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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**Form 10-KSB**

(Mark One)
| x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|--------------------------------------------------------------------------------------|

For the fiscal year ended  **January 31, 2006**
| [      | ]                                    | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|--------|--------------------------------------|------------------------------------------------------------------------------------|
|   | For the transition period from  | to                                                                            |  
Commission file number  **000-50071**

**LIBERTY STAR GOLD CORP.**

(Name of small business issuer in its charter)

 

**Nevada**

 

**90-0175540**

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

**2766 N Country Club Road, Tucson, Arizona**

 

**85716**

(Address of principal executive offices)

 

(Zip Code)

Issuer's telephone number  (**520) 731-8786**

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

Title of each class**Nil**

 

Name of each exchange on which registered**Nil**

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

**Common Stock, par value $0.001**

(Title of class)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x     No [   ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will 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-KSB or any amendment to this Form 10-KSB.  [   ]

State issuer's revenues for its most recent fiscal year.  Nil

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 sold, or the average bid and asked prices of such common equity, as of a specified date within 60 days.  (See definition of affiliate in Rule 12b-2 of the Exchange Act.)

 

 

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Note:  If determining whether a person is an affiliate will involve an unreasonable effort and expense, the issuer may calculate the aggregate market value of the common equity held by non-affiliates on the basis of reasonable assumptions, if the assumptions are stated.

**28,464,174 shares of Common Stock @ $1.175 (1) = $33,445,404**

(1)  Average of bid and ask closing prices on April 24, 2006.

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

**37,254,174 shares of Common Stock issued and outstanding as of April 17, 2006.**

Transitional Small Business Disclosure Format (Check one):  

Yes [  

]  

No x.

 

 

 

 

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**PART I**

**Item 1.**

**Description of Business.**

This annual report contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  These statements relate to future events or our future financial performance.  In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts" or "potential" or the negative of these terms or other comparable terminology.  These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors" beginning on page 6 of this report, that may cause our company's or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by theseforward-looking statements.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.

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

As used in this annual report, the terms "we", "us" and "Company", and "Liberty Star" mean our company, Liberty Star Gold Corp., unless otherwise indicated.  

***Business development***

We were incorporated August 20, 2001 in the State of Nevada, under the name "Titanium Intelligence, Inc."  From incorporation until January 2004, we were a development stage company focused primarily on developing an Internet textile trade center website to facilitate the trade of textile products manufactured in China.  We began to operate a textile trade center website on April 2, 2002.  Our board of directors completed a review and evaluation of our textile trade center website business in December 2003 and determined in January 2004 to discontinue our textile trade center website operations and become an exploration stage company engaged in the acquisition and exploration of mineral properties through the acquisition of Liberty Star Gold Corp., a Nevada Company, and its subsidiary, Big Chunk Corp., an Alaska corporation pursuant to the Agreement and Plan of Merger with Alaska Star Minerals LLC described below.

Effective January 6, 2004, we increased our authorized capital from 25,000,000 shares of common stock to 200,000,000 shares of common stock.  Concurrent with this increase to our authorized capital, each previously issued and outstanding share of our common stock was exchanged for eight shares of our common stock.  As a result, the number of shares of our common stock issued and outstanding increased from 2,500,000 shares to 20,000,000 shares.

**Acquisition of Liberty Star Gold Corp.**

 

On January 19, 2004, we entered into an Agreement and Plan of Merger with Alaska Star Minerals LLC, James Briscoe and Paul Matysek (then the beneficial owners of Alaska Star Minerals LLC), Liberty Star Gold Corp. (then a private Nevada company wholly owned by Alaska Star Minerals LLC) and Liberty Star Acquisition Corp. (then our wholly owned Nevada subsidiary). 

The Agreement and Plan of Merger provided for the acquisition of Liberty Star Gold Corp. by Liberty Star Acquisition Corp.  The acquisition was completed effective February 3, 2004 and Big Chunk Corp. (then a subsidiary of Liberty Star Gold Corp.) became the wholly owned subsidiary of Liberty Star Acquisition Corp.  We acquired 100% of the issued and outstanding shares of Liberty Star Gold Corp. in exchange for the issuance of 17,500,000 shares of our company’s common stock to Alaska Star Minerals LLC. The acquisition of Liberty Star Gold Corp. has been accounted for as an asset purchase reported at the fair value of our common shares issued based on the average market closing price of our common shares over the 3 trading dates prior to the completion of the asset purchase. Upon completion of the acquisition, we issued 17,500,000 shares of our common stock to 

 

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Alaska Star Minerals LLC.  As a result of this issuance, the number of outstanding shares of our common stock was increased from 20,000,000 shares to 37,500,000 shares, of which approximately 46.7% were owned by Alaska Star Minerals LLC. 

On February 5, 2004, Liberty Star Acquisition was merged into our company through a parent/subsidiary merger completed pursuant to Nevada Revised Statute 92A.180.  Also on February 5, 2004, our company’s name was changed from Titanium Intelligence, Inc. to “Liberty Star Gold Corp.”  Big Chunk Corp. is now our wholly-owned subsidiary.

On February 5, 2004, we commenced operations in the acquisition and exploration of mineral properties business following completion of the above transactions pursuant to which our company indirectly acquired 981 mineral claims, spanning 237 square miles in the Iliamna region of southwestern Alaska (the "Alaska Claims").  Our company is considered to be an exploration stage company, as it has not generated any revenues from operations. 

The acquisition of Liberty Star Gold Corp. has been accounted for as an asset purchase reported at the fair value of our common shares issued based on the average market closing price of our common shares over the 3 trading dates prior to the completion of the asset purchase.  Titanium Intelligence, Inc. acquired mineral claims, assumed liabilities of $313,895 and issued 17,500,000 shares valued at $15,925,000.  Our company conducted a fair value assessment of the asset acquisition following the transaction date and determined the fair value of the mineral claims received was less than the value paid.  The fair value was determined by an independent appraisal of the mineral claims.  As a result we recorded an impairment loss of $15,907,500 in the same quarter as the asset acquisition.

As a condition to the closing of the acquisition, we agreed to appoint James Briscoe and Jon Young as members of our board of directors on closing, and Chen (Jason) Wu and Paulo Martins agreed to and did tender their respective resignations as directors at the closing of the acquisition.  James Briscoe and Jon Young were appointed to our board of directors on February 3, 2004.  John Guilbert was appointed as one of our directors subsequent to the acquisition on February 5, 2004.

On October 29, 2004 and later as amended, Alaska Star Minerals, L.L.C., Briscoe Investments, LP, RLLP, Paul Matysek, Bedrock Capital Corporation Ltd., a Nevada corporation wholly owned and controlled by Paul Matysek, and our company, agreed to the following:

1. that Alaska Star Minerals LLC would surrender to our company for cancellation 7,000,000 of our common shares;

2. that 1,750,000 shares would be transferred to Bedrock Capital Corporation in exchange for the redemption of Paul Matysek’s membership interest in Alaska Star Minerals LLC.  Bedrock Capital Corporation Ltd. is owned by Paul Matysek; and,

3. that the 1,750,000 common shares to be issued to Bedrock Capital Corporation should be registered for resale on a Form SB-2 registration statement filed with the Securities and Exchange Commission.  

1,750,000 shares of our common stock were transferred to Bedrock Capital Corporation Ltd. on November 19, 2004.  Bedrock Capital Corporation Ltd. has subsequently sold 1,500,000 of its restricted common shares and has waived the requirement to register its shares.  7,000,000 shares of our common stock held by Alaska Star Minerals LLP were cancelled on November 22, 2004, leaving Alaska Star Minerals LLP with 8,750,000 shares of our common stock.  The Membership Interest Redemption and Withdrawal Agreement and amendment, dated October 29, 2004 and November 19, 2004, are incorporated by reference as exhibits to the registration statement of which this prospectus forms a part.

***Our current business***

We are an exploration stage company engaged in the acquisition and exploration of mineral properties in the State of Alaska through our wholly-owned subsidiary, Big Chunk Corp.  The company currently holds a 100% interest in 1,718 mineral claims covering approximately 421 square miles in the Iliamna region of southwestern Alaska, located on the north side of the Cook Inlet, approximately 265 miles southwest of the city of Anchorage, Alaska (the “Alaska Claims”). The company also holds 163 mineral claims covering approximately 40.75 square miles in southwestern Alaska approximately 40 miles northeast of the northern boundary of the Big Chunk claims (the “Bonanza Hills Claims”). These Alaska claims are held in the name of our wholly-owned subsidiary, Big Chunk Corp.  The company also holds a 100% interest in 651 Federal mining claims covering approximately 21 square miles on the ColoradoPlateau Province of Northern Arizona (the “North Pipes”). 

Title to mineral claims involves certain inherent risks due to difficulties of determining the validity of certain claims as well as potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. The company has investigated title to all our mineral properties and, to the best of our knowledge, title to all properties are in good standing.

 

 

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The mineral resource business generally consists of three stages: exploration, development and production.  Mineral resource companies that are in the exploration stage have not yet found mineral resources in commercially exploitable quantities, and are engaged in exploring land in an effort to discover them.  Mineral resource companies that have located a mineral resource in commercially exploitable quantities and are preparing to extract that resource are in the development stage, while those engaged in the extraction of a known mineral resource are in the production stage.  Our company is in the exploration stage – we have not found any mineral resources in commercially exploitable quantities.

Mineral resource exploration can consist of several stages.  The earliest stage usually consists of the identification of a potential prospect through either the discovery of a mineralized showing on that property or as the result of a property being in proximity to another property on which exploitable resources have been identified, whether or not they are or have in the past been extracted.

After the identification of a property as a potential prospect, the next stage would usually be the acquisition of a right to explore the area for mineral resources.  This can consist of the outright acquisition of the land or the acquisition of specific, but limited, rights to the land (e.g., a license, lease or concession).  After acquisition, exploration would probably begin with a surface examination by a professional geologist with the aim of identifying areas of potential mineralization, followed by detailed geological sampling and mapping of this showing with possible geophysical and geochemical grid surveys to establish whether a known trend of mineralization continues through un-exposed portions of the property (i.e., underground), possibly trenching in these covered areas to allow sampling of the underlying rock.  Exploration also commonly includes systematic regularly spaced drilling in order todetermine the extent and grade of the mineralized system at depth and over a given area, as well as gaining underground access by ramping or shafting in order to obtain bulk samples that would allow one to determine the ability to recover various commodities from the rock.  Exploration would conclude with a feasibility study to determine whether mining the minerals would make economic sense.  A feasibility study is a study that reaches a conclusion with respect to the economics of bringing a mineral resource to the production stage.

There is no assurance that a commercially viable mineral deposit exists on any of our properties, and further exploration is required before we can evaluate whether any exist and, if so, whether it would be economically and legally feasible to develop or exploit those resources.  Even if we complete our current exploration program and we are successful in identifying a mineral deposit, we would be required to spend substantial funds on further drilling and engineering studies before we could know whether that mineral deposit will constitute a reserve (a reserve is a commercially viable mineral deposit).  Please refer to the section entitled "Risk Factors", beginning on page 8 of this prospectus, for additional information about the risks of mineral exploration.

To date, we have not generated any revenues and we remain in the exploration stage.  Our ability to pursue our business plan and generate revenues is subject to our ability to obtain additional financing, and we cannot give any assurance that we will be able to do so.

***Compliance with government regulation***

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in the State of Alaska and the State of Arizona. 

We have paid the applicable rental fees required by Alaskan mining regulations for the staking of the property, which extends the Alaska Claims for a two year period from the staking of the claims. Annual assessment work of $400 per quarter section  and $100 per quarter-quarter section must also be performed by us in order to keep the claims in good standing, or a total of approximately $740,000 must be paid to maintain the claims in good standing. We conducted a detailed aerial survey of the magnetic fields on our Big Chunk claims in Alaska and associated work at a cost of $283,889 during the period January 10 through June 6, 2004. Additional studies including extensive soil sampling and testing, Induced Polarization surveys, diamond core drilling and interpretation of data and samples that were collected in those studies were completed in 2005. The approximate cost of these activities was in excess of$1.8 million and may be applied towards maintaining the claims in good standing for 2004 and four additional years.

In order to proceed with any drilling program in Alaska, we will have to apply to the Alaska Department of Natural Resources, the Alaska Department of Conservation and the US Corps of Engineers. The permitting process is anticipated to take approximately six weeks and would be done through contractors based in Anchorage. The permit fees are anticipated to be under $1,000 in total. The cost of contractors assisting with the permitting process is estimated to be approximately $15,000. The permitting process will be targeted to commence early in the field season with the objective of obtaining drilling permits for those locations identified for prospective drilling as a result of our initial exploration. 

 

 

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Our Arizona claims are on U.S. Federal Lands and are administered by the Department of Interior, Bureau of Land Management (surface and mineral) land.  Our claims may be kept in good standing by paying an advance annual maintenance and rental fee before noon, September 1, 2006, in the amount of $125 per mining claim.   To keep our existing property in good standing, the annual maintenance and rental fees total approximately $81,400.

In order to proceed with any drilling program in Arizona, we will have to apply for various permits with the State of Arizona.  The permitting process is anticipated to take several weeks and would be done through contractors based in Arizona.  We plan to apply for a few drilling permits at a time to drill at those breccia pipe locations that we have prioritized for geophysical testing.  The permit fees are anticipated to be approximately $3,000 per pipe. The cost of contractors assisting with the permitting process is estimated to be approximately $8,000 to $10,000 per pipe. The permitting process will be targeted to commence in May 2006 with the objective of obtaining drilling permits for those breccia pipe locations identified for prospective drilling as a result of our initial exploration.

Additional approvals and authorizations may be required from other government agencies, depending upon the nature and scope of the proposed exploration program. The amount of these costs is not known at this time as we do not know the size, quality of any resource or reserve at this time, it is impossible to assess the impact of any capital expenditures on earnings or our competitive position. 

***Competition***

We are a mineral resource exploration stage company engaged in the business of mineral exploration.  We compete with other mineral resource exploration stage companies for financing from a limited number of investors that are prepared to make investments in mineral resource exploration stage companies.  The presence of competing mineral resource exploration stage companies may impact our ability to raise additional capital in order to fund our property acquisitions and exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors. 

We also compete for mineral properties of merit with other exploration stage companies.  Competition could reduce the availability of properties of merit or increase the cost of acquiring additional mineral properties. 

Many of the resource exploration stage companies with whom we compete have greater financial and technical resources than we do.  Accordingly, these competitors may be able to spend greater amounts on acquisitions of properties of merit and on exploration of their properties.  In addition, they may be able to afford greater geological expertise in the targeting and exploration of resource properties.  This competition could result in our competitors having resource properties of greater quality and interest to prospective investors who may finance additional exploration and to senior exploration stage companies that may purchase resource properties or enter into joint venture agreements with junior exploration stage companies.  This competition could adversely impact our ability to finance property acquisitions and further exploration.

***Employees***

As of January 31, 2006, we had six full time employees, one part-time employee and two independent contractors on full time status.  Competition for exploration geologists is intense as there are too few to meet the need and few new college graduates are entering the field.  As a result we have decided to maintain a core of experienced critical employees and contractors and contract for technical workers on an as needs basis during field months.  As of the date of this report, we are employing or contracting three full time geologists, including President and CEO, James Briscoe, and VP Exploration, Phil St. George, as well as one senior geologist R. Macer. We also employ David Boyer M.Sc. a specialist in computer mapping.  We have contracted with Dr. Karen Wenrich as a full time consultant on uranium exploration. Experienced field crewmembers as part of the geophysical crew, geochemical samplers, and acamp cook have been contracted as well.  In all, there will be up to 22 workers for the field season.  These permanent and contracted personnel can work approximately year round in Arizona and start about May 15 in Alaska and work until freeze up about the end of October.  Additionally, we have geoscience consultants specializing in exploration geology, geophysics, geochemistry, and geocomputer data applications, of whom our Technical Advisory Board is comprised.  These individuals are contracted for 140 days of consulting services over the period January 1, 2006 through December 31, 2006 but particularly during the summer field season in Alaska.

 

 

 

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**RISK FACTORS**

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

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

***We have yet to attain profitable operations and because we will need additional financing to fund our extensive exploration activities, our accountants believe there is substantial doubt about our ability to continue as a going concern.***

We have incurred a net loss of $23,152,591 for the period from August 20, 2001 (inception) to January 31, 2006, and have no revenue to date.  As of January 31, 2006, we had cash in the amount of $933,102.  We believe that our current resources are not sufficient to conduct the initial phase of our exploration program.  We will require additional financing in order to proceed with any work beyond the initial phase of our exploration program already completed, including our planned drilling program.  No additional work, aside from the completion of our proposed exploration program, is planned at this time.  We will also require additional financing if the costs of the exploration of our mineral claims are greater than anticipated.  We will also require additional financing to sustain our business operations if we are not successful in earning revenues.  We currently have contingent arrangements for financinghowever we may not be able to obtain financing when required.  Our future is dependent upon our ability to obtain financing and upon future profitable operations from the development of our mineral claims. 

***Our independent auditors' report states that there is a substantial doubt that we will be able to continue as a going concern.***

Our independent auditors, Semple & Cooper, LLP, state in their audit report attached to our audited financial statements for the fiscal year ended January 31, 2006 that since we are an exploration stage company, have no established source of revenue and are dependent on our ability to raise capital from shareholders or other sources to sustain operations, there is a substantial doubt that we will be able to continue as a going concern.

***If we cannot compete successfully for financing and for qualified managerial and technical employees, our exploration program may suffer.***

Our competition in the mining industry includes large established mining companies with substantial capabilities and with greater financial and technical resources than we have.  As a result of this competition, we may be unable to acquire additional financing on terms we consider acceptable because investors may choose to invest in our competitors instead of investing in us.  We also compete with other mining companies in the recruitment and retention of qualified managerial and technical employees.  Our success will be largely dependent on our ability to hire and retain highly qualified personnel.  These individuals are in high demand and we may not be able to attract the personnel we need.  We may not be able to afford the high salaries and fees demanded by qualified personnel, or may lose such employees after they are hired.  If we are unable to successfully compete for financing or for qualifiedemployees, our exploration program may be slowed down or suspended.

***Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure.***

Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises.  The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake.  These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates.  The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits.  Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts.  If the results of our exploration do not reveal viable commercialmineralization, we may decide to abandon our claim and acquire new claims for new exploration.  

 

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The acquisition of additional claims will be dependent upon us possessing capital resources at the time in order to purchase such claims.  If no funding is available, we may be forced to abandon our operations. 

***Because of the speculative nature of exploration of mineral properties, there is no assurance that our exploration activities will result in the discovery of new commercially exploitable quantities of minerals.***

We have not found any mineral reserves on our claims and there can be no assurance that any of our mineral claims contain commercial quantities of any minerals.  We plan to continue exploration on our mineral properties.  The search for valuable minerals as a business is extremely risky.  We can provide investors with no assurance that additional exploration on our properties will establish that commercially exploitable reserves of minerals exist on our properties.  Even if we identify commercial quantities of mineral in any of our claims, there can be no assurance that we will be able to exploit the reserves or, if we are able to exploit them, that we will do so on a profitable basis.  Problems such as unusual or unexpected geological formations or other variable conditions are involved in exploration and often result in exploration efforts being unsuccessful.  The additional potential problems include,but are not limited to, unanticipated problems relating to exploration and attendant additional costs and expenses that may exceed current estimates.  These risks may result in us being unable to establish the presence of additional commercial quantities of ore on our mineral claims with the result that our ability to fund future exploration activities may be impeded. 

***Because the probability of any of our claims having commercially exploitable reserves is extremely remote, any funds spent on exploration will probably be lost and investors may lose all of their investment in our Company.***

Because our claims are without known mineral reserves and are in the exploration stage only, we have neither generated revenues nor realized a profit from our operations to date and there is little likelihood that we will generate any revenues or realize any profits in the short term. Any profitability in the future from our business would be dependent on locating commercially exploitable mineral reserves. The likelihood that our claims contain valuable and commercially exploitable minerals is extremely remote. In all probability, our claims do not contain any commercially exploitable reserves and any funds that we spend on exploration will be lost. We may never discover commercially exploitable mineral resources on our claims, or we may do so and still not be commercially successful if we are unable to exploit those resources profitably. We may not be able to operate profitably and may have to ceaseoperations, the price of our securities may decline and investors may lose all of their investment in our company.

***Because we anticipate our operating expenses will increase prior to our earning revenues, we may never achieve profitability.***

Prior to completion of our exploration stage, we anticipate that we will incur increased operating expenses without realizing any revenues.  We therefore expect to incur significant losses into the foreseeable future.  We recognize that if we are unable to generate significant revenues from the exploration of our mineral claims, we will not be able to earn profits or continue operations.  There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide no assurance that we will generate any revenues or ever achieve profitability.  If we are unsuccessful in addressing these risks, our business will most likely fail. 

***Because of the inherent dangers involved in mineral exploration, there is a risk that we may incur liability or damages as we conduct our business.***

The search for valuable minerals involves numerous hazards.  As a result, we may become subject to liability for such hazards, including pollution, cave-ins and other hazards against which we cannot insure or against which we may elect not to insure.  At the present time we have no coverage to insure against these hazards.  The payment of such liabilities may have a material adverse effect on our financial position. 

***Because access to our mineral claim may be restricted by inclement weather, we may be delayed in our exploration.***

Access to the Alaska Claims may be restricted through some of the year due to weather in the area.  As a result, any attempt to test or explore the property is largely limited to the times when weather permits such activities.  These limitations can result in significant delays in exploration efforts.  Such delays can have a significant negative effect on our exploration efforts. 

 

 

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***Exploration and exploitation activities are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our company.***

Exploration and exploitation activities are subject to federal, provincial, and local laws, regulations and policies, including laws regulating the removal of natural resources from the ground and the discharge of materials into the environment.  Exploration and exploitation activities are also subject to federal, provincial, and local laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment. 

Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received.  Environmental and other legal standards imposed by federal, provincial, or local authorities may be changed and any such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have material adverse effects on our business.  Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us.  Additionally, we may be subject to liability for pollution or other environmental damages which we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons.  Any laws, regulations or policies of any government body or regulatory agency may be changed, applied or interpreted in amanner which will alter and negatively affect our ability to carry on our business.

***If our exploration costs are higher than anticipated, then our profitability will be adversely affected.***

We are currently proceeding with exploration of our mineral properties on the basis of estimated exploration costs.  If our exploration costs are greater than anticipated, then we will not be able to carry out all the exploration of our claims that we intend to carry out.  Factors that could cause exploration costs to increase are: adverse weather conditions, difficult terrain and shortages of qualified personnel. 

***The inability of our Chief Financial Officer and Secretary to devote sufficient amounts of their time to the operation of the business may limit our Company's success.***

Presently our Chief Financial Officer and Secretary each allocate only a portion of their time to the operation of our business. If the business requires more time for operations than anticipated or the business develops faster than anticipated, the Chief Financial Officer and/or Secretary may not be able to devote sufficient time to the operation of the business to ensure that it continues as a going concern. Even if this lack of sufficient time of our management is not fatal to our existence, it may result in limited growth and success of the business. 

***We may not be able to access sufficient funds under the Standby Equity Distribution Agreement when needed.***

We are dependent on external financing to fund our operations. Our financing needs are expected to be substantially provided from the Standby Equity Distribution Agreement we have signed with Cornell Capital Partners on March 8, 2006. No assurances can be given that such financing will be available in sufficient amounts or at all when needed, in part, because we are limited to a maximum cash advance of $300,000 during any five trading day period. Based on an assumed offering price of $1.00 per share, we will be able to draw a total amount of $10,000,000 in gross proceeds under the Standby Equity Distribution Agreement. This amount will utilize approximately 10,000,000 shares of our common stock we are registering pursuant to the Standby Equity Distribution Agreement and under this registration statement. If the actual average price at which we sell shares of common stock under the Standby EquityDistribution Agreement is less than $1.00 per share, we would need to register additional shares to fully utilize the funds available under the Standby Equity Distribution Agreement.

***We may be unable to obtain a cash advance under the Standby Equity Distribution Agreement if Cornell Capital Partners holds more than 9.9% of our common stock.***

In the event Cornell Capital Partners holds more than 9.9% of our then-outstanding common stock, we will be unable to obtain a cash advance under the Standby Equity Distribution Agreement of March 8, 2006. A possibility exists that Cornell Capital Partners may own more than 9.9% of our outstanding common stock at a time when we would otherwise plan to make an advance under the Standby Equity Distribution Agreement. In that event, if we are unable to obtain additional external funding or generate revenue from our mineral claims, we could be forced to curtail or cease our operations.

***Trading of our stock may be restricted by the SEC's "Penny Stock" regulations which may limit a stockholder's ability to buy and sell our stock.***

The U.S. Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to 

 

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certain exceptions.  Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors."  The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealerand its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules.  Consequently, these penny stock rules may affect the ability of broker-dealers to tradeour securities.  We believe that the penny stock rules discourage investor interest in and limit the marketability of, our common stock.

***NASD sales practice requirements may also limit a stockholder's ability to buy and sell our stock.***

In addition to the "penny stock" rules described above, the NASD has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.  Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information.  Under interpretations of these rules, the NASD believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers.  The NASD requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

***Trading in our common stocks on the OTC Bulletin Board is limited and sporadic making it difficult for our shareholders to sell their shares or liquidate their investments.***

Our common stock is currently listed for public trading on the OTC Bulletin Board.  The trading price of our common stock has been subject to wide fluctuations.  Trading prices of our common stock may fluctuate in response to a number of factors, many of which will be beyond our control.  The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with no current business operation.  There can be no assurance that trading prices and price earnings ratios previously experienced by our common stock will be matched or maintained.  These broad market and industry factors may adversely affect the market price of our common stock, regardless of our operating performance.  In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation hasoften been instituted.  Such litigation, if instituted, could result in substantial costs for us and a diversion of management's attention and resources.

***Our By-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.***

Our By-laws contain provisions with respect to the indemnification of our officers and directors against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him, including an amount paid to settle an action or satisfy a judgment in a civil, criminal or administrative action or proceeding to which he is made a party by reason of his being or having been one of our directors or officers.

***Investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share if we issue additional shares or raise funds through the sale of equity securities.***

Our constating documents authorize the issuance of 200,000,000 shares of common stock with a par value of $0.001.  In the event that we are required to issue any additional shares or enter into private placements to raise financing through the sale of equity securities, investors' interests in our company will be diluted and investors may suffer dilution in their net book value per share depending on the price at which such securities are sold.  If we issue any such additional shares, such issuances also will cause a reduction in the proportionate ownership and voting power of all other shareholders.  Further, any such issuance may result in a change in our control.

 

 

11

 

 

**Item 2.**

**Description of Property.**

***Our offices***

We rent the premises for our principal office that consists of approximately 1,300 square feet of engineering office space and 1,800 square feet of warehouse storage space located at 2766 N Country Club Road., Tucson, Arizona 85716.  We rent these premises from Roger Brestel for $3,000 per month plus a pro rata share of utilities and maintenance.  Prior to September 2005,  we had sublet these premises from JABA (US) Inc. Our president and chairman, Mr. James Briscoe, was the president of JABA (US) Inc during this time.

We believe that our existing office facilities are adequate for our needs through the end of the year ended January 31, 2007.  Should we require additional space at that time, or prior thereto, we believe that such space can be secured on commercially reasonable terms.

***Our mineral claims***

The company currently holds a 100% interest in 1,718 mineral claims in the Iliamna region of southwestern Alaska, located on the north side of the Cook Inlet, approximately 421 miles southwest of the city of Anchorage, Alaska (the “Alaska Claims”). The company also holds 163 mineral claims covering approximately 40.75 miles in southwestern Alaska approximately 40 miles northeast of the northern boundary of the Big Chunk claims (the “Bonanza Hills Claims”). The company also holds a 100% interest in 651 Federal mining claims covering approximately 21 square miles on the Colorado Plateau Province of Northern Arizona (the “North Pipes”).  We have not found any mineral resources on any of our claims.

***Our claims in the State of Alaska***

Our claims in the State of Alaska consist of 1881 State mineral claims, spanning approximately 462 square miles in the Iliamna Mining District of southwestern Alaska, located on the north side of the Cook Inlet, approximately 200 miles southwest of the city of Anchorage, Alaska.  The properties lie about 20 to 60 miles north of Lake Iliamna, and 15 to 60 miles northwest of the village of the same name, see map below.  The only access to our Alaska Claims and the general area is by snowmobile in the winter, helicopter during any time of the year, or by foot.

Our claims in the State of Alaska are Alaska State mining claims on State of Alaska owned (surface and mineral) land.  State mineral claims in Alaska may be kept in good standing by incurring annual assessment work or by paying cash in lieu of assessment work in the amount of $400 per 160 acre quarter section claims or $100 per 40 acre quarter-quarter section mineral claims per year and by paying annual escalating state rentals.  To keep our existing property in good standing, the annual assessment work or cash in lieu obligations total approximately $740,000.  Sufficient work has been done to cover all requirements for 2006, and 2007.  The annual state rentals are $100 for 160-acre quarter section claims and $25 for 40-acre quarter-quarter section claims.  The rental period begins at noon on September 1st through the following September 1st and annual rental payments are due onNovember 30th of each year.  State rentals for our Alaska claims for the rental period ending September 1, 2005 totaled approximately $98,000 and have been paid.  State rentals for the rental period ending September 1, 2006 will total approximately $172,000 and have been paid. Alaska State production royalty is three percent of net proceeds (income).  State law prescribes that after a 3.5-year exemption from state taxes a metal mine is liable for a 15% state licensing tax on net income from the mine.

Our Alaska Claims are owned 100% by Big Chunk Inc., an Alaska corporation that in turn is owned 100% by us.  The only royalties, payments or other encumbrances on the property are those owed to the State of Alaska as mentioned above.  Federal taxes will be owed on profits made from mining on the property.  

 

 

12

 

 

**Figure 1:  Alaska Properties – Big Chunk and Bonanza Hills- Location Map**

 

 

13

 

 

Environmental / Permits

Within our Alaska claims, aside from the foreseeable displacement of fish and wildlife resources within the immediate mine and related structures and increased human access by a mine development project, we are not aware of any specific environmental impact that affect the mineral claims.  In August 2004, Liberty Star contracted Lynx Enterprises to obtain permits for drilling.  The following table summarizes the permits required for drilling and the day those permits were issued.  Some of these permits are multi-year permits, and others will have to be renewed each year.

**Alaska  Permits**

**Date  Issued**

DNR Temporary Water Use Authorization TWUP F2004-24

September 17, 2004

US Army Corps of Engineers authorization under Nationwide Permit #6, Survey Activities POA-2004-1317-D

September 7, 2004

DNR Miscellaneous Land Use Permit for Hardrock Exploration and Reclamation

September 17, 2004

DNR Fish Habitat Permit FH-04-II-0267

September 20, 2004

Annual Reclamation  APMA A042793

December 1, 2004

DNR Miscellaneous Land Use Permit # A052793

May 11,2005

DNR 2005 AMENDMENT #1 Miscellaneous Land Use Permit

June 8, 2005

DNR Annual Placer Mining Permit A052793

May 11, 2005

DNR Fish Habitat Permit FH-05-II-0142

May 11, 2005

DNR 2005 AMENDMENT #2 Miscellaneous Land Use Permit

August 2, 2005

Annual Reclamation APMA A052793

November 10, 2005

****All of our Alaska Claims are large enough to host open pit mines, with sufficient areas for facility sites, waste and tailing storage and all other spatial requirements.  Water is found at surface to supply mining and mineral recovery operations as well as other water demands.  Power is not available on the properties and will have to be developed or brought in prior to mining and mineral recovery operations.

Drilling

Quest Drilling completed four holes on the Alaskan properties in late 2004.  The holes were drilled with a LF70 helicopter portable diamond core rig, taking a 2.35 inch in diameter core sample and a total footage of 1,329 feet in samples.  We contracted Connors Drilling to carry out the drilling in 2005.  A helicopter portable diamond core drill was used.  A total of 10,948 feet was completed. Both 3.77 inch and 2.35 inch core was drilled.  Permits for both programs were filed, accepted and subsequent to drilling closeout work and reclamation reports were filed after completion.  

  Accessibility, Climate, Local Resources, Infrastructure and Physiography

Our claims in the State of Alaska lie within the Nushagak-Big River Hills, an area of rolling hills and low mountains separated by wide shallow valleys blanketed with glacial deposits and numerous streams and small, shallow lakes.  Elevations range from 525 feet above sea level (asl) to 1,584 feet asl.

Access to the project from Anchorage is via fixed wing aircraft to the Village of Iliamna, a distance of 200 miles.  Iliamna has a state-operated airport with a 5,000 foot paved runway.  It is serviced by several passenger and cargo flights daily from Anchorage, using Platus PC12, Fairchild Metroliner III, Hercules and DC-6 aircraft, as well as smaller charter aircraft.  Current access from Iliamna to the property is by helicopter, a flying distance of 25 miles.  Bulk fuel and heavy freight can also be barged in the summer months to Lake Iliamna via the Kvichak River.  There is no extensive road network in the Iliamna 

 

14

 

district, with only limited local roads in and around the villages of Newhalen, Iliamna and Nondalton.  The communities of Iliamna, Newhalen and Nondalton have a combined population of approximately 700 people.  Iliamna and surrounding communities have very limited commercial business infrastructure, except for that which services a seasonal sports fishing and hunting industry.  A small hydroelectric installation provides power for the three communities.

The climate of the Iliamna area is similar to that of Anchorage.  The mean daily maximum temperature in July is 62°F and the mean daily minimum temperature in January is 8°F.  Average annual precipitation is 27 inches with most occurring as rainfall from June through August.  The climate, while periodically harsh, is sufficiently moderate to allow mining to be conducted year-round.  Tundra plant communities, mixtures of shrub and herbaceous plants, occupy the barren ground of the project area.  Willow is commonly found only along streams and sparse patches of dense alder are confined to better-drained areas where coarse soils have developed.  Poorly drained regions underlain by fine soils support only dwarf birch and grasses.  Vast areas of undeveloped land exist for facility sighting and other developments to support a large open mining operation.

The property is large enough to host numerous open pit mines, with sufficient areas for facility sites, waste and tailing storage and all other spatial requirements.  Water is found at surface to supply mining and mineral recovery operations as well as other water demands.  Power is not available on the property and will have to be developed or brought in prior to mining and mineral recovery operations.

***Our Arizona claims***

Our Arizona claims consist of 651 Federal mining claims, covering approximately 21 square miles in northwestern Arizona, located on the north side of the Colorado River, approximately 120 miles northeast of the city of Las Vegas, Nevada.  The property lies about 12 to 35 miles south of the southern Utah border.  Access to these Arizona Claims and the general area is by paved highway, dirt roads or by foot.

Our Arizona claims are on U.S. Federal Lands and are administered by the Department of Interior, Bureau of Land Management (surface and mineral) land.  Our claims may be kept in good standing by paying an advance annual maintenance and rental fee before noon, September the 1st, in the amount of $125 per mining claim.   To keep our existing property in good standing, the annual maintenance and rental fees total $81,400.

We own 100% of our Arizona claims.  The only royalties, payments or other encumbrances on the property are those owed to the Bureau of Land Management as mentioned above.  Federal taxes will be owed on profits made from mining on the property.

Within our Arizona claims, aside from the foreseeable displacement of wildlife resources within the immediate mine and related structures and increased human access by a mine development project, we are not aware of any specific environmental impact that affect the mineral claims.  

The following table summarizes the permits required for geophysics or drilling that we expect to apply for over the next 12 months:

**Arizona Permit/Filing (Per 2001  43CFR3809)**

**Date**

Notice of Intent (< five acres of disturbance)

To be filed

Plan of Operations (> five acres of disturbance)

To be filed

Bond Reclamation Estimate Calculation

To be filed

Environmental Assessment for Plan of Ops

To be filed

State of Arizona Water Resources Drilling Permit

To be filed

Archaeological Survey and Permit

To be filed

 

 

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**Figure 2: North Pipes Project - Arizona Properties Location Map**

 

 

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Our Arizona properties are from 13 to 38 miles from the towns of Fredonia, Arizona or Colorado City, Utah.  The Federal lands within this area, encompasses about 2.8 million acres of public land located in the northwest corner of Arizona and is known as the “Arizona Strip” (Strip).  Isolated from the rest of Arizona by the deep canyons of the Colorado River, this area is closely linked geographically, culturally and economically with southern Utah. The town of Kanab about 10 miles north of Fredonia, Arizona is the primary supply depot and the location of the company’s field office for the North Pipes Project.  The town of St. George, the largest in southern Utah lies about 150 miles by two lane paved highway west of Kanab.  The area is vegetated with sage and juniper, with incised arroyos and canyons.  The Strip encompasses the northern portion of Mohave and Coconino Counties.  There are noinhabited communities in the interior of the Strip and the human population is low. 

The only highways, three of them, cross the northern tier of the Arizona Strip. No paved roads extend into the interior, but over 4,400 miles of unpaved roads and truck trails criss-cross the area. Most of the development in the interior of the Arizona Strip is related to ranching operations and includes waters, fences and diverse other types of rangeland improvements. The few ranch houses scattered across the Strip are not permanent residences but only occasionally used by ranch hands. 

The principal industries in the Arizona Strip are ranching and minerals exploration and development. Grazing of livestock has been a major use of the public lands since the 1880's and continues to be to this day.  Active uranium exploration and development operations have occurred over the past two decades.  Eight mines were operated on the Strip.  Three were mined out and the sites rehabilitated.  The other five have been shut down due to low uranium prices.

Present condition of our claims

Both the Alaskan and Arizona properties are undeveloped.  There are no open-pit or underground mines, nor is there any mining plant or equipment located on the properties.  There is no power supply to the properties.  There is not any road access to the Alaskan properties, but there is road access to the Arizona properties.

Claim status

On November 28, 2005 we filed assessment affidavits and paid the applicable fees required by Alaskan mining regulations for the Alaska claims, which will expire two years after the date we paid those fees.  We are required to perform annual assessment work of $400 per quarter section in order to keep the claims in good standing.  We conducted a detailed aerial study of the magnetic fields of our Big Chunk claims in Alaska and associated work at cost of $283,889 during the period January 10 through June 6, 2004.  Additional studies including extensive soil sampling, Induced Polarization geophysical surveying, diamond core drilling and interpretation of the data and samples from those studies was conducted in 2005.  The approximate cost of these activities has been in excess of $1.8 million and may be applied towards maintaining the claims in good standing for 2005 and three additional years up to andincluding 2008 obligations.

In Arizona, during the month of August 2005 we filed with the Bureau of Land Management the Notice of Intent to Hold and Certification of Payment of Rental and Maintenance Fee Affidavits for the initial group of 313 federal unpatented lode mining claims.  In December 2005 an additional 95 federal unpatented lode mining claims were filed with the Bureau of Land Management.  In February and March of 2006 we filed an additional 139 federal unpatented lode mining claims with the Bureau of Land Management.  In April 2006, we staked an additional 104 claims and filed them with the Bureau of Land Management.  The combined 651 mining claims have had all applicable fees paid, and are in good standing.

***Exploration History***

Prior History

Except as indicated with respect to our Arizona claims and otherwise as set out below, we are unaware of any previous claim ownership anywhere on the property, nor any exploration, other then minor surface sampling.  No evidence of development work has been found on the property.  No historical mineral resources or reserves are in the published literature.  

Our Alaska claims  

Our Alaska claims are located in a remote area of southwestern Alaska where limited exploration and development activity has occurred.  The area is largely covered by glacial debris, soil, and tundra.  Little geologic, geochemical or geophysical data is available, and that which is available is of a general nature and of low quality.

 

 

17

 

 

Our Big Chunk claims

We are unaware of any previous claim ownership anywhere on our Big Chunk claims in Alaska. No historical mineral resources or reserves are in the published literature concerning the property.  Other than minor exploration that was conducted by Cominco Alaska, Anaconda and the United States Geological Survey, we are not aware of any prior exploration that was conducted on our Big Chunk claims in Alaska prior to January 10, 2004, when our aerial survey of the magnetic fields began.  

Our Bonanza Hills claims

Anaconda and Cominco Alaska also conducted some minor tests on our Bonanza Hills claims in the past.  The work they conducted consisted of surface sampling and a small geophysical survey. We are not aware of any other exploration that occurred there before we began our exploration there.

Our Arizona claims

The Arizona Strip was an active exploration district in the 1970’s and 1980’s with several producing mines and huge tracts of claims held by companies including International Uranium Corp., Energy Fuels Nuclear, Pathfinder as well as others.  The work accomplished by these companies included geophysics and drilling.  Little to none of this information is available to the public, though many of the drill holes are marked and still visible.  No evidence of actual development work has been found on any of our properties.  No historical mineral resources or reserves are in the published literature.  

Recent Exploration of the Alaska Claims

We have carried out exploration work on our Alaska claims in an effort to ascertain whether they possess commercially viable deposits of gold, copper and molybdenum and by-product silver.  We have undertaken an aeromagnetic geophysical survey, started January 10, 2004 and completed June 6, 2004, over the claims and a significant surrounding area.  This survey covers 1,408 square miles, was flown at a constant elevation above the surface of 297 feet with lines every 825 feet with a magnetic measurement every 18 feet.  The magnetic contours are reduced to the pole and color contoured.  This map is the most detailed existing for the area.  This map is the foundation that will be used to help interpret sub surface geology and alteration related to rock types, faults and vein and alteration zones.  It will also help us interpret the results of other studies done or to be done, such as geochemical sampling andelectrical ground geophysics known as Induced Polarization or IP.  The next step in our exploration program was the collection of geochemical samples consisting of twigs of specific plants, known as biogeochemical samples; soil samples taken from shallow excavations about six inches deep known as soil sampling; sediments from running streams known as stream sediment sampling; and water samples from still water simply known as water sampling.  These samples were taken along lines 3,279 feet apart with samples every 660 feet along each line except for the stream sediment samples and water samples that were taken along waterways where sample material was available.  Each sample was located with a Hewlett-Packard Pocket PC (IPAC) equipped with Global Positioning Satellite (GPS) software and color map display.  All detailed information about the sample was collected using software written for the purpose.  This information was automatically down loaded each night by each sampler, andtransmitted to an archival computer at base camp.  Each sample was analyzed for 37 elements including gold, silver, copper and molybdenum by an accredited analytical geochemical laboratory.  Numerous blanks and repeat samples were submitted at the same time to assure quality assurance/quality control (QA/QC) as a standard procedure.  Nine thousand three hundred and three sampleswere collected and greater than 325,000 determinations made on these samples.  Appropriate computer programs were used to plot these results for each element on computer maps that are accurate in scale.  The computer software is known as Geographic Information Systems (GIS) and is standard for the industry.  The next step was to do ground electrical geophysics known as Induced Polarization or IP.  This method involves putting an electrical current into the ground, shutting off the current and measuring the time it takes for the electricity tocome back out.  Where there is mineralization, the metallic particles act as micro storage units (capacitors) showing the metallic mineral content.  This method is standard for the industry having been in use for more than 40 years.  Zonge Engineering and Research Organization Inc. of Tucson, Arizona did the work.  There was only one month of available survey time and not all the ground could be tested. 

 

 

18

 

 

One area of unusually high geochemical values (an anomaly) was emphasized.  Strong IP response was obtained indicating metallic minerals co-incident with the geochemical anomalies.  This area was declared an interesting target and was named White Sox – for the small biting insect with white feet that lives there.  When a diamond drill rig was available in late October, we drilled four scout drill holes spaced about one kilometer apart and drilled to penetrate below the surface to get a preliminary idea of what was beneath glacial soil-tundra (till) cover.  Porphyry style alteration and mineralization was encountered.  The two westerly holes encountered strong pyrite (iron sulfide) and high arsenic but little copper and molybdenum values.  The easterly holes showed lower pyrite content, no significant arsenic but higher copper and molybdenum values.  These results are classical porphyry deposit metalzoning patterns.  They tell us a porphyry mineral center is probably located to the north and east perhaps about 3,000 feet.  Additional interpretative work is ongoing.  The cost of these above described studies was approximately $2 million.  Additional IP geophysics, geochemistry sampling and drilling will be performed with the objective of defining a resource at White Sox and more scout diamond drilling on other geophysical and geochemical anomalies that may define other mineral centers.

Geology of the Alaska Claims

Basement or pre-intrusive rocks in the area of our Alaska claims include Triassic to Cretaceous sediments ranging from limestone to shales, sandstone and conglomerate as well as volcaniclastic units.  These sedimentary units have been intruded by a variety of igneous (molten rock arising from below the surface of the earth which intrude – thus intrusives – solid surface rocks) rocks ranging in age from Upper Cretaceous to Tertiary.  Included are quartz monzonite, granodiorite, quartz diorite and porphyrtic granodiorite intrusive types.  These rocks are thought by the U.S. Geological Survey and company geologiststo shortly precede or be contemporaneous with metallic mineral emplacement and alteration.  Post mineral cover rocks include Tertiary volcanics of basaltic, andesitic and rhyolitic composition.  These post mineral coverrocks include flows and flow breccias as well as pyroclastic tuffs.  Thin alluvium and glacial detritus or till of various types cover low areas.

Mineralization is expected to be disseminated in intrusive rocks in typical porphyry copper manner.  Porphyry copper deposits are the largest source of the world supply of copper.  They are generally mined by open pit methods but are sometimes mined by underground methods using a bulk mining technique called block caving.  In strict definition they are disseminated copper minerals in a large body of porphyry intrusive igneous rock.  In the commercial sense the term is not restricted to ore in porphyry but is applied to deposits characterized by huge size (particularly with respect to horizontal dimension), uniform dissemination and low average per ton copper content.  They typically and generally contain molybdenum, gold, silver, zinc and lead which can be important by or co-products of the mineral deposit.  Higher-grade skarn replacements in limestones as well as in hornfelsed clastic rocks may also bepresent.  These types of mineral occurrences happen when the mineral bearing intrusive porphyry comes in contact with limestone or sandy shale sediments.  Chemical reaction with these rocks tends to form an alteration product known as skarn or hornfels and richer grade mineralization is concentrated in these areas.  Large breccia features, perhaps pipes, have been described in the area and may provide loci for high-grade mineralization.  Breccia pipes are typical of porphyry copper deposits and form as a result of rock movement (faulting) or the action of hot, high pressure moving water vapor (hydrothermal fluid) where in some cases high grade copper or other metallic minerals are concentrated.

Mineralization

Mineralization consists principally of pyrite, chalcopyrite, and molybdenite as fracture fillings and disseminations in intrusive and sedimentary host rocks, with some quartz-veinlet stockwork.  Mineralization is strongest within and around the altered intrusive dikes and sills and is spatially associated with quartz veining and chlorite alteration.  Drill hole BC1003 contains the strongest mineralization, with several zones of chalcopyrite and molybdenite.  The table below summarizes the geochemistry of that hole.  Trace amounts of chalcopyrite were noted in the other drill holes.

 

**Summary of Drill Hole  Geochemistry**

**HoleID**

**From(m)**

**To(m)**

**Length(m)**

**Ag(ppm)**

**Au(ppm)**

**Cu(ppm)**

**Mo(ppm)**

**Pb(ppm)**

**Zn(ppm)**

BC1001

3.66

90.47

86.81

0.15

0.004

82

1

6

88

BC1002

9.14

34.44

25.3

0.1

0.001

192

13

4

65

BC1003

3.05

206.35

203.3

0.08

0.002

195

16

3

66

including

70.82

78.94

8.12

0.15

0.004

456

19

4

49

including

176.39

177.39

1

0.05

0.0005

300

289

2

97

BC1004

42

73.76

31.76

0.14

0.011

93

1

9

92

 

 

 

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Exploration

Liberty Star staked the property in December 2003.  An aeromag survey was flown over the property in the months of January, February, March, and April with the final product submitted in the first week of June 2004.  Fieldwork including surface sampling, induced polarization (IP) geophysics and drilling were conducted from June through October 2004.

McPhar Geophysics flew the aeromag survey during January, February, March and April of 2004 with the use of a fixed wing aircraft.  The survey covers approximately 1,407 square miles.  It was flown at an optimum elevation of 395 feet draped above the ground surface, and flight lines spacing was 820 feet.  Flight line profiles grids were computer generated into a three-dimensional surface 295 feet above the ground.  The plane was controlled primarily by autopilot flying the computer surface controlled by GPS, radar, altimeter, barometers altimeter, and pilotage.  The dense flight line spacing and low elevation flight lines provide a high level of detail in the data, which is helpful in mapping out rock types and structures accurately.

A majority of the 2004 fieldwork was surface geochem sampling.  The table below summarizes the number of samples collected during this work.

 

**Summary of  Surface Samples Collected in 2004**

**Sample Type**

**Number of Samples**

Vegetation Samples

4,274

Soil Samples

3,366

Water

993

Stream Sediment

610

Rock

60

**Total**

**9,303**

Surface sampling methods followed industry standards for collecting a representative sample from its location and minimizing contamination.  Vegetation and soil samples were collected on a grid, with approximate 656 feet station spacing and 0.621 mile line spacing.  Infill lines were sampled on anomalous areas.  Stream sediment, water, and rock,samples were collected approximately every 800 meters on most drainages.  Rock samples were collected wherever premineralalteration or mineralization was noted. 

Surface samples were shipped to MEG Labs in Carson City, Nevada for lab preparation and analyzed at Acme Labs, a certified lab in Vancouver, British Columbia, Canada using ICP, mass spectrometer analytical methods.

Surface sampling analysis indicates the White Sox area as a primary target for copper and molybdenum mineralization.  Vegetation sampling analysis indicates several other targets on the property have porphyry copper geochemical signatures and further work is needed.

Induced Polarization (IP) surveys were conducted by Zonge Engineering, Tucson Arizona.  Dipole lengths were 492 feet.  The Reconnaissance IP (RIP) surveys used 1,640 feet receiver wires, spread in an L shape at each station.

The White Sox area has an IP response indicating the presence of metallic mineralization with readings similar to a copper porphyry deposit within the district and elsewhere in the world.  Two small responses in the RIP survey indicate potential for small metallic deposits in those areas.

Shea Clark Smith (MEG Labs) and Michael Schaefer (Geo-Information Solutions) conducted a study of the vegetation geochemistry and concluded that data is reliable and useful for interpretation of the property.  They wrote a report summarizing their findings with recommendations to follow up many different multi-element anomalies.

Thirty days of IP was conducted from August 15 through September 15, 2004.  Both dipole-dipole and reconnaissance IP (RIP) was conducted.  The table below summarizes the work that was completed.  It was a very productive crew and the results are encouraging.  A few small areas of IP response was detected with the RIP survey.  But, more significantly a sizeable and significant IP response was measured on all four lines at White Sox.  These profiles indicate the presence of disseminated metallic material, similar in quantity to many copper porphyries around the world.

 

 

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**Summary of Induced  Polarization Surveys**

**IP Method**

**Line-Miles or Area Covered**

9 Dipole-Dipole lines

26.1 miles

30 RIP Stations

~13.5 sq miles

Drilling

Four drill holes totalling 1,329 feet were completed in the White Sox area.  The table below summarizes this drill campaign.

 

**Summary of Drilling in  2004, Coordinates in WGS84, UTM Zone 5**

**DH_ID**

**utm_x**

**utm_y**

**El_m**

**Bearing**

**Dip**

**Depth (ft)**

**Depth (m)**

BC1001

365275

6658179

274

90

-75

297

90.47

BC1002

365574

6657205

229

270

-75

113

34.4

BC1003

365828

6657215

237

90

-80

677

206.35

BC1004

365102

6656378

221

263

-75

242

73.76

**Total**

 

 

 

 

 

**1,329**

**404.98**

Drilling was accomplished by Quest Drilling, Vancouver, British Columbia, Canada, with the use of a helicopter portable LF70 hydraulic drill.

The core was not "oriented", so the true thickness, and orientation of mineralized zones is unknown.  Assay results show that the eastern-most hole has the most copper and molybdenum, and future drilling should continue testing to the east.

The drill results are encouraging, visible copper mineralization was noted in two holes and visible molybdenite was noted in several places in one hole.  This mineralization and the associated alteration are indicative of a copper porphyry system, and maybe peripheral to a large disseminated deposit.

Sampling Method and Approach

The holes are all NQ diameter core.  Core was photographed prior to logging and again after splitting.  The core was logged after the first pass of photography; lithology, alteration and mineralization were entered into an Access database form.  Sample intervals were then assigned, with new sample intervals at every lithology break, and also at the strongest alteration and mineralization boundaries.  Samples of 6.56 feet were the standard sample length between these breaks.  After logging, the core was split with a diamond saw, half the core went back in the core boxes for permanent storage and half the core was put into clear polyethylene bags.  The sample numbers from each batch were then randomized and the samples were gathered in that randomized order for shipment to the prep lab.  The samples were then sent to ALS Chemex Labs in Fairbanks, Alaska for crushing and pulverization (lab preparation) intopulps.  The pulps were then sent from there to ALS Chemex Labs (a certified laboratory) in Vancouver, British Columbia, Canada for assay.

As this was just the earliest exploration drilling, a chain of custody for the samples was not implemented.  A QA/QC program was implemented.  The samples within each sample batch were randomized within the submittal form and a standard or blank was inserted every tenth sample.  The samples were submitted to be processed at the prep lab and at the assay lab in the randomized order.  Visual inspection of the assay results of the QA/QC samples indicates that there was no down-hole smearing or other analytical problems.

No sampling, or recovery issues or any other factors have been identified that could have lead to any reliability issues of the drill results.  Visual estimates of the drill core were in the 100 to 200 ppm copper range (1 to 2% chalcopyrite) and the assays confirm those estimates.  There was no significant core loss, or significant zones of low recovery.  The diamond saw was new, with regular blade cleaning and no other processes that would lead to contamination.  The samples were continuous downhole, and there are no issues regarding the quality of the samples.  Grades were relatively uniform, so there are no issues regarding compositing of low-grade material with higher-grade material.

 

 

21

 

 

Sample Preparation, Analyses and Security

Industry standard treatment of core was implemented.  The samples were handled, photographed, logged and split in a facility that had constant traffic of employees and contractors with no periods of time where salting, or other altering of the sample quality could have taken place without notice by several employees or contractors.  An officer of the company supervised all aspects of the core handling, photography, logging, splitting and sampling.  This officer performed none of the sampling or splitting or any other core handling that could have reduced the validity of the sampling.

Data Verification

ALS Chemex Labs is ISO 9000:2001 certified, and a world-renowned laboratory, well respected in the industry for quality control and quality assurance.  Liberty Star conducted its own QA/QC checks, which could be checked against ALS Chemex QA/QC records.  We believe the integrity of the sampling, sample preparation, security and analytical procedures are of the best industry standards.  We also believe that the QA/QC work verifies this integrity and that there are no other problems regarding the sample results.

Mineral Processing and Metallurgical Testing

No metallurgical testing has been accomplished on our property.  However, a mineralization is thought to be typical of the porphyry copper type that can be recovered by standard techniques of crushing, grinding concentration by froth flotation and smelting of such concentrates.

Mineral Resource and Mineral Reserve Estimates

No resource estimation has been accomplished on our property.  However, mineralization is thought to be typical of the porphyry copper type that can be recovered by standard metallurgical of crushing, grinding concentration by froth flotation and smelting of such concentrates.

Mineral Resource and Mineral Reserve Estimates

No resource estimation has been accomplished on our property.

Recommendations

Our property is in various stages of exploration.  The White Sox area has received the most work and is a little more advanced then other portions of the property.  A mineralized center has been identified with drilling.  Additional drilling on and near the IP response is recommended during the next field season, summer of 2005.  The IP response at White Sox should be fully delineated with additional IP to the north, east and south of the current survey.  Concurrently additional geochemical sampling should be done on more closely spaced intervals.  Drilling should continue to evaluate those areas with the appropriate geochemical and IP response (>40 mRad).  Once ore-grade mineralization is encountered, a grid-drilling program should be initiated to delineate resources.  320 ft by 320 ft drill spacing is sufficient to delineate inferred resources.

Dipole-dipole Induced Polarization (IP) and Reconnaissance IP (RIP) should be conducted on the remainder of the property.  The higher quality geochemical anomalies should be evaluated with dipole-dipole IP.  Any significant sized dipole-dipole IP responses over 40 mRad should be drill tested.

Lower quality geochemical anomalies should be evaluated with RIP.  Any RIP anomalies should be detailed with dipole-dipole IP.  Any significant sized dipole-dipole IP responses over 40 mRad should be drill tested.

Our Arizona Property

We have conducted no recent exploration of our Arizona property to date. 

**Item 4.**

**Submissions of Matters to a Vote of Security Holders.**

The Company held it’s first annual shareholders meeting on December 2, 2005 in Tucson, Arizona.  The following matters were voted upon at the meeting:

 

 

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The following directors were elected:

Director

Votes in Favor

Votes Withheld

Jim Briscoe

27,544,545

26,650

Jon Young

27,511,341

58,600

Gary Musil

27,513,891

56,100

John Guilbert

27,501,141

64,350

Philip St. George

27,527,741

41,050

Shareholders ratified the appointment of Semple & Cooper, LLP as our independent auditors by a vote of 27,520,941 in favor with 48,650 against.

 

**PART II**

**Item 5.**

**Market for Common Equity and Related Stockholder Matters.**

Our common stock was listed and commenced trading on the OTC Bulletin Board on July 15, 2003 under the symbol "LBTS.OB".  Since July 15, 2003, trading in our common stock has been limited and sporadic.  The following table sets forth, for the periods indicated, the high and low sales prices for our common stock on the OTC Bulletin Board:

 

**OTC Bulletin Board (1)**

**Quarter Ended**

**High**

**Low**

January 31, 2006

$1.52

$1.07

October 31, 2005

$2.27

$1.21

July 31, 2005

$1.67

$1.03

April 30, 2005

$1.97

$1.10

January 31, 2005

$2.14

$1.20

October 31, 2004

$1.74

$1.35

July 31, 2004

$1.86

$0.90

April 30, 2004 **(2)**

$1.82

$1.28

March 31, 2004**(3)**

$2.50

$0.10

December 31, 2003 **(4)**

n/a

n/a
 
 

(1)

These prices were taken from Yahoo! Finance.  Such over-the-counter market quotations reflect inter-dealer prices, without retail mark-up, mark down or commission and may not necessarily represent actual transactions.

 

(2)

These high and low bids are for the month of April only.  On May 26, 2004, our company changed its fiscal year end to January 31 resulting in this one-month transition period for the reporting of high and low bids.

 

(3)

Reflects an 8:1 stock split.

 

(4)

During the period from the date of incorporation to December 31, 2003, there were no reported high or low bid prices for our common stock. The source of the high and low bid information for trading during this period is the OTC Bulletin Board.
 
Our common stock is issued in registered form.  The Nevada Agency and Trust Company, of Suite 880 Bank of America, 50 West Liberty Street, Reno, Nevada 89501 USA (telephone: 775.322.0626; facsimile 775.322.5632) is the registrar and transfer agent for our common stock.

 

 

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On April 17, 2006, the shareholders' list for our common stock showed 104 registered stockholders and 37,254,174 shares issued and outstanding.  The closing sale price for our common stock on April 17, 2006, as reported on the OTC Bulletin Board, was $1.09.

***Recent Sales of Unregistered Securities***

On March 8, 2006, the Company entered into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP. Pursuant to the Standby Equity Distribution Agreement, we may, at our discretion, periodically sell to Cornell Capital Partners shares of our common stock for a total purchase price of up to $10,000,000 for a period of up to two years.  The periodic sale of shares is known as an advance.  For each share of our common stock purchased under the Standby Equity Distribution Agreement, Cornell Capital Partners will pay us 96%, or a 4% discount of the lowest volume weighted average per share purchase price of our common stock on our principal trading market for the 5 days following our request for an advance.  If the volume weighted average price of the common stock on any day during such five (5) day period is less than 90% of the closing bid price on the trading day immediately preceding thenotice date, then, the volume weighted average price on such date is excluded from the calculation and the number of shares sold and the amount of the advance are reduced by 20%.  We may waive this price protection by providing Cornell Capital Partners with notice of the waiver prior to the relevant advance notice date. In addition, 5% of each cash advance will be paid to Cornell Capital Partners as a commitment fee and $500 per advance will be paid to Yorkville Advisors, LLC an affiliate of Cornell Capital Partners as a structuring fee.  The amount of each advance is subject to a maximum amount of $300,000, and we may not submit a request for an advance within five trading days of a prior advance.  In addition, we may not request cash advances if the shares to be issued in connection with such advances would result in Cornell Capital Partners owning more than 9.9% of our outstanding common stock.  The effectiveness of the sale of the shares under the Standby Equity DistributionAgreement is conditioned upon registering the shares of common stock with the SEC and obtaining all necessary permits or qualifying for exemptions under applicable state laws.  A registration statement was filed with the SEC on March 23, 2006.  Cornell Capital Partners also received an initial commitment fee of $290,000, which was paid by the issuance of 256,637 shares of common stock on March 8, 2006.  Yorkville Advisors, LLC an affiliate of Cornell Capital Partners, received a one time structuring fee of $15,000.  Proceeds received under the Standby Equity Distribution Agreement will be used for exploration activities and working capital.

On March 8, 2006 Newbridge Securities Corporation was paid an initial structuring fee of $10,000 by the issuance of 8,850 shares of common stock. Liberty Star engaged Newbridge Securities Corporation, an unaffiliated registered broker-dealer, to advise it in connection with the Standby Equity Distribution Agreement.

On May 20, 2005, we issued 1,970 units to two non-U.S. investors in an offshore private placement, pursuant to an exemption under Regulation S of the Securities Act of 1933, as amended. These units were issued as consultants fees in connection with consultant agreements with the two non-U.S. investors and valued at par value $0.001 per share.  Each unit consists of one share of common stock and one-half share purchase warrant.  Each whole share purchase warrant entitles the holder to purchase one share of common stock at a price of $1.50 per share and is exercisable for a period of two years.

On March 22, 2005, we completed a private placement financing of $5,052,732 by the issuance of 3,886,717 units at a price of $1.30 per unit.  Each unit consists of one share of common stock and one-half share purchase warrant.  Each whole warrant entitles the holder to purchase an additional share of common stock at a price of $1.50 per share and is exercisable for a period of two years.  The units were issued to three accredited investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act and twenty-one non-US persons in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933. As a condition of the private placement, we agreed to return all proceeds from the private placement in the event that we did not file a registration statement on Form SB-2 within 60 days of the closing date of the private placementregistering all of the securities issued. We filed the Form SB-2 within the 60-day deadline.  Finder’s fees are payable on portions of the investment from non-US persons in the amount of 3% to 3.5% in cash and 1% in units.  Proceeds of the private placement will be used to explore our mineral claims and for working capital.

***Equity Compensation Plan Information***

As of January 31, 2006, we had one compensation plan in place, entitled "2004 Stock Option Plan."  This plan has not been approved by our security holders.

 

 

 

 

24

 

 

 

**Total number of securities authorized**

**Number of securities to be issued upon  exercise of outstanding options as at January 31, 2006**

**Weighted-average exercise price of  outstanding options as at January 31, 2006**

**Number of securities remaining available for  further issuance as at January 31, 2006**

3,850,000

676,000

$1.68

3,174,000

On April 5, 2006, we granted to our employees, consultants, officers and directors stock options to purchase an aggregate of 1,594,000 common shares exercisable at the price of $1.11 per share for a term of ten years. The grant of stock options was made under the terms of our 2004 Stock Option Plan.

***Purchases of Equity Securities by the Issuer and Affiliated Purchasers***

On November 22, 2004 the Company received and retired 7,000,000 shares that were returned from Alaska Star Minerals, LLC for which no cash was exchanged.  The 7,000,000 shares were part of the original issuance of shares to affect the asset acquisition.  These shares were issued in exchange for mineral claims and notes payable.  The return of 7,000,000 shares was completed in order to remove one of the Alaska Star Minerals LLC owners from the asset acquisition when it was decided that he would not be employed by the Company.  The receipt and retirement of these shares were reported at the market closing price on that date of $1.60 per share, $11,200,000, recorded as a reduction of common stock and additional paid-in capital.

**Item 6.**

**Management's Discussion and Analysis or Plan of Operation.**

The following discussion should be read in conjunction with our consolidated audited financial statements and the related notes that appear elsewhere in this annual report.  The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  We refer you to the cautionary statement regarding forward-looking statements included at the beginning of this annual report.  Our actual results could differ materially from those discussed in the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 6 of this annual report.

Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

***Overview***

We are an exploration stage company engaged in exploration of three large mineral projects.  Two of these projects are located in the Iliamna area of southwestern Alaska – Big Chunk and Bonanza Hills. The third is located in the Mojave and Coconino counties of Northern Arizona in an area known as the North Pipes Project. 

At our Big Chunk and Bonanza Hills properties in Alaska, which are held through our wholly-owned Alaska subsidiary, Big Chunk Inc. (“Big Chunk”), we have acquired and are exploring at Big Chunk 1,718 mineral claims spanning approximately 421 square miles in an area centered 25 miles northwest of the village of Iliamna, on the north shore of Lake Iliamna in southwestern Alaska. At Bonanza Hills we have 163 claims covering approximately 40.75 square miles. In each case these are Alaska State Mining Claims and are subject only to a small royalty due the state of Alaska.  We plan to ascertain whether the claims possess commercially viable deposits of gold, copper, molybdenum, silver and zinc.  To date, we have completed a detailed study, by airplane, of the magnetic fields found on our Big Chunk claims.  One hundred eleven miles of induced polarization surveys have been completed over portions of ourBig Chunk claims.  We have also drilled 31 drill holes to an average depth of about 400 feet for a total of 12,277 feet of drilling on our Big Chunk properties.

The Bonanza Hills mining district lies about 60 miles northeast of the village of Iliamna and about 40 miles north east of the northern boundry of the Big Chunk Project.  At present, only a small part of our Bonanza Hills claims have been sampled.  Additional sampling is planned for the field season of 2006.

In Arizona starting on or about November 2004, in response to rising uranium consumption and prices, we started a literature research program of the characteristics of uranium bearing breccia pipes which occur in north central Arizona between the town of Flagstaff and the Utah border.    We determined that areas that held breccia pipes were available for acquisition by staking federal mining claims.  Almost all previously held claims had been allowed to expire by their previous holders because of the low price of uranium from the early 1980’s until recently.  As a result of our investigation and the interest it developed, the company has acquired, through staking, 651 federal lode mining claims in northern Arizona that include approximately 123 

 

25

 

breccia pipe targets.  These federal claims provide the mining rights to discovered minerals and no royalty is due on production from them.  We have established a field office in Kanab, Utah for the company.  Kanab, Utah is the nearest town to the area of exploration which lies 15 to 48 miles to the south in Arizona. 

**PLAN OF OPERATIONS AND CASH REQUIREMENTS**

***Cash Requirements***

Over the next twelve months we intend to continue our exploration program at Big Chunk and Bonanza Hills in Alaska and the uranium pipes at North Pipes in northern Arizona.  We anticipate that we will incur expenses over the next twelve months for geological, geophysical, and geochemical studies and interpretation of data acquired in the field season of 2006. 

We will require additional funds to implement our growth strategy in exploration operations.  These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares.  There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock.  Further, we may continue to be unprofitable.

Our net cash provided by financing activities during the year ended January 31, 2006 was $5,052,732.

In order to proceed with our plans we raised funds by way of private placements of equity securities in our company and a standby equity distribution agreement.  The private placement offering consisted of 3,886,717 units at a price of $1.30 per unit for gross proceeds of $5,052,732.  Each unit consists of one share of common stock and one-half share purchase warrant.  Each whole warrant entitles the holder to purchase an additional share of our common stock at a price of $1.50 per share and is exercisable for a period of two years.  The net proceeds received have been and are being used to explore our mineral properties and for working capital.

On March 8, 2006, we entered into a Standby Equity Distribution Agreement with Cornell Capital Partners.  Under the Standby Equity Distribution Agreement, we may, at our discretion, periodically sell to Cornell Capital Partners shares of our common stock for a total purchase price of up to $10,000,000.  For each share of common stock purchased under the Standby Equity Distribution Agreement, Cornell Capital Partners will pay Liberty Star 96%, or a 4% discount on the lowest volume weighted average per share price of our common stock on the principal market for the 5 days following our request for advance.  Cornell Capital Partners’ obligation to purchase shares of Liberty Star’s common stock under the Standby Equity Distribution Agreement is subject to certain conditions, including Liberty Star obtaining an effective registration statement for shares of common stock sold under the Standby EquityDistribution Agreement and each advance is limited to $300,000 per five business days.

Over the next twelve months we intend to use all available funds to expand on the exploration of our mineral properties, as follows: 

 

**Estimated Funding Required  During the Next Twelve Months**

**Expense**

**Amount**

Mineral Claim Exploration Expenses

$9,000,000 

Professional Fees

360,000 

Investor Relations & Sales Related

322,000   

Rent, Utilities & Insurance

105,000 

General Administrative Expenses

213,000 

**Total**

$10,000,000 

We had cash and cash equivalents in the amount of $933,102 as of January 31, 2006.  We had working capital of $808,491 as of January 31, 2006.

As at January 31, 2006, we had $160,075 in current liabilities. We had a net loss of $4,627,965 for the twelve month period ended January 31, 2006 compared to a net loss of $18,392,024 for the twelve-month period ended January 31, 2005.  Our total liabilities and stockholders’ equity as of January 31, 2006 were $1,179,566 as compared to total liabilities and stockholders’ equity of $691,041 as of January 31, 2004.  The increase in total liabilities and stockholders’ equity was due to the issuance of 

 

26

 

an additional 3,886,717 shares of common stock for gross proceeds of $5,052,732 and the increased exploration of our mineral claims.  We incurred expenses in the amount of $4,694,804 for the year ended January 31, 2006 compared to $18,397,569 for the year ended January 31, 2005.  The change in expenses was primarily due to the impairment loss that we experienced as a result of the acquisition of Liberty Star Gold Corp., on February 3, 2004.  We have accounted for the transaction as an asset purchase reported at the fair value of our common shares issued based on the average market closing price of our common shares over the three (3) trading dates prior to the completion of the asset purchase, which has resulted in a non-recurring impairment loss for the period of $15,907,500. During the twelve month period ended January 31, 2006 we spent $3,577,964 on exploration of our mineral properties.  

The results that we can accomplish with our current budgeted expenditures of $10,000,000 are limited.  We will need additional funding to prove whether we have a commercially viable mineral resource. There is no assurance that we will be able to raise additional funds in the amounts and at the times we will require them.

We have no arrangements in place for any additional financing and there is no assurance that we will be able to do so in the required amounts.  Please refer to the section of this annual report entitled "Risk Factors" beginning on page 7 for a more detailed description of the risks that we will face, and the risks that any person investing in our company will face, that may arise as the result of our attempt to raise money for the continuation of our exploration program through the sale of equity in our company.  Because of these risks and for other reasons, our auditors, in their report on the annual consolidated financial statements for the year ended January 31, 2006, included an explanatory paragraph regarding their concerns about our ability to continue as a going concern.

***Purchase or Sale of Equipment***

We do not anticipate that we will expend any significant amount on the purchase of equipment for our present operations or for our projected operations over the next 12 months.  Nor do we anticipate that we will sell any equipment over the next 12 months.

***Personnel***

As of January 31, 2006, we had six full time employees, one part-time employee and two contractors on full time status.  Competition for outstanding exploration geologists is intense as there are too few to meet the need and few new college graduates are entering the field.  As a result we have decided to maintain a core of experienced critical employees and contractors and contract for technical workers on an as needs basis during field months.  As of the date of this prospectus, we are employing or contracting three full time geologists, including President and CEO, James Briscoe, and VP Exploration, Phil St. George, as well as one senior geologist R. Macer. We also employ David Boyer M.Sc. a specialist in computer mapping.  We have contracted with Dr. Karen Wenrich as a full time consultant on uranium exploration. Experienced field crewmembers as part of the geophysical crew, geochemical samplers, and acamp cook have been contracted as well.  In all, there will be up to 22 workers for the field season.  These permanent and contracted personnel can work approximately year round in Arizona and start about May 15 in Alaska and work until freeze up about the end of October.  Additionally, we have geoscience consultants specializing in exploration geology, geophysics, geochemistry, and geocomputer data applications, of whom our Technical Advisory Board is comprised.  These individuals are generally contracted for 140 days of consulting services over the period January 1, 2006 through December 31, 2006 but particularly during the summer field season in Alaska.

***Off-Balance Sheet Arrangements***

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. 

***Presentation of Financial Information***

We completed the acquisition of Liberty Star Gold Corp., the private Nevada Corporation that we acquired from Alaska Star Minerals LLC, effective February 3, 2004 and subsequently changed our year end from December 31 to January 31.  Under United States generally accepted accounting principles, this acquisition was treated as a purchase of the private company Liberty Star Gold Corp. by Liberty Star Acquisition Corp.  Our financial statements for the period ended January 31, 2006 reflect financial information for the twelve month period ending January 31, 2006, as well as from inception through January 31, 2006 and for the twelve-month period ended January 31, 2005.

 

 

27

 

 

You should read the following discussion of our financial condition and results of operations together with the consolidated audited financial statements and the notes to consolidated audited financial statements included elsewhere in this filing.  This discussion contains forward-looking statements that reflect our plans, estimates and beliefs.  Our actual results could differ materially from those anticipated in these forward-looking statements.

Since we have not generated any revenue, we have included a reference to our ability to continue as a going concern in connection with our financial statements for the year ended January 31, 2006.  Our accumulated stockholders’ equity at January 31, 2006, was $1,019,491 and the net loss for the twelve-month period ended January 31, 2006 was $4,627,965.  All of our exploration costs are expensed as incurred.

These financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing will be obtained as required and that our assets will be realized, and liabilities settled in the ordinary course of business.  Accordingly, these financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order to continue as a going concern, we require additional financing.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of the financial statements.

***Critical Accounting Policies***

Our significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 7 in the Form 10-KSB. The significant accounting policies adopted by our company are as follows:

*Use of estimates*

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

*Cash and cash equivalents*

The company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. The company maintains its cash in bank deposit accounts which, for periods of time, may exceed federally insured limits.

*Mineral claim costs*

Mineral claim costs of carrying and retaining undeveloped properties are charged to expense as incurred.

*Equipment*

Equipment is stated at cost.   The Company capitalizes all purchased equipment over $500 with a useful life of more than one year. Depreciation is calculated using the straight line method over the estimated useful lives of the assets.  Maintenance and repairs are expensed as incurred while betterments or renewals are capitalized.  Equipment is reviewed periodically for impairment.  Useful lives range from 3 to 7 years.  

*Accounting for the impairment of long-lived assets and long-lived assets to be disposed of:*

The company reviews property, equipment and land for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. 

 

 

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*Environmental expenditures*

The operations of the company have been and may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for future removal and site restoration costs. The likelihood of new regulations and their overall effect upon our company are not predictable. The company will provide for any reclamation costs in accordance with Financial Accounting Standard No. 143 “Accounting for Asset Retirement Obligations”.

*Stock-based compensation*

The company accounts for stock options under Accounting Principles Board Opinion 25 (“APB 25”).  Under APB 25, there is generally no charge to earnings for employee stock option awards because the options granted have an exercise price equal to the market value of the underlying common stock on the grant date.  Alternatively, had we adopted the fair value provisions of SFAS No. 123, the fair value of each option granted would have been estimated at the date of grant and charged to compensation expense over the option’s service life.  The fair value of options granted has been determined to be $0, based on the Black-Scholes Valuation method, see Note 5, and has no effect on the pro forma loss per share.

*Income taxes*

Income taxes are recorded using the asset and liability method.  Under the asset and liability method, tax assets and liabilities are recognized for the tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Future tax assets and liabilities are measured using the enacted tax rates expected to apply when the asset is realized or the liability settled.  The effect on future tax assets and liabilities of change in tax rates is recognized in income in the period that enactment occurs.  To the extent that our company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess. 

*Net loss per share*

Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period.  The calculation of basic loss per share gives retroactive effect to an eight for one stock split which resulted in 20,000,000 common shares outstanding prior to the merger.  Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic loss per share) and potentially dilutive shares of common stock that are not anti-dilutive.  At January 31, 2006, there were 3,420,342 potentially dilutive instruments outstanding.

***New Accounting Pronouncements***

In December 2004, the FASB revised Statement of Financial Accounting Standards No. 123 (“SFAS 123(R)”), “Share-Based Payment.” The SFAS 123(R) revision established standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services and focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  It does not change the accounting guidance for share-based payment transactions with parties other than employees.  For public entities that file as small business issuers, the revisions to SFAS 123 are effective as of the beginning of the first annual reporting period that begins after December 15, 2005. The Company intends to comply with the standard upon its effectiveness; however, the Company does not believe that the impact to the Company’sconsolidated financial statements would be materially different from the pro forma disclosures under SFAS No. 123 disclosed in Note 5, Stock Based Compensation. 

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, (“SFAS 154”), “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, “Accounting Changes” and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS 154 applies to all voluntary changes in accounting principle and changes the requirements for accounting for and reporting a change in accounting principle. SFAS 154 requires the retrospective application to prior periods’ financial statements of the direct effect of a voluntary change in accounting principle unless it is impracticable. APB No. 20 required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. FASB stated that SFAS 154 improvesfinancial reporting because its requirements enhance the consistency of financial information between periods. Unless early adoption is elected, SFAS 154 is effective for fiscal years beginning after December 15, 2005. Early adoption is permitted for fiscal years beginning after June 1, 2005. SFAS 154 does not change the transition provisions of any 

 

29

 

existing accounting pronouncements, including those that are in a transition phase as of the effective date of this statement. The adoption of SFAS 154 is not expected to have a material affect on the Company’s financial position or results of operations.

In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 155, “Accounting for Certain Hybrid Financial Instruments” (“SFAS No. 155”), an amendment to FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities” and FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”. SFAS No. 155 applies to hybrid financial instruments that contain an embedded derivative that otherwise would require bifurcation. The FASB stated that SFAS No. 155 improves financial reporting by eliminating the exemption from applying Statement No. 133 to interests in securitized financial assets so that similar instruments are accounted for similarly regardless of the form of the instruments.  SFAS No. 155 also allows a preparer toelect fair value measurement at acquisition, at issuance, or when a previously recognized financial instrument is subject to a remeasurement (new basis) event, on an instrument-by-instrument basis, in cases in which a derivative would otherwise have to be bifurcated. SFAS No. 155 amends Statement No. 140 by eliminating the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. Any differences resulting from adoption of SFAS No. 155 should be recognized as a cumulative-effect adjustment to beginning retained earnings. Unless early adoption is elected, SFAS No. 155 is effective for fiscal years beginning after September 15, 2006. Early adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Managementdoes not believe that the adoption of SFAS No. 155 will have a material effect on our results of operations or financial position.

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets (SFAS 156), which provides the following: 1) revised guidance on when a servicing asset and servicing liability should be recognized; 2) requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable; 3) permits an entity to elect to measure servicing assets and servicing liabilities at fair value each reporting date and report changes in fair value in earnings in the period in which the changes occur; 4) upon initial adoption, permits a onetime reclassification of available-for-sale securities to trading securities for securities which are identified as offsetting the entity’s exposure to changes in the fair value of servicing assets or liabilities that a servicer elects tosubsequently measure at fair value; and 5) requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional footnote disclosures. SFAS 156 is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006.  The Company does not believe that this statement will have a significant impact on the Company’s overall results of operations or financial position.

The adoption of these new pronouncements is not expected to have a material effect on our financial position or results of operations.

***Going Concern***

Since we have not generated any revenue, we have included a reference to our ability to continue as a going concern in connection with our financial statements for the year ended January 31, 2006.  All exploration costs are expensed as incurred.

These financial statements have been prepared on the going concern basis, which assumes that adequate sources of financing will be obtained as required and that our assets will be realized, and liabilities settled in the ordinary course of business.  Accordingly, these financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should we be unable to continue as a going concern.

In order to continue as a going concern, we require additional financing.  There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms.  If we are not able to continue as a going concern, we would likely be unable to realize the carrying value of our assets reflected in the balances set out in the preparation of the financial statements.

**Item 7.**

**Financial Statements.**

Our consolidated financial statements are prepared in accordance with United States Generally Accepted Accounting Principles.

The following consolidated financial statements are filed as part of this annual report:

Report of Independent Registered Public Accounting Firm

 

 

30

 

 

Consolidated Balance Sheet as of January 31, 2006 and 2005

Consolidated Statements of Operations for the twelve month period ended January 31, 2006, the twelve month period ended January 31, 2005 and the period from inception (August 20, 2001) to January 31, 2006

Consolidated Statement of Stockholders' Equity for the period from inception (August 20, 2001) to January 31, 2006

Consolidated Statements of Cash Flows for the twelve month period ended January 31, 2006, the twelve month period ended January 31, 2005 and for the period from inception (August 20, 2001) to January 31, 2006

Notes to the Consolidated Financial Statements

 

 

31

 

 

Report of Independent Registered Public Accounting Firm

 

Board of Directors

 

Liberty Star Gold Corp.

 

We have audited the accompanying consolidated balance sheets of Liberty Star Gold Corp. as of January 31, 2006 and 2005, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended and for the cumulative period from inception (August 20, 2001) through January 31, 2006. 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 audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about 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 internal control over financial reporting.  Our audits include 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 theaccounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2006 and 2005, and the results of its operations, changes in stockholders’ equity, and its cash flows for the years then ended, and for the cumulative period from inception (August 20, 2001) through January 31, 2006, 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 13 to the consolidated financial statements, the Company is in the exploration stage, has suffered recurring losses from operations, and requires additional funds for further exploratory activity prior to attaining a revenue generating status.  In addition, the Company may not find sufficient ore reserves to be commercially mined. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 13.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

 

/s/ Semple & Cooper, LLP

Phoenix, Arizona

March 29, 2006

 

 

32

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**CONSOLIDATED BALANCE SHEET**

 

**ASSETS**

 

 

 

**January 31, 2006**

 

**January 31, 2005**

Current:

Cash and cash equivalents

Prepaid expenses

Other current assets

Deposits

 

$

 

933,102

15,007

7,875

12,582

 

$

 

531,044

125,822

-

10,080

Total current assets

 

968,566

 

666,946

 

 

 

 

 

Equipment, net

 

211,000

 

24,095

 

 

 

 

 

Total assets

$

1,179,566

$

691,041

 

 

**LIABILITIES AND STOCKHOLDERS’ EQUITY**

 

Current:

Accounts payable and accrued liabilities

 

$

 

160,075

 

$

 

96,317

Total current liabilities

 

160,075

 

96,317

 

 

 

 

 

Commitments 

 

-

 

-

 

 

 

 

 

Stockholders’ equity 

 

 

 

 

Common stock - $.001 par value; 200,000,000 shares authorized; 36,988,687 and 33,100,000 issued and outstanding

 

 

36,989

 

 

33,100

Additional paid-in capital

 

12,935,093

 

7,886,250

Deficit accumulated during the exploration stage

 

(11,952,591)

 

(7,324,626)

Total stockholders’ equity

 

1,019,491

 

594,724

 

 

 

 

 

Total liabilities and stockholders’ equity

$

1,179,566

$

691,041

 

 

The Accompanying Notes are an Integral Part of the Consolidated Financial Statements.

 

 

33

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**CONSOLIDATED STATEMENT OF OPERATIONS**

 

 

 

 

 

 

For the twelve

months ended

January 31, 2006

 

 

 

 

For the twelve

months ended

January 31, 2005

 

 

Cumulative from date of inception

 (August 20, 2001)

to

January 31, 2006

Revenues

$

-

$

-

$

-

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

Geological and geophysical costs

 

3,577,964

 

1,874,639

 

5,452,603

Salaries and benefits

 

232,794

 

153,104

 

385,898

Accounting and auditing

 

204,162

 

90,324

 

294,580

Advertising

 

72,767

 

72,846

 

145,793

Depreciation

 

27,185

 

17,416

 

44,601

Legal

 

162,164

 

51,618

 

213,782

Professional services

 

-

 

32,097

 

143,992

Office

 

359,506

 

179,033

 

560,191

Travel

 

58,262

 

18,992

 

84,504

Impairment loss

 

-

 

15,907,500

 

15,907,500

Net operating expenses

 

4,694,804

 

18,397,569

 

23,233,444

 

 

 

 

 

 

 

Loss from operations

 

(4,694,804)

 

(18,397,569)

 

(23,233,444)

 

 

 

 

 

 

 

Other income

 

 

 

 

 

 

Interest income

 

66,815

 

5,545

 

72,958

Gain on sale of assets

 

24

 

-

 

24

Foreign exchange gain

 

-

 

-

 

505

Gain on settlement of debt to

related  party

 

 

-

 

 

-

 

 

7,366

Total other income

 

66,839

 

5,545

 

80,853

 

 

 

 

 

 

 

Loss before income taxes

 

(4,627,965)

 

(18,392,024)

 

(23,152,591)

 

 

 

 

 

 

 

Income tax expense

 

-

 

-

 

-

 

 

 

 

 

 

 

Net loss

$

(4,627,965)

$

(18,392,024)

$

(23,152,591)

 

 

 

 

 

 

 

Basic and diluted net loss per share of

common stock

 

$

 

(0.13)

 

$

 

 (0.48)

 

$

 

(0.84)

 

 

 

 

 

 

 

Basic and diluted weighted average number of shares of common stock outstanding

 

 

36,455,672

 

 

37,871,311

 

 

27,721,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Accompanying Notes are an Integral Part of the Consolidated Financial Statements. 

 

 

34

 

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)**

 

 

Common stock

 

Additional paid-in

 

Deficit accumulated during the exploration

 

Total stockholders’ equity

 

Shares

 

Amount

 

capital

 

stage

 

(deficit)

**Balance, August 20, 2001**

(Date of inception)

-

$

-

$

-

$

-

$

-

Common stock issued for cash,

November 30, 2001

 

20,000,000

 

 

20,000

 

 

80,000

 

 

-

 

 

100,000

Net loss for the period from inception

to December 31, 2001

 

-

 

 

-

 

 

-

 

 

(5,061)

 

 

(5,061)

**Balance, December 31, 2001**

20,000,000

 

20,000

 

80,000

 

(5,061)

 

94,939

Net loss for the twelve month period

ended December 31, 2002

 

-

 

 

-

 

 

-

 

 

(65,611)

 

 

(65,611)

**Balance, December 31, 2002**

20,000,000

 

20,000

 

80,000

 

(70,672)

 

29,328

Net loss for the twelve month period 

ended December 31, 2003

 

-

 

 

-

 

 

-

 

 

(58,425)

 

 

(58,425)

**Balance, December 31, 2003**

20,000,000

 

20,000

 

80,000

 

(129,097)

 

(29,097)

Net loss for the one month transition

period ended January 31, 2004

 

-

 

 

-

 

 

-

 

 

(3,505)

 

 

(3,505)

**Balance, January 31, 2004**

20,000,000

 

20,000

 

80,000

 

(132,602)

 

(32,602)

Acquisition, February 3, 2004 

17,500,000

 

17,500

 

15,907,500

 

-

 

15,925,000

Issuance of common stock

private placement

 

1,000,000

 

 

1,000

 

 

999,000

 

 

-

 

 

1,000,000

Issuance of common stock and 

warrants private placement     

 

1,600,000

 

 

1,600

 

 

1,998,400

 

 

-

 

 

2,000,000

Options issued for services

-

 

-

 

94,350

 

-

 

94,350

Return of shares

(7,000,000)

 

(7,000)

 

(11,193,000)

 

11,200,000

 

-

Net loss for the twelve month period 

ended January 31, 2005

 

-

 

 

-

 

 

-

 

 

(18,392,024)

 

 

(18,392,024)

**Balance, January 31, 2005**

33,100,000

 

33,100

 

7,886,250

 

(7,324,626)

 

594,724

Issuance of common stock and 

warrants private placement 

 

3,886,717

 

 

3,887

 

 

5,048,845

 

 

-

 

 

5,052,732

Issuance of common stock and 

warrants private placement 

 

1,970

 

 

2

 

 

(2)

 

 

-

 

 

-

Net loss for the twelve month period 

ended January 31, 2006

 

-

 

 

-

 

 

-

 

 

(4,627,965)

 

 

(4,627,965)

**Balance, January 31, 2006**

36,988,687

$

36,989

$

12,935,093

$

(11,952,591)    

$

1,019,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Accompanying Notes are an Integral Part of the Consolidated Financial Statements.

 

35

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

 

                

 

 

 

 

 

For the twelve

months ended

January 31, 2006

 

For the twelve

months ended

January 31, 2005

 

Cumulative from date of inception

(August 20, 2001)

to 

January 31, 2006

Cash flows from operating activities

 

 

 

 

 

 

Net loss

$

(4,627,965)

$

 (18,392,024)

$

(23,152,591)    

Adjustments to reconcile net loss 

to net cash from operating activities:

 

 

 

 

 

 

Depreciation expense

 

27,185

 

17,416

 

44,601

Mineral claim costs

 

-

 

343,085

 

343,085

Impairment loss

 

-

 

15,907,500

 

15,907,500

Gain on sale of fixed asset

 

(24)

 

-

 

(24)

Changes in assets and liabilities:

Prepaid expenses

 

 

110,815

 

 

(31,472)

 

 

72,843

Other current assets

 

(7,875)

 

-

 

(7,875)

Deposits

 

(2,502)

 

(10,080)

 

(12,582)

Accounts payable and accrued expenses

 

63,758

 

71,895

 

154,060

Net cash used in operating activities

 

(4,436,608)

 

(2,093,680)

 

(6,650,983)

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Proceeds from sale of fixed asset

 

1,774

 

-

 

1,774

Purchase of equipment

 

(215,840)

 

(41,511)

 

(257,351)

Net cash used in investing activities

 

(214,066)

 

(41,511)

 

(255,577)

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from the issuance of common stock

 

5,052,732

 

2,686,930

 

7,839,662

Principal activity on notes payable

 

-

 

(25,000)

 

-

Net cash provided by financing activities

 

5,052,732

 

2,661,930

 

7,839,662

 

 

 

 

 

 

 

Net increase in cash and cash equivalents for period

 

402,058

 

526,739

 

933,102

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period 

 

531,044

 

4,305

 

-

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

$

933,102

$

531,044

$

933,102      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Accompanying Notes are an Integral Part of the Consolidated Financial Statements.

 

 

 

36

 

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**NOTE 1 – Organization**

 

Liberty Star Gold Corp. (the “Company”) was formally Titanium Intelligence, Inc (“Titanium”).  Titanium was incorporated on August 20, 2001 under the laws of the State of Nevada.  Until Titanium entered into the transaction to purchase Liberty Star Gold Corp. (“Liberty Star Nevada”), its focus consisted primarily of developing an Internet textile trade centre website to facilitate the trade of textile products manufactured in China.  Following a review and evaluation of the textile trade centre website business in December 2003, Titanium’s board of directors determined to discontinue the website operations and change the focus of the Company’s business operations to become an exploration stage company engaged in the acquisition and exploration of mineral properties.  Titanium was considered to be a development stage company in the Internet textile trade business as ithad not generated any revenue from internet textile trade operations.

 

On January 19, 2004, we entered into an Agreement and Plan of Merger with Alaska Star Minerals LLC, James Briscoe and Paul Matysek (then the beneficial owners of Alaska Star Minerals LLC), Liberty Star Gold Corp. (then a private Nevada company wholly owned by Alaska Star Minerals LLC) and Liberty Star Acquisition Corp. (then our wholly owned Nevada subsidiary). 

 

The Agreement and Plan of Merger provided for the acquisition of Liberty Star Gold Corp. by Liberty Star Acquisition Corp.  The acquisition was completed effective February 3, 2004 and Big Chunk Corp. (“Big Chunk”) (then a subsidiary of Liberty Star Gold Corp.) became the wholly owned subsidiary of Liberty Star Acquisition Corp.  We acquired 100% of the issued and outstanding shares of Liberty Star Gold Corp. in exchange for the issuance of 17,500,000 shares of the Company’s common stock to Alaska Star Minerals LLC.  The acquisition of Liberty Star Gold Corp. has been accounted for as an asset purchase reported at the fair value of our common shares issued based on the average market closing price of our common shares over the 3 trading dates prior to the completion of the asset purchase. Upon completion of the acquisition, we issued 17,500,000 shares of our common stock to Alaska StarMinerals LLC.  As a result of this issuance, the number of outstanding shares of our common stock was increased from 20,000,000 shares to 37,500,000 shares, of which approximately 46.7% were owned by Alaska Star Minerals LLC. 

 

On February 5, 2004, Liberty Star Acquisition was merged into the Company through a parent/subsidiary merger completed pursuant to Nevada Revised Statute 92A.180.  Also on February 5, 2004, the Company’s name was changed from Titanium Intelligence, Inc. to “Liberty Star Gold Corp.”  Big Chunk Corp. is now our wholly-owned subsidiary.

 

On February 5, 2004, we commenced operations in the acquisition and exploration of mineral properties business following completion of the above transactions pursuant to which the Company indirectly acquired 981 mineral claims, spanning 237 square miles in the Iliamna region of southwestern Alaska (the "Alaska Claims").  The Company is considered to be an exploration stage company, as it has not generated any revenues from operations.

 

These consolidated financial statements include the results of operations and cash flows of Big Chunk from the date of acquisition.  All significant intercompany accounts and transactions were eliminated upon consolidation.

These financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below currently exist which raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.  The operations of the Company have primarily been funded by the issuance of capital stock and amounts due to related parties. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or generate profitable operations in thefuture. Management’s plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms.

 

 

37

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 2 - Summary of significant accounting policies**

The summary of significant accounting policies presented below is designed to assist in understanding the Company's consolidated financial statements. Such consolidated financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America (“GAAP") in all material respects, and have been consistently applied in preparing the accompanying consolidated financial statements. The significant accounting policies adopted by the Company are as follows:

*Use of estimates*

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

*Principles of consolidation*

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Big Chunk, from the date of acquisition, February 3, 2004.  All significant intercompany accounts and transactions have been eliminated upon consolidation.

*Cash and cash equivalents*

The Company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. The Company maintains its cash in bank deposit accounts which, for periods of time, may exceed federally insured limits.  At January 31, 2006 and 2005, the amount of cash in bank deposit accounts that exceeded federally insured limits was approximately $858,000 and $450,000, respectively.

*Mineral claim costs*

Mineral claim costs of carrying, retaining and developing properties are charged to expense in the period incurred in our geological and geophysical costs.

*Equipment*

Equipment is stated at cost.   The Company capitalizes all purchased equipment over $500 with a useful life of more than one year. Depreciation is calculated using the straight line method over the estimated useful lives of the assets.  Maintenance and repairs are expensed as incurred while betterments or renewals are capitalized.  Equipment is reviewed periodically for impairment.  Useful lives range from 3 to 7 years.  At January 31, 2006 and 2005 accumulated depreciation was $44,601 and $17,416 respectively.

*Accounting for the impairment of long-lived assets and long-lived assets to be disposed of*

The Company reviews property, equipment and land for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. 

 

 

38

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

 

**NOTE 2 - Summary of significant accounting policies – continued**

*Environmental expenditures*

The operations of the Company have been and may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for future removal and site restoration costs. The likelihood of new regulations and their overall effect upon the Company are not predictable. The Company will provide for any reclamation costs in accordance with Financial Accounting Standard No. 143 “Accounting for Asset Retirement Obligations”.  It is management’s opinion that the Company is not currently exposed to significant environmental and reclamation liabilities and has recorded no reserve for environmental and reclamation expenditures.

*Stock-based compensation*

The Company accounts for stock options under Accounting Principles Board Opinion 25 (“APB 25”).  Under APB 25, there is generally no charge to earnings for employee stock option awards because the options granted have an exercise price equal to the market value of the underlying common stock on the grant date.  Alternatively, had the Company adopted the fair value provisions of SFAS No. 123, the fair value of each option granted would have been estimated at the date of grant and charged to compensation expense over the option’s service life.  The fair value of options granted has been determined to be $0, based on the Black-Scholes Valuation method, see Note 5, and has no effect on the pro forma loss per share.

*Income taxes*

Income taxes are recorded using the asset and liability method.  Under the asset and liability method, tax assets and liabilities are recognized for the tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Future tax assets and liabilities are measured using the enacted tax rates expected to apply when the asset is realized or the liability settled.  The effect on future tax assets and liabilities of change in tax rates is recognized in income in the period that enactment occurs.  To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess. 

*Advertising costs*

The Company charges advertising costs to expense as incurred.

*Net loss per share*

Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period.  The calculation of basic loss per share gives retroactive effect to an eight for one stock split which resulted in 20,000,000 common shares outstanding prior to the merger.  Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic loss per share) and potentially dilutive shares of common stock that are not anti-dilutive.  At January 31, 2006 and 2005, there were 3,420,342 and 1,479,000 potentially dilutive instruments outstanding, respectively. 

*Asset acquisition*

 

On January 19, 2004, we entered into an Agreement and Plan of Merger with Alaska Star Minerals LLC, James Briscoe and Paul Matysek (then the beneficial owners of Alaska Star Minerals LLC), Liberty Star Gold Corp. (then a private Nevada company wholly owned by Alaska Star Minerals LLC) and Liberty Star Acquisition Corp. (then our wholly owned Nevada subsidiary). 

 

 

39

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 2 - Summary of significant accounting policies – continued**

 

*Asset acquisition - continued*

The Agreement and Plan of Merger provided for the acquisition of Liberty Star Gold Corp. by Liberty Star Acquisition Corp.  The acquisition was completed effective February 3, 2004 and Big Chunk Corp. (then a subsidiary of Liberty Star Gold Corp.) became the wholly owned subsidiary of Liberty Star Acquisition Corp.  We acquired 100% of the issued and outstanding shares of Liberty Star Gold Corp. in exchange for the issuance of 17,500,000 shares of the Company’s common stock to Alaska Star Minerals LLC.  The acquisition of Liberty Star Gold Corp. has been accounted for as an asset purchase reported at the fair value of our common shares issued based on the average market closing price of our common shares over the 3 trading dates prior to the completion of the asset purchase. Upon completion of the acquisition, we issued 17,500,000 shares of our common stock to Alaska Star Minerals LLC.  As a result ofthis issuance, the number of outstanding shares of our common stock was increased from 20,000,000 shares to 37,500,000 shares, of which approximately 46.7% were owned by Alaska Star Minerals LLC. 

 

On February 5, 2004, Liberty Star Acquisition was merged into the Company through a parent/subsidiary merger completed pursuant to Nevada Revised Statute 92A.180.  Also on February 5, 2004, the Company’s name was changed from Titanium Intelligence, Inc. to “Liberty Star Gold Corp.”  Big Chunk Corp. is now our wholly-owned subsidiary.

 

On February 5, 2004, we commenced operations in the acquisition and exploration of mineral properties business following completion of the above transactions pursuant to which the Company indirectly acquired 981 mineral claims, spanning 237 square miles in the Iliamna region of southwestern Alaska (the "Alaska Claims").  The Company is considered to be an exploration stage company, as it has not generated any revenues from operations.

 

These consolidated financial statements include the results of operations and cash flows of Big Chunk from the date of acquisition.  All significant intercompany accounts and transactions were eliminated upon consolidation.

 

The acquisition of Liberty Star Gold Corp. has been accounted for as an asset purchase reported at the fair value of our common shares issued based on the average market closing price of our common shares over the 3 trading dates prior to the completion of the asset purchase.  Titanium Intelligence, Inc. acquired mineral claims, assumed liabilities of $313,895 and issued 17,500,000 shares valued at $15,925,000.  The Company conducted a fair value assessment of the asset acquisition following the transaction date and determined the fair value of the mineral claims received was less than the value paid.  The fair value was determined by an independent appraisal of the mineral claims.  As a result the Company recorded an impairment loss of $15,907,500 in the same quarter as the asset acquisition.  Mineral claim costs of $331,395 have been expensed as geological and geophysical costs in the statement ofoperations during the twelve month period ended January 31, 2005.  The impairment loss of $15,907,500 has been expensed and included in the statement of operations during the twelve month period ended January 31, 2005.

*Recently issued accounting standards*

In December 2004, the FASB revised Statement of Financial Accounting Standards No. 123 (“SFAS 123(R)”), “Share-Based Payment.” The SFAS 123(R) revision established standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services and focuses primarily on accounting for transactions in which an entity obtains employee services in share-based payment transactions.  It does not change the accounting guidance for share-based payment transactions with parties other than employees.  For public entities that file as small business issuers, the revisions to SFAS 123 are effective as of the beginning of the first annual reporting period that begins after December 15, 2005. The Company intends to comply with the standard upon its effectiveness; however, the Company does not believe that the impact to the Company’sconsolidated financial statements would be materially different from the pro forma disclosures under SFAS No. 123 disclosed in Note 5, Stock Based Compensation. 

 

 

40

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 2 - Summary of significant accounting policies – continued**

*Recently issued accounting standards - continued*

 

In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, (“SFAS 154”), “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, “Accounting Changes” and FASB Statement No. 3, “Reporting Accounting Changes in Interim Financial Statements.” SFAS 154 applies to all voluntary changes in accounting principle and changes the requirements for accounting for and reporting a change in accounting principle. SFAS 154 requires the retrospective application to prior periods’ financial statements of the direct effect of a voluntary change in accounting principle unless it is impracticable. APB No. 20 required that most voluntary changes in accounting principle be recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. FASB stated that SFAS 154 improvesfinancial reporting because its requirements enhance the consistency of financial information between periods. Unless early adoption is elected, SFAS 154 is effective for fiscal years beginning after December 15, 2005. Early adoption is permitted for fiscal years beginning after June 1, 2005. SFAS 154 does not change the transition provisions of any existing accounting pronouncements, including those that are in a transition phase as of the effective date of this statement. The adoption of SFAS 154 will not have a material affect on the Company’s financial position or results of operations.

In February 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard No. 155, “Accounting for Certain Hybrid Financial Instruments” (“SFAS No. 155”), an amendment to FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities” and FASB Statement No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”. SFAS No. 155 applies to hybrid financial instruments that contain an embedded derivative that otherwise would require bifurcation. The FASB stated that SFAS No. 155 improves financial reporting by eliminating the exemption from applying Statement No. 133 to interests in securitized financial assets so that similar instruments are accounted for similarly regardless of the form of the instruments.  SFAS No. 155 also allows a preparer toelect fair value measurement at acquisition, at issuance, or when a previously recognized financial instrument is subject to a remeasurement (new basis) event, on an instrument-by-instrument basis, in cases in which a derivative would otherwise have to be bifurcated. SFAS No. 155 amends Statement No. 140 by eliminating the prohibition on a qualifying special-purpose entity from holding a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. Any differences resulting from adoption of SFAS No. 155 should be recognized as a cumulative-effect adjustment to beginning retained earnings. Unless early adoption is elected, SFAS No. 155 is effective for fiscal years beginning after September 15, 2006. Early adoption is permitted as of the beginning of an entity’s fiscal year, provided the entity has not yet issued financial statements, including financial statements for any interim period for that fiscal year. Managementdoes not believe that the adoption of SFAS No. 155 will have a material effect on our results of operations or financial position.

In March 2006, the FASB issued Statement of Financial Accounting Standards No. 156, Accounting for Servicing of Financial Assets (SFAS 156), which provides the following: 1) revised guidance on when a servicing asset and servicing liability should be recognized; 2) requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable; 3) permits an entity to elect to measure servicing assets and servicing liabilities at fair value each reporting date and report changes in fair value in earnings in the period in which the changes occur; 4) upon initial adoption, permits a onetime reclassification of available-for-sale securities to trading securities for securities which are identified as offsetting the entity’s exposure to changes in the fair value of servicing assets or liabilities that a servicer elects tosubsequently measure at fair value; and 5) requires separate presentation of servicing assets and servicing liabilities subsequently measured at fair value in the statement of financial position and additional footnote disclosures. SFAS 156 is effective as of the beginning of an entity’s first fiscal year that begins after September 15, 2006.  The Company does not believe that this statement will have a significant impact on the Company’s overall results of operations or financial position.

 

 

41

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 3– Mineral claims**

On January 31, 2006 the Company held a 100% interest in 1,718 Alaska State mining claims spanning approximately 421 square miles in the Iliamna region of southwestern Alaska, located on the north side of the Cook Inlet, approximately 200 miles southwest of the city of Anchorage, Alaska (the “Big Chunk Claims”).  On January 31, 2006, the Company held a 100% interest in 163 Alaska State mining claims spanning approximately 40 square miles in the Iliamna region of southwestern Alaska, located on the north side of the Cook Inlet approximately 60 miles north of Lake Iliamna (the Bonanza Hills Claims”).  On January 31, 2006, the Company also held a 100% interest in 408 standard Federal lode mining claims spanning approximately 13 square miles on the Colorado Plateau Province of Northern Arizona (the “North Pipes Claims”).

Title to mineral claims involves certain inherent risks due to difficulties of determining the validity of certain claims as well as potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties.  The Company has investigated title to all its mineral properties and, to the best of its knowledge, title to all properties are in good standing.

**NOTE 4– Common stock**

 

In March 2004 the Company completed two private placements, each consisting of 500,000 shares of common stock issued at a price of $1.00 per share for total proceeds of $1,000,000.  Each private placement was settled by receipt of cash of $343,465, and the settlement of indebtedness of $156,535. The settlement of indebtedness totaling $313,070 related to amounts paid on behalf of Big Chunk by third parties. 

In June 2004 the Company completed a private placement consisting of 1,600,000 units at a price of $ 1.25 per unit for total proceeds of $2,000,000.  Each unit consists of one share of common stock and one-half share purchase warrant.  Each whole warrant entitles the holder to purchase an additional share of common stock in our company at a price of $1.75 per share and is exercisable for a period of two years.

On November 22, 2004 the Company received and retired 7,000,000 shares that were returned from Alaska Star Minerals, LLC for which no cash was exchanged.  The 7,000,000 shares were part of the original issuance of shares to affect the asset acquisition.  These shares were issued in exchange for mineral claims and notes payable.  The return of 7,000,000 shares was completed in order to remove one of the Alaska Star Minerals LLC owners from the asset acquisition when it was decided that he would not be employed by the Company.  The receipt and retirement of these shares were reported at the market closing price on that date of $1.60 per share ($11,200,000), recorded as a reduction of common stock and additional paid-in capital.

On March 22, 2005, the Company completed a private placement financing of $5,052,732 by the issuance of 3,886,717 units at a price of $1.30 per unit.  Each unit consists of one share of common stock and one-half share purchase warrant.  Each whole share purchase warrant entitles the holder to purchase one share of common stock at a price of $1.50 per share and is exercisable for a period of two years. The units were issued to three accredited investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act and twenty-one non-US persons in an offshore transaction relying on Regulation S and/or Section 4(2) of the Securities Act of 1933.  As a condition of the private placement, we agreed to return all proceeds from the private placement in the event that we did not file a registration statement on Form SB-2 within 60 days of the closing date of the privateplacement registering all of the securities issued. We filed the Form SB-2 within the 60-day deadline. Finder’s fees are payable on portions of the investment from non-US persons in the amount of 3% to 3.5% in cash and 1% in units.  Proceeds of the private placement will be used to explore our mineral claims and for working capital. 

 

 

 

42

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 4– Common stock - continued**

On May 20, 2005, we issued 1,970 units to two non-U.S. investors in an offshore private placement, pursuant to an exemption under Regulation S of the Securities Act of 1933, as amended. These units were issued as consulting fees in connection with the above private placement.  Each unit consists of one share of common stock and one-half share purchase warrant.  Each whole share purchase warrant entitles the holder to purchase one share of common stock at a price of $1.50 per share and is exercisable for a period of two years.

As of January 31, 2006 there were 5,488,687 one-half share purchase warrants outstanding and exercisable.  The warrants have a weighted average remaining life of 0.91 years and exercise prices of $1.50 and $1.75 per whole warrant for one common share.

Whole share purchase warrants outstanding at January 31, 2006 are as follows:

 

 

 

Number of whole share purchase warrants

 

Weighted average exercise price per share

Outstanding, February 1, 2004

 

-

$

-

 

 

 

 

 

Issued

 

800,000

 

1.75

Forfeited or expired

 

-

 

-

Exercised

 

-

 

-

 

 

 

 

 

Outstanding, January 31, 2005

 

800,000

 

1.75

 

 

 

 

 

Issued

 

1,944,342

 

1.50

Forfeited or expired

 

-

 

-

Exercised

 

-

 

-

 

 

 

 

 

Outstanding, January 31, 2006

 

2,744,342

 

1.57

Exercisable, January 31, 2006

 

2,744,342

$

1.57

The common shares of the Company are all of the same class, are voting and entitle stockholders to receive dividends as defined. Upon liquidation or wind-up, stockholders are entitled to participate equally with respect to any distribution of net assets or any dividends that may be declared. 

**NOTE 5– Stock-based compensation**

 

The 2004 Stock Option Plan was approved and adopted by the Board of Directors on December 27, 2004. The plan allows for up to 3,850,000 shares to be granted to key employees and consultants after specific objectives are met.  The options granted vest under various provisions, not to exceed two years.  The options granted have a useful life not to exceed ten years from the date of grant or five years for options granted to more than 10% stockholders.  The option price set by the Plan Administration shall not be less than the fair market value per share of the common stock on the grant date or 110% of the fair market value per share of the common stock on the grant date for options granted to greater than 10% stockholders.

 

 

 

43

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 5– Stock-based compensation - continued**

Stock options outstanding at January 31, 2006 are as follows:

 

 

 

Number of Options

 

Weighted average exercise price

Outstanding, February 1, 2004

 

-

$

-

 

 

 

 

 

Granted

 

704,000

 

1.678

Forfeited or expired

 

(25,000)

 

1.678

Exercised

 

-

 

-

 

 

 

 

 

Outstanding, January 31, 2005

 

679,000

 

1.678

 

 

 

 

 

Granted

 

-

 

-

Forfeited or expired

 

(3,000)

 

1.678

Exercised

 

-

 

-

 

 

 

 

 

Outstanding, January 31, 2006

 

676,000

 

1.678

Exercisable, January 31, 2006

 

407,000

$

1.678

The options have a weighted-average remaining contractual life of 8.91 years at January 31, 2006.

The fair value of options granted to employees has been determined to be $0 at January 31, 2005, based on the Black-Scholes valuation method. Therefore, there is no proforma impact of stock options granted on the Company’s net loss as reported for the twelve months ended January 31, 2006 and 2005 and the period from incorporation (August 20, 2001) to January 31, 2006.

The fair value of options granted to employees is estimated as of the date of grant utilizing the Black-Scholes option-pricing model with the following weighted average assumptions for grants at January 31, 2005: expected life of options of 5 years, expected volatility of 0%, risk-free interest rate of 5%, and a 0% dividend yield. The weighted average fair value at date of grant for options granted for the twelve months ended January 31, 2005 was approximately $0.

The fair value of options granted to service providers is estimated as of the date of the grant utilizing the Black-Scholes option-pricing model with the same assumptions as above except for expected volatility of 50%.  The estimated cost of the options as a result of these assumptions is $0.513 per option.  There were 185,000 options issued to service providers valued at $94,350, during the year ended January 31, 2005.

**NOTE 6 – Income taxes**

As of January 31 the deferred tax asset is as follows:

 

 

2006

 

2005

 

Net operating loss carryforwards

$

2,738,000

$

1,047,000

 

 

 

 

 

 

 

Less valuation allowance

 

(2,738,000)

 

(1,047,000)

 

 

$

-

 

-

 

Management has elected to provide a deferred tax asset valuation allowance equal to the potential benefit due to the Company’s history of losses.  When the Company demonstrates the ability to generate taxable income, management 

 

44

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 6 – Income taxes - continued**

will reevaluate the allowance. The change in the valuation allowance of $1,691,000 and $994,000 in the years ended January 31, 2006 and 2005 represents the benefit of the change in net operating loss carryforwards during the period.

At January 31, 2006 and 2005 the Company has a federal net operating loss carry-forward of approximately $7,100,000 and $2,600,000 that is available to offset future taxable income that expires at various dates through 2025.

A reconciliation between the provision for income taxes and the expected tax benefit using the federal statutory rate of 34% for the years ended January 31, 2006 and 2005 is as follows:

 

 

January 31, 2006

 

January 31, 2005

Income tax benefit at federal statutory rate

$

(1,463,362)

$

(5,815,558)

State income tax benefit, net of effect on federal taxes

 

(323,958)

 

(1,287,442)

Permanent and temporary differences

 

96,320

 

6,109,000

Increase in valuation allowance

 

1,691,000

 

994,000

Income tax expenses (benefit)

$

-

$

-

**NOTE 7 – Related party transactions**

The Company entered into the following transactions with related parties during the period ended January 31, 2006:

Paid or accrued $10,500 in rent.  The Company rented these premises from JABA (US) Inc.  Our president and chairman, Mr. James Briscoe, was the president of JABA (US) Inc.   The Company rented the facility for $1,500 per month plus a pro rata share of utilities and maintenance from April 2004 through August 2005. 

 

On May 23, 2005, a 1994 GMC long bed truck was purchased from an officer for $10,095.

 

On October 6, 2005, a 1994 Isuzu sport utility vehicle was purchased from an officer for $5,805.

Paid or accrued $3,359 in rent.  We rented an office from an officer on a month to month basis for $197 per month from February 2005 through August 2005 and $395 per month from September 2005 through January 2006.

The Company entered into the following transactions with related parties during the period ended January 31, 2005:

Paid or accrued $ 10,980 of management fees to a company controlled by a common director.

Paid or accrued $ 3,147 of office expenses to a company with a common director.

Paid or accrued $ 1,000 of travel advance to a director.

Paid or accrued $15,000 in rent.  The Company rented these premises from JABA (US) Inc. for $1,500 per month plus a pro rata share of utilities and maintenance, beginning in April, 2005.  Our president and chairman, Mr. James Briscoe, was the president of JABA (US) Inc.

**NOTE 8 – Commitments**

The Company is required to perform annual assessment work in order to maintain the Alaska State mining claims.  Completion of annual assessment work in the amount of $400 per 1⁄4 section (160 acre) claim or $100 per 1⁄4 -1⁄4 section 

 

 

45

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 8 – Commitments - continued**

(40 acre) claim extends the claims for a two-year period from the staking of claims.  The Company estimates that the required annual assessments to maintain the claims will be approximately $740,000.  At January 31, 2006, more than $740,000 has been paid that can be used to meet annual assessment requirements.  

 

The annual state rentals for the Alaska State mining claims are $100 for each 1⁄4 section (160 acres) claim and $25 for each 1⁄4 -1⁄4 section (40 acres) claim.  The rental period begins at noon September 1st through the following September 1st and annual rental payments are due on November 30th of each year.  Annual rent is due in full within 45 days of staking a new claim and covers the period from staking until the next September 1st.  Claims that are staked in accordance with AS 38.05.195(b)(1) meridian, township, range, section and claim system location “MTRSC” receive a one-time only credit of 50% of the second year’s rent payment.  Our Alaska claims are all MTRSC claims eligible for the 50% rental credit in the second rental year.  State rentals for our Alaska claims for the period from September 1, 2004 through September 1, 2005 forclaims that were staked prior to September 1, 2004 totalled $47,625 and had been paid during the fiscal year ended January 31, 2005.  State rentals for the period from September 1, 2004 through September 1, 2005 for new claims staked totalled $50,500 and have been paid during the fiscal year ended January 31, 2006.  Rentals for the period from September 1, 2005 through September 1, 2006 total $172,025 and have been paid during the fiscal year ended January 31, 2006.  Alaska State production royalty is three percent of net income.  State law prescribes that after a 3.5-year exemption from state taxes a metal mine is liable for a 15% state licensing tax on net income from the mine.

The Company is required to pay annual rentals for its Federal lode mining claims for the North Pipes project in the State of Arizona.  The rental period begins at noon on September 1st through the following September 1st and rental payments are due by the first day of the rental period.  The annual rental for the period from September 1, 2004 through September 1, 2005 is $100 per claim.  The annual rental for the period from September 1, 2005 through September 1, 2006 is $125 per claim.  Additional fees of $25 per claim for the period from September 1, 2004 through September 1, 2005 and $45 per claim for the period from September 1, 2005 through September 1, 2006 are due in the first year of filing a federal lode mining claim along with the first years rent.  Rentals for the period from September 1, 2004 through September 1, 2005 totalled $42,555 and have been paid during the fiscalyear ended January 31, 2006.  Rentals for the period from September 1, 2005 through September 1, 2006 totalled $55,275 and have been paid in the fiscal year ended January 31, 2006.

In September 2005 the Company began renting it’s office facility on a month-to-month basis from Roger Brestel for $3,000 per month plus a pro rata share of utilities and maintenance.  In October 2005 the rent increased to $3,150 per month.  For the year ended January 31, 2006 the Company paid $15,600 related to this lease.

The Company rented equipment from Instrumentation GDD, Inc. on a month to month basis beginning in June 2005 for $500 per month.  For the year ended January 31, 2006 the Company paid $4,000 related to this lease.

The Company entered into a vehicle lease in October 2005.  The lease requires a downpayment of $5,458 and monthly payments of $392 through March 2009.  For the year ended January 31, 2006 the Company paid $7,026 related to this lease.

 

Future minimum lease payments during the fiscal year ended:

 

 

January 31, 2007

$

4,704

January 31, 2008

 

4,704

January 31, 2009

 

4,704

January 31, 2010

 

784

 

$

14,896

 

 

 

46

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 8 – Commitments - continued**

 

The Company entered into a lease for lodging with Coral Cliffs Townhomes in Kanab, Utah in order to supply temporary housing for certain field personnel of the North Pipes project.  The lease requires monthly payments of $1,964 from October 2004 through May 2006 with the option to extend the lease to October 2006 and a deposit of one month’s rent.  For the year ended January 31, 2006 the Company paid $9,820 related to this lease.  Future minimum lease payments for the year ended January 31, 2007 will be $5,892.

**NOTE 9 – Supplemental disclosures with respect to cash flows**

There were no significant non-cash investing and financing transactions for the twelve month period ended January 31, 2006.

The significant non-cash investing and financing transactions for the twelve month period ended January 31, 2005 were as follows:

 

a)

Issued 17,500,000 shares of common stock on the purchase of Big Chunk and its mineral claims (Note 1 – $15,925,000).

 

b)

Issued 313,070 shares of common stock, valued at $313,070, on the settlement of indebtedness.

 

c)

Warrants issued of $94,350 to service providers.

 

d)

Received and retired 7,000,000 shares of common stock recorded at $11,690,000 (Note 4).

**NOTE 10 – Financial instruments**

The Company's financial instruments consist of cash and cash equivalents, accounts payable and accrued liabilities. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.  The fair value of these financial instruments approximates their carrying values.

**NOTE 11 – Segment information**

The Company's operations were conducted in one reportable segment, being the acquisition and exploration of mineral claims, in the United States of America.

**NOTE 12 –Subsequent events**

On March 8, 2006, the Company entered into a Standby Equity Distribution Agreement with Cornell Capital Partners, LP. Pursuant to the Standby Equity Distribution Agreement, we may, at our discretion, periodically sell to Cornell Capital Partners shares of our common stock for a total purchase price of up to $10,000,000 for a period of up to two years.  The periodic sale of shares is known as an advance.  For each share of our common stock purchased under the Standby Equity Distribution Agreement, Cornell Capital Partners will pay us 96%, or a 4% discount of the lowest volume weighted average per share purchase price of our common stock on our principal trading market for the 5 days following our request for an advance.  If the volume weighted average price of the common stock on any day during such five (5) day period is less than 90% of the closing bid price on the trading day immediately preceding thenotice date, then, the volume weighted average price on such date is excluded from the calculation and the number of shares sold and the amount of the advance are reduced by 20%.  We may waive this price protection by providing Cornell Capital Partners with notice of the waiver prior to the relevant advance notice date. In addition, 5% of each cash advance will be paid to Cornell Capital Partners as a commitment fee and $500 per advance will be paid to Yorkville Advisors, LLC an affiliate of Cornell Capital Partners as a structuring fee.  The amount of each advance is subject to a 

 

 

47

 

 

**LIBERTY STAR GOLD CORP.**

**FORMERLY TITANIUM INTELLIGENCE, INC.**

**(AN EXPLORATION STAGE COMPANY)**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued**

**NOTE 12 –Subsequent events - continued**

maximum amount of $300,000, and we may not submit a request for an advance within five trading days of a prior advance.  In addition, we may not request cash advances if the shares to be issued in connection with such advances would result in Cornell Capital Partners owning more than 9.9% of our outstanding common stock.  The effectiveness of the sale of the shares under the Standby Equity Distribution Agreement is conditioned upon registering the shares of common stock with the SEC and obtaining all necessary permits or qualifying for exemptions under applicable state laws.  A registration statement was filed with the SEC on March 23, 2006.  Cornell Capital Partners also received an initial commitment fee of $290,000, which was paid by the issuance of 256,637 shares of common stock on March 8, 2006.  Yorkville Advisors, LLC an affiliate of Cornell Capital Partners, received a one time structuring fee of$15,000.  Proceeds received under the Standby Equity Distribution Agreement will be used for exploration activities and working capital.

Liberty Star has engaged Newbridge Securities Corporation, an unaffiliated registered broker-dealer, to advise it in connection with the Standby Equity Distribution Agreement.  Newbridge Securities Corporation was paid an initial structuring fee of $10,000 by the issuance of 8,850 shares of common stock on March 8, 2006.  

On April 6, 2006 the Company granted 1,594,000 stock options to directors, officers and employees of the Company in accordance with the 2004 Stock Option Plan that was approved and adopted by the Board of Directors on December 27, 2004.  The options have an exercise price of $1.11 per common share.  The options granted vest under various provisions, not to exceed two years.  The options are exercisable for a period of ten years.  The fair value of options granted to employees and service providers using the Black-Scholes option-pricing model has not yet been completed.

In February and March 2006 the Company staked 139 additional standard Federal lode mining claims spanning approximately 4.5 square miles at the North Pipes project in Northern Arizona.  In April 2006 the Company staked 104 additional standard Federal lode mining claims spanning approximately 3.4 miles at the North Pipes project in Northern Arizona.  The Company now controls 651 standard Federal lode mining claims at the North Pipes project spanning 21 square miles.  Initial filing fees of $45 per claim and initial rental fees of $125 per claim for the period from staking through September 1, 2006 totalling $41,310 have been paid.

**NOTE 13 – Going concern**

The Company is in the exploration stage, has incurred losses from operations, and requires additional funds for further exploratory activity prior to attaining a revenue generating status.  In addition, the Company may not find sufficient ore reserves to be commercially mined.

Management has secured approximately $10,000,000 in additional financing under the Cornell Capital Partners Standby Equity Distribution Agreement to fund further exploration activity.  The financing is contingent on the successful completion of a registration statement.  If the registration statement is not completed on a timely basis, the Standby Equity Distribution Agreement is subject to rescission.  The Company has filed a registration statement within the required time.  The financial statements do not include any adjustments that might result from the outcome of these uncertainties.

 

 

 

48

 

 

 

**Item 8.**

**Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.**

Dohan and Company CPA PA was dismissed on September 13, 2004 as our independent auditors.  Dohan and Company's audit reports as of January 31, 2004 and for the year then ended on our financial statements did not contain an adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope, or accounting principles, except that Dohan and Company CPA PA expressed in their reports substantial doubt about our ability to continue as a going concern. 

During the two most recent fiscal years, and in the subsequent interim periods, there were no disagreements with Dohan and Company CPA PA on any matters of accounting principles or practices, financial statement disclosure, or auditing scope and procedures which, if not resolved to the satisfaction of Dohan and Company CPA PA would have caused Dohan and Company CPA PA to make reference to the matter in their report.  We requested Dohan and Company CPA PA to furnish us with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements.  A copy of that letter, dated September 29, 2004 was filed as Exhibit 16 to our Form 8-K/A as filed with the Securities and Exchange Commission on September 30, 2004.  Semple & Cooper, LLP was engaged on September 13, 2004 as our principal accountant to audit our financial statements.  The decision to change accountantswas approved by the board of directors.

During the years ended January 31, 2005 and subsequent to the date hereof, neither us nor anyone on our behalf consulted with Semple & Cooper, LLP regarding either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, nor has Semple & Cooper, LLP provided to us a written report or oral advice regarding such principles or audit opinion or any matter that was the subject of a disagreement or reportable events set forth in Item 304(a)(iv) of Regulation S-B with our former accountant.

**Item 8A.**

**Controls and Procedures.**

As required by Rule 13a-15 under the Exchange Act, as of the end of the period covered by this report, being January 31, 2006, we have carried out an evaluation of the effectiveness of the design and operation of our company's disclosure controls and procedures.  This evaluation was carried out under the supervision and with the participation of our management, including our president and chief executive officer and chief financial officer.  Based upon that evaluation, our president and chief  executive  officer and chief financial officer concluded  that our  disclosure  controls and procedures areeffective  as of the end of the period  covered by this  report.  There have been no changes in our internal  controls  over  financial reporting that occurred during our most recent fiscal quarter that have  materially  affected,  or are reasonably  likely to materially affect our internal controls over financial reporting.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms.  Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our president and chief executive officer as appropriate, to allow timely decisions regarding required disclosure.

 

 

49

 

 

 

**PART III**

**Item 9.**

**Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act.**

All directors of our company hold office until the next annual meeting of the stockholders or until their successors have been elected and qualified.  The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office.  Our directors, executive officers and significant employees, their ages, positions held, and duration as such, are as follows:

 

**Name**

**Position Held with the****Company**

**Age**

**Date First Elected****or Appointed**

James Briscoe

President, Chief Executive Officer, Chairman of the Board and Director

64

President, Chief Executive Officer, Chairman of the Board and Director since February 3, 2004

Jon Young

Chief Financial Officer and Director

61

Chief Financial Officer and Director since February 3, 2004

Gary Musil

Secretary and Director

54

Secretary and Director since October 23, 2003

John Guilbert

Director

74

Director since February 5, 2004

Philip St. George

Vice President of Exploration and Director

47

Vice President of Exploration since February 2004 and Director since May 2005

*James Briscoe - Chief Executive Officer, President, Chairman of the Board and Director*

Mr. Briscoe was appointed as our Chief Executive Officer, President, Chairman and a director on February 3, 2004. Mr. Briscoe is a Registered Professional Geologist in the states of Arizona and California.  From 1996 to April 2005, Mr. Briscoe was the Vice President Exploration, and Chairman of the Board of JABA Exploration Inc., a TSX Venture Exchange Canadian public company.  Mr. Briscoe was also the President, Chief Executive Officer and a Geologist of JABA (US) Inc. and President of Compania Minera JABA, S.A. de C.V. in Mexico.  Compania Minera JABA, S.A. de C.V. is no longer active and is in the process of dissolution.  During the periods of time indicated below, Mr. Briscoe served in the positions listed for the following two Canadian public companies:

 

Company

Title

From

To

1. Excellon

VP Exploration

April 1994

January 1996

2. JABA Inc.

CEO

January 1980

April 2005

*Jon Young – Chief Financial Officer and Director*

Mr. Young was appointed as our Chief Financial Officer and a director on February 3, 2004.  Mr. Young is a certified public accountant.  Mr. Young is presently the Chief Executive Officer of Oracle Capital Advisors, Ltd. and has more than 30 years experience in providing clients with business consulting services.  Mr. Young is president of Jon R. Young Company PC, an accounting practice limited to providing litigation support, and is strategically aligned with Beach-Fleischman & Co CPA’s, P.C., Southern Arizona's largest accounting firm.  Mr. Young was a partner with the Tucson office of KPMG Peat Marwick for 13 years.

 

 

 

50

 

 

*Gary Musil – Secretary and Director*

Mr. Gary Musil was appointed as one our directors on October 23, 2003 and is presently our corporate Secretary.  Mr. Musil was our Chief Executive Officer and Chief Financial Officer from October 23, 2003 to February 3, 2004.  Mr. Musil has more than 30 years of management and financial consulting experience.  Mr. Musil has served as an officer and director on numerous public mining companies since 1988.  This experience has resulted in his overseeing exploration projects in Peru, Chile, Eastern Europe (Slovak Republic), British Columbia, Ontario, Quebec and New Brunswick (Canada).  Prior to this, he was employed for 15 years with Dickenson Mines Ltd. and Kam-Kotia Mines Ltd. as a controller for the producing silver/lead/zinc mine in the interior of British Columbia, Canada.  Mr. Musil currently serves as an officer/director of four TSX Venture Exchange public companies in Canada.  Mr. Musil has been thePresident, Chief Executive Officer, Chief Financial Officer and a director of Montoro Resources Inc., a TSX Venture company and a reporting issuer in Canada, since February 1999.  Mr. Musil has been the chief financial officer and secretary and a director of Belmont Resources Inc., a TSX Venture company and a reporting issuer in Canada, since August 1992.  Mr. Musil has been the chief financial officer and a director of Mandalay Resources Corp, a TSX Venture company and a reporting issuer in Canada, since January 2000.  Mr. Musil has been the Chief Financial Officer and secretary of Highbank Resources Ltd., a TSX Venture company and a reporting issuer in Canada, since December 1988.

*John Guilbert – Director*

Dr. Guilbert was appointed as one of our directors on February 5, 2004.  Dr. Guilbert is a Professor Emeritus at the University of Arizona and is a world-renowned geologist and author and a co-developer of the Lowell-Guilbert porphyry copper model and recipient of two mining awards, the R.A.F. Penrose Medal and the D.C. Jackling Award.  Dr. Guilbert has served as a director of Excellon Inc. a Vancouver Stock Exchange listed company from 1992 – 1996.  Dr. Guilbert has served as a Board Chairman and director for JABA Inc., an Alberta Stock Exchange (later CDNX then TSX) listed company from 1996 – 2002.

*Philip St. George – Vice President of Exploration and Director*

Mr. St. George was appointed as one of our directors on May 9, 2005.  Mr. St. George has been our Vice President of Exploration since February 2004.  Since that time, Mr. St. George has been managing the geotechnical work on our Big Chunk claims.  Mr. St. George has over 25 years experience in the mining exploration business, with over 16 years with major mining companies.  Mr. St. George’s experience in property development from exploration through production will guide our efforts with our Big Chunk claims.

***Family Relationships***

There are no family relationships among our directors or officers.

***Board and Committee Meetings***

The board of directors of our company held one formal meeting in the year ended January 31, 2006 and no formal meetings during the year ended January 31, 2005.  All proceedings of the board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors.  Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the Nevada General Corporate Law and the By-laws of our company, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

For the year ended January 31, 2005 our only standing committee of the board of directors was our audit committee.

***Audit Committee***

Currently our audit committee consists of our entire board of directors.  We do not have a separately-designated standing audit committee established in accordance with section 3(a)(58)(A) of the Exchange Act. 

 

 

51

 

 

There has not been any defined policy or procedure requirements for shareholders to submit recommendations or nomination for directors.

During fiscal year ended January 31, 2006 and January 31, 2005, there were no special meetings held by this committee.  The business of the Audit Committee was conducted by resolutions consented to in writing by all the members of the board and filed with the minutes of the proceedings of the board.

***Audit Committee Financial Expert***

Our board of directors has determined that it does not have a member of its audit committee that qualifies as an "audit committee financial expert" as defined in Item 401(e) of Regulation S-B, and is "independent" as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.

We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting.  In addition, we believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date.

***Involvement in Certain Legal Proceedings***

Our directors, executive officers and control persons have not been involved in any of the following events during the past five years:

1.

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; 

2.

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

3.

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.

being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

***Section 16(a) Beneficial Ownership Compliance***

Section 16(a) of the Securities Exchange Act requires our executive officers and directors, and persons who own more than 10% of our common stock, to file reports regarding ownership of, and transactions in, our securities with the Securities and Exchange Commission and to provide us with copies of those filings.  Based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended January 31, 2006, all filing requirements applicable to its officers, directors and greater than 10% percent beneficial owners were complied with, with the exception of the following:

**Name**

**Number of Late Reports**

**Number of Transactions Not****Reported on a  Timely Basis**

**Failure to File****Requested Forms**

James Briscoe

1(1)

1(1)

Nil

Jon Young

2(1)(2)

1(1)(2)

Nil

Gary Musil

2(1)(2)

2(1)(2)

Nil

John Guilbert

2(1)(2)

2(1)(2)

Nil

 

 

 

52

 

 

 

Alaska Star Minerals LLC

2(1)(2)

2(1)(2)

Nil

(1)  The named officer, director or greater than 10% stockholder, as applicable, filed a late Form 3 - Initial Statement of Beneficial Ownership of Securities.

(2)  The named officer, director or greater than 10% stockholder, as applicable, filed a late Form 4 - Statement of Changes in Beneficial Ownership of Securities.

***Code of Ethics***

Effective March 15, 2004, our company's board of directors adopted a Code of Business Conduct and Ethics that applies to, among other persons, our company's president and secretary (being our principal executive officer, principal financial officer and principal accounting officer), as well as persons performing similar functions.  As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:

1.

honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;

2.

full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;

3.

compliance with applicable governmental laws, rules and regulations;

4.

the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and

5.

accountability for adherence to the Code of Business Conduct and Ethics.  Our Code of Business Conduct and Ethics requires, among other things, that all of our company's Senior Officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.

In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly Senior Officers, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state securities laws.  Any Senior Officer who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our company.  Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter.  It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics was filed with the Securities and Exchange Commission on March 13, 2004 as Exhibit 14.1 to our annual report.  We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request.  Requests can be sent to: Liberty Star Gold Corp., 2766 N Country Club Road, Tucson, Arizona 85716.

**Item 10.**

**EXECUTIVE COMPENSATION.**

Following are the particulars of compensation paid or accruing to our officers, as a group, for our last three fiscal years ended.

 

 

53

 

 

**Summary Compensation Table**

**Name and Principal****Position**

**Year**

**Annual Compensation**

**Long Term Compensation (1)**

**All Other****Compen-****sation**

**Salary****(US$)**

**Bonus****(US$)**

**Other****Annual****Compen-****sation****(US$) (1)**

**Awards**

**Payouts**

**Securities****Underlying****Options/****SARs****Granted**

**Restricted****Shares or****Restricted****Share****Units**

**LTIP****Payouts****(US$)**

James Briscoe (2)President, CEO, Chairman and Director 

200620052004

98,75084,144N/A

NilNilN/A

NilNilN/A

NilNilN/A

NilNilN/A

NilNilN/A

NilNilN/A

Gary Musil (3)Secretary and Director, Former President and CEO

200620052004

NilNilNil

NilNilNil

NilNil $11,750(4)

Nil17,000(6)

Nil

NilNilNil

NilNilNil

NilNilNil

Paulo Martins (5)Former Director and CEO

200620052004

N/AN/ANil

N/AN/ANil

N/AN/ANil

N/AN/ANil

N/AN/ANil

N/AN/ANil

N/AN/ANil

Jon R. YoungDirector, Treasurer and CFO

200620052004

36,00031,500Nil

NilNilN/A

NilNilN/A

Nil120,000(6)N/A

NilNilN/A

NilNilN/A

NilNilN/A

Philip St. George

Vice President of Exploration and Director

200620052004

NilNil

N/A

Nil

Nil

N/A

110,560(7)

90,180(7)

N/A

Nil

270,000(8)

N/A

Nil

Nil

N/A

Nil

Nil

N/A

Nil

Nil

N/A

(1)  The value of perquisites and other personal benefits, securities and property for the officers that do not exceed the lesser of $50,000 or 10% of the total of the annual salary and bonus is not reported herein.

(2)  Mr. Briscoe was appointed as a director and officer on February 3, 2004.

(3)  

Mr. Musil served as our chief executive officer until February 3, 2004.

(4)  We paid management consulting fees to Sundance Capital Group, Inc., a private company directed by Mr. Musil, our secretary and one of our directors, for accounting, financial and administrative services provided to our company by Sundance at the rate of $3,000 per month, plus reasonable expenses from October 24, 2003 to January 24, 2004.  The management agreement was extended for a further three months until April 24, 2004.****This agreement was not renewed but Capital Group, Inc. is now paid on an advisory basis for work performed.

(5)  Mr. Martins served as our chief executive officer until October 24, 2003. 

(6) These options were granted on December 27, 2004, and are exercisable at a price of $1.68 per share until December 27, 2014, and vest on the basis of 25% of the options on each of the 6 month anniversaries from the date of granting.

 

 

54

 

 

(7) We contract Mr. St. George as a full time consultant.  The other compensation represents amounts paid to Mr. St. George as a consultant.

(8) These options were granted on December 27, 2004, and are exercisable at a price of $1.68 per share until December 27, 2014, and vest on the basis of 50% at date of grant, and 25% on each of the 1 year anniversaries from the date of granting.

**Option/SAR Grants in the last fiscal year**

During the year ended January 31, 2006 we did not grant any stock options to our directors and officers. We granted options to our directors and officers on April 5, 2006, exercisable at $1.11 for 10 years.  

The following table sets forth for each director and officer certain information concerning the number of shares subject to both exercisable and unexercisable stock options as of January 31, 2006. 

**Name**

**Shares****Acquired on****Exercise (#)**

**Aggregate****Value****Realized**

**Number of Securities Underlying****Unexercised Options/SARs at****Fiscal Year-End (#)**

**Value of Unexercised In-the-Money  Options/SARs at Fiscal Year-End(1) ($)**

**Exercisable**

**Unexercisable**

**Exercisable**

**Unexercisable**

J. Young

Nil

Nil

60,000

60,000

$0

$0

G. Musil

Nil

Nil

8,500

8,500

$0

$0

J. Guilbert

Nil

Nil

40,000

40,000

$0

$0

P. St. George

Nil

Nil

202,500

67,500

$0

$0

(1)  The values for "in-the-money" options are calculated by determining the difference between the fair market value of the securities underlying the options as of January 31, 2006 ($1.26 per share on NASD OTCBB) and the exercise price of the individual's options ($1.67), or -$0.41.  

**Long-Term Incentive Plans**

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers, except that our directors and executive officers receive stock options at the discretion of our Board.  We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of our Board.

We have no plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation exceeds $60,000 per executive officer.

***Compensation of Directors***

We have no formal plan for compensating our directors for their service in their capacity as directors, although such directors are expected in the future to receive stock options to purchase common stock as awarded by our board of directors or (as to future stock options) a compensation committee which may be established.  Directors are entitled 

 

55

 

to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.  Our board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.  No director received and/or accrued any compensation for their services as a director, including committee participation and/or special assignments.

***Employment Contracts***

We have not entered into any employment agreements or compensation arrangements with any of our directors or officers.

We entered into a management consulting agreement with Sundance Capital Group, Inc., a private company directed by Mr. Musil, our secretary and director, for accounting, financial and administrative services provided to our company by Sundance at the rate of $3,000 per month, plus reasonable expenses.  The current term of this agreement expired April 24, 2004 and was not renewed.  

**COMPENSATION PLANS**

As of January 31, 2006, we had one compensation plan in place, entitled "2004 Stock Option Plan."  This plan has not been approved by our stockholders. On April 5, 2006 we granted stock options to purchase an aggregate of 1,594,000 common shares exercisable at the price of $1.11 per share for a term of ten years. The grant of stock options was made under the terms of the Company’s 2004 Stock Option Plan.

 

**Number of securities authorized**

**Number of securities to be issued  upon exercise of outstanding options as at January 31, 2006**

**Weighted-average exercise price  of outstanding options as at January 31, 2006**

**Number of securities remaining  available for further issuance as at January 31, 2006**

3,850,000

676,000

$1.68

3,174,000

**Item 11.**

**Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.**

We have set forth in the following table certain information regarding our common stock beneficially owned on April 1, 2006 for (i) each shareholder we know to be the beneficial owner of 5% or more of our outstanding common stock, (ii) each of our executive officers and directors, and (iii) all executive officers and directors as a group.  In general, a person is deemed to be a "beneficial owner" of a security if that person has or shares the power to vote or direct the voting of such security, or the power to dispose or to direct the disposition of such security.  A person is also deemed to be a beneficial owner of any securities of which the person has the right to acquire beneficial ownership within 60 days.  As of April 1, 2006, we had outstanding 37,254,174 shares of common stock issues and outstanding.

 

**Name and Address of Beneficial Owner**

**Amount and Nature of****Beneficial Ownership**

**Percentage****of Class(1)**

James Briscoe5610 E Sutler LaneTucson AZ  85712 USA 

8,750,000 (2)

23%

 

 

 

56

 

 

 

Jon Young1985 E River RoadTucson AZ  85718USA

Nil

0%

Gary Musil3577 Marshall Street Vancouver BC  V5N 4S2 Canada 

40,000

<1%

John Guilbert961 E Linda Vista Blvd. Tucson AZ  85727 USA 

Nil

0%

Philip St. George

17543 Toakoana DriveEagle River, AK  99577USA

Nil

0%

Directors and Executive Officers as a Group

8,790,000

23.6%
 
(1)

Based on 37,254,174 shares of common stock issued and outstanding as of April 10, 2006.  Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.  Except as otherwise indicated, we believe that the beneficial owners of the common stock listed above, based on information furnished by such owners, have sole investment and voting power with respect to such shares, subject to community property laws where applicable.  
  
(2)

These shares are held by Alaska Star Minerals LLC.  James Briscoe beneficially owns 100% of the membership interest in Alaska Star Minerals LLC. 
 
***Changes in Control***

We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of our company.

**Item 12.**

**Certain Relationships and Related Transactions.**

Other than as listed below, we have not been a party to any transaction, proposed transaction, or series of transactions in which the amount involved exceeds $60,000, and in which, to our knowledge, any of our directors, officers, five percent beneficial security holder, or any member of the immediate family of the foregoing persons has had or will have a direct or indirect material interest.

On closing of our acquisition of Liberty Star Gold Corp., on February 3, 2004, we issued to Alaska Star Minerals LLC, an Arizona limited liability company, a total of 17,500,000 shares of our common stock.  James Briscoe, our president and chairman, owns a 100% beneficial interest in Alaska Star Minerals LLC.  See the section of this annual report entitled "Description of Business" at page 3, for a complete description of this transaction. 

Gary Musil, our secretary and a director, advanced $25,000 to us in 2003 in order to fund operating expenses.  These funds were advanced as a loan.  The loan was non-interest bearing, was unsecured and was without any fixed terms of repayment.  The loan was repaid as of December 31, 2004.

On October 24, 2003, our company entered into an agreement with Sundance Capital Corp. (“Sundance”), a company controlled by the President, for a period of three months whereby Sundance agreed to provide certain management services. As consideration, we paid $5,000 upon execution and agreed to pay $3,000 per month, plus reasonable expenses (not to exceed $250 per month). During January 2004, this agreement was automatically renewed for a term of three months.  After April 2004, this agreement was not renewed but Capital Group, Inc. is now paid on an advisory basis for work performed.

 

 

57

 

 

**Item 13.**

**Exhibits.**

 
 
**Exhibit****Number**

**Description of  Exhibit**

 
3.1

Articles of Incorporation(1)

 
3.2

Bylaws(1)

 
3.3

Certificate of Change to Authorized Capital(4)

 
3.4

Articles of Merger(4)

 
10.1

Merger Agreement dated effective January 19, 2004 among Titanium Intelligence, Inc., Liberty Star Gold Corp., Liberty Star Acquisition Corp., Alaska Star Minerals LLC, James Briscoe and Paul Matysek(3)

 
10.2

Termination Agreement dated effective January 30, 2004 with Zhejiang Weilain Group Company(5)

 
10.3

Form of Subscription Agreement for June 2004 private placement(5)

 
10.4

Form of Registration Rights Agreement for June 2004 private placement(5)

 
10.5

Membership Interest Redemption and Withdrawal Agreement dated October 29, 2004 between Alaska Star Minerals, LLC, Briscoe Investments, LP, RLLP, and Paul Matysek(6)

 
10.6

Amendment to Membership Interest Redemption and Withdrawal Agreement dated November 19, 2004 between Alaska Star Minerals, LLC, Briscoe Investments, LP, RLLP, Paul Matysek, Bedrock Capital Corporation Ltd. and Liberty Star Gold Corp. (6)

 
14.1

Code of Ethics(4)

 
21.1

Subsidiaries:

Big Chunk Corp.

 
23.1*

Consent of Semple & Cooper, LLP

 
31.1*

Section 302 Certification under Sarbanes-Oxley Act of 2002 of James Briscoe

 
31.2*

Section 302 Certification under Sarbanes-Oxley Act of 2002 of Jon Young

 
32.1*

Section 906 Certification under Sarbanes-Oxley Act of 2002 of James Briscoe

 
32.2*

Section 906 Certification under Sarbanes-Oxley Act of 2002 of Jon Young

(1)

Filed as an exhibit to our Registration Statement on Form SB-2, filed with the SEC on May 14, 2002.

 
(2)

Filed as an exhibit to our Quarterly Report on Form 10-QSB for the fiscal quarter ended September 30, 2003.

 
(3)

Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on January 23, 2004.

 
(4)

Filed as an exhibit to our Annual Report on Form 10-KSB, filed with the SEC on March 31, 2004.

 
(5)

Filed as an exhibit to our Quarterly Report on Form 10-QSB/A for the fiscal quarter ended April 30, 2004.

 
(6)

Filed as an exhibit to our Annual Report on Form 10-KSB, filed with the SEC on May 13, 2005.

 
*

Filed herewith.

 
**Item 14.**

**Principal Accountants Fees and Services.**

 
***Audit Fees***

For the fiscal year ended January 31, 2006, the aggregate fees billed by Semple & Cooper, LLP for professional services rendered for the audit of our annual consolidated financial statements included in our annual report on Form 10-KSB were $116,994.  For the fiscal year ended January 31, 2005, the aggregate fees billed by Semple & Cooper, 

 

58

 

LLP for professional services rendered for the audit of our annual consolidated financial statements included in our annual report on Form 10-KSB were $12,104.

***Audit Related Fees***

For the fiscal year ended January 31, 2006, the aggregate fees billed for assurance and related services by Semple & Cooper LLP relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above, was $0.  For the fiscal year ended January 31, 2005, the aggregate fees billed for assurance and related services by Semple & Cooper LLP relating to the performance of the audit of our financial statements which are not reported under the caption "Audit Fees" above, was $0.

***Tax Fees***

For the fiscal year ended January 31, 2006, the aggregate fees billed by Semple & Cooper, LLP for other non-audit professional services, other than those services listed above, totalled $0.  For the fiscal year ended January 31, 2005, the aggregate fees billed by Semple & Cooper, LLP for other non-audit professional services, other than those services listed above, totalled $0.

We do not use Semple & Cooper, LLP for financial information system design and implementation.  These services, which include designing or implementing a system that aggregates source data underlying the financial statements or generates information that is significant to our financial statements, are provided internally or by other service providers.  We do not engage Semple & Cooper, LLP to provide compliance outsourcing services.

Effective May 6, 2003, the Securities and Exchange Commission adopted rules that require that before Semple & Cooper, LLP is engaged by us to render any auditing or permitted non-audit related service, the engagement be:

 

**•**

approved by our audit committee (which consists of our entire board of directors); or

 

**•**

entered into pursuant to pre-approval policies and procedures established by the board of directors, provided the policies and procedures are detailed as to the particular service, the board of directors is informed of each service, and such policies and procedures do not include delegation of the board of directors' responsibilities to management.

The board of directors pre-approves all services provided by our independent auditors.  All of the above services and fees were reviewed and approved by the board of directors either before or after the respective services were rendered.

The board of directors has considered the nature and amount of fees billed by Semple & Cooper, LLP and believes that the provision of services for activities unrelated to the audit is compatible with maintaining Semple & Cooper, LLP's independence.

 

 

59

 

 

 

**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.

**LIBERTY STAR GOLD CORP.**

 

By:  /s/ James Briscoe

James Briscoe

Chief Executive Officer,

President and Director

(Principal Executive Officer)

Dated: May 1, 2006

 

By:  /s/ Jon Young

Jon Young

Chief Financial Officer and Director

(Principal Financial Officer

and Principal Accounting Officer)

Dated: May 1, 2006

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

 

By:  

/s/ James Briscoe

James Briscoe

Chief Executive Officer, 

President and Director

(Principal Executive Officer)

Dated:  May 1, 2006

 

By:  

/s/ Jon Young

Jon Young

Chief Financial Officer and Director

(Principal Financial Officer

and Principal Accounting Officer)

Dated:  May 1, 2006

 

By:  /s/ Gary Musil

Gary Musil

Secretary and Director

Dated:  May 1, 2006

 

 

 

- 60 -

 

 

 

By:  /s/ JohnGuilbert

Dr. John Guilbert

Director

Dated:  May 1, 2006

By:  /s/ Phil St. George

Phil St. George

Director

Dated:  May 1, 2006

 

 

 

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