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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549FORM 10-K(Mark
One)[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934For the fiscal year ended January 31,
2011[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934For the transition period from
toCommission file number 000-50071LIBERTY STAR URANIUM & METALS CORP.(Name of
registrant as specified in its charter)

|Nevada                                                               | 90-0175540                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)
|                                                                     |                                     
|                                                                     |                                     
|                                                                     |                                     
|5610 E Sutler Lane, Tucson, Arizona                                  | 85712                               
|(Address of principal executive offices)                             | (Zip Code)                          

Registrant's telephone number (520)
731-8786Securities registered pursuant to Section 12(b) of the
Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Nil                 | Nil                                      

Securities registered pursuant to Section 12(g) of the
Act:Common Stock, par value $0.00001(Title of
class)

Check whether the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act     Yes [
]     No [ X ]

Check whether the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Act.      [
]

Note: Checking the box above will not relieve any registrant
required to file reports pursuant to Section 13 or 15(d) of the Exchange Act
from their obligations under those Sections.

Check whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.      Yes
[X]     No [ ]

Check whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months.      Yes[
]      No[X]

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2

Check if there is disclosure of delinquent filers in response to
Item 405 of Regulation S-K 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-K
or any amendment to this Form 10-K.      [ ]

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

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

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

State the aggregate market value of the voting and non-voting
common equity held by non-affiliates computed by reference to the price at which
the common equity was sold, or the average bid and asked prices of such common
equity, as of the last business day of the registrants most recently completed
second fiscal quarter.

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.

432,597,157(1)shares of Common
Stock @ $0.021(1)= $9,084,540(1)Adjusted for retroactive effect of 1 for 4 reverse stock split on
September 1, 2009. Closing price on July 30, 2010 was $0.021.

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

602,411,882 shares of Common Stock issued and outstanding as
of April 28, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

Not applicable.

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3TABLE OF CONTENTS

|PART I   | Page                                                                                                
|-------- | ----------------------------------------------------------------------------------------------------
|         |                                                                                                     
|Item 1.  | Description
      of Business                                                                       
|Item 1A. | Risk Factors                                                                                        
|Item 2.  | Description
      of Property                                                                       
|Item 3.  | Legal Proceedings                                                                                   
|Item 4.  | (Removed and
      Reserved)                                                                        
|         |                                                                                                     
|PART II  |                                                                                                     
|         |                                                                                                     
|Item 5.  | Market for
      Common Equity and Related Stockholder Matters                                      
|Item 6.  | Selected Financial Data                                                                             
|Item 7.  | Management's
      Discussion and Analysis of Financial Condition and Results of Operations         
|Item 7A. | Quantitative and Qualitative
      Disclosures About Market Risk                                    
|Item 8.  | Financial
      Statements                                                                          
|Item 9.  | Changes In and Disagreements
      With Accountants on Accounting and Financial Disclosure          
|Item 9A. | Controls and
      Procedures                                                                       
|Item 9B. | Other Information                                                                                   
|         |                                                                                                     
|PART III |                                                                                                     
|         |                                                                                                     
|Item 10. | Directors, Executive
      Officers and Corporate Governance                                        
|Item 11. | Executive
      Compensation                                                                        
|Item 12. | Security Ownership of
      Certain Beneficial Owners and Management and Related Stockholder Matters
|Item 13. | Certain
      Relationships and Related Transactions, and Director Independence                     
|Item 14. | Principal Accountant Fees
      and Services                                                        
|         | Exhibits                                                                                            
|         | Signatures                                                                                          

FORWARD-LOOKING STATEMENTS

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

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. 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 consolidated financial statements are stated in United
States Dollars (US$) and are prepared in conformity with accounting principles
generally accepted in the United States of America. The following discussion
should be read in conjunction with our consolidated financial statements and the
related notes that appear elsewhere in this annual report.

As used in this annual report, the terms "we", "us", the
Company and "Liberty Star" mean Liberty Star Uranium & Metals Corp. and
our subsidiaries Big Chunk Corp. and Redwall Drilling Inc., unless otherwise
indicated. All dollar amounts refer to U.S. dollars unless otherwise
indicated.

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4

PART I

Item 1. Description of Business.

Business development

Liberty Star Uranium & Metals Corp. was formerly Liberty
Star Gold Corp. and formerly Titanium Intelligence, Inc. (Titanium). Titanium
was incorporated on August 20, 2001 under the laws of the State of Nevada. On
February 5, 2004 we commenced operations in the acquisition and exploration of
mineral properties business. Big Chunk Corp. (Big Chunk) is our wholly owned
subsidiary and was incorporated on December 14, 2003 in the State of Alaska. Big
Chunk is engaged in the acquisition and exploration of mineral properties
business in the State of Alaska. Redwall Drilling Inc. (Redwall) was our
wholly owned subsidiary and was incorporated on August 31, 2007 in the State of
Arizona. Redwall performed drilling services on our mineral properties. Redwall
ceased drilling activities in July 2008 and was dissolved on March 30, 2010. In
April 2007, we changed our name to Liberty Star Uranium & Metals Corp. to
reflect our current concentrated efforts on uranium exploration. We are
considered to be an exploration stage company, as we have not generated any
revenues from operations.

In December 2006, we entered into a joint venture agreement
(Elle Venture) with XState Resources Limited (XState). We hold a 50%
interest in the Elle Venture, a general partnership with XState that was formed
to explore and, if warranted, develop certain US Federal lode mining claims
within the North Pipes Super Project area on the Colorado Plateau Province of
Northern Arizona (the Arizona Strip). The Elle Venture ceased exploration
activities in 2008 and has been inactive since that time.

Our current business

We are an exploration stage company engaged in the acquisition
and exploration of mineral properties in the States of Arizona and Alaska.
Claims in the State of Alaska are held in the name of our wholly-owned
subsidiary, Big Chunk Corp. Claims in the State of Arizona are held in the name
of Liberty Star. We use the term Super Project to indicate a project in which
numerous mineral targets have been identified, any one or more of which could
potentially contain commercially viable quantities of minerals. Our significant
projects are described below.

North Pipes Super Project (North Pipes and NPSP):Located in Northern Arizona on the Arizona Strip, we plan to ascertain
whether the NPSP claims possess commercially viable deposits of uranium. We have
not identified any ore reserves to date.

Big Chunk Super Project (Big Chunk):Located in the
Iliamna region of Southwestern Alaska, we plan to ascertain whether the Big
Chunk claims possess commercially viable deposits of copper, gold, molybdenum,
silver and zinc. We have not identified any ore reserves to date.

Bonanza Hills Project (Bonanza Hills):Located in the
Iliamna region of Southwestern Alaska, we plan to ascertain whether the Bonanza
Hills claims possess commercially viable deposits of gold and silver. We have
not identified any ore reserves to date.

Tombstone Porphyry-Precious Metals Project (Tombstone):Located in Cochise County, Arizona, we plan to ascertain whether the
Tombstone claims possess commercially viable deposits of copper, molybdenum,
gold, silver, lead and zinc. We have not identified any ore reserves to
date.

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. We have investigated title to all the
Companys mineral properties and, to the best of its knowledge, title to all
properties are in good standing.

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. We are in
the exploration stage  as we have not found any mineral resources in
commercially exploitable quantities.

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 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 an ore reserve (an ore reserve is a commercially viable mineral
deposit). Please refer to the section entitled "Risk Factors" for additional
information about the risks of mineral exploration.

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5

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.

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 may 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.

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 States of Arizona and Alaska.

We are required to perform annual assessment work in order to
maintain the Big Chunk and Bonanza Hills Alaska State mining claims. If annual
assessment work is not performed we must pay the assessment amount in cash in
order to maintain the claims. Completion of annual assessment work in the amount
of $400 per 1/4 section (160 acre) claim or $100 per 1/16 section (40 acre)
claim extends the claims for a one year period. Assessment work performed in
excess of the required amount may be carried forward for up to 4 years to reduce
future obligations for assessment work. We estimate that the required annual
assessments to maintain the claims will be approximately $260,600.

The annual state rentals for the Big Chunk and Bonanza Hills
Alaska State mining claims vary from $70 to $280 per mineral claim. The rental
period begins at noon September 1stthrough the following September
1stand annual rental payments are due on November 30thof
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. The
estimated state rentals due by November 30, 2011 for the period from September
1, 2011 through September 1, 2012 are $174,580. 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.

Our North Pipes claims are Federal lode mining claims located
on U.S. Federal Lands and administered by the Department of Interior, Bureau of
Land Management. The Bureau of Land Management (BLM) is preparing an
environmental impact statement addressing potential effects of withdrawing
Federal lands from locatable mineral exploration and mining near the Grand
Canyon in Arizona. Nearly 1 million acres of land managed by the BLM and the
Forest Service were segregated in July 2009 by the Secretary of Interior. The
segregation stops the location of any new mining claims for two years. In that
period, the land will be evaluated for withdrawal for up to 20 additional years.
We are required to pay annual rentals to maintain our Federal lode mining claims
in good standing. The rental period begins at noon on September 1stthrough the following September 1stand rental payments are due
by the first day of the rental period. The annual rental is $140 per claim.
Additional fees of $45 per claim are due in the first year of filing a Federal
lode mining claim along with the first years rent. The annual rentals required
to maintain the North Pipes claims are $60,340. There is no requirement for
annual assessment or exploration work on the Federal lode mining claims. There
are no royalties associated with the Federal lode mining claims.

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, and it is
extremely difficult to assess the impact of any capital expenditures on earnings
or our competitive position.

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6

Personnel

Currently we employ one full time geologist who is also our
President and CEO, James Briscoe. We employ two full time executives and one
part-time accountant. We hire consultants for investor relations, exploration
and administrative functions on an as needed basis.

Item 1A. 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".

Risks related to our business

Because of the speculative nature of the exploration of
natural resource properties, there is substantial risk that this business will
fail.

There is no assurance that any of the claims we explore or
acquire will contain commercially exploitable reserves of minerals. Exploration
for natural resources is a speculative venture involving substantial risk.
Hazards such as unusual or unexpected geological formations and other conditions
often result in unsuccessful exploration efforts. We may also become subject to
significant liability for pollution or hazards, which we cannot insure or which
we may elect not to insure. There is substantial risk that our business will
fail.

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 qualified
employees, our exploration program may be slowed down or suspended.

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,
state, 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, state, 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,
state, 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 a manner which will
alter and negatively affect our ability to carry on our business.

There are no known reserves of minerals on our mineral
claims and we cannot guarantee that we will find any commercial quantities of
minerals.

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7

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. Even if we identify commercial quantities of minerals 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.

Because the probability of an individual prospect ever
having reserves is extremely remote, any funds spent on exploration will
probably be lost.

The probability of an individual prospect ever having reserves
is extremely remote. In all probability our properties do not contain any
reserves. As such, any funds spent on exploration will probably be lost which
would most likely result in a loss of your investment.

Risks related to our company

We have a limited operating history and as a result there is
no assurance we can operate on a profitable basis.

We have a limited operating history and must be considered in
the exploration stage. Our operations will be subject to all the risks inherent
in the establishment of an exploration stage enterprise and the uncertainties
arising from the absence of a significant operating history. Potential investors
should be aware of the difficulties normally encountered by mineral exploration
companies and the high rate of failure of such enterprises, especially those
with a limited operating history. 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 of rock or land 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 commercial mineralization, we may decide to abandon our claim and
acquire new claims for new exploration or cease operations. 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. No assurance can be given that we will ever
operate on a profitable basis.

If we do not obtain additional financing, our business will
fail and our investors could lose their investment.

We had cash in the amount of $1,100,315 and negative working
capital of $(2,193,786) as of January 31, 2011. We currently do not generate
revenues from our operations. Our business plan calls for substantial investment
and cost in connection with the acquisition and exploration of our mineral
properties currently under lease and option. Any direct acquisition of any of
the claims under lease or option is subject to our ability to obtain the
financing necessary for us to fund and carry out exploration programs on the
subject properties. The requirements are substantial. We do not currently have
any arrangements for financing in addition to the Northern Dynasty Secured
Convertible Note (as described in Item 5, Part II of this annual report) and
private placements of our securities. 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. Obtaining additional financing would be subject to a number of
factors, including market prices for minerals, investor acceptance of our
properties, contractual restrictions on our ability to enter into further
financing arrangements, and investor sentiment. These factors may make the
timing, amount, terms or conditions of additional financing unavailable to us
and our business could fail.

Because there is no assurance that we will generate
revenues, we face a high risk of business failure.

We have not earned any revenues as of the date of this filing
and have never been profitable. We do not have an interest in any revenue
generating properties. We were incorporated on August 20, 2001 and took over our
current business on February 5, 2004. To date we have been involved primarily in
organizational and exploration activities. We will incur substantial operating
and exploration expenditures without realizing any revenues. We therefore expect
to incur significant losses into the foreseeable future. We have limited
operating history upon which an evaluation of our future success or failure can
be made. Our net loss from inception to January 31, 2011 is $(58,969,802). We
recognize that if we are unable to generate significant revenues from our
activities, we will not be able to earn profits or continue operations. Based
upon current plans, we also expect to incur significant operating losses in the
future. We cannot guarantee that we will be successful in raising capital to
fund these operating losses or generate revenues in the future. We can provide
investors with no assurance that we will generate any operating revenues or ever
achieve profitable operations. If we are unsuccessful in addressing these risks,
our business will most likely fail and our investors could lose their
investment.

Our independent registered public accounting firms report
states that there is a substantial doubt that we will be able to continue as a
going concern.

Our independent registered public accounting firm, Semple,
Marchal & Cooper, LLP, state in their audit report attached to our audited
financial statements for the fiscal year ended January 31, 2011 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.

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8

The existence of our mining claims depends on our ability to
fund exploratory activity or to pay fees.



Our mining claims, which are the central part of our business,
require that we either pay fees, or incur certain minimum development costs
annually, or the claims will be forfeited. Due to our current financial
situation we may not be able to meet these obligations and we could therefore
lose our claims. This would impair our ability to raise capital and would
negatively impact the value of the Company.

Risks related to our common stock

Because we will likely issue additional shares of our common
stock, investment in our company could be subject to substantial dilution.

Investors interests in our company will be diluted and
investors may suffer dilution in their net book value per share when we issue
additional shares. Our constating documents authorize the issuance of up to
200,000,000 shares of common stock with a par value of $0.001. At our
shareholder meeting held on May 27, 2009 the shareholders voted to increase the
number of authorized shares to 10,000,000,000 shares of common stock with a par
value of $0.001. We filed a certificate of amendment on June 4, 2009 to increase
the number of authorized shares to 5,000,000,000 shares of common stock with a
par value of $0.001. On September 1, 2009 we completed a one for four reverse
stock split of our authorized and outstanding common stock resulting in a
decrease in authorized shares to 1,250,000,000 with a par value of $0.00001. As
of January 31, 2011, there were 602,411,882 of our common shares issued and
outstanding. We anticipate that all or at least some of our future funding, if
any, will be in the form of equity financing from the sale of our common stock.
If we do sell more common stock, investors investment in our company will
likely be diluted. Dilution is the difference between what you pay for your
stock and the net tangible book value per share immediately after the additional
shares are sold by us. If dilution occurs, any investment in our companys
common stock could seriously decline in value.

The sale of our stock under the convertible notes and the
common share purchase warrants could encourage short sales by third parties,
which could contribute to the future decline of our stock price.

In many circumstances, the provision of financing based on the
distribution of equity for companies that are traded on the OTC Bulletin Board
has the potential to cause a significant downward pressure on the price of
common stock. This is especially the case if the shares being placed into the
market exceed the markets ability to take up the increased stock or if we have
not performed in such a manner to show that the equity funds raised will be used
to grow our business. Such an event could place further downward pressure on the
price of our common stock. Regardless of our activities, the opportunity exists
for short sellers and others to contribute to the future decline of our stock
price. If there are significant short sales of our common stock, the price
decline that would result from this activity will cause the share price to
decline more, which may cause other shareholders of the stock to sell their
shares, thereby contributing to sales of common stock in the market. If there
are many more shares of our common stock on the market for sale than the market
will absorb, the price of our common shares will likely decline.

Trading in our common stock 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 has
often 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.

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9

Our By-laws do not contain anti-takeover provisions which
could result in a change of our management and directors if there is a take-over
of our company.

We do not currently have a shareholder rights plan or any
anti-takeover provisions in our By-laws. Without any anti-takeover provisions,
there is no deterrent for a take-over of our company, which may result in a
change in our management and directors. This could result in a disruption to the
activities of our company, which could have a material adverse effect on our
operations.

We do not intend to pay dividends on any investment in the
shares of stock of our company and any gain on an investment in our company will
need to come through an increase in our stocks price, which may never
happen.

We have never paid any cash dividends and currently do not
intend to pay any dividends for the foreseeable future. To the extent that we
require additional funding currently not provided for in our financing plan, our
funding sources may prohibit the payment of a dividend. Because we do not intend
to declare dividends, any gain on an investment in our company will need to come
through an increase in the stocks price. This may never happen and investors
may lose all of their investment in our company.

Because our securities are subject to penny stock rules, you
may have difficulty reselling your shares.

Our shares as penny stocks, are covered by Section 15(g) of the
Securities Exchange Act of 1934 which imposes additional sales practice
requirements on broker/dealers who sell our company's securities including the
delivery of a standardized disclosure document; disclosure and confirmation of
quotation prices; disclosure of compensation the broker/dealer receives; and,
furnishing monthly account statements. These rules apply to companies whose
shares are not traded on a national stock exchange or on the Nasdaq system,
trade at less than $5.00 per share, or who do not meet certain other financial
requirements specified by the Securities and Exchange Commission. These rules
require brokers who sell "penny stocks" to persons other than established
customers and "accredited investors" to complete certain documentation, make
suitability inquiries of investors, and provide investors with certain
information concerning the risks of trading in such penny stocks. These rules
may discourage or restrict the ability of brokers to sell our shares of common
stock and may affect the secondary market for our shares of common stock. These
rules could also hamper our ability to raise funds in the primary market for our
shares of common stock.

Item 2. Description of Property.

Our offices

We rent the premises for our principal office located at 5610 E
Sutler Lane, Tucson, Arizona 85712. We rent this office space which is located
in the home of our President and CEO for $522 per month plus a pro rata share of
taxes and maintenance. We rent other office space located at 2980 N Swan Road,
Suite 222, Tucson, Arizona 85712. We rent this office space for $2,280 per
month. Our part-time employees work either from our principal office or from
offices maintained in their homes.

We believe that our existing office facilities are adequate for
our needs through the end of the year ended January 31, 2012. 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

We have investigated titles to all of our mineral properties
and, to the best of our knowledge, titles to all properties are in good standing
as of January 31, 2011.

North Pipes Super Project (North Pipes and
NPSP):

We hold a 100% interest in 431 Federal lode mining claims
strategically placed on the Arizona Strip. The 431 Federal lode mining claims
include breccia pipe targets (Pipes). Breccia pipes are cylindrical formations
in the earths crust identified by a surface depression and contain a high
concentration of fragmented rock breccia cemented by uranium and other
minerals. We plan to ascertain whether our North Pipes claims possess
commercially viable deposits of uranium.

Our NPSP claims are undeveloped. There are neither open-pit nor
underground mines, nor is there any mining plant or equipment located on the
properties. There is no power supply to the properties. We have not found any
mineral resources on any of our claims. The Arizona Strip was an active
exploration district in the 1970s and 1980s with multiple producing uranium
mines. No evidence of actual development work has been found on any of our
properties and no significant exploration activities have been performed on our
NPSP claims since 2008 as a result of cash flow constraints. Below is a summary
of prior exploration activities performed on our NPSP claims:

Geophysics:We have completed PEM (Pulse
Electro-magnetic) geophysical surveys on our North Pipes Super Project claims.
Two types of PEM surveys were conducted in 2007: Downhole PEM and In-Loop
PEM.

---

10

Stereoscopic geologic color air photo interpretation
(photo-geology):Stereoscopic geologic interpretation of 1:24,000 (1 inch =
2,000 feet) high resolution color air photographs was contracted and completed
by Edward Ulmer, a Registered Professional Geologist who worked on the Arizona
Strip in the mid to late 1970s.

Geologic field mapping on the surface:Geological field
mapping was conducted in 2007 and 2008 by our staff geologists as well as
contracted geologists. Approximately 180 of the breccias pipe target areas have
been mapped in detail 1:5,000 (1 inch = 417 feet). Several detailed measured
stratigraphic sections have also been completed.

Geochemical sampling:A comprehensive soil geochemical
survey was completed in 2007. We have collected approximately 14,000 soil
samples and a strict chain of custody procedures were followed and quality
assurance/quality control (QA/QC) samples were inserted regularly into the
sample stream. The samples were assayed for 63 elements. Assay analyses were
conducted by a Certified Assay Lab, Acme Analytical Laboratories of Vancouver,
British Columbia, Canada.

Drilling:In 2007 a drilling program was undertaken
using both rotary drilling and core drilling. Rotary drilling was contracted by
Boyart Longyear. Diamond core drilling was completed by Redwall Drilling Inc., a
former wholly owned subsidiary of Liberty Star. A total of 22 holes were drilled
for a total of 16,226 feet of drilling. We did not intersect any ore
mineralization during the drilling program.

Bonanza Hills Project (Bonanza Hills):

We hold 56 mineral claims covering approximately 13.5 square
miles in Southwestern Alaska, located approximately 40 miles northeast of the
northern boundary of the Big Chunk claims. We plan to ascertain whether the
Bonanza Hills claims possess commercially viable deposits of gold and
silver.

Our Bonanza Hills claims are undeveloped. The 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. 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 no road access to the properties. Little
geologic, geochemical or geophysical data is available, and that which is
available is of a general nature and of low quality. Anaconda and Cominco Alaska
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. We have not found any mineral resources on any of our
claims.

Big Chunk Super Project (Big Chunk):

We hold a 100% interest in 612 mineral claims covering
approximately 177 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. We plan to ascertain whether the Big Chunk
claims possess commercially viable deposits of copper, gold, molybdenum, silver
and zinc.

Our Big Chunk claims are undeveloped. The 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. 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 no road access to the properties. Little geologic,
geochemical or geophysical data is available, and that which is available is of
a general nature and of low quality. 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 Teck Cominco Alaska, Anaconda
Mining Inc. 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.

Technical Studies on the Big Chunk Super Project:We
hired Geotech Ltd to perform 1D and 2D ZTEM geophysical surveys in 2009. The
surveys covered 315.2 sq kilometers (121.7 sq miles) and consisted of
north-south lines spaced 250 meters apart on our Big Chunk Super Project mineral
claims. In May 2010 Liberty Star received feedback from Geotech Ltd. that its
interpretation showed at least 6 to 7 signatures that are consistent with
porphyry copper responses. The 2D model shows a typical low responsive area,
which could correspond to an ore mineral core zone with a surrounding responsive
cylinder representing a pyrite halo typical of porphyry systems.

We have not found any mineral resources on any of our
claims.

Letter Agreement and Secured Convertible Note with Northern
Dynasty Minerals Ltd. With Respect to Big Chunk

On July 15, 2010 we issued a secured convertible promissory
note (the Convertible Note) to Northern Dynasty Minerals Ltd (Northern
Dynasty). The original advanced amount is $4,000,000 and bears interest at a
rate of 10% per annum compounded monthly (the Loan). On August 17, 2010 we
transferred 95 of our Alaska State mineral claims from the Big Chunk Super
Project to Northern Dynasty for consideration of $1,000,000 of the original
advanced amount under the Convertible Note, leaving $3,000,000 of the loan
amount outstanding. No interest accrued on the $1,000,000 of the original
advanced amount.

---

11

As part of the transaction noted above, subject to negotiating
and signing a definitive earn-in option and joint venture agreement, Northern
Dynasty can earn a 60% interest in our Big Chunk and Bonanza Hills projects in
Alaska (the Joint Venture Claims) by spending $10,000,000 on those properties
over six years. The outstanding Loan amounts from Northern Dynasty may be
applied as part of Northern Dynastys earn-in requirements. Northern Dynastys
minimum annual expenditures under the earn-in would be the minimum level
necessary to keep the Joint Venture Claims in good standing. Northern Dynasty
may elect to abandon the earn-in at any time on 30 days notice, so long as
sufficient annual labor is performed, or a cash payment in lieu of labor is
made, in order to fulfill the annual labor requirements for the Joint Venture
Claims for a minimum of 12 months after termination of the earn-in.

Tombstone Porphyry-Precious Metals Project
(Tombstone):

We hold an option to explore 33 standard Federal lode mining
claims located due east and southeast of the town of Tombstone, Arizona. The
mineral claims are owned by JABA US Inc., a corporation in which two of our
directors are owners. We plan to ascertain whether the Tombstone claims possess
commercially viable deposits of copper, gold, molybdenum, silver and zinc.

The Tombstone claims are undeveloped. In mid March, 2011
Liberty Star contracted SRK Consulting to prepare a mineral report in a form
similar to mineral reports prescribed under Canadian National Instrument
43-101-Standards of Disclosure form Mineral Projects (NI 43-101). Members of
SRKs engineering/scientific staff supervised by a Qualified Person as defined
under NI 43-101 and SRKs Tucson Office Principle Geologist, Corolla Hoag, and
geologist Dr. Jan Rasmussen have visited the Tombstone property. This
information will be combined with the previously gathered geochemical,
geophysical and computer modeling data and undergo a thorough technical
analysis. We have not found any mineral resources on any of our claims.

Item 3. Legal Proceedings.

Wintrode Settlement:

On January 26, 2010 we were named in a lawsuit filed with the
clerk of the Superior Court of Arizona in the County of Pima by our former
landlord B&D Ventures LLC. The former landlord was seeking to obtain damages
in the amount of $48,909 from our termination of our lease obligation before the
end of the lease term. We vacated the premises in January 2009 and the lease end
date was November 30, 2010. On May 13, 2010 a judgment was issued in this case
in favor of B&D Ventures LLC for $48,909 plus interest accruing at 10% until
paid. On November 12, 2010 we settled the outstanding balance with B&D
Ventures for a payment of $25,000 and we have been released from all other
liability related to this judgment.

Alpha and Platinum Settlement:

On August 26, 2010, Platinum Long Term Growth VI LLC
(Platinum) and Alpha Capital Anstalt (Alpha), two former lenders of the
Company (the Plaintiffs), filed lawsuit in the United States District Court,
Southern District of New York, against Liberty Star and James Briscoe, our
President and CEO. The Plaintiffs sought to require Liberty Star to honor
outstanding warrants held by the Plaintiffs at an exercise price of $0.002 (two
tenths of one cent) per share and to issue to the Plaintiffs ten times the
number of warrants that Liberty Star had on record, or in the alternative
monetary damages. The claim was based on a provision in the warrant agreements
that would permit a ratchet down of price and a multiplication of number of
warrants in the event of certain share issuances by Liberty Star.

The Plaintiffs claimed that Platinum was entitled to
201,053,015 warrants and that Alpha was entitled to 240,919,010 warrants all
exercisable at $0.002 per share. These warrants all contained a cashless
exercise feature, permitting issuance of shares without payment of any cash to
the Company. The Plaintiffs also claimed monetary damages for non-compliance
with what they claimed were the terms of the warrants, costs and attorney fees
incurred in the action.

On September 15, 2010 we entered into a settlement agreement
with Platinum and Alpha whereby we agreed to amend the warrants issued to
Platinum and Alpha on August 14, 2009 as follows: Platinums warrant was
increased to 70,368,557 common stock purchase warrants exercisable at $0.002 per
common share until August 14, 2015. Alphas warrant was increased to 84,321,650
common stock purchase warrants exercisable at $0.002 per common share until
August 14, 2015. These warrants may still be exercised using a cashless exercise
feature, however, the holders of the warrants are not permitted to own or have
beneficial ownership in excess of 4.99% of our outstanding common stock.

In addition to the amendment of the August 14, 2009 warrants,
we agreed to issue to Platinum and Alpha common stock purchase warrants of
10,052,651 and 12,045,950, respectively, exercisable at $0.10 per common share
expiring three years from the date of issuance with no cashless exercise
provision.

We also agreed that the warrants issued to Platinum and Alpha
in May 2007 will be modified so as not to permit the holders to own or have
beneficial ownership in excess of 4.99% of our outstanding common stock.

---

12

Harborview and Brio Settlement:

On October 15, 2010 we settled a threatened lawsuit by two of
our August 2009 common stock purchase warrant holders Harborview Master Fund LP
(Harborview) and Brio Capital LP (Brio). These two warrant holders were
seeking to require Liberty Star to honor outstanding warrants at an exercise
price of $0.002 (two tenths of one cent) per share and to issue to them 10 times
the number of warrants that Liberty Star had on record. The claim was based on a
provision in the warrant agreements that would permit a ratchet down of price
and a multiplication of number of warrants in the event of certain share
issuances by Liberty Star. We agreed to amend the warrants issued to Harborview
and Brio on August 14, 2009 as follows: Harborviews warrant was increased to
23,054,100 common stock purchase warrants exercisable at $0.002 per common
share. Brios warrant was increased to 13,275,591 common stock purchase warrants
exercisable at $0.002 per common share. Pursuant to the settlement, these
warrants were immediately exercised using the cashless exercise provision and we
issued 22,293,234 common shares to Harborview and 12,837,452 common shares to
Brio.

Item 4. (Removed and Reserved)

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 when our corporate name was Titanium
Intelligence Inc. On February 3, 2004, we merged with our subsidiary and changed
our name to Liberty Star Gold Corp. and traded under the symbol "LBTS.OB". On
April 16, 2007 we again changed our name to Liberty Star Uranium & Metals
Corp. and our stock changed its trading symbol to LBSU.OB. On September 1,
2009 we effected a one for four reverse stock split of our authorized and issued
and outstanding common stock. As a result our authorized capital decreased to
1,250,000,000 shares of common stock with a par value of $0.00001. Our stock is
traded under a new symbol LBSR as of the opening of trading on September 1,
2009.

The following table sets forth, for the periods indicated, the
high and low bid prices for our common stock on the OTC Bulletin Board:

OTC Bulletin Board(1)Quarter Ended
    High
    LowJanuary 31, 2011
    $0.081
    $0.036October 31, 2010
    $0.19
    $0.00July 31, 2010
    $0.0325
    $0.0012April 30, 2010
    $0.0025
    $0.001January 31, 2010
    $0.007
    $0.0018October 31, 2009
    $0.01
    $0.00July 31, 2009
    $0.0099
    $0.0016April 30, 2009
    $0.004
    $0.0013


| | (1) | These bid prices were taken from OTC Bulletin Board
      quarterly trade and quote summary report. 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.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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.

On January 31, 2011, the shareholders' list for our common
stock showed 602,411,882 shares issued and outstanding with 75 registered
stockholders and an unknown number of unregistered stockholders whose shares are
held in their brokerage accounts. The closing sale price for our common stock on
April 21, 2011, as reported on the OTC Bulletin Board, was $0.0315.

Recent Sales of Unregistered Securities

We issued convertible promissory notes in private placements of
our securities to institutional investors pursuant to exemptions from
registration set out in Rule 506 of Regulation D under the Securities Act of
1933 (the 1933 Act). The convertible notes were issued in May 2007, August
2008, May 2009 and August 2009. In July 2010 the notes were paid in full. We
issued 187,127,678 shares of common stock as repayment of $227,455 principal
portion and $47,522 interest portion of the monthly payments on theses
convertible notes during the year ended January 31, 2011.

---

13

On July 15, 2010 the Company issued a secured convertible
promissory note (the Convertible Note) to Northern Dynasty Minerals Ltd
(Northern Dynasty). The original advanced amount is $4,000,000 and bears
interest at a rate of 10% per annum compounded monthly (the Loan). The Company
transferred 95 of its Alaska State mineral claims to Northern Dynasty for
consideration of $1,000,000 of the original advanced amount under the
Convertible Note, leaving $3,000,000 of the loan amount outstanding. Northern
Dynasty is not a U.S. person (as that term is defined in Regulation S of the
1933 Act). In issuing this Convertible Note to Northern Dynasty, we relied on
the registration exemption provided for in Regulation S and/or Section 4(2) of
the 1933 Act.

Provided a minimum of $1,000,000 has been expended by Northern
Dynasty on earn in expenses, the Loan will be convertible until repaid or deemed
repaid, into common shares of our company at the 5 day volume weighted average
trading price immediately prior to Northern Dynasty giving a notice of
conversion less the maximum allowable discount applicable as if our companys
shares were listed on the TSX Venture Exchange. To date Northern Dynasty has not
expended the minimum of $1,000,000 earn in expenses.

On September 15, 2010 we issued 22,098,601 common stock
purchase warrants exercisable at $0.10 through September 15, 2013 pursuant to a
settlement agreement with two of our warrant holders. We also amended the August
2009 common stock purchase warrants for four of our warrant holders pursuant to
a settlement agreement. The warrants were increased by 134,712,799 warrants and
the exercise price was reduced from $0.02 per common share to $0.002 per common
share. The Company recognized settlement expense of $13,241,020 related to these
settlement agreements and is reported under settlement expense on our financial
statements. We issued these warrants pursuant to an exemption from registration
set out in Section 4(2) of the 1933 Act.

We issued 135,848,741 shares of common stock upon exercise of
August 2009 common stock purchase warrants for no cash proceeds as all exercises
were completed pursuant to the cashless exercise provisions of the August 2009
common stock purchase warrants. We issued these shares pursuant to an exemption
from registration set out in Section 4(2) of the 1933 Act.

On October 20, 2010, we sold 25,000,000 units at a price of
$0.04 per unit to one investor for net proceeds of $999,980. Each unit consisted
of one common share of our company and one non-transferable common stock
purchase warrant. Each common stock purchase warrant entitles the investor to
purchase one additional common share of our company at a price of $0.056 until
October 20, 2013. The securities were issued to an accredited investor pursuant
to an exemption from the registration requirements of the 1933 Act provided by
Rule 506 of Regulation D.

On November 12, 2010, we sold 5,465,114 units at a price of
$0.043 per unit to four investors for net proceeds of $234,701. Each unit
consisted of one common share of our company and one non-transferable share
purchase warrant. Each share purchase warrant entitles the investor to purchase
one additional common share of our company at a price of $0.06 until November
12, 2013. The securities were issued to accredited investors pursuant to an
exemption from the registration requirements of the 1933 Act provided by Rule
506 of Regulation D.

On January 12, 2011, we sold 1,313,370 units at a price of
$0.038 per unit to one investor for net proceeds of $50,000. Each unit consisted
of one common share of our company and one non-transferable common stock
purchase warrant. Each common stock purchase warrant entitles the investor to
purchase one additional common share of our company at a price of $0.06 until
January 12, 2014. The securities were issued to an accredited investor pursuant
to an exemption from the registration requirements of the 1933 Act provided by
Rule 506 of Regulation D.

All proceeds will be used for working capital and exploration
expenses.

Equity Compensation Plan Information

As of January 31, 2011 we had three compensation plans in
place, entitled "2004 Stock Option Plan", 2007 Stock Option Plan and 2010
Stock Option Plan. These plans have been approved by our security holders.
These plans have been given retroactive effect of the 1 for 4 reverse stock
split on September 1, 2009.

Plan
    Total number
      of securities authorized
    Number of securities to be issued upon
      exercise of outstanding options as at January 31,
      2011
    Weighted-average exercise price of
      outstanding options as at January 31, 2011
    Number of securities remaining available
      for further issuance as at January 31, 20112004 Stock Option Plan
    962,500
    451,375
    $4.51
    511,1252007 Stock Option Plan
    2,500,000
    212,500
    $0.88
    2,287,5002010 Stock Option Plan
    95,500,000
    95,500,000
    $0.038
    0


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14

On August 10, 2010 we granted incentive stock options and
non-qualified stock options to certain of our directors, officers, employees and
consultants to purchase an aggregate of 95,500,000 shares of our common stock at
an exercise price of $0.038 per share for a term expiring on August 10, 2015.
The options were fully vested upon granting.

Item 6. Selected Financial Data.

Not applicable.

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.

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" included in this annual report.

Our consolidated audited financial statements are stated in
United States Dollars and are prepared in accordance with accounting principles
generally accepted in the United States of America.

Overview

We are an exploration stage company engaged in the acquisition
and exploration of mineral properties in the States of Arizona and Alaska.
Claims in the State of Alaska are held in the name of our wholly-owned
subsidiary, Big Chunk Corp. Claims in the State of Arizona are held in the name
of Liberty Star. We use the term Super Project to indicate a project in which
numerous mineral targets have been identified, any one or more of which could
potentially contain commercially viable quantities of minerals.

Liquidity and Capital Resources

We had cash and cash equivalents in the amount of $1,100,315 as
of January 31, 2011. We had negative working capital of $(2,193,786) as of
January 31, 2011. We had cash inflows from financing activities of $1,632,267
for the year ended January 31, 2011. In February 2010 we sold substantially all
of our drilling assets owned by Redwall and raised net cash inflows of $269,601
most of which has been used to pay off the loans secured by the drilling assets
and our accounts payable. We received $466,217 of net proceeds from the issuance
of a secured convertible promissory note and sale of mineral claims to Northern
Dynasty. The remaining proceeds of $3,533,783 were used to pay off the May 2007,
August 2008, May 2009 and August 2009 secured convertible notes that were in
default. We received $1,284,681 of proceeds from the private placements of our
securities. We plan to use these proceeds over the next twelve months to pay
annual rentals on our mineral claims, to perform limited exploration activities
and for working capital.

Letter Agreement and Secured Convertible Note with
Northern Dynasty Minerals Ltd.

On July 15, 2010 we issued a secured convertible promissory
note (the Convertible Note) to Northern Dynasty Minerals Ltd (Northern
Dynasty). The original advanced amount is $4,000,000 and bears interest at a
rate of 10% per annum compounded monthly (the Loan). On August 17, 2010 we
transferred 95 of our Alaska State mineral claims to Northern Dynasty for
consideration of $1,000,000 of the original advanced amount under the
Convertible Note, leaving $3,000,000 of the loan amount outstanding. No interest
accrued on the $1,000,000 of the original advanced amount.

As part of the transaction noted above, subject to negotiating
and signing a definitive earn-in option and joint venture agreement, Northern
Dynasty can earn a 60% interest in our Big Chunk and Bonanza Hills projects in
Alaska (the Joint Venture Claims) by spending $10,000,000 on those properties
over six years. The outstanding Loan amounts from Northern Dynasty may be
applied as part of Northern Dynastys earn-in requirements. Northern Dynastys
minimum annual expenditures under the earn-in would be the minimum level
necessary to keep the Joint Venture Claims in good standing. Northern Dynasty
may elect to abandon the earn-in at any time on 30 days notice, so long as
sufficient annual labor is performed, or a cash payment in lieu of labor is
made, in order to fulfill the annual labor requirements for the Joint Venture
Claims for a minimum of 12 months after termination of the earn-in.

The Loan is secured against substantially all of our companys
assets. The Loan is due for repayment 45 days after the earlier to occur of: (i)
Northern Dynastys completion of its earn-in to the Joint Venture Claims unless
it has elected to deem the entire outstanding balance of the Loan (including
interest thereon) to be part of the earn-in expenditure requirements and (ii)
termination of Northern Dynastys earn-in right by voluntary abandonment
provided that $1,000,000 in expenditures has been made; or (iii) termination of
Northern Dynastys earn-in right on account of a superior third party joint
venture offer.

---

15

Provided a minimum of $1,000,000 has been expended by Northern
Dynasty on earn in expenses, the Loan will be convertible until repaid or deemed
repaid, into common shares of our company at the 5 day volume weighted average
trading price immediately prior to Northern Dynasty giving a notice of
conversion less the maximum allowable discount applicable as if our shares were
listed on the TSX Venture Exchange. To date Northern Dynasty has not yet
expended the $1,000,000 earn in expenses. The Loan may be prepaid by our company
without penalty at any time on 10 days prior notice during which time Northern
Dynastys conversion rights are unaffected.

Results of Operations for the year ended January 31,
2011

We had a net loss of ($19,865,419) for the twelve-month period
ended January 31, 2011 compared to a net loss of ($2,809,843) for the
twelve-month period ended January 31, 2010. The increase in net loss of
approximately $17 million is mainly due to the following factors:

| | 1) | Increase in settlement expense of approximately $13.2
      million due to the settlement of actual and threatened lawsuits from four
      warrant holders. We amended some of the existing warrants that were
      outstanding to these holders as well as issuing new warrants to two of
      these holders. The black-scholes valuation model was used to estimate the
      fair market value of these modifications and new warrants.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | 2) | Increase of $3.7 million loss on change in the fair value
      of warrants. The change in fair value of warrants was most greatly
      impacted by large fluctuations in our stock trading prices over the past
      fiscal year.                                                                                                                                                                                                         

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 are material to
stockholders.

Presentation of Financial Information

Our consolidated financial statements for the period ended
January 31, 2011 reflect financial information for the twelve month period
ending January 31, 2011, as well as from inception through January 31, 2011 and
for the twelve-month period ended January 31, 2010.

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
consolidated financial statements for the years ended January 31, 2011 and 2010.
Our accumulated stockholders equity (deficit) at January 31, 2011, was
($2,049,659) and the net loss for the twelve-month period ended January 31, 2011
was ($19,865,419). All of our exploration costs are expensed as incurred.

These consolidated 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 consolidated
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 consolidated financial
statements.

Critical Accounting Policies

The consolidated financial statements of Liberty Star Uranium
& Metals Corp. have been prepared in conformity with accounting principles
generally accepted in the United States of America. Our significant accounting
policies are described in Note 2 to the consolidated financial statements
included in Item 8 in the Form 10-K. The critical accounting policies adopted by
our company are as follows:

Going Concern

Since we have not generated any revenue, we have negative cash
flows from operations, and negative working capital we have included a reference
to the substantial doubt about our ability to continue as a going concern in
connection with our consolidated financial statements for the period ended
January 31, 2011. Our total stockholders equity (deficit) at January 31, 2011
was $(2,049,659).

---

16

These consolidated 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 consolidated
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.

Mineral claims

We account for costs incurred to acquire, maintain and explore
mineral properties as charged to expense in the period incurred until the time
that a proven mineral resource is established at which point development of the
mineral property would be capitalized. Currently, we do not have any proven
mineral resources on any of our mineral properties.

Convertible promissory notes

We reviewed the convertible promissory notes and the related
subscription agreements to determine the appropriate reporting within the
financial statements. We report convertible promissory notes as liabilities at
their carrying value less unamortized discounts in accordance with the
applicable accounting guidance. We bifurcate conversion options and detachable
common stock purchase warrants and report them as liabilities at fair value at
each reporting period when required in accordance with the applicable accounting
guidance. No gain or loss is reported when the notes are converted into shares
of our common stock in accordance with the notes terms.

Common stock purchase warrants

We report common stock purchase warrants as equity unless a
condition exists which requires reporting as a derivative liability at fair
market value. For common stock purchase warrants reported as a derivative
liability, as well as new and modified warrants reported as equity, we utilize
the Black-Scholes valuation method in order to determine fair market value.

Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.

Not applicable.

Item 8. Financial Statements.

Our consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States of
America.

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

| | Report of Independent Registered Public
      Accounting Firm                                                                                                                                                         
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                                                                       
| | Consolidated Balance Sheets as of January
      31, 2011 and 2010                                                                                                                                                     
| |                                                                                                                                                                                                                       
| | Consolidated Statements of Operations for
      the twelve months ended January 31, 2011, the twelve months ended January
      31, 2010 and the period from inception (August 20, 2001) to January 31,
      2011    
| |                                                                                                                                                                                                                       
| | Consolidated Statements of Stockholders'
      Equity (Deficit) for the period from inception (August 20, 2001) to
      January 31, 2011                                                                             
| |                                                                                                                                                                                                                       
| | Consolidated Statements of Cash Flows for
      the twelve months ended January 31, 2011, the twelve months ended January
      31, 2010 and for the period from inception (August 20, 2001) to January
      31, 2011
| |                                                                                                                                                                                                                       
| | Notes to Consolidated Financial Statements                                                                                                                                                                            

---

17

Report of Independent Registered Public Accounting
Firm

Board of Directors and Stockholders ofLiberty Star Uranium
& Metals Corp.

We have audited the accompanying consolidated balance sheets of
Liberty Star Uranium & Metals Corp. (an exploration stage company) as of
January 31, 2011 and 2010, and the related consolidated statements of
operations, stockholders equity (deficit), and cash flows for the years then
ended and for the cumulative period from inception (August 20, 2001) through
January 31, 2011. These consolidated financial statements are the responsibility
of the Companys management. Our responsibility is to express an opinion on
these consolidated 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, assessing the accounting 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, 2011 and 2010, and the results of its operations,
changes in stockholders equity (deficit), and its cash flows for the years then
ended, and for the cumulative period from inception (August 20, 2001) through
January 31, 2011, 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 16 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 16. The consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.

/s/ Semple, Marchal & Cooper, LLPPhoenix,
Arizona
Dated: May 2, 2011

---

|18                                 
|-----------------------------------
|                                   
|LIBERTY STAR URANIUM & METALS CORP.
|(AN EXPLORATION STAGE COMPANY)     
|CONSOLIDATED BALANCE SHEETS        

|ASSETS                                                                                                                                           |  
|------------------------------------------------------------------------------------------------------------------------------------------------ | -
|                                                                                                                                                 |  
|                                                                                                                                                 |  
|Current:                                                                                                                                         |  
|Cash and cash equivalents                                                                                                                        | $
|Prepaid expenses and supplies                                                                                                                    |  
|Total current assets                                                                                                                             |  
|                                                                                                                                                 |  
|Property and equipment, net                                                                                                                      |  
|Certificates of deposit                                                                                                                          |  
|Deferred financing charges, net                                                                                                                  |  
|                                                                                                                                                 |  
|Total assets                                                                                                                                     | $
|                                                                                                                                                 |  
|LIABILITIES AND STOCKHOLDERS EQUITY
      (DEFICIT)                                                                                             |  
|                                                                                                                                                 |  
|Current:                                                                                                                                         |  
|Current portion of long-term
      debt                                                                                                          | $
|Convertible promissory notes, net of discounts                                                                                                   |  
|Accounts payable and accrued
      liabilities                                                                                                   |  
|Accrued wages to related party                                                                                                                   |  
|Accrued interest                                                                                                                                 |  
|Total current
      liabilities                                                                                                                  |  
|                                                                                                                                                 |  
|Long-term debt, net of current portion                                                                                                           |  
|Warrant liability                                                                                                                                |  
|                                                                                                                                                 |  
|Total liabilities                                                                                                                                |  
|                                                                                                                                                 |  
|Stockholders equity
      (deficit)                                                                                                             |  
|Common stock - $.00001 par value;
      1,250,000,000
      shares          authorized;
      602,411,882 and 247,656,979 issued and outstanding |  
|Additional paid-in capital                                                                                                                       |  
|Deficit accumulated during the exploration stage                                                                                                 |  
|Total stockholders
      equity (deficit)                                                                                                       |  
|                                                                                                                                                 |  
|Total liabilities and stockholders equity
      (deficit)                                                                                       | $

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

---

|19                                   
|-------------------------------------
|                                     
|LIBERTY STAR URANIUM & METALS CORP.  
|(AN EXPLORATION STAGE COMPANY)       
|CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                      |   |                  |   |   |                  |   |   | Cumulative from   |  
|------------------------------------------------------------------------------------- | - | ---------------- | - | - | ---------------- | - | - | ----------------- | -
|                                                                                      |   |                  |   |   |                  |   |   | date of inception |  
|                                                                                      |   | For the twelve   |   |   | For the twelve   |   |   | (August 20, 2001) |  
|                                                                                      |   | months ended     |   |   | months ended     |   |   | to                |  
|                                                                                      |   | January 31, 2011 |   |   | January 31, 2010 |   |   | January 31, 2011  |  
|Revenues                                                                              | $ | -                |   | $ | -                |   | $ | -                 |  
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Expenses:                                                                             |   |                  |   |   |                  |   |   |                   |  
|Geological and geophysical costs                                                      |   | 1,526,572        |   |   | 773,802          |   |   | 13,152,020        |  
|Salaries and benefits                                                                 |   | 1,314,732        |   |   | 160,730          |   |   | 3,482,207         |  
|Accounting and auditing                                                               |   | 93,258           |   |   | 108,687          |   |   | 1,042,808         |  
|Public relations                                                                      |   | 35,881           |   |   | 14,937           |   |   | 724,042           |  
|Depreciation                                                                          |   | 61,129           |   |   | 225,305          |   |   | 815,222           |  
|Legal                                                                                 |   | 192,096          |   |   | 45,239           |   |   | 829,192           |  
|Professional services                                                                 |   | -                |   |   | -                |   |   | 143,992           |  
|General and administrative                                                            |   | 107,228          |   |   | 167,972          |   |   | 1,713,132         |  
|Travel                                                                                |   | 53,280           |   |   | 613              |   |   | 191,489           |  
|Settlement expense                                                                    |   | 13,241,020       |   |   | -                |   |   | 13,241,020        |  
|Impairment loss                                                                       |   | -                |   |   | 185,370          |   |   | 16,092,870        |  
|Net operating expenses                                                                |   | 16,625,196       |   |   | 1,682,655        |   |   | 51,427,994        |  
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Loss from operations                                                                  |   | ( 16,625,196     | ) |   | ( 1,682,655      | ) |   | ( 51,427,994      | )
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Other income (expense):                                                               |   |                  |   |   |                  |   |   |                   |  
|Interest income                                                                       |   | 776              |   |   | 41               |   |   | 197,755           |  
|Interest expense                                                                      |   | ( 673,405        | ) |   | ( 1,110,176      | ) |   | ( 5,559,472       | )
|Gain (loss) on sale of assets                                                         |   | 7,795            |   |   | ( 24,980         | ) |   | ( 42,453          | )
|Gain (loss) on change in
      fair value of warrant liability                        |   | ( 3,700,389      | ) |   | 7,927            |   |   | ( 3,692,462       | )
|Debt conversion expense                                                               |   | -                |   |   | -                |   |   | ( 103,437         | )
|Other income                                                                          |   | 1,125,000        |   |   | -                |   |   | 1,350,390         |  
|Income from Elle Venture                                                              |   | -                |   |   | -                |   |   | 300,000           |  
|Foreign exchange gain                                                                 |   | -                |   |   | -                |   |   | 505               |  
|Gain on settlement of debt to related party                                           |   | -                |   |   | -                |   |   | 7,366             |  
|Total other income (expense)                                                          |   | ( 3,240,223      | ) |   | ( 1,127,188      | ) |   | ( 7,541,808       | )
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Loss before income taxes                                                              |   | ( 19,865,419     | ) |   | ( 2,809,843      | ) |   | ( 58,969,802      | )
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Income tax expense                                                                    |   | -                |   |   | -                |   |   | -                 |  
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Net loss                                                                              | $ | ( 19,865,419     | ) | $ | ( 2,809,843      | ) | $ | ( 58,969,802      | )
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Basic and diluted net loss per share of
      common stock                            | $ | ( 0.04           | ) | $ | ( 0.03           | ) | $ | ( 0.93            | )
|                                                                                      |   |                  |   |   |                  |   |   |                   |  
|Basic and diluted weighted average number
      of shares of common stock outstanding |   | 444,262,699      |   |   | 82,937,096       |   |   | 63,603,934        |  

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

---

|20                                                             
|---------------------------------------------------------------
|                                                               
|LIBERTY STAR URANIUM & METALS CORP.                            
|(AN EXPLORATION STAGE COMPANY)                                 
|CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
      (DEFICIT)

|                                                                                                                                     |              |   |   |         |   |   |                 |   |   | Deficit 
            accumulated |   |   | Total         |  
|------------------------------------------------------------------------------------------------------------------------------------ | ------------ | - | - | ------- | - | - | --------------- | - | - | -------------------------------- | - | - | ------------- | -
|                                                                                                                                     |              |   |   |         |   |   | Additional      |   |   | during                           |   |   | stockholders |  
|                                                                                                                                     | Common stock |   |   | paid-in |   |   | the exploration |   |   | equity                           |  
|                                                                                                                                     | Shares       |   |   | Amount  |   |   | capital         |   |   | stage                            |   |   | (deficit)     |  
|Balance, August 20, 2001
            (Date of inception)                                                                             | -            |   | $ | -       |   | $ | -               |   | $ | -                                |   | $ | -             |  
|Common stock issued for cash                                                                                                         | 5,000,000    |   |   | 50      |   |   | 99,950          |   |   | -                                |   |   | 100,000       |  
|Net loss
            for the period from inception, August 20, 2001, to January 31, 2004                                             | -            |   |   | -       |   |   | -               |   |   | (132,602                         | ) |   | (132,602      | )
|Balance, January 31, 2004                                                                                                            | 5,000,000    |   |   | 50      |   |   | 99,950          |   |   | (132,602                         | ) |   | (32,602       | )
|Acquisition,
            February 3, 2004                                                                                            | 4,375,000    |   |   | 44      |   |   | 15,924,956      |   |   | -                                |   |   | 15,925,000    |  
|Issuance of common stock and
            warrants private placement                                                                  | 650,000      |   |   | 7       |   |   | 2,999,993       |   |   | -                                |   |   | 3,000,000     |  
|Options issued
            for services                                                                                              | -            |   |   | -       |   |   | 94,350          |   |   | -                                |   |   | 94,350        |  
|Return of shares                                                                                                                     | (1,750,000   | ) |   | (18     | ) |   | (11,199,982     | ) |   | 11,200,000                       |   |   | -             |  
|Net loss for the
            year ended January 31, 2005                                                                             | -            |   |   | -       |   |   | -               |   |   | (18,392,024                      | ) |   | (18,392,024   | )
|Balance, January 31, 2005                                                                                                            | 8,275,000    |   |   | 83      |   |   | 7,919,267       |   |   | (7,324,626                       | ) |   | 594,724       |  
|Issuance of
            common stock and warrants private placement                                                                  | 972,172      |   |   | 10      |   |   | 5,052,722       |   |   | -                                |   |   | 5,052,732     |  
|Net loss for the year ended
            January 31, 2006                                                                             | -            |   |   | -       |   |   | -               |   |   | (4,627,965                       | ) |   | (4,627,965    | )
|Balance, January 31,
            2006                                                                                                | 9,247,172    |   |   | 93      |   |   | 12,971,989      |   |   | (11,952,591                      | ) |   | 1,019,491     |  
|Issuance of common stock private
            placement                                                                               | 990,596      |   |   | 10      |   |   | 2,545,985       |   |   | -                                |   |   | 2,545,995     |  
|Issuance of
            common stock for services                                                                                    | 37,500       |   |   | -       |   |   | 93,000          |   |   | -                                |   |   | 93,000        |  
|Expenses of common stock
            issuance                                                                                        | -            |   |   | -       |   |   | (320,000        | ) |   | -                                |   |   | (320,000      | )
|Options granted
            to consultants and employees                                                                             | -            |   |   | -       |   |   | 832,343         |   |   | -                                |   |   | 832,343       |  
|Net loss for the year ended
            January 31 2007                                                                              | -            |   |   | -       |   |   | -               |   |   | (3,267,948                       | ) |   | (3,267,948    | )
|Balance, January 31,
            2007                                                                                                | 10,275,268   |   |   | 103     |   |   | 16,123,317      |   |   | (15,220,539                      | ) |   | 902,881       |  
|Issuance of common stock private
            placement                                                                               | 429,700      |   |   | 4       |   |   | 1,074,413       |   |   | -                                |   |   | 1,074,417     |  
|Issuance of
            common stock for services                                                                                    | 28,000       |   |   | -       |   |   | 54,540          |   |   | -                                |   |   | 54,540        |  
|Issuance of common stock for
            conversion of promissory note                                                               | 99,884       |   |   | 1       |   |   | 259,698         |   |   | -                                |   |   | 259,699       |  
|Options granted
            to employees and consultants                                                                             | -            |   |   | -       |   |   | 358,646         |   |   | -                                |   |   | 358,646       |  
|Issuance of common stock
            purchase warrants                                                                               | -            |   |   | -       |   |   | 1,421,538       |   |   | -                                |   |   | 1,421,538     |  
|Beneficial
            conversion feature of convertible promissory notes                                                            | -            |   |   | -       |   |   | 1,842,734       |   |   | -                                |   |   | 1,842,734     |  
|Net loss for the year ended
            January 31, 2008                                                                             | -            |   |   | -       |   |   | -               |   |   | (5,697,935                       | ) |   | (5,697,935    | )
|Balance, January 31,
            2008                                                                                                | 10,832,852   |   |   | 108     |   |   | 21,134,886      |   |   | (20,918,474                      | ) |   | 216,520       |  
|Issuance of common stock
            for conversion or payment of promissory note                                                    | 37,646,325   |   |   | 376     |   |   | 1,839,135       |   |   | -                                |   |   | 1,839,511     |  
|Issuance of
            common stock for inducement to convert promissory note                                                       | 7,500        |   |   | -       |   |   | 9,000           |   |   | -                                |   |   | 9,000         |  
|Reduction of conversion
            price for inducement to convert promissory note                                                  | -            |   |   | -       |   |   | 94,437          |   |   | -                                |   |   | 94,437        |  
|Stock based
            compensation                                                                                                 | -            |   |   | -       |   |   | 576,244         |   |   | -                                |   |   | 576,244       |  
|Common stock purchase warrants
            exercise price reduction                                                                  | -            |   |   | -       |   |   | 67,700          |   |   | -                                |   |   | 67,700        |  
|Net loss for the
            year ended January 31, 2009                                                                             | -            |   |   | -       |   |   | -               |   |   | (4,176,066                       | ) |   | (4,176,066    | )
|Balance, January 31, 2009                                                                                                            | 48,486,677   |   |   | 484     |   |   | 23,721,402      |   |   | (25,094,540                      | ) |   | (1,372,654    | )
|Issuance of common stock for
            conversion or payment of promissory note                                                    | 199,170,302  |   |   | 1,992   |   |   | 603,661         |   |   | -                                |   |   | 605,653       |  
|Discounts on convertible
            promissory notes for beneficial conversion feature and detachable purchase
            warrants | -            |   |   | -       |   |   | 330,366         |   |   | -                                |   |   | 330,366       |  
|Net loss for the
            year ended January 31, 2010                                                                             | -            |   |   | -       |   |   | -               |   |   | (2,809,843                       | ) |   | (2,809,843    | )
|Balance, January 31, 2010                                                                                                            | 247,656,979  |   |   | 2,476   |   |   | 24,655,429      |   |   | (27,904,383                      | ) |   | (3,246,478    | )
|Issuance of
            common stock for conversion or payment of promissory note                                                    | 187,127,678  |   |   | 1,872   |   |   | 273,105         |   |   | -                                |   |   | 274,977       |  
|Issuance of common stock and
            warrants private placement, net                                                             | 31,778,484   |   |   | 318     |   |   | 1,284,363       |   |   | -                                |   |   | 1,284,681     |  
|Exercise of
            common stock purchase warrants                                                                               | 135,848,741  |   |   | 1,358   |   |   | 1,880,588       |   |   | -                                |   |   | 1,881,946     |  
|Issuance and modification of
            common stock purchase warrants                                                              | -            |   |   | -       |   |   | 15,089,884      |   |   | -                                |   |   | 15,089,884    |  
|Stock based
            compensation                                                                                                 | -            |   |   | -       |   |   | 2,530,750       |   |   | -                                |   |   | 2,530,750     |  
|Net loss for the year ended
            January 31, 2011                                                                             | -            |   |   | -       |   |   | -               |   |   | (19,865,419                      | ) |   | (19,865,419   | )
|Balance, January 31,
            2011                                                                                                | 602,411,882  |   | $ | 6,024   |   | $ | 45,714,119      |   | $ | (47,769,802                      | ) | $ | (2,049,659    | )

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

---

|21                                   
|-------------------------------------
|                                     
|LIBERTY STAR URANIUM & METALS CORP.  
|(AN EXPLORATION STAGE COMPANY)       
|CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                               |   |                  |   |   |                   |   |   | Cumulative from    |  
|------------------------------------------------------------------------------ | - | ---------------- | - | - | ----------------- | - | - | ------------------ | -
|                                                                               |   |                  |   |   |                   |   |   | date of inception  |  
|                                                                               |   | For the twelve   |   |   | For the twelve    |   |   | (August 20, 2001)  |  
|                                                                               |   | months ended     |   |   | months ended      |   |   | to                 |  
|                                                                               |   | January 31, 2011 |   |   | January 31, 2010  |   |   | January 31, 2011   |  
|Net change in cash and cash equivalents                                        |   |                  |   |   |                   |   |   |                    |  
|Cash flows from operating activities:                                          |   |                  |   |   |                   |   |   |                    |  
|Net loss                                                                       | $ | ( 19,865,419     | ) | $ | ( 2,809,843       | ) | $ | ( 58,969,802       | )
|Adjustments to reconcile net loss to net
      cash from operating activities: |   |                  |   |   |                   |   |   |                    |  
|Depreciation                                                                   |   | 61,129           |   |   | 225,305           |   |   | 816,233            |  
|Amortization of deferred
      financing charges                               |   | 19,690           |   |   | 110,023           |   |   | 542,716            |  
|Amortization of
      discount on convertible promissory notes                 |   | 205,185          |   |   | 640,821           |   |   | 3,632,995          |  
|Mineral claim costs                                                            |   | -                |   |   | -                 |   |   | 343,085            |  
|Impairment loss                                                                |   | -                |   |   | 185,370           |   |   | 16,092,870         |  
|(Gain) loss on sale of fixed
      assets                                      |   | ( 7,795          | ) |   | 24,980            |   |   | 42,453             |  
|(Gain) loss on
      change in fair value of warrant liability                 |   | 3,700,389        |   |   | (7,927            | ) |   | 3,692,462          |  
|Share based compensation                                                       |   | 2,530,750        |   |   | -                 |   |   | 4,297,983          |  
|Share and
      warrant based payments                                         |   | 13,241,020       |   |   | -                 |   |   | 13,795,973         |  
|Interest paid through issuance
      of debt                                   |   | 282,569          |   |   | -                 |   |   | 282,569            |  
|Non-cash other
      income from sale of mineral claims                        |   | ( 1,000,000      | ) |   | -                 |   |   | (1,000,000         | )
|Changes in assets and
      liabilities:                                       |   |                  |   |   |                   |   |   |                    |  
|Prepaid expenses and supplies                                                  |   | 128,655          |   |   | 10,769            |   |   | 34,387             |  
|Other
      current assets                                                     |   | -                |   |   | -                 |   |   | ( 7,875            | )
|Certificates of deposit                                                        |   | -                |   |   | -                 |   |   | ( 11,435           | )
|Other
      assets                                                             |   | -                |   |   | -                 |   |   | ( 25,000           | )
|Accounts payable and accrued expenses                                          |   | ( 226,163        | ) |   | 222,259           |   |   | 34,300             |  
|Accrued
      wages related party                                              |   | ( 5,800          | ) |   | 57,000            |   |   | 93,700             |  
|Accrued interest                                                               |   | 164,383          |   |   | 335,735           |   |   | 572,584            |  
|Net cash used in operating activities                                          |   | (
      771,407  | ) |   | (
      1,005,508 | ) |   | (
      15,739,802 | )
|                                                                               |   |                  |   |   |                   |   |   |                    |  
|Cash flows from investing activities:                                          |   |                  |   |   |                   |   |   |                    |  
|Proceeds from the sale of
      fixed asset                                    |   | 269,601          |   |   | 76,640            |   |   | 407,327            |  
|Proceeds from redemption of certificate of
      deposit                       |   | -                |   |   | -                 |   |   | 213,232            |  
|Purchase of certificate of
      deposit                                       |   | -                |   |   | -                 |   |   | ( 204,797          | )
|Purchase of equipment                                                          |   | (
      50,668   | ) |   | -                 |   |   | (
      1,149,618  | )
|Net cash provided by (used in) investing
      activities                      |   | 218,933          |   |   | 76,640            |   |   | ( 733,856          | )
|                                                                               |   |                  |   |   |                   |   |   |                    |  
|Cash flows from financing activities:                                          |   |                  |   |   |                   |   |   |                    |  
|Principal activity on long-term debt                                           |   | ( 118,631        | ) |   | ( 39,231          | ) |   | ( 496,553          | )
|Principal activity on capital
      lease obligation                           |   | -                |   |   | -                 |   |   | ( 39,298           | )
|Principal activity on convertible promissory
      notes                       |   | -                |   |   | -                 |   |   | ( 286,227          | )
|Net repayments from related
      parties                                      |   | -                |   |   | 1,888             |   |   | -                  |  
|Proceeds from the issuance of common stock,
      net of expenses              |   | 1,284,681        |   |   | -                 |   |   | 12,424,755         |  
|Proceeds from the sale of
      convertible promissory notes                   |   | 466,217          |   |   | 923,483           |   |   | 5,772,371          |  
|Proceeds from long-term debt                                                   |   | -                |   |   | -                 |   |   | 198,925            |  
|Net cash provided by financing activities                                      |   | 1,632,267        |   |   | 886,140           |   |   | 17,573,973         |  
|                                                                               |   |                  |   |   |                   |   |   |                    |  
|Net increase (decrease) in cash and cash
      equivalents for period          |   | 1,079,793        |   |   | ( 42,728          | ) |   | 1,100,315          |  
|                                                                               |   |                  |   |   |                   |   |   |                    |  
|Cash and cash equivalents, beginning of
      period                           |   | 20,522           |   |   | 63,250            |   |   | -                  |  
|                                                                               |   |                  |   |   |                   |   |   |                    |  
|Cash and cash equivalents, end of period                                       | $ | 1,100,315        |   | $ | 20,522            |   | $ | 1,100,315          |  
|                                                                               |   |                  |   |   |                   |   |   |                    |  
|Interest paid during the period                                                | $ | 1,579            |   | $ | 23,596            |   | $ | 200,635            |  
|                                                                               |   |                  |   |   |                   |   |   |                    |  
|Income taxes paid                                                              | $ | -                |   | $ | -                 |   | $ | -                  |  

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

---

|22                                        
|------------------------------------------
|                                          
|                                          
|LIBERTY STAR URANIUM & METALS CORP.       
|(AN EXPLORATION STAGE COMPANY)            
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  Organization

Liberty Star Uranium & Metals Corp. (the Company or We or Liberty Star) was formerly Liberty Star Gold Corp. and formerly Titanium Intelligence, Inc. (Titanium). Titanium was incorporated on August
20, 2001 under the laws of the State of Nevada. On February 5, 2004 we commenced operations in the acquisition and exploration of mineral properties business. Big Chunk Corp. (Big Chunk) is our wholly owned subsidiary and was
incorporated on December 14, 2003 in the State of Alaska.  Big Chunk is engaged in the acquisition and exploration of mineral properties business in the State of Alaska. Redwall Drilling Inc. (Redwall) was our wholly owned subsidiary and
was incorporated on August 31, 2007 in the State of Arizona. Redwall performed drilling services on our mineral properties. Redwall ceased drilling activities in July 2008 and was dissolved on March 30, 2010. In April 2007, we changed our name to
Liberty Star Uranium & Metals Corp. to reflect our current concentrated efforts on uranium exploration. We are considered to be an exploration stage company, as we have not generated any revenues from operations.

In December 2006, we entered into a joint venture agreement (Elle Venture) with XState Resources Limited (XState). We hold a 50% interest in the Elle Venture, a general partnership with XState that was formed to explore and,
if warranted, develop certain US Federal lode mining claims within the North Pipes Super Project area on the Arizona strip, Northern Arizona. The Elle Venture ceased exploration activities in 2008 and has been inactive since that date.

These consolidated financial statements include the results of operations and cash flows of Liberty Star Uranium & Metals Corp. and its wholly owned subsidiaries, Big Chunk and Redwall, from the dates of acquisition. All significant intercompany
accounts and transactions were eliminated upon consolidation.

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

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.

The valuation of stock-based compensation, valuation of common stock purchase warrants, value of embedded conversion options, value of beneficial conversion features, valuation allowance on deferred tax assets, the determination of useful lives and
recoverability of depreciable assets, accruals, and contingencies are significant estimates made by management. It is at least reasonably possible that a change in these estimates may occur in the near term.

Principles of consolidation

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Big Chunk and Redwall, from the date of acquisition, February 5, 2004 and August 31, 2007, respectively. All significant intercompany
accounts and transactions have been eliminated upon consolidation.

---

|23                                                    
|------------------------------------------------------
|                                                      
|                                                      
|LIBERTY STAR URANIUM & METALS CORP.                   
|(AN EXPLORATION STAGE COMPANY)                        
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE 2  Summary of significant accounting policies - continued

Cash and cash equivalents

We consider cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. We maintain our cash in bank deposit accounts which, for periods of time, may exceed federally insured
limits. At January 31, 2011 and 2010, we had cash in bank deposit accounts that exceeded federally insured limits of $751,000 and $0, 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.

Property and equipment

Property and equipment is stated at cost. We capitalize 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.
Leasehold improvements are stated at cost and are amortized over their estimated useful lives or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred while betterments or renewals are capitalized. Property and
equipment is reviewed periodically for impairment. The estimated useful lives range from 2 to 7 years.

Convertible promissory notes

We report convertible promissory notes as liabilities at their carrying value less unamortized discounts, which approximates fair value. We bifurcate conversion options and detachable common stock purchase warrants and report them as liabilities at
fair value at each reporting period when required in accordance with the applicable accounting guidance. When convertible promissory notes are converted into shares of our common stock in accordance with the debts terms, no gain or loss is
recognized. We account for inducements to convert as an expense in the period incurred, included in debt conversion expense.

Common stock purchase warrants

We report common stock purchase warrants as equity unless a condition exists which requires reporting as a derivative liability at fair market value. For common stock purchase warrants reported as a derivative liability, as well as new and modified
warrants reported as equity, we utilize the Black-Scholes valuation method in order to estimate fair market value.

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

We review property and equipment 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.

Environmental expenditures

Our operations 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 us are not predictable. We provide for any reclamation costs in accordance with the accounting standards codification section 360-35. It is managements opinion that we are not currently exposed to significant environmental
and reclamation liabilities and has recorded no reserve for environmental and reclamation expenditures at January 31, 2011 and 2010.

---

|24                                                    
|------------------------------------------------------
|                                                      
|                                                      
|LIBERTY STAR URANIUM & METALS CORP.                   
|(AN EXPLORATION STAGE COMPANY)                        
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE 2  Summary of significant accounting policies - continued

Fair Value of Financial Assets and Liabilities:

The Company measures and discloses certain financial assets and liabilities at fair value. Authoritative guidance defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  Authoritative guidance also establishes a fair value hierarchy which requires an entity to maximize the
use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1- Quoted prices in active markets for identical assets or liabilities.

Level 2- Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data
for substantially the full term of the assets or liabilities.

Level 3- Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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 a 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. Interest and penalties associated with unrecognized tax benefits, if any, are classified as additional income taxes in the statement of operations. With few exceptions, we are no longer subject to U.S. federal, state and local
examinations by tax authorities for years before 2009.

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 forward stock split on January 6, 2004 which resulted in 20,000,000 common shares outstanding. The calculation of basic loss per share gives retroactive effect to a one for four reverse stock split on September 1, 2009 which
resulted in 67,261,764 common shares outstanding. 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, 2011 and 2010, there were 204,639,535 and 62,260,338, respectively, potentially dilutive instruments outstanding. Additionally, at January 31, 2011 and 2010 if settlement of the Convertible Promissory Notes were
completed by the issuance of common shares there would be 83,846,926 and 2,021,513,000 additional shares, respectively.  At January 31, 2011 and 2010 there are 1,250,000,000 common shares authorized.  These instruments were not included in the
determination of diluted loss per share as their effect was anti-dilutive.

Recently issued accounting standards

With the exception of those discussed below, there have been no recent accounting pronouncements or changes in accounting pronouncements during the twelve months ended January 31, 2011, that are of significance, or potential significance, to us.

In January 2010, the FASB issued Accounting Standards Update 2010-06 (ASU 2010-06) on improving disclosure of fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2009 except for disclosures
about purchases, sales, issuances, and settlements in the roll forward of activity of Level 3 fair value measurements which is effective for fiscal years beginning after December 15, 2010. This guidance did not have a material impact on our
financial position and results of operations.

---

|25                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
      continued

NOTE 3 Mineral claims

At January 31, 2011 the Company held a 100% interest in 431
standard Federal lode mining claims on the Colorado Plateau Province of Northern
Arizona (the North Pipes Claims).

At January 31, 2011 the Company held an option to explore 59
standard Federal lode mining claims located at the East Silver Bell and
Tombstone region of Arizona. The mineral claims are owned by JABA US Inc, an
Arizona Corporation in which two directors of the Company are owners.

At January 31, 2011 the Company held a 100% interest in 612
Alaska State mining claims 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).

At January 31, 2011 the Company held a 100% interest in 56
Alaska State mining claims 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).

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 titles
to all its mineral properties and, to the best of its knowledge, titles to all
properties are in good standing as of January 31, 2011.

NOTE 4  Property and equipment

The balances of our major classes of depreciable assets
are:

|                                               |   | January 31, 2011 |   |   | January 31, 2010 |  
|---------------------------------------------- | - | ---------------- | - | - | ---------------- | -
|Geology equipment                              | $ | 327,105          |   | $ | 315,805          |  
|Drilling equipment                             |   | -                |   |   | 459,297          |  
|Vehicles and transportation equipment          |   | 50,180           |   |   | 122,655          |  
|Office furniture and equipment                 |   | 74,572           |   |   | 68,425           |  
|                                               |   | 451,857          |   |   | 966,182          |  
|Less accumulated depreciation and amortization |   | (288,706         | ) |   | (556,551         | )
|                                               | $ | 163,151          |   | $ | 409,631          |  

NOTE 5  Long-term debt

Note payable to Ford Credit payable in monthly installments of
$544 including interest at a fixed rate of 9.49% through maturity in February
2016. Principal balance at January 31, 2011 and 2010 is $25,787 and $0,
respectively. Carrying amount of a vehicle that serves as collateral is $36,966
and $0 at January 31, 2011 and 2010, respectively.

Notes payable to Chase Bank payable in aggregate monthly
installments of $1,302 including interest at fixed rates of 8.9% maturing at
various dates through February 2013, secured by liens on vehicles. Principal
balances at January 31, 2011 and 2010 are $0 and $37,742, respectively. Carrying
amount of vehicles that serve as collateral is $0 and $27,923 at January 31,
2011 and 2010, respectively.

Note payable to Atlas Copco payable in monthly installments of
$5,436 including interest at a fixed rate of 9% through maturity in September
2010, secured by a lien on equipment. Principal balance at January 31, 2011 and
2010 is $0 and $80,889, respectively. Carrying amount of equipment that serves
as collateral is $0 and $220,445 at January 31, 2011 and 2010, respectively.

The following is a summary of the principal maturities of
long-term debt during the next five years: For the twelve months ended
January 31,

| | 2012                    | $ | 3,763  |  
| | ----------------------- | - | ------ | -
| | 2013                    |   | 4,631  |  
| | 2014                    |   | 5,090  |  
| | 2015                    |   | 5,594  |  
| | 2016                    |   | 6,149  |  
| | Thereafter              |   | 560    |  
| |                         |   | 25,787 |  
| | Less current maturities |   | (3,763 | )
| |                         | $ | 22,024 |  

---

|26                                                    
|------------------------------------------------------
|                                                      
|LIBERTY STAR URANIUM & METALS CORP.                   
|(AN EXPLORATION STAGE COMPANY)                        
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued

NOTE 6  Convertible promissory notes

We issue convertible promissory notes in private placements of our securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The convertible notes issued in
May 2007, August 2008, May 2009 and August 2009 were paid in full on July 15, 2010. Principal balance of these notes at January 31, 2010 was $3,004,772.

On July 15, 2010 we issued a secured convertible promissory note to Northern Dynasty Minerals Ltd (Northern Dynasty). The original advanced amount is $4,000,000 and bears interest at a rate of 10% per annum compounded monthly. On
August 17, 2010 we transferred 95 of our Alaska State mineral claims to Northern Dynasty for consideration of $1,000,000 of the original advanced amount under the secured convertible promissory note. No interest accrued on the $1,000,000 of
the original advanced amount.

As part of the transaction noted above, subject to negotiating and signing a definitive earn-in option and joint venture agreement, Northern Dynasty can earn a 60% interest in our Big Chunk and Bonanza Hills projects in Alaska (the Joint
Venture Claims) by spending $10,000,000 on those properties over six years. The borrowings from Northern Dynasty may be applied as part of Northern Dynastys earn-in requirements. Northern Dynastys minimum annual expenditures
under the earn-in would be the minimum level necessary to keep the Joint Venture Claims in good standing. Northern Dynasty may elect to abandon the earn-in at any time on 30 days notice, so long as sufficient annual labor is performed, or a
cash payment in lieu of labor is made, in order to fulfill the annual labor requirements for the Joint Venture Claims for a minimum of 12 months after termination of the earn-in.

The Loan is a secured convertible loan, secured against substantially all of our companys assets. The Loan is due for repayment 45 days after the earlier to occur of: (i) Northern Dynastys completion of its earn-in to the Joint Venture
Claims unless it has elected to deem the entire outstanding balance of the Loan (including interest thereon) to be part of the earn-in expenditure requirements and (ii) termination of Northern Dynastys earn-in right by voluntary abandonment
provided that $1,000,000 in expenditures has been made; or (iii) termination of Northern Dynastys earn-in right on account of a superior third party joint venture offer.

Provided a minimum of $1,000,000 has been expended by Northern Dynasty on earn in expenses, the Loan will be convertible until repaid or deemed repaid, into common shares of our company at the 5 day volume weighted average trading price
immediately prior to Northern Dynasty giving a notice of conversion less the maximum allowable discount applicable as if our shares were listed on the TSX Venture Exchange. At January 31, 2011 Northern Dynasty has not yet expended the $1,000,000
earn in expenses.

The Loan may be pre-paid by our company without penalty at any time on 10 days prior notice during which time Northern Dynastys conversion rights are unaffected.

If settlement of all of the Convertible Notes occurred on January 31, 2011 we would have been obligated to pay $3,000,000 in principal and $164,383 of accrued interest. If the settlement were completed by the issuance of common shares the
conversion price at January 31, 2011 would have been $0.03774 per share for a total of 83,846,926 shares required to convert the note.

We have classified the entire amount as a current liability as the joint venture agreement has not been finalized at January 31, 2011 and as a result the note can be called by Northern Dynasty.

NOTE 7  Common stock

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.

As of January 31, 2011, there were 108,475,660 whole share purchase warrants outstanding and exercisable. The warrants have a weighted average remaining life of 3.56 years and a weighted average exercise price of $0.04 per whole warrant for one
common share. Whole share purchase warrants outstanding at January 31, 2011 are as follows:

---

|27                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      continued

NOTE 7  Common stock  continued

Number of whole share
    
    
    Weighted average exercisepurchase warrants
    
    
    price per shareOutstanding, January 31, 2009
    
    2,262,763
    
    $
    1.59Issued
    
    58,917,700
    
    
    0.02Outstanding, January 31, 2010
    
    61,180,463
    
    $
    0.08Issued
    
    188,589,884
    
    
    0.02Exercised
    
    (140,808,847
    )
    
    0.002Expired
    
    (485,840
    )
    
    6.00Outstanding, January 31, 2011
    
    108,475,660
    
    $
    0.04Exercisable, January 31, 2011
    
    108,475,660
    
    $
    0.04


On September 15, 2010 we issued 22,098,601 common stock
purchase warrants exercisable at $0.10 through September 15, 2013 pursuant to a
settlement agreement with two of our warrant holders. We also amended the August
2009 common stock purchase warrants for the same two warrant holders pursuant to
a settlement agreement. The warrants were increased by 110,493,005 warrants and
the exercise price was reduced from $0.02 per common share to $0.002 per common
share. On October 15, 2010 we amended the August 2009 common stock purchase
warrants for two additional warrant holders pursuant to a settlement agreement.
The warrants were increased by 24,219,794 warrants and the exercise price was
reduced from $0.02 per common share to $0.002 per common share. We recognized
settlement expense of $13,241,020 related to these settlement agreements which
is reported under settlement expense on our financial statements. We estimated
the fair value of the amended warrants and the new warrants using the
Black-Scholes valuation model. We used the following assumptions to estimate the
fair value of stock purchase warrants issued and amended pursuant to the
settlement agreements:

Warrant Issuance & Amendment
    Expected volatility
    Expected dividend yield
    Expected term
    Risk-free interest rateSeptember 15, 2010
    90%
    0%
    4.9 years
    1.46%October 15, 2010
    90%
    0%
    4.9 years
    1.20%


During the year ended January 31, 2011 investors exercised
140,808,847 common stock purchase warrants using the cashless exercise provision
of the August 2009 common stock purchase warrants. The cashless exercise
provision allows the investor, if the fair market value of one share of common
stock is greater than the exercise price, to elect to receive shares equal to
the value of the warrant less a portion of the warrant that is cancelled using a
specific formula. We issued 135,848,741 shares of common stock and cancelled
4,960,106 common stock purchase warrants pursuant to the cashless exercise
provision. No cash proceeds were received.

We issued 187,127,678 shares of common stock as repayment of
$227,455 principal portion and $47,522 interest portion of the monthly payments
on the May 2007, August 2008, May 2009 and August 2009 convertible notes.

On October 20, 2010, we sold 25,000,000 units at a price of
$0.04 per unit to one investor for net proceeds of $999,980. Each unit consisted
of one common share of our company and one non-transferable common stock
purchase warrant. Each common stock purchase warrant entitles the investor to
purchase one additional common share of our company at a price of $0.056 until
October 20, 2013. The securities were issued to an accredited investor pursuant
to an exemption from the registration requirements of the Securities Act of 1933
provided by Rule 506 of Regulation D.

On November 12, 2010, we sold 5,465,114 units at a price of
$0.0429 per unit to investors for net proceeds of $234,701. Each unit consisted
of one common share of our company and one non-transferable common stock
purchase warrant. Each common stock purchase warrant entitles the investor to
purchase one additional common share of our company at a price of $0.06 until
November 12, 2013. The securities were issued to accredited investors pursuant
to an exemption from the registration requirements of the Securities Act of 1933
provided by Rule 506 of Regulation D.

On January 12, 2011, we sold 1,313,370 units at a price of
$0.038 per unit to one investor for net proceeds of $50,000. Each unit consisted
of one common share of our company and one non-transferable common stock
purchase warrant. Each common stock purchase warrant entitles the investor to
purchase one additional common share of our company at a price of $0.06 until
January 12, 2014. The securities were issued to an accredited investor pursuant
to an exemption from the registration requirements of the Securities Act of 1933
provided by Rule 506 of Regulation D.

---

|28                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      continued

NOTE 8  Share-based compensation

The 2010 Stock Option Plan was approved and adopted by the
Board of Directors on August 10, 2010. The plan allows for up to 95,500,000
shares to be granted to key employees and non-employee consultants after
specific objectives are met. The 2007 Stock Option Plan was approved and adopted
by the Board of Directors on December 10, 2007. The plan allows for up to
2,500,000 shares to be granted to key employees and non-employee consultants
after specific objectives are met. The 2004 Stock Option Plan was approved and
adopted by the Board of Directors on December 27, 2004. The plan allows for up
to 962,500 shares to be granted to key employees and non-employee consultants
after specific objectives are met. Employees can receive incentive stock options
and non-qualified stock options while non-employee consultants can receive only
non-qualified stock options. The options granted vest under various provisions
using graded vesting, not to exceed four years. The options granted have a term
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. There are
no options remaining available for grant under the 2010 Stock Option Plan at
January 31, 2011 and 2010. Options remaining available for grant under the 2007
Stock Option Plan at January 31, 2011 and 2010 are 2,287,500 and 2,056,250,
respectively. Options remaining available for grant under the 2004 Stock Option
Plan at January 31, 2011 and 2010 are 511,125 and 326,375, respectively.

On August 10, 2010 we granted incentive stock options and
non-qualified stock options to certain of our directors, officers, employees and
consultants to purchase an aggregate of 95,500,000 shares of our common stock at
an exercise price of $0.038 per share for a term expiring on August 10, 2015.
The options were fully vested upon granting.

The following tables summarize the Companys stock option
activity during the year ended January 31, 2011.

Incentive stock options to employees outstanding at January 31,
2011 are as follows:

|                              |  |                   |   |   |                  |  |  | Weighted       |  |   |                 | 
|----------------------------- |  | ----------------- | - | - | ---------------- |  |  | -------------- |  | - | --------------- | 
|                              |  |                   |   |   |                  |  |  | average        |  |   |                 | 
|                              |  |                   |   |   | Weighted average |  |  | remaining life |  |   | Aggregate       | 
|                              |  | Number of options |   |   | exercise price   |  |  | (years)        |  |   | intrinsic value | 
|Outstanding, January 31, 2010 |  | 632,625           |   | $ | 2.26             |  |  |                |  |   |                 | 
|Granted                       |  | 95,000,000        |   |   | 0.038            |  |  |                |  |   |                 | 
|Vested, Cancelled             |  | (247,250          | ) |   | 1.93             |  |  |                |  |   |                 | 
|                              |  |                   |   |   |                  |  |  |                |  |   |                 | 
|Outstanding and exercisable,  |  |                   |   |   |                  |  |  |                |  |   |                 | 
|January 31, 2011              |  | 95,385,375        |   | $ | 0.048            |  |  | 4.53           |  | $ | -               | 

Non-qualified stock options to non-employee consultants
outstanding at January 31, 2011 are as follows:

|                                              |  |                   |   |   |                  |  |  | Weighted       |  |   |                 | 
|--------------------------------------------- |  | ----------------- | - | - | ---------------- |  |  | -------------- |  | - | --------------- | 
|                                              |  |                   |   |   | Weighted         |  |  | average        |  |   |                 | 
|                                              |  |                   |   |   | average exercise |  |  | remaining life |  |   | Aggregate       | 
|                                              |  | Number of options |   |   | price            |  |  | (years)        |  |   | intrinsic value | 
|Outstanding, January 31, 2010                 |  | 447,250           |   | $ | 3.29             |  |  |                |  |   |                 | 
|Granted                                       |  | 500,000           |   |   | 0.038            |  |  |                |  |   |                 | 
|Expired                                       |  | (62,500           | ) |   | 1.80             |  |  |                |  |   |                 | 
|Vested, Cancelled                             |  | (106,250          | ) |   | 0.88             |  |  |                |  |   |                 | 
|                                              |  |                   |   |   |                  |  |  |                |  |   |                 | 
|Outstanding and exercisable, January 31, 2011 |  | 778,500           |   | $ | 1.65             |  |  | 4.73           |  | $ | -               | 

The aggregate intrinsic value is calculated based on the
January 31, 2011 stock price of $0.03612 per share.

As of January 31, 2011 there were no nonvested stock options.
During the year ended January 31, 2011 the stock options granted were
immediately fully vested. The weighted average grant date fair value of options
vested during the year ended January 31, 2011 was $0.0265. The Company estimates
the fair value of option awards on the grant date using the Black-Scholes
valuation model. The Company uses historical volatility, disregarding
identifiable periods of time in which share price was extraordinarily volatile
due to certain events that are not expected to recur during the expected term,
as its method to estimate expected volatility. The Company used the following
assumptions to estimate the fair value of stock option grants:

---

|29                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
      continued

NOTE 8  Share-based compensation  continued

Expected dividend
    
    Risk-free interestGrant date
    Expected volatility
    yield
    Expected term
    rate
    Forfeiture rateAugust 10, 2010
    90%
    0%
    5 years
    1.46%
    0%


The weighted average grant date fair value of the options
granted during the year ended January 31, 2011 was $0.0265 per option. There
were no options exercised during the year ended January 31, 2011.

Share-based compensation expense is reported in our statement
of operations as follows:

|                                 |   |                  |  |   |                  |  |   | From inception       | 
|-------------------------------- | - | ---------------- |  | - | ---------------- |  | - | -------------------- | 
|                                 |   |                  |  |   |                  |  |   | (August 20, 2001) to | 
|                                 |   | January 31, 2011 |  |   | January 31, 2010 |  |   | January 31, 2011     | 
|Geological and geophysical costs | $ | 1,391,250        |  | $ | -                |  | $ | 2,537,298            | 
|Salaries and benefits            |   | 1,126,250        |  |   | -                |  |   | 1,789,285            | 
|Investor relations               |   | 13,250           |  |   | -                |  |   | 65,750               | 
|                                 |   |                  |  |   |                  |  |   |                      | 
|                                 | $ | 2,530,750        |  | $ | -                |  | $ | 4,392,333            | 

At January 31, 2011 there is no unrecognized share-based
compensation for all share-based awards outstanding.

NOTE 9  Income taxes

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

| |                                                          |   | January 31, 2011 |   |   | January 31, 2010 |  
| | -------------------------------------------------------- | - | ---------------- | - | - | ---------------- | -
| | Net operating loss carryforwards                         | $ | 8,484,000        |   | $ | 8,560,000        |  
| | Temporary book and tax depreciation differences          |   | (1,000           | ) |   | (15,000          | )
| | Temporary accrued expense differences                    |   | 60,000           |   |   | 61,000           |  
| | Temporary non-qualified stock option expense differences |   | 307,000          |   |   | 332,000          |  
| | Less valuation allowance                                 |   | (8,850,000       | ) |   | (8,938,000       | )
| |                                                          | $ | -                |   |   | -                |  

Management has elected to provide a deferred tax asset
valuation allowance equal to the potential benefit due to the Companys history
of losses. If the Company demonstrates the ability to generate taxable income,
management will re-evaluate the allowance. The change in the valuation allowance
of $(88,000) and $925,000 in the years ended January 31, 2011 and 2010 primarily
represents the benefit of the change in net operating loss carry-forwards during
the period.

Internal Revenue Code Section 382 limits the ability to utilize
net operating losses is a 50% change in ownership occurs over a three year
period. Such limitation of the net operating losses may have occurred but the
Company has not analyzed it at this time as the deferred tax asset is fully
reserved. The Company has federal and state net operating loss carry-forwards
that are available to offset future taxable income. The schedule below shows the
amounts and expiration dates for the net operating loss carry-forwards.

|                                                 |                                                       |   | January 31, 2011 |  |   | January 31, 2010 | 
|------------------------------------------------ | ----------------------------------------------------- | - | ---------------- |  | - | ---------------- | 
|Federal net operating loss
      carry-forwards: |                                                       |   |                  |  |   |                 
|                                                 | Expiring January 31, 2025                             | $ | 313,895          |  | $ | 313,895          | 
|                                                 | Expiring January 31, 2026                             |   | 2,785,529        |  |   | 2,785,529        | 
|                                                 | Expiring January 31, 2027                             |   | 4,652,642        |  |   | 4,652,642        | 
|                                                 | Expiring January 31, 2028                             |   | 3,285,552        |  |   | 3,285,552        | 
|                                                 | Expiring January 31, 2029                             |   | 5,314,524        |  |   | 5,314,524        | 
|                                                 | Expiring January 31, 2030                             |   | 3,639,090        |  |   | 3,639,090        | 
|                                                 | Expiring January 31, 2031                             |   | 2,551,567        |  |   | 2,551,567        | 
|                                                 | Expiring January 31, 2032                             |   | 357,144          |  |   | -                | 
|                                                 |                                                       |   |                  |  |   |                  | 
|                                                 | Total Federal net operating
      loss carry-forwards | $ | 22,899,943       |  | $ | 22,542,799       | 

---

|30                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      continued

NOTE 9  Income taxes  continued

| | Arizona net operating loss carry-forwards: |                                                       |   |            |  |   |           
| | ------------------------------------------ | ----------------------------------------------------- | - | ---------- |  | - | ----------
| |                                            | Expiring January 31, 2011                             | $ | -          |  | $ | 4,652,642 
| |                                            | Expiring January
      31, 2012                       |   | 3,047,057  |  |   | 3,047,057 
| |                                            | Expiring January 31, 2013                             |   | 5,510,233  |  |   | 5,510,233 
| |                                            | Expiring January
      31, 2014                       |   | 3,639,611  |  |   | 3,639,611 
| |                                            | Expiring January 31, 2015                             |   | 2,551,517  |  |   | 2,551,517 
| |                                            | Expiring January
      31, 2016                       |   | 357,094    |  |   | -         
| |                                            |                                                       |   |            |  |   |           
| |                                            | Total Arizona net
      operating loss carry-forwards | $ | 15,105,512 |  | $ | 19,401,060

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, 2011 and 2010 is as follows:

| |                                                          |   | January 31, 2011 |   |   | January 31, 2010 |  
| | -------------------------------------------------------- | - | ---------------- | - | - | ---------------- | -
| |                                                          |   |                  |   |   |                  |  
| | Income tax benefit at federal statutory
      rate       | $ | (6,281,000       | ) | $ | (878,000         | )
| | State income tax benefit, net of effect on federal taxes |   | (1,391,000       | ) |   | (197,000         | )
| | Permanent differences and other (federal)                |   | 6,082,000        |   |   | (37,000          | )
| | Permanent differences and other (state)                  |   | 1,678,000        |   |   | 187,000          |  
| | Increase (decrease) in valuation allowance               |   | (88,000          | ) |   | 925,000          |  
| |                                                          |   |                  |   |   |                  |  
| | Income tax expenses (benefit)                            | $ | -                |   | $ | -                |  

NOTE 10  Related party transactions

The Company entered into the following transactions with
related parties during the year ended January 31, 2011:

Paid or accrued $5,888 in rent. We rented an office from Jim
Briscoe, our President and CEO, on a month-to-month basis for $459 per month
through July 2010 and $522 per month beginning in August 2010.

We sold a trailer to Jim Briscoe, our President and CEO, for
$3,000 and purchased a vehicle from Jim Briscoe for $11,000.

Accrued $93,700 of unpaid wages to Jim Briscoe, our President
and CEO.

We included $3,165 in accounts payable to Larry Liang and Eddie
Othon for expense reimbursements for travel that occurred before January 31,
2011. Mr. Liang is our Executive Vice President and Director. Mr. Othon is our
Vice President of Global Business Development and Director.

We recognized $2,451,250 of compensation expense for stock
options granted to officers and directors of our company.

The Company entered into the following transactions with
related parties during the year ended January 31, 2010:

Paid or accrued $5,512 in rent. We rented an office from an
officer on a month-to-month basis for $459 per month.

Accrued $99,500 of unpaid wages to Jim Briscoe, our President
and CEO.

NOTE 11  Commitments

The Company is required to perform annual assessment work in
order to maintain the Big Chunk and Bonanza Hills Alaska State mining claims. If
annual assessment work is not performed the Company must pay the assessment
amount in cash in order to maintain the 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 (40 acre) claim extends the claims for a one-year period from the
staking of claims. Assessment work performed in excess of the required amount
may be carried forward for up to four years to satisfy future obligations. The
Company estimates that the required annual assessments to maintain the claims
will be approximately $260,600. We have been informed by Northern Dynasty
Minerals Inc. that sufficient funds have been expended by them to maintain the
claims until August 31, 2011 (unaudited).

---

|31                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
      continued

NOTE 11  Commitments  continued

The annual state rentals for the Big Chunk and Bonanza Hills
Alaska State mining claims vary from $70 to $280 per mineral claim. The rental
period begins at noon September 1stthrough the following September
1stand annual rental payments are due on November 30thof
each year. The estimated state rentals due by November 30, 2011 for the period
from September 1, 2011 through September 1, 2012 are $174,580. 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 1stthrough the following
September 1stand rental payments are due by the first day of the
rental period. The annual rentals are $140 per claim. The estimated rentals due
by September 1, 2011 for the period from September 1, 2011 through September 1,
2012 are $60,340.

In December 2010 we entered into a 12 month non-cancellable
operating lease for office space. The lease calls for monthly payments of rent
plus sales tax of $2,280. We have the option to extend the lease for one
additional twelve month term at current market rates. We recognized rent expense
of $3,089 during the year ended January 31, 2011 pursuant to this lease. Future
minimum lease payments pursuant to this lease total $24,269 payable during the
fiscal year ending January 31, 2012.

NOTE 12  Supplemental disclosures with respect to cash
flows

The significant non-cash investing and financing
transactions for the twelve month period ended January 31, 2011 were as
follows:

We issued 187,127,678 shares of common stock as repayment of
$227,455 principal portion and $47,522 interest portion of the monthly payments
on the convertible notes.

We issued $4,000,000 secured convertible promissory note to
Northern Dynasty in exchange for $466,217 cash received and payoff of principal
and interest on the May 2007, August 2008, May 2009 and August 2009 secured
convertible promissory notes totaling $3,533,783.

We issued 22,098,601 common stock purchase warrants exercisable
at $0.10 through September 15, 2013 pursuant to a settlement agreement with two
of our warrant holders. We also amended the August 2009 common stock purchase
warrants for four of our warrant holders pursuant to a settlement agreement. The
warrants were increased by 134,712,799 warrants and the exercise price was
reduced from $0.02 per common share to $0.002 per common share. The company
recognized settlement expense of $13,241,020 related to these settlement
agreements which is reported under settlement expense on our financial
statements.

We issued 135,848,741 shares of common stock upon exercise of
common stock purchase warrants for no cash proceeds as all exercises were
completed pursuant to the cashless exercise provisions of the August 2009 common
stock purchase warrants.

We recognized a $3,730,810 loss on the change in warrant
liability fair value.

We recognized $2,530,750 of compensation expense related to the
granting of 95,500,000 incentive and non-qualified stock options to officers,
employees and consultants.

We transferred 95 of our mineral claims in the state of Alaska
to Northern Dynasty in exchange for a $1,000,000 reduction of the principal of
our secured convertible promissory note.

We purchased a vehicle with a long-term note payable of
$25,787.

The significant non-cash investing and financing
transactions for the twelve month period ended January 31, 2010 were as
follows:

We issued 199,170,302 shares of common stock as repayment of
$513,685 principal portion and $91,968 interest portion of the monthly payments
on the convertible notes.

We issued 58,917,700 detachable common stock purchase warrants
to the investors who purchased the August 2009 convertible notes recorded at
fair value as a discount on convertible promissory notes of $38,349.

Deferred financing charges of $42,437 were deducted from the
proceeds we received on the sale of August 2009 Convertible Notes.

We recorded $330,366 of discounts on convertible promissory
notes for beneficial conversion features.

---

|32                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -
      continued

NOTE 13  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 14  Fair value of financial instruments

Our financial instruments consist of cash and cash equivalents,
accounts payable, accrued liabilities, convertible notes payable, notes payable,
and warrant liability. It is management's opinion that we are 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. Gains and losses recognized on changes in fair value of
financial instruments are reported in other income (expense) as gain (loss) on
change in fair value. We estimate the fair value of level 3 inputs using the
Black-Scholes valuation model. We use historical volatility as its method to
estimate expected volatility. At January 31, 2011 we had no financial
instruments outstanding that were estimated using level 1, level 2 or level 3
inputs.

Fair value measurements using significantunobservable inputs (Level 3):Description
    
    
    Warrant liabilityBeginning balance, January 31, 2010
    
    $
    30,422Total (gains) or losses
    
    
    3,700,389Purchases, issuances and settlements
    
    
    10,238,696Transfers in or out of
      Level 3
    
    
    (13,969,507
    )Ending balance, January 31, 2011
    
    $
    -


We used the following assumptions to estimate the fair value of
the warrant liability during the year ended January 31, 2011:

Expected volatility
    Expected dividend yield
    Expected term
    Risk-free interest rate90%
    0%
    0.54 to 4.9 years
    0.25% to 1.46%


NOTE 15  Litigation

We currently have no pending or threatened litigation at
January 31, 2011 that is deemed material by the Company. During the year ended
January 31, 2011 we settled three litigation actions against us.

Wintrode Settlement:

On January 26, 2010 we were named in a lawsuit filed with the
clerk of the Superior Court of Arizona in the County of Pima by our former
landlord B&D Ventures LLC. The former landlord was seeking to obtain damages
in the amount of $48,909 from our termination of our lease obligation before the
end of the lease term. We vacated the premises in January 2009 and the lease end
date was November 30, 2010. On May 13, 2010 a judgment was issued in this case
in favor of B&D Ventures LLC for $48,909 plus interest accruing at 10% until
paid. On November 12, 2010 we settled the outstanding balance with B&D
Ventures for a payment of $25,000 and we have been released from all other
liability related to this judgment.

Alpha and Platinum Settlement:

On August 26, 2010, Platinum Long Term Growth VI LLC
(Platinum) and Alpha Capital Anstalt (Alpha), two former lenders of the
Company (the Plaintiffs), filed lawsuit in the United States District Court,
Southern District of New York, against Liberty Star and James Briscoe, our
President and CEO. The Plaintiffs sought to require Liberty Star to honor
outstanding warrants held by the Plaintiffs at an exercise price of $0.002 (two
tenths of one cent) per share and to issue to the Plaintiffs ten times the
number of warrants that Liberty Star had on record, or in the alternative
monetary damages. The claim was based on a provision in the warrant agreements
that would permit a ratchet down of price and a multiplication of number of
warrants in the event of certain share issuances by Liberty Star.

The Plaintiffs claimed that Platinum was entitled to
201,053,015 warrants and that Alpha was entitled to 240,919,010 warrants all
exercisable at $0.002 per share. These warrants all contained a cashless
exercise feature, permitting issuance of shares without payment of any cash to
the company. The Plaintiffs also claimed monetary damages for non-compliance
with what they claimed were the terms of the warrants, costs and attorney fees
incurred in the action.

---

|33                                                          
|------------------------------------------------------------
|                                                            
|                                                            
|LIBERTY STAR URANIUM & METALS CORP.                         
|(AN EXPLORATION STAGE COMPANY)                              
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
      continued

NOTE 15  Litigation  continued

On September 15, 2010 we entered into a settlement agreement
with Platinum and Alpha whereby we agreed to amend the warrants issued to
Platinum and Alpha on August 14, 2009 as follows: Platinums warrant was
increased to 70,368,557 common stock purchase warrants exercisable at $0.002 per
common share until August 14, 2015. Alphas warrant was increased to 84,321,650
common stock purchase warrants exercisable at $0.002 per common share until
August 14, 2015. These warrants may still be exercised using a cashless exercise
feature, however, the holders of the warrants are not permitted to own or have
beneficial ownership in excess of 4.99% of our outstanding common stock.

In addition to the amendment of the August 14, 2009 warrants,
we agreed to issue to Platinum and Alpha common stock purchase warrants of
10,052,651 and 12,045,950, respectively, exercisable at $0.10 per common share
expiring three years from the date of issuance with no cashless exercise
provision.

We also agreed that the warrants issued to Platinum and Alpha
in May 2007 will be modified so as not to permit the holders to own or have
beneficial ownership in excess of 4.99% of our outstanding common stock.

Harborview and Brio Settlement:

On October 15, 2010 we settled a threatened lawsuit by two of
our August 2009 common stock purchase warrant holders Harborview Master Fund LP
(Harborview) and Brio Capital LP (Brio). These two warrant holders were
seeking to require Liberty Star to honor outstanding warrants at an exercise
price of $0.002 (two tenths of one cent) per share and to issue to them 10 times
the number of warrants that Liberty Star had on record. The claim was based on a
provision in the warrant agreements that would permit a ratchet down of price
and a multiplication of number of warrants in the event of certain share
issuances by Liberty Star. We agreed to amend the warrants issued to Harborview
and Brio on August 14, 2009 as follows: Harborviews warrant was increased to
23,054,100 common stock purchase warrants exercisable at $0.002 per common
share. Brios warrant was increased to 13,275,591 common stock purchase warrants
exercisable at $0.002 per common share. Pursuant to the settlement, these
warrants were immediately exercised using the cashless exercise provision and we
issued 22,293,234 common shares to Harborview and 12,837,452 common shares to
Brio.

NOTE 16  Going concern

The Company is in the exploration stage, has incurred losses
from operations, requires additional funds for further exploratory activity and
to maintain its claims prior to attaining a revenue generating status. There are
no assurances that a commercially viable mineral deposit exists on any of our
properties. In addition, the Company may not find sufficient ore reserves to be
commercially mined. As such, the Company's auditors have expressed an
uncertainty about the Company's ability to continue as a going concern in their
opinion attached to our audited financial statements for the fiscal year ended
January 31, 2011.

Management is working to secure additional funds through the
exercise of stock warrants already outstanding, equity financings or joint
venture agreements. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties.

---

34

Item 9. Changes In and Disagreements With Accountants on
Accounting and Financial Disclosure.

During the two most recent fiscal years, and in the subsequent
interim periods, there were no disagreements with Semple, Marchal & Cooper,
LLP on any matters of accounting principles or practices, financial statement
disclosure, or auditing scope and procedures which, if not resolved to the
satisfaction of Semple, Marchal & Cooper, LLP would have caused Semple,
Marchal & Cooper, LLP to make reference to the matter in their report.

Item 9A. Controls and Procedures.

As required by Rule 13a-15 under the Exchange Act, our
management has evaluated the effectiveness of the design and operation of our
disclosure controls and procedures at January 31, 2011, which is the end of the
period covered by this report. This evaluation was carried out by our management
with the participation of our principal executive officer and principal
financial officer, Mr. James Briscoe. Based on this evaluation, our management,
including our chief executive officer and chief financial officer, concluded
that the design and operation of our disclosure controls and procedures were
effective as of the end of the period covered by this report.

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

Management's Report on Internal Control over Financial
Reporting

Management of our company is responsible for establishing and
maintaining adequate internal control over financial reporting for the company,
as such term is defined in the Securities Exchange Act Rule 13a-15(f). Our
principal financial officer and principal executive officer, Mr. James Briscoe,
conducted an evaluation of the effectiveness of our internal control over
financial reporting as of January 31, 2011 as required by the Securities
Exchange Act of 1934 Rule 13a-15(c). In making this assessment, our principal
financial officer and principal executive officer used the criteria set forth in
the framework in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on the
evaluation conducted under the framework in Internal Control  Integrated
Framework our principal financial officer and principal executive officer
concluded that our companys internal control over financial reporting was
effective, as of January 31, 2011, in providing reasonable assurance regarding
the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles.

This report does not include an attestation report of our
independent registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by our
companys independent registered public accounting firm pursuant to rules of the
SEC that permit our company to provide only managements report in this Annual
Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial
reporting or in other factors that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting in
our most recent fiscal quarter.

Item 9B. Other Information.

None.

PART III

Item 10. Directors, Executive Officers and Corporate
Governance.

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:

---

35

Name
    Position Held with the Company
    Age
    Date First Elected or AppointedJames Briscoe
    President, Chief Executive
      Officer, Chief Financial Officer, Chairman of the Board and
      Director
    69
    February 3, 2004Gary Musil
    Secretary and Director
    59
    October 23, 2003John Guilbert
    Director
    78
    February 5, 2004Keith Brill
    Director
    33
    December 23, 2009Larry Liang
    Director, Executive Vice President
    31
    December 29, 2009Eduardo Othon
    Director, Vice President Global
      Business Development
    38
    January 27, 2011Charles Vollmer
    Director
    63
    February 15, 2011


James Briscoe - Chief Executive Officer, Chief Financial
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 became the
interim Chief Financial Officer on July 31, 2008. 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 of 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
    To1. Excellon
    VP Exploration
    April 1994
    January 19962. JABA Inc.
    CEO
    January 1980
    April 2005


We believe Mr. Briscoe is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experience as described above.

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 the President,
Chief Executive Officer, Chief Financial Officer and a director of International
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 Megastar Development Corp, a TSX Venture
company and a reporting issuer in Canada, since July 2006. 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.

We believe Mr. Musil is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experience as described above.

---

36

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.

We believe Dr. Guilbert is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experience as described above.

Keith Brill  Director

Mr. Brill was appointed as one of our directors on December 23,
2009. Mr. Brill received an International Master of Business Administration
(IMBA) from the Moore School of Business, University of South Carolina in May
2005. He graduated from the South Carolina Honors College, University of South
Carolina in May 2003 with a Bachelor of Science, magna cum laude, major in
Economics and Finance, minor in Spanish. Mr. Brill has been a management
consultant with PA Consulting Group, Inc., a leading global consulting firm,
since 2004. He has provided multinational Fortune 500 companies with consulting
advice on topics including cost reduction, operational efficiency, and IT
strategy. Mr. Brill has extensive experience in conducting ROI analysis,
developing business cases, and providing strategic financial advice on major
business transformation programs.

We believe Mr. Brill is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experience as described above.

Larry Liang  Director & Executive Vice President

Mr. Liang has a strong background in international business
development both in China and the United States. As a banker and real estate
broker, Mr. Liang has negotiated multi-million dollar transactions for Chinese,
American and other international clients. His current focus is on
entrepreneurial projects that will utilize his expertise in public and private
mergers and acquisitions, joint ventures and strategic alliances. Previously,
Mr. Liang had practiced corporate law for the Tian Lun Law Firm, one of southern
China s largest law firms. He holds law degrees from the Southwest University
of Political Science and Law, Chong Qing, China and from the James E. Rogers
College of Law, University of Arizona, Tucson, Arizona.

We believe Mr. Lang is qualified to serve on our board of
directors because of his knowledge of our companys history and current
operations, which he gained from working for our company as described above, in
addition to his education and business experience as described above.

Eduardo Othon  Director & Vice President Global
Business Development

Mr. Othon joined Liberty Star in January 2010 as an executive
focused on developing the Company's contacts in Mexico. In January 2011 Mr.
Othon was named Vice President, Global Business Development and appointed to the
Liberty Star board of directors reflecting his activities on behalf of the
Company in the Middle East. He is the founder and President of Global Solutions
LLC, a Tucson-based business development consulting firm and has participated in
numerous transactions between international clients and Mexican mining concerns.
Mr. Othon is a dual citizen of the US and Mexico. He holds a Bachelor of Art in
Psychology from the University of Arizona.

Charles Vollmer  Director

Mr. Vollmer joined the board February 15, 2011. Mr. Vollmer has
significant experience and numerous contacts in the Middle East. From 1999 to
2007, Mr. Vollmer was under contract to the US government to assist moderate
Arab and Muslim leaders to develop strategies and operational concepts for
coalition building. In this capacity, Mr. Vollmer developed several hundred
US/Arab strategy and policy documents and held twelve Mideast Air Chief and
Cross-Cultural Symposia attended by leaders of a dozen nations in the Arab Gulf,
Europe and the US. He is involved in Israel and Palestinian security issues and
has extensive knowledge of the Israeli and Arab security establishments. US
officials and war colleges reviewed a detailed analysis of Iran authored by Mr.
Vollmer. He lectures on the Middle East, Islam and Arabs.

---

37

Family Relationships

There are no family relationships among our directors or
officers.

Board and Committee Meetings

The board of directors of our company held four formal meetings
in the year ended January 31, 2011 and one formal meeting in the year ended
January 31, 2010. 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.

There have been no material changes to the procedures by which
our shareholders may recommend nominees to our board of directors during the
year ended January 31, 2011. Shareholders may contact our President, Jim
Briscoe, to recommend nominees to our board of directors.

For the year ended January 31, 2011 our only standing committee
of the board of directors was our audit committee. We do not have a nominating
committee or a compensation 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.

During fiscal years ended January 31, 2011 and January 31,
2010, 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 board of directors or audit committee that qualifies as an "audit
committee financial expert" as defined in Item 407(d)(5)(ii) of Regulation S-K,
or who 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 consolidated 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 and executive officers have not been involved in
any of the following events during the past ten 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;
|   |                                                                                                                                                                                                                                                                                                                             
|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.                                        

---

38

|5. | being the subject of, or a party to, any federal or state
      judicial or administrative order, judgment, decree, or finding, not
      subsequently reversed, suspended or vacated, relating to an alleged
      violation of: (i) any federal or state securities or commodities law or
      regulation; or (ii) any law or regulation respecting financial
      institutions or insurance companies including, but not limited to, a
      temporary or permanent injunction, order of disgorgement or restitution,
      civil money penalty or temporary or permanent cease- and-desist order, or
      removal or prohibition order; or (iii) any law or regulation prohibiting
      mail or wire fraud or fraud in connection with any business entity;
    or,
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|6. | being the subject of, or a party to, any sanction or
      order, not subsequently reversed, suspended or vacated, of any self-
      regulatory organization (as defined in Section 3(a)(26) of the Securities
      Exchange Act of 1934), any registered entity (as defined in Section
      1(a)(29) of the Commodity Exchange Act), or any equivalent exchange,
      association, entity or organization that has disciplinary authority over
      its members or persons associated with a member.                                                                                                                                                                                                                                                                 

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, 2011, all filing requirements
applicable to its officers, directors and greater than 10% percent beneficial
owners were complied with.

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 Uranium & Metals Corp., 5610 E Sutler Ln, Tucson, Arizona 85712.

Item 11. EXECUTIVE COMPENSATION.

Following are the particulars of all compensation paid or
accruing to our named executive officers for the last two fiscal years
ended.

---

39

Summary Compensation Table

Name and Principal
      Position
    Year
    Salary
      (US$)
    Bonus
      (US$)
    Stock
      Awards (US$)
    Option Awards
      (US$)
    Nonequity Incentive Plan
      Compensation (US$)
    Non-qualified Deferred
      Compensation Earnings (US$)
    All Other
      Compensation (US$)(1)
    Total
      (US$)James BriscoePrincipal Executive
      Officer, President, CEO, Chairman and Director
    2011 2010
    115,500
      63,000
    6,800 Nil
    Nil Nil
    1,391,250
      (3)Nil
    Nil Nil
    Nil Nil
    Nil
      68,754(2)
    $1,513,550
      $131,754Larry LiangDirector &
      Executive Vice President
    2011 2010
    17,500 Nil
    Nil Nil
    Nil Nil
    66,250 (4)Nil
    Nil Nil
    Nil Nil
    Nil Nil
    $83,750 $0Eduardo OthonDirector & Vice
     President Global Business Development
    2011 2010
    27,901 Nil
    Nil Nil
    Nil Nil
    66,250
      (5)Nil
    Nil Nil
    Nil Nil
    Nil Nil
    $94,151 $0


|(1) | The value of perquisites and other personal benefits,
      securities and property for the officers that do not exceed the lesser of
      $10,000 or 10% of the total of the annual salary and bonus and is not
      reported herein.                                               
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                        
|(2) | Mr. Briscoes other compensation represents accrued and
      unpaid wages during the twelve months ended January 31, 2010 and unused
      paid time off paid out to Mr. Briscoe of $11,754.                                                                                          
|    |                                                                                                                                                                                                                                                                                        
|(3) | Mr. Briscoe was awarded 52,500,000 incentive stock
      options on August 10, 2010 with a grant date fair value of $0.0265 per
      share. The assumptions used to determine the grant date fair value can be
      found in Note 8 to our audited consolidated financial
statements.
|    |                                                                                                                                                                                                                                                                                        
|(4) | Mr. Liang was awarded 2,500,000 incentive stock options
      on August 10, 2010 with a grant date fair value of $0.0265 per share. The
      assumptions used to determine the grant date fair value can be found in
      Note 8 to our audited consolidated financial statements.   
|    |                                                                                                                                                                                                                                                                                        
|(5) | Mr. Othon was awarded 2,500,000 incentive stock options
      on August 10, 2010 with a grant date fair value of $0.0265 per share. The
      assumptions used to determine the grant date fair value can be found in
      Note 8 to our audited consolidated financial
statements.   

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth for each named executive officer
certain information concerning the outstanding equity awards as of January 31,
2011.

**Option Awards**
    Stock AwardsName
    Number of
      Securities Underlying Unexercised
      Options Exercisable
    Number of
      Securities Underlying Unexercised
      Options Unexercisable
    Equity
      Incentive Plan Awards: Number
      of Securities Underlying Unexercised
      Unearned Options
    Option
      Exercise Price
    Option
      Expiration Date
    Number of Shares
      or Units of Stock that Have Not
      Vested
    Market Value of
      Shares or Units of Stock that Have Not
      Vested
    Equity
      Incentive Plan Awards : Number of
      Unearned Shares, Units or Other
      Rights that Have Not Vested
    Equity
      Incentive Plan Awards : Market or
      Payout Value of Unearned Shares, Units
      or Other Rights that Have Not
      VestedJames Briscoe
    52,500,000
    Nil
    Nil
    $0.038
    8/10/2015
    Nil
    Nil
    Nil
    NilJames Briscoe
    75,000
    Nil
    Nil
    $0.06
    5/21/2018
    Nil
    Nil
    Nil
    NilLarry Liang
    2,500,000
    Nil
    Nil
    $0.038
    8/10/2015
    Nil
    Nil
    Nil
    NilEduardo Othon
    2,500,000
    Nil
    Nil
    $0.038
    8/10/2015
    Nil
    Nil
    Nil
    Nil


---

40

COMPENSATION PLANS

As of January 31, 2011 we had three compensation plans in
place, entitled "2004 Stock Option Plan", 2007 Stock Option Plan and 2010
Stock Option Plan. These plans have been approved by our security holders.
These plans have been given retroactive effect of the 1 for 4 reverse stock
split on September 1, 2009.

Plan
    Total number
      of securities authorized
    Number of securities to be issued upon
      exercise of outstanding options as at January 31,
      2011
    Weighted-average exercise price of
      outstanding options as at January 31, 2011
    Number of securities remaining available
      for further issuance as at January 31, 20112004 Stock
      Option Plan
    962,500
    451,375
    $4.51
    511,1252007 Stock Option Plan
    2,500,000
    212,500
    $0.88
    2,287,5002010 Stock Option Plan
    95,500,000
    95,500,000
    $0.038
    0


On August 10, 2010 we granted incentive stock options and
non-qualified stock options to certain of our directors, officers, employees and
consultants to purchase an aggregate of 95,500,000 shares of our common stock at
an exercise price of $0.038 per share for a term expiring on August 10, 2015.
The options were fully vested upon granting.

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.

Employment Contracts

We have not entered into any written employment agreements or
compensation arrangements with any of our named executive officers. We have
entered into a verbal agreement with James Briscoe, CEO and Director for annual
salary of $120,000.

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 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.

Incentive stock options were granted to directors during the
fiscal year ended January 31, 2011. There was no compensation paid or accruing
to any director, unless such director is also a named executive officer, during
the fiscal year ended January 31, 2010.

Name
    Year
    Fees Earned or Paid in
      Cash (US$)
    Stock
      Awards (US$)
    Option
      Awards (US$)
    Nonequity Incentive Plan
      Compensatio n (US$)
    Non-qualified Deferred
      Compensatio n Earnings (US$)
    All Other
      Compensation (US$)(1)
    Total
      (US$)John Guilbert
    2011
    Nil
    Nil
    397,500(2)
    Nil
    Nil
    Nil
    $397,500Gary Musil
    2011
    Nil
    Nil
    198,750(3)
    Nil
    Nil
    Nil
    $198,750Keith Brill
    2011
    Nil
    Nil
    66,250(4)
    Nil
    Nil
    Nil
    $66,250


---

41

|(1) | The value of perquisites and other personal benefits,
      securities and property for the officers that do not exceed the lesser of
      $10,000 or 10% of the total of the annual salary and bonus and is not
      reported herein.                                
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                         
|(2) | Mr. Guilbert was awarded 15,000,000 options on August 10,
      2010 with a grant date fair value of $0.0265 per share. The assumptions
      used to determine the grant date fair value can be found in Note 8 to our
      audited consolidated financial statements.
|    |                                                                                                                                                                                                                                                                         
|(3) | Mr. Musil was awarded 7,500,000 options on August 10,
      2010 with a grant date fair value of $0.0265 per share. The assumptions
      used to determine the grant date fair value can be found in Note 8 to our
      audited consolidated financial statements.    
|    |                                                                                                                                                                                                                                                                         
|(4) | Mr. Brill was awarded 2,500,000 options on August 10,
      2010 with a grant date fair value of $0.0265 per share. The assumptions
      used to determine the grant date fair value can be found in Note 8 to our
      audited consolidated financial statements.    

Item 12. 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 January 31, 2011 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. All percentages are calculated based upon a total
number of 602,411,882 shares of common stock issues and outstanding as of
January 31, 2011, plus, in the case of the individual or entity for which the
calculation is made, that number of options or warrants owned by such individual
or entity that are currently exercisable or exercisable within 60 days.

Name and Address of Beneficial Owner
    Amount and Nature of
      Beneficial Ownership
    Percentage of
      Class(1)James Briscoe 5610 E Sutler Lane
      Tucson AZ 85712 USA
    54,762,500 (2)(3)
    8.36%Gary Musil 3577 Marshall Street
      Vancouver BC V5N 4S2 Canada
    7,547,000(3)
    1.24%John Guilbert 961 E Linda Vista Blvd.
      Tucson AZ 85727 USA
    15,052,500(3)
    2.44%Keith Brill 250 Central Ave Apt B204
      New York, NY 11559 USA
    2,500,000(3)
    0.41%Larry Liang 6651 N Campbell Ave #254
      Tucson, AZ 85718 USA
    2,500,000(3)
    0.41%Eddie Othon 6025 S 6thAvenue Tucson, AZ 85706 USA
    2,500,000(3)
    0.41%Charles Vollmer 1645 White Pine Drive
      Vienna, VA 22182 USA
    Nil
    0%


---

42

Name and Address of Beneficial Owner
    Amount and Nature of Beneficial
      Ownership
    Percentage of Class(1)Cede & Company PO Box 20
      Bowling Green Station New York, NY 10274
    568,298,672
    94.3%Directors and Executive Officers as a Group
    84,862,000
    12.39%


|(1) | Based on 602,411,882 shares of common stock issued and
      outstanding as of January 31, 2011. 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) | There are 2,187,500 shares that are held by Alaska Star
      Minerals LLC. James Briscoe beneficially owns 100% of the membership
      interest in Alaska Star Minerals LLC. There are 52,575,000 incentive stock
      options granted to James Briscoe under the 2004, 2007 and 2010 stock
      option plans that are exercisable at January 31, 2011.                                                                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(3) | Includes incentive stock options granted under the 2004,
      2007 and 2010 stock option plans that are exercisable at January 31,
      2011.                                                                                                                                                                                                                                                                                                                                                                                                                                                           

Changes in Control

At January 31, 2011 we had 602,411,882 shares of common stock
issued and outstanding. At January 31, 2011 if the settlement of the Convertible
Promissory Notes was completed by the issuance of common shares there would be
83,846,926 shares required to convert the notes. Therefore, it is possible that
if the holders of our Convertible Promissory Notes were to settle their debt
through the issuance of common shares it would cause a change in control.

Item 13. Certain Relationships and Related Transactions, and
Director Independence.

Certain Relationships and Related Transactions

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.

Director Independence

We have no directors who meet the definition set forth in Rule
5605(a)(2) of the Listing Rules of the NASDAQ, which defines an independent
director generally as a person other than an executive officer or employee of
the company, or any other individual having a relationship which, in the opinion
of the companys board of directors, would interfere with the exercise of
independent judgment in carrying out the responsibilities of a director.

Item 14. Principal Accountants Fees and Services.

Audit Fees

For the fiscal year ended January 31, 2011, the aggregate fees
billed by Semple, Marchal & Cooper, LLP for professional services rendered
for the audit of our annual consolidated financial statements included in our
annual report on Form 10-K and for the reviews of our consolidated financial
statements included in Forms 10-Q were $68,854. For the fiscal year ended
January 31, 2010, the aggregate fees billed by Semple, Marchal & Cooper, LLP
for professional services rendered for the audit of our annual consolidated
financial statements included in our annual report on Form 10-K and for the
reviews of our consolidated financial statements included in Forms 10-Q were
$80,823.

Audit Related Fees

For the fiscal year ended January 31, 2011, the aggregate fees
billed for assurance and related services by Semple, Marchal & Cooper, LLP
relating to the performance of the audit of our consolidated financial
statements which are not reported under the caption "Audit Fees" above, was $0.
For the fiscal year ended January 31, 2010, the aggregate fees billed for
assurance and related services by Semple, Marchal & Cooper, LLP relating to
the performance of the audit of our consolidated financial statements which are
not reported under the caption "Audit Fees" above, was $0.

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43

Tax Fees

For the fiscal years ended January 31, 2011 and 2010, the
aggregate fees billed by Semple, Marchal & Cooper, LLP for other non-audit
professional services, other than those services listed above, totalled $0 in
both years.

All Other Fees

We do not use Semple, Marchal & 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
consolidated financial statements, are provided internally or by other service
providers. We do not engage Semple, Marchal & Cooper, LLP to provide
compliance outsourcing services.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before Semple, Marchal & 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 before the respective services were
rendered.

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

Exhibits.

Exhibit Number
    Description of Exhibit3.1
    Articles of
      Incorporation(1)3.2
    Bylaws(2)3.3
    Certificate of Change to Authorized
      Capital(3)3.4
    Articles of Merger(3)10.10
    Form of Securities Purchase
      Agreement for May 11, 2007 Senior May 2007 Convertible Notes
      (4)10.11
    Form of Convertible Promissory Note
      for May 11, 2007 Senior May 2007 Convertible Notes (4)10.12
    Form of Common Stock Purchase
      Warrant for May 11, 2007 Senior May 2007 Convertible Notes (4)10.13
    List of Subscribers for May 11,
      2007 Senior May 2007 Convertible Notes (4)10.14
    Form of Subscription Agreement for
      August 28, 2008 Secured Convertible Promissory Notes (5)10.15
    Form of Secured Convertible
      Promissory Notes dated August 28, 2008 (5)10.16
    Form of Security Agreement for
      August 28, 2008 Secured Convertible Promissory Notes (5)10.17
    Form of Subscription Agreement for
      May 21, 2009 Secured Convertible Promissory Notes (6)10.18
    Form of Secured Convertible
      Promissory Notes dated May 21, 2009 (6)10.19
    Form of Guarantee dated May 21,
      2009 of Big Chunk Corp for May 21, 2009 Secured Convertible Promissory
      Notes (6)


---

44

Exhibit Number
    Description of Exhibit10.20
    Form of Lock Up Agreement for May
      21, 2009 Secured Convertible Promissory Notes (6)10.21
    Form of Escrow Agreement for May
      21, 2009 Secured Convertible Promissory Notes (6)10.22
    Form of Subscription Agreement for
      August 14, 2009 Secured Convertible Promissory Notes(7)10.23
    Form of Secured Convertible
      Promissory Notes dated August 14, 2009(7)10.24
    Form of Escrow Agreement for August
      14, 2009 Secured Convertible Promissory Notes (7)10.25
    Form of Lock Up Agreement for
      August 14, 2009 Secured Convertible Promissory Notes(7)10.26
    Form of Warrant dated August 14,
      2009(7)10.27
    Form of Guarantee dated August 14,
      2009 of Big Chunk Corp for August 14, 2009 Secured Convertible Promissory
      Notes (7)10.28
    Form of Extension and Modification
      Agreement of Secured Convertible Promissory Notes (8)10.29
    Code of Ethics(3)10.30
    Subsidiaries: Big Chunk Corp.10.31
    Form of Letter Agreement with
      Northern Dynasty Minerals, Ltd dated June 29, 2010 (9)10.32
    Form of Subscription Agreement for
      private placement of securities issued October 20, 2010 and November 12,
      2010.(10)10.33
    Form of Subscription Agreement for
    private placement of securities issued January 12, 2011 (11)31.1*
    Section 302 Certification under
      Sarbanes-Oxley Act of 2002 of James Briscoe32.1*
    Section 906 Certification under
      Sarbanes-Oxley Act of 2002 of James Briscoe


|(1)  | Filed as an exhibit to our Registration
      Statement on Form SB-2, filed with the SEC on May 14, 2002. 
|---- | ----------------------------------------------------------------------------------------------------------
|     |                                                                                                           
|(2)  | Files as an exhibit to our Quarterly Report on
      Form 10-QSB, filed with the SEC on December 14, 2007.
|     |                                                                                                           
|(3)  | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on September 1, 2009.     
|     |                                                                                                           
|(4)  | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on May 15, 2007.          
|     |                                                                                                           
|(5)  | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on September 3, 2008.     
|     |                                                                                                           
|(6)  | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on May 26, 2009.          
|     |                                                                                                           
|(7)  | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on August 14, 2009.       
|     |                                                                                                           
|(8)  | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on March 3, 2010.         
|     |                                                                                                           
|(9)  | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on June 29, 2010.         
|     |                                                                                                           
|(10) | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on November 15, 2010.     
|     |                                                                                                           
|(11) | Filed as an exhibit to our Current Report on
      Form 8-K, filed with the SEC on January 12, 2011.      
|     |                                                                                                           
|*    | Filed herewith.                                                                                           

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45

SIGNATURES

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

LIBERTY STAR URANIUM & METALS CORP.

|By: /s/ James
      Briscoe                                          | 
|-------------------------------------------------------------------- | 
|                                                                     | 
|James A. Briscoe                                                     | 
|Chief Executive Officer, President and Director                      | 
|Chief Financial Officer                                              | 
|(Principal Executive Officer)                                        | 
|(Principal Financial Officer and Principal Accounting
      Officer) | 
|Dated: May 2, 2011                                                   | 

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 A. Briscoe                                                     | 
|Chief Executive Officer, President and Director                      | 
|Chief Financial Officer                                              | 
|(Principal Executive Officer)                                        | 
|(Principal Financial Officer and Principal Accounting
      Officer) | 
|Dated: May 2, 2011                                                   | 

|By: /s/ Gary Musil        |  | By:
      /s/ Keith Brill  
|------------------------- |  | ---------------------------
|                          |  |                            
|Gary Musil                |  | Keith Brill                
|Secretary and Director    |  | Director                   
|Dated: May 2, 2011        |  | Dated: May 2, 2011         
|                          |  |                            
|By: /s/ Larry
      Liang |  | By:
      /s/ Eduardo Othon
|                          |  |                            
|Larry Liang               |  | Eduardo Othon              
|Director                  |  | Director                   
|Dated: May 2, 2011        |  | Dated: May 2, 2011         

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