, 2010 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 114,708   |   |        | February 9, 2011  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 16,667    |   |        | June 22, 2011     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 46,041    |   |        | July 6, 2011      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 111,978   |   |        | March 16, 2012    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 33,608    |   |        | March 16, 2012    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 11,510    |   |        | November 7, 2012  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 1,381     |   |        | November 8, 2012  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 68,281    |   |        | November 15, 2012 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 182,989   |   |        | December 12, 2012 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 31,489    |   |        | February 5, 2013  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 71,819    |   |        | February 25, 2014 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 311,358   |   |        | February 26, 2014 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 2,270,000 |   |        | October 26, 2014  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   |      |   |        |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |   | 3,300,996 |   |        |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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

| Options |      |   | Options |   |      |   Exercise Price |   |
|---------|-----------|--------|---------|--------|-----------|-----------------------|--------|
| Granted |      |   | Vested  |   |      | per share             |   | Expiry Date |
|    | 114,708   |   |    |   | 114,708   |                  |   | $ | 1.81 |   | February 9, 2011 |
|    | 16,667    |   |    |   | 16,667    |                  |   | $ | 7.70 |   | June 22, 2011 |
|    | 46,041    |   |    |   | 46,041    |                  |   | $ | 25.09 |   | July 6, 2011 |
|    | 111,978   |   |    |   | 111,978   |                  |   | $ | 3.42 |   | March 16, 2012 |
|    | 33,608    |   |    |   | 33,608    |                  |   | $ | 20.31 |   | March 16, 2012 |
|    | 11,510    |   |    |   | 11,510    |                  |   | $ | 13.36 |   | November 7, 2012 |
|    | 1,381     |   |    |   | 1,381     |                  |   | $ | 12.81 |   | November 8, 2012 |
|    | 68,281    |   |    |   | 68,281    |                  |   | $ | 2.03 |   | November 15, 2012 |
|    | 182,989   |   |    |   | 182,989   |                  |   | $ | 1.67 |   | December 12, 2012 |
|    | 31,489    |   |    |   | 31,489    |                  |   | $ | 6.73 |   | February 5, 2013 |
|    | 71,819    |   |    |   | 71,819    |                  |   | $ | 1.09 |   | February 25, 2014 |
|    | 311,358   |   |    |   | 311,358   |                  |   | $ | 0.53 |   | February 26, 2014 |
|    | 2,270,000 |   |    |   | 1,520,900 |                  |   | $ | 0.82 |   | October 26, 2014 |
|    | 745,000   |   |    |   | 745,000   |                  |   | $ | 0.96 |   | November 1, 2015 |
|    |      |   |    |   |      |                  |   |   |   |   |   |
|    | 4,016,829 |   |    |   | 3,267,729 |                  |   |   |   |   |   |

----

----

|                                      |   | Year Ended        |       |   | Year Ended        |   |       | Year Ended        |   |
|-------------------------------------------|--------|-------------------|------------|--------|-------------------|--------|------------|-------------------|--------|
|                                      |   | December 31, 2010 |       |   | December 31, 2009 |   |       | December 31, 2008 |   |
|                                      |   |              | $          |   |              |   | $          |              |   |   | $ |   |
| Balance, beginning of year                |   |              | 1,242,264  |   |              |   | 3,099,170  |              |   |   | 3,271,070 |   |
| Expired                                   |   |              | (1,242,264 | )      |              |   | (1,666,670 | )                 |   |   | (171,900 | ) |
| Exchanged warrants (Note 2 & 7(a)(i)) |   |              | -          |   |              |   | 1,548,934  |              |   |   | - |   |
| Share consolidation (Note 7(a)(ii))       |   |              | -          |   |              |   | (1,739,170 | )                 |   |   | - |   |
|                                      |   |              |       |   |              |   |       |              |   |   |   |   |
| Balance, end of year                      |   |              | -          |   |              |   | 1,242,264  |              |   |   | 3,099,170 |   |

|                                           |   | Year Ended        |      |   | Year Ended        |   |      | Year Ended        |   |
|------------------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|-----------|-------------------|--------|
|                                           |   | December 31, 2010 |      |   | December 31, 2009 |   |      | December 31, 2008 |   |
|                                           |   |  $           |      |   |  $           |   |      |  $           |   |   |   | $ |   |
| Balance, beginning of year                     |   |              | 8,333,185 |   |              |   | 7,502,258 |              |   |   | 6,157,412 |   |   |   |   |   |
|                                           |   |              |      |   |              |   |      |              |   |   |   |   |   |   |   |   |
| Stock options granted/vested                   |   |              | 1,116,992 |   |              |   | 614,999   |              |   |   | 62,900 |   |   |   |   |   |
| Reallocated from warrant equity to contributed |   |              |  -   |   |              |   |      |              |   |   |  - |   |   |   | 1,281,946 |   |
| surplus on expiry of warrants                  |   |              |      |   |              |   |      |              |   |   |   |   |   |   |   |   |
| Exchange options and warrants (Note 2)         |   |              | -         |   |              |   | 215,928   |              |   |   | - |   |   |   |   |   |
|                                           |   |              |      |   |              |   |      |              |   |   |   |   |   |   |   |   |
| Balance, end of year                           |   |              | 9,450,177 |   |              |   | 8,333,185 |              |   |   | 7,502,258 |   |   |   |   |   |

----

----

|   | (a) | Prior to the completion of the Arrangements, the Company engaged Grosso Group Management Ltd. (the “Grosso Group”) to provide services and facilities to the Company. The Grosso Group is a private company owned partially by the Company previously. The Company paid a monthly fee that included geological, corporate development, administrative, and management services. After the completion of the Arrangements, the Company terminated the Services Contract with the Grosso Group in October 2009, paid a termination payment of $500,000, and no longer retained any interest in the Grosso Group.  The Company paid $Nil in 2010 under the above arrangement (2009 - $521,122; 2008 - $619,807). |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (b) | During the year ended December 31, 2010, the Company paid $Nil (2009 - $520,486; 2008 - $310,558) to companies controlled by directors and officers of the Company, for accounting, management and consulting services provided. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (c) | During the year ended December 31, 2010, management services fees of $14,400 (2009 - $Nil; 2008 - $Nil) were charged to a company related by common directors. As of December 31, 2010, $1,359 is owed to the Company as a result of management service provided to related corporation. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (d) | In 2009, the Company terminated an agreement with its previous president and paid $1,211,500 related to bonus and termination benefits. No such payment was made in 2010 or 2008. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                     |   | December 31, 2010 |      |   | December 31, 2009 |   |   | December 31, 2008 |   |
|------------------------------------------|--------|-------------------|-----------|--------|-------------------|--------|--------|-------------------|--------|
|                                     |   | US$               |      |   | Arg$              |   |   | US$               |   |   | Arg$ |   |   | US$ |   |   | Arg$ |   |
|                                     |   |              |      |   |              |   |   |              |   |   |   |   |   |   |   |   |   |   |
| Cash                                     |   |              | 2,100,545 |   |              |   | -      |              |   |   | 2,168,732 |   |   |   | 12,863 |   |   |   | 86,829 |   |   |   | 613 |   |
| Other receivables and prepaids           |   |              | -         |   |              |   | -      |              |   |   | - |   |   |   | - |   |   |   | 27,967 |   |   |   | - |   |
| Accounts payable and accrued liabilities |   |              | (5,073    | )      |              |   | -      |              |   |   | (5,510 | ) |   |   | - |   |   |   | (27,834 | ) |   |   | - |   |
|                                     |   |              | 2,095,472 |   |              |   | -      |              |   |   | 2,163,222 |   |   |   | 12,863 |   |   |   | 86,962 |   |   |   | 613 |   |

----

----

|                                              |   | Level 1 |       |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
|---------------------------------------------------|--------|---------|------------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| Assets                                            |   | $       |       |   |    | $      |   |    |   | $      |   |   |   | $ |   |   |
|     Cash and cash equivalents |   |    | 38,852,899 |   |    |   | -      |    |   |   | -      |   |   |   | 38,852,899 |   |
|     Marketable securities     |   |    | 2,084,233  |   |    |   | -      |    |   |   | -      |   |   |   | 2,084,233 |   |

|                                              |   | Level 1 |       |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
|---------------------------------------------------|--------|---------|------------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| Assets                                            |   | $       |       |   |    | $      |   |    |   | $      |   |   |   | $ |   |   |
|     Cash and cash equivalents |   |    | 40,911,288 |   |    |   | -      |    |   |   | -      |   |   |   | 40,911,288 |   |
|     Marketable securities     |   |    | 5,000,900  |   |    |   | -      |    |   |   | -      |   |   |   | 5,000,900 |   |

----

----

|                                                   |   | 2010   |       | 2009   |   | 2008   |
|--------------------------------------------------------|--------|--------|------------|--------|--------|--------|
| Statutory tax rate                                     |   |   | 28.50%     |   |   | 30.00% |   |   | 31.00% |
|                                                   |   | $      |       |   |   | $      |   |   |   | $ |   |   |
| Loss for the year before taxes                         |   |   | (3,373,785 | )      |   |   | (3,690,610 | ) |   |   | (4,301,910 | ) |
| Provision for income taxes based on statutory Canadian |   |   |       |   |   |   |   |   |   |   |   |   |
| combined federal and provincial income tax rates       |   |   | (961,529   | )      |   |   | (1,107,183 | ) |   |   | (1,333,592 | ) |
| Change in tax rates                                    |   |   | 87,907     |   |   |   | 646,707 |   |   |   | - |   |
| BC mineral taxes                                       |   |   | 13,383     |   |   |   | - |   |   |   | - |   |
| Non-deductible differences                             |   |   | 570,762    |   |   |   | 171,911 |   |   |   | 23,134 |   |
| Loss expiry & acquired tax positions               |   |   | 69,554     |   |   |   | (963,255 | ) |   |   | 260,760 |   |
| Change in valuation allowance                          |   |   | 302,208    |   |   |   | 416,068 |   |   |   | 1,107,675 |   |
| Other                                                  |   |   | 282,298    |   |   |   | 309,055 |   |   |   | (57,977 | ) |
|                                                   |   |   | 364,583    |   |   |   | (526,697 | ) |   |   | - |   |

| The significant components of the Company's future tax assets are as follows: |   |   |       |   |   |   |       |
|-------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|
|                                                                          |   | 2010   |       |   | 2009   |   |       | 2008 |   |
|                                                                          |   | $      |       |   |   | $      |       |   |   | $ |   |   |
| Future income tax assets                                                      |   |   |       |   |   |   |       |   |   |   |   |   |
| Operating loss carryforward                                                   |   |   | 5,885,867  |   |   |   | 5,713,032  |   |   |   | 4,681,251 |   |
| Capital losses                                                                |   |   | -          |   |   |   | 38,664     |   |   |   | - |   |
| Share issue costs                                                             |   |   | 128,379    |   |   |   | 379,826    |   |   |   | 143,509 |   |
| Resource deductions                                                           |   |   | 660,901    |   |   |   | 784,052    |   |   |   | 778,142 |   |
| Other                                                                         |   |   | 198,984    |   |   |   | 20,932     |   |   |   | 390,839 |   |
|                                                                          |   |   | 6,874,131  |   |   |   | 6,936,506  |   |   |   | 5,993,741 |   |
| Valuation allowance for future income tax assets                              |   |   | (6,712,017 | )      |   |   | (6,409,809 | ) |   |   | (5,993,741 | ) |
|                                                                          |   |   | 162,114    |   |   |   | 526,697    |   |   |   | - |   |
| Future income tax liabilities                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Marketable securities                                                         |   |   | (162,114   | )      |   |   | (526,697   | ) |   |   | - |   |
|                                                                          |   |   | -          |   |   |   | -          |   |   |   | - |   |

----

----

| Expiry Date |   | $      |       |
|-------------|--------|--------|------------|
| 2030        |   |   | 1,730,922  |   |
| 2029        |   |   | 2,265,850  |   |
| 2028        |   |   | 3,470,001  |   |
| 2027        |   |   | 2,491,033  |   |
| 2026        |   |   | 4,236,105  |   |
| 2025        |   |   | 753,793    |   |
| 2024        |   |   | 422,473    |   |
| 2015        |   |   | 4,708,790  |   |
| 2014        |   |   | 2,873,451  |   |
| 2013        |   |   | 281,738    |   |
|        |   |   | 23,234,156 |   |

| 14. | DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES |
|-----|----------------------------------------------------------------------------------------|

|   | The consolidated financial statements of the Company have been prepared in accordance with Canadian GAAP, which differs in certain material respects from US GAAP. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                 |   | 2010   |       |   | 2009   |   |       | 2008   |   |
|------------------------------------------------------|--------|--------|------------|--------|--------|--------|------------|--------|--------|
|                                                 |   |   |       |   |   |   |       |   |   |
| Consolidated statements of operations                |   |   |       |   |   |   |       |   |   |
|                                                 |   |   |       |   |   |   |       |   |   |
| Net loss for the year under Canadian GAAP            |   | $      | (3,738,368 | )      |   | $      | (3,163,913 | )      |   | $ | (4,301,910 | ) |
| Income tax expense/(recovery) (i)                    |   | $      | 364,583    |   |   | $      | (526,697   | )      |   | $ | - |   |
| Net loss for the year under US GAAP                  |   | $      | (3,373,785 | )      |   | $      | (3,690,610 | )      |   | $ | (4,301,910 | ) |
|                                                 |   |   |       |   |   |   |       |   |   |   |   |   |
| Basic and diluted loss per share under US GAAP       |   | $      | (0.07      | )      |   | $      | (0.13      | )      |   | $ | (0.20 | ) |
| Weighted average number of common shares outstanding |   |   | 45,967,077 |   |   |   | 27,958,434 |   |   |   | 21,721,693 |   |

----

----

| 14. | DIFFERENCE BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (Continued) |
|-----|----------------------------------------------------------------------------------------------------|

|   | i) | For the fiscal year ended December 31, 2010, the Company recorded a $364,583 income tax expense in the statement of operations under Canadian GAAP. The income tax expense is not recorded for US GAAP therefore the net loss for 2010 under US GAAP was $3,373,785. The income tax expense would also be a reconciling item in arriving at comprehensive income for US GAAP purposes, resulting in comprehensive loss for the year ended December 31, 2010 being $6,290,452 (2009: $863,070 income; 2008: $4,301,910 loss) for US GAAP purposes. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ii) | For US GAAP purposes a subtotal in the statement of cash flows under operating activities prior to the change in non-cash working balances is not allowed. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Accounting for uncertainty in income taxes |
|--------|--------------------------------------------|

|   | For US GAAP purposes the Company recognizes tax uncertainties when it is “more likely than not” that the Company’s tax position would not be upheld on reviews by the tax authority. The Company measures a tax uncertainty for US GAAP purposes at the largest amount that is more likely than not to be upheld. The Company did not have any unrecognized tax benefits at January 1, 2008. In addition, no adjustments were recognized for uncertain tax benefits during the years ended December 31, 2008, 2009 and 2010. There are no unrecognized tax benefits at December 31, 2009 and 2010. Interest and penalties that arise on tax uncertainties would be recognized in income tax expense. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The Company files tax returns in Canada, Argentina and the United States. Years ranging from 2006 to 2010, as applicable, are subject to examination by the taxing authorities in the respective jurisdictions where returns are filed. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Impact of recent United States accounting pronouncements |
|--------|----------------------------------------------------------|

|   | i) | The FASB has introduced an amendment to ASC 820-10 which requires new disclosures and that clarify certain existing disclosure requirements related to fair value measurements. The revised standard provides additional guidance for estimating fair value when the level the volume and level of activity for the asset and liability have significantly decreased. The revised standard is effective for interim and annual reporting periods beginning after December 15, 2009. The adoption of this standard had no effect on the consolidated financial statements. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |    |
|--------|--------|--------|---------|
| 2011   |   | $      | 223,297 |   |
| 2012   |   |   | 223,297 |   |
| 2013   |   |   | 18,608  |   |
|   |   | $      | 465,202 |   |

----

----

| (a)   | Subsequent to December 31, 2010, 114,708 stock options with an exercise price of $1.81 expired without exercise. |
|-----------------|------------------------------------------------------------------------------------------------------------------|

| (b)   | In March 2011, 90,755 stock options were exercised at a price ranging from $0.53 to $0.96 for total proceeds of $60,586 to the Company. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------|