UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-K





(Mark
One)


x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
Fiscal Year Ended January 31, 2010





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





For the
transition period from _______________ to ________________





Commission
File Number 000-52055





RED METAL RESOURCES
LTD.


(Exact
name of registrant as specified in its charter)





Nevada
            
            20-2138504(State
      or other jurisdiction of
              incorporation
      or organization)
            
            (I.R.S.
      Employer
              Identification
      No.)





195 Park Avenue Thunder Bay,
Ontario P7B 1B9


(Address
of principal executive offices)





Registrant’s
telephone number, including area code: (807) 345-5380





Securities
registered pursuant to Section 12(b) of the Act:





Title of each class
            
            Name
      of each exchange on
              which each is registeredN/A
            
            N/A





Securities
registered pursuant to Section 12(g) of the Act:  Common Stock, $0.001
par value





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.  Yes [   ] No [X]





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.  Yes [   ] No
[X]










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. Yes [] No [ X ]  The registrant has been
subject to the filing requirements since April 13, 2010.





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this
chapter) during the preceeding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes [   ] No
[   ]  The registrant is not yet subject to this
requirement.





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.





Large
      accelerated filer [   ]
            
            Accelerated
      filer                  
      [   ]Non-accelerated
      filer   [   ]
            
            Smaller
      reporting company [X](Do
      not check if a smaller reporting company)





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





State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter.  As of July 30, 2009, the aggregate market value of the
voting and non-voting common equity held by non-affiliates computed by reference
to the average bid and asked price of the common equity was
$1,246,066.





Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date.  The number of shares of the
registrant’s common stock, $0.001 par value per share, outstanding as of April
30, 2010 was 10,216,301.










TABLE
OF CONTENTS




NOTE ABOUT
      FORWARD-LOOKING STATEMENTS
            1ITEM 1: BUSINESS
            1GENERAL
            1UNPROVED MINERAL
      PROPERTIES
            3COMPETITION
            15RAW
    MATERIALS
            15DEPENDENCE ON MAJOR
      CUSTOMERS
            15PATENTS/TRADEMARKS/LICENSES/FRANCHISES/CONCESSIONS/ROYALTY
      AGREEMENTS/LABOR CONTRACTS
            16GOVERNMENT CONTROLS
      AND REGULATIONS
            16COSTS AND EFFECTS OF
      COMPLIANCE WITH ENVIRONMENTAL LAWS
            16EXPENDITURES ON
      RESEARCH AND DEVELOPMENT
            16NUMBER OF TOTAL
      EMPLOYEES AND NUMBER OF FULL-TIME EMPLOYEES
            16ITEM 1A: RISK FACTORS
            17ITEM 1B: UNRESOLVED
      STAFF COMMENTS
            21ITEM 2:
      PROPERTIES
            21ITEM 3:  LEGAL PROCEEDINGS
            22ITEM 4:  REMOVED AND RESERVED
            22ITEM 5: MARKET FOR
      REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
      PURCHASES OF EQUITY SECURITIES
            22ITEM 6:  SELECTED FINANCIAL
    DATA.
            23ITEM 7: MANAGEMENT’S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
      OPERATIONS
            24ITEM 7A:
      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            32ITEM 8: FINANCIAL
      STATEMENTS AND SUPPLEMENTARY DATA
            33INDEX TO FINANCIAL STATEMENTS
            33ITEM 9: CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
            34ITEM 9A(T):  CONTROLS AND
PROCEDURES
            34ITEM 9B:  OTHER INFORMATION
            35ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND
      CORPORATE GOVERNANCE
            35ITEM 11: EXECUTIVE COMPENSATION
            37ITEM 12: SECURITY OWNERSHIP OF CERTAIN
      BENEFICIAL OWNERS AND MANAGEMENT
            38ITEM 13: CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS, AND DIRECTOR INDEPENDENCE
            39DIRECTOR INDEPENDENCE
            39TRANSACTIONS WITH RELATED PERSONS
            39ITEM 14: PRINCIPAL ACCOUNTING FEES AND
    SERVICES
            42ITEM 15: EXHIBITS
            43










NOTE
ABOUT FORWARD-LOOKING STATEMENTS




This
annual report on Form 10-K contains “forward-looking
statements”.  These forward-looking statements are based on our
current expectations, assumptions, estimates and projections about our business
and our industry.  Words such as “believe,” “anticipate,” “expect,”
“intend,” “plan,” “may,” and other similar expressions identify forward-looking
statements.  In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward-looking statements.  These forward-looking statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those reflected in the forward-looking
statements.  Factors that might cause such a difference include, but
are not limited to, those discussed in the sections of this annual report titled
“Risk Factors”, “Business” and “Management’s Discussion and Analysis of
Financial Condition and Results of Operations”, as well as the
following:





·
              general
      economic conditions, because they may affect our ability to raise
      money


·
              our
      ability to raise enough money to continue our
  operations


·
              changes
      in regulatory requirements that adversely affect our
    business


·
              changes
      in the prices for minerals that adversely affect our
    business


·
              political
      changes in Chile, which could affect our interests
  there


·
              other
      uncertainties, all of which are difficult to predict and many of which are
      beyond our control





You are
cautioned not to place undue reliance on these forward-looking statements, which
relate only to events as of the date on which the statements are
made.  We undertake no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date of this annual report.  You should refer to and carefully
review the information in future documents we file with the Securities and
Exchange Commission.




ITEM
1: BUSINESS




General





Red Metal
Resources Ltd. was incorporated in Nevada on January 10, 2005 as Red Lake
Exploration, Inc.  We changed our name to Red Metal Resources Ltd. on
August 27, 2008.





On August
21, 2007, we formed Minera Polymet Limitada, a limited liability company, under
the laws of the Republic of Chile.  We own 99% of Polymet, which holds
our Chilean mineral property interests.  Under Chilean law, a resident
of Chile must be a shareholder in a limitada.  To meet this
requirement, 1% of Polymet is owned by a Chilean resident, an experienced
manager who has organized an office and other resources for us to use and is
Polymet’s legal representative in Chile. Polymet’s office is located in
Vallenar, III Region of Atacama, Chile.





Our
resident agent’s office is at 711 S. Carson Street, Suite 4, Carson City,
Nevada, 89701.  Our business office is at 195 Park Avenue, Thunder
Bay, Ontario, Canada, P7B 1B9.  Our telephone number is (807)
345-5380; our email address is info@redmetalresources.com;
and our web address is www.redmetalresources.com.  Information
on our web site is not a part of this annual report.





We are a
start-up exploration stage company without operations.  We are in the
business of acquiring and exploring mineral claims. All of our claims are
located in the III Region of Atacama, Chile. We have not determined whether
our claims contain mineral reserves that are economically
recoverable.   We have not produced revenues from our principal
business and are considered an exploration stage company as defined by
“Accounting and Reporting by Development Stage Enterprises.”




1





Our
ability to realize a return on our investment in mineral claims depends upon
whether we maintain the legal ownership of the claims. Title to mineral claims
involves risks inherent in the process of determining the validity of claims and
the ambiguous transfer history characteristic of many mineral
claims.  To the best of our knowledge, and after consultation with an
attorney knowledgeable in the practice of mining, we believe that we have taken
the steps necessary to ensure that we have good title to our mineral
claims.  We have had our contracts and deeds notarized, recorded in
the registry of mines and published in the mining bulletin and we review the
mining bulletin regularly to determine whether other parties have staked claims
over our ground.  We have discovered no such claims.





Chile’s mining and land tenure policies
were established to secure the property rights of both domestic and foreign
investors to stimulate development of mining in Chile. The government of Chile
owns all mineral resources, but exploration and exploitation of these resources
are permitted through exploration and mining concessions. A mineral concession
must pass through three stages to become a permanent mining concession, namely,
pedimento, manifestacion and mensura.





A pedimento is an initial exploration
claim. It can be placed on any area, whereas the survey to establish a permanent
mensura claim can only be completed on free areas where no other mensuras exist.
A pedimento is valid for a maximum of two years. At the end of this period it
may either be reduced in size by at least 50% and renewed for an additional two
years or entered into the manifestacion process to establish a permanent mensura
claim. New pedimentos can overlap existing pedimentos, but the pedimento with
the earliest filing date takes precedence providing the claim holder maintains
the pedimento in accordance with the mining code and the applicable
regulations.





Manifestacion is the process by which a
pedimento is converted to a permanent mining claim. At any stage during its
two-year life, the holder of a pedimento can submit a manifestacion application,
which is valid for 220 days. To begin the manifestacion process, the owner must
request a survey (mensura) within 220 days. After the survey request is
accepted, the owner has approximately 12 months to have the claim surveyed by a
government-licensed surveyor, inspected and approved by the national mining
service, and affirmed as a mensura (equivalent to a patented claim) by a judge.
Thereafter, an abstract describing the claim is published in Chile’s official
mining bulletin (published weekly) and 30 days later the claim is inscribed in
the appropriate mining registry.





A mensura is a permanent property right
that does not expire so long as the annual fees (patentes) are paid in a timely
manner. Failure to pay the patentes for an extended period can result in the
claim being listed for sale at auction, where a third party can acquire a claim
for the payment of the back taxes owed and a penalty.





In Chile, we have both pedimento and
mensura claims.  We cannot guarantee that any of our pedimento claims
will convert to mensura claims. Some of our pedimentos are still in the
registration process and some are in the manifestacion stage. We may decide, for
geologic, economic or other reasons, not to complete a registration or
manifestacion or to abandon a claim after it is registered.  Some of
our pedimentos may have been staked over other owners’ claims as permitted by
the Chilean mining code.  Our pedimento rights in these claims will
not crystallize unless the owners of the underlying claims fail to pay their
taxes or otherwise forfeit their interests in their claims.  Our
purpose in over-staking is to claim free ground around others’ claims and to
have the first right to forfeited claims if we want
them.  Over-staking is easier and less costly than staking available
ground around claims and ensures that all available ground is covered that might
otherwise be missed.





We have a close working relationship
with Minera Farellon Limitada, a Chilean company owned equally by Kevin
Mitchell, Polymet’s legal representative in Chile, and Richard Jeffs, the father
of our president, each of whom holds more than 5% of our shares of common stock
(see Table 19 below).  Minera Farellon investigates potential claims
and often ties them up, either by staking new claims or optioning or buying
others’ claims, all at its cost.  This gives us an opportunity to
review the claims to decide whether they are of interest to us.  If we
are interested, then we either proceed to acquire an interest in the property
directly from the owner, or, if Minera Farellon has already obtained an
interest, we take an option to acquire its interest. Minera Farellon, which is
located in the city of Vallenar, also provides all of our logistical support in
Vallenar under month-to-month contracts, which enables us to limit our operating
expenses to those needed from time to time.




2




Unproved
mineral properties





We have two principal properties—the
Farellon and Mateo—consisting of both mining claims and exploration claims that
we have assembled since the beginning of 2007.  We had options to
purchase the Santa Rosa and the Camila claims, which we abandoned in November
and December, 2008: the Camila after our initial exploration program indicated
more prospective ground lay to the northeast; and the Santa Rosa as we
considered the carrying cost too high in today’s market.





Principal
properties





Our principal properties as of the date
of this filing are set out in Table 1. These properties are accessible by road
from Vallenar as illustrated in Figure 1.




Table
      1: Principal propertiesHectaresProperty
            Percentage
      and type of claim
            Per
      claim
            TotalFarellonFarellon
      1 – 8 claim
            100%,
      mensura
            66Cecil
      1 – 49 claims
            100%,
      mensura
            230Cecil
      1 – 40 and Burghley 1 – 60 claims
            100%,
      manifestacion
            500
            796MateoMargarita
      claim
            100%,
      mensura
            56Che
      1 & 2 claims
            Option
      for 100%, mensura
            76Irene
      1 & 2 claims
            Letter
      of intent for 100%, mensura
            60Mateo
            100%,
      pedimentoa
            
            2,2002,996aThis
      pedimento is staked over the three mensuras to claim the mineral interests
      between them and includes the hectares covered by the mensuras. See Figure
      2 below.





3


Figure
      1: Location and access to principal
properties.





farellon
property





The
Farellon property consists of two groups of claims—the Farellon claim and the
Cecil and Burghley claims—which are not contiguous but lie within the historical
Carrizal Alto mining district southwest of the Carrizal Alto mine. Table 2
describes the claims and Figure 2 illustrates them.





Table
      2: Farellon propertyName
      of claim
            Type
      of claim
            HectaresFarellon
      1 – 8
            Mensura
            66Cecil
      1 – 49
            Mensura
            230Cecil
      1 – 40
            Manifestacion
            200Burghley
      1 – 60
            Manifestacion
            300796




4




Figure
      2: Farellon property





The
Farellon 1 – 8 is the first mineral claim that we acquired in Chile. It covers
66 hectares (163 acres) and is centered about 309,150 east and 6,888,800 south
UTM PSAD56 Zone 19 in Province of Huasco, Commune of Huasco, III Region of
Atacama, Chile.





We acquired the claim through an
assignment agreement between Polymet and Minera Farellon Limitada dated
September 25, 2007, as amended. Under the assignment agreement, Minera
Farellon agreed to assign to Polymet its option to buy the Farellon claim for
$250,000 payable by April 30, 2008.  We paid Minera Farellon for the
assignment on April 25, 2008, and assumed all of Minera Farellón’s rights and
obligations under the Farellon option agreement on the same day. We exercised
the option and bought the claim from the vendor for $300,000 on April 25, 2008.
We continue to owe a royalty equal to 1.5% of the net proceeds that we receive
from the processor to a maximum of $600,000, payable monthly and subject to a
monthly minimum of $1,000 when we start exploiting the minerals we extract from
the claim.  We can pay any unpaid balance of the royalty at any time.
We have not yet exploited the claim.





On September 17, 2008, we bought the
Cecil 1 – 49, Cecil 1 – 40 and Burghley 1 – 60 claims for $20,000 and $7,676 in
legal and transfer costs. The Cecil and Burghley claims cover 728 hectares and
are centered at 311,500 east and 6,890,000 south UTM PSAD56 Zone 19 and lie
approximately 1.7 kilometers north of the Farellon 1 – 8 border. The claims
cover a 1.8-kilometre strike length of a mineralized vein interpreted to be part
of the same mineralizing system as the Farellon 1 – 8 vein. An investigation
completed during the Farellon 1 – 8 acquisition uncovered a broad regional
reconnaissance sampling program completed in 1996 showing results from the areas
covered by the Cecil and Burghley claims. Results from the 1996 sampling show
copper and gold grades similar to grades returned from the Farellon vein,
indicating that the Cecil and Burghley claims could have similar mineralized
bodies.  On December 1, 2009, we initiated the manifestacion process
when we applied to convert the Cecil 1 – 40 and Burghley 1 – 60 exploration
(pedimento) claims to mining (mensura) claims.




5





Location and means
of access.The Farellon
property is approximately 40 kilometers west of the Pan-American Highway, about
one hour and 15 minutes by vehicle from the town of Vallenar which has a
population of 40,000 and modern facilities.  High-tension power lines
and a fiber-optic communications line run along the highway and both power and
rail are connected to the Cerro Colorado iron ore mine only 20 kilometers from
the Farellon property. The area is serviced from Copiapó, a city of 70,000 with
daily air and bus services to Santiago and other centers.





The Farellon property can be accessed
by driving approximately 20 kilometers north on the Pan-American Highway from
Vallenar then turning northwest towards Canto del Agua.  From Canto
del Agua, the Farellon property is approximately 10 kilometers along a
well-maintained gravel road.  There are numerous gravel roads in the
area, so a guide is necessary to access the property the first
time.  All of the roads are well maintained and can support large
machinery necessary to transport drills, backhoes and
bulldozers.  Water is readily available in Canto del Agua and could
probably be found on the Farellon property where all of the historic drill holes
intersected water.





Exploration history
..The Farellon property is
in the Carrizal Alto mining district and lies five kilometers along strike south
of the center of the historic Carrizal Alto copper-gold mine. Veins of the
Farellon property were exploited as part of the Carrizal Alto mines. We have
located no hard data summarizing all of the past mining activity, but tailings,
slag dumps and the size of the shafts and some of the shallow surface workings
are evidence of extensive historical mining.





Mine workings of various sizes are all
along the Farellon property, but only one modern exploration program has been
completed.  In 1996, the Farellon and two other veins, the Fortuna and
the Theresa, were explored by an Australian junior mining company under the name
Minera Stamford S.A.  Their exploration included a large mapping and
surface sampling program followed by a 34-hole RC drilling
program.  Of these 34 drill holes, 23 were drilled on the Farellon 1 –
8 claim.  The RC drilling program on the Farellon claim consistently
intersected oxide and sulphide facies mineralization along a two-kilometer-long
zone covering the Farellon claim and strike extents to the
south.  Mineralization is two to 35 meters wide with an average width
of five meters.  The mineralized zone consists of one or more discrete
veins and, in places, stockwork veining and mineralization.  While
drilling covered the length of the property, gaps up to 350 meters are untested
and infill drilling is required to confirm an economic ore body. Table 3
presents the significant intersections from the 23 holes drilled on the Farellon
claim in the 1996 drilling.




6





Table
      3: Farellon historic significant intersections (1996)Drill
      hole
              FAR–96
            Significant
      intervals (m)
            Assay
      resultsFrom
            To
            Length
            Gold
      (g/t)
            Copper
      (%)
            Cobalt
      (%)06
            49
            54
            5
            0.15
            0.73
            0.0107
            25
            34
            9
            0.38
            1.05
            0.0209
            57
            84
            27
            0.51
            0.91
            0.03010
            31
            36
            5
            1.00
            0.68
            0.04011
            20
            26
            6
            0.67
            0.46
            0.02013
            86
            93
            7
            0.87
            1.68
            0.04014
            77
            83
            6
            0.66
            0.85
            0.06015
            59
            79
            20
            0.99
            0.98
            0.0699
            109
            10
            0.18
            1.02
            0.03016
            24
            26
            2
            0.95
            1.57
            0.0264
            70
            6
            0.73
            0.81
            0.07020
            14
            16
            2
            0.46
            1.85
            0.0539
            43
            4
            0.75
            0.90
            0.03021
            22
            25
            3
            4.17
            5.29
            0.11022
            29
            39
            10
            1.53
            1.31
            0.04100
            108
            8
            3.72
            2.49
            0.06023
            50
            53
            3
            0.48
            1.10
            0.0659
            64
            5
            0.28
            0.78
            0.03132
            147
            15
            0.60
            1.42
            0.03024
            33
            36
            3
            0.94
            2.89
            0.06025
            65
            85
            20
            0.97
            1.22
            0.02028
            55
            58
            3
            0.12
            0.52
            0.06029
            30
            34
            4
            0.18
            1.15
            0.0782
            87
            5
            0.09
            0.96
            0.01





Geology .The Farellon area
has two major lithological units: Palaeozoic metamorphic sediments consisting of
schists, phyllites and quartzites; and the Franja Central
diorites.  The metamorphosed sediments outcrop in the western part of
the property and have been metamorphosed to lower greenschist facies and then
extensively overprinted by hydrothermal alteration.  Hydrothermal
alteration is directly associated with the shear zone.  The diorite
underlies the eastern part of the project area and has been extensively intruded
by northeasterly trending intermediate mafic dykes.  At the Farellon
property, a small stock-like felsic body named Pan de Azucar intrudes the
diorite.  The intrusive relationship between the diorite and
metamorphic sediments always appear to be tectonic.  Within the
property and at the main Carrizal Alto workings to the north, the major
mineralization is intimately related to the south-southwest trending mylonitic
sheared contact between the metamorphic sediments and the
diorite.  The shear is considered a splay of the main Atacama Fault
Zone and dips 30o to 65o west. This contact parallels the regional geological
trend and coincides with a major lineament which extends for hundreds of
kilometers.  The sheared contact is 50 meters to 200 meters wide over
the 1.7-kilometre strike length of the Farellon property.  Veins are
typically three to 15 meters wide, striking south-southwest and dipping
approximately 65 degrees to the northwest.





Mineralization.The Farellon
property lies within the Candelaria iron oxide-copper-gold (IOCG) belt of
Chile. Ore bodies in the belt occur in veins, breccias, stringer bodies and
layer parallel replacement bodies and are typically associated with north-south
trending faults related to the Atacama Fault Zone.  All IOCG deposits
have a strong association with iron oxides in the form of hematite or
magnetite.  In the Candelaria region, larger ore bodies are located
where the fault zones intersect a lithological contact with significant
rheological contrast such as a sedimentary and volcanic intrusive
contact.





Economic
IOCG deposits are generally polymetallic and can include iron, copper, gold,
zinc, lead, uranium and cobalt among others.  The Farellon property
historically has been exploited for copper and lesser gold.  Cobalt
mineralization was observed during the 1996–97 exploration work, but we have
found no records of cobalt extraction.




7





Drilling.In September 2009, we
completed a 725-metre RC drilling program on the Farellon property. Table 4
summarizes the results of our drilling.





The
drilling program was designed to confirm historic drilling results and test
mineralization down dip of previous drilling. Of the five holes drilled, three
holes—FAR–09–A, B and E—tested historic intersections FAR–96–09, 021 and 022
summarized in Table 3; and two—FAR–09–C and D—tested depth extents of the
previously known mineralization. Results of the drilling show grades and widths
of mineralization consistent with historic exploration results and have given us
valuable geological information showing the possibility of a shallow, 30-degree
dip of the mineralization.





Table
      4: Farellon drilling results (2009)Drill
      hole
              FAR
      – 09
            Assay
      interval (m)
            
            Assay
      gradeFrom
            To
            Core
      length
            
            Gold
      (ppm)
            Copper
      (%)A
            
            31
            34
            3.0
            
            0.81
            1.9979
            109
            30.0
            
            0.18
            0.62including
            97
            106
            9.0
            
            0.44
            1.63B
            
            56
            96
            40.0
            
            0.27
            0.55including
            56
            63
            7.0
            
            0.22
            0.6674
            96
            22.0
            
            0.42
            0.79including
            75
            86
            11.0
            
            0.67
            1.35C
            
            73
            103
            30.0
            
            0.79
            0.55including
            77
            82
            5.0
            
            4.16
            2.57D
            
            95
            134
            39.0
            
            0.11
            0.58including
            95
            103
            8.0
            
            0.33
            2.02E
            
            25
            30
            5.0
            
            0.54
            1.3565
            68
            3.0
            
            0.58
            1.46





We
commissioned Micon International Limited to prepare a technical report that
complies with Canadian National Instrument 43-101 summarizing the information
obtained from this drilling program. Micon concluded that our drilling confirmed
the general location and tenure of the mineralization identified during the 1996
drilling program and noted some disparities between historical 1996 gold assays
and the recent 2009 gold assays in two of the drill holes—FAR–09–A and E. In
FAR–09–E, the disparity between the historical 1996 and the recent 2009 assays
also occurs in the copper assays. Micon recommended that we investigate these
disparities during the next phase of drilling.





The
drilling identified that the copper and gold mineralization exhibited a direct
correlation in both location and relative intensity and provided useful
information for outlining the relative location and spacing of drill holes in
our next exploration programs.





All of
our 2009 drill holes intersected oxide facies mineralization with only minor
amounts of sulphides observed in drill hole FAR–09–D. When we have established
the general trend of the mineralization we can conduct some drilling to identify
the oxide-sulphide interface.





Micon
recommended that we conduct a two-phase drilling program. The first phase would
consist of approximately 1,200 meters of diamond drilling to assist in defining
the structural controls on the mineralization, which could have been
misinterpreted in the past due to the limited geological information obtained
from the historic RC drilling, and the depth and nature of the sulphide
mineralization.  The estimated cost of this phase is
$220,000.





If this
phase is successful, Micon recommended that we conduct a much larger phase of
exploration consisting of 5,000 meters of diamond drilling and 10,000 meters of
RC drilling, and geophysical surveys and geological mapping. A geophysics survey
using both magnetics and induced polarization will help to identify further
mineralized structures on the property that may not have been noticed in the
historic mapping. A phase two drill program would be at defined spacing to
outline the continuity of mineralization leading to a 3D model and initial
resource estimation.  The depth of the drilling would be dependent on
the results of the phase one drilling program. The estimated cost of this phase
is $1.9 million.




8





QA/QC, sampling
procedures and analytical methods.We conducted sampling on one-meter
intervals, which is generally the industry-standard sampling practice for RC
drilling. Sampling started at the collar of the hole and proceeded to the toe or
bottom of the drill hole on one-meter increments. Generally, the sample recovery
was good to excellent for the 2009 drilling program. Table 4 summarizes
significant assay results.  They are reported as drill lengths as we
have not established the width of the mineralized zone.





We took the cuttings for each one-meter
sample from the cyclone and passed them through a splitter. We took two samples
for each sample interval: a larger sample (approximately 15 kg) as a backup
sample; and a smaller sample (from 2 to 4 kg), which we sent to the assay
laboratory for analysis.  Both plastic sample bags were clearly marked
with the drill hole identification letter and the depth of the sample. We later
added Acme Laboratories’ sample tickets and recorded them in both the log and
the stubs of the ticket book for precise number sample control correlation. We
took washed drill chips or cuttings from each sample interval of a meter and
placed them in cutting tray boxes to record the geology of each interval. The
maintenance of cuttings in a tray box is similar to keeping half of the core for
each sample interval in a core drilling program.





We stapled a paper ticket on the inside
of each sample bag destined for the assay lab, wrote the number twice on each
bag with a permanent ink marker, and sealed each bag with two rows of staples.
We attended to each sample individually and placed them in order in poly woven
sacks which were then sealed.





We saved the backup or representative
samples for every meter of drilling in heavy duty sample bags and stored them in
Canto del Agua at our field house. We stored the sample bags under heavy-duty
dark tarps to protect them from deterioration under the strong sunlight. We
clearly marked all samples with drillhole and meterage information and stapled
an extra sample ticket to each sample bag.





We stored the chip trays, backup
samples and the assay samples under lock and key in a shed at our field house
until they were shipped. We trucked the assay samples contained in the sealed
poly woven sacks to Vallenar and then shipped them via Pullman Cargo to the Acme
lab in Santiago where they were prepared and assayed.





Our quality assurance, quality control
(QA/QC) protocol consists of the addition of standards, blanks and laboratory
duplicates to the sample stream.  We inserted these into the sample
series using the same number sequence as the samples themselves.  One
of the QA/QC check samples is inserted every 25 samples and it alternates
between standards, blanks and laboratory duplicates.  Table 5
summarizes the type and frequency of the QA/QC samples inserted at the various
preparation stages.





Table
      5: Type and frequency of QA/QC samplesStage
            Type
            Frequency
            Description
            Inserted
      byAfter
      splitting
            Standard
            1
      per 75 samples
            1
      of 3 standards
            Red
      MetalAfter
      splitting
            Blank
            1
      per 75 samples
            Pulp
      blank
            Red
      MetalAfter
      lab crushing
            Crush
      duplicate
            1
      per 75 samples
            Second
      50 gm split
            Acme
      Laboratory





We bought three standards for the
drilling program—one gold standard and two copper-gold multi-element standards.
We bought the gold standard from RockLabs Limited in Auckland, New Zealand, and
the copper-gold multi-element standards from Analytical Solutions Ltd. in
Toronto, Canada.  Table 6 summarizes the assay standards we used and
the number of each standard sent for analysis.




9




Table
      6: Summary of standard reference materialType
      of
                reference
              Number
      of
                standards
              
              
              
              
              Recommended
              95%
      Confidence levelmaterial
              sent
              Label
              Element
              value
              Low
              HighGold
      standard
              3
              
              SG-31
              
              Gold
              
              0.996
      ppm
              
              0.985
      ppm
              
              1.007
      ppmCopper-gold
      multi-element standard
              4
              
              OREAS
      94
              
              Copper
      Cobalt
              
              1.14%
                23.1
      ppm
              
              1.12%
                22.2
      ppm
              
              1.17%
                24.0
      ppmCopper-gold
      multi-element standard
              3
              
              OREAS
      96b
              
              Copper
      Cobalt
              
              3.93%
                49.9
      ppm
              
              3.87%
                47.6
      ppm
              
              3.99%
                52.1
      ppm10





We bought blank pulp samples from
Accurassay Laboratories in Thunder Bay, Ontario, Canada. We inserted the blank
pulp samples sequentially numbered on a ratio of one sample for every 75
samples.





We asked Acme to split one kilogram of
material after crushing from the indicated sample to be analyzed and employ
crush duplicates.  We included an empty sample bag containing the
duplicate’s sample tag in the sample shipment sent to Acme.





We submitted 10 standard reference
samples to Acme in Santiago for analysis. Table 7 summarizes the assay results.
The number of standard or reference samples is statistically too small upon
which to base any definitive conclusions. However, the results appear to
indicate that the assay procedures for both copper and gold at Acme in Santiago
were well conducted.





Table
      7: Standard sample resultsStandard
      reference
              sample
      ID
            Drill
      hole
              number
            Sample
      number
            Assay
      resultsCopper
              (%)
            Gold
              (ppm)SG-31
            FAR-09-A
            200275
            –
            0.926FAR-09-D
            200425
            –
            0.971FAR-09-D
            200650
            –
            0.949OREAS
      94
            FAR-09-B
            200125
            1.105
            –FAR-09-A
            200350
            1.163
            –FAR-09-D
            200500
            1.115
            –FAR-09-C
            200725
            1.131
            –OREAS
      96b
            FAR-09-E
            200200
            3.906
            –FAR-09-D
            200575
            3.946
            –FAR-09-C
            200800
            4.155
            –





We submitted 10 blank samples to Acme
in Santiago for analysis. Table 8 summarizes the assay results. While 10 samples
are statistically too few samples upon which to normally base any definitive
conclusions, all of the samples returned assays below or at the detection limit.
The sample preparation at Acme appears to have been well conducted and with no
contamination or other potential errors introduced during the sample preparation
phase of the assaying process. We will have to analyze more samples in order to
build up enough statistical data to conclusively demonstrate this
statement.




10





Table
      8:  Blank sample resultsDrill
      hole
              Number
            Sample
              number
            Assay
      resultsCopper
              (%)
            Gold
              (ppm)FAR-09-B
            200150
            0.001
            0.005FAR-09-E
            200225
            0.001
            0.005FAR-09-A
            200300
            0.001
            0.005FAR-09-A
            200375
            0.001
            0.005FAR-09-D
            200450
            0.001
            0.005FAR-09-D
            200525
            0.001
            0.005FAR-09-D
            200600
            0.001
            0.005FAR-09-D
            200675
            0.001
            0.005FAR-09-C
            200750
            0.001
            0.005FAR-09-C
            200825
            0.001
            0.005





We submitted nine crush duplicate
samples to Acme in Santiago for analysis. Table 9 summarizes the assay
results.





Table
      9: Crush duplicate resultsDrill
      hole number
            Sample
              number
            Original
      assay
              results
            Duplicate
      assay
              results
            Mean
            Absolute
              differenceCopper
      (%)
            Gold
      (ppm)
            Copper
      (%)
            Gold
      (ppm)
            Copper
            Gold
            Copper
            GoldFAR-09-B
            200174
            0.569
            1.279
            0.562
            1.107
            0.5655
            1.193
            0.007
            0.172FAR-09-E
            200249
            0.007
            0.005
            0.006
            0.005
            0.0065
            0.005
            0.001
            0.000FAR-09-A
            200324
            0.044
            0.01
            0.044
            0.009
            0.044
            0.0095
            0.000
            0.001FAR-09-D
            200399
            0.004
            0.006
            0.004
            0.005
            0.004
            0.0055
            0.000
            0.001FAR-09-D
            200474
            0.031
            0.013
            0.031
            0.011
            0.031
            0.012
            0.000
            0.002FAR-09-D
            200549
            0.086
            0.012
            0.086
            0.014
            0.086
            0.013
            0.000
            0.002FAR-09-D
            200624
            0.018
            0.008
            0.017
            0.006
            0.0175
            0.007
            0.001
            0.002FAR-09-C
            200699
            0.002
            0.009
            0.002
            0.009
            0.002
            0.009
            0.000
            0.000FAR-09-C
            200774
            2.214
            2.016
            2.377
            2.114
            2.2955
            2.065
            0.163
            0.098





mateo
property





We have assembled a group of claims in
the vicinity of the abandoned Camila claims: the Che Uno and Che Dos, the
Margarita, and the Irene Uno and Irene Dos mining claims, and the Mateo
exploration claims as described in Table 10 and illustrated in Figure
3.  The Mateo exploration claims overlap the Che, Margarita and Irene
claims to secure the areas around the claims. Some of them may overlap others’
prior claims. We will acquire rights to these overlapped prior claims only
if the owners forfeit their rights, and we will exercise our rights only if we
want the property. We acquired all of these claims for the same geological
reasons and consider them one property, which we call the Mateo
property.




11




Table
      10: Mateo propertyClaim
            TypeMensura
              (ha)
            Pedimentoa
              (ha)Che
      Uno 1 – 8
            32Che
      Dos 1 – 10
            44Margarita
      1 – 14
            56Irene
      Uno 1 – 2
            10Irene
      Dos 1 – 10
            50Mateo
      1
            
            300Mateo
      2
            
            300Mateo
      3
            
            200Mateo
      9
            
            300Mateo
      10
            
            300Mateo
      12
            
            200Mateo
      13
            
            200Mateo
      14
            
            300Mateo
      15
            
            100192
            2,200aThe
      pedimentos are staked over the mensuras to claim the areas between the
      mensuras. See Figure 3.





Figure
      3: Mateo property





che
uno and che dos claims





On
October 10, 2008 Minera Farellon granted us the option to purchase the Che Uno
and Dos claims. The Che claims cover 76 hectares centered about 339,002 east and
6,838,450 south UTM PSAD56 Zone 19. They are in the northwest corner of the
Mateo property.  On December 2, 2008 we paid $444 to acquire the
option and $334 in legal and transfer costs, and must pay $20,000 by April 10,
2011 to exercise the option and complete our acquisition of the
claims.




12





Minera
Farellon agreed to pay the former owner a royalty equal to 1% of the net
proceeds from the sale of ore to a maximum of $100,000 with no monthly minimum.
We will assume this royalty obligation if we exercise our option and buy the
claims.





margarita
claim





We bought
the Margarita mining claim on November 27, 2008 through a public auction and at
October 31, 2009 had spent a total of $16,677 (including legal and registration
costs) for this claim and owe the outstanding property taxes of approximately
$700.  The Margarita claim covers 56 hectares centered around 340,353
east and 6,838,347 south UTM PSAD56 Zone 19 located within the northeast corner
of the Mateo claim.





irene
uno and irene dos claims





We can
buy the Irene Uno and Dos mining claims from Minera Farellon according to a
letter of intent dated February 2, 2009.  To formalize our right to
buy these claims, we must enter into a purchase agreement with Minera Farellon.
We are finalizing the terms with Minera Farellon with a view to executing the
purchase agreement by the end of May 2010. The purchase price is 21,000,000
Chilean pesos (approximately $40,000) and the owner’s legal, transfer, holding
and other costs. The Irene claims cover 60 hectares centered about 341,002 east
and 6,838,101 south UTM PSAD56 Zone 19, are located within the northeast corner
of the Mateo property, and share their western border with the Margarita
claim.





mateo
claims





The Mateo
claims consist of nine exploration claims—Mateo 1 – 3, 9, 10 and 12 –
15—covering 2,200 hectares, which we staked between November, 2008 and
September, 2009. The claims are centered about 337,675 east and 6,837,600 south
UTM PSAD56 Zone 19 and cover a five-kilometer strike length of intensely altered
volcanics with significant massive sulphide mineralization.





We can
explore these claims for two years from the date of staking before applying to
convert them to mining claims. We cannot guarantee that we will be able to
convert all of these exploration claims into mining claims.





Location and means of access.
The Mateo property is centered about 337,675 east and 6,837,600 south UTM PSAD56
Zone 19 approximately 10 kilometers east of Vallenar with the highest point at
approximately 1,050 meters above sea level.  A well-used road leads
from the city of Vallenar and crosses through the middle of the west half of the
properties and along the southern border of the east half of the
properties.  Many unmarked dirt roads in the area provide reliable
access to most areas of Mateo.





Description. The Mateo
property is a copper-gold-silver project that lies in the Candelaria IOCG belt
in the Chilean Coastal Cordillera.  The Mateo property has undergone
limited modern exploration including surface and underground RC drilling and
artisanal mining on three separate mine sites, the Irene, Margarita and Santa
Theresa mines.  We have reviewed all available records of work
completed to date, including some records of the mining
activity. Our interpretation of the work completed to date indicates
the potential for an economic ore body in mineralized mantos and skarn-style
mineralization associated with IOCG deposits.





Exploration history.
Historical work includes several drill programs completed by different Chilean
private and public companies.  Records exist from eight drillholes
completed in 1994 on the Irene mine and include two full reports written by
ENAMI (the Chilean national mining company) with interpretation of
mineralization and recommendations for further exploration and mining
work.




13





The Irene
mine was investigated by ENAMI in 1994.  Work completed during this
time included surface RC drilling, including 490 meters in four RC drillholes,
and underground diamond drilling, including 220 meters in four
drillholes.  We obtained ENAMI’s reports of mining activities from
1994 through 1997.  Approximately 11,875 tonnes of rock were mined in
that time averaging 4.3% copper, 61.9 grams per tonne silver, and 1.01 grams per
tonne gold.





A private
Chilean company, Minera Taurus, drilled 16 RC holes on the east end of the Irene
claim, but we have no record from this drilling. An unknown company built a
portal 250 meters long and approximately three meters wide by three meters high.
The portal leads to three mined-out chimneys connected to the surface providing
ventilation channels.  On a recent property visit with ENAMI’s
geologists, we found an extension of the mineralized zone at the base of the
tunnel below showing the potential for mineral resources.





Geology.Geologically, the
Mateo property is located within the brittle-ductile north-south-trending
Atacama Fault System that is known to host many of the major deposits in the
Candelaria IOCG belt.  Known mineralization is hosted in an andesitic
volcaniclastic sequence assigned to the Bandurrias Formation. Widespread iron
oxide and potassic alteration indicates an IOCG mineralizing system further
supported by significant amounts of economic grade mineralization.





Generative
claims





As an
exploration company, from time to time we will stake, purchase or option claims
to allow ourselves the time and access to fully consider the geological
potential of the claims. This allows us to generate new properties in areas that
have not been explored. We have conducted groundwork on numerous generative
claims of interest to us in the areas of our principal properties. We have
acquired several of these claims, have options to acquire others, and have
staked claims in the same areas. We continue to compile data on and review other
claims and discuss terms with various owners.





Abandoned
claims





During
the last 24 months, we acquired and abandoned the Camila Breccia and the Santa
Rosa mining claims and several generative claims.





camila
breccia claims





On February 1, 2008 Minera Farellon
granted us an option to acquire its option to buy the Camila claims. Under the
option agreement, the acquisition price was $455,000 payable in stages on
various dates between February 1, 2008 and December 7, 2009. The option
agreement included a royalty equal to 6% of the net sales of minerals extracted
from the claims to a maximum of $1 million payable monthly once exploitation
began and payable in full by December 7, 2011. The option was exercisable on
December 1, 2008.  We paid Minera Farellon $5,000 on February 1, 2008
and $50,000 on May 23, 2008.  We reviewed the results of the 2008
drilling program and reconnaissance mapping in the area and decided that better
potential for a mineralized ore body lies to the northeast of the Camila claims
where we have staked the Mateo claims.  We did not exploit the claims,
did not exercise the option and have written off $55,000 in acquisition
costs.





santa
rosa claims





On
February 1, 2008 Minera Farellon granted us an option to acquire its option to
buy the Santa Rosa claims. The acquisition price was $419,500 payable in stages
between February 1, 2008 and June, 2011, and included a royalty equal to 1.5% of
the net sales of minerals extracted from the claims to a maximum of
$590,000.  We paid Mineral Farellon $9,500 on February 1, 2008 to
acquire the option, $8,500 per month from March 5, 2008 to July 5, 2008, and
$50,000 on August 5, 2008 to exercise the option.  We then paid the
owner $7,500 per month from August 2008 to November 2009. The total of these
payments is $132,000.




14





Minera
Farellon maintained the right to mine the claims and paid us a royalty equal to
5% of the net proceeds from the sale of ore while we were making minimum monthly
payments to the vendor. On October 27, 2008 Minera Farellon ceased mining
operations on the Santa Rosa and ended all of our royalty revenue and
obligations. During the year ended January 31, 2009, Minera Farellon paid us
approximately $16,000 on account of the royalty.





The Santa
Rosa claims consist of two mining and exploration claims totaling 110
hectares.  In the summer of 2008, we completed three diamond drill
holes totaling 311 meters.  Significant results are summarized in
Table 11.




Table
      11: Santa Rosa significant intersectionsDDH
            Meters
            Copper
              (%)
            Gold
              (grams/tonne)SRA-08-002
            1.05
            1.37
            0.17SRA-08-002
            1.00
            1.32
            0.15SRA-08-003
            7.40
            1.07
            0.14





We
considered the purchase price too high, given today’s market, and terminated the
agreement in November 2008, writing off $132,000 in acquisition costs that we
had paid to maintain the option.  We remain interested in the claims
and are continuing to discuss new terms with the owner.





generative
claims




On
November 27, 2008 we attended a government auction of mineral claims and
acquired the Cañas, Estrella and Caminada generative claims. The purchase
price for each claim was equal to the fiscal tax unpaid for the years 1997 to
1999 inclusive and a six percent commission, both of which we paid to the
government of Chile. At October 31, 2009, we abandoned these claims, as the
outstanding back taxes that we would have had to pay to maintain our interest in
the claims exceeded our assessment of their fair market value, we hadn’t the
capital to continue to maintain them, or they didn’t have sufficient geological
potential.  We wrote off $187,000 in acquisition costs on abandoned
generative claims during the year ended January 31, 2009, and $29,685 during the
year ended January 31, 2010.




Competition




The
mineral exploration business is an extremely competitive industry.  We
are competing with many other exploration companies looking for
minerals.  We are one of the smallest exploration companies and a very
small participant in the mineral exploration business.  Being a junior
mineral exploration company, we compete with other similar companies for
financing and joint venture partners, and for resources such as professional
geologists, camp staff, helicopters and mineral exploration contractors and
supplies.




Raw
materials




The raw
materials for our exploration programs include camp equipment, hand exploration
tools, sample bags, first aid supplies, groceries and propane.  All of
these types of materials are readily available from a variety of
suppliers.




Dependence
on major customers




We have
no customers.  Our first customer likely will be ENAMI, which refines
and smelts copper from the ore that it buys from Chile’s small- and medium-scale
miners.  ENAMI is located in Vallenar.  We could also
deliver our ore to a private smelter located about fifty kilometers south of
Vallenar.




15




Patents/Trademarks/Licenses/Franchises/Concessions/Royalty
agreements/Labor Contracts




We have
no intellectual property such as patents or trademarks, and, other than the
royalties that we must pay if we begin to exploit our Chilean properties, no
royalty agreements or labor contracts.  We were receiving a 5% royalty
from Minera Farellon, which had the right to mine our Santa Rosa claims. Minera
Farellon stopped mining on October 27, 2008, thus ending our royalty revenue. On
November 18, 2008, we terminated our option to purchase the Santa
Rosa.




Government
controls and regulations




We are
not required to obtain permits or submit operational plans in order to conduct
exploration on our properties.  The mining business, however, is
subject to various levels of government controls and regulations, which are
supplemented and revised from time to time.  We cannot predict what
additional legislation or revisions might be proposed that could affect our
business or when any proposals, if enacted, might become
effective.  Such changes, however, could require more operating
capital and expenditures and could prevent or delay some of our
operations.





The
various levels of government controls and regulations address, among other
things, the environmental impact of mining and mineral processing
operations.  For mining and processing, legislation and regulations in
various jurisdictions establish performance standards, air and water quality
emission standards and other design or operational requirements for various
components of operations, including health and safety
standards.  Legislation and regulations also establish requirements
for decommissioning, reclaiming and rehabilitating mining properties following
the cessation of operations, and may require that some former mining properties
be managed for long periods of time. As we are not mining or processing,
and are unlikely to for some years, we have not investigated these
regulations.





None of
the exploration work that we have completed to date requires an environmental
permit. We must repair any damage done to the land during exploration. Some of
our claims are within the boundaries of a national park. According to the Mining
Code of Chile, we will have to get written authorization from the government to
mine or complete any exploration work within the park boundaries. We have
requested advice on this issue from our Chilean mining lawyer, but have no plans
to explore within the boundaries of the park.





If our
operations in Chile become profitable, any earnings that we remit abroad will be
subject to Chilean withholding tax.





We
believe that we are in substantial compliance with all material government
controls and regulations at each of our mineral claims.





Costs
and effects of compliance with environmental laws





We have
incurred no costs to date for compliance with environmental laws for our
exploration programs on any of our claims.





Expenditures
on research and development





We have
incurred no research or development costs since our inception on January 10,
2005.





Number
of total employees and number of full-time employees





Red Metal
does not have any employees. Caitlin Jeffs and Michael Thompson, both of
whom are directors and officers, John daCosta, who is an officer, and Kevin
Mitchell, who is Polymet’s legal representative and manager in Chile, all
provide their services to the company as independent consultants. Polymet
retains one full-time employee who provides administration work to our office in
Chile and contracts geo-technical services as needed.  We intend to
contract for the services of geologists, prospectors and other consultants as we
require them to conduct our exploration programs.




16





ITEM
1A: RISK FACTORS





In
addition to the factors discussed elsewhere in this annual report, the following
risks and uncertainties could materially adversely affect our business,
financial condition and results of operations.  Additional risks and
uncertainties not presently known to us or that we currently deem immaterial
also may impair our business operations and financial condition.





During
the fiscal year ended January 31, 2009 we earned $15,658 in royalty revenue
while our operating expenses totalled $1,399,542.  During the fiscal
year ended January 31, 2010 we earned no royalty revenue while our operating
expenses totalled $710,745.  If we do not find sources of financing as
and when we need it, we may be required to cease our operations.





Mineral
exploration and development are very expensive.  During the fiscal
year that ended on January 31, 2009, we earned a total of $15,658 in royalty
revenue, while our operating expenses totalled $1,399,542.  Our net
loss for the year ended January 31, 2009 was $1,383,884.  During the
fiscal year that ended on January 31, 2010 we earned no royalty revenue while
our operating expenses totalled $710,745. Our net loss for the year ended
January 31, 2010 was $710,745, which resulted in a total accumulated loss of
$2,384,201 since inception.  We have limited financial
resources.  As of January 31, 2010 we had cash of
$7,951.  Since our inception we have sold our securities and borrowed
money to fund our operations.  Our ability to continue our operations,
including exploring and developing our properties, will depend on our ability to
generate operating revenue or obtain additional financing.  If
additional financing is not available, we may have to postpone the development
of our mineral claims or sell them, or we may be required to cease our
operations.





Our
auditors have expressed substantial doubt about our ability to continue as a
going concern; as a result we could have difficulty finding additional
financing.





Our
financial statements have been prepared assuming that we will continue as a
going concern.   Except for approximately $16,000 of royalty income
that we received during the last fiscal year from Minera Farellón, we have not
generated any revenue since inception and have accumulated losses.  As
a result, our auditors have expressed substantial doubt about our ability to
continue as a going concern.  Our ability to continue our operations
depends on our ability to complete equity or debt financings or generate
profitable operations.  Such financings may not be available or may
not be available on reasonable terms.  Our financial statements do not
include any adjustments that could result from the outcome of this
uncertainty.





Unfavorable
economic conditions may have a material adverse effect on us since raising
capital to continue our operations could be more difficult.





Uncertainty
and negative trends in general economic conditions in the United States and
abroad, including significant tightening of credit markets and a general decline
in the value of real property, have created a difficult operating environment
for our businesses and other companies in our industry. Depending upon the
ultimate severity and duration of any economic downturn, the resulting effects
on Red Metal could be materially adverse if it is unable to raise the working
capital required to carry out its business plan.





If
we do not have the funds to make required payments on our mineral claims, we
could lose our rights to the claims.





To retain
our interests in our mineral claims for the next 12 months, we have to pay
$20,000 to the property owner to acquire the Che claims, 21,000,000 pesos
($40,000) to purchase the Irene claim and approximately $10,000 in property
taxes to the government of Chile.  If we do not have the funds to make
these payments as they come due, we may lose our interests in three of our
claims.




17





Our
business was formed in January 2005 and our operations, to date, have earned
only minimal revenues.  Due to the high costs of acquiring and
exploring claims, we may never be profitable.  We expect to continue
to incur operating losses during the next 12 months.





We were
incorporated on January 10, 2005 and to date have been involved primarily in
organizational activities, acquiring and exploring mineral claims and obtaining
financing.  We have earned minimal revenues and we are not
profitable.  Whether we will be successful as a mining company must be
considered in light of the costs, difficulties, complications and delays
associated with our proposed exploration programs.  These potential
problems include, but are not limited to, finding claims with mineral deposits
that can be cost-effectively mined, the costs associated with acquiring the
properties and the unavailability of human or equipment resources.  We
have a very short history and had no more than minimal operations until April
25, 2008 when we acquired the mining claims known as Farellon Alto 1 – 8 in
Chile.  We cannot assure you that we will ever generate significant
revenue from our operations or realize a profit.  We expect to
continue to incur operating losses during the next 12 months.





If
we do not find a joint venture partner for the development of our mineral
claims, we may not be able to develop them.





If our
exploration programs are successful, we may try to form a joint venture with a
partner for further exploration and development of our mineral
claims.  We would face competition from other junior mineral resource
exploration companies who have claims that they believe have more potential for
higher economic returns and lower investment costs.  If we entered
into a joint venture, we would probably have to assign a percentage of our
interest in our mineral claims to the joint venture partner.  If we
are unable to find a suitable joint venture partner, we could fail to find the
required funding for further exploration and eventual production.





In
some instances members of the board of directors or an officer may be liable for
losses incurred by holders of our common stock.  If a shareholder were
to prevail in such an action in the U.S., it may be difficult for the
shareholder to enforce the judgment against any of our directors or officers,
who are not U.S. residents.





In
certain instances, such as trading securities based on material non-public
information, a director may incur liability to shareholders for losses sustained
by the shareholders as a result of the director’s or officer’s illegal or
negligent activity.  However, all of our directors and officers live
and maintain a substantial portion of their assets outside the
U.S.  As a result it may be difficult or impossible to effect service
of process within the U.S. upon these directors and officers or to enforce in
the courts any judgment obtained here against them predicated upon any civil
liability provisions of the U.S. federal securities laws.





Foreign
courts may not entertain original actions predicated solely upon U.S. federal
securities laws against these directors; and judgments predicated upon any civil
liability provisions of the U.S. federal securities laws may not be directly
enforceable in foreign countries.





As a
result of the foregoing, it may be difficult or impossible for a shareholder to
recover from any of these directors or officers if, in fact, the shareholder is
damaged as a result of the negligent or illegal activity of an officer or
director.





Mineral
exploration is highly speculative and risky: we might not find mineral deposits
that can be extracted cost effectively on our claims.





Exploration
for mineral deposits is a speculative venture involving substantial
risk.  Problems such as unusual and unexpected rock formations often
result in unsuccessful exploration efforts.  We cannot assure you that
our claims contain mineral deposits that can be extracted cost
effectively.




18




Mineral
exploration is hazardous.  We could incur liability or damages as we
conduct our business due to the dangers inherent in mineral
exploration.





The
search for minerals is hazardous.  We could become liable for hazards
such as pollution, cave-ins and other hazards against which we cannot insure or
against which we may elect not to insure.  We have no insurance for
these kinds of hazards, nor do we expect to get such insurance for the
foreseeable future.  If we were to suffer from such a hazard, the
costs of rectifying it could exceed our asset value and require that we
liquidate our assets.





In
the future we may be required to comply with government regulations affecting
mineral exploration and exploitation, which could adversely affect our business,
the results of our operations and our financial condition.





The
mining business is subject to various levels of government control and
regulation, which are supplemented and revised from time to time.  We
cannot predict what legislation or revisions might be proposed that could affect
our business or when any such proposals, if enacted, might become
effective.  Our exploration activities are subject to laws and
regulations governing worker safety, and, if we explore within the national park
that is part of our Farellon property, protection of endangered and other
special status species.   The cost of complying with these
regulations has not been burdensome to date, but if we mine our properties and
process more than 5,000 tonnes of ore monthly on our properties, we will be
required to submit an environmental impact study for review and approval by the
federal environmental agency.  We anticipate that the cost of such a
study will be significant.  If the study were to show too great an
adverse impact on the environment, we might be unable to develop the property or
we might have to engage in expensive remedial measures during or after
developing the property, which could make production
unprofitable.  This requirement could materially adversely affect our
business, the results of our operations and our financial condition if we were
to proceed to mine a property or process ore on the property.  We have
no immediate or intermediate plans to process ore on any of our
properties.





If we do
not comply with applicable environmental and health and safety laws and
regulations, we could be fined, enjoined from continuing our operations, and
suffer other penalties.  Although we make every attempt to comply with
these laws and regulations, we cannot assure you that we have fully complied or
will always fully comply with them.





We
might not be able to market any minerals that we find on our mineral claims due
to market factors that are beyond our control.





Even if
we discover minerals that can be extracted cost-effectively, we may not be able
to find a ready market for our minerals.  Many factors beyond our
control affect the marketability of minerals.  These factors include
market fluctuations, the proximity and capacity of natural resource markets and
processing equipment, government regulations, including regulations relating to
prices, taxes, royalties, land tenure, land use, importing and exporting
minerals and environmental protection.  We cannot accurately predict
the effect of these factors, but any combination of these factors could result
in an inadequate return on invested capital.





We
are not certain that we can successfully compete in the mineral exploration
business.  We do not represent a significant presence in this
industry.





The
mineral exploration business is an extremely competitive industry.  We
are competing with many other exploration companies looking for
minerals.  We are one of the smallest exploration companies and we do
not represent a significant presence in the mineral exploration
business.  Being a junior mineral exploration company, we compete with
other similar companies for financing and joint venture partners, and for
resources such as professional geologists, camp staff, helicopters and mineral
exploration contractors and supplies.  We may not have the means to
compete successfully for these resources.




19





We
conduct operations in a foreign jurisdiction, and are subject to certain risks
that may limit or disrupt our business operations.





Our head
office is in Canada; and our mining operations are in Chile.  Mining
investments are subject to the risks normally associated with the conduct of any
business in foreign countries including uncertain political and economic
environments; wars, terrorism and civil disturbances; changes in laws or
policies, including those relating to imports, exports, duties and currency;
cancellation or renegotiation of contracts; royalty and tax increases or other
claims by government entities, including retroactive claims; risk of
expropriation and nationalization; delays in obtaining or the inability to
obtain or maintain necessary governmental permits; currency fluctuations;
restrictions on the ability of local operating companies to sell gold, copper or
other minerals offshore for U.S. dollars, and on the ability of such companies
to hold U.S. dollars or other foreign currencies in offshore bank accounts;
import and export regulations, including restrictions on the export of gold,
copper or other minerals; limitations on the repatriation of earnings; and
increased financing costs.





These
risks could limit or disrupt our exploration programs, cause us to lose our
interests in our mineral claims, restrict the movement of funds, cause us to
spend more than we expected, deprive us of contract rights or result in our
operations being nationalized or expropriated without fair compensation, and
could materially adversely affect our financial position or the results of our
operations.  If a dispute arises from our activities in Chile, we
could be subject to the exclusive jurisdiction of courts outside North America,
which could adversely affect the outcome of the dispute.





While we take the
steps we believe are necessary to maintain legal ownership of our claims, title
to mineral claims may be invalidated for a number of reasons, including errors
in the transfer history or our acquisition of a claim we believed, after
appropriate due diligence investigation, to be valid, but in fact,
wasn’t.  If ownership of our claims was ultimately determined to be
invalid, our business and prospects would likely be materially and adversely
affected.





Our
ability to realize a return on our investment in mineral claims depends upon
whether we maintain the legal ownership of the claims.  Title to
mineral claims involves risks inherent in the process of determining the
validity of claims and the ambiguous transfer history characteristic of many
mineral claims.  We take a number of steps to protect the legal
ownership of our claims, including having our contracts and deeds notarized,
recording these documents with the registry of mines and publishing them in the
mining bulletin.  We also review the mining bulletin regularly to
determine whether other parties have staked claims over our
ground.  However, none of these steps guarantees that another party
could not challenge our right to a claim.  Any such challenge could be
costly to defend and, if we lost our claim, our business and prospects would
likely be materially and adversely affected.





We cannot
guarantee that any of our pedimento claims will convert to mensura
claims.





Some of
our exploration claims (pedimentos) are still in the registration
process.  We cannot guarantee that any of our pedimento claims will
convert to mining claims (mensuras).  Some of our Mateo pedimentos may
have been staked over other owners’ claims, as permitted by the Chilean mining
code.  The pedimento with the earliest filing date takes precedence
providing the claim holder maintains its claim in accordance with the mining
code and the applicable regulations.  Our pedimento rights in these
claims will not crystallize unless the owners of the underlying claims fail to
pay their taxes or otherwise forfeit their interests in their
claims.  We will exercise any right that we acquire through forfeiture
only if the ground remains of interest to us.





We
sometimes hold a significant portion of our cash in United States dollars, which
could weaken our purchasing power in other currencies and limit our ability to
conduct our exploration programs.





Currency
fluctuations could affect the costs of our operations and affect our operating
results and cash flows.  Gold and copper are sold throughout the world
based principally on the U.S. dollar price, but most of our operating expenses
are incurred in local currencies, such as the Canadian dollar and the Chilean
peso.  The appreciation of other currencies against the U.S. dollar
can increase the costs of our operations.




20





We
sometimes hold a significant portion of our cash in U.S.
dollars.  Currency exchange rate fluctuations can result in conversion
gains and losses and diminish the value of our U.S. dollars.  If the
U.S. dollar declined significantly against the Canadian dollar or the Chilean
peso, our U.S.-dollar purchasing power in Canadian dollars and Chilean pesos
would also significantly decline and we would not be able to afford to conduct
our mineral exploration programs.  We have not entered into derivative
instruments to offset the impact of foreign exchange fluctuations.





Because
our directors are not independent they can make and control corporate decisions
that may be disadvantageous to other common shareholders.





Our securities are not listed on a
national securities exchange or quoted on an inter-dealer quotation system that
requires that directors be independent.  Using the definition of
“independent” in Section 803 of the Rules of the NYSE Amex, we have determined
that none of our directors is independent. Our directors have a significant
influence in determining the outcome of all corporate transactions or other
matters, including mergers, consolidations, and the sale of all or substantially
all of our assets.  They also have the power to prevent or cause a
change in control. The interests of our directors may differ from the interests
of the other stockholders and thus result in corporate decisions that are
disadvantageous to other shareholders.





We
do not expect to declare or pay dividends in the foreseeable
future.





We have
never paid cash dividends on our common stock and have no plans to do so in the
foreseeable future. We intend to retain any earnings to develop, carry on, and
expand our business.





“Penny
stock” rules may make buying or selling our common stock difficult, and severely
limit its marketability and liquidity.





Trading
in shares of our common stock is subject to regulations adopted by the SEC
commonly known as the “penny stock” rules.   The additional burdens
imposed upon broker-dealers by the penny stock rules could discourage
broker-dealers from participating in transactions involving shares of our common
stock, which could severely limit its marketability and
liquidity.  Under the penny stock rules, broker-dealers participating
in penny-stock transactions must first deliver to their customer a risk
disclosure document describing the risks associated with penny stocks, the
broker-dealer’s duties in selling the stock, the customer’s rights and remedies,
and certain market and other information.  The broker-dealer must
determine the customer’s suitability for penny- stock transactions based on the
customer’s financial situation, investment experience and
objectives.  Broker-dealers must also disclose these restrictions in
writing to the customer, obtain specific written consent from the customer, and
provide monthly account statements to the customer.  The effect of
these restrictions can decrease broker-dealers’ willingness to make a market in
our shares of common stock, decrease the liquidity of our common stock, and
increase transaction costs for sales and purchases of our common stock as
compared to other securities.




ITEM
1B: UNRESOLVED STAFF COMMENTS




As a
smaller reporting company we are not required to provide this
information.




ITEM
2: PROPERTIES




Our
executive offices are located at 195 Park Avenue, Thunder Bay, Ontario, Canada,
P7B 1B9.  Our president, Caitlin Jeffs, provides this space free of
charge although she is under no obligation to do so.  We also have a
field and administrative officein Vallenar, Chile,which we rent from month
to month at the rate of 550,000 Chilean pesos (approximately $1,000) per
month.   We believe that these properties are suitable and
adequate for our business operations.




21





We have
assembled interests in two mineral properties in Chile—the Farellon and
Mateo—which we have described above in Item 1.




ITEM
3:  LEGAL PROCEEDINGS




We are
not a party to any pending legal proceedings and, to the best of our knowledge,
none of our property or assets are the subject of any pending legal
proceedings.




ITEM
4:  REMOVED AND RESERVED




ITEM
5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES




On
November 19, 2009 we completed a one-for-14 reverse split, reducing the number
of shares of our common stock outstanding to 5,584,574. All references to the
number of issued shares in this report are references to the post–reverse-split
numbers of shares; and all references to the prices of our outstanding shares
reflect the reverse split.




Since
November 19, 2009 our common stock has been quoted on the Pink Sheets under the
symbolRMES. From
September 16, 2008 to November 19, 2009 our common stock was quoted on the OTC
Bulletin Board under the symbolRMET.  From
January 16, 2007 to September 16, 2008, our symbol was RLKX. Table 12
presents the range of high and low bid quotes of our common stock for each
quarter for the last two fiscal years as reported by the Pink OTC
Markets.  The bid prices represent inter-dealer quotations, without
adjustments for retail mark-ups, markdowns or commissions and may not
necessarily represent actual transactions.  As indicated above, the
information below reflects the 1-for-14 reverse stock split that was effective
on November 19, 2009.




Table
      12: High and low bidsHigh
            LowFiscal
      year ended January 31, 2010First
      quarter
            $2.52
            $0.84Second
      quarter
            $0.98
            $0.14Third
      quarter
            $0.98
            $0.14Fourth
      quarter
            $0.10
            $0.02Fiscal
      year ended January 31, 2009First
      quarter
            $5.18
            $3.36Second
      quarter
            $9.66
            $4.48Third
      quarter
            $7.14
            $2.10Fourth
      quarter
            $2.80
            $1.40




As of
April 30, 2010, we had approximately 22 shareholders of record according to a
shareholders list provided by our transfer agent.  This number does
not include an indeterminate number of shareholders whose shares are held by
brokers in street name. Our transfer agent is Empire Stock Transfer, 1859
Whitney Mesa Dr. Henderson, Nevada, 89014 and their phone number is
702-818-5898.




Dividends




We have
not paid any cash dividends on our common stock since our inception and do not
anticipate paying any cash dividends in the foreseeable future.  We plan to
retain our earnings, if any, to provide funds for the expansion of our
business.




22




Securities
Authorized for Issuance under Equity Compensation Plans




We have
no securities authorized for issuance under equity compensation
plans.




Recent
Issuances of Unregistered Securities




On
September 15, 2009 we sold 1,428,572 shares of our common stock at a price of
$0.07 per share to Caitlin Jeffs, our chief executive officer, president and a
director.  We raised $100,000 from this offering.




On
January 19, 2010 we sold to Susan Jeffs 200,000 units consisting of one share of
common stock and a warrant to purchase one share of common stock.  The
purchase price per unit was $0.25.  The exercise price of the warrants
is $0.30 per share and the term is 2 years.  We raised $50,000 in this
offering.




On
January 19, 2010 we issued 830,087 shares of our common stock to Fladgate
Exploration Consulting Corporation for services that had been rendered to us
having a value of $249,026; and we issued 296,667 shares of our common stock to
Da Costa Management Corporation for services having a value of
$89,000.  The price per share was $0.30.




On
January 19, 2010 we issued 2,714,973 shares of our common stock at a price of
$0.30 to Richard N. Jeffs to pay 16 promissory notes.  The promissory
notes represented loans made to us in various principal amounts ranging from
$7,000 to $200,000 from July 17, 2008 through September 9, 2009for a total
principal paid of $744,500.  The total interest paid was
$69,992.




We sold
all of these securities to non-US persons in offshore transactions, relying on
the registration exemption in Rule 903 of Regulation S promulgated under the
Securities Act of 1933, as amended. We did not engage in any directed selling
efforts in the United States, and each investor represented to us that the
investor was not a U.S. person and was not acquiring the stock for the account
or benefit of a U.S. person. The subscription agreements included
statements that the securities had not been registered pursuant to the
Securities Act and could not be offered or sold in the United States unless they
are registered under the Securities Act or an exemption from registration is
available to the seller. Each investor agreed (i) to resell the securities only
in accordance with the provisions of Regulation S or pursuant to registration or
an exemption from registration under the Securities Act, (ii) that we must
refuse to register any sale of the securities purchased unless the sale is in
accordance with the provisions of Regulation S or pursuant to registration or an
exemption from registration under the Securities Act, and (iii) not to engage in
hedging transactions with the securities purchased unless the transaction
complies with the Securities Act. The certificates representing the
securities issued were endorsed with a restrictive legend confirming that the
securities had been issued pursuant to Regulation S of the Securities Act and
could not be resold without registration under the Securities Act or an
applicable exemption from the registration requirements of the Securities
Act.





We gave
each investor adequate access to sufficient information about the company to
make an informed investment decision.  We sold none of the securities
through underwriters and had no underwriting discounts or commissions; and we
granted no registration rights to any of the investors.




ITEM
6:  SELECTED FINANCIAL DATA.




As a
smaller reporting company we are not required to provide this
information.




23




ITEM
7: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS




Overview




Red Metal
is a mineral exploration company engaged in locating and, eventually, developing
mineral resources in Chile. Our business strategy is to identify, acquire and
explore prospective mineral claims with a view to either developing them
ourselves or, more likely, finding a joint venture partner with the mining
experience and financial means to undertake the development. All of our claims
are in the Candelaria IOCG belt in the Chilean Coastal Cordillera.




We have
no revenue-generating operations and are entirely dependent upon the equity
markets for our working capital. The collapse of the equity markets late in 2008
and the economic uncertainty and market instability that followed and persist
have affected our ability to raise equity capital despite the generally positive
market prices of copper and gold in 2009.





In
response to the difficulty in raising equity capital, we have reduced our costs
in Chile by abandoning certain mineral claims that we hadn’t the capital to
maintain or explore; reduced our administration, travel and promotion costs; and
even terminated our duty to file reports with the Securities and Exchange
Commission to save the legal and auditing costs. These measures significantly
reduced our operating costs. We own nothing in Chile except our claims and have
no long term commitments except the obligation to pay royalties if we exploit
our properties. All of our support there—vehicles, office and equipment, and
administrative personnel—is supplied under short-term contracts. We resumed
filing reports with the Securities and Exchange Commission as of April 13, 2010,
which will increase our legal and auditing costs.





We
conducted a drilling program on our Farellon property in September of 2009. We
have analyzed the results and believe that further drilling of the property is
warranted. Micon International Limited, from whom we commissioned a Canadian
National Instrument 43-101 technical report summarizing the drilling results,
has recommended that we conduct a two-phase drilling program. The first phase
would consist of 1,200 meters of diamond drilling to define the structural
controls on the mineralization, which may have been misinterpreted in the past
due to the limited geological information available from the historic RC
drilling, and assist in defining the depth and nature of the sulphide
mineralization. The estimated cost of this phase is $220,000.





If the
first phase is successful, we propose to conduct a larger exploration program
consisting of 10,000 meters of RC drilling, 5,000 meters of diamond drilling,
geophysical surveys and geological mapping to ascertain the extent of the
structural controls and the potential size of the mineralization. The estimated
cost of this phase is $1.9 million.





The cost and timing of both phases are subject
to the availability of qualified mining personnel, such as consulting geologists
and geo-technicians, and drillers and drilling equipment. When we first started
exploring in Chile in late 2007 and early 2008, geologists, geo-technicians,
drillers and drilling rigs were in short supply, those that were available were
often unreliable and very expensive, and we had to work to their schedules
rather than to ours. This changed following the market collapse in 2008, but the
increasing prices of copper and gold—the price of copper has increased steadily
from a low of $1.26 per pound in December 2008 to $3.55 per pound in March,
2010, and the price of gold has increased from a low of $750 per ounce in
December 2008 to a high of more than $1,150 per ounce in January 2010—have
caused mining companies to increase their operations, reducing the availability
of personnel and equipment. Although Chile has a well-trained and qualified
mining workforce from which to draw, we have good contacts within the local
mining community, and not a lot of early-stage companies such as Red Metal are
competing for the available resources, if we are unable to find the personnel
and equipment that we need when we need them at the prices that we have
estimated today, we might have to revise or postpone our plans.




24





At
January 31, 2010, we had a working capital deficit of $296,575 and $7,951 in
cash.  To complete our exploration programs, we will have to raise
approximately $2.1 million in capital.  We will also have to raise
approximately $400,000 to cover our estimated expenditures for legal, audit and
other professional fees, administration, consulting, advertising and promotion,
and office and vehicle rental that we will incur over the next 12
months.  We have engaged a broker-dealer to assist us with our capital
raising efforts.  We cannot predict whether the equity markets will
stabilize or whether we will be able to raise the capital necessary to carry on
operating or to execute our proposed exploration programs. If we are unable to
raise the capital that we need to meet our working capital needs, we might have
to alter our business plan and revise or postpone our exploration and
development plans.





We
conducted drilling programs in 2008 on two optioned properties: the Camila and
the Santa Rosa. The results were not encouraging and we abandoned both
properties, writing off $187,000. Our preliminary exploration in the vicinity of
the Camila property led us to assemble the Mateo property, which we believe is
more prospective than the Camila. We would re-consider the Santa Rosa property
if we could negotiate a more reasonable purchase price.





Results
of operations





summary
of financial condition





Table 13
summarizes and compares our financial condition at January 31, 2010 to the
year-ended January 31, 2009.




Table
      13: Comparison of financial conditionJanuary
      31,
              2010
            
            
            January
      31,
              2009Working
      capital deficit
            
            $
            (296,575
            )
            
            $
            (975,070
            )Current
      assets
            
            $
            25,126
            
            
            $
            42,715Unproved
      mineral properties
            
            $
            643,481
            
            
            $
            753,519Total
      liabilities
            
            $
            321,701
            
            
            $
            1,017,785Common
      stock and additional paid in capital
            
            $
            2,788,517
            
            
            $
            1,473,499Deficit
            
            $
            (2,384,201
            )
            
            $
            (1,673,456
            )





comparison
of prior quarterly results





Tables
14.1 and 14.2 present selected financial information for each of the past eight
quarters.




Table
      14.1: Summary of quarterly results (2010)April
      30,
              2009
            
            
            July
      31,
              2009
            
            
            October
      31,
              2009
            
            
            January
      31,
              2010Revenue
            
            
            –
            
            
            
            –
            
            
            
            –
            
            
            
            –Net
      loss
            
            $
            (290,188
            )
            
            $
            (111,162
            )
            
            $
            (105,334
            )
            
            $
            (204,061
            )Basic
      and diluted loss per share
            
            $
            (0.01
            )
            
            $
            (0.00
            )
            
            $
            (0.00
            )
            
            $
            (0.04
            )




Table
      14.2: Summary of quarterly results (2009)April
      30,
              2008
            
            
            July
      31,
              2008
            
            
            October
      31,
              2008
            
            
            January
      31, 2009Revenue
            
            $
            5,262
            
            
            $
            4,537
            
            
            $
            4,462
            
            
            $
            1,397Net
      loss
            
            $
            (275,552
            )
            
            $
            (362,241
            )
            
            $
            (374,250
            )
            
            $
            (371,841
            )Basic
      and diluted loss per share
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.01
            )
            
            $
            (0.01
            )





All of
the revenue that we received during the four quarters ended April 30, July 31,
October 31, 2008 and January 31, 2009 was the result of a 5% royalty from Minera
Farellon, which had the right to mine our Santa Rosa claims.  On
October 27, 2008, Minera Farellon stopped mining the Santa Rosa claims, which
ended our royalty revenue. In November 2008, we terminated our option agreement
to purchase the Santa Rosa. Due to the exploration rather than production nature
of our business, we do not expect to have operating revenue within the next
year.




25




During
the quarters ended April 30, July 31 and October 31, 2008 we began acquiring
mineral claims, which increased our administration, advertising, mineral
exploration, and professional overheads. Due to the downturn in the economy, we
substantially decreased our operations during the quarters ended April 30, 2009
and July 31, 2009. Excluding the written down unproved mineral claims, our net
loss for these quarters was $179,425 and $95,037, respectively. During the
quarter ended October 31, 2009 we conducted a drilling program on one of our
properties, which increased our mineral exploration expenses. Excluding the
recovery of written down unproved mineral property costs, our net loss for the
third quarter of fiscal 2010 was $202,537.  During the quarter ended
January 31, 2010, we filed this Form 10 to resume our reporting obligations,
which resulted in a substantial increase in our professional fees.





Selected
Financial Results




years
ended january 31, 2010 and january 31, 2009





Our
operating results for the years ended January 31, 2010 and 2009 and the changes
in our operating results between those periods are summarized in Table
15.




Table
      15: Changes in operating resultsYearended
              January
      31,
            
            
            Changes
      between
              the
      years ended2010
            
            
            2009
            
            
            January
      31,
              2010
      and 2009Royalties
            
            $
            –
            
            
            $
            15,658
            
            
            $
            (15,658
            )Operating
      Expenses:Administration
            
            
            76,821
            
            
            
            101,905
            
            
            
            (25,084
            )Advertising
      and promotion
            
            
            62,891
            
            
            
            154,038
            
            
            
            (91,147
            )Automobile
            
            
            22,361
            
            
            
            19,234
            
            
            
            3,127Bank
      charges and interest
            
            
            6,756
            
            
            
            4,731
            
            
            
            2,025Consulting
      fees
            
            
            111,067
            
            
            
            115,675
            
            
            
            (4,608
            )Interest
      on notes payable
            
            
            49,128
            
            
            
            20,864
            
            
            
            28,264Mineral
      exploration costs
            
            
            174,556
            
            
            
            483,339
            
            
            
            (308,783
            )Office
            
            
            4,496
            
            
            
            12,665
            
            
            
            (8,169
            )Professional
      fees
            
            
            101,403
            
            
            
            163,176
            
            
            
            (61,773
            )Rent
            
            
            12,403
            
            
            
            11,556
            
            
            
            847Regulatory
            
            
            12,397
            
            
            
            9,579
            
            
            
            2,818Travel
      and entertainment
            
            
            29,444
            
            
            
            87,636
            
            
            
            (58,192
            )Salaries,
      wages and benefits
            
            
            17,392
            
            
            
            28,803
            
            
            
            (11,411
            )Foreign
      exchange loss (gain)
            
            
            (55
            )
            
            
            (659
            )
            
            
            604Write-down
      of unproved mineral properties
            
            
            29,685
            
            
            
            187,000
            
            
            
            (157,315
            )Total
      operating expenses
            
            
            710,745
            
            
            
            1,399,542
            
            
            
            (688,797
            )Net
      loss
            
            $
            (710,745
            )
            
            $
            (1,383,884
            )
            
            $
            673,139





Revenue. Our revenue for the
year ended January 31, 2010 was $0 compared to $15,658 for the year ended
January 31, 2009. All of the revenue in 2009 was the result of a 5% royalty from
Minera Farellon which had the right to mine our Santa Rosa claims. Minera
Farellon stopped mining the Santa Rosa claims on October 27, 2008, which ended
our royalty revenue. In November 2008, we terminated our option agreement to
purchase the Santa Rosa. Due to the exploration rather than production nature of
our business, we do not expect to have operating revenue within the next
year.




26




Operating
expenses.Our operating
expenses decreased by $688,797, or 50%, from $1,399,542 for the year ended
January 31, 2009 to $710,745 for the year ended January 31,
2010. Generally, most expenses during the year ended January 31, 2010 were
comparable to or lower than our expenses during the corresponding period of
2009.  The most significant of these were:





·
            During
      the year ended January 31, 2010, we wrote down $29,685 in mineral property
      acquisition costs after we abandoned several generative claims with
      outstanding taxes. During the year ended January 31, 2009, we wrote down
      $187,000 in mineral property acquisition costs when we abandoned our Santa
      Rosa and Camila claims.


·
            During
      the year ended January 31, 2009, we incurred approximately $483,340 in
      mineral exploration costs as a result of active operations in Chile.
      During the year ended January 31, 2010, we incurred approximately $174,560
      in mineral exploration costs as a result of our minimal exploration work
      and NI 43-101 report preparation on the Farellon
  claim.


·
            Our
      year-to-date administration, advertising and promotion, and travel
      expenses decreased by approximately $25,000, $90,000, and $58,000
      respectively as a result of our efforts to control our
    costs.


·
            On
      June 2, 2009, we terminated our duty to file reports with the Securities
      and Exchange Commission, which resulted in a decrease of our professional
      fees by approximately $61,780 for the year ended January 31,
      2010.


·
            During
      the year ended January 31, 2010 and 2009 we accrued $49,128 and $20,864 in
      interest on the promissory notes issued to the father of our president. On
      January 19, 2010 accumulated interest on notes payable was converted to
      shares of our common stock.





Net loss. We had a net loss
of $710,745 for the year ended January 31, 2010 compared to a net loss of
$1,383,884 for the year ended January 31, 2009.  The $673,139 decrease
in net loss was due mainly to reduced mineral exploration activities in Chile,
and decreases in advertising, travel, professional, and administrative
expenses.





Liquidity





going
concern





The
unaudited consolidated financial statements included in this annual report have
been prepared on a going concern basis, which implies that we will continue to
realize our assets and discharge our liabilities in the normal course of
business. We have not generated any significant revenues from mineral sales
since inception, have never paid any dividends and are unlikely to pay dividends
or generate significant earnings in the immediate or foreseeable future. Our
continuation as a going concern depends upon the continued financial support of
our shareholders, our ability to obtain necessary equity financing to continue
operations, and the attainment of profitable operations. Our ability to achieve
and maintain profitability and positive cash flow depends upon our ability to
locate profitable mineral claims, generate revenue from mineral production and
control our production costs. Based upon our current plans, we expect to incur
operating losses in future periods, which we plan to mitigate by controlling our
operating costs.  We plan to obtain sufficient working capital through
additional debt or equity financing and private loans, although there is no
guarantee that we will be successful in our efforts to raise working
capital.  At January 31, 2010, we had a working capital deficit of
$296,575 and accumulated losses of $2,384,201 since inception. These factors
raise substantial doubt about our ability to continue as a going concern. We
cannot assure you that we will be able to generate significant revenues in the
future. Our consolidated financial statements do not give effect to any
adjustments that would be necessary should we be unable to continue as a going
concern and therefore be required to realize our assets and discharge our
liabilities in other than the normal course of business and at amounts different
from those reflected in our financial statements.





internal
and external sources of liquidity





To date
we have funded our operations by selling our securities and borrowing funds,
and, to a lesser extent, from mining royalties.





27





Sources
and uses of cash




-years
ended january 31, 2010 and 2009




Table 16
summarizes our sources and uses of cash for the years ended January 31, 2010 and
2009.




Table 16:  Summary of sources and uses of cashJanuary
      31,2010
            
            
            2009Net
      cash provided by financing activities
            
            $
            327,000
            
            
            $
            1,880,000Net
      cash used in operating activities
            
            
            (250,646
            )
            
            
            (893,673
            )Net
      cash used in investing activities
            
            
            (58,702
            )
            
            
            (940,519
            )Effect
      of foreign currency exchange
            
            
            (35,816
            )
            
            
            (21,594
            )Net
      increase (decrease) in cash
            
            $
            (18,164
            )
            
            $
            24,214





Net cash provided
by financing activities.During the year ended January 31, 2010, we issued 1,678,572 shares of our common
stock for $162,500, and we borrowed $164,500 from the father of a
director.





During the year ended January 31, 2009,
we issued 357,147 units of our common stock for $1.3 million cash and borrowed
$580,000 from the father of a director.





Net cash used in
operating activities.During the year ended January 31, 2010 we used net cash of $250,646 in operating
activities.  We used $710,745 to cover operating costs and increased
our prepaid expenses and other receivables by $575.





These uses of cash were offset by net
increases in accounts payable of $55,117, mainly associated with our Farellon
drilling program; accrued liabilities of $40,495; accounts payable to related
parties of $286,249 for administration, consulting, advertising and promotion,
mineral exploration, office, entertainment, automobile, rental and travel
expenses; and accrued interest on our notes payable to a related party of
$49,128.  We wrote off $29,685 in acquisition costs of the unproved
mineral claims that we abandoned and $139,055 in associated
accrued property taxes.





During the year ended January 31, 2009
we used $893,673 net cash in operating activities. We used $1,383,884 to
cover our operating costs for the period. We increased our prepaid expenses and
other receivables by $16,600, primarily for advertising and
marketing. These uses of cash were partially offset by increases in our
accounts payable of $29,698 and accrued liabilities and professional fees of
$159,027;  amounts due to related parties of $110,222; and interest
accrued on our notes payable of $20,864.





Net cash used in
investing activities.During the year ended January 31, 2010, we spent $32,141 acquiring mineral
claims and options to acquire mineral claims and capitalized Chilean value-added
tax of $26,561 as part of the unproved mineral claims. This VAT is recoverable
from future VAT payable.





During the year ended January 31, 2009,
we spent $940,519 acquiring mineral claims and options to acquire mineral
claims.





Since inception, we have invested
$1,008,221 acquiring our mineral claims.





Non-cash financing
transactions.During the
year ended January 31, 2010, we converted $338,026 payable to related parties
into 1,126,754 shares of our common stock at $0.30 per share; and
$744,500  of principal and $69,922 of accrued interest on notes
payable to a related party into 2,714,973 shares of our common stock
at $0.30 per share.





28





During the year ended January 31, 2009
we had no non-cash financing transactions.





Capital
resources





Our
ability to acquire and explore our Chilean claims is subject to our ability to
obtain the necessary funding. To assist us with our funding efforts, during
the past two fiscal years through the date of this report, we have retained the
services of a number of consultants.





On May 2,
2008 we entered into a letter agreement with a brokerage house for the private
placement of up to $6 million of units of our common stock and common stock
purchase warrants on a best efforts basis.  We agreed to pay the
brokerage house a commission equal to 9% of the total financing and issue
warrants equal to 10% of the total number of units issued.  We paid a
non-refundable work fee of $25,000 Cdn, which is deductible from the
commission. We did not agree to register the units under the Securities Act
of 1933, as amended, and they may not be offered or sold in the United States
without registration or an applicable exemption from the registration
requirements.  We have completed no financing under this
agreement.  The contract will expire on May 19, 2010.





On
October 21, 2008 we entered into a letter agreement with an independent investor
relations specialist. We agreed to pay him a monthly fee of $4,500 for an
investor relations program to provide information about us to institutional and
individual investors. We terminated this contract on April 30,
2009.





On March
18, 2009 we entered into a one-year agreement, now expired, with a broker-dealer
whereby the broker-dealer agreed to use its best efforts to raise funds for us
or find a buyer for our Farellon claim. Either party was able to terminate the
agreement or extend its term with five days’ written notice.  We
completed no financing under this agreement, which expired on March 18,
2010.





On
December 1, 2009 we retained the services of an independent investor relations
specialist to handle our corporate communications. We agreed to pay him a
monthly compensation in the amount of $5,000 Cdn (approximately $4,700 US) on a
month-to-month contract that can be cancelled any time with 30 days written
notice.




On April
22, 2010 we entered into a one-year agreement with a broker-dealer as our
exclusive agent to arrange funding for us of either equity or debt. We agreed to
pay the broker-dealer the following compensation for any financing attributable
to the broker-dealer during the term of the agreement and for one year following
the termination of the agreement if we complete a financing with anyone
introduced to us during the term:




•
            a
      cash fee equal to ten percent of the proceeds that we receive from a
      financing


•
            warrants
      equal to ten percent of the common stock or common stock equivalent that
      we issue in a financing on the same terms as any warrants that are a part
      of the financing


•
            all
      reasonable out-of-pocket expenses up to 1.5 percent of the funds
      raised




The
securities offered will not be registered under the Securities Act of 1933 and
may not be offered or sold in the United States absent registration or an
applicable exemption from registration requirements.





Contingencies
and commitments




We had no
contingencies at January 31, 2010.




29





We have
the following long-term contractual obligations and commitments:




·
            Farellon royalty.We
      are committed to paying the vendor a royalty equal to 1.5% on the net
      sales of minerals extracted from the Farellon claims up to a total of
      $600,000.  The royalty payments are due monthly once
      exploitation begins and are subject to minimum payments of $1,000 per
      month.  We have no obligation to pay the royalty if we do not
      commence exploitation.  As of the date of this report we have
      not commenced exploitation.


·
            Che option. Under the
      terms of our option agreement with Minera Farellon, we must pay $20,000 by
      April 10, 2011 to exercise the option and purchase the Che
      claims.  If we exercise our option, then we must pay a royalty
      equal to 1% of the net sales of minerals extracted from the claims to a
      maximum of $100,000 to the former owner. The royalty payments are due
      monthly once exploitation begins, and are not subject to minimum
      payments.





Equity
financing





To
generate working capital, between August 13, 2007 and April 30, 2010 we issued
6,441,256 shares of our common stock and warrants for the purchase of
861,430 shares to raise $2,850,018 under Regulation S promulgated under the
Securities Act of 1933. See Item 5, “Market for Registrant’s Common Equity,
Related Stockholder Matters and Issuer Purchases of Equity Securities – Recent
Issuances of Unregistered Securities” for information relating to offerings made
during the past fiscal year.





Based on
our operating plan, we anticipate incurring operating losses in the foreseeable
future and will require additional equity capital to support our operations and
develop our business plan.  If we succeed in completing future equity
financing, the issuance of additional shares will result in dilution to our
existing shareholders.





Debt
financing





As of January 6, 2010, we had borrowed
$744,500 from Richard Jeffs, the father of our president, to whom we issued
demand promissory notes for the principal sum together with interest of
8%.  We accrued $76,785 in interest payable on these notes. On January 7,
2010, we agreed to convert $814,492 in principle and interest on these loans
into 2,714,973 shares of our common stock. In return, Mr. Jeffs agreed to
forgive $6,792 in interest accumulated from December 1, 2009 to January 7,
2010.  On February 22, 2010, we borrowed $50,000 from a company owned
by Richard Jeffs, to which we issued a demand promissory note to secure the
repayment of the principal sum together with interest at 6% per
annum.




Challenges
and risks





Although we have raised $2,850,018
since January 31, 2007, our cash position is inadequate to satisfy our working
capital needs for the next twelve months.  Over the next twelve months
we will need to raise capital to cover our operating costs, fulfill the
obligations we may incur under our property agreements, and pay exploration or
development costs on our properties.





With the
exception of legal and accounting fees which we expect to increase since we have
resumed the obligation to file reports with the SEC, we expect our general and
administrative expenses to remain about the same. These costs include exploring
and developing our mineral properties and sourcing additional mineral properties
and exploration claims.  We are reviewing other mineral claims and
could decide to buy or stake more mineral claims or to acquire options to buy
more claims, which would require that we raise more capital.





We do not
anticipate generating any revenue over the next twelve months. We plan to fund
our operations through any combination of equity financing from the sale of our
securities, private loans, joint ventures or through the sale of a part interest
in our mineral properties.  Other than the letter agreement dated April 22,
2010 relating to the private placement of our securities, we do not have any
financing arranged.  We cannot assure you that we can raise
significant funds through this offering.  Although we have succeeded
in raising funds as we have needed them, we cannot assure you that we will be
able to raise sufficient funds in order to cover our general and
administrative expenses and acquire and develop properties. The downturn in the
United States economy could affect potential investors’ willingness to invest in
risky ventures such as ours. We may consider entering into a joint venture
partnership with a more senior resource company to provide the funding that we
need to complete a mineral exploration program in Chile.  If we enter
into a joint venture arrangement, we would likely have to assign a percentage of
our interest in our mineral claims to our joint venture partner in exchange for
the funding.





30





Investments
in and expenditures on mineral interests





Realization
of our investments in mineral properties depends upon our maintaining legal
ownership, producing from the properties or gainfully disposing of
them.





Title to
mineral claims involves risks inherent in the difficulties of determining the
validity of claims as well as the potential for problems arising from the
ambiguous conveyancing history characteristic of many mineral claims. Our
contracts and deeds have been notarized, recorded in the registry of mines and
published in the mining bulletin. We review the mining bulletin regularly to
discover whether other parties have staked claims over our ground. We have
discovered no such claims. To the best of our knowledge, we have taken the steps
necessary to ensure that we have good title to our mineral claims.





Foreign
exchange





We are
subject to foreign exchange risk for transactions denominated in foreign
currencies.  Foreign currency risk arises from the fluctuation of
foreign exchange rates and the degree of volatility of these rates relative to
the United States dollar.  We do not believe that we have any material
risk due to foreign currency exchange.


Trends,
events or uncertainties that may impact results of operations or
liquidity





The
economic crisis in the United States and the resulting economic uncertainty and
market instability may make it harder for us to raise capital as and when we
need it and have made it difficult for us to assess the impact of the crisis on
our operations or liquidity and to determine if the prices we will receive on
the sale of minerals will exceed the cost of mineral exploitation.  If
we are unable to raise cash, we may be required to cease our operations. 
As noted above, we expect our legal and accounting fees to increase since we
have resumed the obligation to file reports with the SEC.  Other than as
discussed in this annual report, we know of no other trends, events or
uncertainties that have or are reasonably likely to have a material impact on
our short-term or long-term liquidity.





Off-balance
sheet arrangements





We have
no off-balance sheet arrangements and no non-consolidated, special-purpose
entities.




Related-party
transactions





Related-party
transactions are disclosed in Item 13 on page 45 of this annual
report.





Critical
Accounting Estimates





The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain of the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the year. The Company
regularly evaluates estimates and assumptions. The Company bases its estimates
and assumptions on current facts, historical experience and various other
factors it believes to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by the Company may
differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected. The most significant estimates
with regard to these financial statements relate to carrying values of unproven
mineral properties, determination of fair values of stock based transactions,
and deferred income tax rates.





31





Reclassifications





Certain
comparative amounts in the accompanying consolidated financial statements have
been reclassified to conform to the current year’s presentation. These
reclassifications had no effect on the consolidated results of operations or
financial position for any year presented.




Unproved
mineral property costs





We have
been in the exploration stage since our inception on January 10, 2005 and have
not yet generated significant revenue from our operations. We are primarily
engaged in acquiring and exploring mining claims. We expense our mineral
exploration costs as we incur them. We initially capitalize them at each fiscal
quarter end. When we have determined that a mineral claim can be economically
developed as a result of establishing proven and probable reserves, we
capitalize the costs then incurred to develop the claim and will amortize them
using the units-of-production method over the estimated life of the probable
reserve. If mineral claims are subsequently abandoned or impaired, we will
charge capitalized costs to operations.





During
the year ended January 31, 2009 we wrote down $187,000 in capitalized costs
when we terminated our options to buy the Camila and Santa Rosa claims. During
the year ended January 31, 2010, we wrote down $29,685 in capitalized costs of
abandoned generative claims.





Financial
instruments





Our
financial instruments include cash, accounts receivable, accounts payable,
accrued liabilities, accrued professional fees and accrued mineral property
costs. The fair value of these financial instruments approximates their carrying
values due to their short maturities.





Recently
Adopted Accounting Guidance




The
Company has reviewed recently issued accounting pronouncements and plans to
adopt those that are applicable to it. It does not expect the adoption of these
pronouncements to have a material impact on its financial position, results of
operations or cash flows.




ITEM
7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




As a
smaller reporting company we are not required to provide this
information.




32





ITEM
8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA




Index
      to Financial StatementsPage
      No.Financial
      StatementsReport
      of Independent Registered Public Accounting Firm
            F-1Consolidated
      Balance Sheets as of January 31, 2010 and January 31, 2009
            F-2Consolidated
      Statements of Operations  for the years ended January 31, 2010
      and 2009, and the period from inception (January 10, 2005) to January 31,
      2010
            F-3Consolidated
      Statement of Stockholders’ Equity for the period from January 10, 2005
      (inception) to January 31, 2010
            F-4Consolidated  Statements
      of Cash Flows for the years  ended January 31, 2010 and 2009,
      and the period from inception (January 10, 2005) to January 31,
      2010
            F-5Notes
      to Consolidated  Financial Statements
            F-6




33





REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





To the
Stockholders and Board of Directors of Red Metal Resources Ltd:





We have
audited the accompanying consolidated balance sheet of Red Metal Resources Ltd.
(the “Company”) (an exploration stage company) as at January 31, 2010 and the
related consolidated statements of operations, stockholders’ equity and cash
flows for the year then ended and the cumulative period from January 10, 2005
(inception) to January 31, 2010.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our
audit.  The consolidated financial statements as of January 31, 2009
and for the period from January 10, 2005 (inception) to January 31, 2009 were
audited by other auditors whose report dated April 24, 2009 expressed an
unqualified opinion on those financial statements. The consolidated financial
statements for the period January 10, 2005 (inception) to January 31, 2009
reflect a total net loss of $1,673,456 of the related cumulative
totals.  Our opinion, insofar as it relates to amounts included for
such prior periods, is based solely on the report of such other
auditors.





We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the
financial statements are free of material misstatement.  The Company
is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included consideration of
internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control
over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audit provides a reasonable basis
for our opinion.





In our
opinion, based on our audit and the report of other auditors, these financial
statements present fairly, in all material respects, the financial position of
the Company as at January 31, 2010 and the results of its operations and its
cash flows for the year then ended and for the period from January 10, 2005
(inception) to January 31, 2010, in conformity with accounting principles
generally accepted in the United States of America.





The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note 1
to the financial statements, the Company has not generated revenues since
inception, has incurred losses in developing its business, and further losses
are anticipated.  The Company requires additional funds to meet its
obligations and the costs of its operations.  These factors raise
substantial doubt about the Company’s ability to continue as a going
concern.  Management’s plans in this regard are described in Note
1.  The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.





/s/
DMCL





Dale
Matheson Carr-Hilton Labonte LLP





CHARTERED
ACCOUNTANTS





Vancouver,
Canada





April 13,
2010





F-1


RED
      METAL RESOURCES LTD.(Formerly
      Red Lake Exploration, Inc.)(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      BALANCE SHEETSJanuary
      31,
              2010
            
            
            January
      31,
              2009ASSETSCurrent
      assetsCash
            
            $
            7,951
            
            
            $
            26,115Prepaids
      and other receivables
            
            
            17,175
            
            
            
            16,600Total
      current assets
            
            
            25,126
            
            
            
            42,715Unproved
      mineral properties
            
            
            643,481
            
            
            
            753,519Total
      assets
            
            $
            668,607
            
            
            $
            796,234LIABILITES
      AND STOCKHOLDERS’ EQUITY (DEFICIT)Current
      liabilitiesAccounts
      payable
            
            $
            129,534
            
            
            $
            74,417Accrued
      liabilities
            
            
            92,485
            
            
            
            191,045Due
      to related parties
            
            
            99,682
            
            
            
            752,323Total
      liabilities
            
            
            321,701
            
            
            
            1,017,785Stockholders’
      equity (deficit)
              Common
      stock, $0.001 par value, authorized 500,000,000,
              9,676,301
      and 4,156,002 issued  and outstanding at January 31, 2010 and
      January 31, 2009, respectively
            
            
            9,677
            
            
            
            4,156Additional
      paid in capital
            
            
            2,778,840
            
            
            
            1,469,343Deficit
      accumulated during the exploration stage
            
            
            (2,384,201
            )
            
            
            (1,673,456
            )Accumulated
      other comprehensive loss
            
            
            (57,410
            )
            
            
            (21,594
            )Total
      stockholders’ equity (deficit)
            
            
            346,906
            
            
            
            (221,551
            )Total
      liabilities and stockholders’ equity (deficit)
            
            $
            668,607
            
            
            $
            796,234


Commitments
(Notes 3 and 4)





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





F-2


RED
      METAL RESOURCES LTD.(Formerly
      Red Lake Exploration, Inc.)(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF OPERATIONS  Year
                Ended
      January 31,
              
              
              From
                January
      10,
                2005
                (Inception)
                to
      January 31,2010
              
              
              2009
              
              
              2010RevenueRoyalties
              
              $
              -
              
              
              $
              15,658
              
              
              $
              15,658Operating
      Expenses:Administration
              
              
              76,821
              
              
              
              101,905
              
              
              
              179,267Advertising
      and promotion
              
              
              62,891
              
              
              
              154,038
              
              
              
              221,766Automobile
              
              
              22,361
              
              
              
              19,234
              
              
              
              41,595Bank
      charges and interest
              
              
              6,756
              
              
              
              4,731
              
              
              
              12,394Consulting
      fees
              
              
              111,067
              
              
              
              115,675
              
              
              
              292,610Interest
      on notes payable
              
              
              49,128
              
              
              
              20,864
              
              
              
              69,992Mineral
      exploration costs
              
              
              174,556
              
              
              
              483,339
              
              
              
              726,193Office
              
              
              4,496
              
              
              
              12,665
              
              
              
              19,222Professional
      fees
              
              
              101,403
              
              
              
              163,176
              
              
              
              356,401Rent
              
              
              12,403
              
              
              
              11,556
              
              
              
              28,709Regulatory
              
              
              12,397
              
              
              
              9,579
              
              
              
              33,646Travel
      and entertainment
              
              
              29,444
              
              
              
              87,636
              
              
              
              146,211Salaries,
      wages and benefits
              
              
              17,392
              
              
              
              28,803
              
              
              
              46,195Foreign
      exchange gain
              
              
              (55
              )
              
              
              (659
              )
              
              
              (27
              )Write-down
      of unproved mineral properties
              
              
              29,685
              
              
              
              187,000
              
              
              
              225,685Total
      operating expenses
              
              
              710,745
              
              
              
              1,399,542
              
              
              
              2,399,859Net
      loss
              
              $
              (710,745
              )
              
              $
              (1,383,884
              )
              
              $
              (2,384,201
              )Net
      loss per share – basic and diluted
              
              $
              (0.15
              )
              
              $
              (0.34
              )Weighted
      average number of shares
                outstanding
      – basic and diluted
              
              
              4,830,642
              
              
              
              4,072,473





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




F-3




RED
      METAL RESOURCES LTD.(Formerly
      Red Lake Exploration, Inc.)(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      STATEMENT OF STOCKHOLDERS’ EQUITYFOR
      THE PERIOD FROM JANUARY 10, 2005 (INCEPTION) TO JANUARY 31,
      2010  Common
      Stock IssuedNumber
      of
                Shares
              
              
              Amount
              
              
              Additional
                Paid-in
                Capital
              
              
              Accumulated
      Deficit
              
              
              Accumulated
                Other
      Comprehensive
                Loss
              
              
              TotalBalance
      at January 10, 2005
                (Inception)
              
              
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -
              
              
              $
              -Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (825
              )
              
              
              -
              
              
              
              (825
              )Balance
      at January 31, 2005
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (825
              )
              
              
              -
              
              
              
              (825
              )Common
      stock issued for cash
              
              
              5,525,000
              
              
              
              5,525
              
              
              
              53,725
              
              
              
              -
              
              
              
              -
              
              
              
              59,250(1)
      Common stock adjustment
              
              
              45
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -Donated
      services
              
              
              -
              
              
              
              -
              
              
              
              3,000
              
              
              
              -
              
              
              
              -
              
              
              
              3,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (12,363
              )
              
              
              -
              
              
              
              (12,363
              )Balance
      at January 31, 2006
              
              
              5,525,045
              
              
              
              5,525
              
              
              
              56,725
              
              
              
              (13,188
              )
              
              
              -
              
              
              
              49,062Donated
      services
              
              
              -
              
              
              
              -
              
              
              
              9,000
              
              
              
              -
              
              
              
              -
              
              
              
              9,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (43,885
              )
              
              
              -
              
              
              
              (43,885
              )Balance
      at January 31, 2007
              
              
              5,525,045
              
              
              
              5,525
              
              
              
              65,725
              
              
              
              (57,073
              )
              
              
              -
              
              
              
              14,177Donated
      services
              
              
              -
              
              
              
              -
              
              
              
              2,250
              
              
              
              -
              
              
              
              -
              
              
              
              2,250Return
      of common stock to treasury
              
              
              (1,750,000
              )
              
              
              (1,750
              )
              
              
              1,749
              
              
              
              -
              
              
              
              -
              
              
              
              (1
              )Common
      stock issued for cash
              
              
              23,810
              
              
              
              24
              
              
              
              99,976
              
              
              
              -
              
              
              
              -
              
              
              
              100,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (232,499
              )
              
              
              -
              
              
              
              (232,499
              )Balance
      at January 31, 2008
              
              
              3,798,855
              
              
              
              3,799
              
              
              
              169,700
              
              
              
              (289,572
              )
              
              
              -
              
              
              
              (116,073
              )Common
      stock issued for cash
              
              
              357,147
              
              
              
              357
              
              
              
              1,299,643
              
              
              
              -
              
              
              
              -
              
              
              
              1,300,000Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,383,884
              )
              
              
              -
              
              
              
              (1,383,884
              )Foreign
      currency exchange loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (21,594
              )
              
              
              (21,594
              )Comprehensive
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (1,405,478
              )Balance
      at January 31, 2009
              
              
              4,156,002
              
              
              
              4,156
              
              
              
              1,469,343
              
              
              
              (1,673,456
              )
              
              
              (21,594
              )
              
              
              (221,551
              )Common
      stock issued for cash
              
              
              1,678,572
              
              
              
              1,678
              
              
              
              160,822
              
              
              
              -
              
              
              
              -
              
              
              
              162,500Common
      stock issued for debt
              
              
              3,841,727
              
              
              
              3,843
              
              
              
              1,148,675
              
              
              
              -
              
              
              
              -
              
              
              
              1,152,518Net
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (710,745
              )
              
              
              -
              
              
              
              (710,745
              )Foreign
      currency exchange loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (35,816
              )
              
              
              (35,816
              )Comprehensive
      loss
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              -
              
              
              
              (746,561
              )Balance
      at January 31, 2010
              
              
              9,676,301
              
              
              $
              9,677
              
              
              $
              2,778,840
              
              
              $
              (2,384,201
              )
              
              $
              (57,410
              )
              
              $
              346,906





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





F-4




RED
      METAL RESOURCES LTD.(Formerly
      Red Lake Exploration, Inc.)(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF CASH FLOWS  For
      the years
                Ended
      January 31,
              
              
              From
      January 10,
                2005
                (Inception)
                to
      January 31,2010
              
              
              2009
              
              
              2010Cash
      flows used in operating activities:Net
      loss
              
              $
              (710,745
              )
              
              $
              (1,383,884
              )
              
              $
              (2,384,201
              )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Donated
      services and rent
              
              
              -
              
              
              
              -
              
              
              
              14,250Write-down
      of unproved mineral properties
              
              
              29,685
              
              
              
              187,000
              
              
              
              225,685Changes
      in operating assets and liabilities:Prepaids
      and other receivables
              
              
              (575
              )
              
              
              (16,600
              )
              
              
              (17,175
              )Accounts
      payable
              
              
              55,117
              
              
              
              29,698
              
              
              
              139,319Accrued
      liabilities
              
              
              40,495
              
              
              
              159,027
              
              
              
              231,540Due
      to related parties
              
              
              286,249
              
              
              
              110,222
              
              
              
              427,922Accrued
      interest on  notes payable to related party
              
              
              49,128
              
              
              
              20,864
              
              
              
              69,992Net
      cash used in operating activities
              
              
              (250,646
              )
              
              
              (893,673
              )
              
              
              (1,292,668
              )Cash
      flows from investing activities:Acquisition
      of unproved mineral properties
              
              
              (58,702
              )
              
              
              (940,519
              )
              
              
              (1,008,221
              )Net
      cash used in investing activities
              
              
              (58,702
              )
              
              
              (940,519
              )
              
              
              (1,008,221
              )Cash
      flows provided by financing activities:Cash
      received on issuance of notes payable to related party
              
              
              164,500
              
              
              
              580,000
              
              
              
              744,500Proceeds
      from issuance of common stock
              
              
              162,500
              
              
              
              1,300,000
              
              
              
              1,621,750Net
      cash provided by financing activities
              
              
              327,000
              
              
              
              1,880,000
              
              
              
              2,366,250Effects
      of foreign currency exchange
              
              
              (35,816
              )
              
              
              (21,594
              )
              
              
              (57,410
              )Increase
      (decrease) in cash
              
              
              (18,164
              )
              
              
              24,214
              
              
              
              7,951Cash,
      beginning
              
              
              26,115
              
              
              
              1,901
              
              
              
              -Cash,
      ending
              
              $
              7,951
              
              
              $
              26,115
              
              
              $
              7,951Supplemental
      disclosures:Cash
      paid for:Income
      tax
              
              $
              -
              
              
              $
              -
              
              
              $
              -Interest
              
              $
              -
              
              
              $
              -
              
              
              $
              -Non-cash
      financing transactions:Conversion
      of debt to related parties to shares of common stock
              
              $
              (338,026
              )
              
              $
              -
              
              
              $
              (338,026
              )Conversion
      of notes payable to shares of common stock
              
              $
              (744,500
              )
              
              $
              -
              
              
              $
              (744,500
              )Conversion
      of accrued interest to shares of common stock
              
              $
              (69,992
              )
              
              $
              -
              
              
              $
              (69,992
              )





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




F-5




RED
METAL RESOURCES LTD.


(AN
EXPLORATION STAGE COMPANY)


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


JANUARY
31, 2010




NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION





Nature
of Operations





Red Metal
Resources Ltd. (the “Company”) was incorporated on January 10, 2005 under the
laws of the State of Nevada as Red Lake Exploration, Inc. and changed its name
to Red Metal Resources Ltd. on August 27, 2008.  On August 21, 2007,
the Company acquired a 99% interest in Minera Polymet Limitada (“Polymet”), a
limited liability company formed on August 21, 2007 under the laws of the
Republic of Chile. The Company is involved in acquiring and exploring mineral
properties in Chile.  The Company has not determined whether its
properties contain mineral reserves that are economically
recoverable.





The
Company’s consolidated financial statements are prepared on a going concern
basis in accordance with generally accepted accounting principles in the United
States which contemplates the realization of assets and discharge liabilities
and commitments in the normal course of business.  The Company is in
the exploration stage.  It has not generated operating revenues to
date, and has accumulated losses of $2,384,201 since inception.  The
Company has funded its operations through the issuance of capital stock and
debt.  Management plans to raise additional funds through equity
and/or debt financings.  There is no certainty that further funding
will be available as needed.  These factors raise substantial doubt
about the ability of the Company to continue operation as a going
concern.  The Company’s ability to continue its operations as a going
concern, realize the carrying value of its assets, and discharge its liabilities
in the normal course of business is dependent upon its ability to raise new
capital sufficient to fund its commitments and ongoing losses, and ultimately on
generating profitable operations.





NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES





Basis
of Presentation





These
consolidated financial statements and related notes are presented in accordance
with accounting principles generally accepted in the United States, and are
expressed in United States dollars. The Company has not produced revenues from
its principal business and is an exploration stage company as defined by
“Accounting and Reporting by Development Stage Enterprises.” These financial
statements include the accounts of the Company and its wholly owned subsidiary,
Polymet. All intercompany transactions and balances have been
eliminated.





Reclassifications





Certain
comparative amounts in the accompanying consolidated financial statements have
been reclassified to conform to the current year’s presentation. These
reclassifications had no effect on the consolidated results of operations or
financial position for any year presented.





Accounting
Estimates





The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain of the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the year. The Company
regularly evaluates estimates and assumptions. The Company bases its estimates
and assumptions on current facts, historical experience and various other
factors it believes to be reasonable under the circumstances, the results of
which form the basis for making judgments about the carrying values of assets
and liabilities and the accrual of costs and expenses that are not readily
apparent from other sources. The actual results experienced by the Company may
differ materially and adversely from the Company’s estimates. To the extent
there are material differences between the estimates and the actual results,
future results of operations will be affected. The most significant estimates
with regard to these financial statements relate to carrying values of unproven
mineral properties, determination of fair values of stock based transactions,
and deferred income tax rates.





F-6





Asset
Retirement Obligations





The
Company records the fair value of an asset retirement obligation as a liability
in the period in which it incurs an obligation associated with the retirement of
tangible long-lived assets that result from the acquisition, construction,
development and/or normal use of the assets. The estimated fair value of the
asset retirement obligation is based on the current cost escalated at an
inflation rate and discounted at a credit adjusted risk-free rate. This
liability is capitalized as part of the cost of the related asset and amortized
over its useful life.  The liability accretes until the Company
settles the obligation.  To date the Company has not incurred any
measurable asset retirement obligations.





Long
Lived Assets





The
carrying value of intangible assets and other long-lived assets is reviewed on a
regular basis for the existence of facts or circumstances that may suggest
impairment. The Company recognizes impairment when the sum of the expected
undiscounted future cash flows is less than the carrying amount of the asset.
Impairment losses, if any, are measured as the excess of the carrying amount of
the asset over its estimated fair value.





Fair
Value of Financial Instruments





The
estimated fair values for financial instruments are determined at discrete
points in time based on relevant market information. These estimates involve
uncertainties and cannot be determined with precision. The estimated fair
value of cash, other receivables, amounts due to related parties and accounts
payable approximates their carrying value due to their short-term
nature.





Foreign
Currency Translation and Transaction





The
functional currency for the Company’s foreign subsidiary is the Chilean peso.
 The Company translates assets and liabilities to US dollars using year-end
exchange rates, translates unproved mineral properties using historical exchange
rates, and translates revenues and expenses using average exchange rates during
the period. Exchange gains and losses arising from the translation of foreign
entity financial statements are included as a component of other comprehensive
loss.





Transactions
denominated in currencies other than the functional currency of the legal entity
are re-measured to the functional currency of the legal entity at the year-end
exchange rates.  Any associated transactional currency re-measurement gains
and losses are recognized in current operations.





Revenue
Recognition





The
Company records revenues and royalties from the sale of minerals when persuasive
evidence of an arrangement exists, the minerals have been delivered to the
customer and the risk of ownership or title has been transferred, and
collectability is reasonably assured.





F-7





Other
Comprehensive Loss





The
Company reports and displays comprehensive loss and its components in the
financial statements. For the years ended January 31, 2010 and 2009, the only
components of comprehensive loss were foreign currency translation
adjustments.





Loss
per Share





The
Company presents both basic and diluted loss per share (“LPS”) on the face of
the statements of operations. Basic LPS is computed by dividing net loss
available to common shareholders by the weighted average number of shares
outstanding during the year. Diluted LPS gives effect to all dilutive potential
common shares outstanding during the period including convertible debt, stock
options, and warrants, using the treasury stock method. Diluted LPS excludes all
dilutive potential shares if their effect is anti-dilutive.





Income
Taxes





Income
taxes are determined using the liability method.  Deferred tax assets
and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of assets and
liabilities and their respective tax basis. Deferred tax assets and liabilities
are measured using the 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 effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes that
date of enactment.  In addition, a valuation allowance is established
to reduce any deferred tax asset for which it is determined that it is more
likely than not that some portion of the deferred tax asset will not be
realized.





The
Company accounts for uncertainty in income taxes by applying a two-step method.
First, it evaluates whether a tax position has met a more likely than not
recognition threshold, and second, it measures that tax position to determine
the amount of benefit, if any, to be recognized in the financial statements. The
application of this method did not have a material effect on the Company's
financial statements.





Mineral
Properties





Realization
of the Company's investment in and expenditures on mineral properties is
dependent upon the establishment of legal ownership, the attainment of
successful production from the properties or from the proceeds of their
disposal.





Title to
mineral properties involves certain inherent risks due to the difficulties of
determining the validity of certain claims as well as the potential for problems
arising from the frequently ambiguous conveyancing history characteristics of
many mineral properties. To the best of its knowledge the Company believes all
of its unproved mineral interests are in good standing and that it has title to
all of these mineral interests.





The
Company classifies its mineral rights as tangible assets and accordingly
acquisition costs are capitalized as mineral property costs. Long-lived assets
are to be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. In
performing the review for recoverability, the Company is to estimate the future
cash flows expected to result from the use of the asset and its eventual
disposition. If the sum of the undiscounted expected future cash flows is less
than the carrying amount of the asset, an impairment loss is recognized. Mineral
exploration costs are expensed as incurred until commercially mineable deposits
are determined to exist within a particular property.





F-8





Recently
Adopted Accounting Guidance





The
Company has reviewed recently issued accounting pronouncements and plans to
adopt those that are applicable to it. It does not expect the adoption of these
pronouncements to have a material impact on its financial position, results of
operations or cash flows.





NOTE
3 – RELATED-PARTY TRANSACTIONS





The
following amounts were due to related parties at January 31, 2010 and January
31, 2009:




January
      31,
              2010
            
            
            January
      31, 2009Due
      to a company owned by an officer (a)
            
            $
            26,324
            
            
            $
            13,552Due
      to a company controlled by directors (b)
            
            
            48,920
            
            
            
            130,345Due
      to a company owned by a major shareholder and a relative of the president
      (c)
            
            
            18,594
            
            
            
            5,074Due
      to a major shareholder (d)
            
            
            5,719
            
            
            
            2,363Due
      to a relative of the president
            
            
            125
            
            
            
            125Total
      due to related parties
            
            $
            89,896
            
            
            $
            151,459





Amounts
due to related parties are unsecured, bear no interest and are due on
demand.





(a)
During the years ended January 31, 2010 and 2009, the Company incurred a total
of $127,540 and $123,823, respectively in consulting and other business expenses
to a company owned by the Chief Financial Officer (“CFO”) of the
Company





(b)
During the years ended January 31, 2010 and 2009, the Company incurred a total
of $115,213 and $327,081, respectively in administration, advertising and
promotion, mineral exploration, travel and other business expenses to a company
controlled by two directors.





(c)
During the years ended January 31, 2010 and 2009, the Company incurred a total
of $61,002 and $289,348 in administration, automobile, mineral exploration,
rental, and other business expenses to a company owned by a major shareholder
and a relative of the president.  During the year ended January 31, 2009,
the Company received $15,658 in royalty income from the same
company.





(d)
During the year ended January 31, 2010 and 2009, the Company incurred a total of
$25,210 and $31,292, respectively, in administration and other business expenses
to a major shareholder.





On
January 31, 2010 and January 31, 2009, the Company had the following notes
payable to a relative of the president:




F-9




January 31,2010
            
            
            January
      31, 2009Notes
      payable, on demand, unsecured, bearing interest
              at
      8% per annum, compounded monthly
            
            $
            -
            
            
            $
            580,000Accrued
      interest
            
            
            -
            
            
            
            20,864Notes
      payable to a related party
            
            $
            -
            
            
            $
            600,864





On
January 19, 2010, outstanding $744,500 in notes payable along with $69,992 of
accrued interest were converted into 2,714,973 common shares of the
Company.





On
January 19, 2010, $338,026 in related party debt was converted to 1,126,754
common shares of the Company.





NOTE
4 – UNPROVED MINERAL PROPERTIES





January
      31,2010
            
            
            January
      31, 2009Unproved
      mineral properties, beginning
            
            $
            753,519
            
            
            $
            -Acquisition
      costs
            
            
            58,702
            
            
            
            940,519Unproved
      mineral properties written down
            
            
            (168,740
            )
            
            
            (187,000
            )Unproved
      mineral properties, ending
            
            $
            643,481
            
            
            $
            753,519





Farellon
Property





Farellon
Alto Uno al Ocho Mineral Claim





On
September 25, 2007, Polymet entered into an agreement with a related company to
acquire, by assignment, the option to purchase the Farellon Alto Uno al Ocho
mining claims located in the Commune of Freirina, Province of Huasco, III Region
of Atacama, Chile. On April 25, 2008, the Company exercised the option to
acquire the right to purchase the property by paying $250,000 to the optionor
and $300,000 to the vendor to acquire the claims. The claims are subject to a
1.5% royalty on the net sales of minerals extracted from the property to a total
of $600,000.  The royalty payments are due monthly once exploitation
begins, and are subject to minimum payments of $1,000 per month.  The
Company has no obligation to pay the royalty if it does not commence
exploitation.  At January 31, 2010, the Company had spent a total of
$550,000 on the acquisition of those claims.





Cecil
Mineral Claims





On
September 5, 2008, the Company paid $20,000 to acquire the Cecil mining
claims.  The properties are located near the Farellon property in
commune of Freirina, Province of Huasco, III Region of Atacama,
Chile.  The acquisition of the Cecil properties was completed on
September 17, 2008. At January 31, 2010, the Company had spent a total of
$27,676 on the acquisition of these claims.





Mateo
Property





Margarita
Claims





On
November 27, 2008, the Company purchased the Margarita mining claims for
$16,072. At January 31, 2010 the Company spent a total of $16,678 on the
acquisition of these claims.





F-10




Che
Claims





On
October 10, 2008, the Company entered into an option to purchase contract with a
related company to acquire an option to purchase the Che Uno and Che Dos mining
claims under the terms of the option, as amended, the Company agreed to pay $444
on December 2, 2008 as consideration for the option agreement and $20,000 by
April 10, 2011 to acquire the Che claims.  On December 2, 2008, the
Company paid the consideration and acquired the option agreement. The claims are
subject to a 1% royalty on the net sales of minerals extracted from the property
to a total of $100,000.  The royalty payments are due monthly once
exploitation begins and are not subject to minimum payments.  The
Company has no obligation to pay the royalty if it does not commence
exploitation.  At January 31, 2010 the Company had paid a total of
$778 in option acquisition costs for these properties.





Irene
Claims





On
February 2, 2009, the Company entered into a letter of intent to purchase the
Irene claims from a related company for 21 million Chilean pesos (approximately
US $40,000). As at January 31, 2010, the Company had spent $0 on acquiring
these claims.





Mateo
Exploration Claims





At
January 31, 2010 the Company had spent a total of $6,660 (2008-$0) on the
acquisition of these claims.





Abandoned
claims





During
the year ended January 31, 2010, the Company abandoned mineral claims with a
cost of $29,685 (2008-$187,000) as it decided not to pursue exploration of the
claims.





NOTE
5 – COMMON STOCK





On
October 2, 2009, the Company approved a share consolidation of 14 to
1.





On
January 19, 2010, the Company issued 250,000 units at $0.25 per share in a
private placement for cash of $62,500.  Each unit consists of one
common share and one share purchase warrant.  Each share purchase
warrant is exercisable at $0.30 for a period of two years.





On
January 19, 2010, the Company issued 3,841,727 shares of its common stock to
settle $1,152,518 in debt with related party.





On
September 15, 2009, the Company issued 1,428,572 shares of the Company’s common
stock at $0.07 per share in a private placement for cash of
$100,000.





On August
27, 2008, our authorized common stock increased from 75,000,000 shares to
500,000,000 shares with a par value of $0.001 per share.





On May
14, 2008, the Company issued 71,430 units at $4.20 per unit in a private
placement for cash of $300,000.  Each unit consists of one share of
common stock and one warrant entitling the holder to purchase one share of
common stock for $7.00.





On April
21, 2008, the Company issued 285,717 units at $3.50 per unit in a private
placement for cash of $1,000,000.  Each unit consists of one share of
common stock and one warrant entitling the holder to purchase one share of
common stock for $4.90.





F-11




NOTE
6 – WARRANTS





January
      31, 2010Warrants
            
            
            Weighted
      average exercise priceWarrants,
      beginning
            
            
            369,052
            
            
            $
            5.37Granted
            
            
            250,000
            
            
            $
            0.30Exercised
            
            
            -
            
            
            
            -Expired
            
            
            (11,905
            
            
            $
            7.00Warrants,
      ending
            
            
            607,147
            
            
            $
            3.25





The
weighted average life remaining of the warrants at January 31, 2010 is 0.94
years.





NOTE
7 – INCOME TAXES





The
provision for income taxes differs from the amount that would have resulted in
applying the combined federal statutory tax rate as follows:3





2010
            
            
            2009Loss
      before discontinued operations and non-controlling
interest
            
            $
            (710,745
            )
            
            $
            (1,383,884
            )Statutory
      income tax rate
            
            
            34
            %
            
            
            34
            %Expected
      in tax recovery at statutory income tax rates
            
            $
            (241,653
            )
            
            $
            (470,521
            )Non-deductible
      expenses
            
            
            8,638
            
            
            
            903Difference
      in foreign tax rates
            
            
            52,118
            
            
            
            161,673Change
      in valuation allowance
            
            
            180,898
            
            
            
            307,945Income
      tax recovery
            
            $
            -
            
            
            $
            -





Temporary
differences that give rise to the following deferred income tax assets and
liabilities at are:





January
      31, 2010
            
            
            January
      31, 2009Deferred
      income tax assetsFederal
      loss carryforwards
            
            $
            59,292
            
            
            $
            230,511Foreign
      loss carryforwards
            
            
            176,914
            
            
            
            129,843Mineral
      properties
            
            
            38,366
            
            
            
            33,320574,572
            
            
            
            393,674Valuation
      allowance
            
            
            (574,572
            
            
            
            (393,674$
            -
            
            
            $
            -





The
Company has the $1,357,363 of United States federal net operating loss carry
forwards that may be offset against future taxable income. These losses
expire as follows:





Expiry2026
            
            $
            1,1882027
            
            
            14,9322028
            
            
            231,6442029
            
            
            430,2102030
            
            
            679,389$
            1,357,363





The
Company also has $1,040,670 of Chilean tax losses.  The Chilean tax
losses can be carried forward indefinitely.





F-12




NOTE
8 – SUBSEQUENT EVENTS





Subsequent
to January 31, 2010, the Company issued a promissory note for $50,000 to a
company owned by a relative of a director. The note is payable on demand,
unsecured and bears interest at 6% per annum, compounded monthly.





During
March and April 2010, the Company received proceeds of $165,000 related to the
subscription of 660,000 units at a price of $0.25 per unit.  Each unit
consists of one common share and one share purchase warrant.  Each
share purchase warrant is exercisable into one common share at $0.30 for a
period of two years.




The
Company evaluated events up to the date the financial statements were issued.
There were no subsequent events that provided additional evidence about
conditions that existed at the date of the balance sheet, including the
estimates inherent in the process of preparing financial
statements.




F-13





ITEM
9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE




On
September 30, 2009, we dismissed Mendoza Berger & Company, LLP as our
independent registered public accounting firm. This action was approved by the
board of directors.





The
reports of Mendoza Berger on our consolidated financial statements for the
fiscal years ended January 31, 2009 and 2008 did not contain any adverse opinion
or a disclaimer of opinion, but the reports issued on these financial statements
were modified as to our ability to continue as a going concern.





During
our fiscal years ended January 31, 2009 and 2008 and through September 30, 2009,
we had no disagreements with Mendoza Berger on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of Mendoza
Berger, would have caused it to refer to the disagreement in its reports on our
financial statements for those fiscal years.





On
October 30, 2009, we engaged Dale Matheson Carr-Hilton LaBonte LLP as our
independent registered public accounting firm. This engagement was approved by
our board of directors. During our fiscal years ended January 31, 2009 and 2008
and through September 30, 2009 we did not consult with Dale Matheson regarding
any of the matters or events set forth in Item 304(a)(2)(i) or Item
304(a)(2)(ii) of Regulation S-K.




ITEM
9A(T):  CONTROLS AND PROCEDURES




Report
on Controls and Procedures





We
carried out an evaluation, under the supervision and with the participation of
our management, including our chief executive officer and our chief financial
officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the period covered by this
report.  The evaluation was undertaken in consultation with our
accounting personnel.  Based on that evaluation, our chief executive
officer and our chief financial officer concluded that our disclosure controls
and procedures are effective to ensure that information required to be disclosed
by us in the reports that we file or submit under the Securities Exchange Act of
1934 is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission’s rules and
forms.





Report
on Internal Control over Financial Reporting





Our chief
executive officer and our chief financial officer are responsible for
establishing and maintaining internal control over financial
reporting.  Internal control over financial reporting is defined in
Rule 13a-15(f) and 15d-15(f) promulgated under the Securities Exchange Act of
1934 as a process designed by, or under the supervision of, our principal
executive and principal financial officers and effected by our board of
directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures
that:





·
            pertain
      to the maintenance of records that in reasonable detail accurately and
      fairly reflect the transactions and dispositions of our
      assets;


·
            provide
      reasonable assurance that transactions are recorded as necessary to permit
      preparation of financial statements in accordance with generally accepted
      accounting principles, and that our receipts and expenditures are being
      made only in accordance with authorizations of management and our
      directors; and


·
            provide
      reasonable assurance regarding prevention or timely detection of
      unauthorized acquisition, use or disposition of our assets that could have
      a material effect on the financial
statements.





34





Because
of its inherent limitations, our internal control over financial reporting may
not prevent or detect misstatements.  Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.  Projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may
deteriorate.





Our chief
executive officer and our chief financial officer assessed the effectiveness of
our internal control over financial reporting as of January 31,
2010.  In making this assessment, management used the criteria set
forth by the Committee of Sponsoring Organizations of the Treadway Commission
(COSO) in Internal
Control—Integrated Framework





Based on
our assessment, our chief executive officer and our chief financial officer
determined that, as of January 31, 2010, our internal control over financial
reporting is effective.





This
report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting.  Management's report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only management’s report in
this report.





Changes
in Internal Control over Financial Reporting





There
have been no changes in our internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15 (f) under the Exchange Act) during
the fourth quarter of the last fiscal year that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.




ITEM
9B:  OTHER INFORMATION




Not
applicable.




ITEM
10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE




Table 17 contains certain information
regarding our directors, executive officers and key personnel. There is a
family relationship between Caitlin Jeffs and Michael
Thompson.  Directors serve for one year and until their successors are
duly elected and qualified. In Chile, Polymet has one legal representative,
which is similar to a director, and a manager, which is similar to a
president.





Table 17:
Directors and officers


Name
            Age
            PositionCaitlin
      Jeffs
            34
            Director,
      chief executive officer, president and secretaryMichael
      Thompson
            40
            Director
      and vice president of explorationJohn
      Da Costa
            45
            Chief
      financial officer and treasurerKevin
      Mitchell
            49
            Legal
      representative and manager of
Polymet





Caitlin Jeffs, P.
Geo.  Ms. Jeffs has been a director since October 2007 and
our president, chief executive officer and secretary since April 21, 2008. She
has more than seven years’ of experience as an exploration geologist.  Ms.
Jeffs graduated from the University of British Columbia in 2002 with an honors
bachelor of science in geology. She is a professional geologist on the
register of the Association of Professional Geoscientists of Ontario. She
worked for Placer Dome (CLA) Ltd. in Canada from February 2003 until May 2006
where she worked as both a project geologist managing drill programs for the
exploration department at Placer Dome’s Musselwhite Mine in Northwestern Ontario
and then as part of the generative team evaluating potential projects in
Northwestern Ontario. Placer Dome (since acquired by Barrick Gold Corp. and Gold
Corp.) was a major mining company with operations in North America, Australia,
Africa and South America.  None of these companies is related to Red
Metal. Ms. Jeffs was a self-employed consulting geologist from May 2006 to
April 2007. She is one of the founders and the general manager of Fladgate
Exploration Consulting Corporation, a firm of consulting geologists in Ontario,
Canada, which provides its services to Red Metal. She was a director of Trilogy
Metals Inc., a resource exploration company listed on the TSX Venture Exchange,
from July 2006 to May 2007.  She lives with Michael Thompson as a
family.





35




Michael Thompson, P. Geo. Mr.
Thompson has been a director since October 2007 and our vice-president of
exploration since April 2008. He has more than ten years’ of experience as an
exploration geologist.  Mr. Thompson graduated from the University of
Toronto in 1997 with an honors bachelor of science in geology.  He is
a professional geologist on the register of the Association of Professional
Geoscientists of Ontario.  He worked in Canada for Teck Resources Ltd.
from 1999 until 2002 as a project geologist managing exploration projects in
Northwestern Ontario. From January 2003 until May 2006 he worked for Placer Dome
(CLA) Ltd. as both a project geologist managing drill programs for the
exploration department at Placer Dome’s Musselwhite Mine in Northwestern Ontario
and then as part of the generative team evaluating potential projects in
Northwestern Ontario. Teck Resources and Placer Dome (since acquired by Barrick
Gold Corp. and Gold Corp.) are major mining companies with operations in North
America, Australia, Africa and South America. None of these former employers is
related to Red Metal. Mr. Thompson was a self-employed consulting geologist
from May 2006 to April 2007.  He is a founder and the president of
Fladgate Exploration Consulting Corporation, a firm of consulting geologists in
Ontario, Canada, which provides its services to Red Metal. He lives with Caitlin
Jeffs as a family.





We
believe that the extensive education and experience that Ms. Jeffs and Mr.
Thompson have as geologists make them uniquely qualified to serve as directors
of our company.  Their knowledge of mining and geology provides them
with the tools necessary to set goals for our business and to determine how
those goals can be achieved.





John Da Costa.Mr. Da
Costa has been our chief financial officer and treasurer since May 13,
2008.  Mr. Da Costa has more than twenty years of experience providing
bookkeeping and accounting services for both private and public companies and is
the founder and president of Da Costa Management Corp., a company that has
provided management and accounting services to public and private companies
since August 2003.  Red Metal is a client of Da Costa Management
Corp.  Mr. Da Costa is also the treasurer of Rock City Energy Corp., a
non-reporting public company, a position he has held since August 2006, a
director and the chief executive officer (since February 2006) and chief
financial officer and secretary (since May 2002) of GlobeTrac Inc., also a
public company; and a director (from March 2004 – to July 2007) and chief
executive officer and president (from July 2006 – to July 2007) and the chief
financial officer (from April 2005 – to July 2007) of Trilogy Metals Inc. a
resource exploration company listed on the TSX Venture
Exchange.  GlobeTrac sold, marketed, distributed and installed global
wireless tracking and telematics equipment in Europe until November 2004 when it
wound down its operations.  GlobeTrac’s only business now is receiving
and accounting for royalties and commissions receivable from the supplier of the
telematics equipment.  GlobeTrac’s business objective is to locate and
complete a merger with or acquire a viable business.





Biographical
information: Significant employee





Kevin Mitchell.  Mr.
Mitchell has been the legal representative and manager of Minera Polymet
Limitada since it was formed in August 2007.  He is a Canadian who has
lived in Chile for more than twenty years.  He has owned and operated
a heavy equipment company for all of that time, mainly servicing the mining
industry.  Since February 2007 he has been the legal representative
and manager of Minera Farellon Limitada, a Chilean company that investigates
potential projects, conducts due diligence reviews, and provides logistical
support.




36


During
the past ten years none of our directors or executive officers was involved in
any legal proceedings described in subparagraph (f) of Item 401 of Regulation
S-K.





Directors’
compensation





Our
directors did not receive compensation during the years ended January 31, 2009
and 2010.


Section
16(a) Beneficial Ownership Reporting Compliance





Section
16(a) of the Securities Exchange Act of 1934, as amended, and the rules
thereunder require our officers and directors, and persons who own more than 10%
of our common stock, to file reports of ownership and changes in ownership with
the Securities and Exchange Commission and to furnish us with
copies.  During the past fiscal year, our officers, directors and 10%
shareholders were subject to this requirement from February 1, 2009 through
August 31, 2009.  To our knowledge, based solely upon review of the copies
of such reports received or written representations from the reporting persons,
we believe that during the period from February 1, 2009 through August 31, 2009,
our directors, executive officers and persons who own more than 10% of our
common stock complied with all Section 16(a) filing requirements.





Code
of Ethics





We have
adopted a code of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions.  Our code of ethics will be
provided to any person without charge, upon request.  Requests should
be in writing and addressed to Caitlin Jeffs, c/o Red Metal Resources Ltd., 195
Park Avenue, Thunder Bay, Ontario P7B 1B9.





Corporate
Governance





Our board
of directors does not have an audit committee, a compensation committee or a
nominating committee.





We have
not adopted any procedures by which our security holders may recommend nominees
to our board of directors and that has not changed during the last fiscal
year.





None of
the members of our board of directors qualifies as an “audit committee financial
expert”, as defined by Item 407 of Regulation S-K promulgated under the
Securities Act of 1933 and the Securities Exchange Act of 1934.




ITEM
11: EXECUTIVE COMPENSATION




Table 18
discloses information with respect to all compensation awarded to, earned by or
paid to our chief executive officer and up to two of our executive officers
whose annual salary and bonus exceeded $100,000 during our last two completed
fiscal years. We have no employment agreements with these executive
officers.




37




Table
      18: Summary compensationName
      and principal position
            Fiscal
      year
            All
      other
              compensation
              ($)
            Total
              ($)Caitlin
      Jeffs
              Chief
      executive officer, president and secretary
            2010
            115,213a
            115,213a2009
            327,081a
            327,081aMichael
      Thompson
              Vice
      president of exploration
            2010
            115,213a
            115,213a2009
            327,081a
            327,081aJohn
      Da Costa
              Chief
      financial officer
            2010
            127,540b
            127,540b2009
            123,823b
            123,823baPaid
      or accrued to a company controlled by Caitlin Jeffs and Michael Thompson
      for administrative and geological services
              bPaid
      or accrued to a company owned by John Da Costa for consulting and out of
      pocket expenses




When we
are able to do so, our plan is to implement a compensation program consisting of
base salary, bonuses and awards of stock options or shares of common
stock.  We believe that a combination of cash and common stock or
options will allow us to attract and retain the services of the individuals who
will help us achieve our business objectives, thereby increasing value for our
shareholders.  We intend to grant options or shares of common stock
because we believe that share ownership by our employees is an effective method
to deliver superior shareholder returns by increasing the alignment between the
interests of our employees and our shareholders.





In
setting the compensation for our officers, we plan to look primarily at the
officer’s experience and responsibilities, at salaries paid to others in
businesses comparable to ours, and at our ability to replace the
officer.  We are not likely to pay salaries to our officers until we
generate cash flow from our operations.





We also
expect that we may pay bonuses in the future to reward exceptional performance,
either by the officer or by the company.





We have
granted no stock options to our executive officers or any other
persons.




ITEM
12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT




Table 19 presents, as of April 30,
2010, information regarding the beneficial ownership of our common stock with
respect to each of our executive officers, each of our directors, each person
known by us to own beneficially more than 5% of the common stock, and all of our
directors and executive officers as a group.  Beneficial ownership is
determined under the rules of the Securities and Exchange Commission and
generally includes voting or investment power over securities.  Each
individual or entity named has sole investment and voting power with respect to
the shares of common stock indicated as beneficially owned by them, subject to
community property laws, where applicable, except where otherwise
noted.




Shares of common stock subject to
options or warrants that are currently exercisable or exercisable within 60 days
from April 30, 2010 are considered outstanding and beneficially owned by the
person holding the options or warrants for the purpose of computing the
percentage ownership of that person but are not treated as outstanding for the
purpose of computing the percentage ownership of any other
person.




38




Table
      19: Security ownershipClass
      of security
            Name
      and address of beneficial owner
            Number
      of shares
              beneficially
      owned
            Percentage
      of
              common
      stockCommon
      stock
            Caitlin
      Jeffsa
            1,608,576
            15.75Common
      stock
            Michael
      Thompsona
            2,858
            0.03Common
      stock
            Fladgate
      Exploration Consulting Corp.b
            830,087
            8.13Common
      stock
            John
      Da Costac
            477,024d
            4.67All
      officers and directors as a group
            2,918,545
            28.57Common
      stock
            Richard  N.
      Jeffse,f
            2,929,261g
            28.61Common
      stock
            Susan
      Jeffse,f
            580,004h
            5.57Common
      stock
            Kevin
      Mitchellf,i
            535,725
            5.24Common
      stock
            Laboa
      Holdings Inc.f
            535,725
            5.24Common
      stock
            T.A.B.
      Millsfk
            800,000j
            7.54aThe
      address for Caitlin Jeffs and Michael Thompson is 195 Park Avenue, Thunder
      Bay, Ontario P7B 1B9.
              bFladgate
      Exploration Consulting Corporation is controlled by Caitlin Jeffs and
      Michael Thompson.
              cThe
      address for John Da Costa is 610-1100 Melville Street, Vancouver, British
      Columbia V6E 4A6.
              dThis
      sum includes 296,667 shares held by DaCosta Management Corp., a company
      owned by John Da Costa.
              eThe
      address for Richard N. Jeffs and Susan Jeffs is 49 Pont Street, London,
      United Kingdom SW1X 0BD.
              f5%
      shareholder
              gThis
      sum includes warrants exercisable for 23,810 shares.
              hThis
      sum includes warrants exercisable for 200,000 shares.
              iThe
      address for Kevin Mitchell is Baldomero Lillo 3260, Vallenar, III Region,
      Chile.
              jThis
      sum includes warrants exercisable for 400,000 shares.
              kThe address for Mr. Mills is College Farm House, Tetbury Road,
      Cirencester, Glocs., United Kingdom GL7
6PY.




ITEM
13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE




Director
independence




Using the
definition of “independent” in Section 803 of the Rules of the NYSE Amex, we
have determined that none of our directors is independent.





Transactions
with related persons





Since
February 1, 2008, the directors, executive officers, or holders of more than 5%
of our common stock, or members of their immediate families, as described below,
have completed transactions with us in which they had direct or indirect
material interests that exceeded the lesser of $120,000 or 1% of the average of
our total assets at year end for the last two completed fiscal
years.





Amounts
due to related parties





Table 20
describes amounts due to related parties that were incurred during the fiscal
years ended January 31, 2010 and January 31, 2009, and through April 23,
2010.




39




Table 20:
Due to related parties


Period
      ended
                April
      23, 2010*
              Fiscal
      years ended January 31,2010
              2009Due
      to Da Costa Management Corp.a
              $70,611
              $26,324
              $13,552Due
      to Fladgate Exploration Consulting Corporationb
              $92,780
              $48,920
              $130,345Due
      to Minera Farellon Limitadac
              $11,123
              $18,594
              $5,074Due
      to Kevin Mitchelld
              $10,380
              $5,718
              $2,363
  *The amounts accrued at April 23, 2010 may change if additional
      services are rendered after that date.
              aDuring the period from February 1, 2010 to April 23, 2010 we paid
      or accrued a total of $31,049 in consulting and other business expenses to
      Da Costa Management Corp. During the years ended January 31, 2010 and
      2009, we paid or accrued a total of $127,540 and $123,823, respectively in
      consulting and other business expenses to Da Costa Management Corp. This
      company became related on May 13, 2008 when its owner was appointed CFO
      and treasurer of Red Metal.
              bDuring the period from February 1, 2010 to April 23, 2010 we paid
      or accrued a total of $41,653 in administration, advertising and
      promotion, office, and travel and entertainment costs to Fladgate
      Exploration Consulting Corporation, a company controlled by two directors.
      During the year ended January 31, 2010, we paid or accrued a total of
      $115,213 in administration, advertising and promotion, mineral
      exploration, office, and travel and entertainment costs to the same
      company. During the year ended January 31, 2009, we paid or accrued a
      total of $327,081 in administration, advertising and promotion, mineral
      exploration, office, regulatory and travel and entertainment costs to the
      same company. During the year ended January 31, 2008, we paid or accrued
      $67,503 in mineral exploration and travel and entertainment expenses to
      the same company.
              cDuring the period from February 1, 2010 to April 23, 2010 we paid
      or accrued a total of $17,670 in administration, automobile, rental
      expenses to Minera Farellon Limitada, a company owned by Kevin Mitchell, a
      major shareholder, and Richard Jeffs, the father of our president. During
      the years ended January 31, 2010 and 2009, we paid or accrued a total of
      $61,002 and $289,348 in administration, automobile, mineral exploration,
      rental, and other business expenses to the same company.  During the
      year ended January 31, 2009, we received $15,658 in royalty income from
      the same company.
              dDuring the period from February 1, 2010 to April 23, 2010 we paid
      or accrued a total of $5,827 in administration expense to Kevin Mitchell,
      a major shareholder. During the years ended January 31, 2010 and 2009, we
      paid or accrued $25,210 and $31,292, respectively, in administration and
      other business expenses to the same
shareholder.





Notes payable to related
party





Table 21
describes the promissory notes and accrued interest payable to Richard Jeffs,
the father of our president, on January 31, 2010, January 31, 2009, and January
31, 2008 and through April 23, 2010.





Table 21:
Notes payable to Richard Jeffs and a company owned by Richard Jeffs


Fiscal
      years ended January 31,Period
      ended
              April
      23, 2010
            2010
            2009
            2008Notes
      payable, on demand, unsecured, bearing interest at 8% per annum,
      compounded monthly
            $50,000
            
            –
            $580,000
            
            –Accrued
      interest
            503
            
            –
            20,864
            
            –Total
      payable to a related partya
            $50,503
            
            –
            $600,864
            
            –  a
      On January 19, 2010, outstanding principal of $744,500 and accrued
      interest of $69,992 were converted to shares of our common stock at $0.30
      per share.  The largest aggregate amount of principal
      outstanding during the period for which disclosure is provided was
      $744,500.




40


Transactions
with directors and officers





We have
completed a number of transactions with our directors and officers:





•
            On
      April 21, 2008, we issued 2,858 units at $3.50 per unit in a private
      placement to Michael Thompson for $10,000 cash.  Each unit
      consisted of one share of our common stock and one warrant entitling the
      holder to purchase one share of common stock for $4.90 per
      share.  The warrants expired unexercised on April 21,
      2010.


•
            On
      September 15, 2009, we issued 1,428,571 shares of our common stock at
      $0.07 per share in a private placement to Caitlin Jeffs for $100,000
      cash.


•
            On
      January 19, 2010 we issued, at a deemed price of $0.30 per share, 830,087
      shares of our common stock to Fladgate Exploration Consulting Corporation,
      owned by our directors, to settle $249,026 in accrued debt for services
      rendered, and 296,667 shares to Da Costa Management Corporation, owned by
      our chief financial officer, to settle $89,000 in accrued debt for
      services rendered.





Transactions
with other related parties





We have a
close working relationship with Minera Farellon Limitada, which is owned by
Kevin Mitchell, Polymet’s legal representative and a holder of more than 5% of
our shares of common stock, and Richard Jeffs, the father of our president.
Minera Farellon provides administrative services and supplies our logistical
needs under a contract. Minera Farellon also investigates potential claims and
often ties them, either by staking new claims or optioning or buying others’
claims. This gives us an opportunity to review them to decide whether they are
of interest to us. We have completed a number of material transactions with
Minera Farellon:





•
            On
      April 25, 2008, we paid Minera Farellon Limitada $250,000 to acquire the
      option to purchase the Farellon 1 – 8 mining
  claims.


•
            Between
      February 12, 2008 and August 8, 2008, we paid Minera Farellon Limitada
      $102,000 to acquire the option to purchase the Santa Rosa mining
      claim.


•
            Between
      February 12, 2008 and May 23, 2008, we paid Minera Farellon Limitada
      $55,000 to keep our option to purchase the Camila mining claims in good
      standing.





We have
completed a number of transactions with relatives of our president:




•
            On
      August 13, 2007, we issued 23,810 units at $4.20 per unit in a private
      placement to Richard Jeffs, the father of our president.  Each
      unit consisted of one share of our common stock and half of one
      warrant.  Two share purchase warrants entitled the holder to
      purchase one share of common stock for $7.00 per share.  The
      warrants expired unexercised on August 13,
  2009.


•
            On
      April 21, 2008, we issued 142,858 units at $3.50 per unit in a private
      placement to Mr. Jeffs.  Each unit consists of one share of our
      common stock and one warrant entitling the holder to purchase one share of
      common stock for $4.90 per share.  The warrants expired
      unexercised on April 21,
2010.


•
            On
      May 14, 2008, we issued 23,810 units at $4.20 per unit in a private
      placement to Mr. Jeffs.  Each unit consists of one share of our
      common stock and one warrant entitling the holder to purchase one share of
      common stock for $7.00 per share.  The warrants expire on May
      14, 2010.   The warrants must be exercised if, at any time after
      November 14, 2008, our shares trade at $11.20 per share for 30 consecutive
      days. At the date of filing none of these warrants had been
      exercised.


•
              On
      January 19, 2010 we issued 2,714,973 shares of our common stock at $0.30
      per share to pay promissory notes issued to Mr. Jeffs for cash plus
      accrued interest for a total of
$814,492.


•
            On
      January 19, 2010, we issued 200,000 units at $0.25 per unit to Susan
      Jeffs, the mother of our president. Each unit consists of one common share
      and one warrant entitling the holder to purchase one share of common stock
      for $0.30 per share. The warrants expire on January 19,
    2012.




41


We issued
shares to a number of shareholders who held more than 5% of the issued shares of
our common stock at the time of the transaction. None of these shareholders
holds 5% as of the date of this report.





•
            On
      April 21, 2008, we issued 125,715 units at $3.50 per unit in a private
      placement to Money Layer Limited for cash of $440,000.  Each
      unit consisted of one share of our common stock and one warrant entitling
      the holder to purchase one share of common stock for $4.90 per
      share.  The warrants expired unexercised on April 21,
      2010.


•
            On
      April 21, 2008, we issued 14,286 units at $3.50 per unit in a private
      placement to Kinnaman Trading Company Limited for cash of $50,000. Each
      unit consisted of one share of common stock and one warrant entitling the
      holder to purchase one share of common stock for $4.90 per share. The
      warrants expired unexercised on April 21,
2010.


•
            On
      May 14, 2008, we issued 23,810 units at $4.20 per unit in a private
      placement to Kinnaman Trading Company Limited for cash of $100,000. Each
      unit consisted of one share of our common stock and one warrant entitling
      the holder to purchase one share of common stock for $7.00 per share. The
      warrants expire on May 14, 2010. The warrants must be exercised if, at any
      time after November 14, 2008, our shares trade at $11.20 per share for 30
      consecutive days. At the date of filing none of these warrants had been
      exercised.


•
            On
      May 14, 2008, we issued 23,810 units at $4.20 per unit in a private
      placement to Pilenga Limited for cash of $100,000. Each unit consists of
      one common share and one warrant entitling the holder to purchase one
      share of common stock for $7.00 per share. The warrants expire on May 14,
      2010. The warrants must be exercised if, at any time after November 14,
      2008, our shares trade at $11.20 per share for 30 consecutive days. At the
      date of filing none of these warrants had been
  exercised.




ITEM
14: PRINCIPAL ACCOUNTING FEES AND SERVICES




(1)  Audit
Fees and Related Fees





The
aggregate fees billed for each of the last two fiscal years for professional
services rendered by our principal accountant for the audit of our annual
consolidated financial statements and for the review of our financial statements
or for services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for those fiscal years
were:





2010 - $0
– Manning Elliot Chartered Accountants


2009 -
$2,757 – Manning Elliot
Chartered Accountants





2010 -
$27,500 – Mendoza Berger & Company, L.L.P.


2009 -
$42,826 – Mendoza Berger & Company, L.L.P.





2010 -
$9,528 – Dale Matheson Carr-Hilton Labonte LLP


2009 - $0
– Dale Matheson Carr-Hilton Labonte LLP





(2)  Audit-Related
Fees





The
aggregate fees billed in each of the last two fiscal years for assurance and
related services by the principal accountants that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported in the preceding paragraph:





2010 - $0
– Manning Elliot Chartered Accountants


2009 - $0
– Manning Elliot Chartered Accountants




42


2010 -
$8,202 – Mendoza Berger & Company, L.L.P.


2009 - $0
- Mendoza Berger & Company, L.L.P.





2010 - $0
– Dale Matheson Carr-Hilton Labonte LLP


2009 - $0
– Dale Matheson Carr-Hilton Labonte LLP





(3)  Tax
Fees





The
aggregate fees billed in each of the last two fiscal years for professional
services rendered by the principal accountant for tax compliance, tax advice,
and tax planning was:





2010 - $0
– Manning Elliot Chartered Accountants


2009 -
$1,669 – Manning Elliot Chartered Accountants





2010 - $0
– Mendoza Berger & Company, L.L.P.


2009 -
$1,491 – Mendoza Berger & Company, L.L.P.





2010 -
$789 – Javier Cortez Godoy


2009 -
$954 – Javier Cortez Godoy





2010 - $0
– Dale Matheson Carr-Hilton Labonte LLP


2009 - $0
– Dale Matheson Carr-Hilton Labonte LLP





(4)  All
Other Fees





The
aggregate fees billed in each of the last two fiscal years for the products and
services provided by the principal accountant, other than the services reported
in paragraphs (1), (2) and (3) was:





2010 - $0
– Manning Elliot Chartered Accountants


2009 - $0
– Manning Elliot Chartered Accountants





2010 - $0
– Mendoza Berger & Company, L.L.P.


2009 -
$1,000 – Mendoza Berger & Company, L.L.P.





2010 - $0
– Dale Matheson Carr-Hilton Labonte LLP


2009 - $0
– Dale Matheson Carr-Hilton Labonte LLP




We do not
have an audit committee.  Our board of directors pre-approves all
audit and permissible non-audit services provided by the independent auditors.
 These services may include audit services, audit-related services, tax
services and other services.




ITEM
15: EXHIBITS




See the
index to financial statements on page 33.





The
following table sets out the exhibits either filed herewith or incorporated by
reference.




43




Exhibit
            Description3.1
            Articles
      of Incorporation13.2
            By-laws110.1
            Agreement
      to assign contract for the option to purchase mining holdings dated
      September 25, 2007 between Minera Farellon Limitada and Minera Polymet
      Limitada210.2
            Contract
      for the option to purchase mining holdings dated May 2, 2007 between
      Compañia Minera Romelio Alday Limitada and Minera Farellon Limitada210.3
            Amendment
      number 1 to Agreement to assign contract for the option to purchase mining
      holdings dated November 20, 2007310.4
            Contract
      for the option to purchase mining holdings dated December 7, 2007 between
      Ingenieria De Proyectos, Desarrollo, Estudios y Servicios H.I.T. Limitada
      and Minera Farellon Limitada410.5
            Santa
      Rosa option agreement to acquire mining concession dated February 1, 2008
      between Minera Farellon Limitada and Minera Polymet Limitada410.6
            Contract
      for the option to purchase mining holdings dated September 10, 2007
      between Antolin Amadeo Crespo Garcia and Minera Farellon Limitada410.7
            Camila
      option agreement to acquire mining concession dated February 1, 2008
      between Minera Farellon Limitada and Minera Polymet Limitada410.8
            Contract
      for the option to purchase mining holdings dated October 10, 2008 between
      Minera Farellon Limitada and Minera Polymet Limitada6,Amendment #1 dated October 10, 20086
      and Amendment #2 dated April 7, 2009510.9
            Letter
      of intent for the purchase of Pertenencia Irene Una al Dos dated February
      2, 2009 between Minera Farellon Limitada and Minera Polymet Limitada610.10
            Contract
      for consulting services dated April 1, 2009 between Minera Farellon
      Limitada and Minera Polymet Limitada5,710.11
            Loan
      Agreement dated November 19, 2008 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated November 19, 2008 in favor of
      Richard N. Jeffs610.12
            Loan
      Agreement dated February 11, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated February 11, 2009 in favor of
      Richard N. Jeffs610.13
            Loan
      Agreement dated February 25, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated February 25, 2009 in favor of
      Richard N. Jeffs610.14
            Loan
      Agreement dated April 6, 2009 between Red Metal Resources Ltd. and Richard
      N. Jeffs and Promissory Note dated April 6, 2009 in favor of Richard N.
      Jeffs610.15
            Loan
      Agreement dated April 28, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated April 28, 2009 in favor of
      Richard N. Jeffs610.16
            Termination
      of option to purchase Santa Rosa property610.17
            Loan
      Agreement dated July 17, 2008 between Red Metal Resources Ltd. and Richard
      N. Jeffs and Promissory Note dated July 17, 2008 in favor of Richard N.
      Jeffs610.18
            Loan
      Agreement dated July 30, 2008 between Red Metal Resources Ltd. and Richard
      N. Jeffs and Promissory Note dated July 30, 2008 in favor of Richard N.
      Jeffs610.19
            Loan
      Agreement dated September 11, 2008 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated September 11, 2008 in favor of
      Richard N. Jeffs610.20
            Loan
      Agreement dated October 22, 2008 between Red Metal Resources
      Ltd. and Richard N. Jeffs and Promissory Note dated October 22, 2008
      in favor of Richard N. Jeffs610.21
            Loan
      Agreement dated May 08, 2009 between Red Metal Resources Ltd. and Richard
      N. Jeffs and Promissory Note dated May 08, 2009 in favor of Richard N.
      Jeffs810.22
            Loan
      Agreement dated May 12, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated May 12, 2009  in
      favor of Richard N. Jeffs810.23
            Loan
      Agreement dated June 10, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated June 10,
      2009  in favor of Richard N. Jeffs910.24
            Loan
      Agreement dated July 6, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated July 6, 2009  in
      favor of Richard N. Jeffs910.25
            Loan
      Agreement dated August 11, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated August 11,
      2009  in favor of Richard N. Jeffs910.26
            Loan
      Agreement dated August 25, 2009 between Red Metal Resources Ltd. and
      Richard N. Jeffs and Promissory Note dated August 25, 2009 in favor
      of Richard N. Jeffs910.27
            Loan
      Agreement dated September 09, 2009 between Red Metal Resources Ltd.
      and Richard N. Jeffs and Promissory Note dated September 09,
      2009  in favor of Richard N. Jeffs910.28
            Contract
      dated September 21, 2009 with Micon International Limited for preparation
      of a NI 43-101 technical report910.29
            Loan
      Agreement and Promissory Note dated February 11, 2010 between Red
      Metal Resources Ltd. and Wet Coast Management Corp. in favor of Wet Coast
      Management Corp.1016
            Letter
      re change in certifying accountant921
            List
      of significant subsidiaries of Red Metal Resources Ltd.631.1
            Certification
      of chief executive officer and president pursuant to Rule
      13a-14(a)/15d-14(a)1031.2
            Certification
      of chief financial officer pursuant to Rule 13a-14(a)/15d-14(a)1032.
            Certification
      pursuant to 18 U.S.C. Section 135010   44
  1Incorporated
      by reference from the registrant’s report on Form SB-2 filed with the
      Securities and Exchange Commission on May 22, 2006 as file number
      333-134-363
              2Incorporated
      by reference from the registrant’s report on Form 8-K filed with the
      Securities and Exchange Commission on October 2, 2007
              3Incorporated
      by reference from the registrant’s report on Form 8-K filed with the
      Securities and Exchange Commission on May 1, 2008
              4
      Incorporated by reference from the registrant’s annual report on Form
      10-KSB for the fiscal year ended January 31, 2008 filed with the
      Securities and Exchange Commission on May 13, 2008
              5Incorporated
      by reference from the registrant’s report on Form 8-K filed with the
      Securities and Exchange Commission on April 15, 2009
              6Incorporated
      by reference from the registrant’s annual report on Form 10-K for the
      fiscal year ended January 31, 2009 filed with the Securities and Exchange
      Commission on May 4, 2009
              7Denotes
      a management contract
              8Incorporated
      by reference from the registrant’s report on Form 8-K filed with the
      Securities and Exchange Commission on May 15, 2009
              9
      Incorporated by reference from the registrant’s report on Form 10 filed
      with the Securities and Exchange Commission on February 12,
      2010
              10Filed
      herewith





45





SIGNATURES





In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.





Dated:  April
30, 2010





RED
      METAL RESOURCES LTD.By:
            /s/
      Caitlin JeffsCaitlin
      Jeffs, Chief Executive Officer





By:
            /s/
      John Da CostaJohn
      Da Costa, Chief Financial Officer





Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated





Signature
            
            Title
            
            Date/s/
      Caitlin Jeffs
            
            Chief
      Executive Officer,
            
            April
      30, 2010Caitlin
      Jeffs
            
            President,
      Secretary and director/s/
      John Da Costa
            
            Chief
      Financial Officer
            
            April
      30, 2010John
      Da Costa/s/
      Michael Thompson
            
            Director
            
            April
      30, 2010Michael
      Thompson









46