---

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2010

or

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

For the transition period from _____________________ to
_____________________

Commission File Number 333-140299

SILVERSTAR MINING CORP.(Exact name of registrant as specified in its charter)

|Nevada                                                               | N/A                              
|-------------------------------------------------------------------- | ---------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (IRS Employer Identification No.)
|                                                                     |                                  
|621 Bank Street, Wallace, Idaho                                      | 83873                            
|(Address of principal executive offices)                             | (Zip Code)                       

604.960.0535(Registrants telephone number,
including area code)

N/A(Former name, former address
and former fiscal year, if changed since last report)

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 such
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 Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation
S-K (§229.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).
[   ] YES    [X] NO

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a small
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   [   ] | (Do not check if a smaller reporting company) | Smaller reporting company
[X]                        

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.[   ]
YES    [   ] NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the
issuers classes of common stock, as of the latest practicable date. Our company
had 42,168,837 common shares issued and outstanding as of September 13, 2009

---

PART 1  FINANCIAL INFORMATION

Item 1. Financial Statements.

Our unaudited interim consolidated financial statements for the
three month period ended June 30, 2010 immediately follow and are a integral part of this
quarterly report. They are stated in United States Dollars (US$) and are
prepared in accordance with United States generally accepted accounting
principles.

-2-

---









Silverstar Mining Corp.(A Development Stage Company)

Consolidated Financial Statements(Expressed in U.S. Dollars)(Unaudited)30 June 2010









-3-

---

|Silverstar Mining Corp.      
|-----------------------------
|(A Development Stage Company)
|Consolidated Balance Sheets  
|(Expressed in U.S. Dollars)  
|(Unaudited)                  

|                                                                                                                                                                             |  |            |   |  | As at 30   |  
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------- | - |  | ---------- | -
|                                                                                                                                                                             |  | As at      |   |  | September  |  
|                                                                                                                                                                             |  | 30 June    |   |  | 2009       |  
|                                                                                                                                                                             |  | 2010       |   |  | (Audited)  |  
|                                                                                                                                                                             |  | **$**      |   |  | **$**      |  
|Assets                                                                                                                                                                       |  |            |   |  |            |  
|                                                                                                                                                                             |  |            |   |  |            |  
|Current                                                                                                                                                                      |  |            |   |  |            |  
|Cash and cash equivalents                                                                                                                                                    |  | 1,997      |   |  | 1,013      |  
|                                                                                                                                                                             |  |            |   |  |            |  
|                                                                                                                                                                             |  | 1,997      |   |  | 1,013      |  
|                                                                                                                                                                             |  |            |   |  |            |  
|Liabilities                                                                                                                                                                  |  |            |   |  |            |  
|                                                                                                                                                                             |  |            |   |  |            |  
|Current                                                                                                                                                                      |  |            |   |  |            |  
|Accounts payable and accrued liabilities
      (Note 6)                                                                                                                      |  | 16,399     |   |  | 16,501     |  
|Convertible debentures (Note 7)                                                                                                                                              |  | 16,740     |   |  | 15,616     |  
|Shareholders demand loans (Note 8)                                                                                                                                          |  | 34,365     |   |  | -          |  
|Due to related parties (Note 9)                                                                                                                                              |  | 15,000     |   |  | 8,500      |  
|                                                                                                                                                                             |  |            |   |  |            |  
|                                                                                                                                                                             |  | 82,504     |   |  | 40,617     |  
|Stockholders deficiency                                                                                                                                                     |  |            |   |  |            |  
|Capital stock(Note 11)                                                                                                                                                       |  |            |   |  |            |  
|Authorized 
       225,000,000 common shares, par value $0.001                                                                                                               |  |            |   |  |            |  
|Issued and outstanding
        30 June 2010  42,168,837 common shares, par value
      $0.001 
        30 September 2009  42,168,837 common shares, par value
      $0.001 |  | 42,169     |   |  | 42,169     |  
|Additional paid-in capital                                                                                                                                                   |  | 1,315,852  |   |  | 1,297,852  |  
|Deficit, accumulated during the development stage                                                                                                                            |  | (1,438,528 | ) |  | (1,379,625 | )
|                                                                                                                                                                             |  |            |   |  |            |  
|                                                                                                                                                                             |  | (80,507    | ) |  | (39,604    | )
|                                                                                                                                                                             |  |            |   |  |            |  
|                                                                                                                                                                             |  | 1,997      |   |  | 1,013      |  

Nature, Basis of Presentation and Continuance of Operations(Note 1), Commitment (Note 14) and Subsequent Event (Note 15)

|Lawrence
      Siccia | Director
|----------------------- | --------
|Lawrence Siccia         |         

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

-4-

---

|Silverstar Mining Corp.              
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Operations
|(Expressed in U.S. Dollars)          
|(Unaudited)                          

|                                                                             |  | For the period |            |  |           |            |  |           |            |  |            |            |  |            |  
|---------------------------------------------------------------------------- |  | -------------- | ---------- |  | --------- | ---------- |  | --------- | ---------- |  | ---------- | ---------- |  | ---------- | -
|                                                                             |  | from the date  |            |  |           |            |  |           |            |  |            |            |  |            |  
|                                                                             |  | of             |            |  | For the   |            |  | For the   |            |  |            |            |  |            |  
|                                                                             |  | incorporation  |            |  | three     |            |  | three     |            |  | For the    |            |  | For the    |  
|                                                                             |  | on 5 December  |            |  | month     |            |  | month     |            |  | nine month |            |  | nine month |  
|                                                                             |  | 2003 to        |            |  | period    |            |  | period    |            |  | period     |            |  | period     |  
|                                                                             |  | 30 June        |            |  | ended 30  |            |  | ended 30  |            |  | ended 30   |            |  | ended 30   |  
|                                                                             |  | 2010           |            |  | June 2010 |            |  | June 2009 |            |  | June 2010  |            |  | June 2009  |  
|                                                                             |  | **$**          |            |  | **$**     |            |  | **$**     |            |  | **$**      |            |  | **$**      |  
|                                                                             |  |                |            |  |           |            |  |           |            |  |            |            |  |            |  
|Expenses                                                                     |  |                |            |  |           |            |  |           |            |  |            |            |  |            |  
|Bank charges and interest (Notes 7, 8 and 13)                                |  | 21,939         |            |  | 1,311     |            |  | 201       |            |  | 4,261      |            |  | 719        |  
|Consulting                                                                   |  | 138,467        |            |  | -         |            |  | -         |            |  | -          |            |  | 57,000     |  
|Exploration and development (recovery) (Note 5)                              |  | 12,428         |            |  | -         |            |  | -         |            |  | (600       | )          |  | 2,458      |  
|Filing fees                                                                  |  | 17,140         |            |  | -         |            |  | 1,047     |            |  | 1,928      |            |  | 5,808      |  
|Investor relations                                                           |  | 84,992         |            |  | -         |            |  | -         |            |  | -          |            |  | 38,100     |  
|Legal and accounting (Note 10)                                               |  | 184,598        |            |  | 11,143    |            |  | 9,924     |            |  | 30,093     |            |  | 42,087     |  
|Licences and permits                                                         |  | 3,415          |            |  | -         |            |  | -         |            |  | -          |            |  | -          |  
|Management fees (Notes 10 and 13)                                            |  | 80,500         |            |  | 4,500     |            |  | 4,500     |            |  | 13,500     |            |  | 17,500     |  
|Rent (Notes 10 and 13)                                                       |  | 31,200         |            |  | 1,500     |            |  | (726      | )          |  | 4,500      |            |  | (221       | )
|Transfer agent fees                                                          |  | 19,504         |            |  | 1,175     |            |  | 2,300     |            |  | 2,682      |            |  | 6,200      |  
|Travel, entertainment and office                                             |  | 26,049         |            |  | -         |            |  | 1,207     |            |  | 2,539      |            |  | 4,302      |  
|Write-down of mineral property acquisition
        costs (Note 5)            |  | 811,696        |            |  | -         |            |  | -         |            |  | -          |            |  | 4,142      |  
|Write-down of website development costs   (Note
      4)                     |  | 6,600          |            |  | -         |            |  | 29,021    |            |  | -          |            |  | 29,021     |  
|Recovery of expenses                                                         |  | -              |            |  | -         |            |  | -         |            |  | -          |            |  | (20,900    | )
|                                                                             |  |                |            |  |           |            |  |           |            |  |            |            |  |            |  
|Net loss for the period                                                      |  | (1,438,528     | )          |  | (19,629   | )          |  | (47,474   | )          |  | (58,903    | )          |  | (186,216   | )
|                                                                             |  |                |            |  |           |            |  |           |            |  |            |            |  |            |  
|Basic and diluted loss per common share                                      |  |                |            |  | (0.000    | )          |  | (0.001    | )          |  | (0.001     | )          |  | (0.004     | )
|                                                                             |  |                |            |  |           |            |  |           |            |  |            |            |  |            |  
|Weighted average number of common
      shares used in per share calculation |  |                | 42,168,837 |  |           | 42,850,705 |  |           | 42,168,837 |  |            | 44,193,499 | 

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

-5-

---

|Silverstar Mining Corp.              
|-------------------------------------
|(A Development Stage Company)        
|Consolidated Statements of Cash Flows
|(Expressed in U.S. Dollars)          
|(Unaudited)                          

|                                                                             |  | For the      |   |  |             |   |  |             |   |  |              |   |  |            |  
|---------------------------------------------------------------------------- |  | ------------ | - |  | ----------- | - |  | ----------- | - |  | ------------ | - |  | ---------- | -
|                                                                             |  | period from  |   |  | For the     |   |  | For the     |   |  | For the nine |   |  | For the    |  
|                                                                             |  | the date of  |   |  | three month |   |  | three month |   |  | month        |   |  | nine month |  
|                                                                             |  | inception on |   |  | period      |   |  | period      |   |  | period       |   |  | period     |  
|                                                                             |  | 5 December   |   |  | ended 30    |   |  | ended 30    |   |  | ended 30     |   |  | ended 30   |  
|                                                                             |  | 2003 to 30   |   |  | June        |   |  | June        |   |  | June         |   |  | June       |  
|                                                                             |  | June 2010    |   |  | 2010        |   |  | 2009        |   |  | 2010         |   |  | 2009       |  
|                                                                             |  | **$**        |   |  | **$**       |   |  | **$**       |   |  | **$**        |   |  | **$**      |  
|Cash flows used in operating activities                                      |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|Net loss for the period                                                      |  | (1,438,528   | ) |  | (19,629     | ) |  | (47,474     | ) |  | (58,903      | ) |  | (186,216   | )
|Adjustments to reconcile loss to net cash used by operating
      activities |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|Accrued interest (Notes 7 and
      8)                                       |  | 18,605       |   |  | 1,155       |   |  | 6,000       |   |  | 2,989        |   |  | 59,500     |  
|Contributions to capital by
      related    parties (Notes 10 and 13)       |  | 143,500      |   |  | 6,000       |   |  | -           |   |  | 18,000       |   |  | -          |  
|Write-down of mineral
      property    acquisition costs (Note 5)           |  | 811,696      |   |  | -           |   |  | -           |   |  | -            |   |  | -          |  
|Write-down of website
      development    costs (Note 4)                    |  | 6,600        |   |  | -           |   |  | -           |   |  | -            |   |  | -          |  
|Changes in operating assets and liabilities                                  |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|Increase (decrease) in
      accounts    payable and accrued liabilities     |  | 16,399       |   |  | 4,360       |   |  | 800         |   |  | (102         | ) |  | 800        |  
|Increase (decrease) in
      due to related    parties                       |  | 15,000       |   |  | 7,500       |   |  | (3,042      | ) |  | 6,500        |   |  | (40,084    | )
|                                                                             |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|                                                                             |  | (426,728     | ) |  | (614        | ) |  | (43,716     | ) |  | (31,516      | ) |  | (166,000   | )
|Cash flows from (used in) investing activities                               |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|Acquisition of Silverdale, net of cash
      received (Note 3)               |  | (140,221     | ) |  | -           |   |  | -           |   |  | -            |   |  | -          |  
|Mineral property acquisition costs (Note 5)                                  |  | (21,375      | ) |  | -           |   |  | -           |   |  | -            |   |  | -          |  
|Website development costs (Note 4)                                           |  | (6,600       | ) |  | -           |   |  | 29,021      |   |  | -            |   |  | 29,021     |  
|                                                                             |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|                                                                             |  | (168,196     | ) |  | -           |   |  | 29,021      |   |  | -            |   |  | 29,021     |  
|Cash flows from financing activities                                         |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|Convertible debenture (Note 7)                                               |  | 15,000       |   |  | -           |   |  | -           |   |  | -            |   |  | -          |  
|Shareholders demand loans (Note 8)                                          |  | 32,500       |   |  | 2,500       |   |  | -           |   |  | 32,500       |   |  | -          |  
|Share subscriptions received in advance
      (Note 11)                      |  | -            |   |  | -           |   |  | 15,000      |   |  | -            |   |  | 15,000     |  
|Share issue costs                                                            |  | (1,255       | ) |  | -           |   |  | -           |   |  | -            |   |  | (422,176   | )
|Common shares issued for cash (Note 11)                                      |  | 550,677      |   |  | -           |   |  | -           |   |  | -            |   |  | -          |  
|Common shares redeemed (Note 11)                                             |  | (1           | ) |  | -           |   |  | -           |   |  | -            |   |  | 455,676    |  
|                                                                             |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|                                                                             |  | 596,921      |   |  | 2,500       |   |  | 15,000      |   |  | 32,500       |   |  | 48,500     |  
|Increase (decrease) in cash and cash
      equivalents                       |  | 1,997        |   |  | 1,886       |   |  | 305         |   |  | 984          |   |  | (88,479    | )
|                                                                             |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|Cash and cash equivalents, beginning
      of period                         |  | -            |   |  | 111         |   |  | 1,035       |   |  | 1,013        |   |  | 89,819     |  
|                                                                             |  |              |   |  |             |   |  |             |   |  |              |   |  |            |  
|Cash and cash equivalents, end of
      period                               |  | 1,997        |   |  | 1,997       |   |  | 1,340       |   |  | 1,997        |   |  | 1,340      |  

Supplemental Disclosures with Respect to Cash Flows(Note 13)

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

-6-

---

|Silverstar Mining Corp.                                                      
|-----------------------------------------------------------------------------
|(A Development Stage Company)                                                
|Consolidated Statements of Changes in Stockholders Equity
      (Deficiency)
|(Expressed in U.S. Dollars)                                                  
|(Unaudited)                                                                  

|                                                                                                      |  |             |   |  |               |   |  | Share           |   |  |             |   |  |               |  
|----------------------------------------------------------------------------------------------------- |  | ----------- | - |  | ------------- | - |  | --------------- | - |  | ----------- | - |  | ------------- | -
|                                                                                                      |  |             |   |  |               |   |  | subscription    |   |  | Deficit,    |   |  |               |  
|                                                                                                      |  |             |   |  |               |   |  | received in     |   |  | accumulated |   |  |               |  
|                                                                                                      |  | Number of   |   |  |               |   |  | advance /       |   |  | during the  |   |  | Stockholders |  
|                                                                                                      |  | shares      |   |  |               |   |  | Additional      |   |  | development |   |  | equity        |  
|                                                                                                      |  | issued      |   |  | Capital stock |   |  | paid in capital |   |  | stage       |   |  | (deficiency)  |  
|                                                                                                      |  |             |   |  | $             |   |  | $               |   |  | $           |   |  | $             |  
|Balance at 5 December 2003
      (inception)                                                          |  | -           |   |  | -             |   |  | -               |   |  | -           |   |  | -             |  
|Common share issued for
      cash    ($0.33 per share) (Note 11)                                     |  | 3           |   |  | -             |   |  | 1               |   |  | -           |   |  | 1             |  
|Net loss for the period                                                                               |  | -           |   |  | -             |   |  | -               |   |  | (450        | ) |  | (450          | )
|                                                                                                      |  |             |   |  |               |   |  |                 |   |  |             |   |  |               |  
|Balance at 30 September 2004                                                                          |  | 3           |   |  | -             |   |  | 1               |   |  | (450        | ) |  | (449          | )
|Net loss for the year                                                                                 |  | -           |   |  | -             |   |  | -               |   |  | (300        | ) |  | (300          | )
|                                                                                                      |  |             |   |  |               |   |  |                 |   |  |             |   |  |               |  
|Balance at 30 September 2005                                                                          |  | 3           |   |  | -             |   |  | 1               |   |  | (750        | ) |  | (749          | )
|Common shares issued for
      cash    ($0.0003 per share) (Note 11)                                  |  | 30,000,000  |   |  | 30,000        |   |  | (20,000         | ) |  | -           |   |  | 10,000        |  
|Common shares redeemed 
      cash    ($0.33 per share) (Note 11)                                    |  | (3          | ) |  | -             |   |  | (1              | ) |  | -           |   |  | (1            | )
|Contributions to capital
      by related    parties  expenses                                       |  | -           |   |  | -             |   |  | 24,000          |   |  | -           |   |  | 24,000        |  
|Net loss for the year                                                                                 |  | -           |   |  | -             |   |  | -               |   |  | (40,190     | ) |  | (40,190       | )
|                                                                                                      |  |             |   |  |               |   |  |                 |   |  |             |   |  |               |  
|Balance at 30 September 2006                                                                          |  | 30,000,000  |   |  | 30,000        |   |  | 4,000           |   |  | (40,940     | ) |  | (6,940        | )
|Contributions to capital
      by related    parties  expenses                                       |  | -           |   |  | -             |   |  | 24,000          |   |  | -           |   |  | 24,000        |  
|Common shares issued for
      cash    ($0.0033 per share) (Note 11)                                  |  | 25,500,000  |   |  | 25,500        |   |  | 59,500          |   |  | -           |   |  | 85,000        |  
|Net loss for the year                                                                                 |  | -           |   |  | -             |   |  | -               |   |  | (64,567     | ) |  | (64,567       | )
|                                                                                                      |  |             |   |  |               |   |  |                 |   |  |             |   |  |               |  
|Balance at 30 September 2007                                                                          |  | 55,500,000  |   |  | 55,500        |   |  | 87,500          |   |  | (105,507    | ) |  | 37,493        |  
|Contributions to capital by
      related    parties  expenses                                       |  | -           |   |  | -             |   |  | 12,000          |   |  | -           |   |  | 12,000        |  
|Share subscriptions
      received in    advance (Note 11)                                            |  | -           |   |  | -             |   |  | 422,176         |   |  | -           |   |  | 422,176       |  
|Share issue costs                                                                                     |  | -           |   |  | -             |   |  | (1,255          | ) |  | -           |   |  | (1,255        | )
|Common shares issued
      for    business acquisition ($0.15
      per    share) (Notes 3, 5 and 11) |  | 4,334,000   |   |  | 4,334         |   |  | 645,766         |   |  | -           |   |  | 650,100       |  
|Common shares returned to
      treasury    and cancelled (Notes 11 and 13)                           |  | (15,000,000 | ) |  | (15,000       | ) |  | 15,000          |   |  | -           |   |  | -             |  
|Net loss for the year                                                                                 |  | -           |   |  | -             |   |  | -               |   |  | (263,596    | ) |  | (263,596      | )
|                                                                                                      |  |             |   |  |               |   |  |                 |   |  |             |   |  |               |  
|Balance at 30 September 2008                                                                          |  | 44,834,000  |   |  | 44,834        |   |  | 1,181,187       |   |  | (369,103    | ) |  | 856,918       |  

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

-7-

---

|Silverstar Mining Corp.                                                      
|-----------------------------------------------------------------------------
|(A Development Stage Company)                                                
|Consolidated Statements of Changes in Stockholders Equity
      (Deficiency)
|(Expressed in U.S. Dollars)                                                  
|(Unaudited)                                                                  

|                                                                                           |  |            |   |  |               |   |  | Share         |   |  |             |   |  |               |  
|------------------------------------------------------------------------------------------ |  | ---------- | - |  | ------------- | - |  | ------------- | - |  | ----------- | - |  | ------------- | -
|                                                                                           |  |            |   |  |               |   |  | subscriptions |   |  |             |   |  |               |  
|                                                                                           |  |            |   |  |               |   |  | received in   |   |  | Deficit,    |   |  |               |  
|                                                                                           |  |            |   |  |               |   |  | advance /     |   |  | accumulated |   |  |               |  
|                                                                                           |  | Number of  |   |  |               |   |  | Additional    |   |  | during the  |   |  | Stockholders |  
|                                                                                           |  | shares     |   |  |               |   |  | paid-in       |   |  | development |   |  | equity        |  
|                                                                                           |  | issued     |   |  | Capital stock |   |  | capital       |   |  | stage       |   |  | (deficiency)  |  
|                                                                                           |  |            |   |  | $             |   |  | $             |   |  | $           |   |  | $             |  
|                                                                                           |  |            |   |  |               |   |  |               |   |  |             |   |  |               |  
|Balance at 30 September 2008                                                               |  | 44,834,000 |   |  | 44,834        |   |  | 1,181,187     |   |  | (369,103    | ) |  | 856,918       |  
|Contributions to capital by
      related    parties  expense                             |  | -          |   |  | -             |   |  | 65,500        |   |  | -           |   |  | 65,500        |  
|Share subscriptions received
      in    advance                                           |  | -          |   |  | -             |   |  | (422,176      | ) |  | -           |   |  | (422,176      | )
|Common shares issued for
      cash    ($0.25 per share) (Note 11)                         |  | 950,000    |   |  | 950           |   |  | 236,550       |   |  | -           |   |  | 237,500       |  
|Common shares issued for
      cash    ($0.45 per share) (Note 11)                         |  | 484,837    |   |  | 485           |   |  | 217,691       |   |  | -           |   |  | 218,176       |  
|Common shares returned
      to    treasury and cancelled
      (Notes    11 and 13)       |  | (4,100,000 | ) |  | (4,100        | ) |  | 4,100         |   |  | -           |   |  | -             |  
|Intrinsic value of
      beneficial    conversion feature (Note 11)                        |  | -          |   |  | -             |   |  | 15,000        |   |  | -           |   |  | 15,000        |  
|Net loss for the year                                                                      |  | -          |   |  | -             |   |  | -             |   |  | (1,010,522  | ) |  | (1,010,522    | )
|                                                                                           |  |            |   |  |               |   |  |               |   |  |             |   |  |               |  
|Balance at 30 September 2009                                                               |  | 42,168,837 |   |  | 42,169        |   |  | 1,297,852     |   |  | (1,379,625  | ) |  | (39,604       | )
|Contributions to capital
      by    related parties  expenses   
      (Notes 10 and 13) |  | -          |   |  | -             |   |  | 18,000        |   |  | -           |   |  | 18,000        |  
|Net loss for the period                                                                    |  | -          |   |  | -             |   |  | -             |   |  | (58,903     | ) |  | (58,903       | )
|                                                                                           |  |            |   |  |               |   |  |               |   |  |             |   |  |               |  
|Balance at 30 June 2010                                                                    |  | 42,168,837 |   |  | 42,169        |   |  | 1,315,852     |   |  | (1,438,528  | ) |  | (80,507       | )

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

-8-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June
      2010                        

|1. | Nature, Basis of Presentation and Continuance of
      Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Silverstar Mining Corp. (the Company) was incorporated
      under the laws of the State of Nevada on 5 December 2003. On 4 March 2008,
      the Company completed a merger with its wholly-owned subsidiary,
      Silverstar Mining Corp., which was incorporated by the Company solely to
      effect the name change of the Company to Silverstar Mining Corp. The
      Company was incorporated for the purpose to promote and carry on any
      lawful business for which a corporation may be incorporated under the laws
      of the State of Nevada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The accompanying consolidated financial statements
      include the accounts of the Company and its wholly- owned subsidiary,
      Silverdale Mining Corp. (Silverdale) from 24 July 2008, the date of
      acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The Company is a development stage enterprise, as defined
      in Accounting Standards Codification (the Codification or ASC) 915-10,
      Development Stage Entities. The Company is devoting all of its
      present efforts in securing and establishing a new business, and its
      planned principle operations have not commenced, and, accordingly, no
      revenue has been derived during the organization period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | The consolidated financial statements of the Company have
      been prepared in accordance with accounting principles generally accepted
      in the United States of America applicable to development stage
      enterprises (GAAP), and are expressed in U.S. dollars. The Companys
      fiscal year end is 30 September.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Theses consolidated financial statements as at 30 June
      2010 and for the nine month period then ended have been prepared on a
      going concern basis, which contemplates the realization of assets and the
      settlement of liabilities and commitments in the normal course of
      business. The Company has a loss of $58,903 (2009 - $186,216, cumulative -
      $1,438,528) and has working capital deficit of $80,507 at 30 June 2010 (30
      September 2009 - $39,604).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | Management cannot provide assurance that the Company will
      ultimately achieve profitable operations or become cash flow positive, or
      raise additional debt and/or equity capital. Management believes that the
      Companys capital resources should be adequate to continue operating and
      maintaining its business strategy during the fiscal year ending 30
      September 2010. However, if the Company is unable to raise additional
      capital in the near future, due to the Companys liquidity problems,
      management expects that the Company will need to curtail operations,
      liquidate assets, seek additional capital on less favourable terms and/or
      pursue other remedial measures. These consolidated financial statements do
      not include any adjustments related to the recoverability and
      classification of assets or the amounts and classification of liabilities
      that might be necessary should the Company be unable to continue as a
      going concern.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | At 30 June 2010, the Company had suffered losses from
      development stage activities to date. Although management is currently
      attempting to implement its business plan, and is seeking additional
      sources of equity or debt financing, there is no assurance these
      activities will be successful. Accordingly, the Company must rely on its
      president to perform essential functions without compensation until a
      business operation can be commenced. These factors raise substantial doubt
      about the ability of the Company to continue as a going concern. The
      consolidated financial statements do not include any adjustments that
      might result from the outcome of this uncertainty.                                                                                                                                                                                                                                                                                         

-9-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

|2. | Significant Accounting Policies                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The following is a summary of significant accounting
      policies used in the preparation of these consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Principles of consolidation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | All inter-company transactions and balances have been
      eliminated in these consolidated financial statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Cash and cash equivalents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Cash and cash equivalents include highly liquid
      investments with original maturities of three months or less.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Mineral property costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Company is primarily engaged in the acquisition and
      exploration of mining properties.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Mineral property acquisition costs are initially
      capitalized as tangible assets when purchased. At the end of each fiscal
      quarter end, the Company assesses the carrying costs for impairment. If
      proven and probable reserves are established for a property and it has
      been determined that a mineral property can be economically developed,
      costs will be amortized using the units-of-production method over the
      estimated life of the probable reserve.                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Mineral property exploration costs are expensed as
      incurred.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Estimated future removal and site restoration costs, when
      determinable are provided over the life of proven reserves on a
      units-of-production basis. Costs, which include production equipment
      removal and environmental remediation, are estimated each period by
      management based on current regulations, actual expenses incurred, and
      technology and industry standards. Any charge is included in exploration
      expense or the provision for depletion and depreciation during the period
      and the actual restoration expenditures are charged to the accumulated
      provision amounts as incurred.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | As of the date of these consolidated financial
      statements, the Company has not established any proven or probable
      reserves on its mineral properties and incurred only acquisition and
      exploration costs (Note 5).                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Although the Company has taken steps to verify title to
      mineral properties in which it has an interest, according to the usual
      industry standards for the stage of exploration of such properties, these
      procedures do not guarantee the Companys title. Such properties may be
      subject to prior agreements or transfers and title may be affected by
      undetected defects.                                                                                                                                                                                                                                          

-10-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

Reclamation costs

The Companys policy for recording
reclamation costs is to record a liability for the estimated costs to reclaim
mined land by recording charges to production costs for each tonne of ore mined
over the life of the mine. The amount charged is based on managements
estimation of reclamation costs to be incurred. The accrued liability is reduced
as reclamation expenditures are made. Certain reclamation work is performed
concurrently with mining and these expenditures are charged to operations at
that time.

Long-lived assets

Long-term assets of the Company are
reviewed for impairment whenever events or circumstances indicate that the
carrying amount of assets may not be recoverable, pursuant to guidance
established in ASC 360-10-35-15, Impairment or Disposal of Long-Lived
Assets.

Management considers assets to be
impaired if the carrying value exceeds the future projected cash flows from
related operations (undiscounted and without interest charges). If impairment is
deemed to exist, the assets will be written down to fair value. Fair value is
generally determined using a discounted cash flow analysis.

Financial instruments

The carrying value of cash and cash
equivalents, accounts payable, convertible debentures, Shareholders demand
loans and due to related parties approximates their fair value because of the
short maturity of these instruments. The Companys operations are in Nevada and
virtually all of its assets and liabilities are giving rise to significant
exposure to market risks from changes in foreign currency rates. The Companys
financial risk is the risk that arises from fluctuations in foreign exchange
rates and the degree of volatility of these rates. Currently, the Company does
not use derivative instruments to reduce its exposure to foreign currency risk.

Derivative financial instruments

The Company has not, to the date of
these consolidated financial statements, entered into derivative instruments to
offset the impact of foreign currency fluctuations.

Website development costs

The costs of computer software
developed or obtained for internal use, during the preliminary project phase, as
defined under ASC 350-40, Internal-Use Software, will be expensed as
incurred. The costs of website development during the planning stage, as defined
under ASC 350-50, Website Development Costs, will also be expensed as
incurred.

-11-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

Computer software, website development
incurred during the application and infrastructure development stage, including
external direct costs of materials and services consumed in developing the
software and creating graphics and website content, will be capitalized and
amortized over the estimated useful life, beginning when the software is ready
for use and after all substantial testing is completed and the website is
operational.

Income taxes

Deferred income taxes are reported for
timing differences between items of income or expense reported in the
consolidated financial statements and those reported for income tax purposes in
accordance with ASC 740, Income Taxes, which requires the use of the
asset/liability method of accounting for income taxes. Deferred income taxes and
tax benefits 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, and for tax losses and credit
carry-forwards. 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. The Company
provides for deferred taxes for the estimated future tax effects attributable to
temporary differences and carry-forwards when realization is more likely than
not.

Basic and diluted net loss per share

The Company computes net income (loss)
per share in accordance with ASC 260 Earnings per Share. ASC 260
requires presentation of both basic and diluted earnings per share (EPS) on
the face of the income statement. Basic EPS is computed by dividing net income
(loss) available to common shareholders (numerator) by the weighted average
number of shares outstanding (denominator) during the period. Diluted EPS gives
effect to all dilutive potential common shares outstanding during the period
using the treasury stock method and convertible preferred stock using the
if-converted method. In computing diluted EPS, the average stock price for the
period is used in determining the number of shares assumed to be purchased from
the exercise of stock options or warrants. Diluted EPS excluded all dilutive
potential shares if their effect is anti-dilutive.

Comprehensive loss

ASC 220, Comprehensive Income,
establishes standards for the reporting and display of comprehensive loss and
its components in the financial statements. As at 30 June 2010, the Company has
no items that represent a comprehensive loss and, therefore, has not included a
schedule of comprehensive loss in the consolidated financial statements.

-12-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

Segments of an enterprise and
related information

ASC 280, Segment Reporting
establishes guidance for the way that public companies report information about
operating segments in annual financial statements and requires reporting of
selected information about operating segments in interim financial statements
issued to the public. It also establishes standards for disclosures regarding
products and services, geographic areas and major customers. ASC 280 defines
operating segments as components of a company about which separate financial
information is available that is evaluated regularly by the chief operating
decision maker in deciding how to allocate resources and in assessing
performance. The Company has evaluated this Codification and does not believe it
is applicable at this time.

Start-up expenses

The Company has adopted ASC 720-15,
Start-Up Costs, which requires that costs associated with start-up
activities be expensed as incurred. Accordingly, start-up costs associated with
the Companys formation have been included in the Companys general and
administrative expenses for the period from the date of inception on 5 December
2003 to 30 June 2010.

Foreign currency translation

The Companys functional and reporting
currency is U.S. dollars. The consolidated financial statements of the Company
are translated to U.S. dollars in accordance with ASC 830, Foreign Currency
Matters. Monetary assets and liabilities denominated in foreign currencies
are translated using the exchange rate prevailing at the balance sheet date.
Gains and losses arising on translation or settlement of foreign currency
denominated transactions or balances are included in the determination of
income. The Company has not, to the date of these consolidated financial
statements, entered into derivative instruments to offset the impact of foreign
currency fluctuations.

Use of estimates

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

Comparative figures

Certain comparative figures have been
adjusted to conform to the current periods presentation.

-13-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

Changes in accounting policy

In January 2010, the Financial
Accounting Standards Board (FASB) issued ASU No. 2010-02,Accounting and
Reporting for Decreases in Ownership of a Subsidiary - a Scope
Clarification. ASU No. 2010-2 addresses implementation issues related to
the changes in ownership provisions in the ConsolidationOverall Subtopic
(Subtopic 810-10) of the FASB ASC, originally issued as Statement of Financial
Accounting Standards (SFAS) No. 160, Noncontrolling Interests in
Consolidated Financial Statements. Subtopic 810-10 establishes the
accounting and reporting guidance for noncontrolling interests and changes in
ownership interests of a subsidiary. An entity is required to deconsolidate a
subsidiary when the entity ceases to have a controlling financial interest in
the subsidiary. Upon deconsolidation of a subsidiary, an entity recognizes a
gain or loss on the transaction and measures any retained investment in the
subsidiary at fair value. The gain or loss includes any gain or loss associated
with the difference between the fair value of the retained investment in the
subsidiary and its carrying amount at the date the subsidiary is deconsolidated.
In contrast, an entity is required to account for a decrease in ownership
interest of a subsidiary that does not result in a change of control of the
subsidiary as an equity transaction. ASU No. 2010-02 was effective for the
Company starting 1 January 2010. The Companys adoption of ASU No. 2010-2 did
not have a material impact on the Companys consolidated financial statements.

In January 2010, the FASB issued ASU
No. 2010-01, Equity (ASC Topic 505): Accounting for Distributions to
Shareholders with Components of Stock and Cash, which clarifies that the
stock portion of a distribution to shareholders that allow them to elect to
receive cash or stock with a potential limitation on the total amount of cash
that all shareholders can elect to receive in the aggregate is considered a
share issuance that is reflected prospectively in earnings per share and is not
considered a stock dividend for purposes of ASC Topic 505 and ASC Topic 260. ASU
No. 2010-2 was effective for the Company starting 1 January 2010. The adoption
of the ASU No. 2010-01 did not have a material impact on the Companys
consolidated financial statements.

In August 2009, the FASB issued ASU No.
2009-05, Fair Value Measurement and Disclosure (Topic 820)  Measuring
Liabilities at Fair Value, which provides valuation techniques to measure
fair value in circumstances in which a quoted price in an active market for the
identical liability is not available. The guidance provided in this update is
effective 1 October 2009. The adoption of this guidance did not have a material
impact on the Companys consolidated financial statements.

In June 2009, the FASB issued SFAS No.
167, Amendments to FASB Interpretation No. 46(R). SFAS No. 167, which
amends ASC 810-10, Consolidation, prescribes a qualitative model for
identifying whether a company has a controlling financial interest in a variable
interest entity (VIE) and eliminates the quantitative model. The new model
identifies two primary characteristics of a controlling financial interest: (1)
provides a company with the power to direct significant activities of the VIE,
and (2) obligates a company to absorb losses of and/or provides rights to
receive benefits from the VIE. SFAS No. 167 requires a company to reassess on an
ongoing basis whether it holds a controlling financial interest in a VIE. A
company that holds a controlling financial interest is deemed to be the primary
beneficiary of the VIE and is required to consolidate the VIE. SFAS No. 167,
which is referenced in ASC 105-10-65, has not yet been adopted into the
Codification and remains authoritative. SFAS No. 167 was effective 1 January
2010. The adoption of SFAS No. 167 did not have a material impact on the
Companys consolidated financial statements.

-14-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

|   | In June 2009, the FASB issued SFAS No. 166,
      Accounting for Transfer of Financial Assets  an amendment of FASB
      Statement. SFAS No. 166 removes the concept of a qualifying
      special-purpose entity from ASC 860-10, Transfers and Servicing,
      and removes the exception from applying ASC 810-10,
      Consolidation. This statements also clarifies the requirements
      for isolation and limitations on portions of financial assets that are
      eligible for sale accounting. SFAS No. 166, which is referenced in ASC
      105-10-65, has not yet been adopted into the Codification and remains
      authoritative. This statement was effective 1 January 2010. The adoption
      of SFAS No. 166 did not have a material impact on the Companys
      consolidated financial statements.                                                                                                                                                                                                                                                                                                                                        
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In April 2008, the FASB issued new guidance for
      determining the useful life of an intangible assets, the new guidance,
      which is now part of ASC 350, Intangibles  Goodwill and Other.
      In determining the useful life of intangible assets, ASC 350 removes the
      requirement to consider whether an intangible asset can be renewed without
      substantial cost of material modifications to the existing terms and
      conditions and, instead, requires an entity to consider its own historical
      experience in renewing similar arrangements. ASC 350 also requires
      expanded disclosure related to the determination of intangible asset
      useful lives. The new guidance was effective for financial statements
      issued for fiscal years beginning after 15 December 2008. The adoption of
      this guidance did not have a material impact on the Companys consolidated
      financial statements.                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | Recent accounting pronouncements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In February 2010, the FASB issued ASU No. 2010-11,
      Derivatives and Hedging (Topic 815): Scope Exception Related to
      Embedded Credit Derivatives. ASU No. 2010-11 clarifies the type of
      embedded credit derivative that is exempt from embedded derivative
      bifurcation requirements. Specifically, only one form of embedded credit
      derivative qualifies for the exemption  one that is related only to the
      subordination of one financial instrument to another. As a result,
      entities that have contracts containing an embedded credit derivative
      feature in a form other than such subordination may need to separately
      account for the embedded credit derivative feature. The amendments in ASU
      No. 2010-11 are effective for each reporting entity at the beginning of
      its first fiscal quarter beginning after 15 June 2010. Early adoption is
      permitted at the beginning of each entitys first fiscal quarter beginning
      after 5 March 2010. The adoption of ASC No. 2010-11 is not expected to
      have a material impact on the Companys consolidated financial
      statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In February 2010, the FASB issued ASC No. 2010-09,
      Amendments to Certain Recognition and Disclosure Requirements,
      which eliminates the requirement for SEC filers to disclose the date
      through which an entity has evaluated subsequent events. ASC No. 2010-09
      is effective for its fiscal quarter beginning after 15 December 2010. The
      adoption of ASC No. 2010-06 is not expected to have a material impact on
      the Companys consolidated financial statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In January 2010, the FASB issued ASC No. 2010-06,
      Fair Value Measurement and Disclosures (Topic 820): Improving
      Disclosure and Fair Value Measurements, which requires that
      purchases, sales, issuances, and settlements for Level 3 measurements be
      disclosed. ASC No. 2010-06 is effective for its fiscal quarter beginning
      after 15 December 2010. The adoption of ASC No. 2010-06 is not expected to
      have a material impact on the Companys consolidated financial
      statements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|3. | Acquisition                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   | In accordance with ASC 805, Business
      Combinations, acquisitions are accounted for under the purchase
      method of accounting. Under the purchase method of accounting, assets
      acquired and liabilities assumed are recorded at their estimated fair
      values. Goodwill is recorded to the extent the purchase price
      consideration, including certain acquisition and closing costs, exceeds
      the fair value of the net identifiable assets acquired at the date of the
      acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

-15-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

On 24 July 2008, the Company acquired
Silverdale. The aggregate consideration paid by the Company was $791,860 of
which $141,760 was paid in cash, and the Company issued 4,334,000 common shares
of the Company valued at $650,100 to acquire 100% of the issued and outstanding
common shares of Silverdale (Notes 5 and 11). Silverdale was acquired pursuant
to a Stock Exchange Agreement with Silverdale and the former shareholders of
Silverdale dated 13 June 2008. The acquisition of Silverdale expanded the
Companys business of acquiring and exploring mineral properties.

A valuation of certain assets was
completed and the Company internally determined the fair value of other assets
and liabilities. In determining the fair value of acquired assets, standard
valuation techniques were used including the market and income approach.

The purchase price allocation has been
determined as follows:

|                           |  | **$**   | 
|-------------------------- |  | ------- | 
|Assets purchased:          |  |         | 
|Cash and cash equivalents  |  | 1,539   | 
|Mineral property interests |  | 790,321 | 
|                           |  |         | 
|Total assets acquired      |  | 791,860 | 
|                           |  |         | 
|Purchase price             |  | 791,860 | 

|4. | Website Development
Costs
|-- | -------------------------

| |                               |  |       |  |  |                |   |  | Net Book Value | 
| | ----------------------------- |  | ----- |  |  | -------------- | - |  | -------------- | 
| |                               |  |       |  |  |                |   |  |                | 
| |                               |  |       |  |  | Accumulated    |   |  |                | 
| |                               |  |       |  |  | amortization / |   |  | 30 June        | 
| |                               |  | Cost  |  |  | Impairment     |   |  | 2010           | 
| |                               |  | **$** |  |  | **$**          |   |  | **$**          | 
| |                               |  |       |  |  |                |   |  |                | 
| | Website and development costs |  | 6,600 |  |  | (6,600         | ) |  | -              | 
| |                               |  |       |  |  |                |   |  |                | 
| |                               |  | 6,600 |  |  | (6,600         | ) |  | -              | 

|   | During the nine month period ended 30 June 2010, the
      Company incurred website development costs of $Nil (2009 -
$Nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | During the year ended 30 September 2009, the Company
      recorded a provision for write down of website development costs of $6,600
      (2008 - $Nil).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|5. | Mineral Property Costs                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Rose Prospect Lode Mining Claim                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | During the year ended 30 September 2006, the Company
      acquired an interest in a mineral claim located in Clark County, Nevada
      (the Rose Prospect Lode Mining Claim) for $6,375. In May 2006, the
      Company commissioned a geological evaluation report of the Rose Prospect
      Lode Mining Claim and in June 2006, the Company commissioned a Phase I
      work program as recommended by the evaluation report. During the Phase I
      work program, the Company staked a second claim adjacent to the west of
      the Rose Lode Claim to cover other indicated mineralized zones
observed in that area (the Rose Prospect II Lode Mining Claim). The
acquisition cost of $6,375 was initially capitalized as a tangible asset.

-16-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

Expenditures related to the Rose
Prospect Lode Mining Claim property for the nine month period ended 30 June 2010
were $Nil (2009 - $Nil).

During the year ended 30 September
2006, the Company recorded a write-down of mineral property acquisition costs of
$6,375 related to the Rose Prospect Lode Mining Claim.

Pinehurst Properties

During the year ended 30 September
2007, the Company entered into a mineral property option agreement, through its
wholly-owned subsidiary, to acquire an undivided 100% right, title and interest
in eight unpatented mining claims described as the Corby, Cory FR, Walker,
Linda, Eddie, Smokey, Dorian and Valerine claims (the Pinehurst
Properties) located near Pinehurst, Shoshone County, Idaho. The mineral
property option agreement called for cash payments of $1,000,000 ($50,000 paid),
the issuance of 1,000,000 restricted common shares of the Company and the
completion of exploration expenditures of $1,000,000 on the claims by 2011.

Expenditures related to the Pinehurst
Properties for the nine month period ended 30 June 2010 were $Nil (2009 - $Nil).

During the year ended 30 September
2009, the Company recorded a write-down of its deferred mineral property costs
of $106,400 related to the Pinehurst Properties.

Silver Strand Properties

On 1 March 2008, the Company entered
into a mineral property option agreement with New Jersey Mining Company (NJMC)
to purchase a 50% Joint Venture Interest in mining operations on certain mining
properties collectively known as the Silver Strand Properties, located in
Kootenai County, Idaho. The terms of the option agreement calls for the Company
to make payments as follows:

| | i.   | $120,000 upon the signing of the agreement
  (paid);
| | ---- | ----------------------------------------------------
| | ii.  | $150,000 on or before 30 April 2008 (paid); and     
| | iii. | $230,000 on or before 30 May
2008.                  

The terms of the option agreements call
for the Company to contribute 50% of the reclamation bond held as a treasury
bill, the receipt of which is due on or before 30 May 2008, for the benefit of
the Joint Venture. NJMC will be the operator of the mine.

Expenditures related to the Silver
Strand Properties for the nine month period ended 30 June 2010 consist of
acquisition costs of $Nil (2009 - $Nil).

During the year ended 30 September
2009, the Company recorded a write-down of its deferred mineral property costs
of $532,100 related to the Silver Strand Properties.

Cobalt Canyon Gold Project

On 8 September 2008, the Company
entered into a letter of intent with Gold Canyon Properties, LLP to examine and
possibly acquire 100% of the Cobalt Canyon Gold Project located in Lincoln
County, Nevada.

-17-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

|   | The Cobalt Canyon properties are located in the Chief
      Mining District of southeastern Nevada. The project included numerous
      small underground mines within the Chief District situated just north of
      Caliente, Nevada. The project included 22 unpatented federal lode claims
      (approximately 363 acres) and an option to acquire 59 acres in three
      patented mining claims.
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Expenditures related to the Cobalt Canyon Gold Project
      for the nine month period ended 30 June 2010 were $Nil (2009 -
    $Nil).                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                         
|   | During the year ended 30 September 2009, the Company
      recorded a write-down of its deferred mineral property costs $26,600
      related to the Cobalt Gold Project.                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                         
|6. | Accounts Payable and Accrued Liabilities                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Accounts payable and accrued liabilities are non-interest
      bearing, unsecured and have settlement dates within one year.                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                         
|7. | Convertible Debentures                                                                                                                                                                                                                                                                                                                                                                                  

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | Balance at |  |  | Balance at         | 
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  |  |  | ---------- |  |  | ------------------ | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | 30 June    |  |  | 30 September       | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | 2010       |  |  | **2009 (Audited)** | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | **$**      |  |  | **$**              | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  |            |  |  |                    | 
| | Three convertible debentures issued to three unrelated
      parties bearing interest at a rate of 10% per annum on any unpaid
      principle balances, unsecured, and having no fixed terms of repayment. The
      holders of the convertible debentures have the right to convert any
      portion of the unpaid principle and/or accrued interest into restricted
      common shares of the Company at any time within thirty-six months from the
      issue date on the basis of $0.0025 per common share for each dollar of
      principle and/or interest due and payable. The Company may repay principal
      amounts due at any time without premium or penalty. During the nine month
      period ended 30 June 2010, the Company accrued interest expense of $1,124
      (30 June 2009 - $Nil). The balance as at 30 June 2010 consists of
      principal of $15,000 (30 September 2009 - $15,000) and accrued interest of
      $1,740 (30 September 2009 - $616). The Company recorded a $15,000 interest
      expense in relation to amortization of debt discount in the year ended 30
      September 2009. |  |  |  |  | 16,740     |  |  | 15,616             | 

-18-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

|8. | Shareholders Demand
Loans
|-- | --------------------------

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | Balance at |  |  | Balance at         | 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  |  |  | ---------- |  |  | ------------------ | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | 30 June    |  |  | 30 September       | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | 2010       |  |  | **2009 (Audited)** | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | **$**      |  |  | **$**              | 
| | A demand loan issued to a shareholder bearing interest at
      a rate of 10% per annum on any unpaid principle balances, unsecured, and
      having no fixed terms of repayment. The Company may repay principal
      amounts due at any time without premium or penalty. In addition, the
      Company will issue 250,000 common shares in the Company upon repayment of
      the loan (Note 14). During the nine month period ended 30 June 2010, the
      Company accrued interest expense of $1,833 (30 June 2009  $Nil). The
      balance as at 30 June 2010 consists of principal of $30,000 (30 September
      2009  $Nil) and accrued interest of $1,833 (30 September 2009  $Nil). |  |  |  |  | 31,833     |  |  | -                  | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  |            |  |  |                    | 
| | A demand loan issued to a shareholder who is also the
      Companys sole officer and director bearing interest at a rate of 10% per
      annum on any unpaid principle balances, unsecured, and having no fixed
      terms of repayment. The Company may repay principal amounts due at any
      time without premium or penalty. During the nine month period ended 30
      June 2010, the Company accrued interest expense of $32 (30 June 2009 
      $Nil). The balance as at 30 June 2010 consists of principal of $2,500 (30
      September 2009  $Nil) and accrued interest of $32 (30 September 2009 
      $Nil).                                                                   |  |  |  |  | 2,532      |  |  | -                  | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  |            |  |  |                    | 
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |  |  |  |  | 34,365     |  |  | -                  | 

|9.  | Due to Related Parties                                                                                                                                                                                                                                                                                             
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                    
|    | Amounts due to related parties are due to individuals or
      companies controlled by individuals who are shareholders, directors and/or
      former directors of the Company, are non-interest bearing, unsecured and
      have no fixed terms of repayment.                                                   
|    |                                                                                                                                                                                                                                                                                                                    
|10. | Related Party Transactions                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                    
|    | During the nine month period ended 30 June 2010, an
      officer and director of the Company made contributions to capital for
      management fees in the amount of $13,500 (2009 - $17,500, cumulative -
      $80,500) and rent in the amount of $4,500 (2009 - $3,000, cumulative -
      $24,000) (Note 13).
|    |                                                                                                                                                                                                                                                                                                                    
|    | During the nine month period ended 30 June 2010, the
      Company paid or accrued $18,500 to a Company related to the Company by way
      of a shareholder in common for accounting services (2009 - $21,000,
      cumulative - $92,446).                                                                       

-19-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

|11. | Capital Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | Authorized capital stock consists of 225,000,000 common
      shares with a par value of $0.001 per common share. The total issued and
      outstanding capital stock is 42,168,837 common shares with a par value of
      $0.001 per common share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 3 December 2003, a total of 3 common shares of the
      Company were issued for cash proceeds of $1.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 1 January 2006, a total of 30,000,000 common shares
      were issued to an officer and director of the Company for cash proceeds of
      $10,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 1 January 2006, a total of 3 common shares of the
      Company were redeemed for proceeds of $1. These common shares were
      cancelled on the same date.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 3 May 2007, the Company completed a public offering of
      securities pursuant to an exemption provided by Rule 504 of Regulation D,
      registered in the State of Nevada, and issued 25,500,000 common shares for
      total cash proceeds of $85,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 4 March 2008, the Company effected a three (3) for one
      (1) forward stock split of all outstanding common shares and a
      corresponding forward increase in the Companys authorized common stock.
      The effect of the forward split was to increase the number of the
      Companys common shares issued and outstanding from 18,500,000 to
      55,500,000 and to increase the Companys authorized common shares from
      75,000,000 shares par value $0.001 to 225,000,000 shares par value $0.001.
      The consolidated financial statements have been retroactively adjusted to
      reflect this stock split.                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 24 July 2008, the Company issued 4,334,000 common
      shares of the Company valued at $650,100 to acquire 100% of the issued and
      outstanding common shares of Silverdale (Note 13).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 24 July 2008, the Company issued 1,000,000 common
      shares related to a public offering of securities in error. A total of
      500,000 of these common shares were returned to treasury and cancelled. A
      total of 500,000 of these common shares remain outstanding and the Company
      is in the process of obtaining these common shares for return to treasury
      and cancellation. The Company has placed a trading restriction on these
      common shares pending their receipts to treasury and cancellation and has
      excluded them from total number of common shares reported as issued and
      outstanding at 30 June 2010.                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 30 September 2008, a former director and officer of
      the Company returned to treasury 15,000,000 common shares of the Company
      for proceeds of $Nil. These shares were cancelled during the year ended 30
      September 2008 (Note 13).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|    | On 10 October 2008, the Company completed a public
      offering of securities pursuant to an exemption provided by Rule 504 of
      Regulation D, registered in the State of Nevada, and issued 950,000 common
      shares for total cash proceeds of $237,500. On 24 July 2008, the Company
      issued 1,000,000 common shares related to this public offering of
      securities in error. A total of 500,000 of these common shares were
      returned to treasury and cancelled. A total of 500,000 of these common
      shares remain outstanding and the Company is in the process of obtaining
      these common shares for return to treasury and cancellation. The Company
      has placed a trading restriction on these common shares pending their
      receipts to treasury and cancellation and has excluded them from total
      number of common shares reported as issued and outstanding at 30 June
      2010.

-20-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

|    | On 15 January 2009, the Company completed a public
      offering of securities pursuant to an exemption provided by Rule 504 of
      Regulation D, registered in the State of Nevada, and issued 484,837 common
      shares for total cash proceeds of $218,176.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | During the year ended 30 September 2009, former directors
      and officers of the Company returned to treasury 4,100,000 common shares
      of the Company for proceeds of $Nil. These shares were cancelled during
      the year ended 30 September 2009 (Note 13).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | During the year ended 30 September 2009, former officer
      of the Company forgave loans to the Company totaling $39,000. This loan
      forgiveness has been recorded as contributions to capital (Note
  13).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|12. | Income Taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The Company has losses carried forward for income tax
      purposes to 30 June 2010. There are no current or deferred tax expenses
      for the nine month period ended 30 June 2010 due to the Companys loss
      position. The Company has fully reserved for any benefits of these losses.
      The deferred tax consequences of temporary differences in reporting items
      for financial statement and income tax purposes are recognized, as
      appropriate. Realization of the future tax benefits related to the
      deferred tax assets is dependent on many factors, including the Companys
      ability to generate taxable income within the net operating loss
      carryforward period. Management has considered these factors in reaching
      its conclusion as to the valuation allowance for financial reporting
      purposes.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | The provision for refundable federal income tax consists
      of the following:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

| |                                             |  | For the nine  |   |  | For the nine  |  
| | ------------------------------------------- |  | ------------- | - |  | ------------- | -
| |                                             |  | month period  |   |  | month period  |  
| |                                             |  | ended 30 June |   |  | ended 30 June |  
| |                                             |  | 2010          |   |  | 2009          |  
| |                                             |  | **$**         |   |  | **$**         |  
| |                                             |  |               |   |  |               |  
| | Deferred tax asset attributable to:         |  |               |   |  |               |  
| | Current operations                          |  | 20,027        |   |  | 63,313        |  
| | Contributions to capital by related parties |  | (6,120        | ) |  | (6,970        | )
| | Forgiveness of related party payable        |  | -             |   |  | (13,260       | )
| | Less: Change in valuation allowance         |  | (13,907       | ) |  | (43,083       | )
| |                                             |  |               |   |  |               |  
| | Net refundable amount                       |  | -             |   |  | -             |  

-21-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

The composition of the Companys
deferred tax assets as at 30 June 2010 and 30 September 2009 are as follows:

| |                                              |  | As at 30  |   |  | As at 30       |  
| | -------------------------------------------- |  | --------- | - |  | -------------- | -
| |                                              |  | June      |   |  | September      |  
| |                                              |  | 2010      |   |  | 2009 (Audited) |  
| |                                              |  | **$**     |   |  | **$**          |  
| |                                              |  |           |   |  |                |  
| | Income tax operating loss
      carryforward |  | 1,438,528 |   |  | 1,379,625      |  
| |                                              |  |           |   |  |                |  
| | Statutory federal income tax rate            |  | 34%       |   |  | 34%            |  
| | Contributed rent and services                |  | -22.24    |   |  | -22.57%        |  
| | Effective income tax rate                    |  | 0%        |   |  | 0%             |  
| |                                              |  |           |   |  |                |  
| | Deferred tax assets                          |  | 171,600   |   |  | 157,693        |  
| | Less: Valuation allowance                    |  | (171,600  | ) |  | (157,693       | )
| |                                              |  |           |   |  |                |  
| | Net deferred tax asset                       |  | -         |   |  | -              |  

|    | The potential income tax benefit of these losses has been
      offset by a full valuation allowance.                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                          
|    | As at 30 June 2010, the Company has an unused net
      operating loss carry-forward balance of approximately $504,707 that is
      available to offset future taxable income. This unused net operating loss
      carry-forward balance expires between 2024 and 2030.
|    |                                                                                                                                                                                                                                                                          
|13. | Supplemental Disclosures with Respect to Cash
      Flows                                                                                                                                                                                                                

| |                                              |  | For the period   |  |  |               |  |  |               | 
| | -------------------------------------------- |  | ---------------- |  |  | ------------- |  |  | ------------- | 
| |                                              |  | from the date of |  |  |               |  |  |               | 
| |                                              |  | inception on 5   |  |  | For the nine  |  |  | For the nine  | 
| |                                              |  | December         |  |  | month period  |  |  | month period  | 
| |                                              |  | 2003 to 30 June  |  |  | ended 30 June |  |  | ended 30 June | 
| |                                              |  | 2010             |  |  | 2010          |  |  | 2009          | 
| |                                              |  | $                |  |  | $             |  |  | $             | 
| |                                              |  |                  |  |  |               |  |  |               | 
| | Cash paid during the year for
      interest |  | -                |  |  | -             |  |  | -             | 
| | Cash paid during the year for income taxes   |  | -                |  |  | -             |  |  | -             | 

On 24 July 2008, the Company issued
4,334,000 common shares of the Company valued at $650,100 to acquire 100% of the
issued and outstanding common shares of Silverdale (Note 11).

On 30 September 2008, a former director
and officer of the Company returned to treasury 15,000,000 common shares of the
Company for proceeds of $Nil. These shares were cancelled during the year ended
30 September 2008 (Note 11).

On 30 September 2009, a former
directors and officers of the Company returned to treasury 4,100,000 common
shares of the Company for proceeds of $Nil. These shares were cancelled during
the year ended 30 September 2009 (Note 11).

-22-

---

|Silverstar Mining Corp.                   
|------------------------------------------
|(A Development Stage Company)             
|Notes to Consolidated Financial Statements
|(Expressed in U.S. Dollars)               
|(Unaudited)                               
|30 June 2010                              

|    | During the year ended 30 September 2009, former officer
      of the Company forgave loans to the Company totaling $39,000. This loan
      forgiveness has been recorded as contributions to capital (Note
  11).                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                    
|    | During the nine month period ended 30 June 2010, the
      Company accrued interest of $2,989 (2009 - $Nil) related to the
      convertible debentures and demand loans (Notes 7 and 8).                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                    
|    | During the nine month period ended 30 June 2010, an
      officer and director of the Company made contributions to capital for
      management fees in the amount of $13,500 (2009 - $17,500, cumulative -
      $80,500) and rent in the amount of $4,500 (2009 - $3,000, cumulative -
      $24,000) (Note 10).
|    |                                                                                                                                                                                                                                                                                                                    
|14. | Commitment                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                    
|    | The Company is committed to issue 250,000 common shares
      of the Company upon repayment of the shareholders demand loan in the
      amount of $34,365 as at 30 June 2010 is repaid (Note 8).                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                    
|15. | Subsequent Event                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                    
|    | There are no subsequent events from the period from the
      nine month period ended 30 June 2010 to the date the consolidated
      financial statements are available to be issued on 10 September
    2010.                                                                                                    

-23-

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Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations

Forward-Looking Statements

This quarterly report contains forward-looking statements.
These statements relate to future events or our future financial performance. In
some cases, you can identify forward-looking statements by terminology such as
"may", "should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.

Our unaudited consolidated financial statements are stated in
United States Dollars (US$) and are prepared in accordance with United States
Generally Accepted Accounting Principles. The following discussion should be
read in conjunction with our consolidated financial statements and the related
notes that appear elsewhere in this quarterly report. The following discussion
contains forward-looking statements that reflect our plans, estimates and
beliefs. Our actual results could differ materially from those discussed in the
forward looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below and elsewhere
in this quarterly report, particularly in the section entitled "Risk Factors".

In this quarterly report, unless otherwise specified, all
dollar amounts are expressed in United States dollars. All references to "common
shares" refer to the common shares in our capital stock.

As used in this quarterly report and unless otherwise
indicated, the terms "we", "us", "our", Company, and Silverstar mean
Silverstar Mining Corp., a Nevada corporation, unless otherwise indicated and
the term Silverdale means Silverdale Mining Corp., our wholly owned
subsidiary.

Corporate History

We were incorporated under the laws of the State of Nevada on
December 5, 2003 under the name Computer Maid, Inc.. On February 13, 2006, we
changed our name from Computer Maid, Inc. to Rose Explorations Inc..

In February 2006, we acquired the Rose Prospect Lode Mining
Claim in Clark County Nevada and in June 2006, we staked the Rose Prospect II
Lode Mining Claim adjacent to the west of the Rose Lode Claim to cover other
indicated mineralized zones observed in that area. From February 2006, we have
been an exploration stage company engaged in the exploration of mineral
properties.

Effective March 4, 2008, we completed a merger with our
subsidiary, Silverstar Mining Corp., a Nevada corporation. As a result, we
changed our name from Rose Explorations Inc. to Silverstar Mining Corp. We
changed the name of our company to better reflect the direction and business of
our company.

In addition, effective March 4, 2008 we effected a three (3)
for one (1) forward stock split of our authorized and issued and outstanding
common stock. As a result, our authorized capital increased from 75,000,000
shares of common stock with a par value of $0.001 to 225,000,000 shares of
common stock with a par value of $0.001.

On March 31, 2008, we entered into a joint venture agreement
with New Jersey Mining Co. to acquire a 50% interest in the Silver Strand silver
mine located in the Coeur dAlene Mining District. We were unable to close the
joint venture agreement as expected before September 30, 2008. We have not been
notified by NJMC that we are in default.

-24-

---

Under the terms of the joint venture agreement, we have agreed
to share equally in the production and further development and exploration of
the property.

On June 13, 2008, we entered into a share exchange agreement
with Silverdale Mining Corp., a Nevada corporation, and the shareholders of
Silverdale Mining Corp. The closing of the transactions contemplated in the
share exchange agreement and the acquisition of all of the issued and
outstanding common stock in the capital of Silverdale Mining Corp. occurred on
July 24, 2008. In accordance with the closing of the share exchange agreement,
we issued 4,334,000 shares of our common stock to the former shareholders of
Silverdale Mining Corp. in exchange for the acquisition, by our company, of all
of the 4,334,000 issued and outstanding shares of Silverdale Mining Corp.
Silverdale Mining Corp. is now a wholly owned subsidiary of our company.

On September 2, 2008, we entered into a letter of intent with
Gold Canyon Partners, LLP pursuant to which we have agreed to purchase a 100%
interest in a mining property commonly known as the Cobalt Canyon Gold Project,
in the Chief District, located in Lincoln County, Nevada. The acquisition
contemplated by the letter of intent is subject to the fulfillment of certain
conditions precedent, due diligence and the negotiation of a definitive
agreement. We have chosen not to complete the agreement and have forfeited the
$15,000 initial payment.

On September 30, 2008, we entered into a share
cancellation/return to treasury agreement with Greg Cowan, a former director and
officer of our company. Pursuant to the agreement, Mr. Cowan agreed to the
return and cancellation of 15,000,000 shares of our common stock that were held
by him. We did not provide Mr. Cowan with any compensation for such
cancellation.

Effective June 2, 2009, we entered into a share
cancellation/return to treasury agreement with Jim MacKenzie wherein he agreed
to the cancellation and return to treasury of 850,000 shares of our common
stock. Subsequent to the stock cancellation, Mr. MacKenzie will hold 150,000
shares of our common stock.

On June 2, 2009, Mr. Greg Cowan, a former president, chief
executive officer, secretary, treasurer and director of our company, transferred
5,000,000 restricted shares of our common stock to Mr. Lawrence Siccia, our
current president, chief executive officer and director. Mr. Siccia purchased
the shares from personal funds in the amount of $500.

Plan of Operation

We are an exploration stage mining company engaged in the
exploration of minerals on properties located in Idaho and Nevada.

Our current focus is to maintain the interest in our mining
claims until we can raise additional debt or equity capital to conduct
exploration activities on our Rose Load Claim, complete the mineral property
option agreement and joint venture agreement held by our subsidiary, Silverdale
Mining Corp.

Rose Prospect Lode Mining Claim

In February 2006, we acquired the Rose Prospect Lode Mining
Claim in Clark County Nevada and in June 2006, we staked the Rose Prospect II
Lode Mining Claim adjacent to the west of the Rose Lode Claim to cover other
indicated mineralized zones observed in that area.

The Rose Lode Claim is located in the Goodsprings (Yellow Pine)
Mining District situated within the southwestern comer of the State of Nevada,
U.S.A. The Rose Lode Claim covers some former exploratory workings on a mineral
showing.

The Yellow Pine Mining District is located in the area of the
Spring Mountains of southern Nevada. Although less famous than many of the other
mining districts of the Great Basin it nevertheless ranks second only to Tonopah
in total Nevada lead and zinc production. During World War I this district was
one of the most productive in the West, but by the end of World War II only a
few mines remained in operation. The region is known for its historic production
of lead, zinc, silver and gold.

-25-

---

The Rose Lode Claim is underlain by the Mississippian Monte
Cristo Limestone Formation with the mineralization possibly comprised of copper
minerals hosted by a breccia zone which may be up to 200 feet wide within the
Anchor Limestone Member.

Mineral Property Option Agreement between our Company and
Chuck Stein on the Pinehurst Properties

On September 14, 2007, our wholly owned subsidiary, Silverdale
Mining Corp. entered into a mineral property option agreement with Chuck Stein
to acquire an undivided 100% right, tile and interest in eight unpatented mining
claims described as the Corby, Cory FR, Walker, Linda, Eddie,
Smokey, Dorian and Valerine claims which are located near Pinehurst,
Shoshone County, Idaho.

In order to exercise this option we have agreed, over a period
of four years, to make a total cash payment of $1,000,000, issue a total of
1,000,000 restricted shares of our common stock and conduct exploration
expenditures of $1,000,000 on the claims.

To date, we have paid $50,000 but have not completed all the
commitments per the agreement. During the year ended 30 September 2009, our
company recorded a write-down of its deferred mineral property costs of $106,400
related to the Pinehurst Properties.

Mineral Property Joint Venture Agreement between our Company
and New Jersey Mining Company

On March 1, 2008, we entered into a mineral property option
agreement with New Jersey Mining Company ("NJMC") to purchase a 50% Joint
Venture Interest in mining operations on certain mining property commonly known
as the Silver Strand mine, located in Kootenai County, Idaho.

In order to exercise this Joint Venture Agreement we have
agreed to pay NJMC $500,000 and agreed to reimburse NJMC $60,000 being 50% of
the current reclamation bond held by the U.S. Forest Service. We have also
agreed to issue 50,000 shares of our common stock to NJMC. The NJMC will be the
operator of the mine and will also mill the ore at its mineral processing plant
in Kellogg, Idaho and market saleable products on behalf of the Joint Venture.
During the year ended 30 September 2009, our company recorded a write-down of
its deferred mineral property costs of $532,100 related to the Silver Strand
Properties.

Purchase of Significant Equipment

We do not intend to purchase any significant equipment over the
  twelve month period ending June 30, 2011.

Off-Balance Sheet Arrangements

As of June 30, 2010, our company had no off-balance sheet
arrangements, including any outstanding derivative financial statements,
off-balance sheet guarantees, interest rate swap transactions or foreign
currency contracts. Our company does not engage in trading activities involving
non-exchange traded contracts.

Employees

We do not expect any significant changes in the number of
employees during the next twelve month period. We presently conduct our business
through agreements with consultants and arms-length third parties.

Results of Operations for the Three Months Ended June 30,
2010 and 2009

The following summary of our results of operations should be
read in conjunction with our consolidated financial statements for the three
month periods ended June 30, 2010 and 2009.

We have not generated any revenue since inception and are
dependent upon obtaining financing to pursue our business activities. For these
reasons, our auditors believe that there is substantial doubt that we will be
able to continue as a going concern.

-26-

---

Our operating results for the three month periods ended June
30, 2010 and 2009 and the changes between those periods for the respective items
are summarized as follows:

|                                        |   | Three Month Period
      Ended June 30, 2010 |  |   | Three Month Period
      Ended June 30, 2009 |  |   | Change Between Three Month
      Periods Ended June 30, 2010 and June 30,
      2009 | 
|--------------------------------------- | - | -------------------------------------------- |  | - | -------------------------------------------- |  | - | ------------------------------------------------------------------------------------ | 
|Revenue                                 | $ | Nil                                          |  | $ | Nil                                          |  | $ | Nil                                                                                  | 
|Bank charges and interest               | $ | 1,311                                        |  | $ | 201                                          |  | $ | 1,110                                                                                | 
|Filing fees                             | $ | Nil                                          |  | $ | 1,047                                        |  | $ | (1,047)                                                                              | 
|Legal and accounting                    | $ | 11,143                                       |  | $ | 9,924                                        |  | $ | 1,219                                                                                | 
|Management fees                         | $ | 4,500                                        |  | $ | 4,500                                        |  | $ | Nil                                                                                  | 
|Rent                                    | $ | 1,500                                        |  | $ | (726)                                        |  | $ | (2,226)                                                                              | 
|Transfer agent fees                     | $ | 1,175                                        |  | $ | 2,300                                        |  | $ | (1,125)                                                                              | 
|Travel, entertainment and office        | $ | Nil                                          |  | $ | 1,207                                        |  | $ | (1,207)                                                                              | 
|Write-down of website development costs | $ | Nil                                          |  | $ | 29,021                                       |  | $ | (29,021)                                                                             | 
|Net loss                                | $ | (19,629)                                     |  | $ | (47,474)                                     |  | $ | 27,845                                                                               | 

Our expenses decreased during the three month period ended June
30, 2010 compared to the same period in 2009 primarily as a result of an overall
reduction in activity.

Results of Operations for the Nine Months Ended June 30,
2010 and 2009

The following summary of our results of operations should be
read in conjunction with our consolidated financial statements for the nine
month periods ended June 30, 2010 and 2009.

We have not generated any revenue since inception and are
dependent upon obtaining financing to pursue our business activities. For these
reasons, our auditors believe that there is substantial doubt that we will be
able to continue as a going concern.

Our operating results for the nine month periods ended June 30,
  2010 and 2009 and the changes between those periods for the respective items
  are summarized as follows:

|                            |   | Nine Month Period Ended
      June 30, 2010 |  |   | Nine Month Period Ended
      June 30, 2009 |  |   | Change Between Nine Month
      Periods Ended June 30, 2010 and June 30,
      2009 | 
|--------------------------- | - | ------------------------------------------- |  | - | ------------------------------------------- |  | - | ----------------------------------------------------------------------------------- | 
|Revenue                     | $ | Nil                                         |  | $ | Nil                                         |  | $ | Nil                                                                                 | 
|Bank charges and interest   | $ | 4,261                                       |  | $ | 719                                         |  | $ | 3,542                                                                               | 
|Consulting                  | $ | Nil                                         |  | $ | 57,000                                      |  | $ | (57,000)                                                                            | 
|Exploration and development | $ | (600)                                       |  | $ | 2,458                                       |  | $ | (3,058)                                                                             | 
|Filing fees                 | $ | 1,928                                       |  | $ | 5,808                                       |  | $ | (3,880)                                                                             | 
|Investor relations          | $ | Nil                                         |  | $ | 38,100                                      |  | $ | (38,100)                                                                            | 
|Legal and accounting        | $ | 30,093                                      |  | $ | 42,087                                      |  | $ | (11,994)                                                                            | 

-27-

---

|                                                 |   | Nine Month Period Ended
      June 30, 2010 |  |   | Nine Month Period Ended
      June 30, 2009 |  |   | Change Between Nine Month
      Periods Ended June 30, 2010 and June 30,
      2009 | 
|------------------------------------------------ | - | ------------------------------------------- |  | - | ------------------------------------------- |  | - | ----------------------------------------------------------------------------------- | 
|Management fees                                  | $ | 13,500                                      |  | $ | 17,500                                      |  | $ | (4,000)                                                                             | 
|Rent                                             | $ | 4,500                                       |  | $ | (221)                                       |  | $ | 4,721                                                                               | 
|Transfer agent fees                              | $ | 2,682                                       |  | $ | 6,200                                       |  | $ | (3,518)                                                                             | 
|Travel, entertainment and office                 | $ | 2,539                                       |  | $ | 4,302                                       |  | $ | (1,763)                                                                             | 
|Write-down of mineral property acquisition costs | $ | Nil                                         |  | $ | 4,412                                       |  | $ | (4,412)                                                                             | 
|Write-down of website development costs          | $ | Nil                                         |  | $ | 29,021                                      |  | $ | (29,021)                                                                            | 
|Recovery of expenses                             | $ | Nil                                         |  | $ | (20,900)                                    |  | $ | 20,900                                                                              | 
|Net loss                                         | $ | 58,903                                      |  | $ | 186,216                                     |  | $ | (127,313)                                                                           | 

Our expenses decreased during the nine month period ended June
30, 2010 compared to the same period in 2009 primarily as a result of an overall
reduction in activity.

Liquidity and Financial Condition

Working Capital

|                          | Nine Month Period Ended
      June 30, 2010 ($) | Year Ended September 30,
      2009 ($) | Change between June 30,
      2010 and September 30, 2009 ($)
|------------------------- | ----------------------------------------------- | --------------------------------------- | -------------------------------------------------------------
|Current Assets            | 1,997                                           | 1,013                                   | 984                                                          
|Current Liabilities       | 82,504                                          | 40,617                                  | 41,887                                                       
|Working Capital/(Deficit) | (80,507)                                        | (39,604)                                | (40,903)                                                     

Cash Flows

|                                                      |               |               | Change       
|----------------------------------------------------- | ------------- | ------------- | -------------
|                                                      |               |               | between      
|                                                      |               |               | Nine month   
|                                                      |               |               | Periods Ended
|                                                      | Nine month    | Nine month    | June 30, 2010
|                                                      | Period Ended  | Period Ended  | and June 30, 
|                                                      | June 30, 2010 | June 30, 2009 | 2009         
|                                                      | ($)           | ($)           | ($)          
|                                                      |               |               |              
|Cash Flows used in Operating Activities               | (31,516)      | (166,000)     | 134,484      
|Cash Flows provided by/(used in) Investing Activities | Nil           | 29,021        | (29,021)     
|Cash Flows provided by Financing Activities           | 32,500        | 48,500        | (16,000)     
|Net Decrease in Cash During Period                    | 984           | (88,479)      | 89,463       

As of June 30, 2010, our total assets were $1,997 and our total
liabilities were $82,504 and we had a working capital deficit of $80,507. Our
financial statements report a net loss of $58,903 for the nine months ended June
30, 2010, and a net loss of $1,438,528 for the period from December 5, 2003
(inception) to June 30, 2010.

-28-

---

Going Concern

Due to the uncertainty of our ability to meet our current
operating and capital expenses, in their report on the annual consolidated
financial statements for the year ended September 30, 2009, our independent
auditors included an explanatory paragraph regarding concerns about our ability
to continue as a going concern.

We anticipate that additional funding will be required in the
form of debt or equity capital financing from the sale of our common stock. At
this time, we cannot provide investors with any assurance that we will be able
to raise sufficient funding from the sale of our common stock or through debt to
meet our obligations over the next twelve months. We do not have any
arrangements in place for any future debt or equity financing.

Application of Critical Accounting Policies

The discussion and analysis of our financial condition and
results of operations are based upon our consolidated financial statements,
which have been prepared in accordance with the accounting principles generally
accepted in the United States of America. Preparing financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets, liabilities, revenue, and expenses. These estimates and
assumptions are affected by managements application of accounting policies. We
believe that understanding the basis and nature of the estimates and assumptions
involved with the following aspects of our consolidated financial statements is
critical to an understanding of our consolidated financial statements.

We regularly evaluate the accounting policies and estimates
that we use to prepare our consolidated financial statements. In general,
management's estimates are based on historical experience, on information from
third party professionals, and on various other assumptions that are believed to
be reasonable under the facts and circumstances. Actual results could differ
from those estimates made by management.

Significant accounting policies used in the preparation of our
consolidated financial statements are set forth in Note 2 to our consolidated
financial statements.

Mineral property costs

Our company is primarily engaged in the acquisition and
exploration of mining properties.

Mineral property acquisition costs are initially capitalized as
tangible assets when purchased. At the end of each fiscal quarter end, our
company assesses the carrying costs for impairment. If proven and probable
reserves are established for a property and we have been determined that a
mineral property can be economically developed, costs will be amortized using
the units-of-production method over the estimated life of the probable reserve.

Mineral property exploration costs are expensed as incurred.

Estimated future removal and site restoration costs, when
determinable are provided over the life of proven reserves on a
units-of-production basis. Costs, which include production equipment removal and
environmental remediation, are estimated each period by management based on
current regulations, actual expenses incurred, and technology and industry
standards. Any charge is included in exploration expense or the provision for
depletion and depreciation during the period and the actual restoration
expenditures are charged to the accumulated provision amounts as incurred.

As of the date of these consolidated financial statements, our
company has not established any proven or probable reserves on its mineral
properties and incurred only acquisition and exploration costs (Note 5).

Although our company has taken steps to verify title to mineral
properties in which we have an interest, according to the usual industry
standards for the stage of exploration of such properties, these procedures do
not guarantee our companys title. Such properties may be subject to prior
agreements or transfers and title may be affected by undetected defects.

-29-

---

Reclamation costs

Our companys policy for recording reclamation costs is to
record a liability for the estimated costs to reclaim mined land by recording
charges to production costs for each tonne of ore mined over the life of the
mine. The amount charged is based on managements estimation of reclamation
costs to be incurred. The accrued liability is reduced as reclamation
expenditures are made. Certain reclamation work is performed concurrently with
mining and these expenditures are charged to operations at that time.

Long-lived assets

Long-term assets of our company are reviewed for impairment
whenever events or circumstances indicate that the carrying amount of assets may
not be recoverable, pursuant to guidance established in ASC 360-10-35-15, Impairment or Disposal of Long-Lived Assets.

Management considers assets to be impaired if the carrying
value exceeds the future projected cash flows from related operations
(undiscounted and without interest charges). If impairment is deemed to exist,
the assets will be written down to fair value. Fair value is generally
determined using a discounted cash flow analysis.

Financial instruments

The carrying value of cash and cash equivalents, accounts
payable, convertible debentures, Shareholders demand loans and due to related
parties approximates their fair value because of the short maturity of these
instruments. Our companys operations are in Nevada and virtually all of its
assets and liabilities are giving rise to significant exposure to market risks
from changes in foreign currency rates. Our companys financial risk is the risk
that arises from fluctuations in foreign exchange rates and the degree of
volatility of these rates. Currently, our company does not use derivative
instruments to reduce its exposure to foreign currency risk.

Derivative financial instruments

Our company has not, to the date of these consolidated
financial statements, entered into derivative instruments to offset the impact
of foreign currency fluctuations.

Website development costs

The costs of computer software developed or obtained for
internal use, during the preliminary project phase, as defined under ASC 350-40,
Internal-Use Software, will be expensed as incurred. The costs of
website development during the planning stage, as defined under ASC 350-50,
Website Development Costs, will also be expensed as incurred.

Computer software, website development incurred during the
application and infrastructure development stage, including external direct
costs of materials and services consumed in developing the software and creating
graphics and website content, will be capitalized and amortized over the
estimated useful life, beginning when the software is ready for use and after
all substantial testing is completed and the website is operational.

Income taxes

Deferred income taxes are reported for timing differences
between items of income or expense reported in the consolidated financial
statements and those reported for income tax purposes in accordance with ASC
740, Income Taxes, which requires the use of the asset/liability method
of accounting for income taxes. Deferred income taxes and tax benefits 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, and for tax losses and credit carry-forwards.
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. Our company provides for
deferred taxes for the estimated future tax effects attributable to temporary
differences and carry-forwards when realization is more likely than not.

-30-

---

Basic and diluted net loss per share

Our company computes net income (loss) per share in accordance
with ASC 260 Earnings per Share. ASC 260 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income
statement. Basic EPS is computed by dividing net income (loss) available to
common shareholders (numerator) by the weighted average number of shares
outstanding (denominator) during the period. Diluted EPS gives effect to all
dilutive potential common shares outstanding during the period using the
treasury stock method and convertible preferred stock using the if-converted
method. In computing diluted EPS, the average stock price for the period is used
in determining the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excluded all dilutive potential shares if
their effect is anti-dilutive.

Comprehensive loss

ASC 220, Comprehensive Income, establishes standards
for the reporting and display of comprehensive loss and its components in the
financial statements. As at 30 June 2010, our company has no items that
represent a comprehensive loss and, therefore, has not included a schedule of
comprehensive loss in the consolidated financial statements.

Segments of an enterprise and related information

ASC 280, Segment Reporting establishes guidance for
the way that public companies report information about operating segments in
annual financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. ASC 280 defines operating segments as
components of a company about which separate financial information is available
that is evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and in assessing performance. Our company has
evaluated this Codification and does not believe it is applicable at this time.

Start-up expenses

Our company has adopted ASC 720-15, Start-Up Costs,
which requires that costs associated with start-up activities be expensed as
incurred. Accordingly, start-up costs associated with our companys formation
have been included in our companys general and administrative expenses for the
period from the date of inception on 5 December 2003 to 30 June 2010.

Foreign currency translation

Our companys functional and reporting currency is U.S.
dollars. The consolidated financial statements of our company are translated to
U.S. dollars in accordance with ASC 830, Foreign Currency Matters.
Monetary assets and liabilities denominated in foreign currencies are translated
using the exchange rate prevailing at the balance sheet date. Gains and losses
arising on translation or settlement of foreign currency denominated
transactions or balances are included in the determination of income. Our
company has not, to the date of these consolidated financial statements, entered
into derivative instruments to offset the impact of foreign currency
fluctuations.

Use of estimates

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

Comparative figures

Certain comparative figures have been adjusted to conform to
the current periods presentation.

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Changes in accounting policy

In January 2010, the Financial Accounting Standards Board
(FASB) issued ASU No. 2010-02,Accounting and Reporting for Decreases in
Ownership of a Subsidiary - a Scope Clarification. ASU No. 2010-2 addresses
implementation issues related to the changes in ownership provisions in the
ConsolidationOverall Subtopic (Subtopic 810-10) of the FASB ASC, originally
issued as Statement of Financial Accounting Standards (SFAS) No. 160,
Noncontrolling Interests in Consolidated Financial Statements. Subtopic
810-10 establishes the accounting and reporting guidance for noncontrolling
interests and changes in ownership interests of a subsidiary. An entity is
required to deconsolidate a subsidiary when the entity ceases to have a
controlling financial interest in the subsidiary. Upon deconsolidation of a
subsidiary, an entity recognizes a gain or loss on the transaction and measures
any retained investment in the subsidiary at fair value. The gain or loss
includes any gain or loss associated with the difference between the fair value
of the retained investment in the subsidiary and its carrying amount at the date
the subsidiary is deconsolidated. In contrast, an entity is required to account
for a decrease in ownership interest of a subsidiary that does not result in a
change of control of the subsidiary as an equity transaction. ASU No. 2010-02
was effective for our company starting 1 January 2010. Our companys adoption of
ASU No. 2010-2 did not have a material impact on our companys consolidated
financial statements.

In January 2010, the FASB issued ASU No. 2010-01, Equity
(ASC Topic 505): Accounting for Distributions to Shareholders with Components of
Stock and Cash, which clarifies that the stock portion of a distribution to
shareholders that allow them to elect to receive cash or stock with a potential
limitation on the total amount of cash that all shareholders can elect to
receive in the aggregate is considered a share issuance that is reflected
prospectively in earnings per share and is not considered a stock dividend for
purposes of ASC Topic 505 and ASC Topic 260. ASU No. 2010-2 was effective for
our company starting 1 January 2010. The adoption of the ASU No. 2010-01 did not
have a material impact on our companys consolidated financial statements.

In August 2009, the FASB issued ASU No. 2009-05, Fair Value
Measurement and Disclosure (Topic 820)  Measuring Liabilities at Fair
Value, which provides valuation techniques to measure fair value in
circumstances in which a quoted price in an active market for the identical
liability is not available. The guidance provided in this update is effective 1
October 2009. The adoption of this guidance did not have a material impact on
our companys consolidated financial statements.

In June 2009, the FASB issued SFAS No. 167, Amendments to
FASB Interpretation No. 46(R). SFAS No. 167, which amends ASC 810-10,
Consolidation, prescribes a qualitative model for identifying whether a
company has a controlling financial interest in a variable interest entity
(VIE) and eliminates the quantitative model. The new model identifies two
primary characteristics of a controlling financial interest: (1) provides a
company with the power to direct significant activities of the VIE, and (2)
obligates a company to absorb losses of and/or provides rights to receive
benefits from the VIE. SFAS No. 167 requires a company to reassess on an ongoing
basis whether it holds a controlling financial interest in a VIE. A company that
holds a controlling financial interest is deemed to be the primary beneficiary
of the VIE and is required to consolidate the VIE. SFAS No. 167, which is
referenced in ASC 105-10-65, has not yet been adopted into the Codification and
remains authoritative. SFAS No. 167 was effective 1 January 2010. The adoption
of SFAS No. 167 did not have a material impact on our companys consolidated
financial statements.

In June 2009, the FASB issued SFAS No. 166, Accounting for
Transfer of Financial Assets  an amendment of FASB Statement. SFAS No. 166
removes the concept of a qualifying special-purpose entity from ASC 860-10,
Transfers and Servicing, and removes the exception from applying ASC
810-10, Consolidation. This statements also clarifies the requirements
for isolation and limitations on portions of financial assets that are eligible
for sale accounting. SFAS No. 166, which is referenced in ASC 105-10-65, has not
yet been adopted into the Codification and remains authoritative. This statement
was effective 1 January 2010. The adoption of SFAS No. 166 did not have a
material impact on our companys consolidated financial statements.

In April 2008, the FASB issued new guidance for determining the
useful life of an intangible assets, the new guidance, which is now part of ASC
350, Intangibles  Goodwill and Other. In determining the useful life
of intangible assets, ASC 350 removes the requirement to consider whether an
intangible asset can be renewed without substantial cost of material
modifications to the existing terms and conditions and, instead, requires an
entity to consider its own historical experience in renewing similar
arrangements. ASC 350 also requires expanded disclosure related to the determination of intangible asset
useful lives. The new guidance was effective for financial statements issued for
fiscal years beginning after 15 December 2008. The adoption of this guidance did
not have a material impact on our companys consolidated financial statements.

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Recent accounting pronouncements

In February 2010, the FASB issued ASU No. 2010-11,
Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded
Credit Derivatives. ASU No. 2010-11 clarifies the type of embedded credit
derivative that is exempt from embedded derivative bifurcation requirements.
Specifically, only one form of embedded credit derivative qualifies for the
exemption  one that is related only to the subordination of one financial
instrument to another. As a result, entities that have contracts containing an
embedded credit derivative feature in a form other than such subordination may
need to separately account for the embedded credit derivative feature. The
amendments in ASU No. 2010-11 are effective for each reporting entity at the
beginning of its first fiscal quarter beginning after 15 June 2010. Early
adoption is permitted at the beginning of each entitys first fiscal quarter
beginning after 5 March 2010. The adoption of ASC No. 2010-11 is not expected to
have a material impact on our companys consolidated financial statements.

In February 2010, the FASB issued ASC No. 2010-09,
Amendments to Certain Recognition and Disclosure Requirements, which
eliminates the requirement for SEC filers to disclose the date through which an
entity has evaluated subsequent events. ASC No. 2010-09 is effective for its
fiscal quarter beginning after 15 December 2010. The adoption of ASC No. 2010-06
is not expected to have a material impact on our companys consolidated
financial statements

In January 2010, the FASB issued ASC No. 2010-06, Fair
Value Measurement and Disclosures (Topic 820): Improving Disclosure and Fair
Value Measurements, which requires that purchases, sales, issuances, and
settlements for Level 3 measurements be disclosed. ASC No. 2010-06 is effective
for its fiscal quarter beginning after 15 December 2010. The adoption of ASC No.
2010-06 is not expected to have a material impact on our companys consolidated
financial statements.

Item 3. Quantitative and Qualitative Disclosures About
Market Risk

As a smaller reporting company, we are not required to
provide tabular disclosure obligations.

Item 4. Controls and Procedures

Managements Report on Disclosure Controls and
Procedures

We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to our management, including our president and
chief executive officer (our principal executive officer) and our chief
financial officer (our principal financial officer and principle accounting
officer) to allow for timely decisions regarding required disclosure.

As of June 30, the end of our quarter covered by this report,
we carried out an evaluation, under the supervision and with the participation
of our president and chief executive officer (our principal executive officer
and our principal financial officer and principle accounting officer), of the
effectiveness of the design and operation of our disclosure controls and
procedures. Based on the foregoing, our president and chief executive officer
(our principal executive officer and our principal financial officer and
principle accounting officer) concluded that our disclosure controls and
procedures were effective as of the end of the period covered by this quarterly
report.

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Changes in Internal Control over Financial
Reporting

There have been no changes in our internal controls over
financial reporting that occurred during the quarter ended June 30, 2010 that
have materially or are reasonably likely to materially affect, our internal
controls over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, active or pending legal proceedings
against our company, nor are we involved as a plaintiff in any material
proceeding or pending litigation. There are no proceedings in which any of our
directors, officers or affiliates, or any registered or beneficial shareholder,
is an adverse party or has a material interest adverse to our interest.

Item 1A. Risk Factors

Much of the information included in this quarterly report
includes or is based upon estimates, projections or other forward looking
statements. Such forward looking statements include any projections and
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the direction of our business, actual results will almost always vary,
sometimes materially, from any estimates, predictions, projections, assumptions
or other future performance suggested herein.

Such estimates, projections or other forward looking
statements involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other forward looking statements.

Our securities are highly speculative and involve a high degree
of risk, including among other items the risk factors described in our annual
report on Form 10-K for the fiscal year ended September 30, 2009, filed on
January 4, 2010. You should carefully consider those risk factors and other
information in our annual report on Form 10-K and this quarterly report before
deciding to invest in our securities. We are unaware of any material changes in
or additional risk factors since the filing of our annual report.

Other Risks

Trends, Risks and Uncertainties

We have sought to identify what we believe to be the most
significant risks to our business, but we cannot predict whether, or to what
extent, any of such risks may be realized nor can we guarantee that we have
identified all possible risks that might arise. Investors should carefully
consider all of such risk factors before making an investment decision with
respect to our common stock.

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

None.

Item 3. Defaults Upon Senior Securities

None.

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Item 4. [Removed and Reserved]

Item 5. Other Information

None.

Item 6. Exhibits

|Exhibit |                                                                                                                                                                                                                                                                                                                
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description                                                                                                                                                                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                
|(3)     | Articles of Incorporation and Bylaws                                                                                                                                                                                                                                                                           
|        |                                                                                                                                                                                                                                                                                                                
|3.1     | Articles of Incorporation (incorporated by reference from
      our Registration Statement on Form SB-2 filed on January 30, 2007).                                                                                                                                                                            
|        |                                                                                                                                                                                                                                                                                                                
|3.2     | By-laws (incorporated by reference from our Registration
      Statement on Form SB-2 filed on January 30, 2007).                                                                                                                                                                                              
|        |                                                                                                                                                                                                                                                                                                                
|3.3     | Articles of Merger filed with the Secretary of State of
      Nevada on February 20, 2008 and which is effective March 4, 2008
      (incorporated by reference from our Current Report on Form 8-K filed on
      March 5, 2008).                                                                             
|        |                                                                                                                                                                                                                                                                                                                
|3.4     | Certificate of Change filed with the Secretary of State
      of Nevada on February 20, 2008 and which is effective March 4, 2008
      (incorporated by reference from our Current Report on Form 8-K filed on
      March 5, 2008).                                                                          
|        |                                                                                                                                                                                                                                                                                                                
|(10)    | Material Contracts                                                                                                                                                                                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                
|10.1    | Purchase Agreement Rose Prospect Lode Claim (incorporated
      by reference from our Registration Statement on Form SB-2 filed on January
      30, 2007).                                                                                                                                                    
|        |                                                                                                                                                                                                                                                                                                                
|10.2    | Share Exchange Agreement dated June 13, 2008, among our
      company, Silverdale Mining Corp. and the selling the shareholders of
      Silverdale Mining Corp. as set out in the share exchange agreement
      (incorporated by reference from our Current Report on Form 8-K filed on
      June 16, 2008).
|        |                                                                                                                                                                                                                                                                                                                
|10.3    | Mineral Property Option Agreement dated September 14,
      2007 between Silverdale Mining Corp. and Chuck Stein (incorporated by
      reference from our Current Report on Form 8-K filed on July 28, 2008).                                                                                                 
|        |                                                                                                                                                                                                                                                                                                                
|10.4    | Joint Venture Agreement dated March 31, 2008 between our
      company and New Jersey Mining Company (incorporated by reference from our
      Current Report on Form 8-K filed on July 28, 2008).                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                
|10.5    | Consulting Agreement dated April 1, 2008 between our
      company and Mr. James MacKenzie (incorporated by reference from our
      Quarterly Report on Form 10-QSB filed on August 14, 2008).                                                                                                                
|        |                                                                                                                                                                                                                                                                                                                
|10.6    | Share Cancellation/Return to Treasury Agreement with
      Donald James MacKenzie (incorporated by reference from our Current Report
      on Form 8-K filed on October 17, 2008).                                                                                                                             
|        |                                                                                                                                                                                                                                                                                                                
|10.7    | Share Cancellation/Return to Treasury Agreement with Greg
      Cowan (incorporated by reference from our Current Report on Form 8-K filed
      on October 17, 2008).                                                                                                                                         

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|(14)  | Code of Ethics                                                                                                                                   
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                  
|14.1  | Code of Ethics
        and Business Conduct (incorporated by reference from our Annual Report
        on Form 10-KSB filed on December 29, 2008).
|      |                                                                                                                                                  
|(21)  | Subsidiaries of the Registrant                                                                                                                   
|      |                                                                                                                                                  
|21.1  | Silverdale Mining Corp.                                                                                                                          
|      |                                                                                                                                                  
|(31)  | Section 302 Certifications                                                                                                                       
|      |                                                                                                                                                  
|31.1* | Section
      302 Certification of Principal Executive Officer.                                                                                  
|      |                                                                                                                                                  
|(32)  | Section 906 Certification                                                                                                                        
|      |                                                                                                                                                  
|32.1* | Section
      906 Certification of Principal Executive Officer.                                                                                  

*filed herewith

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

|                          | SILVERSTAR MINING CORP.                                
|------------------------- | -------------------------------------------------------
|                          | (Registrant)                                           
|                          |                                                        
|                          |                                                        
|Dated: September 14, 2010 | /s/
      Lawrence Siccia                              
|                          | Lawrence Siccia                                        
|                          | President, Chief Executive Officer and Director        
|                          | (Principal Executive Officer, Principal
      Financial
|                          | Officer and Principal Accounting Officer)              

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