UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
 
 WASHINGTON, D.C.  20549
 
 FORM 20-F
 
 (Mark One)
 
 
  ̈REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 OR
 
 þ    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended April 30, 2011
 
 OR
 
  ̈    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from ____________ to __________
 
 OR
 
  ̈    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report ____________
 
 Commission file number 001-33439
 
 CROSSHAIR EXPLORATION & MINING CORP.(Exact name of Registrant as specified in its charter)British Columbia, Canada(Jurisdiction of incorporation or organization)Suite 1240, 1140 West Pender Street, Vancouver, B.C. Canada V6E 4G1(Address of principal executive offices)Mark Morabito, Phone:  (604) 681-8030, mmorabito@explorationgroup.com

Suite 1240, 1140 West Pender Street, Vancouver, B.C. Canada V6E 4G1
 (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 
 Securities registered pursuant to Section 12(b) of the Act:
 
 Title of each class
Name of Exchange on which registeredCommon Shares, without par value
NYSE Amex Equities
 
 Securities registered pursuant to Section 12(g) of the Act:
 
 None(Title of Class)
 
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
 
 None
 (Title of Class)
 
 Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:47,477,151
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
  ̈ Yes
þ No
 
 If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
  ̈ Yes
þ No
 
 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 þ Yes
 ̈ No
 
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
  ̈ Yes
 ̈ No
 
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):
 
 Large accelerated filer  ̈
Accelerated filer   ̈
Non-accelerated filer þ
 
 Indicate by check mark which basis of accounting the registrant has used to prepare the financial statement included in this filing:
 
 U.S. GAAP  ̈
International Financial Reporting Standards as issued

by the International Accounting Standards Board   ̈
Other þ
 
 If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
 þ Item 17
 ̈ Item 18
 
 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
  ̈ Yes
þ No





Index to Exhibits on Page 115











CROSSHAIR EXPLORATION & MINING CORP.


(the “Company” or “Crosshair”)





FORM 20-F ANNUAL REPORT


TABLE OF CONTENTS




Part I

PageItem 1.
Identity of Directors, Senior Management and Advisers
3Item 2.
Offer Statistics and Expected Timetable
3Item 3.
Key Information
3Item 4.
Information on the Company
14Item 4A.
Unresolved Staff Comments
40Item 5.
Operating and Financial Review and Prospects
41Item 6.
Directors, Senior Management and Employees
47Item 7.
Major Shareholders and Related Party Transactions
62Item 8.
Financial Information
64Item 9.
The Offer and Listing
66Item 10.
Additional Information
67Item 11.
Quantitative and Qualitative Disclosures About Market Risk
75Item 12.
Description of Securities Other Than Equity Securities
75Part IIItem 13.
Defaults, Dividend Arrearages and Delinquencies
76Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
76Item 15.
Controls and Procedures
76Item 16A.
Audit Committee Financial Expert
77Item 16B.
Code of Ethics
77Item 16C.
Principal Accountant Fees and Services
77Item 16D.
Exemptions from the Listing Standards for Audit Committees
78Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
78Item 16F.
Changes in Registrant’s Certifying Accountant
78Item 16G
Corporate Governance
78Part IIIItem 17.
Financial Statements
80Item 18.
Financial Statements
115Item 19.
Exhibits
115Glossary of Geological Terms
118





i





RESOURCE AND RESERVE ESTIMATES




The terms “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” used in our disclosure are Canadian mining terms that are defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Best Practice Guidelines for the Estimation of Mineral Resource and Mineral Reserves (the “CIM Standards”), adopted by the CIM Council on December 11, 2005. These definitions differ from the definitions in the United States Securities and Exchange Commission (the “SEC”) Industry Guide 7 under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.




The terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource” used in our disclosure are Canadian mining terms that are defined in accordance with NI 43-101 under the guidelines set out in the CIM Standards; however, these terms are not defined terms under Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.




Accordingly, information contained in this report and the documents incorporated by reference herein containing descriptions of our mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.




FORWARD-LOOKING STATEMENTS




Certain statements in this document constitute “forward-looking statements” under applicable securities laws.  Forward-looking statements can be identified by the use of terminology such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,” and statements that an action or event “may,” “might,” “could,” or “should,” be taken or occur, or other similar expressions. Forward looking statements contained in this document include, but are not limited to, statements with respect to: (i) the estimation of inferred and indicated mineral resources; (ii) details and goals of exploration activities; (iii) estimations of future costs and expenditures; (iv) permitting timelines; (v) currency fluctuations; (vi) requirements for additional capital and the sufficiency of working capital; (vii) government regulation of mining operations; (viii) environmental risks; (ix) unanticipated reclamation expenses; and (x) increases in mineral resource estimates. These forward-looking statements are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following risks:




·
the risks associated with outstanding litigation, if any;




·
risks associated with project development;




·
the need for additional financing;




·
operational risks associated with mining and mineral processing, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in operations which may or may not be insured;




1




·
fluctuations in metal prices;




·
title matters;




·
environmental liability claims and insurance;




·
reliance on key personnel;




·
the receipt of necessary regulatory approvals;




·
the potential for conflicts of interest among certain officers, directors or promoters with certain other projects;




·
the absence of dividends;




·
currency fluctuations;




·
competition;




·
dilution;




·
the volatility of our common share price and volume;




·
tax consequences to U.S. shareholders;




·
risks related to our being subject to the penny stock rules;




·
risks related to our being a foreign private issuer; and




·
risks related to our possibly being a passive foreign investment company.




Some of the important risks and uncertainties that could affect forward-looking statements are described further in “Item 3. Key Information—D. Risk Factors.”  Except as required by applicable regulations or by law, we do not undertake any obligation to publicly update or review any forward-looking statements whether as a result of new information, future events or otherwise.





FINANCIAL AND OTHER INFORMATION




In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (“CDN$” or “$”).  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).










2








PART I





ITEM 1.  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS




Not applicable




ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE




Not applicable




ITEM 3.  KEY INFORMATION




3.A.           Selected Financial Data




Our selected financial data for the fiscal years ended April 30, 2011, 2010, 2009, 2008 and 2007 was derived from our financial statements that have been audited by Davidson & Company LLP, independent Chartered Accountants, as indicated in their audit reports.  Davidson & Company LLP is a member of the Canadian Institute of Chartered Accountants.




The selected financial data should be read in conjunction with and is qualified in its entirety by reference to the financial statements and notes thereto included elsewhere in this Annual Report.




To date, we have not generated sufficient cash flow from operations to fund ongoing operational requirements and cash commitments.  We have financed our operations principally through the sale of our equity securities.  While we believe we have sufficient capital and liquidity to finance current operations, nevertheless, our ability to continue operations is dependent on our ability to obtain additional financing.  See “Item 3. Key Information—D. Risk Factors.”




The information in the following table is derived from our financial statements, which have been prepared in accordance with Canadian Generally Accepted Accounting Principles (“GAAP”) and Canadian/USA Generally Accepted Auditing Standards (“GAAS”).  All material numerical differences between Canadian GAAP and US GAAP, are described in footnotes to the financial statements.







3










For the Year Ended April 30,2011

2010

2009

2008

2007CANADIAN GAAPRevenue

--

--

--

--

--Income (Loss) for the Period

$(2,086,719)

$(2,321,078)

$(20,724,237)

$(12,933,204)

$(5,533,011)Basic Income (Loss) Per Share

$(0.05)

$(0.02)

$(0.22)

$(0.18)

$(0.09)Dividends Per Share

--

--

--

--

--Weighted Average Shares (#)

41,193,459

118,114,045

93,584,687

72,997,081

62,434,069Period-end Shares (#)

47,477,151

131,477,493

112,184,313

84595,825

70,912,072Working Capital

$10,815,170

$3,403,009

$2,641,169

$13,387,832

$15,390,704Mineral Properties

$31,733,095

$30,385,684

$29,336,828

$27,071,981

$14,551,292Long-Term Debt

$682,162

$490,458

$676,484

--

--Capital Stock

$77,151,646

$70,162,104

$67,793,186

$60,948,053

$44,135,660Shareholders’ Equity

$42,065,500

$33,705,417

$31,849,308

$40,795,458

$30,308,076Total Assets

$43,098,419

$34,998,792

$33,365,659

$42,270,262

$31,664,543US GAAP1 2 3 4 5Net Income (Loss)

$(3,587,171)

$(4,359,091)

$(16,296,230)

$(24,195,442)

$(14,843,892)Loss Per Share

$(0.09)

$(0.15)

$(0.70)

$(0.33)

$(0.24)Mineral Properties

$10,581,303

$10,338,357

$10,690,539

$3,201,950

$2,076,775Shareholders’ Equity

$20,674,447

$13,441,816

$13,172,334

$16,389,177

$17,833,559Total Assets

$21,946,627

$14,951,465

$14,719,370

$18,400,231

$19.190,026


1
The cumulative net loss under US GAAP at April 30, 2011 is approximately $78 million.


2
Under US GAAP, options granted to non-employees as compensation for services provided are fair valued and an expense recorded.


3
Under SEC interpretation of US GAAP, all exploration costs on mineral properties prior to the establishment of proven or probable reserves are expensed as incurred.


4
Under Canadian income tax legislation, we are permitted to issue shares whereby we agree to incur qualifying expenditures (as defined under the Income Tax Act of Canada) on our mineral properties and renounce the related income tax deductions to the investors.  Under Canadian GAAP, flow-through shares are accounted for as part of the issuance of capital stock at the price paid for the shares, net of any future income tax liability.  Under US GAAP, any difference between the market price of our common shares and the fair value of the flow-through shares must be recorded as a liability if a premium is paid by investors or as an asset if investors are purchasing the shares at a discount.  The asset or liability is charged to income as the flow-through share proceeds are expended on qualifying expenditures.


5
Under both Canadian and US GAAP, basic loss per share is calculated using the weighted average number of common shares outstanding during the year.  Under US GAAP, the weighted average number of common shares outstanding excludes any shares held in escrow for which the release is subject to certain performance conditions.





Exchange Rates




The following table sets forth the high and low rates of exchange for the Canadian Dollar for each month during the previous six months. The table also sets forth the average exchange rates for the Canadian Dollar for the five most recent fiscal years ended April 30th.  The yearly average rate means the average of the exchange rates based on the daily rates during each fiscal period.




4


For purposes of this table, the rates of exchange are those quoted by the Bank of Canada.  The table sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar.




Period

High(1)
Low(1)June 2011

0.9861
0.9643May 2011

0.9809
0.9490April 2011

0.9691
0.9486March 2011

0.9918
0.9686February 2011

0.9955
0.9739January 2011

1.0022
0.9864Average(2)Fiscal year ended April 30, 2011
1.0138Fiscal year ended April 30, 2010
1.0721Fiscal year ended April 30, 2009
1.1501Fiscal year ended April 30, 2008
1.0175Fiscal year ended April 30, 2007
1.1341





The exchange rate was $0.9479 on July 20, 2011.




(1)
Means the intra-day high/low rate during the period.




(2)      Means the average of the noon day rates on the last day of each month during the period.




3.B.
Capitalization and Indebtedness




Not applicable




3.C.
Reasons for the Offer and Use of Proceeds




Not applicable




3.D.
Risk Factors




We are subject to a number of risks due to the nature of our business, including our present exploration state.  The following describes the material risks that could affect us.







5





There has been significant economic uncertainty since the second half of 2008 and it has affected the Company’s operations.




The recent unprecedented events in global financial markets have had a profound impact on the global economy. Many industries, including the mining industry, are impacted by these market conditions.  Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates, and tax rates may adversely affect the Company’s growth and profitability.  Specifically:




•the global credit/liquidity crisis could impact the cost and availability of financing and the Company’s overall liquidity;




•the volatility of mineral prices would impact the Company’s revenues, profits, losses and cash flow potential;




•volatile energy prices, commodity and consumables prices and currency exchange rates would impact the Company’s production costs; and




•the devaluation and volatility of global stock markets would impact the valuation of the Company’s equity and other securities.




These factors could have a material adverse effect on the Company’s financial condition and results of operations. As a result, the Company will consider its plans and options carefully in fiscal 2012.




No known reserves




Our properties are in the exploration stage and are without a known body of mineral reserves.




We have no mineral producing properties at this time. Only those mineral deposits that we can economically and legally extract or produce, based on a comprehensive evaluation of cost, grade, recovery and other factors, are considered “reserves.” We have not defined or delineated any proven or probable reserves on any of our properties. Although the mineralized material and mineralized deposit estimates included herein have been carefully prepared by us, or, in some instances have been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and no assurance can be given that any particular level of recovery of uranium, vanadium, copper, gold, base metals and other minerals from mineralized material will in fact be realized or that an identified mineralized deposit will ever qualify as a commercially mineable (or viable) reserve.




Our planned exploration programs may not result in profitable commercial mining operations




Our operations involve exploration, and there is no guarantee that any of our activities will result in commercial production of any mineral deposits.  The exploration for and development of mineral deposits involves significant financial and other risks which even a combination of careful evaluation, experience and knowledge may not eliminate. Most exploration projects do not result in the discovery of commercially mineable deposits.  Major expenses are required to locate and establish mineral reserves, to develop metallurgical processes, and to construct mining and processing facilities at a particular site. Our planned exploration programs may not result in a profitable commercial mining operation.  Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as quantity and quality of the minerals, costs and efficiency of the recovery methods that can be employed; proximity to infrastructure; financing costs; mineral prices, which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land  tenure, land use, importing and exporting of minerals, and environmental protection.  The exact effect of these factors cannot be accurately predicted but could have a material adverse effect upon our operations and/or our ability to receive an adequate return on our invested capital.  There is no certainty that our




6


expenditures made towards the search and evaluation of uranium, vanadium, copper, gold, base metals and other minerals result in discoveries of mineral resources, mineral reserves or any other mineral occurrences, or in profitable commercial mining operations.




Mining operations generally involve a high degree of risk




Our operations are subject to all the hazards and risks normally encountered in the exploration, development and production of uranium and other minerals, including environmental pollution, accidents or spills, industrial accidents, labor disputes, changes in the regulatory environment, natural phenomena, unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage, delays in or cessation of production, exploration or development, monetary losses and cost increases which could make us uncompetitive, and could lead to possible legal liability. Although adequate precautions to minimize risk will be taken, mining operations are subject to hazards such as equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability.  In addition, due to the radioactive nature of the materials handled in uranium mining, applicable regulatory requirements result in additional costs that must be incurred.




Our resource estimates may not be reliable




There is no certainty that any of our mineral resources will be economically mineable. Until a deposit is actually mined and processed the quantity of mineral resources and grades must be considered as estimates only.  Valid estimates made at a given time may significantly change when new information becomes available. In addition, the quantity of mineral resources may vary depending on, among other things, metal prices.  Any material change in quantity of mineral resources, grade or stripping ratio may affect the economic viability of our properties or any project we undertake. In addition, there can be no assurance that mineral or other metal recoveries in small scale laboratory tests will be duplicated in a larger scale test under on-site conditions or during production.




Fluctuations in prices of uranium, vanadium, copper, gold, base metals and other minerals, results of drilling, metallurgical testing and production and the evaluation of studies, reports and plans subsequent to the date of any estimate may require revision of such estimate. Any material reductions in estimates of mineral resources could have a material adverse effect on our results of operations and financial condition.




We rely on a limited number of properties




Our only properties of interest are currently the Central Mineral Belt properties in Labrador, the Golden Promise, South Golden Promise and Victoria Lake properties in Newfoundland and the Bootheel, Buck Point and Juniper Ridge properties in the United States. As a result, unless we acquire additional property interests, any adverse developments affecting these properties could have a material adverse effect upon our business and would materially and adversely affect our potential mineral resource production, profitability, financial performance and results of operations.




Competition from other energy sources and public acceptance of nuclear energy may affect the demand for uranium




Nuclear energy competes with other sources of energy, including oil, natural gas, coal and hydro-electricity.  These other energy sources are to some extent interchangeable with nuclear energy, particularly over the longer term.  Lower prices of oil, natural gas, coal and hydro-electricity may result in lower demand for uranium concentrate and uranium conversion services.  Furthermore, the growth of the uranium and nuclear power industry beyond its current level will depend upon continued and increased acceptance of nuclear technology as a means of generating electricity.  Because of unique political, technological and environmental factors that affect the nuclear industry, the industry is subject to public opinion risks which could have an adverse impact on the demand for nuclear power and increase the regulation of the nuclear power industry.







7





We face strong competition for the acquisition of mining properties




The mining industry is competitive in all of its phases. We face strong competition from other mining companies in connection with the acquisition of properties producing, or capable of producing, uranium and precious metals.  Many of these companies have greater financial resources, operational experience and technical capabilities than we do.  As a result of this competition, we may be unable to maintain or acquire attractive mining properties on terms we consider acceptable, if at all. Consequently, our revenues, operations and financial condition could be materially adversely affected.




The Nunatsiavut moratorium may adversely affect our ability to raise capital




In order to develop the tools to evaluate the impact of large-scale development projects and the environmental impact, on April 8, 2008, Labrador’s Nunatsiavut Government announced a moratorium on uranium mining on Inuit land it governs that was supposed to continue until March 31, 2011. The moratorium was not lifted on March 31, 2011 and as of the date of this document the moratorium remains in effect. There is no certainty about when or if it will be lifted. The moratorium has had a material adverse impact on all uranium exploration and mining companies in Labrador, regardless of whether their properties fall under Nunatsiavut jurisdiction.  Even though the majority of our uranium properties do not fall under Nunatsiavut jurisdiction, we have experienced waning shareholder interest and difficulty in raising the capital required for the development of our projects.




We do not have a history of mineral production or operations




We have never had any interest in mineral producing properties.  There is no assurance that commercial quantities of minerals will be discovered at our current properties or any future properties, nor is there any assurance that our exploration programs thereon will yield any positive results.  Even if commercial quantities of minerals are discovered, there can be no assurance that any of our properties will ever be brought to a stage where mineral resources can profitably be produced thereon.  Factors which may limit our ability to produce mineral resources from our properties include, but are not limited to, the price of the mineral resources which are being explored for, availability of additional capital and financing and the nature of any mineral deposits.




We do not have an extensive operating history and there can be no assurance of our ability to operate our projects profitably in the future.




Our insurance will not cover all the potential risks associated with our operations




Our business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes.  Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to our properties or other properties, delays in mining, monetary losses and possible legal liability.




Our insurance will not cover all the potential risks associated with a mining company’s operations.  We may also be unable to maintain insurance to cover these risks at economically feasible premiums.  Insurance coverage may not be available or may not be adequate to cover any resulting liability. Moreover, there are risks against which we cannot insure or against which we may elect not to insure.  Insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to us or to other companies in the uranium mining industry. We might also become subject to liability for pollution or other hazards which we may not be insured against or which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause substantial delays and require us to incur significant costs that could have a material adverse effect upon our financial condition, results of operations, competitive position and potentially our financial viability.







8





Our operations are subject to environmental regulation




All phases of our operations are subject to environmental regulation in the various jurisdictions in which we operate or may operate in the future. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste.  Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors and employees.  There is no assurance that future changes in environmental regulation, if any, will not adversely affect our operations. Environmental hazards may exist on the properties on which we hold interests which are unknown to us at present and which have been caused by previous or existing owners or operators of the properties.




Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.  Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.




Our operations are dependent on adequate infrastructure




Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure.  Reliable roads, bridges, power sources and water supply are important determinants, which affect capital and operating costs.  Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our operations, financial condition and results of operations.




Our properties may be subject to undetected title defects




It is possible there may still be undetected title defects affecting our properties. Title insurance generally is not available, and our ability to ensure that we have obtained secure claim to individual mineral properties or mining concessions may be severely constrained. Furthermore, we have not conducted surveys of the claims in which we hold interests and, therefore, the precise area and location of such claims may be in doubt. Accordingly, our properties may be subject to prior unregistered liens, agreements, transfers or claims, and title may be affected by, among other things, undetected defects which could have a material adverse impact on our operations.  In addition, we may be unable to operate our properties as permitted or to enforce our rights with respect to our properties.




We may be subject to additional costs for land reclamation




It is difficult to determine the exact amounts which will be required to complete all land reclamation activities in connection with our properties.  Reclamation bonds and other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation activities over the life of a mine.  Accordingly, it may be necessary to revise planned expenditures and operating plans in order to fund reclamation activities.  Such costs may have a material adverse impact upon our financial condition and results of operations.




The inability to obtain necessary permits would adversely affect our ability to operate our business




We may not receive the necessary permits or receive them on acceptable terms, if at all, in order to conduct further exploration and to develop our properties.  The failure to obtain such permits, or delays in obtaining such permits, could adversely affect our operations.




Government approvals, approval of aboriginal people and permits are currently and may in the future be required in connection with our operations. To the extent such approvals are required and not obtained; we may be curtailed or







9





prohibited from continuing our mining operations or from proceeding with planned exploration or development of mineral properties.




We will require additional capital for our mining operations




The development and exploration of our mining properties will require substantial additional financing.  Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration, development or production on our properties or even a loss of property interest. There can be no assurance that additional capital will be available when needed or that, if available, the terms of financing such capital will be acceptable to us.  In addition, any future financing may be dilutive to our existing shareholders.




Future production from our mining properties, if any, is dependent upon the prices of uranium, vanadium, copper, gold, base metals and other minerals being adequate to make these properties economically viable




Mineral and base metals prices received, if any, could be such that our properties cannot be mined at a profit.  The price of our common shares, and our financial results and exploration, development and mining activities may in the future be significantly and adversely affected by declines in the price of uranium, vanadium, copper, gold, base metals and other minerals. The price of uranium, vanadium, copper, gold, base metals and other minerals fluctuates widely and is affected by numerous factors beyond our control such as the sale or purchase of commodities by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, the political and economic conditions and production costs of major mineral-producing countries throughout the world, and the cost of  substitutes, inventory levels and carrying charges.  With respect to uranium, such factors include the demand for nuclear power, political and economic conditions in uranium producing and consuming countries, uranium supply from secondary sources, uranium production levels and costs of production.  Future serious price declines in the market value of uranium, vanadium, copper, gold, base metals and other minerals could cause development of and commercial production from our properties to be impracticable.  Depending on the price of uranium, vanadium, copper, gold, base metals and other minerals, cash flow from mining operations may not be sufficient and we could be forced to discontinue production and may lose our interest in, or may be forced to sell, some of our properties.  Future production from our mining properties, if any, is dependent upon the prices of uranium, vanadium, copper, gold, base metals and other minerals being adequate to make these properties economically viable.




In addition to adversely affecting our reserve estimates, if any, and our financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if a project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.




Exchange rate fluctuations may effectively increase our costs of exploration and production




Exchange rate fluctuations may affect the costs that we incur in our operations.  Uranium, vanadium, copper, gold, base metals and other minerals are generally sold in U.S. dollars and our costs are incurred principally in Canadian dollars.  We also operate several mineral exploration projects in the United States that require payments to be made in U.S. dollars. The appreciation of non-U.S. dollar currencies against the U.S. dollar can increase the cost of exploration and production in U.S. dollar terms, which could materially and adversely affect our profitability, results of operations and financial condition.




Our operations are subject to extensive governmental regulation that may adversely affect our operating costs




Our mining, processing, development and mineral exploration activities are subject to various laws governing prospecting, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people, and other matters.  Although our exploration and development activities are currently carried out in accordance with all applicable rules and regulations, new rules and regulations




10


may be enacted or existing rules and regulations may be applied in a manner which could limit or curtail production or development.  Amendments to current laws and regulations governing operations and activities of mining and milling or more stringent implementation thereof could have a substantial adverse impact on our operations. Worldwide demand for uranium is directly tied to the demand for energy produced by the nuclear electric industry, which is also subject to extensive government regulations and policies.




Amendments to current laws, regulations and permits governing operations and activities of mining and exploration companies, or more stringent implementation thereof, could have a material adverse impact on our operations and cause increases in exploration expenses, capital expenditures or production costs, or reduction in levels of production at producing properties, or require abandonment or delays in development of new mining properties.




The market price of our common shares may experience substantial volatility




In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many mineral exploration companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies.  The price of our common shares is also likely to be significantly affected by short-term changes in prices of uranium, vanadium, copper, gold, base metals and other minerals, or in our financial condition or results of operations as reflected in our quarterly earnings reports.  Other factors unrelated to our performance that may have an effect on the price of our common shares include the following: the extent of analytical coverage available to investors concerning our business may be limited if investment banks with research capabilities do not follow our securities; lessening in trading volume and general market interest in our securities may affect an investor’s ability to trade significant numbers of our common shares; the size of our public float may limit the ability of some institutions to invest in our securities; and a substantial decline in the price of our common shares that persists for a significant period of time could cause our securities to be delisted from such exchange, further reducing market liquidity.




We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future




No dividends on our common shares have been paid to date and we have no earnings. We currently plan to retain all future earnings and other cash resources, if any, for the future operation and development of our business.  Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account many factors, including our operating results, financial condition, and current and anticipated cash needs.




Future sales of common shares by existing shareholders could adversely affect the trading price of our common shares




Sales of a large number of our common shares in the public markets, or the potential for such sales, could decrease the trading price of the common shares and could impair our ability to raise capital through future sales of common shares.




We are dependent upon the services of our key executives




We are dependent upon the services of key executives, including our directors and a small number of highly skilled and experienced executives and personnel. Due to our relatively small size, the loss of our Chief Executive Officer, Stewart Wallis, or our Executive Chairman, Mark Morabito, or our inability to attract and retain additional highly-skilled employees may adversely affect our future operations.




Our directors and officers have certain conflicts of interest




Certain of our directors and officers also serve as directors and/or officers of other companies involved in natural resource exploration and development and, consequently, there exists the possibility for such directors and officers to be in a position of conflict.







11





We have no positive cash flow and no recent history of earnings and we are dependent upon public and private contributions of equity to obtain capital in order to sustain our operations




None of our properties have advanced to the commercial production stage and we have no history of earnings or positive cash flow from operations.  Our cumulative loss, as of the year ended April 30, 2011 determined in accordance with U.S. GAAP, is approximately $78 million.  We do not know if we will ever generate material revenue from mining operations or if we will ever achieve self-sustaining commercial mining operations.  Historically, the only source of funds available to us has been through the sale of our equity securities. Any future additional equity financing would cause dilution to current shareholders.




As of July 20, 2011  we had 5,397,131 purchase options, 1,499,831 share purchase units (each unit consisting of one share and one share purchase warrant) and 15,543,964 share purchase warrants  If all of these securities were exercised, the number of common shares issued and outstanding would increase from 47,477,151 to 71,417,908.  This represents an increase of`50.0% in the number of shares issued and outstanding and would result in significant dilution to current shareholders.




Dilution through employee, director and consultant stock options could adversely affect our shareholders by decreasing shareholder value




Because our success is highly dependent upon our employees, we have granted to some or all of our key employees, directors and consultants options to purchase common shares as non-cash incentives.  To the extent that significant numbers of such options may be granted and exercised, the interests of our other shareholders may be diluted. As of July 20, 2011, there were 5,397,151 share purchase options outstanding, which, if exercised, would result in an additional 5,397,151 common shares being issued.




If we become subject to the SEC’s penny stock rules, the risks associated with penny stock classification could affect the marketability of our equity securities and shareholders could find it difficult to sell their common shares




If we do not maintain the NYSE Amex Equities (“NYSE Amex”) listing for our common shares or a listing of our common stock on another national securities exchange in the United States, and if the trading price of our common shares is less than US $5.00 per share, our common stock will become subject to the SEC’s “penny stock” rules as defined in Rule 3a51-1 under the Securities Exchange Act of 1934 (“Exchange Act”).  The SEC has adopted the penny stock rules to regulate broker-dealer practices in connection with transactions in penny stocks.  Penny stocks generally are equity securities with a price of less than US $5.00, other than securities registered on certain national securities exchanges, provided that current price and volume information with respect to transactions in such securities is provided by the exchange.




Transaction costs associated with purchases and sales of penny stocks are likely to be higher than those for other securities.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.




In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our equity securities in the United States and shareholders may find it more difficult to sell their shares.







12





U.S. investors may not be able to enforce their civil liabilities against us or our directors, controlling persons and officers




It may be difficult to bring and enforce suits against us.  We are incorporated in the province of British Columbia under the Business Corporations Act (British Columbia) (formerly the Company Act).  Our directors and officers are residents of Canada, and all or substantial portions of their assets are located outside of the United States, predominately in Canada.  As a result, it may be difficult for U.S. holders of our common shares to effect service of process on these persons within the United States or to realize in the United States upon judgments rendered against them.  In addition, a shareholder should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of the U.S. federal securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or other laws of the United States.




However, U.S. laws would generally be enforced by a Canadian court provided that those laws are not contrary to Canadian public policy, are not foreign penal laws or laws that deal with taxation or the taking of property by a foreign government and provided that they are in compliance with applicable Canadian legislation regarding the limitation of actions.  Also, a Canadian court would generally recognize a judgment obtained in a U.S. Court except, for example, where:




a)
the U.S. court that rendered the judgment had no jurisdiction according to applicable Canadian law;




b)
the judgment was subject to ordinary remedy (appeal, judicial review and any other judicial proceeding which renders the judgment not final, conclusive or enforceable under the laws of the applicable state) or not final, conclusive or enforceable under the laws of the applicable state;




c)
the judgment was obtained by fraud or in any manner contrary to natural justice or rendered in contravention of fundamental principles of procedure; or




d)
a dispute between the same parties, based on the same subject matter has given rise to a judgment rendered in a Canadian court or has been decided in a third country and the judgment meets the necessary conditions for recognition in a Canadian court.




As a "foreign private issuer”, we are exempt from the Section 14 proxy rules and Section 16 reporting rules under the Exchange Act which may result in shareholders having less complete and timely data




The submission of proxy and annual shareholder meeting information (prepared to Canadian standards) on Form 6-K may result in shareholders having less complete and timely data than if we were subject to the SEC’s domestic issuer proxy rules under Section 14 of the Exchange Act.  The exemption from Section 16 rules under the Exchange Act that require the reporting of acquisitions and disposition of our equity securities by our officers, directors and greater than 10% shareholders also may result in shareholders having less data.




If we are characterized as a passive foreign investment company (“PFIC”), our shareholders may be subject to adverse U.S. federal income tax consequences.




We have not made a determination as to whether we are considered a PFIC as such term is defined in the U.S. Internal Revenue Code of 1986 (the “Code”), for U.S. federal income tax purposes for the current tax year and any prior tax years.  A non-U.S. corporation generally will be considered a PFIC of any tax year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income.




In general, if we are or become a PFIC, any gain recognized on the sale of our common stock and any “excess distributions” (as specifically defined in the U.S. Internal Revenue Code of 1986) paid on the common stock must be ratably allocated to each day in a U.S. taxpayer’s holding period for the securities.  The amount of any such gain or excess distribution allocated to prior years of such U.S. taxpayer’s holding period for the common stock




13


generally will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such prior year, and the U.S. taxpayer will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year.




Litigation





On October 10, 2004, the Company entered in an agreement (the “Agreement”) with Mr. Lewis Murphy pursuant to which the Company was granted an option to acquire an interest in certain mineral licenses in Newfoundland and Labrador.  On April 28, 2010, Mr. Lewis Murphy commenced court proceedings against the Company in the Supreme Court of Newfoundland and Labrador in relation to the Agreement. As acknowledged by Mr. Murphy in the Statement of Claim, the mineral licenses were transferred to Crosshair.  The Agreement provides that upon the Company completing its earn-in obligations under the Agreement and becoming vested as to its 90% interest therein, the Company will pay Mr. Murphy an annual advance royalty of $200,000 per year until the Commencement of Commercial Production.  Mr. Murphy alleges he was owed an annual advance royalty payment in the amount of $200,000 in November 2009.  Mr. Murphy is seeking contractual damages in the amount of $200,000, and various declaratory reliefs including, but not limited to, an order that the transfers of any and all mineral licenses from Murphy to the Company made pursuant to the Agreement are null and void and a declaration that the Agreement is terminated.  The Company defended the court action and filed a Counterclaim alleging that Mr. Murphy had breached certain representations and warranties contained in the Agreement.  The Company was seeking various reliefs including an order of damages and the return of shares.




On January 6, 2011, a judgment was issued by the Supreme Court of Newfoundland and Labrador in favour of Mr. Murphy in the amount of $200,000 (plus costs and interest) and the Company’s counterclaim was dismissed. The Company was granted leave to appeal this judgment on May 31, 2011. The appeal hearing is expected to occur in September or October 2011; however, there can be no assurance that any appeal will be resolved in favour of the Company. As of April 30, 2011, Mr. Murphy has commenced an action to recover an additional $200,000 that he claims is due as an advance royalty payment for November 2010. The company is defending this claim but there can be no assurance that this action will be resolved in favour of the Company. As a result $400,000 has been accrued and is recorded in mineral properties as at April 30, 2011.




The nature of the Company’s business may subject it to other regulatory investigations, claims, lawsuits, and other proceedings. The results of these legal proceedings cannot be predicted with certainty. There can be no assurances that these matters will not have a material adverse effect on the Company.




ITEM 4.
INFORMATION ON THE COMPANY




4.A.           History and Development of the Company




Introduction




Crosshair Exploration & Mining Corp. (the “Company” or “Crosshair”) was incorporated as a specially limited company pursuant to the Company Act (British Columbia) (replaced by the Business Corporations Act (British Columbia) effective March 29, 2004) on September 2, 1966 under the name Shasta Mines & Oil Ltd. (Non-Personal Liability).  We converted from a Private Company to a Public Company on February 20, 1967.  On February 4, 1975 we changed our name to International Shasta Resources Ltd. (Non-Personal Liability) and consolidated our share capital on the basis of one new share for five old shares and increased our share capital from 600,000 common shares to 3,000,000 common shares.  On September 14, 1977 we increased our authorized share capital from 3,000,000 common shares to 5,000,000 common shares.  On April 5, 1982, we increased our authorized share capital from 5,000,000 common shares to 10,000,000 common shares by Special Resolution.  On March 5, 1986 we converted from a Specially Limited Company into a Limited Company under the name of International Shasta Resources Ltd. and increased our authorized share capital from 10,000,000 common shares to 30,000,000 common shares.  On May 20, 1994, we changed our name to Consolidated Shasta Resources Inc. and consolidated our share capital on the basis of one new share for ten old shares and increased our authorized share capital from 3,000,000 common shares to 20,000,000 common shares.  On November 23, 1994 we changed our name to Lima Gold Corporation and on September 21, 1999 we changed our name to International Lima Resources




14


Corp. and consolidated our share capital on the basis of one new share for three old shares and increased our authorized share capital from 6,666,667 common shares to 20,000,000 common shares.  On November 5, 2003 we increased our authorized share capital from 20,000,000 common shares to 100,000,000 common shares.  On March 1, 2004 we changed our name to Crosshair Exploration & Mining Corp.  On June 1, 2004 we replaced our Memorandum with a Notice of Articles as is required by the Business Corporations Act(British Columbia). On March 11, 2005 we changed our authorized capital to an unlimited number of common shares.  On December 15, 2010, we consolidated our share capital on the basis of one new share for four old shares.  All share, stock option, warrant numbers contained in this Form 20-F are reported on a post-consolidation basis.




Our executive office is located at:




Suite 1240 - 1140 West Pender Street




Vancouver, British Columbia, Canada  V6E 4G1




Telephone: (604) 681-8030




Facsimile: (604) 681-8039




Website: www.crosshairexploration.com




Email: mmorabito@explorationgroup.com




The contact person is: Mr. Mark J. Morabito, Executive Chairman.




Our fiscal year ends April 30th.




Our common shares first began trading on the Vancouver Stock Exchange under the name Shasta Mines & Oil Ltd. on March 14, 1969.  Our common shares began trading on the TSX Venture Exchange with the trading symbol “CXX” on March 1, 2004.  On February 10, 2006, we graduated to Tier 1 on the TSX Venture Exchange.  On May 7, 2007, our common shares began trading on the American Stock Exchange (now NYSE Amex) with the trading symbol “CXZ.”  On May 12, 2008, our common shares began trading on the Toronto Stock Exchange with the trading symbol “CXX” and ceased trading on the TSX Venture Exchange.




On March 29, 2004, the Company Act(British Columbia) (the “Company Act”) was replaced by the Business Corporations Act(British Columbia) (the “BCBCA”).  Accordingly, we are now subject to the BCBCA and are no longer governed by the Company Act.  There are a number of differences under the BCBCA, which differences are designed to provide greater flexibility and efficiency for British Columbia companies.




Under the BCBCA, every company incorporated under the Company Act must complete a mandatory transition rollover under the BCBCA to substitute a Notice of Articles for its Memorandum within two years of March 29, 2004.  On June 1, 2004 we replaced our Memorandum with a Notice of Articles as is required by the BCBCA.  The only information contained in the Notice of Articles is the authorized share structure of the company, the name of the company, the address of the registered and records office of the company, and the names and addresses of the directors of the company.  On March 11, 2005, we changed our authorized capital to an unlimited number of common shares.




On March 31, 2009, Crosshair and Target Exploration and Mining Corp. (“Target”) successfully closed a plan of arrangement whereby Crosshair acquired all the outstanding common shares of Target and Target has become a wholly owned subsidiary of Crosshair.  Target shareholders received approximately 14.7 million common shares of Crosshair (1.2 Crosshair shares for each Target common share outstanding) with an estimated market value of approximately $2.6 million. In addition, each outstanding Target warrant and stock option which gives the holder the right to acquire common shares of Target was exchanged for a warrant or stock option which gives the holder the right to acquire common shares of Crosshair on the exchange ratio of 1.2 Crosshair shares for each Target warrant or stock option exercised, with all other terms of such warrants and options (such as term and expiry) remaining unchanged.  As a result of the acquisition of Target, Crosshair acquired an interest in the Bootheel and Sinbad projects in Wyoming and Utah, USA respectively.  During fiscal 2010, we allowed all 62 mineral claims on the Sinbad property located in Emery County, Utah, to lapse, and the State Lease with the State of Utah was not renewed.







15





Property Acquisitions




Since the beginning of fiscal 2011, we have acquired the following properties:




Wyoming, U.S.A.




A Purchase and Sale Agreement  (the “Juniper Ridge Agreement’) dated October 29, 2010 was entered into between Strathmore Resources (US) Ltd., Strathmore Minerals Corp., Crosshair and 448108 Exploration, Inc. a wholly-owned subsidiary of Crosshair’s subsidiary Target, pursuant to which we may earn a 100% interest in the Juniper Ridge Property in the State of Wyoming.  The Juniper Ridge Property is currently owned by Strathmore Resources (US) Ltd. and consists of 197 Federal Mining claims and one state Lease.  Under the Juniper Ridge Agreement, we will conditionally acquire a 100% interest in the Juniper Ridge Property, by making cash payments totaling US$700,000.  In order to maintain the Juniper Ridge Agreement in good standing and to acquire 100% of the legal and beneficial interest in the Juniper Ridge Property, we will, subject to royalty payments, be required to make additional cash payments and issue common shares as more fully described in “Item 4.D. Property, Plants and Equipment – Wyoming – Juniper Ridge” and in the Juniper Ridge Agreement, attached as Exhibit 4.29 hereto.




Property Terminations




Since the beginning of fiscal 2011, we have dropped a total of 1,564 claims from the land package acquired from Expedition Mining  Inc. (formerly Universal Uranium Ltd.) (“Expedition”).  See “Item 4.D. Property, Plants and Equipment – Labrador – Central Mineral Belt – CMB-JV Property and Agreement” for further details about this land package.




Capital Expenditures




Our capital expenditures, excluding property, plant and equipment, for the last three fiscal years were as follows:




Fiscal Year
ExpendituresFiscal 2009
$16,264,847(1)Fiscal 2010
$1,278,652(2)Fiscal 2011
$1,347,411(3)





(1)
These funds were spent as outlined below:





Expense ($)
CMB
CMB JV
Bootheel Project
Golden Promise
Other ClaimsDrilling and trenching
$ 464,663
$         --
$         --
$      6,438
$         --Geology
2,964,923
29,750
48,741
19,790
--Geophysics
3,903
27,057
--
3,745
--Administration
241,485
1,451
19,962
19,346
--Technical analysis
428,500
--
1,580
10,586
--Future reclamation
25,929
44,854
--
--
--Acquisition costs
370,000
7,132,327
3,600,137
746,122
229,796JCEAP refunds received
(150,000)
--
--
--
--Recovery – JV partner
--
(24,294)
--
--
--Administration fees
--
(1,944)
--
--
--








16





(2)           These funds were spent as outlined below:





Expense ($)
CMB
CMB JV
Bootheel Project
Golden Promise
Other ClaimsDrilling and trenching
$ 88,713
$         --
$   2,952
$592,314
$         --Geology
90,800
70,282
209,190
157,040
--Geophysics
--
123,662
--
--
--Administration
56,770
32,435
28,961
47,242
--Technical analysis
37,527
3,901
--
38,974
--Future reclamation
(18,665)
(5,651)
(366,889)
2,005
--Acquisition costs
200,000
--
46,812
20,000
--JCEAP refunds received
--
(70,954)
--
(6,569)
--Recovery – JV partner
--
(71,004)
(18,236)
(4,352)
--Administration fees
--
(8,260)
--
(348)
--





(3)           These funds were spent as outlined below:





Expense ($)
CMB
CMB JV
Bootheel Project
Golden Promise
Juniper Ridge
Other ClaimsDrilling and trenching
$         --
$         --
$         --
$    39,853
$             --
$         --Geology
240,974
190,385
43,512
278,413
25,513
--Geophysics
--
--
--
65,442
--
--Geochemistry................
3,637
27,800
--
43,475
--
--Metallurgy.......................
22,235
--
--
54,586
--
--Administration
4,485
14,088
21,241
15,649
--
--Technical analysis
(652)
(871)
--
(3,850)
--
--Future reclamation
(25,209)
(5,445)
--
(583)

--Acquisition costs
200,000
--
40,903
335
232,945
--JCEAP refunds received
--
--
--
(155,439)
--
--Recovery – JV partner
--
--
(26,011)
--
--
--


We expect to incur capital expenditures of approximately $7 million for fiscal year 2012.  Our capital expenditures are financed through sales of our common shares.




4.B.           Business Overview




Historical Corporate Development




We are a mineral exploration company engaged in the acquisition and exploration of mineral properties (primarily uranium, base and precious metals).  We do not have any producing mineral properties at this time.  Our business is presently focused on the exploration and evaluation of various mineral deposits in North America.




We are currently focusing our exploration activities on the following properties:




Uranium




·
Central Mineral Belt properties located in Labrador, Canada.




17




·
CMB JV Property located in Labrador, Canada.




·
The Bootheel Project LLC located in Wyoming, U.S.A.




·
Juniper Ridge Property located in Wyoming, U.S.A.




Gold and Base Metals




·
South Golden Promise, Victoria Lake and Golden Promise properties located in Newfoundland, Canada.




Material Effects of Government Regulations




Our current and anticipated future operations, including further exploration activities, require permits from various Canadian Federal and Provincial and U.S. Federal and State of Wyoming governmental authorities.  Such operations are subject to various laws governing land use, the protection of the environment, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, well safety and other matters.  Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could have a materially adverse impact on us and cause increases in capital expenditures which could result in our ceasing operations.  We have had no material costs related to compliance and/or permits in recent years, and anticipate no material costs in the next year.




Work may be prohibited on certain parts of the Bootheel Properties due to the presence of sage grouse mating areas during the period March 15th to June 30th.




In order to develop the tools to evaluate the impact of large-scale development projects and the environmental impact, on April 8, 2008, Labrador’s Nunatsiavut Government announced a moratorium on uranium mining on Inuit land it governs that was supposed to continue until March 31, 2011. The moratorium was not lifted on March 31, 2011 and as of the date of this document the moratorium remains in effect. On July 20, 2011 it was announced that a draft land use plan for the Labrador Inuit Settlement Area has been adopted-in-principle for the purpose of public hearings by the Government of Newfoundland and Labrador and the Nunatsiavut Government. The hearings will take place in the five Inuit communities of Nain, Hopedale, Makkovik, Postville, and Rigolet, as well as Mud Lake, Happy Valley-Goose Bay, North West River and St. John’s. It is anticipated the hearings will begin in August with dates to be announced by the Regional Planning Authority. Once the public hearings process is complete, the authority will consult both governments on the commissioner’s report. The authority may then revise the draft land use plan before submitting it to both governments for final decisions. However, there remains no certainty about when or if the moratorium will be lifted.




The moratorium has had a material adverse impact on all uranium exploration and mining companies in Labrador, regardless of whether their properties fall under Nunatsiavut jurisdiction.  Even though the majority of our uranium properties do not fall under Nunatsiavut jurisdiction, we have experienced waning shareholder interest and difficulty in raising the capital required for the development of our projects.




Seasonality




We can only carry out exploration when weather is favorable.  Typically, we cannot carry out any work at a reasonable cost during the months of November and December for winter freeze-up and March and April for spring break-up on our Canadian properties.




Dependency upon Patents/Licenses/Contracts/Processes




Not applicable




Sources/Availability of Raw Materials




Not applicable




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4.C.           Organization Structure




Crosshair is a corporation subject to the BCBCA.  Crosshair owns 100% of the issued and outstanding shares in each of the following subsidiaries:




1.
Target Exploration and Mining Corp. (“Target”), a British Columbia corporation.




a.
Target owns all of the issued and outstanding shares in 448018 Exploration Inc., a Nevada Corporation.




i.
448018 Exploration Inc. holds a 75% interest in The Bootheel Project LLC.




ii.
448018 Exploration Inc. is a party to the Juniper Ridge Agreement.




2.
Gemini Metals Corp., a British Columbia corporation.




4.D.
Property, Plants and Equipment




Our properties are in the exploration stage and a substantial amount of capital will have to be spent on each property before we will know if they contain commercially viable mineral deposits.  Our material properties are located in the Province of Newfoundland and Labrador, Canada and the State of Wyoming, U.S.A.  Our properties are without known reserves and the work being done by us is exploratory in nature.




Our executive offices are located shared office premises of approximately 5,009 square feet at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia Canada.  We have occupied these facilities since 2006.  Beginning on January 1, 2010 (revised on October 1, 2010), we entered into a management services agreement with EGM Exploration Group Management Corp. (“EGM”) under which EGM provides shared office space for the Company and other companies that EGM provides management services to. As part of this agreement, EGM has assumed the lease for the office facilities occupied by the Company.


National Instrument 43-101 Compliance




Except as otherwise indicated, C. Stewart Wallis, P.G., P.Geo., President and CEO of Crosshair and a Qualified Person as defined by NI 43-101, has reviewed and is responsible for the technical information contained in this Annual Report on Form 20-F.  Further information about the Company’s mineral properties can be found in the following technical reports: (i) CMB property – Form 43-101 Technical Report on the Central Mineral Belt (CMB) Uranium - Vanadium Project, Labrador, Canada dated January 20, 2011 (Rev March 10, 2011) (the “2011 CMB Report”), prepared by C. Stewart Wallis, P. Geo,  Gary H. Giroux, P.Eng. MASc., and Barry A. Sparkes, P.Geo.; (ii) CMB JV – the Form 43-101 Technical Report on the CMBNW Property, Labrador, Canada dated June 22, 2009 (the “CMB JV Report”), written by David A. Ross, M.Sc., P. Geo of Scott Wilson Roscoe Postle Associates Inc.; (iii) Bootheel – NI 43-101 Technical Report on the Bootheel Property, Shirley Basin Mining District, Albany County, Wyoming, dated September 8, 2009 (the “Bootheel Report”), prepared by Douglas Underhill PhD C.P.G. and William E. Roscoe P. Eng.; and (iv) Golden Promise, South Golden Promise and Victoria Lake Properties – the Form 43-101 Technical Report on the Golden Promise, South Golden Promise and Victoria Lake Properties dated April 30, 2008, amended September 23, 2008, (the “GP Report”) written by Gary H. Giroux, P.Eng. MASc. and Larry R. Pilgrim, B.Sc., P.Geo. Copies of these reports are available on SEDAR at www.sedar.com. All of the technical report authors listed above are “qualified persons” within the meaning of NI 43-101.







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Newfoundland




Golden Promise Property and Agreements




Paragon Minerals Corp. (“Paragon”) acquired an option to earn a 100% interest in the Golden Promise property subject to an underlying option agreement with William Mercer and Stephen Courtney on a portion of the property surrounding the Jaclyn Zones.  A total of 192 claims (4,800 hectares) comprise the option arrangement with William Mercer with payments totaling $230,000 ($230,000 paid) and 100,000 Paragon common shares, all of which have been issued.  Mr. Mercer’s property includes the Jaclyn deposit and he is entitled to a 2% NSR subject to a $1 million buyback of 50% of the NSR at anytime.  Mr. Mercer also receives $20,000 per year as Advance Royalties deductable from his NSR.  The option arrangement with Mr. Courtney involves 6 claims (150 hectares) with payments totaling $35,000 ($35,000 paid). Mr. Courtney is entitled to a 2% NSR on his property subject to a $1 million buyback of 50% of the NSR at anytime.  There is no known mineralization on his property.  Paragon staked claims in the immediate vicinity of the vendors’ claims.




Under the terms of an option agreement dated May 2, 2006, as amended April 18, 2008, with Paragon, we acquired an option to earn a 60% interest in the Golden Promise Property.  To date, we have issued 15,000 common shares, made cash payments totaling $100,000 and spent $1,334,000 on project expenditures.  To complete the exercise of the option, we were required to issue 5,000 shares by May 1, 2009 and incur project expenditures of at least $1,416,000 by May 1, 2009 and another $1,250,000 by May 1, 2010.







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Under the terms of a Purchase and Sale Agreement dated June 4, 2008 between Gemini Metals Corp. (“Gemini”), Crosshair and Paragon, our option agreement described above was terminated and Paragon’s interest in the Golden Promise Property was to be contributed to Gemini in exchange for shares of Gemini.  Under the terms of this agreement, on closing of the proposed transaction, Gemini would hold 100% interest in the Golden Promise Property.  This agreement was terminated pursuant to the terms of Golden Promise Option and Joint Venture Agreement dated as of April 8, 2009 between Crosshair and Paragon as described below.




Crosshair entered into the Golden Promise Option and Joint Venture Agreement dated April 8, 2009 between Crosshair and Paragon, pursuant to which it acquired a 60% interest in the Golden Promise Gold Project in Central Newfoundland, Canada with an option to acquire up to a 70% interest. This agreement terminated the original property option earn-in agreement with Paragon, and Crosshair also abandoned the previously approved Plan of Arrangement with Gemini whereby Crosshair was to transfer its gold and volcanic-hosted massive sulfide projects located in Newfoundland to Gemini in exchange for shares for Gemini.  As a result of the current market conditions, the board of directors of Crosshair determined that it was no longer in the best interest of shareholders to spin-out the Golden Promise, South Golden Promise and Victoria Lake properties into a separate publicly traded company to be known as Gemini.





Pursuant to the Golden Promise Option and Joint Venture Agreement, Crosshair issued 663,750 common shares with a market value of approximately $686,608 to Paragon to purchase the 60% interest in Golden Promise.  Crosshair will provide Paragon with a $2.0 million carried interest in initial exploration expenditures to be completed prior to May 2013.  Crosshair can extend the timeframe to complete the initial exploration program by 12 months upon issuing 62,500 common shares to Paragon.





Upon the successful completion of the initial $2.0 million exploration program, Crosshair can elect to earn an additional 10% interest (to 70%) in Golden Promise by providing Paragon with an additional $1.0 million carried interest in additional exploration expenditures within 24 months.   Crosshair can extend the timeframe to complete the additional exploration program by 12 months upon issuing 25,000 common shares to Paragon.  In the event Crosshair does not complete the additional expenditure program within the required timeframe, Crosshair can purchase the remaining 10% interest by paying Paragon the difference between actually incurred exploration expenditures and $1.0 million or revert to the 60% interest.  As at July 20, 2011, expenditures under the Golden Promise Option total $1.3 million.





The Golden Promise Property consists of four map-staked licenses located east, and northeast of Red Indian Lake in west central Newfoundland on National Topographic System (NTS) Map Sheet 12A/16,part of the Grand Falls – Buchans Electoral District.    The claims are crosscut by an all season Highway (Route 370) connecting the towns of Buchans in the southwest to Badger at the Trans Canada Highway in the northeast end of the property.





The four blocks of licenses cover 18,125 hectares in 725 map-staked claims. Each claim is 500 by 500 meters, which is bounded by one corner of the UTM grid square and is one quarter of the square. The claims are grouped into licenses, which are the units of ownership and assessment work requirements. The Property also includes a Mining Lease which is included within the license boundaries.





Accessibility




The property is accessible from Badger on the Trans Canada Highway via Route 370 to Buchans Junction about 43 km to the southwest. The Buchans Highway (Route 370) is the principal access road to the various blocks in the west and southwest portions of the property where most of the exploration activity has been focused.  Access to the eastern and southern portions of the property is gained via logging roads trending south and west of the town of Grand Falls-Windsor, a major industrial hub for central Newfoundland.   The Exploits River, the largest river system on the Island of Newfoundland, crosses the north-western part of the property.  Secondary access to most of the property is provided by logging roads and snowmobile and ATV trails leading from Route 370 as well as the logging roads south and southwest of Grand Falls-Windsor.







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History and Previous Work




The exploration history of the vast majority of the property dates back only as far as 2002, when a prospector working in an area burned by a major forest fire in 1999 located gold-bearing quartz boulders immediately north of Route 370 approximately 10 kilometers southwest of the town of Badger.  Exploration in the region prior to 2002 traditionally focused on the productive massive sulfide districts located south and west of the current property boundaries.  The mining town of Buchans, located about 30 kilometers west - southwest of the property, produced very rich ores that carried high combined grades of zinc (14.5%), copper (1.4%), lead (7.6%), gold (1.3 grams per  tonne) and silver (126 grams per tonne) for 56 years prior to closing in 1984.




The property was mapped by both the Provincial and Federal Geological Surveys whose efforts included regional scale geological surveys and geochemical surveys including glacial till and lake sediment sampling.




In the spring of 2002, a local prospector, William Mercer, discovered several large boulders of gold bearing float of which a composite sample from 10 boulders returned 30 grams per tonne gold. The property was subsequently optioned by Mr. Mercer to Paragon in July of 2002.




Geological Setting




The property lies within the Dunnage Zone, a major tectonic and stratigraphic succession of Cambrian to Middle Ordovician aged volcanic and sedimentary rocks occupying much of central Newfoundland.  The Dunnage Zone rocks record the opening and closing of a proto-Atlantic Ocean known as Iapetus.  The Dunnage Zone has been subdivided into two subzones, the Notre Dame and the Exploits, which are separated by a major fault system known as the Red Indian Line. The bulk of the Golden Promise property is inferred to be underlain by rocks of the Exploits Subzone, which includes the Badger and Victoria Lake Groups.




Regional Geology and Mineralization




The property is largely underlain by sedimentary rocks of the Badger Group.  The Badger Group conformably overlies Caradocian black shale, which in turn overlies Ordovician volcanic and sedimentary rocks of the Victoria Lake Supergroup.  The volcanic sequences of the Victoria Lake Supergroup are among the most prolific hosts to massive sulfide copper/lead/zinc deposits in Canada.




Property Geology and Mineralization




The property is largely underlain by sedimentary rocks of the Badger Group, consisting mainly of arkose, greywacke and shale. The Badger Group rocks overlie the Victoria Lake sequences of volcaniclastic and fine grained sedimentary rocks.  A unit of black shale of Caradocian age, a regional stratigraphic marker, separates the Badger Group from the Victoria Lake Group.  The dominant structural trend is northeasterly.  All rock units have been folded into a series of tight, isoclinal, upright, northeast plunging folds and have been cut by northeasterly faults.  Mafic dykes occupy the faults at several locations.




The mineralization at Golden Promise consists of a series of sub-parallel gold-bearing quartz veins ranging up to 4 meters in true thickness. The veins are milky white, inclusion rich and locally bladed. Gold is hosted by the veins typically occurring within narrow intervals (20-30 cm) close to vein margins.  Fine grained arsenopyrite is the most common accessory mineral with lesser amounts of pyrite, galena, sphalerite and chalcopyrite (< 1%) occurring locally.




At least 5 zones of gold mineralization are known to occur at Golden Promise.  They include the Jaclyn Main, Jaclyn South, Jaclyn North, Christopher and Shawn’s Shot occurrences, of which the most important are the Jaclyn Main, Jaclyn South and Jaclyn North Zones.




An NI 43-101 Technical Report titled Golden Promise, South Golden Promise and Victoria Lake Properties dated April 30, 2008, was completed by authors Gary H. Giroux, P.Eng. MASc. and Larry R. Pilgrim, B.Sc., P.Geo.  Based on the results of 68 drill holes that penetrated the Jaclyn Main Zone, and using a 1 gram per tonne gold




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cutoff, Gary H. Giroux calculated an inferred resource of 89,500 ounces of gold in the Jaclyn Main Zone contained within a total of 921,000 tonnes of rock averaging 3.02 grams per tonne gold.  The report was then amended by both authors on September 23, 2008 to include additions to the recommended work programs including a second phase work program on the Golden Promise Property consisting of a bulk sample program, as well as further drilling and metallurgical work.




Exploration and Development




In July of 2002, the property was optioned by local prospectors to Paragon who completed a Phase 1 drilling program to follow up on the discovery of high grade gold-bearing float.  The 21 hole program (1,045 meters) tested the Jaclyn Zone along a 225 meter strike length and to a vertical depth of 50 meters.  Subsequent drilling in late 2003 extended the Jaclyn Zone along strike and to depth, and also tested the newly discovered Jaclyn North and Jaclyn South Zones.




We optioned the Golden Promise property from Paragon on May 1, 2006 and carried out further drilling in June.   This program, completed in February 2007, included 5,488 meters of drilling in 29 holes on the Jaclyn Main, Jaclyn North and Jaclyn South Zones.  From June 2007 through December 2007 a 23 hole 3,926 meter drill program was completed in the Jaclyn area.  The focus of the drilling was the continued evaluation of the Jaclyn Main Zone (19 holes, 3,135 meter), and Jaclyn North Zone (4 holes, 790 meter).




During the current fiscal year the Company completed 7,220 m of drilling in 38 holes.  Twelve (12) holes (641m) were shallow infill holes located in the central part of the deposit designed to provide samples of the vein for metallurgical testing and to test for structural and grade continuity of the vein prior to the planned bulk sampling program.  Three holes (657m) tested the Jaclyn North showing and four holes (572 m) followed up an intercept 400 m west of the North zone.  The remaining 19 holes (5,350m) tested the central part of the deposit and the extension down plunge to the east




Complete assay highlights, as well as a drill hole plan map, long section and core photos can be found on the Crosshair website at: http://www.crosshairexploration.com/s/GoldenPromise.asp.




A composite sample from six previously completed drill holes was submitted to SGS Mineral Services Vancouver, BC (“SGS”) for preliminary metallurgical testing including gravity concentration, flotation and determination of the cyanide leaching characteristics.  Drill core samples from the 12 infill holes drilled in 2010 in the central part of the Jaclyn Main Deposit were also sent to SGS where additional metallurgical test work further defined the extraction process flow sheet.  These core samples were composited to provide two samples (labelled A and B) of 17.0 kilograms (kg) and 13.9 kg with head grades which assayed 8.02 grams per tonne (g/t) and 8.00 gpt respectively.  The composite samples were crushed, then blended and split into individual charges for the various metallurgical tests. The results confirm that the gold in the vein can be effectively recovered using gravity separation in combination with leaching, or by direct leaching.




A gravity separation test conducted on composite A ground to P80 of 150 microns recovered 84% of the gold.  The recovery process was further enhanced when the gravity tail was leached.  Leaching recovered 76% of the gold in the gravity tail, which resulted in a total gold recovery of 96%. The leach kinetics were fast and the recovery was complete within 24 hours.





The gold can also be recovered by direct leaching of the whole rock resulting in 93% extraction of the gold.  When composite A was ground to P80 of 150 microns and leached, 93% of the gold was recovered and only 0.16 kg/t of sodium cyanide (NaCN) was consumed.  Composite B had the same gold recovery and was ground slightly more to P80 of 100 microns and consumed slightly more NaCN (0.25 kg/t).




The 2,200 tonne bulk sampling program was completed in December 2010 in order to determine a more representative gold grade for the Jaclyn resource, since assay results from diamond drilling alone may not be an effective means of reliably determining grade in high-nugget effect gold systems.  The gold occurrences on the Golden Promise Property, including the Jaclyn Main Zone, exhibit many similarities to the deposits of the Bendigo-Ballarat Gold District in Australia, which have collectively produced over 31 million ounces of gold.  Studies of




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other high-nugget effect gold deposits, including deposits from the Bendigo Goldfield, indicate that assays from surface diamond drill holes may understate the actual in-situ gold grade in such deposits.




A total of 2,241 tonnes were delivered to the Nugget Pond Mill owned by Rambler Metals and Mining Plc. Two gold bars weighing 5.37 kilograms were poured and shipped to Johnson Matthey Limited in Toronto for refining.  In addition to the bars, the ball mill and SAG mill were cleaned out and 482.5 kilograms of concentrate were also shipped to Johnson Matthey for treatment and refining.  After refining, the bars and the mill concentrate produced a total of 313.59 ounces of gold and 23.05 ounces of silver which were sold for net receipts of CDN$430,001.85 after treatment charges.  The cost of the program, after receipts from the gold sales, was approximately $100,000.




Based on the mill records and the total gold recovered, the average recovered gold grade was 4.47 g/t gold.  The average tails grade was 1.12 g/t gold indicating a back-calculated head grade of 5.59 g/t gold with an 80% recovery.  While an overall recovery of 80% is positive it is lower than predicted by the bench scale test work.  It is believed that the lower than expected recovery is due to the presence of carbonaceous material in the waste rock.  In future, this issue can be mitigated by modifying the circuit to a carbon in leach process as opposed to a carbon in pulp process.  This would result in a minor modification to the flow sheet which will be further refined in future metallurgical test programs.




For reconciliation purposes, Crosshair compared the head grade with the estimated sample grade using the block model prepared in April 2008 by Gary Giroux, P.Eng. which stated an inferred resource of 921,000t at 3.02 g/t gold (for further details, please refer to: http://www.crosshairexploration.com/s/GoldenPromise.asp). Assuming a 2 metre (m) deep trench and 25% dilution, Gary Giroux determined that the bulk sample would have had a tonnage of 2,125 t at an average grade of 4.42 g/t.




The Jaclyn North occurrence, located 250 meters north of the Jaclyn Zone, has been tested by 13 drill holes and has been defined over a 450 meter strike length.  The occurrence has returned values up to 5.24 grams per tonne gold over 1.70 meters.




The Jaclyn South occurrence, located 300 meters southeast of the Jaclyn Zone, comprises two subparallel quartz veins, one of which is up to 3.4 meters thick.  The zone has been tested by four drill holes from which the best result obtained to date is 0.30 meters grading 44.6 grams per tonne gold.




South Golden Promise (and Victoria Lake) Property and Agreements




Paragon acquired an option to earn a 100% interest in the South Golden Promise Property pursuant to an underlying option agreement, dated January 8, 2003, with Al Keats, Calvin Keats and Kevin Keats.  The vendors are entitled to a 2.5% Net Smelter Return.  Paragon can repurchase a 1.5% Net Smelter Return for $1,500,000 and has a right of first refusal with respect to the remaining 1.0%.  As of September 2005, Paragon completed its obligations under its option agreement with the vendors and now holds a 100% interest in the South Golden Promise Property subject to the 2.5% Net Smelter Return.




Under the terms of an agreement dated February 14, 2003 with Paragon, we earned a 60% interest in the South Golden Promise Property in consideration for issuing a total of 100,000 common shares and incurring a minimum of $1,750,000 in exploration expenditures.




The South Golden Promise Property agreement includes two separate blocks of licenses, these being the South Golden Promise and the Victoria Lake claim blocks, which collectively cover 5,450 hectares in 218 map-staked claims. Each claim is 500 by 500 meters, which is bounded by one corner of the UTM grid square and is one quarter of the square. The claims are grouped into licenses, which are the units of ownership and assessment work requirements.




Paragon was the contractor for the execution of the exploration programs in the first year for cost plus 8% fee.  Subsequent to the first year, we have operated and carried out the exploration programs on the South Golden Promise property using in-house personnel.




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We are responsible for paying for and renewing these licenses.  The fee for license renewals is $25 per claim every five years and failure to pay the fee will result in the loss of the claims.




Paragon has declined to participate in the recent programs and has currently diluted its interest to a 38.33% interest.  Once their interest falls below 10% it will convert to a 1% Net Smelter Return Royalty.




Property Location




The South Golden Promise and Victoria Lake properties consist of two separate blocks of licenses located east and southwest of Red Indian Lake in west central Newfoundland, in the Grand Falls – Buchans Electoral District.  The South Golden Promise property is underlain by similar geology to that of the Golden Promise property, which is contiguous and immediately northeast of the South Golden Promise claims.  The South Golden Promise agreement also includes the Victoria Lake claims, where exploration has focused on massive sulfide deposits as opposed to gold, which is the focus of exploration at Golden Promise and South Golden Promise.




Accessibility




The South Golden Promise claims are accessible from Badger on the Trans Canada Highway via Route 370 to Buchans Junction about 43 kilometers to the southwest of Badger, and from Grand Falls-Windsor, immediately east of the property. The Millertown – Lake Ambrose logging haulage road west southwest of Buchans Junction is the principal access road to the various claim blocks to the south and southwest.  The Exploits River, the provinces largest river system, crosses the northern portion of the property.  The Victoria Lake claim group, which is the most southwestern of the two claim blocks, is best accessed by the main logging road leading west from the Exploits Dam along the south shore of Red Indian Lake.  Numerous older logging roads, generally in poor shape, crosscut the property and afford locally limited access.




History




The northeastern portion of the property has received the least amount of previous exploration.  In fact, prior to the discovery of gold-bearing boulders at Golden Promise in 2002, most of the northern half of the property had received no previous exploration for gold.




The sedimentary sequences that host the Jaclyn gold mineralization received very little exploration by previous explorers.  The bulk of exploration activity in the region focused on the highly prospective volcanic rocks to the southwest which are known to host numerous copper and zinc prospects in the region.  The volcanic sequences, most common on the south side of the Exploits River and occurring in the south central portion of the South Golden Promise property, received moderate amounts of exploration in the search for base metals (copper, lead and zinc).  Noranda was most active and carried out ground surveys including, line cutting, geological mapping, soil sampling and geophysics.  Several widely spaced drill holes did not intersect any mineralization.  Immediately east of the property Aur Resources (subsequently taken over by Teck/Cominco) commenced commercial production in January 2007 at the Duck Pond deposit and will produce concentrate containing copper, zinc, lead, gold and silver over the projected 10 year life of the mine.




The Victoria Lake claims have received the most intensive exploration of all of the South Golden Promise property.  The claims are considered highly prospective to host significant quantities of massive sulfides rich in copper, lead, zinc, gold and silver.  Noranda carried out numerous exploration programs over the past 25 years including diamond drilling.  Favorably altered volcanic rocks were encountered in several localities and suggest that massive sulfide bodies could exist on the claims.  Work by Paragon in 2002 located potentially significant gold mineralization in the extreme southwestern portion of the claim group.  Results include sulfide-bearing quartz veins that have returned assays of 2.5 and 3.6 grams per tonne gold.  The claims covering this gold showing were abandoned by us in 2009.  No work has been carried out on the Victoria Lake Claims during the current fiscal year.







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Project Geology




The South Golden Promise claims are underlain mainly by sedimentary and volcanic rocks of the Ordovician Victoria Lake Group which are in turn overlain by the Badger Group sedimentary rocks.  The Victoria Lake Group is dominated in the upper sections by fine grained sedimentary sequences, while the lower portions of the Group are dominated by mafic and felsic volcanic rocks with minor interbedded sedimentary rocks.  The Victoria Lake Group and Badger Group rocks are separated by a regionally important marker horizon of Caradocian shale.




The prominent structures on the property are a major syncline - anticline pair as traced by folds in the Caradocian shale. The folds are tight and upright with a gentle plunge to the northeast.  A penetrative foliation is commonly developed sub parallel to bedding.  Glacial striae showing ice movement to the northeast and south-southeast are observed locally.




The Victoria Lake claims are underlain mainly by volcanic and sedimentary rocks of the Victoria Lake Group.  The felsic volcanic rocks in the area are considered highly prospective for hosting significant massive sulfide deposits and several areas of favorably altered and locally mineralized volcanic rocks are known to occur.  These areas will be the primary target of exploration efforts on that portion of the property.




Exploration and Development




Since acquiring the properties, we have completed several phases of exploration including prospecting, mapping, till and rock sampling as well as excavator trenching on targets defined by the other works.  The Victoria Lake claims also had ground gravity surveying completed to help identify potential massive sulfide targets.  Diamond drilling has been carried out on the gold targets at South Golden Promise and the massive sulfide targets at Victoria Lake.




At South Golden Promise, the work to date has outlined a significant gold-bearing quartz vein system that has been exposed on surface for 170 meters and tested to about 50 meters depth by diamond drilling.  A total of 16 holes were completed at South Golden Promise in 2006 with two holes returning visible gold-bearing quartz veining which assayed a high of 19.5 grams per tonne gold over 1.15 meters.  During 2009, the Gabbro showing, which had previously sampled up to 10 g/t gold from a narrow quartz vein, was trenched without returning significant gold values.




In 2010, a small structural mapping program was completed over the Snow White-Linda showing.




Further work including diamond drilling and trenching of soil geochemical anomalies is recommended for the South Golden Promise gold target.




At Victoria Lake, an 11 hole (2,197 meters) diamond drilling program was completed in 2006.  The program tested several coincidental geological, rock and soil geochemical anomalies as well as geophysical (gravity) anomalies identified by us.  Favorably altered, sulfide-bearing felsic volcanic units were encountered in several of the holes.  The drilling program was managed by Paragon personnel who have extensive experience in the region and who received 8% of the program costs as a management fee.  During 2008, a borehole Pulse EM survey was conducted to test for off-hole conductors that may represent massive sulfides.  Interpretation of the data identified several anomalies suggestive of conductive sources within the vicinity of the diamond drill holes.  An airborne electromagnetic and magnetic survey commenced in December 2010 and several anomalies were outlined.  Future work will be focused on evaluating these anomalies.







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Labrador—Central Mineral Belt





CMB Property and Agreements




On October 14, 2004, we entered into an agreement with a private individual, local prospector Lewis Murphy, for an option to acquire a 90% interest (subject to a 2% NSR and a 10% carried interest to the vendor) in the Moran Lake Property, comprising 67 claims in Central Labrador. On March 1, 2005 we acquired another 187 claims from Lewis Murphy. The amended and restated Moran Lake option agreement calls for exploration expenditures of $3,000,000, the issuance of 400,000 common shares, and cash payments of $575,000, with the balance of the shares and cash payable over a five-year term.  The agreement also requires completion of a bankable feasibility study for the commencement of commercial production on the property within 24 months of completion of the aforementioned obligations.




We subsequently carried out a detailed digital compilation of all the historic work that has been carried out on the property.




To date, we have issued 400,000 common shares, made cash payments totaling $575,000 and spent more than the required minimum $3,000,000 on project expenditures. On May 21, 2008, we entered into an agreement with Mr. Murphy whereby we received a three year extension on the requirement to complete the bankable feasibility study such that the study will be due on or before November 10, 2013. A bankable feasibility study is a comprehensive study of the property in which all geological, engineering, legal, operating, economic, social, environmental and other relevant factors are considered in sufficient detail that it could reasonably serve as the basis for a final




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decision by a financial institution to finance the development of the property for mineral production. Additionally, the Company is required to make advance royalty payments in the amount of $200,000 per year until the commencement of commercial production. The Company is currently involved in a dispute with Mr. Murphy regarding the timing of the advance royalty payments. See “Item 8. Financial Information – 8.A. Consolidated Statements and Other Financial Information – Legal/Arbitration Proceedings – Litigation with Lewis Murphy.”




On December 2, 2005, we entered into an agreement to acquire 56 claims from Triassic Properties Limited, a private St. John’s, Newfoundland based company.  The claims cover historic uranium occurrences and are strategically located within the Moran Lake property holdings.  In order for us to earn a 100% interest in the Otter and Portage Lake claims, subject to a 1.5% NSR to the vendor, we must, over the 3 year term, carry out $600,000 in eligible exploration expenses, issue 56,250 common shares and pay an aggregate of $140,000.  Through April 30, 2009, we have spent $777,373 in exploration costs, issued 56,250 common shares and made cash payments of $140,000, thereby earning a 100% interest in these claims.




In May 2007, we entered into an agreement with Belmont Resources Inc. and International Montoro Resources Inc. whereby we acquired the option to earn a 75% interest in 139 additional claims comprising four different mineral licenses in the Central Mineral Belt of Labrador totaling 34.75 km.  Three of the licenses, referred to as the Stormy Lake block, are contiguous with the southern boundary of the Central Mineral Belt Project, while the other license, referred to as the Partridge River block, is situated approximately 95 km west of the property.  Under the terms of the agreement, we could have earned a 75% interest in the claims by carrying out $800,000 in exploration expenditures and issuing 43,750 common shares to the vendors over a three year period.  On April 1, 2008, we terminated our option on the Stormy Lake block and the Partridge River block.




Property Description and Location




The Central Mineral Belt Property is located in the Central Mineral Belt of Labrador, about 140 km north of the town of Happy Valley-Goose Bay and 85 km southwest of the coastal community of Postville on Kaipokok Bay. In a direct line, the property is about 75 km from tidewater to the northeast.  The undeveloped Michelin uranium deposit is 60 km east-northeast of the Moran Lake Property.  The property area is within the Naskaupi Electoral District of Labrador.




Accessibility




Helicopter and fixed wing service out of Goose Bay are the most efficient means of access to the property.  Local infrastructure is confined to the limited facilities of the community of Postville, which has commercial airline service from Goose Bay and commercial ferry service from St John’s, Newfoundland.  Coastal boats are available to convey goods and passengers from Happy Valley to Postville.  Most necessary goods and services, including charter aircraft, can be obtained in Goose Bay, which has excellent commercial airline connections to St John’s, Halifax and Montreal.




This portion of central Labrador has a sub-Arctic climate, with strong seasonal contrasts marked by short cool summers and long cold winters.  Freeze-up typically begins in late October and lasts until early to mid June.  Snow cover is relatively heavy and usually lasts seven to eight months.  Daytime temperatures during the winter typically range from -15o Celsius to -30o Celsius, while daytime summer temperatures typically range from 15o Celsius to 25o Celsius.




The topography of the Moran Lake area consists of rolling highlands with maximum relief approaching 300m.  The hilltops can be partly barren while the slopes and valleys are covered in vegetation, mostly scrubby black spruce and some deciduous trees with a thick intervening growth of alders.  Almost everywhere there is a thick ground cover of moss.  The valleys are steep sided at many locations and are often host to boggy ground with small ponds or lakes.  Moran Lake, one of the largest lakes on the property, occupies a prominent valley which trends east-northeast.







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History




Uranium was first discovered near Moran Lake by British Newfoundland Exploration Limited (“Brinex”), which conducted prospecting, geological mapping and radiometric surveying in the area from 1956 to 1958. In 1964, Mokta Co. Ltd. (Mokta) acquired a development license for the Moran Lake area and subsequently discovered uranium mineralization at Lady Lake, the site of the present C zone.  In following years, Mokta completed a considerable amount of prospecting, trenching and packsack drilling in the Moran Lake A, B and C zones. In 1969 however, Mokta allowed the development license to expire at which time the license was granted to Brinex, which did no further work on the property.




In 1976, the license was granted to Commodore Mining Company Limited (Commodore) which in turn optioned the property to Shell Canada Resources Limited (Shell).  During September of 1976, Shell performed geological, magnetometer and Track Etch surveys over the B Zone near Henry Lake and did preliminary geological mapping on the C zone.  This led to a 15 hole, 864 meter drill program to test the B Zone uranium mineralization during the winter of 1977.




In the summer of 1977, a full exploration program was carried out on the C Zone including detailed geological mapping, systematic trench sampling, a scintillometer survey and a small drill program totaling eight holes and 497 meters. Uranium mineralization was discovered in a fault zone over which VLF-EM, magnetometer and Track Etch surveys were performed during September.  In the winter of 1978, Shell completed a 17 hole, 1,542 meter drill program to test the uraniferous fault zone and subsequently found high grade uranium mineralization.  The following summer’s exploration program consisted of VLF-EM, magnetometer and altimeter surveys over the entire C Zone, with a 15 hole, 1,581 meter drill program to test the uraniferous zones.  Low grade uranium mineralization was located in altered sandstones above the Aphebian-Helikian unconformity near Lady Lake.  This led to a 1979 winter dril1 program of 17 drill holes totaling 1,193 meters to explore the unconformity and what became later known as Lower C Zone.




In the summer of 1979, Shell undertook a review of its Moran Lake project.  Drill core from the Upper C zone (C-1 to C-35) was re-logged by one person and multiple samples were taken for thin section study and 30 element spectrographic analysis.  This work led to the appreciation that the rocks were extensively altered, that the identification of primary lithologies was in many cases dubious, that the uranium mineralization was associated with alteration and that there was a definable geometry to the alteration package.  The property was considered to have good uranium potential and an 8 hole, 1,400 meter drill program was proposed but never carried out as Shell abandoned its interest in the area due to a decline in uranium prices.




Lewis Murphy acquired the Moran Lake claims in 2003 and optioned the ground to us in October of 2004.  In 2003, an airborne gravity survey of the area located an interpreted 4 milligal to 8 milligal gravity anomaly, elliptical in shape, about 4 km long and centered between the Moran B and C zones. Considering the spatial association of uranium with brecciated, highly silicified, carbonatized and hematized rocks, plus locally significant concentrations of copper, silver and gold mineralization, we invoked the analogy with Iron Oxide Copper Gold (IOCG) deposit types, as at the Olympic Dam copper-uranium deposit in Australia.




Since acquiring the Moran Lake property in October 2004, we have embarked on an aggressive program including airborne radiometric and magnetic surveys, compilation of previous work including sampling archived drill core from the 1970’s Shell Canada Resources drilling, and commencement of diamond drilling in January of 2006.  A more detailed description of the exploration program is included below under “Exploration”.




Property Geology




The Moran Lake Property was staked in a configuration to cover as much mineralized Paleoproterozoic stratigraphy as was available encompassing mostly rocks of the Moran Lake Group and the overlying Heggart Lake, Brown Lake and Sylvia Lake Formations of the Bruce River Group, both groups containing known occurrences of uranium, Cu, Pb, Zn, Ag, F and iron (as pyrite and hematite).







29





The Moran Lake Group unconformably overlies Archean gneisses and granites of the Nain Province. The basal unit, the Warren Creek Formation was deposited in a low energy, shallow shoreline or shelf environment and consists mainly of black graphitic, grey and green shale and siltstone containing local interbeds of dolostone, chert and black conglomerate with siltstone and shale clasts. The Warren Creek Formation ranges from perhaps 1,200 meter up to 3,000 meter in thickness and is overlain conformably by 100 meter to 300 meter thickness of the Joe Pond Formation, a sequence of light- to dark-green, fine grained, massive and pillowed basalt and mafic tuff with occasional interbeds of variably colored chert or grey dolostone. Rocks of the Moran Lake Group occupy a northeasterly trending belt which underlies the northern portion of the Moran Lake Property.




The Bruce River Group consists of a basal, polymictic conglomerate and sandstone of the Heggart Lake Formation overlain by polymictic conglomerate and tuffaceous sandstone of the Brown Lake Formation.  The uppermost and thickest unit of the Bruce River Group is the Sylvia Lake Formation, a bimodal, potassic calc-alkaline assemblage of predominantly subaerial volcanic rocks which are coeval with the plutons of the Trans Labrador Batholith.  Northerly directed compression during the Grenville orogenic event folded the Bruce River Group into a northeast-trending, open, upright syncline.




Exploration




After acquiring the property in October of 2004, we immediately launched a comprehensive review and compilation of all previous exploration carried out in the area.  The results of the review confirmed that the property had considerable potential to host several types of uranium deposits including uranium-rich iron oxide copper gold deposits (IOCG).




Exploration work on the property by us has included line cutting, airborne and ground geophysical surveys, lake sediment sampling, till geochemical and alpha track surveys, biogeochemical surveys, prospecting, limited hand trenching, mechanical trenching, geological mapping and diamond drilling.  An airborne radiometric and magnetic survey totaling 7,312 line kilometers covering the entire property was carried out by Fugro Airborne Surveys in 2005.  A supplemental airborne survey totaling 675 kilometers covering several claims acquired subsequent to the 2005 survey was carried out by Fugro in 2006.  In 2007, a helicopter supported electromagnetic and magnetic (HeliGEOTEM) survey totaling approximately 4,500 line kilometers was carried out over two different blocks on the property.  The ground geophysical surveys include gravity, induced potential (IP), and horizontal loop EM (Max-Min) surveys.  Follow-up of targets identified from interpretation of the various data has resulted in the discovery of several new showings and target areas, some of which have been drill tested as well as others that are being advanced to the drill ready stage.




In 2008 an Independent NI 43-101 Technical Report was commissioned, which included an updated resource estimate for the Upper and Lower C Zones based on drilling up to May 2008, as well as resource estimates for two new zones of uranium mineralization discovered by Crosshair, these being the Trout Pond (Area 1) and Armstrong zones (the “2008 CMB Report”).  The 2008 CMB Report reportedtotal indicated resource for the Upper C Zone is 5.19 million pounds of U3O8 (6.92 million tonnes grading 0.034% U3O8). The Upper C Zone also contains additional resources in the inferred category which, when combined with the inferred resources in the Lower C Zone, Trout Pond and Armstrong zones total5.83 million pounds of U3O8 (8.17 million tonnes grading 0.032% U3O8).With the exception of the Lower C Zone, these estimates are reported at a block cut-off of 0.015%U3O8.The cut-off grades are considered appropriate for the location and cost profile that can be expected for open pit mining.  In the case of the Lower C Zone, a cut-off grade of 0.035% U3O8is used for reporting purposes, reflecting higher costs associated with underground mining.




Drilling




We launched our first drill program in February 2006, completing approximately 2,750 meters of drilling in 19 holes at the C Zone.  Further drilling using two drill rigs and totaling over 18,500 meters was carried out during the summer of 2006, followed by an additional 9,400 meters of drilling during the winter of 2007.  The 2007 summer program was our most aggressive program, with over 28,000 meters of drilling using three rigs.  This was followed by over 12,000 meters during the 2008 winter program.  The drilling programs focused on defining uranium







30





mineralization at the C Zone, which represents the most advanced uranium target on the property, but also tested targets at Area 1, Armstrong, B Zone, Area 51, Moran Heights, Madsen Lake and Croteau Lake.




Our 2006 drill program totaled 21,486 meters and consisted of 137 holes, of which 58 tested the Upper C Zone and 10 tested the Lower C Zone.  The remainder of the holes tested seven other anomalies or showings on the property.  From late January 2007 to late April 2007, we carried out further drilling at the C Zone as well as limited drilling at Area 1 and the Armstrong and Dominion showings.  Total drilling in the winter of 2007 amounted to 9,410 meters in 34 holes.  At the C Zone, our 2007 winter drill program consisted of 8,211 meters in 26 holes.  Fifteen of the holes tested both the Upper and Lower C Zone, 6 holes (1,042 meters) tested the Upper C Zone only, and 5 holes (1,166 meters) tested the Lower C Zone.  The program expanded the C Zone mineralization along strike and to depth.  The program also included the intersection of the thickest and highest grades of uranium reported from the Lower C Zone.




The summer 2007 drill program totaled 28,745 meters in 121 holes.  Eighty-nine of those holes (15,727 meter) were targeting the C Zone, with the goal of upgrading and expanding the existing NI 43-101 resource.  Drilling intercepted the highest and thickest grades to date including 0.202% U3O8 over 22.4 meters as part of a wider zone grading 0.100% U3O8 over 46.3 meters in hole ML-122 and 0.100% U3O8 over 45.7 meters as part of a much wider interval that assayed 0.074% U3O8 over 71.3 meters in ML-87.  A total of 26 holes (2,820 meters) were drilled at Area 1 in the 2007 summer program and 6 holes (784 meters) at Croteau Lake.




Our 2008 winter drill program consisted of 55 holes totaling 12,198 meters.  Drilling was focused at Armstrong, which is believed to anchor the southern end of the same 4.5 kilometer long trend that hosts the C Zone to the north and Area 1 in the middle.  A total of 6,366 meters in 30 holes were drilled in this recently discovered zone, with highlights from ML-AR-26, which returned 0.20% U3O8 over 9.5 meters including 1.10% U3O8 over 1.6 meters.




The summer 2008 drill program consisted of 3,516 meters in 19 holes.  Eleven of the holes (2,035 meters) tested the C Zone, while 6 of the holes (1,276 meters) tested targets at Area 1 and two holes (205 meters) were drilled at Madsen Lake in the central portion of the CMB Property.




With our latest drilling, we have expanded the C Zone to a strike length of 1,500 meters, Area 1 to 600 meters and Armstrong to 300 meters.  All zones of mineralization are open for expansion, both along strike and to depth.




In December 2008, a previously unidentified zone of uranium mineralization, referred to as the “Apollo Zone” was discovered.  During the summer of 2008, follow-up prospecting of several anomalies identified in 2006 revealed significant uranium mineralization over a 500 meter strike length. The Apollo Zone returned grab samples assaying up to 0.50% U3O8 in outcrop and 0.20% U3O8 in local boulders. This new zone appears to lie along strike of the Boiteau Lake Showing (0.79% U3O8) announced by Bayswater Uranium Corp. in November 2008.  The Boiteau Lake Showing lies very close to the Crosshair/Bayswater property boundary and the trend is open along strike for the 7 kilometers between the showing and the Apollo Zone.  The Apollo Zone lies approximately 11 kilometers NE from the C Zone uranium resource and approximately 3 kilometers south of previously discovered Blue Star, where sampling by Crosshair in 2006 returned values of up to 1.37% U3O8 outcrop. To date on the Moran Lake property, we have completed 366 holes totaling over 65,000 meters.  One hundred and ninety-three holes have been drilled at the C Zone, 55 at Area 1, and 32 at Armstrong.  Several other areas have also been drill tested, including the B Zone, Moran Heights, Area 51, Croteau Lake, and Madsen Lake.  All programs have been helicopter supported producing BTW size drill core.




In December 2010, the Company completed a vanadium resource expansion program and outlined an NI 43-101 resource of 42.8 million pounds of vanadium (14.7 million tonnes at 0.15% V2O5) in the indicated category and an additional 93.6 million pounds (28.3 million tonnes at 0.16% V2O5) in the inferred category. The 2011 CMB Report was filed on SEDAR and is available on the Company’s website.







31





Current Exploration




The 2011 summer program will consist of drilling, prospecting, sampling and trenching.  The goal of the program is to increase the existing uranium and vanadium resources as well as test other exploration targets. A budget of approximately $1.2 million has been allotted for this program, which is expected to take 3 months to complete.




Otter and Portage Lake Properties




On December 2, 2005, we entered into an agreement with a private company for an option to acquire a 100% interest (subject to a 1.5% NSR) in the Otter and Portage Lake properties totaling 56 claims.  The new claims are located in the southern portion of the property, considered by our geological team as being highly prospective for Michelin or “shear zone type” uranium deposits.  Michelin is an advanced uranium project held by Aurora Energy Resources Inc. located 60 kilometers east-northeast of the Moran Lake property with inferred reserves of 32 million pounds of U3O8.  The Otter and Portage Lake properties host previously known uranium occurrences discovered in the 1950’s, but which have not been thoroughly explored. Surface sampling has returned up to 2% U3O8 from grab sampling along a four kilometer strike length of anomalous radioactivity.  Geological mapping, rock sampling, as well as Alpha Track, till sampling and lake sediment surveys were carried out in 2007.




CMB-JV Property and Agreement




In July 2008, we acquired a 60% interest in 4,741 claims in the Central Mineral Belt from Expedition by paying CDN $500,000 and issuing 2,500,000 common shares and 1,875,000 warrants to Expedition.  The claims were part of a property agreement between Expedition and Silver Spruce, under which Expedition had earned a 60% interest.  The claims are host to the Two Time deposit.




Silver Spruce declined to participate in last summer’s program and has diluted its interest to a 37.40% interest.  They have declined to participate in the current drill program and will continue to dilute.  Once their interest reaches less than 10%, their interest converts to a 2% Net Smelter Return Royalty.




Property Description and Location




The CMB-JV Project comprises 800 map-staked claims in several separate claim blocks located roughly 150 kilometers north of the town of Happy Valley – Goose Bay, Labrador.  Approximately half of the claims are contiguous with Crosshair’s 100% owned claims located near Moran Lake, while most of the remaining claims are situated south and southeast of the coastal community of Postville on Kaipokok Bay.




Property Geology




The CMB-JV Project is situated within the Central Mineral Belt (CMB) of Labrador, a geological province comprising six Proterozoic sequences of volcanic, sedimentary and plutonic rocks ranging in age from about 2.0 to 1.3 billion years and include, from oldest to youngest, the Post Hill, Moran Lake, Aillik, Bruce River, Letitia Lake and Seal Lake Groups.  The CMB includes portions of 4 major tectonic provinces, these being the Nain, Makkovik and Grenville provinces, and the Hopedale Block of the Archean Nain Province.  The easternmost claims of the CMB-JV Project lie within the Makkovik Province, while the westernmost claims of the CMB-JV Project generally lie along the boundary between the Nain, Churchill and Grenville Province.




Exploration




Exploration by Silver Spruce and Expedition includes an airborne magnetic radiometric survey over all the claims, as well as limited follow-up over most of the claims including geological mapping, prospecting and lake sediment sampling.  Exploration to date has focused on the claim blocks hosting the Two Time deposit, where work has been more extensive and includes line cutting, ground scintillometer surveying, soil, till, lake, and stream sediment sampling, ground radon (RadonEx) surveying, prospecting, trenching, geological mapping, and diamond drilling.







32





The most significant discovery to date on the CMB-JV claims has been the Two Time deposit, which was discovered as a result of follow-up of a high priority airborne radiometric anomaly.  The Two Time zone is hosted within brecciated and fractured granitic to dioritic intrusive rocks of the Kanairiktok Intrusive Suite characterized by hematite, carbonate, and chlorite alteration.  A number of other showings and prospects have also been discovered on the claim block, including the Firestone Showing, Doucette, HF, J, F, and W occurrences.




Drilling




The only drilling carried out on the CMB-JV Project has been on the ‘CMB-NW (Northwest)’ claim block, which is contiguous with the northern portion of Crosshair’s 100% owned CMB Project.  Diamond drilling carried out to date by Silver Spruce and Expedition totals 11,196 meters in 44 holes.  Highlights include 0.118% U3O8 over 28.00 meters in hole CMB-07-06, 0.101% U3O8 over 33.00 meters in hole CMB-07-14, and 0.112% U3O8 over 19.00 meters in hole CMB-07-34.




Based on the drilling results, an NI 43-101 compliant indicated resource of 2.33 million pounds of U3O8 (1.82 million tonnes grading 0.058% U3O8) and additional inferred resource of 3.73 million pounds of U3O8 (3.16 million tonnes grading 0.053% U3O8) was estimated for the Two Time zone using a cut-off grade of 0.03% U3O8.  The resource estimate is disclosed in the CMB JV Report which was prepared in accordance with the standards of NI 43-101 and the definitions of the CIM Standards and has been filed on SEDAR.  The Two Time zone remains open to depth and along strike to the south.




During the summers of 2009 and 2010, Crosshair carried out geological mapping, prospecting and sampling programs to evaluate priority targets generated from the airborne surveys.  Several new uranium showings were discovered and these will be followed up during the 2011 summer trenching and drilling program.




Two of the new targets, South Brook and Running Man, were found on the CMB-JL Property, which is located directly to the west of the Jacques Lake Deposit, recently purchased by Paladin Energy from Aurora Energy / Fronteer Development Group.  Forty Six (46) samples from the South Brook Showing gave results ranging from 0.03% to 0.46% U3O8, averaging 0.11%.  The showing is outlined by anomalous float and bedrock occurrences for approximately 3.5 kilometres (km).  The Running Man Showing is located approximately 5.5 km southeast of the South Brook Showing and consists of a 2 km long, linear airborne radiometric anomaly where 21 samples gave values from 0.03% to 0.28% U3O8.




The Big Bear Showing is located on the CMB-NE Property, approximately 20 km northeast of CMB-JL.  The showing, in a 1.25 km long corridor of anomalous bedrock radioactivity, is hosted in altered granitic rocks and gave results ranging from 0.02% to 0.1% U3O8, averaging 0.06%.







33





Wyoming – Bootheel and Buck Point Properties












On March 31, 2009, we acquired the Bootheel and Buck Point Properties in Wyoming, USA through the acquisition of Target via Plan of Arrangement.




On June 7, 2007, Target, now a wholly owned Crosshair subsidiary, entered into an agreement to form the Bootheel Project, LLC with URE whereby Target may acquire a 75% participating interest in two uranium properties, the Bootheel and Buck Point properties located in the Shirley Basin, Albany County, Wyoming (the “Bootheel Project”) by completing expenditures totalling US $3 million and issuing 31,250 common shares on or before June 7, 2011. Target has earned its 75% interest in the property as all shares have been issued and US $3.1 million had been spent as of April 30, 2010.




Under Agreements dated February 5, 2008 between M J Ranches, and 448018 as manager, the Bootheel Project LLC leased MJ Ranches’ 75% ownership of the minerals located under four sections and the surface access rights to six sections adjacent to portions of the ground controlled by The Bootheel Project LLC.  The initial term of the




34





agreement is for five years with provision for two renewals.  Payment for the initial five year term is $252,651 paid in advance, increased for inflation for the renewal periods.  The Fee Lands are subject to a sliding scale Royalty tied to the sales price of uranium.




An additional five fractional claims were staked in December 2009, and The Bootheel Project LLC now comprises a 100% mineral interest in 274 Federal Unpatented Mining Claims, two state leases and a 75% mineral interest in four fee sections for a total of 8,524 gross acres and surface access rights to 7,882 acres.




The following information on the Bootheel Project is summarized from the Bootheel Report, an Independent Technical Report compliant with NI 43-101.




Property Location




The Bootheel and Buck Point properties are located in Albany County on the southeast edge of the Shirley Basin approximately 60 miles southeast of Casper, Wyoming and 25 miles southeast of Medicine Bow.




The Bootheel property comprises about 6,113 gross mineral acres consisting of one 640 acre Wyoming State Mineral Lease No 0-40774, 167 unpatented Federal lode mining claims including approximately 2,597 acres, and one mineral lease for approximately 2,516 acres of fee land owned by MJ Ranches Inc. (MJ Ranches). The lode mining claims control the subsurface mineral rights and are administered by the U.S. Bureau of Land Management (BLM). In addition, a surface lease with MJ Ranches provides access to 5,390 acres of the land to which BP LLC has mineral rights.




Accessibility




The Shirley Basin property is readily accessible year-round by an extensive system of county gravel and unimproved ranch roads extending east from U.S. Highways 30 and 287 and Wyoming Road 487. The all season maintained gravel County Road Number 61 (Fetterman Road) crosses the Bootheel property.




History




Uranium was discovered in the Shirley Basin in 1955 by Teton Exploration Drilling Co., who found ore-grade material by drilling west of the Little Medicine Bow River in the western part of the Shirley Basin, 30 mi south of Casper.  In the summer of 1957, several thousand claims were staked over 150 square mi.  By the end of 1959, over 1,000,000 ft of drilling had been completed through the mineralized Wind River Formation, and into underlying pre-Tertiary rocks.  In 1959, Utah Mining Corp. later Utah Construction and Mining Co. (Utah) sank a shaft on their property and the first uranium was produced in March 1960, with ore shipped to the Lucky Mc mill in the Gas Hills area west of Casper.  Late in 1964, the company stopped underground mining and commenced an in-situ leach operation using sulphuric acid and ion exchange for recovery.  Production amounted to approximately 200,000 pounds of U3O8 per year through 1970. In 1970, the ISR operation was replaced by a conventional mine and mill.





In July 1960, Petrotomics Co. commenced an open-pit operation in the same area and in 1962 a solvent extraction facility was built on the property.  A second pit commenced operation in 1966.  By late 1969, there were three operating mines in the Shirley Basin, those of Petrotomics and Utah, as well as Kerr McGee Corp. (“Kerr-McGee”).





Total production from the Basin amounted to about 34 million lbs of uranium. The last mine closed in 1992 and most of the pits have been reclaimed.  Cogema Mining Inc. retains one pit, which is used for the disposal of low-level radioactive waste from the ISR operations in the Powder River Basin.





The Bootheel property was originally staked in 1958 by Kerr McGee Corp. Kerr McGee drilling (283 holes) discovered both shallow oxidized and deeper uranium mineralization in sandstones but dropped the property in 1962.  The company re-acquired the property in 1968, and again abandoned it.  Rocky Mountain Energy Corporation (Union Pacific Railroad) also conducted limited drilling in the early 1970s.  In 1977, Cherokee




35





Exploration Inc. (“Cherokee”) obtained a land package, as well as the Kerr McGee database and formed an exploration and drilling participation agreement with Uranium Resources and Development Company (“URADCO”), a subsidiary of Pennsylvania Power and Light.  Drilling from 1978 to 1980 partly delineated both shallow and deep sandstone mineralization.  Drilling by Kerr McGee Corporation, Cherokee, URADCO and others intersected significant uranium mineralization in sandstones at depths ranging from 150 to 600 feet. Grades and thickness range from 2 feet at 0.12% U3O8 to 22.5 feet at 0.071% U3O8.




Dames & Moore estimated a historical resource included in a report dated 1980, for parts of the property.  Nuclear Assurance Corporation (NAC) completed a study in 1982 reporting the reserves and resources shown in Table 4.D.-1.  As was industry standard for reporting in the 1980s, tonnages are not provided in the reports.  Reserves are reported using a minimum grade of 0.02% eU3O8 and a GT of 0.12 ft%.





TABLE 4.D.-1 – HISTORICAL RESOURCESClassification
Age of Formation
Av. Thick. (ft)
Av grade (%eU3O8)
Av GT
Pounds eU3O8Measured + Indicated Reserves
Jurassic
14.9
0.037
0.55
2,625,000Measured + Indicated Resources
Tertiary
4.9
0.078
0.38
1,095,000Inferred Resources
Jurassic
11.4
0.044
0.50
2,801,000Geological Resources
Jurassic, Cretaceous.
Not reported
Not Reported
Not Reported
4,462,000TOTAL




10,983,000





These resources are historical in nature and were compiled before the implementation of NI 43-101 reporting standards.  Readers are cautioned that recent independent verification of the data has not been performed and we have not completed sufficient exploration to verify the historical resource and reserve estimates.  The categories of mineralization used are not those prescribed by the Canadian Institute of Mining, Metallurgy and Petroleum and stipulated in NI 43-101 but with the exception of the Geological Resources they would correspond to indicated or inferred resources under those guidelines. Additional drilling will be required to verify this resource and classify it under the current standards. Given the quality of the historic work completed on the property, Crosshair believes the resource estimate to be both relevant and reliable. However, a qualified person has not completed sufficient work to classify the historic mineral resources as current mineral resources or mineral reserves as defined in NI 43-101, and Crosshair is not treating the historic resources as current. Therefore, the historical resource estimate should not be relied upon.





In 1995, Cherokee sold the project and database to Cameco Corp. (“Cameco”) who carried out limited drilling and evaluation of the in-situ recovery potential. Although the results were very favorable, Cameco abandoned the property in 1998 due to the low uranium price ($10 per pound). Total drilling on the property is estimated to be over 600,000 feet. The known uranium zone on the property remains open for expansion.




The Bootheel Project LLC acquired a database from Power Resources Inc. that includes reports, gamma logs, drill logs and other data which primarily cover the Federal mining claims but also include some historic data from the surrounding fee land.





On January 15, 2009 the Bootheel Project LLC acquired additional data from Cameco which covers the four fee sections under lease from MJ Ranches.  The data includes historical geological and gamma logs covering 660 drill holes totalling approximately 290,000 feet.  Compilation to date indicates that there have been approximately 1,900 drill holes totalling in excess of 600,000 ft, completed on the property and the surrounding area.





The Buck Point property was drilled in 1979 and 1980 by Cherokee and Mobil Oil Corp.   Mineralization has been found in at least six sandstone units over a 250 ft. interval, with grades up to 0.10% U3O8.  No further work has been carried out on the property since then.







36





Property Geology




The Bootheel Project is located at the south-eastern margin of the Shirley Basin, along the western flank of the Laramie Mountains.  Tertiary sediments occupy the entire surface area of the property and unconformably overlie a gently dipping, relatively undisturbed sequence of Paleozoic and Mesozoic sediments.  A moderate degree of block faulting and some gentle folding are the main structural features and mostly affect pre-Tertiary rocks.





Uranium mineralization occurs within seven different sandstone beds within the gently dipping Jurassic and Cretaceous stratigraphy and within the overlying Tertiary Wind River Formation.  Five horizons host significant mineralization and have the potential to host economic resources: 1) Jurassic Sundance Formation containing the Canyon Springs B and D Beds, 2) Cretaceous Dakota Sandstone, 3) Cretaceous Rusty Beds Sandstone, 4) Cretaceous Muddy Sandstone and 5) Tertiary Wind River Formation.  Three other Cretaceous horizons (Lakota Sandstone, Fuson Shale and Wall Sandstone) contain scattered weak mineralization, but are not considered exploration targets at this time.





Two major zones of mineralization are recognized within the Sundance Formation.  The main zone in Sections 36 and 1 stretches for over 7,000 ft in length and reaches widths of up to 400 ft and is described as a series of tabular zones.  In Sections 6 and 7 the mineralization shows the characteristic roll front shape with the main northeast –trending nose extending approximately 1,900 ft in length.  These zones vary from 2 to 60 ft in thickness, averaging from 0.017% to 0.216% eU3O8 occurring at depths of 158 to 585 ft.  Length of the individual bodies ranges from 300 to 1,300 ft.





Three Cretaceous sandstone units host uranium mineralization.  The Dakota Sandstone ranges from 4 to 47 ft thick and contains abundant pyrite and carbonaceous material.  Uranium mineralization ranging from 2 to 14 ft thick, grades from 0.026% to 0.23% eU3O8 and occurs from 163 to 325 ft below the surface.  The main zone is about 300 ft wide and 1,000 ft long.  The Rusty Beds range from 5 to 87 ft thick, and contain abundant pyrite and carbonaceous debris.  Mineralization is 2 to 18 ft thick, grades from 0.020% to 0.11% eU3O8 and occurs from 232 to 297 ft below the surface.  Mineralization occurs in three small zones, 300 to 400 ft in size.  The Muddy Sandstone is 18 to 45 ft thick and is the least well mineralized of the Cretaceous units, with only one zone, about 200 ft by 400 ft in dimension, drilled to date.  This zone ranges from 2 to 6 ft thick, grades from 0.145% to 0.157% eU3O8 and is relatively shallow at 138 to 149 ft below the surface.





Tertiary Wind River Formation mineralization is typically thin, high grade, meandering and somewhat laterally discontinuous.  The Wind River ranges from 25 to 270 ft thick, averaging 150 ft.  The mineralized zones are typically 2 to 24 ft thick, averaging 5 ft, from 0.016% to 0.520% eU3O8 and occur from 50 to 215 ft below the surface.  The two main zones are up to 700 ft in width and 1,670 ft in length.





Exploration and Development




The 2008 drilling program, designed to further test the mineralized Sundance Formation, consisted of 93 vertical holes averaging 540 feet in depth and totaling 50,163 ft.  Of these holes, 12 were spot cored through the Sundance Formation resulting in 708.5 ft of core.  Drilling commenced in June and was completed September 20, 2008.  Virtually all historic drill hole sites within the main resource zone were resurveyed.




In addition to the drilling program, the historic holes were relocated, limited ground radiometric and water sampling surveys were carried out.   On February 5, 2009 Target reported that preliminary bottle roll tests had confirmed historical metallurgical test work indicating uranium recoveries of 87% or better using sodium bicarbonate as a lixiviant.




The final historic drill data set acquired from Cameco in January 2009 was compiled by our geological team and  combined with the results from over 50,000 feet of drilling completed by Target at Bootheel in 2008.  This compilation allowed us to complete the Bootheel Report.  The estimate includes an indicated resource of 1.09 million pounds of uranium oxide (1.44 million tons at 0.038% eU3O8) and an additional inferred resource of 3.25







37





million pounds of uranium oxide (4.40 million tons at 0.037% eU3O8).  The resource remains open for expansion with less than 60% of the historical resource area included in this initial estimate.




Activities in fiscal 2011 included further base line environmental studies.  A Sage Grouse and Raptor survey was completed in June.  The Nuclear Regulatory Commission was notified in August of the Company`s intention to file a permit application in 2012.




In the summer 2011, Crosshair plans on carrying out a $1.5 million exploration program, which will consist of further drilling, hydrogeological tests and continued permitting.  The goal of the program is to capture the balance of the historical uranium resource and complete a new resource estimate to be followed by a scoping study.




Wyoming – Juniper Ridge Property










The Juniper Ridge Property, located in Carbon County, southwest Wyoming, comprises 197 claims and one state mineral lease totalling 4,710 acres (1,906 Ha) in size.




On October 29, 2010, we signed a definitive agreement with Strathmore Resources Ltd. (“Strathmore”), a wholly owned subsidiary of Strathmore Minerals Corp. to acquire the Juniper Ridge uranium property.  The aggregate total price for a 100% interest in the property will be satisfied as follows:






38




In Cash (USD)

In Shares (USD)

Total (USD)Upon signing of the agreement (paid)
$
25,000
$
-
$
25,000By November 15, 2010 (paid)

175,000

-

175,000By October 29, 2011

250,000

250,000

500,000By October 29, 2012 (1)

1,250,000

1,250,000

2,500,000By October 29, 2013 (1)

1,250,000

1,250,000

2,500,000Upon obtaining production permit (2)

1,500,000

-

1,500,000$
4,250,000
$
2,750,000
$
7,000,000




1 These amounts are based on the estimated 5 million pounds uranium reserves at US $0.50 per pound.  Actual payments will be based on the measured, indicated and inferred uranium resources as defined by the NI 43-101 technical report.




2 This amount is based on the estimated 5 million pounds uranium reserves at US $0.30 per pound.  Actual payments will be based on the proven and probable uranium reserves as determined by prefeasibility or feasibility study.  At the option of Strathmore, the Company will make this payment in cash, shares or a combination of cash and shares.




Title to the Juniper Ridge property will be conditionally transferred to the Company by Strathmore upon making the initial payments of US$700,000 (US$250,000 of which is payable in common shares of Crosshair).  The Company can terminate the acquisition agreement at any time upon written notice, without any further liabilities to the Company.  Strathmore will retain a 2% Gross Revenue Royalty on the property.  The Company has the option to repurchase this royalty at any time during the first three years after commencement of commercial production for US $1.5 million for each 1% of the Gross Revenue Royalty.




Location




The property is located in Carbon County, 60 miles south of Rawlins and the I-80, 6 miles west of Baggs and 2 miles north of the Wyoming Colorado border.




Accessibility




A well maintained gravel road from Baggs crosses the property.  Numerous two-tracks provide easy access to the all of the property from the main road.  Haydon, Colorado, 75 miles southeast of Baggs, is the nearest airport with commercial air service.




History




The property has seen limited production from shallow open pits in the 1950s and 1960s.  It has been reported that 156,000 tons grading 0.172% U3O8 were mined which resulted in the production of 536,000 pounds of uranium.  Urangeshellschaft (“UG”) acquired the property in the 1970s and carried out an extensive program consisting of drilling, metallurgical test work and other technical studies on the feasibility of taking the property to production as an open pit heap-leach operation. Due to low uranium prices the property was sold to AGIP Mining Company (“AGIP”) in 1981 who re-evaluated the property with additional drilling and technical studies in 1982 and 1986.  The earlier study proposed an open pit and heap-leach scenario with a projected 80% recovery while the later study proposed an open pit and conventional mill circuit with an expected 90% recovery using alkaline leaching.  The studies were based on gamma logs from over 4,000 rotary holes and 200 core holes.







39





The most recent historical estimate completed by AGIP in 1986 is 5.2 million tons grading 0.067% eU3O8 for a total 6.97 million pounds of uranium.  This historical resource estimate was based on half-foot interval gamma logs using a tonnage factor of 17.0 cubic feet per short ton, and cut-offs of 0.03% eU3O8 over a minimum 2.0 foot interval.  The resource was estimated using the polygonal method with a maximum 50 foot radius.  This resource estimate was completed prior to the implementation of NI 43-101 and is not compliant with current accepted reserve and resource classifications as set forth by the Canadian Institute of Mining and Metallurgy.  Additional drilling will be required to verify this resource and classify it under the current standards.  Given the quality of the historic work completed on the property, we believe the resource estimate to be both relevant and reliable.  However, a qualified person has not completed sufficient work to classify the historic mineral resources as current mineral resources or mineral reserves as defined in NI 43-101, and we are not treating the historic resources as current.  Therefore, the historical resource estimate should not be relied upon.




AGIP dropped the property in the mid 1980s due to the low price of uranium.  No work has been carried out on the property since then.




Geology




The Juniper Ridge uranium property is located within a small subsidiary basin on the southeast flank of the Washakie Basin.  This basin, as defined by the outcropping Browns Park formation is about 10 miles square appears to be a small tectonic graben down-dropped post Eocene but pre-Browns Park time.  Dominant structures are east-trending high angle normal faults.  Minor east-west trending folds cut through the basin but the effects on the Browns Park are not significant.




Rocks ranging from Cretaceous to recent outcrop in the region surrounding the basin.  The Browns Park is the only Miocene age outcropping in the basin and was deposited on a highly irregular erosion surface.  The formation has a dip of 5oor less.  The base of the Browns Park consists of a conglomerate, unconformably overlying the Wasatch Formation.  The conglomerate is 5 to 75 feet thick and contains quartz and igneous pebbles in a sandstone matrix. Overlying the conglomerate is tuffaceous fine-grained feldspathic sandstone with a bi-model grain size.  The upper unit consists of a similar tuffaceous sandstone but it is a very fine-grained unimodal sandstone.  Both the middle and upper units contain up to 20% clay in the form of montmorillonite or kaolinite.  The consensus of most geologists is that the upper two units are eolian in origin.




Mineralization




Oxidation of the host sandstone is generally less than 60 feet.  Secondary uranium minerals in this zone include autunite, meta-autunite uranophane and schroeckingerite.  The better mineralization is in the un-oxidized sections and is reported to contain autunite, coffinite and uraninite.  Mineralization is largely restricted to the sandstone units above the conglomerate.  It is reported that based on the electric logs there is a tendency for the mineralization to occur between finer and coarser units deposited along classical roll fronts.  Mineralization is predominately parallel to the sedimentary structures but occasionally crosses some structures.  Localization of the uranium appears to be the result of the presence of pyrite or hydrogen sulphide as there is an active gas reservoir at depth.  D Robertson determined that at very low grades, about 0.008%, the mineralization was continuous for several thousand feet but at grades above 0.05% continuity varied between tens of feet to several hundreds of feet.  In an examination of 80 twinned holes (5 to 12 feet apart) there were significant variations in grade and thickness over very short distances.




Exploration and Development




We have not completed any work on the property since the acquisition in 2010 but an 80,000 foot drill program is planned for the spring and summer of 2011.




ITEM 4A.
UNRESOLVED STAFF COMMENTS




Not applicable







40





ITEM 5.                     OPERATING AND FINANCIAL REVIEW AND PROSPECTS




The following discussion for the fiscal years ended April 30, 2011, 2010, and 2009 should be read in conjunction with our audited financial statements for the referenced periods and the notes thereto, and in particular Note 17 related to Differences Between Canadian and United States Generally Accepted Accounting Principles,included in this Annual Report.  Our financial statements have been prepared in accordance with Canadian GAAP and reconciled to US GAAP.  We are a Canadian company and therefore our financial statements have been prepared in Canadian dollars.




Overview




The Company is a mineral exploration company engaged in acquiring, exploring and developing mineral properties and its focus is primarily uranium, base and precious metals.  The Company does not have any producing mineral properties at this time.  The Company’s business is presently focused on the exploration and evaluation of various mineral deposits in North America.  The Company’s shares trade on Toronto Stock Exchange and on NYSE AMEX Exchange.




The Company is currently focusing on exploration activities in the province of Newfoundland and Labrador, Canada and the States of Wyoming and Utah, USA on the following properties:






·
Central Mineral Belt (“CMB”) Uranium Project in Labrador




·
Central Mineral Belt Joint Venture (“CMB JV”) Uranium Project with Silver Spruce Resources Ltd. in Labrador




·
Golden Promise Project, consisting of the Golden Promise, Southern Golden Promise and Victoria Lake Properties in Newfoundland




·
Bootheel Uranium (“Bootheel”) Project with URE in Wyoming




·
Juniper Ridge Property (“Juniper Ridge”) in Wyoming





For fiscal year ended April 30, 2011 the Company reported a net loss of $2,086,719 or $0.05 per common share, compared with a net loss of $2,321,078 or $0.08 per common share for the prior fiscal year.   While figures have been prepared using Canadian generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due, certain conditions and events cast significant doubt on the validity of this assumption.  For the year ended April 30, 2011, the Company reported a loss of $2,086,719 and as at that date had an accumulated deficit of $55,781,355. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional funding from loans or equity financings or through other arrangements. To raise funds for operations, the Company is pursuing merger and acquisition opportunities, in conjunction with private or institutional financing.  However, there can be no assurance that these activities will be successful.




Recent Canadian Accounting Pronouncements




Business combinations, consolidated financial statements and non-controlling interest




In January 2009, the CICA issued CICA Handbook Section 1582, “Business Combinations”, Section 1601, “Consolidations”, and Section 1602, “Non-Controlling Interests”. These sections replace the former Section 1581, “Business Combinations”, and Section 1600, “Consolidated Financial Statements”, and establish a new section for accounting for a non-controlling interest in a subsidiary. Section 1582 establishes standards for the accounting for a business combination, and states that all assets and liabilities of an acquired business will be recorded at fair value. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition-related costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the acquisition date. It provides the Canadian equivalent to IFRS 3, Business Combinations (January 2008). The section applies prospectively to business combinations for which the







41





acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011.




Section 1601 establishes standards for the preparation of consolidated financial statements.




Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in the preparation of consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of IFRS International Accounting Standards (“IAS”) 27, Consolidated and Separate Financial Statements (January 2008).




Sections 1601 and 1602 apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption of these sections is permitted as of the beginning of a fiscal year. All three sections must be adopted concurrently. The adoption of these three sections will affect the Company’s accounting for business combinations, if any, on or after May 1, 2011.




Comprehensive Revaluation of Assets and Liabilities (Section 1625) and Equity (Section 3251)




As a result of issuing CICA Handbook sections 1582, 1601, and 1602, CICA Handbook Section 1625 has been amended and is effective prospectively beginning on or after January 1, 2011. Section 3251, Equity, has been amended as a result of issuing Section 1602 and applies to entities that have adopted this section. The Company does not expect any material impact on its financial position, operating results or disclosure on the adoption of this new section.




International Financial Reporting Standards (“IFRS”)




In February 2008, the Canadian Accounting Standards Board (“AcSB”) announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada’s existing GAAP.  The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.  For the Company, the transition date will be May 1, 2010 and this will require the restatement for comparative purposes of amounts reported by the Company for each of the quarters for the year ended April 30, 2011.  The Company has completed the diagnostic phase of planning for the implementation of IFRS. It has determined that the principal areas of impact will be IFRS 1 – first time adoption; presentation of financial statements; flow through shares and share-based payments; exploration costs; impairment of long-lived assets; asset retirement obligations and future income taxes. The Company expects its detailed analysis of relevant IFRS requirements and of IFRS 1 will be complete by the end of its fiscal quarter ending July 31, 2011, along with its determination of changes to accounting policies and choices to be made.  The Company has not yet reached the stage where a quantified impact of conversion on its financial statements can be measured.  The Company expects to complete its quantification of financial statement impacts by the end of its fiscal quarter ending July 31, 2011.




US GAAP Reconciliation




Under Canadian GAAP, it is acceptable to defer mineral property acquisition and exploration costs until a decision to abandon the property is made, it is determined that the property does not have economically recoverable reserves or that a company is unlikely to pursue exploration activities on the property.  Under U.S. GAAP, mineral exploration costs are expensed until it can be proven that economically viable reserves are present on the property and a company has the ability and intention to pursue exploitation of these reserves.




Under Canadian GAAP, cash flows relating to mineral property exploration costs are reported as investing activities. For U.S. GAAP, these costs would be characterized as operating activities.




Under Canadian GAAP, future income taxes are calculated based on enacted or substantially enacted tax rates applicable to future years.  Under U.S. GAAP, only enacted rates are used in the calculation of future income taxes. This GAAP difference did not result in a difference in our financial position, results of operations or cash flows for the years ended April 30, 2011, 2010 and 2009.







42





We have adopted the fair value based approach to share-based compensation under the provisions of CICA 3870 and SFAS No. 148.  The method of adoption applied by us is permissible under both Canadian and US standards.




5.A.
Operating Results




Results of Operations for the fiscal year ended April 30, 2011 compared to the fiscal year ended April 30, 2010




For fiscal year ended April 30, 2011 the Company reported a net loss of $2,086,719 or $0.05 per common share, compared with a net loss of $2,321,078 or $0.08 per common share for the prior fiscal year.  The weighted average number of common shares for fiscal 2011 increased to 41,193,459 from 29,528,511 for the previous year.  The increase in the average number of shares outstanding was primarily due to share issuances related to the following:




·
Exercise of stock options (200,000 common shares) in the 3rd and 4th quarters of fiscal 2011


·
Various financings (13,749,875 common shares) completed in the 3rd quarter of fiscal 2011


·
Exercise of warrants (657,903 common shares) in the 3rd and 4th quarters of fiscal 2011




Expenses




Expenses for the current year were $3,256,203, 5% higher than in fiscal 2010 due primarily to an increase in stock-based compensation expense and management and consulting fees which was offset by a reduction in office and administration, rent, and wages and salaries expenses as a result of the engagement of a Management Services Company in October 2010.  Stock based compensation, management and consulting fees caused a 20% increase in the overall loss, which was offset by a 13% decrease from office and administration, rent and wages and salaries attributed to the engagement of the Management Services Company.




Stock-based compensation expense for 2011 was 14% higher than in 2010 due largely to new stock options being granted to certain employees and management in the 3rd and 4th quarters of fiscal 2011, and a resulting increase in expense recognition.




Consulting and management fees increased by 279%, as a direct result of increased Company activities, reflecting favorable conditions in the markets.




In addition, investor relations expenditures increased by 113% from fiscal 2010 due to increasing investor and public relations activities.




Wages and salaries decreased in 2011 by 44% from 2010 due primarily to on-going expenditure reductions achieved by the engagement of a Management Services Company which provides administrative, geological, and corporate services at lower costs.




The engagement of a Management Services Company also led to a decrease in office and administration expenses of 46%, and a decrease in rent of 54%.




Audit and accounting expenditures decreased by 42% compared to fiscal 2010 when additional costs attributable to SOX compliance were incurred.




Other Income (Expenses)




Other income increased in fiscal 2011 by $471,739 to $419,484 compared with recorded expenses of $52,255 in 2010.  The Company realized a gain on Marketable securities of $501,961 compared to a last year’s gain of $66,667.  Crosshair has accounted for its investment in marketable securities as “Held for Trading” in accordance with CICA Standard 3855 on Financial Instruments. Held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income. This gain was partially offset by a loss on sale of assets of $110,291. In fiscal 2010, the Company’s Sinbad project was written off and as a result $229,796 was recorded for this write-off. No write-offs of mineral properties occurred in fiscal 2011.







43





Future Income Tax Recovery




The company recognized a recovery of future income tax of $750,000 related to exploration activities funded by flow-through share arrangements and renounced to investors in accordance with Canadian income tax legislation.  During the current fiscal year, the Company issued 3,750,000 common shares on a flow-through basis for gross proceeds of $3,000,000.




Mineral Property Expenditures




During the current fiscal year, the Company incurred total mineral property exploration expenditures of $1,347,411 due primarily to the exploration activities on the CMB Moran Lake property totaling to $445,470 (including $200,000 of acquisition costs); CMB-JV totaling to $225,957; Bootheel totaling to $105,656 (net of recoveries); Golden Promise totaling to $493,320 (net of recoveries); and Juniper Ridge totaling to $258,458 (including $232,945 of acquisition costs)




Working Capital




Working capital was $10,815,170 as at April 30, 2011 compared with $3,403,009 as at April 30, 2010. The increase of $7,412,161 was mainly due to cash provided by financing activities of $9,995,812, which was then partially offset by operating and investing activities of the Company during fiscal 2011.




Results of Operations for the fiscal year ended April 30, 2010 compared to the fiscal year ended April 30, 2009




For fiscal year ended April 30, 2010 the Company reported a net loss of $2,321,078 or $0.08 per common share, compared with a net loss of $20,724,237 or $0.88 per common share for the prior fiscal year.  The weighted average number of common shares for fiscal 2010 increased to 29,528,511 from 23,396,172 for the previous year. The increase in the average number of shares outstanding was primarily due to share issuances related to the following:




•           Exercise of stock options (6,250 common shares) in the 3rd quarter of fiscal 2010




•           Various financings (3,025,000 common shares) completed in the 3rd quarter of fiscal 2010




•           Settlement of vendor debt (87,500 common shares) in the 3rd quarter of fiscal 2010




•           Financing (1,704,545 common shares) competed in the 4th quarter of fiscal 2010




The net loss for the fiscal year ended April 30 2010 decreased 89% from the prior period. The decline resulted from a 105% decrease in losses on marketable securities, a 98% decrease in impairment of mineral properties, a 68% decrease in stock based compensation expense, and a 43% decrease in the general and administrative expenses of the Company.




During fiscal 2010 the Company took certain steps to continue its operations under unfavourable economic conditions. One of these steps was a reduction in general and administrative expenses, in particular office and administrative, audit and accounting, consulting, and investor relations. An additional measure undertaken by the Company was to reduce the number of staff on hand in order to reduce wages and salaries, and travel expenses. This corporate downsizing led also to the decrease in stock based compensation expense resulting in certain stock options being cancelled and fewer stock options being granted and vested during the fiscal year of 2010.




Reflecting the improving securities market, the decrease in losses on marketable securities was mainly due to the increase in carrying value of the Company’s investment recorded at fair market value.




The significant decline in the impairment of mineral properties was attributable to the $14,000,000 non-cash impairment charge on the Company’s uranium interest in the Central Mineral Belt of Labrador recorded in 2009 compared to the $229,796 charge on the Company’s Sinbad project recorded in 2010.







44





The changes in the following items have also had a material effect on reported net loss and the Company’s operations for the period:




Wages and salaries decreased in 2010 by 52% from 2009 due primarily to staff level reductions in an effort to reduce overall expenditures throughout the Company.




Audit and accounting expenses decreased by 23%, when compared to fiscal 2009 due to the fact that the Company’s auditors were not required to audit the Company’s internal controls under SOX 404(b), as was the case in fiscal 2009.




Investor relations expenditures decreased by 56% from fiscal 2009 due to reducing investor relations activities.




Legal expenditures increased by 29% over fiscal 2009 as a result of fees directly associated with the litigation with Expedition.




Office and administrative expenses decreased by 45% due to the overall reduction in office activities related to corporate downsizing.




Other Income (Expenses)




Other expenses decreased in fiscal 2010 by $52,255 to $15,058,379 compared with $15,110,634 in 2009.  The Company’s Sinbad project was written off during the year as a result $229,796 was recorded for this write-off. Additionally, the company’s interest income was $126,303 lower than the prior year due to the lower average cash balances and the Company realized a gain on Marketable securities of $66,667 compared to last year’s loss of $1,290,195.  Crosshair has accounted for its investment in marketable securities as “Held for Trading” in accordance with CICA Standard 3855 on Financial Instruments. Held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income.




Future Income Tax Recovery




The company recognized a recovery of future income tax of $818,750 related to the renouncing in fiscal 2010 of certain deductions for Canadian exploration expenditures incurred on the Company’s resource properties from the prior year’s flow through securities offering to shareholders.  During fiscal 2010, the Company issued 3,479,545 common shares on a flow-through basis for gross proceeds of $3,275,000 which were renounced in fiscal 2010.  The flow-through agreement requires the Company to renounce certain deductions for Canadian exploration expenditures incurred on the Company’s resource properties.




Mineral Property Expenditures




During fiscal 2010, the Company incurred total mineral property exploration expenditures of $1,048,856 due primarily to the exploration and drilling activities on the CMB Moran Lake property totaling $455,145; CMB-JV totals $74,411 (net of recoveries); Bootheel totaling $(97,210); and Golden Promise totaling $846,306.




Working Capital




Working capital was $3,403,009 as at April 30, 2010 compared with $2,641,169 as at April 30, 2009, up by $761,840. The increase was mainly due to cash provided by financing activities of $3,817,314, which was then partially offset by operating and investing activities of the Company during fiscal 2010.







45





5.B.          Liquidity and Capital Resources




Liquidity – April 30, 2011, April 30, 2010 and April 30, 2009




As of April 30, 2011, the Company had cash and cash equivalents of $9,931,585 (April 30, 2010 - $3,427,511, April 30, 2009 - $2,827,274) and working capital of $10,815,170 (April 30, 2010 - $3,403,009, April 30, 2009 - $2,641,169).  Cash used in operating activities during 2011 was $1,965,771 compared with $2,259,493 in 2010 and $3,414,510 in 2009.  Cash utilized in investing activities was $1,525,967 when compared with $957,584 in 2010 and $6,053,579 in 2009. Cash provided by financing activities increased to $9,995,812 compared with $3,817,314 in 2010 as the result of financing completed during the year and the exercises of stock options and warrants and ($980,511) in 2009 due to advances made to Target.




Capital Resources




The Company believes it has sufficient working capital to finance its intended operations, and maintain its priority mineral property licenses for the next 12 months.  To date, the Company’s operations, exploration and development activities have been almost entirely financed from equity financings.  The Company will continue to identify financing opportunities in order to provide additional financial flexibility and to continue the development of its property portfolio, meet land claim expenditure requirements and other commitments.  While the Company has been successful raising the necessary funds in the past, there can be no assurance it can do so in the future. The Company currently does not have any material commitments for capital expenditures.




5.C.           Research and Development, Patents and Licenses, etc.




We are a mineral exploration company and do not engage in conventional research and development.  We have not incurred research and development expenses or adopted research on development policies within the last three fiscal years.




5.D.           Trend Information




We are a mineral exploration company.  Consequently, we have no production, sales, or inventory in the conventional sense.  Our financial success will be dependent upon the extent to which we can discover mineralization and the economic viability of developing such properties.  Such development, if initiated, may take years to complete and the amount of resulting income, if any, is difficult to determine with any certainty.  We have no mineral reserves and to date have not produced any revenues.  The sales value of any mineralization discovered by us is largely dependent upon factors beyond our control such as the market value of the metals produced.




Other than as disclosed herein, we are not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.




The major factors that caused significant variations in net loss were the recording of share-based compensation when stock options were granted and the write-down of properties based on a periodic review of such properties, both of which have no identifiable trend.




5.E.           Off-Balance Sheet Arrangements




Not applicable




5.F.           Tabular Disclosure of Contractual Obligations




As at April 30, 2011, we had no contractual obligations.







46





ITEM 6.                      DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES




6.A.           Directors and Senior Management




Name
Age
PositionMark J. Morabito
44
Executive ChairmanC. Stewart Wallis
67
Chief Executive Officer, President and DirectorJay Sujir2
53
DirectorIan B. Smith 1 2
65
DirectorChris Collingwood 1
64
DirectorDerrick (Rick) Gill 1 2
63
DirectorJoseph Miller
48
DirectorSonya Atwal
31
Chief Financial Officer


1           Member of Audit Committee


2           Member of Compensation Committee





We are an exploration stage junior exploration company.  Our needs will be dependent upon our level of exploration programs and financial condition.  From 2006 to 2009, we entered into employment agreements with our senior officers and all of our full-time employees.  In August 2009, we began entering into consulting agreements with our senior management and currently have no employment agreements in effect with senior management or full-time employees.  See Item 6.B. Compensation – Compensation of Executive Officers and Directors – Employment and Consulting Agreements for a description of the current consulting agreements with senior management.  On January 1, 2010, we entered into a management services agreement with EGM under which EGM provides shared office, administration and payroll services to the Company and as of January 1, 2010, we do not employ any staff full-time.  On October 1, 2010, we entered into a revised management services agreement. See Item 7.B – Related Party Transactions and Exhibit 4.9 for a description of this agreement.




Set forth below are brief descriptions of recent employment and business experience of our directors and senior management.




Mark J. Morabitohas been our Executive Chairman since March 1, 2010.   Mr. Morabito served as our Non-Executive Chairman from December 18, 2009 until his appointment as Executive Chairman on March 1, 2010.   He was also Chief Executive Officer from February 2003 until March 1, 2010 when Stewart Wallis was appointed to that position, and has been a Director since November of 1998.  Mr. Morabito also served as our President from February 2003 until February 18, 2008, when Paul Hosford was appointed to that position.  Mr. Morabito was re-appointed as President on October 21, 2008 following Mr. Hosford’s resignation from that position.  On March 31, 2009, Mr. Morabito ceased to be our President, when Stewart Wallis was appointed to that position in addition to being appointed Chief Executive Officer in 2010.  Mr. Morabito remains our Executive Chairman and a Director.




Mr. Morabito devotes approximately 30% of his time during a typical work week to our business.  Mr. Morabito also serves on the board of directors of Santa Fe Metals Corporation, Silver Quest Resources Ltd., Excelsior Mining Corp., Alderon Resource Corp., Ridgemont Iron Ore Corp., Logan Resources Ltd. and Midland Minerals Corporation. He is also the President and CEO of Alderon Resource Corp. and Ridgemont Iron Ore Corp. Mr. Morabito graduated from Simon Fraser University in Vancouver, British Columbia with a B.A. in 1990 and completed his J.D. at the University of Western Ontario in London, Ontario in 1993.




C. Stewart Walliswas a member of our Board of Directors from June 2003 until July 27, 2008.  Mr. Wallis was appointed to our Board of Directors and was appointed President of the Company on March 31, 2009.  On March 1, 2010 Mr. Wallis was appointed as our CEO.  Mr. Wallis devotes substantially all of his time during a typical work week to our business.  Mr. Wallis is the Managing Director of Sundance Geological Ltd., a private entity owned




47





and controlled by him, which provides geological services, including evaluations and prefeasibility studies, for individuals and mining companies based throughout the world.  He received his Bachelor of Science Degree in Geology from McMaster University, located in Hamilton, Ontario.  His professional affiliations include: Association of Professional Engineers and Geoscientists of Saskatchewan, the Association of Professional Engineers and Geoscientists of British Columbia, the Professional Engineers and Geoscientists of Newfoundland and Labrador, Wyoming Professional Geologists, Certified Professional Geologist under the American Institute of Professional Geologists, Fellow, Society of Economic Geologists and a Member of the Society of Mining Engineers.




Jay Sujirhas been a member of our Board of Directors since February 2003.  Mr. Sujir served as our Non-Executive Chairman from his appointment on September 10, 2007 until December 18, 2009 when Mark Morabito was appointed Non-Executive Chairman.  Mr. Sujir is currently the Chairman of the Board of Sunward Resources Ltd. and is the Corporate Secretary and a Director of Santa Fe Metals Corp.  Mr. Sujir also serves on the boards of directors of Excelsior Mining Corp., AMI Resources Inc., Escape Gold Inc., Midasco Capital Corp., Red Eagle Mining Corporation, Slater Mining Corporation and Uracan Resources Ltd.  Mr. Sujir is a securities and natural resource lawyer who has experience with advising and assisting public companies.   He obtained his B.A. from the University of Victoria, in Victoria, British Columbia, in 1981 and obtained his LL.B. from the University of Victoria in 1985.   He has been a lawyer in the law firm of Anfield Sujir Kennedy & Durno LLP and its predecessor firm since August 1986 and has been a partner of that firm since 1991.




Ian B. Smith joined our Board of Directors in September 2006.  Mr. Smith has over 40 years’ experience in corporate, operations, project management and consulting within the international base, precious metals and coal industries.  He has worked around the world including Africa, China, Southeast Asia and extensively in the Americas. Mr. Smith was President and Founding Partner of MRDI which became one of the largest and most successful mining consultancies in North America.  Mr. Smith is President, CEO and a director of Santa Fe Metals Corporation and Yellowhead Mining Inc.  Mr. Smith also serves on the board of directors of EURO Ressources S.A.  Mr. Smith was granted his Chartered Professional Management Aus. IMM in October 2000 and has been a Fellow with the Aus. IMM since 1990.  Mr. Smith obtained his BE (Mining) from the University of Queensland, Australia in 1966.




Chris Collingwood joined our Board of Directors in October 2007.  Mr. Collingwood received his BComm. from Memorial University of Newfoundland in 1970.   Mr. Collingwood is the Chairman and CEO of Baine Johnston Corp., a privately held Newfoundland firm active in commercial and industrial real estate, Retail operations and Marine Activities, also having investments in a number of other Newfoundland companies.  Mr. Collingwood has previously served on the Audit Committee of Barclay's Bank of Canada, is a past Public Director of the Investment Dealers Association and serves on the Audit Committee of the Newfoundland & Labrador Center for Health Information.




Derrick (Rick) Gill joined our Board of Directors in May 2008.  Mr. Gill has more than 30 years’ experience as an executive and director of public and private companies operating throughout North and South America. Mr. Gill is a principal consultant and director of Strategic Concepts Inc. (“SCI”), which provides strategic planning, financial modeling and business development services to numerous resource companies. Mr. Gill co-founded SCI in 1990.  He also serves on the board of directors of Brigus Gold Corp.




Joseph Miller joined our Board of Directors on June 26, 2009.  He served as our Chief Financial Officer from September 2, 2008 until June 30, 2009.   Mr. Miller has over 20 years experience in financial management of public companies, including numerous energy and resource companies based in Alberta.  Prior to joining Crosshair, Mr. Miller was the Chief Financial Officer of GPS Industries Inc. and was responsible for the overall financial management of the company, including internal and external public reporting and SEC reporting and filings, and initiating the Sarbanes Oxley compliance program identifying and focusing on the high risk processes and controls.  From 1999 to 2007, Mr. Miller was employed by Transalta Corporationin Calgary, Alberta, first as the Manager of Financial Planning and Analysis and then as the Director of Financial Operations.  Mr. Miller received his CMA designation in 1992 and is a member of the Certified Management Accountants of British Columbia.  He received







48





his diploma in Business Administration from Mount Royal College in 1989.  Mr. Miller was the Chief Financial Officer of Powerex Corp., a wholly-owned subsidiary of BC Hydro until May 24, 2011.




Sonya Atwal has been our Chief Financial Officer (“CFO”) since February 15, 2011.  Ms. Atwal received her CGA designation in February 2008, and is a member of the Certified General Accountants of British Columbia.    Ms. Atwal received her Bachelor of Business Administration from the Southern Alberta Institute of Technology (SAIT in 2008).   Ms. Atwal served as our Controller from 2005 until her appointment as Chief Financial Officer.  Ms. Atwal is also the Chief Financial Officer of Alderon Resource Corp. and Excelsior Mining Corp.




Adam Kniec was our Chief Financial Officer from August 16, 2009 until February 15, 2011.  Mr. Kniec is a Canadian Chartered Accountant and a U.S. Certified Public Accountant and has over 12 years of accounting, auditing and financial reporting experience with Canadian and U.S. public companies, including a number of energy and resource companies.  Mr. Kniec is the founder and President of ArkOrion Enterprises Inc., a company that provides accounting and financial reporting services to Canadian and U.S. public companies. Prior to forming ArkOrion Enterprises Inc. in 2007, Mr. Kniec was a Senior Manager at PricewaterhouseCoopers LLP in Vancouver, B.C.  Mr. Kniec received his CA designation in 2002 and is a member of the Institute of Chartered Accountants of British Columbia. In 2003, Mr. Kniec received his U.S. Certified Public Accountant designation from the University of Illinois. He received his diploma in Accounting from Langara College in Vancouver, British Columbia in 1996 and an Advanced Certificate in Accounting from the Institute of Chartered Accountants of British Columbia in 1999.   Since January 2008, Mr. Kniec has also served as the Chief Financial Officer of Petro Vista Energy Corp., an Exchange listed company.




There are no family relationships between any of the Directors or senior management. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or member of senior management.




6.B.           Compensation




Compensation of Executive Officers and Directors




The following table sets out the compensation information for the fiscal year ended April 30, 2011, for our directors and executive officers.




Compensation of Executive Officers/Directors in Fiscal 2011





Name and

Principal Position
Year
Annual CompensationSalary

($)
Bonus

($)
Other Annual Compensation

($)Securities Under Options Granted (#)
Option Exercise Price
Option Expiration DateMark J. Morabito 1

Executive Chairmanand Director
2011
--
$75,000
$108,330

375,000
$1.44
2015/12/21Stewart Wallis 2

CEO, President and Director
2011
--
125,000
$190,000

375,000
$1.44
2015/12/21Joseph Miller

Director
2011
--
--
--

100,000
$1.44
2015/12/21Jay Sujir

Director
2011
--
--
--

100,000
$1.44
2015/12/21Ian Smith

Director
2011
--
--
--

100,000
$1.44
2015/12/21Chris Collingwood

Director
2011
--
--
--

100,000
$1.44
2015/12/21Derrick Gill

Director
2011
--
--
--

100,000
$1.44
2015/12/21Adam Kniec 3

Chief Financial Officer
2011
--
--
68,900

50,000
$1.44
2015/12/21Sonya Atwal 4

Chief Financial Officer
2011
--
10,000
--

100,000
$1.44
2015/12/21




1
Mr. Morabito was appointed President on October 21, 2008 and ceased to be President on March 31, 2009.  Mr. Morabito ceased to be CEO and was appointed Executive Chairman on March 1, 2010.


2
Mr. Wallis ceased to be a director on July 27, 2008 and was appointed a director on March 31, 2009.  Mr. Wallis was appointed President on March 31, 2009 and CEO on March 1, 2010.


3
Mr. Kniec resigned as Chief Financial Officer on February 15, 2011


4
Ms. Atwal was appointed as Chief Financial Officer on February 15, 2011





49


Director Compensation




Directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors.  The 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.




Employment and Consulting Agreements




On March 1, 2011, the Company entered into a consulting agreement with MJM Consulting (“MJM”) and Mark J. Morabito (“Morabito”) (the “2011 MJM Consulting Agreement”). Under the terms of the 2011 MJM Consulting Agreement, MJM provides the services of Morabito to act as Executive Chairman of the Company and to provide such general management consulting services as the Company may require from time to time under such time as the 2011 MJM Consulting Agreement is terminated.   Under the terms of the 2011 MJM Consulting Agreement, MJM receives a monthly fee of $12,500 plus applicable taxes and is eligible to receive an annual cash bonus in an amount to be determined at the discretion of the Board of Directors.  In the event of termination of the 2011MJM Consulting Agreement, MJM will receive a lump sum payment equivalent to 12 months’ fees.  In the event of a change of control, MJM will receive the equivalent of 36 months’ fees.  Prior to entering into the 2011 MJM Consulting Agreement, the Company had entered into a consulting agreement with MJM and Morabito dated March 1, 2010 (the “2010 MJM Consulting Agreement”).  Under the terms of the 2010 MJM Consulting Agreement, provided the services of Morabito to act as Executive Chairman of the Company and general management consulting services to the Company for which MJM received a monthly fee of $8,333 plus applicable taxes and was eligible to receive an annual cash bonus in an amount to be determined at the discretion of the Board of Directors. Upon entering into the 2011 MJM Consulting Agreement, the 2010 MJM Consulting Agreement was terminated.





On March 1, 2011, the Company entered into a consulting agreement with Sundance Geological Ltd. and C. Stewart Wallis (Wallis”) (the “2011 Sundance Consulting Agreement”). Under the terms of the 2011 Sundance Consulting Agreement, Sundance provides the services of Wallis to act as President and Chief Executive Officer of the Company and to provide such general management and geological consulting services as the Company may require from time to time.   The term of the 2011 Sundance Consulting Agreement is three years, commencing on March 1, 2011.   Under the terms of the 2011 Sundance Consulting Agreement, Sundance receives a monthly fee of $20,000 plus applicable taxes and is eligible to receive an annual cash bonus of up to $66,666, payable within 30 days of the Company’s fiscal year end, with the final amount being determined by the Company’s Board of





50





Directors.   In the event of termination of the 2011Sundance Consulting Agreement, Sundance will receive a lump sum payment equivalent to the lesser of 12 months’ fees or the fees payable for the duration of the term of the 2011 Sundance Consulting Agreement.  In the event of a change of control, Sundance will receive the equivalent of 36 months’ fees.  Prior to entering into the 2011 Sundance Consulting Agreement, the Company had entered into a consulting agreement with Sundance and Wallis dated March 1, 2010 (the “2010 Sundance Consulting Agreement”).  Under the terms of the 2010 Sundance Consulting Agreement, provided the services of Wallis to act as President and Chief Executive Officer of the Company and such general management and geological consulting services for which Sundance received a monthly fee of $15,000 plus applicable taxes and was eligible to receive an annual cash bonus of up to $50,000, payable within 30 days of the Company’s fiscal year end, with the final amount being determined by the Board of Directors. Upon entering into the 2011 Sundance Consulting Agreement, the 2010 Sundance Consulting Agreement was terminated.





On August 10, 2009, the Company entered into a consulting agreement (the “ArkOrion Consulting Agreement”) with ArkOrion Enterprises Inc. (“ArkOrion”) under which ArkOrion was engaged to provide management services to the Company and to provide the services of Adam R. Kniec to act as Chief Financial Officer of the Company.   The Consulting Agreement had a one year term commencing on August 16, 2009 and was extended by the Company for an additional one year term.  Under the terms of the ArkOrion Consulting Agreement, ArkOrion received a monthly fee of $5,300 plus applicable taxes, such fee to be reviewed on a six month basis.  The Company also made an initial grant to Adam R. Kniec of options to purchase up to 200,000 common shares at a exercise equal to the Company’s closing stock price on the date of the agreement, such options to have a five year term and vest in accordance with the provisions of the Company’s stock option plan.  In the event of a change of control, ArkOrion was to receive the equivalent of 12 months’ fees.  Mr. Kniec resigned as Chief Financial Officer on February 15, 2011 and the ArkOrion Consulting Agreement was terminated.





Post Employment Compensation





No funds were set aside or accrued by us during Fiscal 2011 to provide pension, retirement or similar benefits for Directors, Executive Officers or Senior Management.




Other than as described above, we do not have any 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 would exceed US$60,000 per person.




6.C.           Board Practices




The Board of Directors presently consists of seven directors all of whom were elected at our annual general meeting of shareholders held on December 15, 2010.  The directors have served in their respective capacities since their election and/or appointment and will serve until the next annual general meeting or until a successor is duly elected, unless the office is vacated in accordance with our Articles. The Board of Directors appoints senior management who serve at the discretion of the Board of Directors.




The following table indicates the date on which each of our directors was appointed a director of our company:




Name of Director
Director sinceMark Morabito
November 12, 1998Stewart Wallis1
March 31, 2009Jay Sujir
February 19, 2003Ian Smith
September 21, 2006Chris Collingwood
October 25, 2007Derrick Gill
May 27, 2008Joseph Miller
June 26, 2009




1
Mr. Wallis served as a director from June 19, 2003 to July 29, 2008.  He was re-appointed as a director on March 31, 2009.





51







There are no service contracts with the Directors providing for benefits upon termination of employment except as described under the heading “Employment and Consulting Agreements” above.





Board of Director Committees




Audit Committee




We have an Audit Committee, which recommends to the Board of Directors the engagement of our independent auditors and reviews with the independent auditors the scope and results of our audits, our internal accounting controls, and the professional services furnished to us by our independent auditors.  The following disclosure is required pursuant to National Instrument 52-110 (“NI 52-110”) adopted by the Canadian Securities Administrators.




The Audit Committee's Charter




Following is a copy of the charter of our audit committee:




Purpose




The Audit Committee (the “Committee”) is a committee of and appointed by the Board of Directors (the “Board”) of Crosshair Exploration & Mining Corp. (the “Corporation”) to assist the Board in fulfilling its oversight responsibilities relating to financial accounting and reporting process and internal controls for the Corporation. The Committee’s primary duties and responsibilities are to:




·
conduct such reviews and discussions with management and the external auditors relating to the audit and financial reporting as are deemed appropriate by the Committee;


·
assess the integrity of internal controls and financial reporting procedures of the Corporation and ensure implementation of such controls and procedures;


·
ensure that there is an appropriate standard of corporate conduct including, if necessary, adopting a corporate code of ethics for senior financial personnel;


·
review the quarterly and annual financial statements and management’s discussion and analysis of the Corporation’s financial position and operating results and report thereon to the Board for approval of same;


·
select and monitor the independence and performance of the Corporation’s external auditors, including attending at private meetings with the external auditors and reviewing and approving all renewals or dismissals of the external auditors and their remuneration;


·
establish procedures for the receipt of complaints and submissions relating to accounting matters;


·
except as set forth below, pre-approve all audit and non-audit services provided by the Corporation’s external auditors; and


·
provide oversight to related party transactions entered into by the Corporation.




The Committee has the authority to conduct or authorize any investigation appropriate to its responsibilities, and it may request the external auditors, as well as any officer of the Corporation, or outside counsel for the Corporation, to attend a meeting of the Committee or to meet with any members of, or advisors to, the Committee to provide pertinent information as necessary.  The Committee shall have unrestricted access to the books and records of the Corporation and has the authority to retain, at the expense of the Corporation, special legal, accounting, or other consultants or experts to assist in the performance of the Committee’s duties.




The Committee shall review and assess the adequacy of this Charter annually and submit any proposed revisions to the Board for approval.




In fulfilling its responsibilities, the Committee will carry out the specific duties set out in Part IV of this Charter.







52






Authority of the Audit Committee


The Committee shall have the authority to:




(a)           engage independent counsel and other advisors as it determines necessary to carry out its duties;




(b)           set and pay the compensation for advisors employed by the Committee;




(c)           communicate directly with the internal and external auditors.




Composition and Meetings




1.
The Committee and its membership shall meet all applicable legal, regulatory and listing requirements, including, without limitation, those of the British Columbia Securities Commission, the Toronto Stock Exchange, the U.S. Securities and Exchange Commission, NYSE Amex, the Business Corporations Act (British Columbia) and all applicable securities regulatory authorities.




2.
The Committee shall be composed of three or more directors as shall be designated by the Board from time to time. The members of the Committee shall appoint from among themselves a member who shall serve as Chair.




3.
Each member of the Committee shall be “independent” and “financially literate”, for the purposes of Multilateral Instrument 52-110 (“MI 52-110”), as it may be amended from time to time.  MI 52-110 currently provides that a member is independent if the member has no direct or independent material relationship with the Corporation.  A “material” relationship is one which could, in the view of the Board, be reasonably expected to interfere with the exercise of a member’s judgment. There are certain relationships that are, however, deemed to be “material” under MI 52-110.  In assessing a proposed nominee to the Committee, the Board shall refer to MI 52-110 and any other requirements or guidelines under applicable securities laws and any stock exchanges on which the Corporation’s securities are listed.




4.
The Committee shall meet at least quarterly, at the discretion of the Chair or a majority of its members, as circumstances dictate or as may be required by applicable legal or listing requirements. A minimum of two and at least 50% of the members of the Committee present either in person or by telephone shall constitute a quorum.




5.
If within one hour of the time appointed for a meeting of the Committee, a quorum is not present, the meeting shall stand adjourned to the same hour on the next business day following the date of such meeting at the same place. If at the adjourned meeting a quorum as hereinbefore specified is not present within one hour of the time appointed for such adjourned meeting, such meeting shall stand adjourned to the same hour on the second business day following the date of such meeting at the same place. If at the second adjourned meeting a quorum as hereinbefore specified is not present, the quorum for the adjourned meeting shall consist of the members then present.




6.
If and whenever a vacancy shall exist, the remaining members of the Committee may exercise all of its powers and responsibilities so long as a quorum remains in office.




7.
The time and place at which meetings of the Committee shall be held, and procedures at such meetings, shall be determined from time to time by, the Committee. A meeting of the Committee may be called by letter, telephone, facsimile, email or other communication equipment, by giving at least 48 hours notice, provided that no notice of a meeting shall be necessary if all of the members are present either in person or by means of conference telephone or if those absent have waived notice or otherwise signified their consent to the holding of such meeting.




8.
Any member of the Committee may participate in the meeting of the Committee by means of conference telephone or other communication equipment, and the member participating in a meeting pursuant to this paragraph shall be deemed, for purposes hereof, to be present in person at the meeting.





53




9.
The Committee shall keep minutes of its meetings which shall be submitted to the Board. The Committee may, from time to time, appoint any person who need not be a member, to act as a secretary at any meeting.


10.
The Committee may invite such officers, directors and employees of the Corporation and its subsidiaries as the Committee may see fit, from time to time, to attend at meetings of the Committee.




11.
Any matters to be determined by the Committee shall be decided by a majority of votes cast at a meeting of the Committee called for such purpose. Actions of the Committee may be taken by an instrument or instruments in writing signed by all of the members of the Committee, and such actions shall be effective as though they had been decided by a majority of votes cast at a meeting of the Committee called for such purpose. All decisions or recommendations of the Committee shall require the approval of the Board prior to implementation.




The Committee members will be elected annually at the first meeting of the Board following the annual general meeting of shareholders.




Responsibilities




Financial Accounting and Reporting Process and Internal Controls




1.
The Committee shall review the annual audited financial statements and interim financial statements of the Corporation to satisfy itself that they are presented in accordance with applicable generally accepted accounting principles (“Canadian and US GAAP” as required) and report thereon to the Board and recommend to the Board whether or not same should be approved prior to their being filed with the appropriate regulatory authorities.  The Committee shall also review the interim financial statements of the Corporation. With respect to the annual audited financial statements, the Committee shall discuss significant issues regarding accounting policies, principles, practices, estimates, reserves and judgments of management with management and the external auditors, as and when the Committee deems it appropriate to do so, and shall satisfy itself that the annual audited financial statements are accurate, complete and represent fairly the Corporation’s financial position and performance and that the audit function has been effectively carried out.  If desirable, the Committee may engage the Corporation’s external auditors to carry out a review of the interim financial statements.




2.
The Committee shall review management’s discussion and analysis relating to the Corporation’s annual and interim financial statements (“MD&A”) MD&A and any other public disclosure documents, including annual and interim earnings press releases, required to be reviewed by the Committee under any applicable laws before the Corporation publicly discloses this information or files this information with securities regulatory authorities.




3.
The Committee shall be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s annual and interim financial statements, MD&A and annual and interim earnings press releases, and periodically assess the adequacy of these procedures.




4.
The Committee shall review the annual budget.




5.
The Committee shall review any internal control reports prepared by management and the evaluation of such reports by the external auditors, together with management’s response.




6.
The Committee shall evaluate whether management is setting the appropriate “control culture” by communicating the importance of internal control and the management of risk and ensuring that all employees have an understanding of their roles and responsibilities.




7.
The Committee shall consider how management is held to account for security of computer systems and applications, and the contingency plans for processing financial information in the event of a systems breakdown.






54




8.
The Committee shall review, in consultation with the external auditors, the integrity of the Corporation’s financial reporting processes, both internal and external.




9.
The Committee shall consider the external auditors’ judgments about the quality and appropriateness, not just the acceptability, of the Corporation’s accounting principles and financial disclosure practices, as applied in its financial reporting, particularly about the degree of aggressiveness or conservatism of its accounting principles and underlying estimates and whether those principles are common practices or are minority practices.




10.
The Committee shall meet no less frequently than annually with the external auditors and the Chief Financial Officer or, in the absence of a Chief Financial Officer, with the officer of the Corporation in charge of financial matters, to review accounting practices, internal controls and such other matters as the Committee, Chief Financial Officer or, in the absence of a Chief Financial Officer, the officer of the Corporation in charge of financial matters, deem appropriate.




11.
The Committee shall consider and approve, if appropriate, major changes to the Corporation’s accounting principles and practices as suggested by management with the concurrence of the external auditor and ensure that the management’s reasoning is described in determining the appropriateness of changes in accounting principles and disclosure.




12.
The Committee shall inquire of management and the external auditors about significant risks or exposures, both internal and external, to which the Corporation may be subject and assess the steps management has taken to minimize such risks, including by obtaining the external auditors’ opinion of how effectively such risks are being managed or controlled.




13.
The Committee shall review the post-audit or management letter containing the recommendations of the external auditors and management’s response and subsequent follow-up to any identified weaknesses.




14.
The Committee shall provide oversight to related party transactions entered into by the Corporation.




15.
The Committee shall review policies and procedures with respect to officers’ expense accounts and management perquisites and benefits, including their expenditures related to executive travel and entertainment, and review the results of the procedures performed in these areas by the external auditor, based on terms of reference agreed upon by the external auditor and the Committee.




Independent Auditors




1.
The Committee shall recommend to the Board the external auditors to be nominated, for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation, and the compensation of the external auditors.




2.
The Committee shall instruct the external auditors to report directly to the Committee and ensure that significant findings and recommendations made by the external auditors are received and discussed by the Committee on a timely basis.




3.
The Committee shall be directly responsible for overseeing the work of the external auditors, including the resolution of disagreements between management and the external auditors regarding financial reporting, and shall review the performance of the external auditors and approve any proposed discharge of the external auditors when circumstances warrant.




4.
The Committee shall periodically consult the external auditors out of the presence of management about any matters that the Committee or the external auditors believes should be discussed privately, including, without limitation, significant risks or exposures, internal controls and other steps that management has taken to control such risks, and the fullness and accuracy of the Corporation’s financial statements.  Particular emphasis should be given to the adequacy of internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper.






55




5.
Except as otherwise indicated in this Charter, the Committee shall pre-approve all audit and non-audit services not prohibited by Canadian securities laws and regulations to be provided by the external auditors and delegate, if desirable, to one or more of its members the authority to pre-approve any such audit or permitted non-audit services, provided that any such pre-approval is presented to the Committee at its next scheduled meeting following the pre-approval.




6.
The Committee shall monitor and assess the relationship between management and the external auditors, including reviewing any management letters or other reports of the external auditors and discussing and resolving any material differences of opinion between management and the external auditors.




7.
The Committee shall monitor, review, confirm and discuss with the external auditors, on an annual basis, all significant relationships the external auditors have with the Corporation and the range of services provided to determine the independence and objectivity of the external auditors.




8.
Prior to the audit, the Committee shall review the external auditors’ audit plan, including the scope, procedures, timing and staffing of the audit, and the Committee may authorize the external auditors to perform supplemental reviews or audits as the Committee may deem desirable.




9.
The Committee shall review with the external auditors the results of the annual audit and, if applicable, the results of the quarterly review, including matters related to the conduct of the audit and the review, as the case may be.




10.
The Committee shall obtain timely reports from the external auditors describing critical accounting policies and practices, alternative treatments of information within Canadian GAAP that were discussed with management, their ramifications, and the external auditors’ preferred treatment and material written communications between the Corporation and the external auditors.




11.
The Committee shall review fees paid by the Corporation to the external auditors and other professionals in respect of audit and non-audit services on an annual basis.




12.
The Committee shall review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Corporation.




Process Improvement




1.
The Committee shall establish regular and separate systems of reporting to the Committee by each of management and the external auditors regarding any significant judgments made in management’s preparation of the financial statements and the view of each as to appropriateness of such judgments.




2.
Following completion of the annual audit and quarterly reviews (if applicable), the Committee shall review separately with each of management and the external auditors any significant changes to planned procedures, any difficulties encountered during the course of the audit and reviews, including any restrictions on the scope of work or access to required information and the cooperation that the external auditors received during the course of the audit and reviews.




3.
The Committee shall review and resolve any significant disagreements among management and the external auditors in connection with the preparation of the financial statements and, where there are significant unsettled issues, the Committee shall ensure that there is an agreed course of action for the resolution of such matters.




4.
The Committee shall review with the external auditor and management significant findings during the year and the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented. This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as decided by the Committee.






56


Ethical and Legal Compliance




1.
The Committee shall establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.




2.
The Committee shall review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up of any non-compliance.




3.
The Committee shall review management’s monitoring of the Corporation’s system that is in place to ensure that the Corporation’s financial statements, reports and other financial information disseminated to governmental organizations and the public satisfy legal requirements.




4.
The Committee shall ensure that there is an appropriate standard of corporate conduct including, if necessary, adopting a corporate code of ethics for senior financial personnel.




5.
The Committee shall obtain regular updates from management and others, including internal and external auditors and legal counsel, concerning the Corporation’s compliance with financial related laws and regulations such as tax and financial reporting laws and regulations, legal withholding requirements, occupational health and safety laws and personal information and protection of privacy laws.




6.
The Committee shall be satisfied that all regulatory compliance matters have been considered in the preparation of financial statements.




7.
The Committee shall review the findings of any examination by regulatory agencies.




Other Responsibilities




While the Committee has the responsibilities and duties set out in this Charter, it is not the duty of the Committee to plan or conduct audits, to prepare or audit financial statements or to design or implement an effective system of internal controls.  Such matters are the responsibility of management and the internal and external auditors of the Corporation, as the case may be. In addition to the responsibilities and duties of the Committee set out in this Charter, the Committee shall perform any other activities consistent with this Charter and all applicable legal, regulatory and listing requirements (including those of the applicable securities regulatory authorities and the stock exchanges on which the Corporation’s securities are listed), as the Committee or the Board deems necessary or appropriate.




Procedures for Receipt of Complaints and Submissions




Relating to Accounting Matters




1.
The Corporation shall inform employees on the Corporation’s intranet, if there is one, or via a newsletter or e-mail that is disseminated to all employees at least annually, of the individual (the “Complaints Officer”) designated from time to time by the Committee to whom complaints and submissions can be made regarding accounting, internal accounting controls or auditing matters or issues of concern regarding questionable accounting or auditing matters.




2.
The Complaints Officer shall be informed that any complaints or submissions so received must be kept confidential and that the identity of employee(s) making complaints or submissions shall be kept confidential and shall only be communicated to the Committee or the Chair of the Committee.




3.
The Complaints Officer shall be informed that he or she must report to the Committee as frequently as such Complaints Officer deems appropriate, but in any event no less frequently than on a quarterly basis prior to the quarterly meeting of the Committee called to approve interim and annual financial statements of the Corporation.






57




4.
Upon receipt of a report from the Complaints Officer, the Committee shall discuss the report and take such steps as the Committee may deem appropriate.




The Complaints Officer shall retain a record of a complaint or submission received for a period of six years following resolution of the complaint or submission.




Procedures for Approval of Non-Audit Services




1.
The Corporation’s external auditors shall be prohibited from performing for the Corporation the following categories of non-audit services:




(a)
bookkeeping or other services related to the Corporation’s accounting records or financial statements;




(b)
financial information systems design and implementation;




(c)
appraisal or valuation services, fairness opinion or contributions-in-kind reports;




(d)
actuarial services;




(e)
internal audit outsourcing services;




(f)
management functions;




(g)
human resources;




(h)
broker or dealer, investment advisor or investment banking services;




(i)
legal services;




(j)
expert services unrelated to the audit; and




(k)
any other service that the Canadian Public Accountability Board or any other applicable regulatory authority determines is impermissible.




2.
In the event that the Corporation wishes to retain the services of the Corporation’s external auditors for tax compliance, tax advice or tax planning, the Chief Financial Officer of the Corporation shall consult with the Chair of the Committee, who shall have the authority to approve or disapprove on behalf of the Committee, such non-audit services in accordance. All other non-audit services shall be approved or disapproved by the Committee as a whole as set forth herein.




3.
The Chief Financial Officer of the Corporation shall maintain a record of non-audit services approved by the Chair of the Committee or the Committee for each fiscal year and provide a report to the Committee no less frequently than on a quarterly basis.




Composition of the Audit Committee




The members of our Audit Committee are Ian Smith, Christopher Collingwood and Derrick Gill, each of whom is an independent director and financially literate.




Relevant Education and Experience




Ian Smith.  Mr. Smith has over 40 years experience in corporate operations, project management and consulting with the international base metals, precious metals and coal industries.  Mr. Smith has been the President, Chief Executive Officer and a director of Santa Fe Metals Corp. since February 2007.  He was the President, Chief Executive Officer, Chief Operating Officer and a director of bcMetals Corporation from October 2004 to February 2007.  Mr. Smith was granted his Chartered Professional Management Aus. IMM in October 2000 and has been a






58




Fellow with the Aus. IMM since 1990.  Mr. Smith obtained his BE (Mining) from the University of Queensland, Australia in 1966.




Chris Collingwood.  Mr. Collingwood received his BComm. from Memorial University of Newfoundland in 1970.  Mr. Collingwood is the Chairman and CEO of Baine Johnston Corp., a privately held Newfoundland firm active in commercial and industrial real estate, Retail operations and Marine Activities, also having investments in a number of other Newfoundland companies.  Mr. Collingwood has previously served on the Audit Committee of Barclay's Bank of Canada, is a past Public Director of the Investment Dealers Association and serves on the Audit Committee of the Newfoundland & Labrador Center for Health Information.




Derrick Gill.  Mr. Gill received his BComm. in Accounting from Memorial University of Newfoundland in 1969.  Mr. Gill has over 30 years’ experience as an executive and director of public and private companies operating throughout North and South America and has served on the audit committees of public companies. Mr. Gill is a principal consultant and director of Strategic Concepts Inc. (“SCI”), which provides strategic planning, financial modeling and business development services to numerous resource companies. Mr. Gill co-founded SCI in 1990.  He also serves on the board of directors of Linear Gold Corp. Inc.




Audit Committee Oversight




At no time since the commencement of our most recently completed financial year was a recommendation of the Committee to nominate or compensate an external auditor not adopted by the Board of Directors.




Reliance on Certain Exemptions




At no time since the commencement of our most recently completed financial year have we relied on the exemption in Section 2.4 of NI 52-110 (De Minimis Non-audit Services), or an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110.  We are not relying on the exemption in Section 6.1 of NI 52-110.




Pre-Approval Policies and Procedures




The Committee has adopted specific policies and procedures for the engagement of non-audit services as set out in our Audit Committee Charter.




Compensation Committee




We have established a Compensation Committee, which currently consists of Ian Smith, Jay Sujir and Derrick Gill.  The Compensation Committee does not operate pursuant to a written charter.




The mandate established for the Compensation Committee is for the purposes of:




1.
considering appropriate levels of compensation for our directors and officers and making recommendations to the Board as to the remuneration and other compensation to be provided to our Directors, the President and our other officers; and




2.
carrying out periodic performance assessments of the President and CEO.




6.D.           Employees




The following table sets out the number of full-time employees who worked for us at the end of the last three completed fiscal years as well as the maximum number of temporary workers who worked for us during each fiscal year:






59




Fiscal year ended
Number of Full Time Employees at the end of the fiscal year
Maximum number of Temporary Workers during the fiscal yearApril 30, 2011
0(1)
0(2)April 30, 2010
0
0(2)April 30, 2009
12
52





1
Pursuant to the Management Services Agreement with EGM dated October 1, 2010, EGM provides shared office, administration and payroll services to the Company. See Item 7.B – Related Party Transactions and Exhibit 4.9 for a description of this agreement. As such, the Company no longer employs any full-time staff.


2
Due to the global economic conditions during the fiscal years ended April 30, 2010 and April 30, 2011, and our cash conservation program, we did not employ any temporary workers during these fiscal years.





6.E.           Share Ownership




The following table presents the beneficial ownership of the directors and those persons named in Item 6.B Compensation above as of July 20, 2011.  As of July 20, 2011, we had 47,477,151 common shares issued and outstanding.  The number of common shares beneficially owned by the persons listed below includes those securities exercisable into common shares within 60 days of July 20, 2011.




Name
Number of

Common Shares
Percent of Outstanding Common SharesMark J. Morabito
1,545,880 1
3.26%Stewart Wallis
734,900 2
1.55%Joseph Miller
169,166 3
*Jay Sujir
327,250 4
*Ian Smith
175,000 5
*Chris Collingwood
272,450 6
*Derrick Gill
261,875 7
*Adam Kniec 8
N/A
N/ASonya Atwal
145,750 9
*Directors and Executive Officers as a group
3,632,271
7.65%





*           Indicates less than one percent.


1
Includes options to purchase 582,954 common shares exercisable within 60 days of July 20, 2010 and warrants to purchase 203,125 common shares expiring November 23, 2012.


2
Includes options to purchase 388,750 common shares exercisable within 60 days of July 20, 2010 and warrants to purchase 75,000 common shares expiring November 23, 2012.


3
Includes options to purchase 337,500 common shares exercisable within 60 days of July 20, 2010,  warrants to purchase 6,250 common shares expiring November 19, 2011 and warrants to purchase 6,250 common shares expiring November 23, 2012.


4
Includes options to purchase 87,500 common shares exercisable within 60 days of July 20, 2010 and warrants to purchase 31,250 common shares expiring November 23, 2012.


5
Includes options to purchase 137,500 common shares exercisable within 60 days of July 20, 2010 and warrants to purchase 12,500 common shares expiring November 23, 2012.


6
Includes options to purchase 160,000 common shares exercisable within 60 days of July 20, 2010 and warrants to purchase 15,625 common shares expiring November 23, 2012.


7
Includes options to purchase 210,000 common shares exercisable within 60 days of July 20, 2010 and warrants to purchase 15,625 common shares expiring November 23, 2012.


8
Mr. Kniec resigned as Chief Financial Officer of the Company on February 15, 2011.


9
Includes options to purchase 130,000 common shares exercisable within 60 days of July 20, 2010.





The following table presents the stock options granted to the aforementioned persons and unexercised as of July 20, 2011.  The stock options are for common shares.  On December 15, 2010, the Company’s common shares were consolidated on the basis of one new share for four old shares.  The following numbers are stated in post-consolidation numbers.






60




Name
Date of Grant
Number of Underlying Common Shares
Vested 1
Exercise Price
Expiration DateMark J. Morabito
Dec. 21, 2010

Nov. 30, 2009

May 28, 2009

Mar. 31, 20092

Mar. 31, 20092

Oct. 23, 2008

Sept. 15, 2008
375,000

118,382

75,000

42,489

45,000

83,333

125,000
93,750

118,382

75,000

42,489

45,000

83,333

125,000
$1.44

$0.88

$1.08

$4.00

$1.40

$0.60

$1.08
Dec. 21, 2015

Nov. 30, 2014

May 28, 2014

Aug. 29, 2012

Aug. 29, 2011

Oct. 23, 2013

Sept. 15, 2013Stewart Wallis
Dec. 21, 2010

Jan. 6, 2010

Nov. 30, 2009

May 28, 2009

Mar. 31, 20092

Sept. 15, 2008
375,000

50,000

25,000

75,000

120,000

25,000
93,750

50,000

25,000

75,000

120,000

25,000
$1.44

$0.84

$0.88

$1.08

$4.00

$1.08
Dec. 21, 2015

Jan. 6, 2015

Nov. 30, 2014

May 28, 2014

Aug. 29, 2012

Sept. 15, 2013Joseph Miller
Dec. 21, 2010

May 28, 2009

Oct. 23, 2008

Aug. 1, 2008
100,000

31,250

41,666

37,500
25,000

31,250

41,666

37,500
$1.44

$1.08

$0.60

$2.00
Dec. 21, 2015

May 28, 2014

Oct. 23, 2013

Aug. 1, 2013Jay Sujir
Dec. 21, 2010

May 28, 2009

Oct. 27, 2008

Sept. 15, 2008
100,000

50,000

87,500

25,000
25,000

50,000

87,500

25,000
$1.44

$1.08

$1.08

$1.08
Dec. 21, 2015

May 28, 2014

Oct. 27, 2013

Sept. 15, 2013Ian Smith
Dec. 21, 2010

Jan. 6, 2010

Nov. 30, 2010

May 28, 2009

Sept. 15, 2008
100,000

25,000

12,500

37,500

37,500
25,000

25,000

12,500

37,500

37,500
$1.44

$0.84

$0.88

$1.08

$1.08
Dec. 21, 2015

Jan. 6, 2015

Nov. 30, 2014

May 28, 2014

Sept. 15, 2013Chris Collingwood
Dec. 21, 2010

Nov. 30, 2009

May 28, 2009

Sept. 15, 2008
100,000

50,000

35,000

50,000
25,000

50,000

35,000

50,000
$1.44

$0.88

$1.08

$1.08
Dec. 21, 2015

Nov. 30, 2014

May 28, 2014

Sept. 15, 2013Derrick Gill
Dec. 21, 2010

Nov. 30, 2009

May 28, 2009

May 23, 2008
100,000

62,500

60,000

62,500
25,000

62,500

60,000

62,500
$1.44

$0.88

$1.08

$3.52
Dec. 21, 2015

Nov. 30, 2014

May 28, 2014

May 23, 2013Adam Kniec
Dec. 21, 2010

Aug. 10, 2009
50,000

12,500
12,500

12,500
$1.44

$0.76
Dec. 21, 2015

Aug. 10, 2014Sonya Atwal
Dec. 21, 2010

May 28, 2009

Mar. 31, 20092

Mar. 31, 20092

Oct. 23, 2008

Mar. 6, 2007
100,000

37,500

9,000

21,000

12,500

25,000
25,000

37,500

9,000

21,000

12,500

25,000
$1.44

$1.08

$4.00

$1.40

$0.60

$0.92
Dec. 21, 2015

May 28, 2014

Aug. 29, 2012

Aug. 29, 2011

Oct. 23, 2013

Mar. 6, 2012






61






1
Includes those options that are exercisable within 60 days of July 20, 2011.


2
Options previously granted by Target which transferred to the Company on closing of the acquisition of Target by the Company on March 31, 2009.





We do not have any arrangements for involving our employees in our capital.  We do not have a share purchase plan or dividend reinvestment plan for our directors, officers and employees.  However, we will, from time to time, grant individual stock options to our directors, officers or employees as an incentive pursuant to our stock option plan.




Stock Option Plan




We may grant stock options to directors, senior management and employees pursuant to our stock option plan dated November 4, 2010 (the “Plan”).  Under the Plan, we may grant stock options to purchase up to a maximum of 10% of the common shares issued and outstanding from time to time.  If any stock option has been exercised, the number of common shares into which such stock option was exercised shall become available to be issued upon the exercise of stock options subsequently granted under the Plan   On December 15, 2010, the Company’s common shares were consolidated on the basis of one new share for four old shares.  The following numbers are stated in post-consolidation numbers.  As at May 1, 2010, the beginning of the fiscal year ended April 30, 2011, there were 313,750 unoptioned common shares available for grant and 584 common shares available for grant under the Plan as at April 30, 2011. During the fiscal year ended April 30, 2011, we granted stock options to purchase an aggregate of 2,815,000 common shares.  During the fiscal year ended April 30, 2011, 200,000 stock options to purchase common shares were exercised and stock options to purchase an aggregate of 446,261 common shares were cancelled or expired. There were no changes in the exercise price of outstanding options during the year ended April 30, 2011 other than the adjustment to all exercise prices to reflect the consolidation of the Company’s shares as described above.




Target Stock Options




As a term of the plan of arrangement between Crosshair and Target that was effective on March 31, 2009, all existing holders of options to purchase common shares in Target had their options exchanged for stock options of the Company that entitled the holder to exercise their Target options for common shares of the Company on the basis of 1.2 common shares of the Company for each Target option exercised (the “Target Exchanged Options”).  On December 15, 2010, the Company’s common shares were consolidated on the basis of one new share for four old shares.  The following numbers are stated in post-consolidation numbers.  As at April 30, 2011 there were 272,908 Target Exchanged Options outstanding, exercisable into a total of 327,490 common shares of the Company.  During the fiscal year ended April 30, 2011, no Target Exchanged Options to purchase common shares were exercised and a total of 64,592 Target Exchanged Options (exercisable into 77,510 common shares) were cancelled.  No additional Target Exchanged Options were to be issued as of March 31, 2009.




ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS




7.A.           Major Shareholders




To the knowledge of management, no person beneficially owns 5% or more of our issued and outstanding common shares.




All of our shares, both, issued and unissued, are common shares of the same class and rank equally as to dividends, voting powers and participation of powers.  Accordingly, there are no special voting powers held by our major shareholders.




On July 20, 2011, we had 47,477,151 common shares issued and outstanding to approximately 428 shareholders of record.  We believe that the number of beneficial owners is substantially greater than the number of record holders because a portion of our outstanding common shares are held in broker “street names” for the benefit of individual investors or other nominees.  Management believes that there are 112 shareholders of record located in the U.S.,







62





who own an aggregate of approximately 3.85% of our outstanding common shares.  In addition to these record holders there may be more persons located in the U.S. holding our common shares in “street” name.




We are a publicly owned Canadian corporation, with shareholders in Canada, the United States and other foreign jurisdictions.  We are not controlled by any foreign government or other person.  We are not aware of any arrangements that would result in a change of control of our company.




7.B.           Related Party Transactions




Other than as disclosed below, for the year ended April 30, 2011 and the period from May 1, 2010 to the date of this annual report, we have not entered into any transactions or loans between us and any: (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, us; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of us that gives them significant influence over us, and close members of any such individuals' family; (d) key management personnel and close members of such individuals' families; or (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly, by any person described in (c) or (d) or over which such a person is able to exercise significant influence.




During the year ended April 30, 2011, the Company had the following transactions with related parties:




·
In January 2010, the Company entered into a contract with a management company (which was amended on October 1, 2010) with a director and officer (Mark Morabito) in common, whereby the management company will provide shared office and payroll services to the Company.  The Company incurred administrative/office costs of $699,268 included in office and administration, wages and salaries, rent, travel, consulting, and investor relations (2010 - $203,639, 2009 -$38,498) to this management company for such services. At April 30, 2011, $72,407 (April 30, 2010 - $Nil) was still owing to this company included in due to related parties, and deposits on hand with this company of $Nil (April 30, 2010 - $130,514) were included in prepaid expenses.




·
Paid rent for its Newfoundland office of $Nil (2010 - $6,592, 2009 - $97,153) to a private company that has a director (Chris Collingwood) in common.  In July 2009, the Company terminated the use of this office space.




·
Consulting fees include $63,600 (2010 - $50,350, 2009 - $Nil) of fees paid or accrued to company owned by a former officer (Adam Kniec) of the Company.  Management fees include $328,330 (2010 - $94,582, 2009 - $43,750) of fees paid or accrued to two private companies owned by a director and officer (Mark Morabito and Steward Wallis) of the Company, of which $Nil (April 30, 2010 – $4,294) was still owing at April 30, 2011.





·
During the year ended April 30, 2011, the Company paid bonus amounts of $210,000 included in management fees and wages and salaries (2010 - $Nil, 2009 - $Nil) to various officers/directors (Chris Collingwood, Ian Smith, Jay Sujir, Rick Gill, Joseph Miller, Sheila Paine, Sonya Atwal, Stewart Wallis, Mark Morabito) of the Company.




·
On October 1, 2010, Crosshair sold all furniture equipment, computer equipment, and software to a management company with a director and officer (Mark Morabito) in common. As consideration for the assets, this management company paid Crosshair the total amount of $30,000, which represents the estimated fair value of the assets on the effective date of the purchase agreement. The difference between the sales price and the carrying value of the sold assets was $110,291, which was recorded as loss on disposal of assets.




·
During the year ended April 30, 2011, $Nil of management fees (2010 - $26,250, 2009 - $Nil) was paid to former directors of Target.





63




·
The $Nil in legal fees (2010 - $24,998, 2009 - $Nil) was paid during the year to the law firm of which a director (Jay Sujir) is a partner..




·
At April 30, 2011, the Company had a receivable of $Nil (April 30, 2010 - $2,669,) from a company with a director and officer (Mark Morabito) in common.  This amount was owed for shared office services, such as rent, office supplies and related utilities, and is included in Receivables.




·
The Company had incurred independent directors’ fees of $Nil (2010 - $Nil, 2009 - $100,500).




The amounts charged to the Company for the services provided have been determined by negotiations among the parties. These transactions were in the normal course of operations and were measured at the exchange value which represented the amounts of consideration established and agreed by the related parties.




The amounts due to the related parties are non-interest bearing, with no fixed terms of repayment. The fair values of the amounts due to the related parties cannot be determined as there are no specific terms of repayment.




7.C.           Interests of Experts and Counsel




Not applicable




ITEM 8.
FINANCIAL INFORMATION




8.A.           Consolidated Statements and Other Financial Information




Financial Statements




Our financial statements are stated in Canadian Dollars and are prepared in accordance with Canadian GAAP, the application of which conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.




See our audited financial statements for the fiscal years ended April 30, 2011, April 30, 2010 and April 30, 2009 included under Item 17 of this annual report.




Dividend Policy




We have not declared or paid any cash dividends on our capital stock.  We do not currently expect to pay cash dividends in the foreseeable future as we anticipate that all available funds will be invested to finance the growth of our business.  The Board of Directors will determine if and when dividends should be declared and paid in the future based upon our financial position at the relevant time.




Legal/Arbitration Proceedings




Litigation with Expedition Mining Inc. (formally known as Universal Uranium Ltd.)





In April 2009, Crosshair commenced an action in British Columbia Supreme Court against Expedition alleging that Expedition had knowledge of trades that artificially inflated the market price of shares of Expedition at the time that Crosshair agreed to purchase property and securities of Expedition.  The action relates to certain agreements Crosshair entered into with Expedition to acquire all of Expedition’s interest in its project in the Central Mineral Belt of Labrador and to purchase securities of Expedition by way of a private placement.





On April 29, 2010, the Company entered into a definitive agreement with Expedition to settle all outstanding litigation between Crosshair and Expedition.




64





The settlement agreement requires Crosshair and Expedition to file a consent dismissal order dismissing both the Crosshair claim and the Expedition counterclaim. Neither company paid any funds to the other pursuant to the terms of settlement.




Crosshair has also entered into a voting trust agreement (the “2010 Voting Trust Agreement”). Pursuant to the 2010 Voting Trust Agreement, Crosshair will either abstain from voting its shares in Expedition or vote those shares in favour of Expedition management’s proposals for a period of thirty-six months. As of April 30, 2011, Crosshair held 2,222,222 Expedition shares.




As per the original voting trust agreement between Crosshair and Expedition signed on July 30, 2008 (the “2008 Voting Trust Agreement”), Expedition was also required to either abstain from voting its shares in Crosshair or vote those shares in favour of Crosshair management’s proposals. As of April 30, 2011, Expedition held 1,875,000 Crosshair warrants.




Pursuant to the settlement, beginning April 2010 and for the next twelve months, both Crosshair and Expedition were required to report on a monthly basis to the other in writing advising of the number of shares in the other they have purchased or sold in the preceding month.  In the case of a breach of these requirements the 2010 Voting Trust Agreement becomes null and void. Since Expedition complied with the terms of the settlement the Voting Trust Agreement remains in full force until July 30, 2013.




Litigation with Lewis Murphy




On October 10, 2004, the Company entered in an agreement (the “Agreement”) with Mr. Lewis Murphy pursuant to which the Company was granted an option to acquire an interest in certain mineral licenses in Newfoundland and Labrador.  On April 28, 2010, Mr. Lewis Murphy commenced court proceedings against the Company in the Supreme Court of Newfoundland and Labrador in relation to the Agreement. As acknowledged by Mr. Murphy in the Statement of Claim, the mineral licenses were transferred to Crosshair.  The Agreement provides that upon the Company completing its earn-in obligations under the Agreement and becoming vested as to its 90% interest therein, the Company will pay Mr. Murphy an annual advance royalty of $200,000 per year until the Commencement of Commercial Production.  Mr. Murphy alleges he was owed an annual advance royalty payment in the amount of $200,000 in November 2009.  Mr. Murphy is seeking contractual damages in the amount of $200,000, and various declaratory reliefs including, but not limited to, an order that the transfers of any and all mineral licenses from Murphy to the Company made pursuant to the Agreement are null and void and a declaration that the Agreement is terminated.




On January 6, 2011, a judgment was issued by the Supreme Court of Newfoundland and Labrador in favour of Mr. Murphy in the amount of $200,000 (plus costs and interest) and the Company’s counterclaim was dismissed. The Company was granted leave to appeal this judgment on May 31, 2011. The appeal hearing is expected to occur in September or October 2011; however, there can be no assurance that any appeal will be resolved in favour of the Company. As of April 30, 2011, Mr. Murphy has commenced an action to recover an additional $200,000 that he claims is due as an advance royalty payment for November 2010. The company is defending this claim but there can be no assurance that this action will be resolved in favour of the Company. As a result $400,000 has been accrued and is recorded in mineral properties as at April 30, 2011.




The nature of the Company’s business may subject it to other regulatory investigations, claims, lawsuits, and other proceedings. The results of these legal proceedings cannot be predicted with certainty. There can be no assurances that these matters will not have a material adverse effect on the Company.





65





8.B.           Significant Changes




Since April 30, 2011, the date of our most recent financial statements, no significant changes have occurred.




ITEM 9.
THE OFFER AND LISTING




9.A.           Offer and Listing Details




The following table lists the high and low prices for our common shares for the last six months, fiscal quarters for the last two completed fiscal years, and the last five fiscal year ends.  Our common shares have traded on the Toronto Stock Exchange since May 12, 2008 and were traded on the TSX Venture Exchange before that date.




Period

High

LowJuly 1-20, 2011

$0.75

$0.66Month ended June 30, 2011

$0.99

$0.62Month ended May 31, 2011

$0.91

$0.67Month ended April 30, 2011

$1.30

$0.76Month ended March 31, 2011

$2.22

$0.92Month ended February 28, 2011

$2.68

$2.02Month ended January 31, 2011

$2.46

$1.79Fiscal quarter ended April 30, 2011

$2.68

$0.76Fiscal quarter ended January 31, 2011

$2.80

$0.76Fiscal quarter ended October 31, 2010

$1.00

$0.52Fiscal quarter ended July 31, 2010

$0.78

$0.42Fiscal quarter ended April 30, 2010

$1.04

$0.70Fiscal quarter ended January 31, 2010

$1.02

$0.76Fiscal quarter ended October 31, 2009

$1.28

$0.72Fiscal quarter ended July 31, 2009

$1.44

$0.68Fiscal year ended April 30, 2011

$2.80

$0.42Fiscal year ended April 30, 2010

$1.44

$0.68Fiscal year ended April 30, 2009

$3.96

$0.40Fiscal year ended April 30, 2008

$12.72

$2.56Fiscal year ended April 30, 2007

$16.80

$4.92





Our common shares began trading on the American Stock Exchange (now NYSE Amex) on May 7, 2007.  The following table lists the high and low prices for our common shares on NYSE Amex for the last six months, fiscal quarters for the last two completed fiscal years, and the last three fiscal years.




66






Period

High

LowJuly 1 - 20, 2011

$0.80

$0.68Month ended June 30, 2011

$1.02

$0.63Month ended May 31, 2011

$0.93

$0.68Month ended April 30, 2011

$1.35

$0.79Month ended March 31, 2011

$2.30

$0.92Month ended February 29, 2011

$2.71

$2.04Month ended January 31, 2011

$2.65

$1.80Fiscal quarter ended April 30, 2011

$2.71

$0.79Fiscal quarter ended January 31, 2011

$2.81

$0.76Fiscal quarter ended October 31, 2010

$1.00

$0.48Fiscal quarter ended July 31, 2010

$0.76

$0.40Fiscal quarter ended April 30, 2010

$1.00
`
$0.64Fiscal quarter ended January 31, 2010

$1.04

$0.72Fiscal quarter ended October 31, 2009

$1.24

$0.68Fiscal quarter ended July 31, 2009

$1.28

$0.56Fiscal Year ended April 30, 2011

$2.81

$0.40Fiscal Year ended April 30, 2010

$1.28

$0.56Fiscal Year ended April 30, 2009

$3.52

$0.28Fiscal Year ended April 30, 2008*

$12.60

$2.52


*from May 7, 2007 to April 30, 2008




9.B.           Plan of Distribution




Not applicable




9.C.           Markets




Our common shares are listed on NYSE Amex under the trading symbol “CXZ”.  Our common shares are also listed on the Toronto Stock Exchange under the trading symbol “CXX”.  There are currently no restrictions on the transferability of these shares under Canadian securities laws.




9.D.           Selling Shareholders




Not applicable




9.E.           Dilution




Not applicable




9.F.           Expenses of the Issue




Not applicable




ITEM 10.
ADDITIONAL INFORMATION




10.A.           Share Capital




Not applicable




10.B.           Memorandum and Articles of Association




This information is incorporated by reference to our Form 20-F Registration Statement, “Item 10.  Additional Information—Memorandum and Articles of Association” as filed on April 25, 2006.




10.C.           Material Contracts




We have entered into the following material contracts during the two years immediately preceding the date of this annual report and which are currently in effect:







67





On April 27, 2010, we entered into a Settlement Agreement and Mutual Release with Expedition to settle all outstanding litigation between Crosshair and Expedition.  See Item 8.A. Consolidated Statements and Other Financial Information – Legal/Arbitration Proceedings for more description of the Settlement Agreement and Mutual Release.




1.
On April 27, 2010, we entered into a Settlement Agreement and Mutual Release with Expedition to settle all outstanding litigation between Crosshair and Expedition.  See Item 8.A. Consolidated Statements and Other Financial Information – Legal/Arbitration Proceedings for more description of the Settlement Agreement and Mutual Release.




2.
On April 27, 2010, we entered into a voting trust agreement with Expedition (the “2010 Voting Trust Agreement”). Pursuant to the 2010 Voting Trust Agreement, Crosshair will either abstain from voting its shares in Expedition or vote those shares in favor of Expedition management’s proposals for a period of thirty-six months. See Item 8.A. Consolidated Statements and Other Financial Information – Legal/Arbitration Proceedings for more description of the 2010 Voting Trust Agreement.




3.
On October 1, 2010, we entered into a Management Services Agreement with EGM, a company controlled by Mark J. Morabito, whereby we engage EGM to provide shared office/administration and payroll services to the Company and the previous Management Services Agreement dated January 1, 2010 between the Company and EGM was terminated. See Item 7.B – Related Party Transactions and Exhibit 4.9 for a description of this agreement.




4.
On March 1, 2011, we entered into a consulting agreement with MJM Consulting (“MJM”) and Mark J. Morabito whereby we engage MJM to provide the services of Mark J. Morabito to act as Executive Chairman of the Company and to provide such general management consulting services as the Company may require from time to time, and a previous consulting agreement dated March 1, 2010 with MJM and Mark J. Morabito was terminated.  See Item 6.B. Compensation – Compensation of Executive Officers and Directors – Employment and Consulting Agreements for a description of this agreement.




5.
On March 1, 2011, we entered into a consulting agreement with Sundance Geological Ltd. (“Sundance”) and C. Stewart Wallis whereby we engage Sundance to provide the services of C. Stewart Wallis to act as President and Chief Executive Officer of the Company and to provide general management and geological consulting services to the Company, and a previous consulting agreement dated March 1, 2010 with Sundance and C. Stewart Wallis was terminated.. See Item 6.B. Compensation – Compensation of Executive Officers and Directors – Employment and Consulting Agreements for a description of this agreement.




6.
On October 29, 2010 we entered into the Juniper Ridge Agreement between Strathmore Resources (US) Ltd., Strathmore Minerals Corp., the Company and 448108 Exploration, Inc. a wholly-owned subsidiary of Crosshair’s subsidiary Target Exploration & Mining Corp., pursuant to which we may earn a 100% interest in the Juniper Ridge Property in the State of Wyoming.  See Item 4.A. History and Development of the Company – Property Acquisitions, and Exhibit 4.29 for a description of this agreement.




7.
On November 23, 2010, we entered into an Agency Agreement with BayFront Capital Partners Ltd. (“BayFront”) agreed to act as agent with respect to the private placement of 3,750,000 Flow-Through Units (“FT Units”) to accredited investors in Canada for gross proceeds of $3,000,000, and 10,000,000 Subscription Receipts (“Subscription Receipts”) to accredited investors in Canada and the United States for gross proceeds of $7,000,000.  Each FT Unit was comprised of one “flow-through common share” as defined in the Income Tax Act (Canada) and one-half of one common share purchase warrant (“FT Warrant”).  Each FT Warrant is exercisable to acquire one non-flow through common share at an exercise price of $1.25 for a period of 24 months following closing of the private placement.  Each Subscription Receipt was convertible into one non flow-through unit (“HD Unit”) comprised of one common share and one common share purchase warrant (“HD Warrant”), with each HD Warrant exercisable to acquire one common share at an exercise price of $1.00 for a period of 24 months following closing of the private placement.  A copy of the Agency Agreement is attached as Exhibit 4.30 hereto.




8.
On November 23, 2010, we entered into a Subscription Receipt Agreement with BayFront Capital Partners Ltd. and Computershare Trust Company of Canada (“Computershare”) pursuant to which Computershare agreed to act as Subscription Receipt Agent with respect to the Subscription Receipt private placement described in paragraph 7 above.  Following shareholder approval for the Subscription Receipt private




68




placement at our annual general meeting held on December 15, 2010, the Subscription Receipts were converted to HD Units. A copy of the Subscription Receipt Agreement is attached as Exhibit 4.31hereto


9.
On November 23, 2010, we entered into a Warrant Indenture with Computershare pursuant to which Computershare agreed to act as Warrant Agent with respect to the FT Warrants, HD Warrants and 1,375,000 Agent’s Warrants issued to BayFront as agent pursuant to the Agency Agreement described in paragraph 7 above.  A copy of the Warrant Indenture is attached as Exhibit 4.32 hereto.




10.D.           Exchange Controls




Canada has no system of exchange controls.  There are no Canadian restrictions on the repatriation of capital or earnings of a Canadian public company to non-resident investors.  There are no laws in Canada or exchange restrictions affecting the remittance of dividends, profits, interest, royalties and other payments to non-resident holders of our securities, except as discussed in “10.E. Taxation” below.




There are no limitations under the laws of Canada or in our organizing documents on the right of foreigners to hold or vote our securities, except that the Investment Canada Act may require review and approval by the Minister of Industry (Canada) of certain acquisitions of "control" of us by a "non-Canadian". The threshold for acquisitions of control is generally defined as being one-third or more of the voting shares of our company. "Non-Canadian" generally means an individual who is not a Canadian citizen, or a corporation, partnership, trust or joint venture that is ultimately controlled by non-Canadians.




10.E.           Taxation




Certain Canadian Federal Income Tax Consequences




The discussion under this heading summarizes the principal Canadian federal income tax consequences of acquiring, holding and disposing of shares of our common stock for a shareholder who at all relevant times, for the purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”) and the Canada-United States Tax Convention (1980), as amended (the "Convention") (i) is not resident or deemed to be resident in Canada nor has not been or deemed to have been a resident in Canada, but is a resident of the U.S., (ii) is a "qualifying person" for the purposes of the Convention, (iii) deals at arm's length and is not affiliated with us, and (iv) will acquire and hold our common shares as capital property for the purposes of the Canadian Tax Act.  Generally, our common shares will be considered to be capital property to the shareholder provided the shareholder does not hold the common shares in the course of carrying on a business of trading or dealing in securities and has not acquired them in one or more transactions considered to be an adventure or concern in the nature of trade.




This summary does not apply to a shareholder who uses or holds, or is deemed to use or hold, its shares in our Company in connection with carrying on a business in Canada, or to a shareholder that is either an insurer carrying on business in Canada and elsewhere or an “authorized foreign bank” as defined in the Canadian Tax Act.  This summary is based on the current provisions of the Canadian Tax Act, the regulations thereunder in force as of the date hereof (the “Regulations”), all proposals to amend the Canadian Tax Act or the Regulations publicly announced by the federal Minister of Finance (Canada) prior to the date hereof (the “Tax Proposals”), and an understanding of the current published administrative practices of the Canada Revenue Agency.




This summary is not exhaustive of all Canadian federal income tax considerations applicable to a shareholder of our company and, except for the Tax Proposals, this summary does not take into account or anticipate any changes in the Canadian Tax Act, the Regulations or the administrative or assessing policies of the Canada Revenue Agency, whether by legislative, governmental or judicial decisions or action, nor does this summary take into account provincial, territorial or other foreign tax legislation or considerations, which may differ significantly from those discussed herein.  There can be no assurance that the Tax Proposals will be enacted in the form proposed, or at all.




This summary is of a general nature only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular shareholder.  The tax consequences to any particular shareholder will depend on a variety







69





of factors including the shareholder’s own particular circumstances.  Therefore, all shareholders should consult their own tax advisors with respect to their own particular circumstances.




The provisions of the Canadian Tax Act are subject to income tax treaties to which Canada is a party, including the Convention.




Dividends on Common Shares




Under the Canadian Tax Act, a non-resident of Canada is generally subject to Canadian withholding tax at the rate of 25% on dividends paid (including dividends deemed to have been paid) or credited to him or her by a corporation resident in Canada.  We are responsible for withholding this tax at the source. The Convention generally limits the rate of withholding tax on dividends to 15% of the gross amount of such dividends paid to shareholders or, if the shareholder is a company that beneficially owns at least 10% of the voting stock of the payor corporation, 5% of the gross amount of the dividends.




The Convention generally exempts from Canadian income tax dividends paid to a religious, scientific, literary, educational or charitable organization or to an organization constituted and operated exclusively to administer a pension, retirement or employee benefit fund or plan, if the organization is a resident of the U.S. and is exempt from income tax under the laws of the U.S.




Dispositions of Common Shares




Under the Canadian Tax Act, a taxpayer’s capital gain or capital loss from a disposition of a share of our common shares is the amount, if any, by which his or her proceeds of disposition exceed (or are exceeded by, respectively) the aggregate of his or her adjusted cost base of the share and reasonable expenses of disposition.  The capital gain or loss must be computed in Canadian currency using a weighted average adjusted cost base for identical properties.  One half of capital gains net of one half of any capital losses are included in income.  The amount by which a shareholder’s capital loss exceeds the capital gain in a year may be deducted from a capital gain realized by the shareholder in the three previous years or any subsequent year, subject to certain restrictions in the case of a corporate shareholder.




Under the Canadian Tax Act, a non-resident of Canada is subject to Canadian tax on taxable capital gains, and may deduct allowable capital losses, realized on a disposition of “taxable Canadian property.”  Shares of our common stock will constitute taxable Canadian property of a shareholder at a particular time the common shares listed on a “designated stock exchange” (which includes the TSX and NYSE Amex) and if at any time in the five years immediately preceding the disposition (i)  25% or more of the issued shares of any class or series in our capital stock were owned by a shareholder, persons with whom the shareholder did not deal at arm's length or the shareholder together with all such persons and (ii) more than 50% of the fair market value of the common shares was derived, directly or indirectly, from one or any combination of real or immovable property situated in Canada,  Canadian resource properties, timber resource properties or options in respect of, or interests in, or for civil law rights in, such properties.  Common shares used in carrying on business in Canada and acquired in certain circumstances will also constitute taxable Canadian property.




The Convention generally relieves U.S. residents who qualify for benefit thereunder from liability for Canadian tax on capital gains derived on a disposition of shares unless the value of the shares is derived principally from real property situated in Canada, including the right to explore for or exploit natural resources and rights to amounts computed by reference to production.




Shareholders should consult their own advisors with respect to the application of the Convention.







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Material U.S. Federal Income Tax Consequences




U.S. Federal Income Tax Consequences




The following is a discussion of material U.S. federal income tax consequences generally applicable to a U.S. Holder (as hereinafter defined) of our common shares under current law.  This discussion does not address all potentially relevant federal income tax matters and it does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as those described below as excluded from the definition of a U.S. Holder.  In addition, this discussion does not cover any state, local or foreign tax consequences.  Accordingly, holders and prospective holders of our common shares are urged to consult their own tax advisors about the specific federal, state, local, and foreign tax consequences to them of purchasing, owning and disposing of our common shares, based upon their individual circumstances.




The following discussion is based upon the Code, Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time and which are subject to differing interpretations. This discussion does not consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.




U.S. Holders




As used in this annual report, a “U.S. Holder” means a holder of our common shares who is a citizen or individual resident of the United States, a corporation created or organized in or under the laws of the United States or of any political subdivision thereof or an entity created or organized in or under the laws of the United States or of any political subdivision thereof which has elected to be treated as a corporation for U.S. federal income tax purposes (under Treasury Regulation Section 301.7701-3), an estate whose income is taxable in the U.S. irrespective of source or a trust subject to the primary supervision of a court within the U.S. and control of a U.S. fiduciary as described in Section 7701(a)(30) of the Code.  This summary does not address the tax consequences to, and the term U.S. Holder does not include, persons subject to specific provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, individual retirement accounts and other tax-deferred accounts, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, non-resident alien individuals, persons or entities that have a “functional currency” other than the U.S. dollar, shareholders subject to the alternative minimum tax, shareholders who hold common shares as part of a straddle, hedging or conversion transaction, and shareholders who acquired their common shares through the exercise of employee stock options or otherwise as compensation for services.  This summary is limited to U.S. Holders who own common shares as capital assets, within the meaning of Section 1221 of the Code, and who own (directly and indirectly, pursuant to applicable rules of constructive ownership) no more than 5% of the value of our total outstanding stock.  This summary does not address the consequences to a person or entity holding an interest in a shareholder or the consequences to a person of the ownership, exercise or disposition of any options, warrants or other rights to acquire common shares. In addition, this summary does not address special rules applicable to U.S. persons (as defined in Section 7701(a)(30) of the Code) holding common shares through a foreign partnership or to foreign persons holding common shares through a domestic partnership.




Distributions on Our Common Shares




Subject to the PFIC and CFC rules discussed below, in general U.S. Holders receiving dividend distributions (including constructive dividends) with respect to our common shares are required to include in gross income for U.S. federal income tax purposes the gross amount of such distributions (without reduction of any Canadian income or other tax withheld from such distributions), equal to the U.S. dollar value of such distributions on the date of receipt (based on the exchange rate on such date), to the extent that we have current or accumulated earnings and profits.  To the extent that distributions exceed our current or accumulated earnings and profits, they will be treated first as a return of capital up to the U.S. Holder’s adjusted tax basis in the common shares and thereafter as gain from the sale or exchange of property. Any Canadian or other non-U.S. tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s federal income tax liability or, alternatively, may be deducted in







71





computing the U.S. Holder’s federal taxable income by those who itemize deductions (See more detailed discussion at “Foreign Tax Credit” below). If we are not a PFIC, dividends received from us by a non-corporate U.S. Holder during taxable years beginning before January 1, 2013, generally will be taxed at a maximum rate of 15% provided that such U.S. Holder has held the shares for more than 60 days during the 120-day period beginning 60 days before the ex-dividend date and that certain other conditions are met (“qualified dividend income”).  For this purpose, dividends will include any distribution paid by us with respect to our common shares but only to the extent such distribution is not in excess of our current and accumulated earnings and profits, as determined under U.S. Federal income tax principles. Qualified dividend income” generally includes dividends paid on stock in U.S. corporations as well as dividends paid on stock in certain non-U.S. corporations that are not classified as PFICs if, among other things, (i) the shares of the non-U.S. corporation (including ADRs backed by such shares) are readily tradable on an established securities market in the U.S., or (ii) the non-U.S. corporation is eligible with respect to substantially all of its income for the benefits of a comprehensive income tax treaty with the U.S. which contains an exchange of information program.   We currently anticipate that if we were to pay any dividends with respect to our shares when we have current or accumulated earnings and profits and if we are not a PFIC for such tax year, then to the extent of such earnings and profits the dividends should constitute “qualified dividend income” for U.S. federal income tax purposes and that non-corporate U.S. Holders should be entitled to the reduced rates of tax, as applicable.




In the case of foreign currency received as a dividend that is not converted by the recipient into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Generally any gain or loss recognized upon a subsequent sale or other disposition of the foreign currency, including the exchange for U.S. dollars, will be ordinary income or loss.




Dividends paid on our common shares will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations. The availability of this deduction is subject to several complex limitations that are beyond the scope of this discussion.




Disposition of Our Common Shares




Subject to the PFIC and CFC rules described below in general U.S. Holders will recognize gain or loss upon the sale of our common shares equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received, and (ii) the shareholder’s adjusted tax basis in our common shares.  Subject to the PFIC and CFC rules described below, preferential tax rates apply to long-term capital gains of U.S. Holders that are individuals, estates or trusts.  In general, gain or loss on the sale of our common shares will be long-term capital gain or loss if our common shares are a capital asset in the hands of the U.S. Holder and are held for more than one year.  Deductions for net capital losses are subject to significant limitations.




Passive Foreign Investment Company




We have not determined whether we meet the definition of a PFIC, within the meaning of Sections 1291 through 1298 of the Code, for the current tax year or for any prior tax year.  We may or may not be classified as a PFIC in subsequent years due to changes in our assets and business operations.  A U.S. Holder who holds stock in a non-U.S. corporation during any year in which such corporation qualifies as a PFIC is subject to numerous special U.S. federal income taxation rules.  The following is a general discussion of these special rules as they apply to U.S. Holders of our common shares.




Section 1297 of the Code defines a PFIC as a corporation that is not formed in the U.S. if, for any taxable year, either (i) 75% or more of its gross income is “passive income,” which includes interest, dividends and certain rents and royalties or (ii) the average percentage, of its assets that produce or are held for the production of passive income is 50% or more. The IRS has indicated in published positions that it considers working capital and cash held in reserve to be passive assets that produce passive income.




U.S. Holders owning shares of a PFIC are subject to a special tax and to an interest charge based on the value of deferral of U.S. tax attributable to undistributed earnings of a PFIC for the period during which the shares of the PFIC are owned.  This special tax would apply to any gain realized on the disposition of shares of a PFIC.  In







72





addition, the gain is subject to U.S. federal income tax as ordinary income and taxed at top marginal rates, rather than as capital gain income.  The special tax would also apply on receipt of “excess distributions” (any distributions received in the current year that are in excess of 125% of the average distributions received during the 3 preceding years or, if shorter, the shareholder’s holding period).  However, if the U.S. Holder makes a timely election to treat a PFIC as a qualified electing fund (“QEF”) with respect to such shareholder’s interest therein, the above-described rules generally will not apply.  Instead, the electing U.S. Holder would include annually in his gross income his pro rata share of the PFIC’s ordinary earnings and any net capital gain regardless of whether such income or gain was actually distributed.  Special rules apply to U.S. Holders who own their interests in a PFIC through intermediate entities or persons. Generally, however, a QEF Election is not effective unless shareholders have sufficient information to determine their proportionate share of a corporation’s net capital gain and ordinary earnings and to comply with certain other requirements. We have not calculated these amounts for any shareholder, and do not anticipate making these calculations in the foreseeable future or providing information required under the QEF rules. Therefore, U.S. Holders of our common shares should consult their own financial advisor, legal counsel or accountant regarding the QEF election before making this election.




U.S. Holders who hold, actually or constructively, marketable stock of a foreign corporation that qualifies as a PFIC may elect to mark such stock to the market (a “mark-to-market election”).  If such an election is made, such U.S. Holder will not be subject to the PFIC special taxation rules described above for the taxable years for which the mark-to-market election is made.  A U.S. Holder who makes such an election will include in income for the taxable year an amount equal to the excess, if any, of the fair market value of our common shares as of the close of such tax year over such U.S. Holder’s adjusted tax basis in such shares.  In addition, the U.S. Holder is allowed a deduction for the lesser of (i) the excess, if any, of such U.S. Holder’s adjusted tax basis in the shares over the fair market value of such shares as of the close of the tax year, or (ii) the excess, if any of (A) the mark-to-market gains included by such U.S. Holder for prior tax years, including any amount which would have been included for any prior year but for the special PFIC rules discussed above with respect to a U.S. Holder who has not made a timely QEF election during the year in which he holds (or is deemed to have held) our common shares and the Company is a PFIC, over (B) the mark-to-market losses that were allowed as deductions for prior tax years.  A U.S. Holder’s adjusted tax basis in our common shares will be increased or decreased to reflect the amount included or deducted as a result of the mark-to-market election.  A mark-to-market election will apply to the tax year for which the election is made and to all later tax years, unless the PFIC stock ceases to be marketable or the IRS consents to the revocation of the election.




The IRS has issued proposed regulations that, subject to certain exceptions, would impose U.S. federal income tax on certain transfers of PFIC stock by a U.S. Holder that are generally not otherwise subject to income tax, such as gifts, exchanges pursuant to corporate reorganizations, and transfers at death. The transferee’s basis will depend on the manner of the transfer. The specific tax effect to the U.S. Holder and the transferee may vary based on the manner in which the common shares are transferred.




The PFIC rules are very complex and fact-specific.  U.S. Holders should consult a tax advisor regarding the potential application of the PFIC rules to his, her or its specific situation.




Controlled Foreign Corporation




If more than 50% of the total combined voting power of all classes of shares entitled to vote or the total value of our common shares is owned, actually or constructively, by citizens or residents of the United States, U.S. domestic partnerships or corporations, or estates or trusts other than foreign estates or trusts (as defined by Code Section 7701(a)(31)), each of which owns, actually or constructively, 10% or more of our total combined voting power of all classes of shares entitled to vote (“U.S. Shareholder”), we would be treated as a controlled foreign corporation (“CFC”) under Subpart F of the Code.  This classification would result in numerous complexities and potentially adverse U.S. tax consequences for a U.S. Holder, one of which is the inclusion by the U.S. shareholders of certain income of a CFC which is subject to current U.S. tax. Such U.S. Shareholders are generally treated as having received a current distribution out of the CFC’s Subpart F income (regardless of whether we make an actual distribution) and are also subject to current U.S. tax on their pro rata shares of increases in the CFC’s earnings invested in U.S. property.  Because of the complexity of Subpart F, a more detailed review of these rules is outside







73





of the scope of this discussion.  We do not believe that we currently are classified as a CFC.  However, there can be no assurance that we will not be considered a CFC for the current or any future taxable year.




Foreign Tax Credit.




A U.S. Holder who pays (or has withheld from distributions) Canadian or other foreign income tax with respect to the ownership of our common shares may be entitled, at the option of the U.S. Holder, to either receive a deduction or a tax credit for U.S. federal income tax purposes with respect to such foreign tax paid or withheld. There are significant and complex limitations that apply to the foreign tax credit, among which is the general limitation that the credit cannot exceed the proportionate share of the U.S. Holder’s U.S. income tax liability that the U.S. Holder’s "foreign source" income bears to his, her or its worldwide taxable income. In applying this limitation, the various items of income and deduction must be classified as either "foreign source" or "U.S. source." Complex rules govern this classification process.




In addition, U.S. Holders that are corporations and that own 10% or more of our voting stock may be entitled to an "indirect" foreign tax credit under Section 902 of the Code with respect to the payment of dividends by us under certain circumstances, subject to complex rules and limitations.The availability of the foreign tax credit and the application of the limitations with respect to the foreign tax credit are fact-specific, and each U.S. Holder of our common shares should consult his, her or its own financial advisor, legal counsel or accountant regarding the foreign tax credit rules.




Information Reporting; Backup Withholding.




Certain information reporting and backup withholding rules may apply with respect to certain payments related to our common shares. In particular, a payor or middleman within the U.S., or in certain cases outside the U.S., will be required to undertake backup withholding at a current rate of 28% (which rate is scheduled for periodic adjustment) of any payments to a U.S. Holder by the Company, if a U.S. Holder fails to furnish its correct taxpayer identification number (generally on Form W-9) or otherwise fails to comply with, or establish an exemption from, the backup withholding tax requirements. Any amounts withheld under the U.S. backup withholding tax rules will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is furnished to the IRS. U.S. U.S. Holders should consult their own financial advisor, legal counsel or accountant regarding the information reporting and backup withholding rules applicable to our common shares.




Recent Legislative Developments




Recent U.S. legislation requires certain U.S. Holders that are individuals, estates or trusts to pay up to an additional 3.8% tax on, among other things, dividends and capital gains for taxable years beginning after December 31, 2012.  In addition, the Company may require U.S. Holders to provide certain tax and reporting information necessary for the Company to comply with new IRS reporting obligations. If a U.S. Holder does not provide such information, the U.S. Holder will generally be subject to U.S. withholding tax on payments made by the Company after January 1, 2013 in accordance with this new legislation.




10.F.           Dividends and Paying Agents




Not applicable




10.G.           Statement by Experts




Not applicable




10.H.           Documents on Display




Material contracts and publicly available corporate records may be viewed at our registered and records office located at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia.






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We are a reporting company under the Exchange Act and a “foreign private issuer” as defined in the Exchange Act.   A foreign private issuer is exempt from the provisions of the Exchange Act which prescribe the furnishing and content of proxy statements to shareholders and relating to short swing profits reporting and liability.  Readers may review a copy of our filings with the SEC, including exhibits and schedules filed with it, at the public reference facilities maintained by the Securities and Exchange Commission at 100 F Street N.E., Washington, D.C. 20549.  Copies of such material may also be obtained from the Public Reference Section of the Securities and Exchange Commission at 100 F Street, NE, Washington, D.C. 20549, at prescribed rates. Information may be obtained regarding the Washington D.C. Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330 or by contacting the Securities and Exchange Commission over the Internet at its website at http://www.sec.gov.




ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Currency Exchange Rate Sensitivity




The results of our operations are subject to currency translation risk and currency transaction risk. Regarding currency translation risk, our operating results and financial position are reported in Canadian dollars in our consolidated financial statements. We incur certain costs in US dollars. The fluctuation of the US dollar in relation to the Canadian dollar will therefore have an impact upon our profitability and may also affect the value of our assets and the amount of shareholders’ equity.




In regards to transaction risk, our functional currency is the Canadian dollar and our activities are predominantly executed using the Canadian dollar. We incur a relatively small portion of our expenses in U.S. dollars. To date, we have completed all of our equity financing in Canadian dollars. We have not entered into any agreements or purchased any instruments to hedge any possible currency risks at this time due to the small amount of exposure.




Interest Rate Sensitivity




We currently have no short term or long term debt requiring interest payments. As a result, we have not entered into any agreement or purchased any instrument to hedge against possible interest rate risks at this time.




Commodity Price Sensitivity




Our future revenue and profitability will be dependent, to a significant extent, upon prevailing spot market prices for metals. In the past metal prices have been volatile. Prices are subject to wide fluctuations in response to changes in supply of and demand for metals, market uncertainty and a variety of additional factors that are beyond our control. Our mineral properties are in the exploration phase and accordingly we are not generating any operating revenues and are therefore not subject to any short term volatility in the prices of metals. As we are in the exploration phase, the above factors have had no material impact on operations or income. We have not entered into any futures or forward contracts.




ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES




Not applicable







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PART II








ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES




Not applicable




ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS




Not applicable




ITEM 15.
CONTROLS AND PROCEDURES




Disclosure Controls and Procedures




At the end of the period covered by this report, an evaluation of the effectiveness of the design and operations of our “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) of the Exchange Act) was carried out by our principal executive officer and principal financial officer. Based upon that evaluation, our principal executive officer and principal financial officer have concluded as of the end of the period covered by this report that the design and operation of our disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures.




Notwithstanding the foregoing, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that our disclosure controls and procedures will detect or uncover every situation involving the failure of persons within our company and our subsidiaries to disclose material information otherwise required to be set forth in our periodic reports.  Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objective of ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act is communicated to management to allow timely decisions regarding required disclosure.




Management Report on Internal Control Over Financial Reporting




The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.





Management conducted an evaluation of the effectiveness of company level internal controls over financial reporting on a risk based approach using elements of the framework in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.





Based on management’s assessment and those criteria, management believes that the internal control over financial reporting as of April 30, 2011 was effective.







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Management’s internal control report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report.







Changes in Internal Control Over Financial Reporting




Other than those described elsewhere in this Form 20-F, there was no change in our internal control over financial reporting that occurred during our most recently completed fiscal year ended April 30, 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.  Nor were there any significant deficiencies or material weaknesses in our internal controls requiring corrective actions.




ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT




Our Board of Directors has determined that Ian Smith, a member of the Company’s Audit Committee, qualifies as an “audit committee financial expert” as defined in Item 16A(b) of Form 20-F.




Our Board of Directors has determined that Mr. Smith is an independent director in accordance with the definition set forth in Section 803 of the NYSE Amex Company Guide.




ITEM 16B.
CODE OF ETHICS




We have adopted a code of ethics that applies to our chief executive officer, the chief financial officer, and other members of senior management. As adopted, the Code of Ethics sets forth standards that are designed to prevent wrongdoing and to promote:




·
honesty and integrity, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;




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




·
compliance with applicable governmental laws, rules and regulations;




·
protection of and respect for the confidentiality of information acquired in the course of work;




·
responsible use of and control over assets and resources;




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




·
accountability for adherence to the Code of Ethics.




ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES




Our Board of Directors appointed Davidson & Company as independent auditors to audit our financial statements for the fiscal year ended April 30, 2011. The aggregate fees billed for professional services rendered by the aforementioned independent auditor in their capacity as our principal accountant during the last fiscal year is set forth below. Our Audit Committee pre-approved all of the following amounts billed to us prior to incurring the expenses associated therewith.




Financial Year Ending
Audit Fees1
Audit Related Fees2
Tax Fees3
All Other Fees42011/04/30
$48,000
$20,485
$1,650
$Nil2010/04/30
$45,000
$13,500
$1,500
$Nil







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1The aggregate fees billed for professional services rendered by our principal accountants for the audit of our annual financial statements and other fees that are normally provided by our principal accountant in connection with our audits.




2The aggregate fees billed for assurance and related services by our principal accountant that are reasonably related to the performance of the audit or review of our financial statements.




3The aggregate fees billed for professional services rendered by our principal accountant for tax compliance, tax advice and tax planning.




4Other fees billed by our principal accountant included general review of certain company documentation, such as our Form 20-F registration filing and, in 2009, our bought deal prospectus offering, unrelated to auditing activities.




Pre-Approval Policies and Procedures:




All services to be performed by our auditor must be approved in advance by the Audit Committee. The Audit Committee has considered whether the provision of services other than audit services is compatible with maintaining the auditors’ independence and has adopted a policy governing the provision of these services. This policy requires the pre-approval by the Audit Committee of all audit and non-audit services provided by the external auditor, other than anyde minimis non-audit services allowed by applicable law or regulation.




Pre-approval from the Audit Committee can be sought for planned engagements based on budgeted or committed fees. No further approval is required to pay pre-approved fees. Additional pre-approval is required for any increase in scope or in final fees.




Of the total aggregate fees paid by the Company to its accountants during the fiscal year ended December 31, April 30, 2010, $nil, or 0% of the aggregate fees, were approved by the Audit Committee pursuant to thede minimis exception provided by Section (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.




ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES




Not applicable




ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS




Not applicable




ITEM 16F.
CHANGES IN REGISTRANT’S CERTIFYING ACCOUNTANT




Not applicable




ITEM 16G.
CORPORATE GOVERNANCE










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79





PART III





ITEM 17.
FINANCIAL STATEMENTS




Our financial statements are stated in Canadian Dollars and are prepared in accordance with Canadian GAAP, the application of which, in our case, conforms in all material respects for the periods presented with United States GAAP, except as discussed in footnotes to the financial statements.




Auditors’ Report dated July 25, 2011




Consolidated Balance Sheets at April 30, 2011 and 2010




Consolidated Statements of Operations and Comprehensive Loss for the years ended




April 30, 2011, 2010 and 2009




Consolidated Statements of Cash Flows for the years ended




April 30, 2011, 2010 and 2009




Consolidated Statements of Shareholders’ Equity for the years ended




April 30, 2011, 2010 and 2009




Notes to the Consolidated Financial Statements for the year ended




April 30, 2011







80





CROSSHAIR EXPLORATION & MINING CORP.
 
 
 CONSOLIDATED FINANCIAL STATEMENTS
 
 
 FOR THE YEAR ENDED APRIL 30, 2011
 
 (Expressed in Canadian Dollars)
 
  81
  
 
 
 
 82
  CROSSHAIR EXPLORATION & MINING CORP.
 CONSOLIDATED BALANCE SHEETS
 AS AT APRIL 30
 (Expressed in Canadian Dollars)
 ASSETS

2011


2010Current assetsCash and cash equivalents

$
9,931,585


$
3,427,511Marketable securities


860,784



358,823Receivables


227,974



135,981Prepaid expenses (Note 10)


145,584



283,61111,165,927


$
4,205,926Reclamation bonds


17,563



26,477Equipment(Note 4)


181,834



380,705Mineral properties (Note 5)


31,733,095



30,385,684$
43,098,419


$
34,998,792LIABILITIES AND SHAREHOLDERS' EQUITYCurrent liabilitiesPayables and accrued liabilities

$
278,350


$
798,623Due to related parties (Note 10)


72,407



4,294350,757



802,917Future reclamation costs (Note 6)


282,162



290,458Contingent liability (Note 15)


400,000



200,0001,032,919



1,293,375Shareholders' equityCapital stock  (Note 8)AuthorizedUnlimited number of common shares without par valueIssued: 47,477,151 (April 30, 2010 – 32,869,373) common shares


77,151,646



70,162,104Contributed surplus (Note 8)


20,695,209



17,237,949Deficit


(55,781,355
)


(53,694,636
)42,065,500



33,705,417$
43,098,419


$
34,998,792
 Nature and Continuance of Operations (Note 1)
 Commitments (Note 7)
 Contingencies (Note 15)
 On behalf of the Board:“Mark J. Morabito”
Director
“Ian B. Smith”
DirectorMark J. Morabito

Ian B. Smith
 
 The accompanying notes are an integral part of these consolidated financial statements.
  83
  CROSSHAIR EXPLORATION & MINING CORP.
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
 YEARS ENDED APRIL 30
 (Expressed in Canadian Dollars)
 2011


2010 2009EXPENSESAccretion (Note 6)

$
22,941


$
54,908


$
28,089Amortization


60,948



113,069



199,213Audit and accounting


76,548



132,498



171,486Consulting (Note 10)


215,985



84,452



174,541Directors’ fees (Note 10)


-



-



100,500Insurance


65,975



80,784



79,272Investor relations


157,235



73,835



167,570Legal (Note 10)


247,543



289,737



225,048Management fees (Note 10)


461,664



94,582



39,583Office and administration (Note 10)


99,089



184,484



332,894Property investigations


9,924



239



-Provision for bad debt


-



31,000



93,270Rent (Note 10)


54,065



117,916



190,232Stock-based compensation (Note 8)


1,200,990



1,049,684



3,312,632Transfer agent and filing fees


166,036



95,263



353,445Travel (Note 10)


58,157



42,860



95,546Wages and salaries (Note 10)


359,103



642,262



1,351,582(3,256,203
)


(3,087,573
)


(6,914,903
)OTHER INCOME (EXPENSES)Interest income


34,748



49,122



175,425Gain (loss) on sale of equipment (Note 10)


(110,291
)


-



21,516Gain (loss) on foreign exchange


(6,934
)


10,018



(17,380
)Asset retirement obligations recovery


-



51,734



-Unrealized gain (loss)–marketable securities


501,961



66,667



(1,290,195
)Mineral property write-off


-



(229,796
)


(14,000,000
)419,484



(52,255
)


(15,110,634
)Loss before income tax


(2,836,719
)


(3,139,828
)


(22,025,537
)Future income tax recovery (Note 11)


750,000



818,750



1,301,300Loss for the year

$
(2,086,719
)

$
(2,321,078
)

$
(20,724,237
)Basic and diluted loss per common share

$
(0.05
)

$
(0.08
)


(0.89
)Weighted average number of common shares outstanding


41,193,459



29,528,511



23,396,172
 
 The accompanying notes are an integral part of these consolidated financial statements
  84
  CROSSHAIR EXPLORATION & MINING CORP.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED APRIL 30
 (Expressed in Canadian Dollars)
 CASH FLOWS FROM OPERATING ACTIVITIES

2011


2010


2009Loss for the year

$
(2,086,719
)

$
(2,321,078
)

$
(20,724,237
)Items not affecting cash:Accretion


22,941



54,908



28,089Accrued income or other receivables


-



-



(8,444
)Asset retirement obligation recovery


-



(51,734
)


-Amortization


60,948



113,069



199,213Provision for bad debt


-



31,000



93,270Loss on sale of equipment


110,291



-



-Future income tax recovery


(750,000
)


(818,750
)


(1,301,300
)Stock-based compensation


1,200,990



1,049,684



3,312,632Unrealized loss/(gain)–foreign exchange


2,089



(25,963
)


(29,238
)Unrealized  (gain) loss–marketable securities


(501,961
)


(66,667
)


1,290,195Mineral property write-off


-



229,796



14,000,000Acquisition of marketable securities


-



-



(1,000,000
)Non-cash working capital item changesReceivables


(91,993
)


(88,768
)


426,812Due from related party


-



(2,669
)


-Prepaid expenses


138,027



33,451



(43,234
)Payables and accrued liabilities


(138,497
)


(301,568
)


353,529Due to related parties


68,113



(94,204
)


(11,797
)Net cash used in operating activities


(1,965,771
)


(2,259,493
)


(3,414,510
)CASH FLOWS FROM INVESTING ACTIVITIESAcquisition costs on acquisition of Target


-



-



(195,271
)Cash acquired on acquisition of Target


-



-



210,572Mineral properties


(1,562,513
)


(954,128
)


(5,965,764
)Proceeds on sale of equipment


30,000



-



-Acquisition of equipment


(2,368
)


(11,088
)


(103,116
)Reclamation bond refunds


8,914



7,632



-Net cash used in investing activities


(1,525,967
)


(957,584
)


(6,053,579
)CASH FLOWS FROM FINANCING ACTIVITIESIssuance of shares and warrants for cash, net of costs


9,995,812



3,817,314



(16,992
)Advances made to Target


-



-



(963,519
)Net cash provided by (used in) financing activities


9,995,812



3,817,314



(980,511
)Net change in cash and cash equivalents during the year


6,504,074



600,237



(10,448,600
)Cash and cash equivalents, beginning of year


3,427,511



2,827,274



13,275,874Cash and cash equivalents, end of year

$
9,931,585


$
3,427,511


$
2,827,274Cash and cash equivalentsCash

$
1,586,093


$
1,502,790


$
787,274Liquid short term investments


8,345,492



1,924,721



2,040,000$
9,931,585


$
3,427,511


$
2,827,274
 Supplemental disclosures with respect to cash flows (Note 9)
 
 The accompanying notes are an integral part of these consolidated financial statements
  85
  
 
 CROSSHAIR EXPLORATION & MINING CORP.
 CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
 (Expressed in Canadian Dollars)
 
 
 Capital StockNumber of Shares


Amount


Contributed


Deficit


TotalSurplusBalance at April 30, 2008


21,148,956


$
60,948,053


$
10,496,726


$
(30,649,321
)

$
40,795,458Issued for:Share issuance costs


-



(16,992)



-



-



(16,992)Property acquisition


3,231,250



5,969,008



1,500,418



-



7,469,426Target plan of arrangement (Note 3)


3,665,872



2,194,417



119,904



-



2,314,321Stock-based compensation for the year


-



-



3,312,632



-



3,312,632Tax benefit renounced to flow-through shareholders


-



(1,301,300)



-



-



(1,301,300)Loss for the year


-



-



-



(20,724,237)



(20,724,237)Balance at April 30, 2009


28,046,078



67,793,186



15,429,680



(51,373,558)



31,849,308Issued for:Stock option exercise


6,250



11,972



(8,222)



-



3,750Private placement – Nov 2009


1,250,000



639,656



360,344



-



1,000,000Flow-through private placement– Nov 2009


1,275,000



1,275,000



-



-



1,275,000Debt Settlement


87,500



79,450



-



-



79,450Flow-through private placement– Dec 2009


500,000



500,000



-



-



500,000Flow-through private placement– April 2010


1,704,545



1,244,333



255,667



-



1,500,000Share issuance costs


-



(562,743)



101,307



-



(461,436)Tax benefit renounced to flow-through shareholders


-



(818,750)



-



-



(818,750)Stock-based compensation for the year


-



-



1,099,173



-



1,099,173Loss for the year


-



-



-



(2,321,078)



(2,321,078)Balance at April 30, 2010


32,869,373



70,162,104



17,237,949



(53,694,636)



33,705,417Issued for:Fractional rounding from share consolidation


(124)



-



-



-



-Flow-through private placement– Nov 2010


3,750,000



2,542,956



457,044



-



3,000,000Private placement – Nov 2010


9,999,999



4,811,726



2,188,274



-



7,000,000Share issuance costs


-



(1,444,798)



519,101



-



(925,697)Exercise of stock options


200,000



877,911



(711,911)



-



166,000Exercise of warrants


657,903



951,747



(196,238)



-



755,509Stock-based compensation for the year


-



-



1,200,990



-



1,200,990Tax benefit renounced to flow-through shareholders


-



(750,000)



-



-



(750,000)Loss for the year


-



-



-



(2,086,719)



(2,086,719)Balance at April 30, 2011


47,477,151


$
77,151,646


$
20,695,209


$
(55,781,355
)

$
42,065,500
 The accompanying notes are an integral part of these consolidated financial statements.
 86
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  1.           NATURE AND CONTINUANCE OF OPERATIONS
 
 Crosshair Exploration & Mining Corp. (the "Company" or “Crosshair”) was incorporated under the laws of British Columbia on September 2, 1966.  Its principal business activities are the acquisition and exploration of mineral properties. All of the Company’s resource properties are located in North America.
  The Company is in the process of exploring its mineral properties and has not yet determined whether the properties contain ore reserves that are economically recoverable.  The recoverability of the amounts shown for mineral properties and related deferred exploration costs are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production.
  These consolidated financial statements have been prepared using Canadian generally accepted accounting principles (“GAAP”) on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future.  The continuing operations of the Company are dependent upon its ability to continue to raise adequate financing and to commence profitable operations in the future.
  Management believes the Company has sufficient working capital to maintain its operations and its activities for the next fiscal year.
  These consolidated financial statements do not reflect the adjustments to the carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary were the going concern assumption deemed to be inappropriate.  These adjustments could be material.
 
 During the year ended April 30, 2011 the Company consolidated its common shares on the basis of one post-consolidated share for every four pre-consolidated common shares held (Note 8).  All references to share amounts have been retroactively restated to reflect the share consolidation.
 
 
 2.           SIGNIFICANT ACCOUNTING POLICIES
 
 Principles of Consolidation
 
 These consolidated financial statements include the accounts of the Company, Target Exploration and Mining Corp (“Target”), (since March 31, 2009, the date of acquisition) (Note 3) and 448018 Exploration Inc.; both of which are wholly-owned subsidiaries, and the account of The Bootheel Project LLC (Note 5). All inter-company transactions and balances have been eliminated.
 
 Use of Estimates
 
 The preparation of consolidated financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions.  These estimates and assumptions affect the reported amounts of assets, liabilities, shareholders’ equity, and the disclosure of contingent assets and liabilities, as at the date of the financial statements, and expenses for the years reported.  In particular, the Black-Scholes stock price valuation model used to value warrants and stock options requires the input of highly subjective assumptions regarding stock price volatility.
 
 Changes in these assumptions can materially affect the fair value estimate, and therefore, the Black-Scholes model does not necessarily provide a reliable measure of fair value.
 
 Other significant estimates used relate to the impairment of resource property interests, valuation of asset retirement obligations and the valuation allowance applied to future income tax assets.  Actual results may differ significantly from estimates and assumptions.
 
  87
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  2.           SIGNIFICANT ACCOUNTING POLICIES (cont’d...)
 
 Financial Instruments
  All financial instruments are classified into one of five categories: held-for-trading, held-to-maturity investments, loans and receivables, available-for-sale financial assets or other financial liabilities. All financial instruments and derivatives are measured in the balance sheet at fair value except for loans and receivables, held-to-maturity investments and other financial liabilities which are measured at amortized cost. Subsequent measurement and changes in fair value will depend on their initial classification. Held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income. Available-for-sale financial instruments are measured at fair value with changes in fair value recorded in other comprehensive income until the instrument is derecognized or impaired.
 
 The Company has classified its cash and cash equivalents and marketable securities as held-for-trading.  Receivables are classified as loans and receivables.  Payables and accrued liabilities and due to related parties are classified as other financial liabilities, all of which are measured at amortized cost.  The Company has elected to measure all derivatives and embedded derivatives at fair value and the Company maintained its policy not to use hedge accounting.
 
 The Company also provides the required disclosure about the inputs used in making fair value measurements, including their classification within a hierarchy that prioritizes their significance.  The three levels of the fair value hierarchy are:
 
 Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
 Level 2 – Inputs other than quoted prices that are observable for the asset or liability either directly or indirectly; and
 Level 3 – Inputs that are not based on observable market data.
 
 See Note 14 for relevant disclosures.
  Cash and Cash Equivalents
 
 The Company considers cash and cash equivalents to include cash on deposit and highly liquid short-term interest bearing variable rate investments. Interest earned is recognized immediately in operations.
  Marketable securities
 
 The Company accounts for its marketable securities at fair market value with gains and losses included in the statement of operations.
 
 Equipment
 
 Equipment is recorded at cost less accumulated amortization.  The equipment below is amortized over its useful life using the following annual rate and methods:
 
 Computer and office equipment
30%
Declining balanceComputer software
45%
Declining balanceExploration equipment
20%
Declining balanceFurniture and fixtures
20%
Declining balanceLeasehold improvements
3 years and 3 months
Straight-line
 
  88
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d...)
 
 Mineral Properties
 
 Costs related to the acquisition and exploration of mineral properties are capitalized by property until the commencement of commercial production.  If commercially profitable ore reserves are developed, capitalized costs of the related property are reclassified as mining assets and amortized using the unit of production method.  If, after management review, it is determined that capitalized acquisition, exploration and development costs are not recoverable over the estimated economic life of the property, or the property is abandoned, or management deems there to be an impairment in value, the property is written down to its net realizable value.
 
 Any option payments received by the Company from third parties or tax credits refunded to the Company are credited to the capitalized cost of the mineral property. If payments received exceed the capitalized cost of the mineral property, the excess is recognized as income in the year received. The amounts shown for mineral properties do not necessarily represent present or future values.  Their recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof.
 
 Future reclamation costs
  The Company recognizes the cost of a liability for an asset retirement obligation at fair value, when a reasonable estimate of fair value can be made, in the period in which it is incurred. This amount is added to the carrying value of the asset, and amortized into income on a systematic basis over its useful life. If the fair value of the liability decreases due to changes in future cash flow estimates, a corresponding decrease in the related asset is recorded. If the reduction exceeds the value of the related asset, the remaining amount is reduced through earnings. Changes in the liability for an asset retirement obligation due to passage of time will be measured by applying an interest method of allocation.  The amount will be recognized as an increase in the liability and accretion expense in the statement of operations.
  Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation.  The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations.
 
  Flow-Through Shares
 
 Resource expenditure deductions for income tax purposes related to exploration activities funded by flow-through share arrangements are renounced to investors in accordance with Canadian income tax legislation.  To the extent that the future tax liabilities created by the renunciation exceed the future tax assets available, the Company records a reduction in capital stock for the estimated tax benefits transferred to shareholders.
  When the Company renounces flow-through expenditures, a portion of the Company’s future income tax assets that were not recognized in previous years, due to the recording of a valuation allowance, is recognized as a recovery of income taxes in the statement of operations.
  Loss per share
  Basic loss per share is computed by dividing the loss for the year by the weighted average number of common shares outstanding during the year.
  For diluted per share computations, assumptions are made regarding potential common shares outstanding during the year.  The weighted average number of common shares is increased to include the number of additional common shares that would be outstanding if, at the beginning of the year, or at time of issuance, if later, all options and warrants are exercised.  Proceeds from exercise are used to purchase the Company’s common shares at their average market price during the year, thereby reducing the weighted average number of common shares outstanding.  If these computations prove to be anti-dilutive, diluted loss per share is the same as basic loss per share.
  89
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  
 2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d...)
 
 Stock-Based Compensation
 
 The Company recognizes stock-based compensation expense based on the estimated fair value of the options on the date of grant, determined using the Black-Scholes option-pricing model.  The fair value of the options is recognized over the vesting period of the options granted as both stock-based compensation expense and contributed surplus.  The contributed surplus account is subsequently reduced if the options are exercised and the amount initially recorded is then credited to share capital.
 
 Income Taxes
 
 Income taxes are accounted for using the asset and liability method. Under this method of tax allocation, future tax assets and liabilities are determined based on differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases (“temporary differences”) and losses carried forward. Future income tax assets and liabilities are measured using the enacted tax rates expected to be in effect when the temporary differences are likely to reverse.  The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the date of enactment or substantive enactment. The amount of future income tax assets recognized is limited to the amount that is more likely than not to be realized.
 
 Impairment of long-lived assets
 
 A long-lived asset is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. An impairment loss is recognized when the carrying amount of a long-lived asset exceeds its fair value. For purposes of recognition and measurement of an impairment loss, a long-lived asset is grouped with other assets and liabilities to form an asset group at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. Estimates of future cash flows used to test recoverability of a long-lived asset include only the future cash flows that are directly associated with, and that are expected to arise as a direct result of, its use and eventual disposition.
 
 Foreign Currency Translation
 
 The Company’s functional and reporting currency is the Canadian dollar. Transactions denominated in foreign currency are translated into Canadian dollars at the rate of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies have been translated into Canadian dollars at the rate of exchange in effect at the balance sheet date. Non-monetary items are translated at historical exchange rates. Revenue and expenses are translated at the average rate during the year in which the transaction occurred. Any gains or losses resulting from translation have been included in the statement of operations.
 
 The financial position and results of the Company’s integrated foreign operations have been translated into
 Canadian funds using the temporal method as follows:
 
 i) Monetary items, at the rate of exchange prevailing at the consolidated balance sheet date;
 ii) Non-monetary items, at the historical rate of exchange; and
 iii) Exploration and administration costs, at the average rate during the year in which the transaction occurred.
 iv) Revenue and expenses are translated at the average rate during the year in which the transaction occurred
 
 Gains and losses arising on currency translation are included in operations for the year.
 
 Comparative Figures
 
 Certain comparative figures have been reclassified to conform with the current year’s presentation.
  90
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  
 2.
SIGNIFICANT ACCOUNTING POLICIES (cont’d...)
 
 Future accounting changes
 
 Business combinations, consolidated financial statements and non-controlling interest
 
 In January 2009, the CICA issued CICA Handbook Section 1582, “Business Combinations”, Section 1601, “Consolidations”, and Section 1602, “Non-Controlling Interests”. These sections replace the former Section 1581, “Business Combinations”, and Section 1600, “Consolidated Financial Statements”, and establish a new section for accounting for a non-controlling interest in a subsidiary. Section 1582 establishes standards for the accounting for a business combination, and states that all assets and liabilities of an acquired business will be recorded at fair value. Obligations for contingent considerations and contingencies will also be recorded at fair value at the acquisition date. The standard also states that acquisition-related costs will be expensed as incurred and that restructuring charges will be expensed in the periods after the acquisition date. It provides the Canadian equivalent to IFRS 3, Business Combinations (January 2008). The section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011.
  Section 1601 establishes standards for the preparation of consolidated financial statements.
 
 Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in the preparation of consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of IFRS International Accounting Standards (“IAS”) 27, Consolidated and Separate Financial Statements (January 2008).
 
 Sections 1601 and 1602 apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011. Earlier adoption of these sections is permitted as of the beginning of a fiscal year. All three sections must be adopted concurrently.
 
 International Financial Reporting Standards (“IFRS”)
 
 In February 2008, the Canadian Accounting Standards Board (“AcSB”) announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada’s existing GAAP.  The date is for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011.  For the Company, the transition date will be May 1, 2010 and this will require the restatement for comparative purposes of amounts reported by the Company for each of the quarters for the year ended April 30, 2011.
  91
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  
 3.           ACQUISITION
 
 Target Exploration and Mining Corp.
 
 On January 6, 2009, the Company entered into a plan of arrangement with Target Exploration and Mining Corp. (“Target”), whereby the Company agreed to acquire all of the outstanding common shares, warrants and stock options of Target. In consideration, the Company issued common shares, warrants and stock options on a 1.2 ratio for each Target common share, warrant and stock option outstanding, with all other terms of the warrants and stock options remaining unchanged. On March 31, 2009, the plan of arrangement was completed and the Company issued 3,665,872 common shares, 570,825 warrants and 600,000 stock options to Target shareholders and paid acquisition costs of $195,271, with a total value of $2,509,592.
 
 The cost of the asset acquisition should be based on the fair value of the consideration given, except where the fair value of the consideration given is not clearly evident. In the case of the Company, the fair value of the consideration given was used which was allocated amongst the fair value of the assets and liabilities of Target as of the date of acquisition.
 
 The acquisition of Target constitutes a related party transaction, and since the transaction has commercial substance and is not in the normal course of operations, it has been measured at the exchange amount.
 
 The total purchase price of $2,509,592 includes the following:
 
 Common shares issued

$
2,194,417Fair value of options


107,594Fair value of warrants


12,310Acquisition costs


195,271$
2,509,592
 
 The purchase price of $2,509,592 was allocated as follows:
 
 Cash

$
210,572Receivables


28,837Reclamation bonds


34,109Equipment


7,228Mineral properties


3,829,933Current liabilities


(232,194
)Advances due to Crosshair


(963,519
)Future reclamation obligations


(405,374
)$
2,509,592
 
 These consolidated financial statements include the results of operations of Target from March 31, 2009, the date of acquisition.
  92
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  4.           EQUIPMENT
 
 April 30, 2011


April 30, 2010Description

Cost


Accumulated Amortization


Net

Book Value


Cost


Accumulated Amortization


Net

Book ValueFurniture & fixtures1

$
-


$
-


$
-


$
203,254


$
146,867


$
56,387Computer & office equipment1


-



-



-



159,002



91,890



67,112Computer software1


-



-



-



71,008



49,876



21,132Exploration equipment


396,292



214,458



181,834



396,292



176,369



219,923Leasehold improvements1


-



-



-



69,986



53,835



16,151$
396,292


$
214,458


$
181,834


$
899,542


$
518,837


$
380,705
 1See Note 10 - Related Party Transactions
  93
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  
 5.           MINERAL PROPERTIES
 
 CMB

$


CMB JV

$


Bootheel Project

$


Golden Promise

$


Juniper Ridge


Other Claims

$


Total

$Balance April 30, 2009


18,373,906



2,542,534



3,670,420



4,520,172



-



229,796



29,336,828Drilling & trenching


88,713



-



2,952



592,314



-



-



683,979Geology


90,800



70,282



209,190



157,040



-



-



527,312Geophysics


-



123,662



-



-



-



-



123,662Administration


56,770



32,435



28,961



47,242



-



-



165,408Technical analysis


37,527



3,901



-



38,974



-



-



80,402Future reclamation


(18,665
)


(5,651
)


(366,889
)


2,005



-



-



(389,200
)Acquisition costs


200,000



-



46,812



20,000



-



-



266,812Recovery- JV partner


-



(71,004
)


(18,236
)


(4,352
)


-



-



(93,592
)Administration fees


-



(8,260
)


-



(348
)


-



-



(8,608
)JCEAP1 refunds received


-



(70,954
)


-



(6,569
)


-



-



(77,523
)Write-off


-



-



-



-



-



(229,796
)


(229,796
)Total for year


455,145



74,411



(97,210
)


846,306



-



(229,796
)


1,048,856Balance April 30, 2010


18,829,051



2,616,945



3,573,210



5,366,478



-



-



30,385,684Drilling & trenching


-



-



-



39,853



-



-



39,853Geology


240,974



190,385



43,512



278,413



25,513



-



778,797Geophysics


-



-



-



65,442



-



-



65,442Geochemical


3,637



27,800



-



43,475



-



-



74,912Metallurgy


22,235



-



-



54,586



-



-



76,821Administration


4,485



14,088



21,241



15,649



-



-



55,463Technical analysis


(652
)


(871
)


-



(3,850
)


-



-



(5,373
)Future reclamation


(25,209
)


(5,445
)


-



(583
)


-



-



(31,237
)Acquisition costs


200,000



-



40,903



335



232,945



-



474,183Recovery- JV partner


-



-



(26,011
)


-



-



-



(26,011
)JCEAP1 refunds received


-



-



-



(155,439
)


-



-



(155,439
)Total for the year


445,470



225,957



79,645



337,881



258,458



-



1,347,411Balance April 30, 2011


19,274,521



2,842,902



3,652,855



5,704,359



258,458



-



31,733,095
 1 Junior Company Exploration Assistance Program
 
  94
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  5.
MINERAL PROPERTIES (cont’d...)
 
 Cumulative totals as at April 30, 2011:
 
 CMB

$


CMB JV

$


Bootheel

Project

$


Golden

Promise

$


Juniper Ridge


Other Claims

$


Totals

$Drilling & trenching


7,313,731



-



2,952



2,340,183



-



-



9,656,866Geology


13,216,764



290,417



301,443



1,058,857



25,513



-



14,892,994Geophysics


1,762,457



150,719



-



506,700



-



-



2,419,876Geochemical


3,637



27,800



-



43,475



-



-



74,912Metallurgy


22,235



-



-



54,586



-



-



76,821Administration


1,670,320



47,974



70,164



275,437



-



-



2,063,895Technical analysis


1,687,857



3,030



1,580



295,132



-



-



1,987,599Future reclamation


146,403



33,758



(366,889
)


3,809



-



-



(182,919
)Acquisition costs


3,350,750



7,132,327



3,687,852



1,387,657



232,945



229,796



16,021,327Recovery- JV partner


-



(95,298
)


(44,247
)


(4,352
)


-



-



(143,897
)Administration fees


-



(10,204
)


-



(348
)


-



-



(10,552
)JCEAP1refunds received


(566,300
)


(70,954
)


-



(256,777
)


-



-



(894,031
)Write-off


(9,333,333
)


(4,666,667
)


-



-



-



(229,796
)


(14,229,796
)Balance April 30, 2011


19,274,521



2,842,902



3,652,855



5,704,359



258,458



-



31,733,095
 
 1 Junior Company Exploration Assistance Program
 
 Central Mineral Belt (“CMB”)
 
 Moran Lake Property
 
 Pursuant to an agreement dated October 14, 2004, the Company acquired an option to earn a 90% interest, subject to a 2% net smelter royalty (“NSR”) and a 10% carried interest to the vendor, in the Moran Lake Property, a uranium prospect located in Central Labrador, Newfoundland, Canada.  The agreement was amended on March 1, 2005 to include additional claims adjacent to the Moran Lake Property, known as Moran Heights.
  To date, the Company has issued 400,000 common shares, made cash payments totaling $575,000 and spent more than the required minimum $3,000,000 on project expenditures.  In connection with the option agreement to earn in its 90% interest in the Moran Lake Property, the Company is required to make advance royalty payments in the amount of $200,000 per year until the commencement of commercial production. The Company is currently involved in a dispute with the original vendor of the Moran Lake Property regarding the timing of the advance royalty payments. The Company has accrued $400,000 as a contingent liability in the event that the Company is not successful in the dispute. (See Note 15). The Company is also required to complete a bankable feasibility study that is due on or before November 10, 2013.
  Otter/Portage Lake Property
  Pursuant to an agreement dated December 2, 2005, the Company acquired an option to earn a 100% interest, subject to a 1.5% NSR, in the Otter and Portage Lake Properties located in the Central Mineral Belt of Labrador.
  To date, the Company has issued the total required 56,250 common shares, made cash payments totaling $140,000 and spent more than the required minimum $600,000 on project expenditures.
   95
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  5.
MINERAL PROPERTIES (cont’d...)
 
 CMB Joint Venture
 
 Silver Spruce Central Mineral Belt (“CMB”) Joint Venture
 
 
 In July 2008, the Company entered into an agreement with Expedition Mining Inc. ("Expedition"), formally known as Universal Uranium Ltd., to acquire all of Expedition's interest (60%) in its joint venture project with Silver Spruce Resources Inc. in Labrador for consideration of $500,000 cash, 2,500,000 common shares with a value of $5,100,000 and 1,875,000 warrants having a value of $1,500,418. The warrants were valued using the Black Scholes model with the following assumptions: risk free interest rate of 2.5%; expected life of 3 years; dividend rate of 0%; and volatility of 84%.  $95,581 of legal and regulatory costs was also incurred in relation to this acquisition.  In addition the Company also acquired exploration equipment with a fair value of $63,672 from Expedition.  Expedition retains a 2% net smelter return (“NSR”) royalty on its 60% interest in the property, which may be reduced to 1.5% in consideration for a cash payment of $1,000,000.  In July 2008, Crosshair also subscribed for 2,222,222 units of Expedition at a price of $0.45 per unit.  Each unit consists of one common share of Expedition and one share purchase warrant entitling Crosshair to purchase an additional common share of Expedition at a price of $0.65 on or before July 29, 2010.  Expedition warrants expired unexercised during the current fiscal year.
 
 Bootheel Project
 
 On March 31, 2009, the Company acquired the Bootheel and Buckpoint Properties in Wyoming, USA through the acquisition via Plan of Arrangement of Target Exploration and Mining Corp. Under an agreement dated June 7, 2007, as amended December 21, 2007, and February 28, 2008, between UR-Energy USA Inc. (“URE”), several of its subsidiaries, Target, now a wholly owned Crosshair subsidiary, and 448018, a wholly owned subsidiary of Target, the Company may earn a 75% interest in The Bootheel Project LLC (“BHP LLC”), subject to certain royalties, by completing expenditures totalling US $3,000,000 and issuing 31,250 common shares on or before June 7, 2011.  As of April 30, 2011 and 2010, the Company, through Target, had earned its 75% interest in BHP LLC.
  Under Agreements dated February 5, 2008 between M J Ranches Inc, and 448018 as manager, BHP LLC leased MJ Ranches’ 75% ownership of certain minerals on fee land that adjoins the Bootheel Property.  The initial term of the agreement is for five years with provision for two renewals.  Payment for the initial five year term is US $252,651 paid in advance, increased for inflation for the renewal periods.  The acquired mineral rights are subject to a sliding scale royalty tied to the sales price of uranium.
 
 
 Golden Promise
 
 Golden Promise Property
 
 On April 29, 2009, Crosshair acquired a 60% interest in the Golden Promise Gold Project in Central Newfoundland, Canada with an option to acquire up to a 70% interest and terminated the original property option earn-in agreement with Paragon Minerals Corp. (“Paragon”).
 
  96
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  5.
MINERAL PROPERTIES (cont’d...)
 
 Golden Promise  (cont’d...)
 
 Golden Promise Property (cont’d...)
 
 As per the original property option earn-in agreement the Company issued 5,000 common shares during the year ended April 30, 2009 to Paragon at a value of $12,400.
 
 Pursuant to the amended agreement with Paragon dated April 8, 2009, Crosshair issued 663,750 common shares with a market value of $686,608 during the year ended April 30, 2009.  Crosshair will provide Paragon with a $2,000,000 carried interest in initial exploration expenditures to be completed prior to May 2013. Crosshair can extend the timeframe to complete the initial exploration program by 12 months upon issuing 62,500 common shares to Paragon.
 
 Upon the successful completion of the initial $2,000,000 exploration program, Crosshair can elect to earn an additional 10% interest (to 70%) in Golden Promise by providing Paragon with an additional $1,000,000 carried interest in additional exploration expenditures within 24 months.   Crosshair can extend the timeframe to complete the additional exploration program by 12 months upon issuing 25,000 common shares to Paragon.  In the event Crosshair does not complete the additional expenditure program within the required timeframe, Crosshair can purchase the remaining 10% interest by paying Paragon the difference between actually incurred exploration expenditures and $1,000,000 or just retain the 60% interest.
 
 Southern Golden Promise (Victoria Lake)
 
 The Company has earned a 60% interest in mineral claims located in the Botwood Basin area of Central Newfoundland known as Southern Golden Promise in consideration for issuing a total 100,000 common shares and incurring a minimum of $1,750,000 exploration expenditures within specified deadlines.
  Juniper Ridge Uranium Property
 
 On October 29, 2010, the Company signed a definitive agreement with Strathmore Resources Ltd., a wholly owned subsidiary of Strathmore Minerals Corp. (“Strathmore”) to acquire a 100% interest in the Juniper Ridge Uranium Property (the “Property”).The aggregate total price for a 100% interest in the Property will be satisfied by Crosshair as follows:
 
 
 In Cash (USD)


In Shares (USD)


Total (USD)Upon signing of the agreement (paid)

$
25,000


$
-


$
25,000By November 15, 2010 (paid)


175,000



-



175,000By October 29, 2011


250,000



250,000



500,000By October 29, 2012 (1)


1,250,000



1,250,000



2,500,000By October 29, 2013 (1)


1,250,000



1,250,000



2,500,000Upon obtaining production permit (2)


1,500,000



-



1,500,000$
4,450,000


$
2,750,000


$
7,200,000
 
 1 These amounts are based on the estimated 5 million pounds uranium reserves at US $0.50 per pound.  Actual payments will be based on the measured, indicated and inferred uranium resources as defined by the NI 43-101 technical report. The minimum commitment is US $2,500,000, with the company paying an additional US $0.50 per pound in excess of 5 million pounds if the NI 43-101 technical report shows a resource in excess of 5 million pounds.
  97
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  5.           MINERAL PROPERTIES (cont’d...)
 
 Juniper Ridge Uranium Property (cont’d...)
 
 2 This amount is based on the estimated 5 million pounds uranium reserves at US $0.30 per pound.  Actual payments will be based on the proven and probable uranium reserves as determined by prefeasibility or feasibility study.  At the option of Strathmore, the Company will make this payment in cash, shares or a combination of cash and shares. The minimum commitment is US $1,500,000.
 
 Title to the Juniper Ridge property will be conditionally transferred to the Company by Strathmore upon making the initial payments of US$700,000 (US$250,000 of which is payable in common shares of Crosshair). US$200,000 of this amount has been paid , and the remaining US$500,000 will be paid on or before October 29, 2011.  The Company can terminate the acquisition agreement at any time upon written notice, without any further liabilities to the Company.  Strathmore will retain a 2% Gross Revenue Royalty on the Property.  The Company has the option to repurchase this royalty at any time during the first three years after commencement of commercial production for US $1,500,000 for each 1% of the Gross Revenue Royalty.
 
 Other Claims
 
 Sinbad Claims
 
 On March 31, 2009, the Company acquired the Sinbad Property in Utah, USA through the acquisition via plan of arrangement of Target Exploration and Mining Corp.  During the 2010 fiscal year, the Company allowed the property to lapse and as a result the related costs of $229,796 were written off to operations.
 
 
 6.
FUTURE RECLAMATION COSTS
 
 April 30, 2011


April 30, 2010Asset retirement obligation – beginning balance

$
290,458


$
676,484Change in estimates


(31,237
)2


(440,934
)1Accretion expense


22,941



54,908Asset retirement obligation – ending balance

$
282,162


$
290,458
 
 1 The Company revised its estimates down from the previous year based on new information regarding potential reclamation costs to be incurred in the future.
 
 2The Company revised its prior estimates based on the estimated dates of abandonment of the mineral property interests.
 
 The Company has legal obligations associated with its Moran Lake, Silver Spruce CMB JV, Southern Golden Promise, Juniper Ridge and Bootheel mineral properties for reclamation costs.   These costs are anticipated to be incurred between 2013 and 2015.
 
 The total undiscounted amount of estimated cash flows required to settle the obligations is approximately $300,000, which was adjusted for inflation at the rate of 2%, discounted at 8% and projected out to 2015.  Certain minimum amounts of asset retirement obligations will occur each year with the significant amounts to be paid on abandonment of the mineral property interests.
   98
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  7.           COMMITMENTS
 
 In connection with the option agreement to earn in its 90% interest in the Moran Lake Property, the Company is required to make advance royalty payments in the amount of $200,000 per year until the commencement of commercial production. The Company is currently involved in a dispute with the original vendor of the Moran Lake Property regarding the timing of the advance royalty payments. The Company has accrued $400,000 as a contingent liability in the event that the Company is not successful in the dispute. (See Note 15). The Company is also required to complete a bankable feasibility study that is due on or before November 10, 2013. In addition, as at April 30, 2011, the Company is required to spend approximately $288,669 over the next fiscal year  (net of recoveries from the government of Newfoundland and joint venture partner) to maintain the highest potential claims.
  8.           CAPITAL STOCK AND CONTRIBUTED SURPLUS
 
 Share and warrant issuances
 
 During the year ended April 30, 2011, common shares were issued as follows:
  ·
On December 15, 2010, the Company consolidated its common shares on the basis of one post-consolidated common share for every four pre-consolidated common shares.  The 146,993,893 pre-consolidated common shares were reduced to 36,748,349 post consolidated common shares (after taking into account the cancellation of 124 shares due to fractional rounding). Stock options and warrants were similarly adjusted. All references to share and per share amounts have been retroactively restated to reflect the share consolidation.
 
 ·
On November 23, 2010, the Company closed a brokered private placement of 3,750,000 flow-through units (the “flow-through units”) at a price of $0.80 per flow-through unit for gross proceeds of $3,000,000. The proceeds have been allocated based on the relative fair values of common shares and warrants as follows: common shares $2,542,956 and warrants $457,044. Each flow-through unit consisted of one flow-through common share and one half of one warrant (the “Warrant”); 1,875,000 in total.  Each whole Warrant is exercisable for one non flow-through common share at an exercise price of $1.25 per common share until November 23, 2012.Each flow-through unit consists of one common share which qualifies as a “flow-through share” for purposes of the Income Tax Act(Canada).
 
 On  November 23, 2010, the Company also closed a brokered private placement of subscription receipts for gross proceeds of $7,000,000.  The proceeds have been allocated based on the relative fair value of common shares and warrants as follows: common shares $4,811,726 and warrants $2,188,274. The subscription receipts were subject to certain escrow release conditions.   The escrow release conditions were as follows: (i) shareholder approval of the offering of subscription receipts; and (ii) the completion of the consolidation of the Company’s Common Shares on the basis of one post-consolidation common share for every four pre-consolidation common shares outstanding. These conditions were met on December 16, 2010, and thus the subscription receipts were converted to 9,999,999 units (the “Units”) at a price of $0.70 per Unit.  Each Unit consisted of one common share and one common share purchase warrant (a “Warrant”) with each Warrant exercisable for one common share at an exercise price of $1.00 per common share for 24 months.   The Company issued broker’s warrants exercisable to acquire 1,375,000 broker’s units (“Broker’s Units”) at an exercise price of $0.70 per Broker’s Unit (valued at $519,101), for a period of 24 months, expiring on November 23, 2012.  Each Broker’s Unit consists of one common share and one warrant exercisable for one common share at an exercise price of $1.00 per common share for 24 months, expiring on November 23, 2012. The Black-Scholes pricing model was used to value these warrants, using a risk-free interest rate of 1.7%, expected life of 2 years, annualized volatility of 104%, and dividend rate of 0%.
 
 ·
657,903 warrants with an exercise price ranging from $1.00 to $1.40 per warrant were exercised for gross proceeds of $755,509.  An amount of $196,238, representing the fair value of these warrants on granting was reclassified from contributed surplus to share capital on exercise. In connection with the exercise of agent warrants 168 warrants with an exercise price of $1.20 and 63,920 warrants with an exercise price of $1.40 were issued. The 63,920 warrants issued were immediately exercised (and are included in the total warrants exercised of 657,913).
  99
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  8.           CAPITAL STOCK AND CONTRIBUTED SURPLUS (cont’d...)
 Share and warrant issuances (cont’d...)
 
 ·
200,000 stock options with an exercise price ranging from $0.60 to $0.92 were exercised for gross proceeds of $166,000. An amount of $711,911, representing the fair value of the options on granting was reclassified from contributed surplus to share capital on exercise.
 As of April 30, 2011 the Company had Nil shares and warrants in escrow.
 
 During the year ended April 30, 2010, common shares were issued as follows:
   On November 19, 2009, the Company completed a brokered private placement of 1,250,000 units (the “Units”) at a price of $0.80 per Unit for gross proceeds of $1,000,000.  The proceeds have been allocated based on the relative fair value of common shares and warrants as follows: common shares $639,656 and warrants $360,344. Each Unit consisted of one common share and one common share purchase warrant (a “Warrant”) with each Warrant exercisable for one common share at an exercise price of $1.20 per common share for 24 months.   The Company paid the Agent a commission equal to 8% of the gross proceeds and issued agent’s warrants exercisable to acquire 125,000 agent’s units (“Agent’s Units”) at an exercise price of $1.02 per Agent’s Unit (valued at $59,617), for a period of 24 months, expiring on November 19, 2011.  Each Agent’s Unit consists of one common share and one warrant exercisable for one common share at an exercise price of $1.20 per common share for 24 months, expiring on November 19, 2011. The Black-Scholes pricing model was used to value these warrants, using a risk-free interest rate of 2%, expected life of 2 years, annualized volatility of 118%, and dividend rate of 0%.
 
  The Company also concurrently closed a brokered private placement with the Agent of 1,275,000 flow-through shares at a price of $1.00 per flow-through share for gross proceeds of $1,275,000. Each flow-through share consisted of one common share which qualifies as a “flow-through share” for purposes of the Income Tax Act(Canada). The Company paid the Agent a commission equal to 8% of the gross proceeds raised by the flow-through private placement and issued 127,500 agent’s warrants (“Agent’s Warrants”) (valued at $60,809), with each Agent’s Warrant exercisable for one common share at an exercise price of $1.02 per common share, for a period of 24 months, expiring on November 19, 2011. The Black-Scholes pricing model was used to value these warrants, using a risk-free interest rate of 2%, expected life of 2 years, annualized volatility of 118%, and dividend rate of 0%.
 
 ·
On December 2, 2009, the Company settled debt of $79,450 by the issuing 87,500 common shares.
 
 ·
On December 15, 2009, the Company completed a non-brokered private placement of 500,000 flow-through shares of Crosshair at a price of $1.00 per flow-through share for gross proceeds of $500,000.  Each flow-through share qualifies as a “flow-through share” for the purposes of the Income Tax Act (Canada). In connection with the flow-through private placement the Company issued 30,000 warrants (6% of shares issued), (valued at $13,853), as a finder’s fee. The Black-Scholes pricing model was used to value these warrants, using a risk-free interest rate of 2%, expected life of 2 years, annualized volatility of 116%, and dividend rate of 0%.
 
 ·
6,250 shares were issued from the exercise of stock options at price of $0.60 per share for gross proceeds of $3,750.  An amount of $8,222 representing the fair value of the options on granting was reclassified from contributed surplus to capital stock on exercise.
 
 ·
On April 1, 2010, the Company closed a non-brokered private placement with Mineral Fields Group of 1,704,545 units (“Unit”) at a price of $0.88 per unit for gross proceeds of $1,500,000.  Each Unit consists of one flow-through common share, which qualifies as a “flow-through share” for the purposes of the Income Tax Act (Canada), and one half of one transferable non-flow-through share purchase warrant (a “Warrant”).  Each full Warrant has a two year term and is exercisable for one non-flow-through common share at an exercise price of $1.40 per common share for the first year and $1.60 for the second year following the date the private placement closes.
  100
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  
 8.           CAPITAL STOCK AND CONTRIBUTED SURPLUS (cont’d...)
 Share and warrant issuances (cont’d...)
 
 ·
In connection with the flow-through private placement the Company paid a finder’s fee of a cash commission equal to 5% and a due diligence fee equal to 3.5% of the gross proceeds received from the private placement and issued 127,841 (valued at $56,781) finder’s fee warrants exercisable to acquire that number of Units (“Agent’s Units”), at an exercise price of $0.88 per Agent’s Unit, for a period of 24 months following the date the private placement closes.  Each Agent’s Unit consists of one common share and one half of one share purchase warrant on the same terms as the Warrants. The Black-Scholes pricing model was used to value these warrants, using a risk-free interest rate of 2%, expected life of 2 years, annualized volatility of 111%, and dividend rate of 0%.
 
 
 As of April 30, 2010, the Company had 357,250 shares and 268,500 warrants in escrow held by Universal.
 
 During the year ended April 30, 2009, shares and warrants were issued as follows:
 
 ·
5,000 common shares valued at $12,400 were issued for acquisition costs associated with the Golden Promise Property and 62,500 common shares valued at $170,000, were issued for acquisition costs associated with the Moran Lake Property.
 
 ·
2,500,000 common shares valued at $5,100,000 and 1,875,000 warrants valued at $1,500,418, were issued to Universal as consideration for Universal – Silver Spruce CMB Joint Venture Property (Note 5).  Each warrant entitles the holder to purchase one additional Crosshair common share at $4.00 for the three year period ending July 29, 2011.  The warrants are subject to early expiry if Crosshair’s shares trade at a value of $8.00 or more for a period of 20 days.  Both the shares and warrants are held in escrow and released as to 312,500 shares and 234,375 warrants every three months commencing in October 2008.  Universal has granted Crosshair’s management a voting proxy over shares it holds or acquires through the exercise of the warrants.  Universal can obtain a release from the escrow provisions and proxy rights in respect of shares and/or warrants it distributes to shareholders.
 
 ·
In connection with the plan of arrangement of Target Exploration and Mining Corp., (see Note 3) the Company issued 3,665,872 common shares valued at $2,194,417, 600,000 options valued at $12,310 and 570,825 warrants valued at $107,594.
 
 ·
In order to earn its 60% interest in the Golden Promise Property, the Company issued 663,750 common shares valued at $686,608 to Paragon Minerals Corp.
 
 As of April 30, 2009, the Company had 1,429,000 shares and 1,071,750 warrants in escrow held by Universal.
 
  101
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  8.           CAPITAL STOCK AND CONTRIBUTED SURPLUS (cont’d...)
 
 Warrants
 
 The following is a summary of warrants outstanding at April 30, 2011, 2010, and 2009 and changes during the years then ended.
 
 30-Apr-11


30-Apr-10


30-Apr-09Number

of Warrants


Weighted

Average

Exercise Price


Number

of Warrants


Weighted

Average

Exercise Price


Number

of Warrants


Weighted

Average

Exercise PriceOutstanding, beginning of the year


4,387,614


$
2.41



4,619,450


$
5.23



2,173,625


$
7.04Issued


13,314,087



1.01



2,512,614



1.23



2,445,825



3.64Exercised


(657,903
)


1.15



-



- -



-



-Expired


-



-



(2,744,450
)


6.06



-



-Cancelled due to fractional rounding


(2
)


-



-



-



-



-Outstanding, end of the year


17,043,796


$
1.37



4,387,614


$
2.41



4,619,450


$
5.23
 At April 30, 2011, the following warrants were outstanding:
 
 Outstanding

Exercise Price ($)

Expiry Date1,875,000

4.00

July 29, 2011813,125

1.20

November 19, 2011124,831

1.02

November 19, 20111127,500

1.02

November 19, 2011168

1.20

November 19, 2011900

1.00

December 15, 2011852,273

1.60

April 1, 20129,999,999

1.00

November 23, 20121,875,000

1.25

November 23, 20121,375,000

0.70

November 23, 201217,043,796

1.37
 (1)
These warrants were issued to the Agent in connection with the private placement on November 19, 2009. Each warrant is exercisable into one common share and one warrant exercisable into one common share at an exercise price of $1.20, expiring on November 19, 2011.
  102
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  8.           CAPITAL STOCK AND CONTRIBUTED SURPLUS (cont’d...)
 
 
 Stock options
 
 On December 15, 2010 the Company’s shareholders approved the amendment of the Company’s Stock Option Plan (the “Amended Plan”) to a 10% rolling plan.  The Amended Plan allows a maximum 10% of the issued shares to be reserved for issuance under the plan. Options granted under the Amended Plan may not have a term exceeding 10 years and vesting provisions at the discretion of the Board of Directors.
 
 The following is a summary of stock options outstanding at April 30, 2011, 2010, and 2009, and changes during the years then ended.
 
 
 30-Apr-11


30-Apr-10


30-Apr-09Number


Weighted


Number


Weighted


Number


Weightedof options


Average


of options


Average


of options


AverageExercise Price





Exercise Price





Exercise PriceOutstanding, beginning of year


2,905,882


$
1.52



2,495,625


$
2.58



2,398,250


$
6.84Exercised


(200,000
)


0.83



(6,250
)


0.6



-



-Cancelled


(271,261
)


1.42



(800,625
)


3.85



(1,522,625
)


5.44Expired


(175,000
)


3.94



(118,750
)


1.8



-



-Granted


2,815,000



1.44



1,335,882



0.98



1,620,000



1.56Outstanding, end of year


5,074,621


$
1.43



2,905,882


$
1.52



2,495,625


$
2.58
 103
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  8.           CAPITAL STOCK AND CONTRIBUTED SURPLUS (cont’d...)
 
 
 Stock options (cont’d...)
 
 At April 30, 2011, the following stock options were outstanding to directors, officers and employees:
 
 Outstanding


Exercisable


Exercise Price ($)

Expiry Date66,000



66,000



1.40

August 29, 20116,000



6,000



2.08

November 15, 201137,500



37,500



0.92

March 6, 201225,000



25,000



3.48

March 23, 201227,000



27,000



3.44

May 1, 2012198,490



198,490



4.00

August 29, 201225,000



25,000



0.92

October 15, 201262,500



62,500



3.52

May 23, 201330,000



30,000



1.88

June 5, 201337,500



37,500



2.00

August 1, 2013387,500



387,500



1.08

September 15, 2013162,500



162,500



0.60

October 23, 201387,500



87,500



1.08

October 27, 2013638,750



479,063



1.08

May 28, 201412,500



-



0.76

August 10, 2014293,381



293,382



0.88

November 30, 201425,000



25,000



0.80

December 21, 2014137,500



137,500



0.84

January 6, 20152,580,000



-



1.44

December 21, 2015100,000



25,000



1.95

January 7, 2016135,000



-



1.12

April 1, 20165,074,621



2,112,435
 
 
 Stock-based compensation
 
 The Company recognizes compensation expense for all stock options granted using the fair value based method of accounting.  For the year ended April 30, 2011 the Company recognized stock-based compensation expense of $1,200,990 (2010 - $1,099,173, 2009 - $3,312,632).  Of this amount $Nil (2010 - $49,489, 2009 - $Nil) was allocated to mineral properties. The weighted average fair value of options granted in the period was $1.43 (2010 - $0.60, 2009 – $2.40) per option.
  Where stock options were re-priced, new fair values were calculated based on the new exercise price and this new fair value used in determining compensation expense over the remaining vesting periods of the options.
  The following weighted average assumptions were used for the Black-Scholes method of valuation of stock options during the years ended April 30, 2011, 2010, and 2009:
  April 30, 2011
April 30, 2010
April 30, 2009Risk-free interest rate
1.7%
1.02%
3.09%Expected life of options
3 years
5 years
5 yearsAnnualized volatility
133.37%
103%
92%Dividend rate
0%
0%
0%
  104
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  9.           SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
 
 The following were significant non-cash investing and financing transactions during the year ended April 30, 2011:
  (a)
Mineral property costs of $12,180 were included in accounts payable.
  (b)
200,000 stock options were exercised with a fair value of $711,911
  (c)
657,903 warrants were exercised with a fair value for $307,760.
  (d)
1,439,088 broker warrants were issued, and recorded as share issuance costs, with a fair value of $630,623.
  (e)
Included in mineral properties is $400,000 related to the contingent liability (Note 15).
  (f)
Mineral properties were reduced by $31,237 due to a change in assumptions associated with asset retirement obligation.
  The following were significant non-cash investing and financing transactions during the year ended April 30, 2010:
  (g)
Mineral property costs of $396,045 were included in accounts payable.
  (h)
$49,489 of stock-based compensation was allocated to mineral properties.
  (i)
87,500 common shares of the Company were issued for mineral properties (Note 8).
  (j)
$8,222 was reallocated from contributed surplus to capital stock upon the exercise of stock options.
  (k)
the Company issued a total of 410,341 agents’ warrants valued at $191,060 which were recorded as share issue costs and included in contributed surplus. These were reduced by $89,753 of cash share issuance costs which are included in contributed surplus.
  (l)
Included in mineral properties is $200,000 relating to the contingent liability (Note 15).
  (m)
Included in mineral properties are $389,200 in future reclamation costs.
  The following were significant non-cash investing and financing transactions during year ended April 30, 2009:
  (n)
2,567,500 common shares valued at $5,282,400, 663,750 common shares valued at $686,608 and 1,875,000 warrants valued at $1,500,418 were issued for property acquisitions (Note 8).  Also, exploration equipment with a fair-market value of $63,672 was acquired in connection with the Universal – Silver Spruce CMB Joint Venture agreement.
  (o)
Mineral property costs of $11,260 were incurred and included in accounts payable.
  (p)
A mineral property impairment charge of $14,000,000 was charged in the last quarter of fiscal 2009.
  (q)
Mineral property costs and the provision for future reclamation costs were increased by $70,783.
  (r)
In connection with the acquisition of Target Exploration and Mining Corp., (see Note 3) the Company issued 3,665,872 common shares valued at $2,194,417, 600,000 options valued at $12,310 and 570,825 warrants valued at $107,593.
   105
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  10.           RELATED PARTY TRANSACTIONS
 
 During the year ended April 30, 2011, the Company had the following transactions with related parties:
  ·
In January 2010, the Company entered into a contract with a management company (which was amended on October 1, 2010) with a director and officer in common, whereby the management company will provide shared office and payroll services to the Company.  The Company incurred administrative/office costs of $699,268 included in office and administration, wages and salaries, rent, travel, consulting, and investor relations (2010 - $203,639, 2009 -$38,498) to this management company for such services. At April 30, 2011, $72,407 (April 30, 2010 - $Nil) was still owing to this company included in due to related parties, and deposits on hand with this company of $Nil (April 30, 2010 - $130,514) were included in prepaid expenses.
 
 ·
Paid rent for its Newfoundland office of $Nil (2010 - $6,592, 2009 - $97,153) to a private company that has a director in common.  In July 2009, the Company terminated the use of this office space.
 
 ·
Consulting fees include $63,600 (2010 - $50,350, 2009 - $Nil) of fees paid or accrued to company owned by a former officer of the Company.  Management fees include $328,330 (2010 - $94,582, 2009 - $43,750) of fees paid or accrued to two private companies owned by a director and officer of the Company, of which $Nil (April 30, 2010 – $4,294) was still owing at April 30, 2011.
 
 ·
During the year ended April 30, 2011, the Company paid bonus amounts of $210,000 included in management fees and wages and salaries (2010 - $Nil, 2009 - $Nil) to various officers/directors of the Company.
 
 ·
On October 1, 2010, Crosshair sold all furniture equipment, computer equipment, and software to a management company with a director and officer in common. As consideration for the assets, this management company paid Crosshair the total amount of $30,000, which represents the estimated fair value of the assets on the effective date of the purchase agreement. The difference between the sales price and the carrying value of the sold assets was $110,291, which was recorded as loss on sale of equipment.
 
 ·
During the year ended April 30, 2011, $Nil of management fees (2010 - $26,250, 2009 - $Nil) was paid to former directors of Target.
 
 ·
The $Nil in legal fees (2010 - $24,998, 2009 - $Nil) was paid during the year to the law firm of which a director is a partner.
 
 ·
At April 30, 2011, the Company had a receivable of $Nil (April 30, 2010 - $2,669) from a company with a director and officer in common.  This amount was owed for shared office services, such as rent, office supplies and related utilities, and is included in Receivables.
 
 ·
The Company had incurred independent directors’ fees of $Nil (2010 - $Nil, 2009 - $100,500).
 
 
 The amounts charged to the Company for the services provided have been determined by negotiations among the parties. These transactions were in the normal course of operations and were measured at the exchange value which represented the amounts of consideration established and agreed by the related parties.
 
 The amounts due to the related parties are non-interest bearing, with no fixed terms of repayment.
  106
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  11.           INCOME TAXES
 
 A reconciliation of income taxes at statutory rates with the reported taxes is as follows:
 
 2011


2010


2009Loss before income tax recovery

$
(2,836,719
)

$
(3,139,828
)

$
(22,025,537
)Expected income tax recovery at statutory rates

$
(808,465
)

$
(926,249
)

$
(7,322,831
)Non-taxable items


77,364



252,144



1,359,883Non-capital loss and resource expenditure benefits unrecognized (recognized)


(18,899
)


(144,645
)


4,661,648Total income recovery

$
(750,000
)

$
(818,750
)

$
(1,301,300
)
 
 
 The significant components of the Company's future tax assets are as follows:
 
 2011


2010


2009Future tax assets:Loss carry forwards

$
3,687,294


$
3,093,917


$
2,614,089Marketable securities


354,239



833,969



442,330Equipment


60,153



116,973



103,748Share issuance costs


314,124



212,147



234,613Mineral property and related exploration expenditures


734,067



1,079,720



5,873,8185,149,877



5,336,726



9,268,598Less:  valuation allowances


(5,149,877
)


(5,336,726
)


(9,268,598
)Net future tax assets

$
-


$
-


$
-
 
 
 During the year ended April 30, 2011, the Company issued 3,750,000 common shares on a flow-through basis for gross proceeds of $3,000,000.  The flow-through agreement requires the Company to renounce certain deductions for Canadian exploration expenditures incurred on the Company’s resource properties.  Future income taxes of $750,000 on the exploration expenditures to be renounced to shareholders was applied against capital stock in fiscal 2011 as a result.
 
 The Company has available for deduction against future taxable income non-capital losses of approximately $14,750,000. These losses, if not utilized, will expire through 2031. In addition, the Company also has resource deductions available to reduce taxable income in future years. Future tax benefits, which may arise as a result of these losses and resource expenditures, have not been recognized in these financial statements, and have been offset by a valuation allowance due to the uncertainty of their realization.
  107
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  12.           SEGMENTED INFORMATION
 
 The Company operates in one reportable operating segment, being the acquisition and exploration of mineral properties in North America.
 
 April 30, 2011


April 30, 2010Equipment:United States

$
4,714


$
5,788Canada


177,120



374,917$
181,834


$
380,705Mineral properties:United States

$
3,911,313


$
3,573,210Canada


27,821,782



26,812,474$
31,733,095


$
30,385,684
 
 13.           CAPITAL MANAGEMENT
 
 The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to pursue the exploration and development of its mineral properties, acquire additional mineral property interests and to maintain a flexible capital structure which optimizes the costs of capital at an acceptable risk.  In the management of capital, the Company includes its components of shareholders’ equity.
 
 The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets.  To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue debt, acquire or dispose of assets.
  In order to facilitate the management of its capital requirements, the Company prepares annual expenditure budgets that are updated as necessary depending on various factors, including successful capital deployment and general industry conditions.  The annual and updated budgets are approved by the Board of Directors.
 
 At this stage of the Company’s development, in order to maximize ongoing development efforts, the Company does not pay out dividends.
 
 The Company manages its exposure to USD currency fluctuations by keeping a sufficient amount of US dollars on hand.
 
 The Company’s investment policy is to invest its cash, not otherwise designated for strategic investments, in highly liquid short-term interest-bearing R1-High investment rated (DBRS) investments with maturities of 90 days or less from the original date of acquisition.
 
 The Company completed an equity financing in the third quarter of 2011 to carry on its operations for the next 12 months and beyond April 30, 2012.
 
 The Company currently is not subject to externally imposed capital requirements.  There were no changes in the Company’s approach to capital management.
  108
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  14.           FINANCIAL INSTRUMENTS
 
 The fair value of the Company’s receivables, payables and accrued liabilities, and due to related parties approximate carrying value due to their short-term nature.  The Company’s other financial instruments, being cash and cash equivalents and marketable securities, under the fair value hierarchy are based on level one quoted prices in active markets for identical assets or liabilities.
  The Company’s financial instruments are exposed to certain financial risks, including currency risk, credit risk, liquidity risk, interest rate risk and price risk.
  Credit risk
 
 Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.
  The Company’s cash and cash equivalents are held at a large Canadian financial institution in interest bearing accounts.  The Company has no investments in asset-backed commercial paper.
  The Company’s receivables consist mainly of HST receivable due from the Government of Canada.  The Company does not believe it is exposed to significant credit risk.
  
 Liquidity risk
 
 Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.
  The Company manages liquidity risk through its capital management as outlined in Note 13 to the consolidated financial statements.  Accounts payable relating to mineral properties and other accounts payable and accrued liabilities are due within one year.  Management believes the Company has sufficient funds to meets its liabilities as they become due.
  Market Risk
 
 Market risk is the risk of loss that may arise from changes in market factors such as interest rates, commodity and equity prices, and foreign exchange rates.
  (a)
Interest rate risk
 
 Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.
  The risk that the Company will realize a loss as a result of a decline in the fair value of the short-term investments included in cash and cash equivalents is minimal because these investments roll over daily.
  (b)
Price risk
 
 The Company is exposed to price risk with respect to commodity prices, particularly uranium, and equity prices, since the Company possesses investments in publicly traded securities.  The Company closely monitors those prices to determine the appropriate course of action to be taken by the Company. However, there can be no assurance that the Company can exit these positions if required, resulting in proceeds approximating the carrying value of these securities.
  (c)
Currency risk
 
 As at April 30, 2011, the Company’s expenditures are predominantly in Canadian dollars, and any future equity raised is expected to be predominantly in Canadian dollars.  As at April 30, 2011, the Company has accounts payable denominated in US dollars of $43,180 and cash of $1,405 US dollars.  A 10% change in the Canadian dollar vs. the US dollar would give rise to a $3,963 gain/loss.
   109
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  15.           CONTINGENCIES
 
 Litigation with Expedition Mining Inc. (formally known as Universal Uranium Ltd.)
 
 In April 2009, Crosshair commenced an action in British Columbia Supreme Court against Expedition Mining Inc. (“Expedition”) alleging that Expedition had knowledge of trades that artificially inflated the market price of shares of Expedition at the time that Crosshair agreed to purchase property and securities of Expedition.  The action relates to certain agreements Crosshair entered into with Expedition to acquire all of Expedition’s interest in its project in the Central Mineral Belt of Labrador and to purchase securities of Expedition by way of a private placement.
 
 On April 29, 2010, the Company entered into a definitive agreement with Expedition to settle all outstanding litigation between Crosshair and Expedition.
 
 The settlement agreement requires Crosshair and Expedition to file a consent dismissal order dismissing both the Crosshair claim and the Expedition counterclaim. Neither company paid any funds to the other pursuant to the terms of settlement.
 
 Crosshair has also entered into a voting trust agreement (the “2010 Voting Trust Agreement”). Pursuant to the 2010 Voting Trust Agreement, Crosshair will either abstain from voting its shares in Expedition or vote those shares in favour of Expedition management’s proposals for a period of thirty-six months. As of April 30, 2011, Crosshair held 2,222,222 Expedition shares.
 
 As per the original voting trust agreement between Crosshair and Expedition signed on July 30, 2008 (the “2008 Voting Trust Agreement”), Expedition was also required to either abstain from voting its shares in Crosshair or vote those shares in favour of Crosshair management’s proposals. As of April 30, 2011, Expedition held 1,875,000 Crosshair warrants.
 
 Pursuant to the settlement, beginning April 2010 and for the next twelve months, both Crosshair and Expedition were required to report on a monthly basis to the other in writing advising of the number of shares in the other they have purchased or sold in the preceding month.  In the case of a breach of these requirements the 2010 Voting Trust Agreement becomes null and void. Since Expedition complied with the terms of the settlement the Voting Trust Agreement remains in full force until July 30, 2013.
 
 Litigation with Lewis Murphy
 
 On October 10, 2004, the Company entered in an agreement (the “Agreement”) with Mr. Lewis Murphy pursuant to which the Company was granted an option to acquire an interest in certain mineral licenses in Newfoundland and Labrador.  On April 28, 2010, Mr. Lewis Murphy commenced court proceedings against the Company in the Supreme Court of Newfoundland and Labrador in relation to the Agreement. As acknowledged by Mr. Murphy in the Statement of Claim, the mineral licenses were transferred to Crosshair.  The Agreement provides that upon the Company completing its earn-in obligations under the Agreement and becoming vested as to its 90% interest therein, the Company will pay Mr. Murphy an annual advance royalty of $200,000 per year until the Commencement of Commercial Production.  Mr. Murphy alleges he was owed an annual advance royalty payment in the amount of $200,000 in November 2009.  Mr. Murphy is seeking contractual damages in the amount of $200,000, and various declaratory reliefs including, but not limited to, an order that the transfers of any and all mineral licenses from Murphy to the Company made pursuant to the Agreement are null and void and a declaration that the Agreement is terminated.
  110
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  15.           CONTINGENCIES (cont’d...)
 
 Litigation with Lewis Murphy (cont’d...)
 
 On January 6, 2011, a judgment was issued by the Supreme Court of Newfoundland and Labrador in favour of Mr. Murphy in the amount of $200,000 (plus costs and interest) and the Company’s counterclaim was dismissed. The Company was granted leave to appeal this judgment on May 31, 2011. The appeal hearing is expected to occur in September or October 2011; however, there can be no assurance that any appeal will be resolved in favour of the Company. As of April 30, 2011, Mr. Murphy has commenced an action to recover an additional $200,000 that he claims is due as an advance royalty payment for November 2010. The company is defending this claim but there can be no assurance that this action will be resolved in favour of the Company. As a result $400,000 has been accrued and is recorded in mineral properties as at April 30, 2011.
 
 16.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
 
 These financial statements have been prepared in accordance with Canadian GAAP.  Material variations in the accounting principles, practices and methods used in preparing these financial statements from principles, practices and methods accepted in the United States ("US GAAP") are described and quantified below.
  Balance sheets
 
 The impact of the differences between Canadian GAAP and United States GAAP on the balance sheets would be as follows:
  2011


2010Balance,

Canadian

GAAP


Adjustments


Balance,

US

GAAP


Balance,

Canadian

GAAP


Adjustments


Balance,

US

GAAPAssets:Current assets

$
11,165,927


$
-


$
11,165,927


$
4,205,926


$
-


$
4,205,926Long-term receivables


-



-



-



-



-



-Reclamation bonds


17,563



-



17,563



26,477



-



26,477Equipment


181,834



-



181,834



380,705



-



380,705Mineral properties


31,733,095



(21,151,792
)


10,581,303



30,385,684



(20,047,327
)


10,338,357Total assets

$
43,098,419


$
(21,151,792
)

$
21,946,627


$
34,998,792


$
(20,047,327
)

$
14,951,465LiabilitiesCurrent liabilities

$
350,757


$
-


$
350,757


$
802,917


$
-


$
802,917Contingent liability


400,000



-



400,000



200,000







200,000Future reclamation costs


282,162



-



282,162



290,458



-



290,458Flow-through share liability


-



239,261



239,261



-



218,274



218,274Shareholders’ equityCapital stock


77,151,646



1,589,436



78,741,082



70,162,104



1,214,436



71,376,540Contributed surplus


20,695,209



-



20,695,209



17,237,949



-



17,237,949Deficit


(55,781,355
)


(22,980,489
)


(78,761,844
)


(53,694,636
)


(21,480,037
)


(75,174,673
)Total liabilities and

shareholders’ equity

$
43,098,419


$
(21,151,792
)

$
21,946,627


$
34,998,792


$
(20,047,327
)

$
14,951,465
 
  111
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  16.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d...)
 
 
 Statements of operations
 
 The impact of the differences between Canadian GAAP and United States GAAP on the statements of operations would be as follows:
 
 2011


2010


2009Loss for the year under Canadian GAAP

$
(2,086,719
)

$
(2,321,078
)

$
(20,724,237
)Adjustments:Mineral property expenditures incurred during the year


(1,104,465
)


(1,401,038
)


(4,115,682
)Mineral properties written off during the year


-



-



9,339,424Flow-through share premium paid in excess of market value


354,013



181,775



505,565Future income tax recovery


(750,000
)


(818,750
)


(1,301,300
)Loss under US GAAP

$
(3,587,171
)

$
(4,359,091
)

$
(16,296,230
)Weighted average number of common shares outstanding   under US GAAP


41,193,459



29,528,511



23,396,172Loss per share under US GAAP

$
(0.09
)

$
(0.15
)

$
(0.70
)
 
 Statements of cash flows
 
 The impact of the differences between Canadian GAAP and United States GAAP on the statements of cash flows would be as follows:
 
 2011


2010


2009Net cash flows from operating activitiesUnder Canadian GAAP

$
(1,965,771
)

$
(2,259,493
)

$
(3,414,510
)Mineral properties


(1,288,330
)


(887,316
)


(5,145,919
)Net cash used in operating activities under US GAAP


(3,254,101
)


(3,146,809
)


(8,560,429
)Net cash flows from financing activitiesUnder Canadian GAAP and US GAAP


9,995,812



3,817,314



(980,511
)Net cash flows used in investing activitiesUnder Canadian GAAP


(1,525,967
)


(957,584
)


(6,053,579
)Mineral properties


1,288,330



887,316



5,145,919Net cash used in investing activities under US GAAP


(237,637
)


(70,268
)


(907,660
)Net increase in cash and cash equivalents during the year


6,504,074



600,237



(10,448,600
)Cash and cash equivalents, beginning the year


3,427,511



2,827,274



13,275,874Cash and cash equivalents, end of year

$
9,331,585


$
3,427,511


$
2,827,274
 
 112
 
 16.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (cont’d...)
 
 Mineral property interests and deferred exploration costs
 
 Mineral property costs and related exploration expenditures are accounted for in accordance with Canadian GAAP as disclosed in Note 2. For U.S. GAAP purposes, the Company capitalizes acquisition costs and expenses as incurred exploration costs relating to unproven mineral properties. When proven and probable reserves are determined for a property and a feasibility study prepared, then subsequent development costs of the property would be capitalized. The capitalized costs of such properties would then be measured periodically for recoverability of carrying values.
 The Company considers mineral rights to be tangible assets and accordingly, the Company capitalizes costs related to the acquisition of mineral rights.
 
 Flow-through shares
 
 Under Canadian income tax legislation, the Company is permitted to issue shares whereby the Company agrees to incur qualifying expenditures (as defined under the Income Tax Act of Canada) and renounce the related income tax deductions to the investors.  Under Canadian GAAP, flow-through shares are accounted for as part of the issuance of capital stock at the price paid for the shares, net of any future income tax liability.  Under US GAAP, any difference between the market price of the Company's stock and the fair value of the flow-through shares must be recorded as a liability if a premium is paid by investors or as an asset if investors are purchasing the shares at a discount.  The asset or liability is charged to income as the flow-through share proceeds are expended on qualifying expenditures.
  During the year ended April 30, 2011, the Company issued 3,750,000 flow-through shares for total proceeds of $3,000,000.  As the market price of the Company’s stock was less than the fair value of the flow-through shares issued, a premium of $135,739 has been recorded for the expended cash on qualifying expenditures and a flow-through share liability of $239,261 was recorded for the unexpended amount as of April 30, 2011.
  During the year ended April 30, 2010, the Company issued 13,918,180 flow-through shares for total proceeds of $3,275,000.  As the market price of the Company’s stock was less than the fair value of the flow-through shares issued, a premium of $151,090 has been recorded for the expended cash on qualifying expenditures and a flow-through share liability of $218,273 was recorded for the unexpended amount as of April 30, 2010.
 
 Loss per share
 
 Under both Canadian and United States generally accepted accounting principles basic loss per share is calculated using the weighted average number of common shares outstanding during the year.
  Under United States generally accepted accounting principles, the weighted average number of common shares outstanding excludes any shares held in escrow for which the release is subject to certain performance conditions. The weighted average number of shares outstanding under United States generally accepted accounting principles for the years ended April 30, 2011, 2010 and 2009 were 41,193,439, 29,528,811, and 23,396,172 respectively.
 
  113
 CROSSHAIR EXPLORATION & MINING CORP.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 APRIL 30, 2011
 (Expressed in Canadian Dollars)
  16.
DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES(cont’d...)
 
 New Accounting Standards
 
 In April 2010, the FASB issued ASU 2010-13, Compensation – Stock Compensation (Topic 718), amending ASC 718. ASU 2010-13 clarifies that a share-based payment award with an exercise price denominated in the currency of a market in which the entity's equity securities trade should not be classified as a liability if it otherwise qualifies as equity. ASU 2010-13 also improves GAAP by improving consistency in financial reporting by eliminating diversity in practice. ASU 2010-13 is effective for interim and annual reporting periods beginning after December 15, 2010 (January 1, 2011 for the Company). The Company does not expect its adoption to have a material impact on the Company's financial reporting and disclosures.
 
 In December 2010, the FASB issued ASU 2010-29, which contains updated accounting guidance to clarify the acquisition date that should be used for reporting pro forma financial information when comparative financial statements are issued. This update requires that a company should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This update also requires disclosure of the nature and amount of material, nonrecurring pro forma adjustments. The provisions of this update, which are to be applied prospectively, are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted. The impact of this update on the Company's consolidated financial statements will depend on the size and nature of future business combinations.
  114


ITEM 18.  FINANCIAL STATEMENTS




See “Item 17 – Financial Statements.”




ITEM 19.  EXHIBITS




1.1(1)
Certificate of Incorporation dated September 2, 1966




1.2(1)
Memorandum dated August 31, 1966




1.3(1)
Certificate of Conversion to Public Company dated February 20, 1967




1.4(1)
Certificate of Name Change from Shasta Mines & Oil Ltd. (NPL) to International Shasta Resources Ltd dated February 4, 1975




1.5(1)
Certificate of Name Change from International Shasta Resources Ltd. to Consolidated Shasta Resources Inc dated May 20, 1994




1.6(1)
Certificate of Name Change from Consolidated Shasta Resources Inc. to Lima Gold Corporation dated November 23, 1994




1.7(1)
Certificate of Name Change from Lima Gold Corporation to International Lima Resources Corp. dated September 21, 1999




1.8(1)
Certificate of Name Change from International Lima Resources Corp. to Crosshair Exploration & Mining Corp. dated March 1, 2004




1.9(1)
Transition Application and Notice of Articles transitioning from the former Company Act (British Columbia) to the Business Corporations Act (British Columbia) dated June 1, 2004




1.10(1)
Notice of Alteration removing the Pre-Existing Company Provisions filed September 30, 2004




1.11(1)
Notice of Alteration increasing the authorized share capital from 100,000,000 common shares to an unlimited number of common shares filed March 11, 2005




1.12(1)
New Articles - 2004




2.1
Specimen Common Share certificate




2.2(1)
Sample of Warrant Terms and Conditions




3.1(7)
Voting Trust Agreement between Crosshair and Expedition dated July 29, 2008




3.2(8)
Voting Trust Agreement between Crosshair and Expedition dated April 27, 2010




4.1(1)
Victoria Lake Property Agreement between Rubicon Minerals Corp. and Crosshair dated February 14, 2003.  (This agreement is in relation to the South Golden Promise Property)




4.2(1)
1st Amended Agreement with Rubicon Minerals Corp. regarding Victoria Lake Property dated April 29, 2004. (This agreement relates to the South Golden Promise Property)




4.3(1)
2nd Amended Agreement with Rubicon Minerals Corp. regarding Victoria Lake Property dated November 16, 2004. (This agreement relates to the South Golden Promise Property)




4.4(2)
Golden Promise Agreement between Rubicon Minerals Corp. and Crosshair Exploration dated May 1, 2006







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4.5(1)
Amended and Restated Moran Lake Agreement between Lewis Murphy and Crosshair dated March 1, 2005




4.6
Stock Option Plan dated as of November 4, 2010




4.7
Sample Stock Option Grant Certificate




4.8(3)
Agreement with Triassic Properties Limited regarding Otter and Portage Lake, dated December 2, 2005




4.9
Management Services Agreement with EGM dated October 1, 2010




4.10(5)
Amended and Restated Shareholder Rights Plan Agreement with Computershare Investor Services Inc. dated as of November 19, 2007, as amended and restated March 31, 2008




4.11(8)
Consulting Agreement with ArkOrion Enterprises Inc. dated August 10, 2009




4.12
Consulting Agreement with MJM Consulting and Mark J. Morabito dated March 1, 2011




4.13
Consulting Agreement with Sundance Geological Ltd. and C. Stewart Wallis dated March 1, 2011




4.14(8)
Settlement Agreement and Mutual Release dated April 27, 2010 with Expedition




4.15(8)
Settlement Agreement dated November 4, 2009 with Cartwright Drilling Inc.




4.16(7)
Purchase and Sale Agreement between Crosshair and Expedition dated July 29, 2008




4.17(7)
Escrow Agreement between Crosshair, Expedition and Computershare Investor Services Inc. dated July 29, 2008




4.18(7)
Settlement and Release Agreement made among Expedition, Silver Spruce and Crosshair dated July 29, 2008




4.19(7)
Subscription Agreement between Expedition and Crosshair with respect to Crosshair’s July 28, 2008 subscription for 2,222,222 units of Expedition at a price of $0.45 per unit




4.20(6)
Combination Agreement made among Crosshair, 0843540 B.C. Ltd. and Target dated January 28, 2009




4.21(7)
Golden Promise Option and Joint Venture Agreement between Crosshair and Paragon dated April 8, 2009




4.22(7)
List of Crosshair Subsidiaries




4.23(7)
The Bootheel Project, LLC Exploration, Development & Mine Operating Agreement among 448018 Exploration, Inc., NFUR Bootheel, LLC, Target Exploration and Mining Corp., Ur-Energy USA Inc. and NFU Wyoming LLC dated June 7, 2007




4.24(7)
Amendment No. 1 to The Bootheel Project, LLC Exploration, Development & Mine Operating Agreement dated December 21, 2007




4.25(7)
Uranium Lease and Surface and Damage Agreement between 448018 Exploration, Inc. and M J Ranches dated February 5, 2008




4.26(7)
Assignment of Uranium Lease and Surface and Damage Agreement between 448018 Exploration, Inc. and The Bootheel Project, LLC dated April 11, 2008




4.27(7)
Surface Impact Agreement between 448018 Exploration, Inc. and M J Ranches dated February 5, 2008







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4.28((7)
Assignment of Surface Impact Agreement between 448018 Exploration, Inc. and The Bootheel Project, LLC dated April 11, 2008




4.29
Juniper Ridge Agreement between Strathmore Resources (US) Ltd., Strathmore Minerals Corp., the Company and 448018 Exploration, Inc. dated October 29, 2010




4.30
Agency Agreement between the Company and BayFront Capital Partners Ltd. dated November 23, 2010




4.31
Subscription Receipt Agreement between the Company, BayFront Capital Partners Ltd. and Computershare Trust Company of Canada dated November 23, 2010




4.32
Warrant Indenture between the Company and Computershare Trust Company of Canada dated November 23, 2010




11.1(4)
Code of Ethics




12.1
Section 302 CEO Certification




12.2
Section 302 CFO Certification




13.1
Section 906 CEO Certification




13.2
Section 906 CFO Certification




_________________




(1)
Filed as an exhibit to our Registration Statement on Form 20-F filed April 25, 2006.


(2)
Filed as an exhibit to our Registration Statement on Form 20-F filed July 21, 2006.


(3)
Filed as an exhibit to our Annual Report on Form 20-F filed October 31, 2006.


(4)
Filed as an exhibit to our Form 6-K filed April 8, 2009.


(5)
Filed as an exhibit to our Form 6-K filed April 16, 2008.


(6)
Filed as an exhibit to our Form 6-K filed January 29, 2009.


(7)
Filed as an exhibit to our Annual Report on Form 20-F filed June 25, 2009.


(8)
Filed as an exhibit to our Annual Report on Form 20-F filed July 29, 2010.











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GLOSSARY OF GEOLOGICAL TERMS





The following is a glossary of certain geological terms used in this Form 20-F Annual Report:




Anomalousmeans having a geochemical or geophysical character which deviates from regularity.




Anticlinemeans a fold with strata sloping downward on both sides from a common crest.




Archean means of or relating to the oldest known rocks, those of the Precambrian Eon, Basaltmeans a hard, dense, dark volcanic rock composed chiefly of plagioclase, pyroxene, and olivine, and often having a glassy appearance.




Breccia means fragmental rock whose components are angular and, therefore, as distinguished from conglomerates, are not water worn. May be sedimentary or formed by crushing or grinding along faults.




Chertmeans variety of silica containing microcrystalline quartz.




Claimmeans the area that confers mineral exploration/exploitation rights to the registered (mineral/mining) holder under the laws of the governing jurisdiction.




Clasticmeans a sedimentary rock composed of fragments from pre-existing rock.




Conglomeratemeansa composite rock made up of particles of varying size.




Contiguousmeans adjacent.




Diamond Drillmeans a type of rotary drill in which the cutting is done by abrasion rather than percussion.  The cutting bit is set with diamonds and is attached to the end of long hollow rods through which water is pumped to the cutting face.  The drill cuts a core of rock which is recovered in long cylindrical sections, an inch or more in diameter.




Dolostone means a sedimentary rock composed primarily of dolomite, a mineral made up of calcium, magnesium, carbon, and oxygen.




eU3O8means equivalent uranium as determined from a gamma log measured by a downhole probe.  Expressing the uranium content in this manner is standard industry practice for uranium exploration in the USA.




Faultmeans a fracture in a rock along which there has been relative movement between the two sides either vertically or horizontally.




Foliationmeans the layered structure common to metamorphic rocks.




Fracturemeans breaks in rocks due to intensive folding or faulting.




Galenameans a soft blue-gray mineral; a major source of lead.




Geologicalmeans pertaining to geology, the study of the planet earth – the materials of which it is made, the processes that act on these materials, the products formed, and the history of the planet and its life forms since its origin.




Geochemicalmeans the chemistry of the composition and alterations of the solid matter of the earth or a celestial body.







118





Geophysicsmeans the study of the earth by quantitative physical methods.




Gneisses means a banded or foliated metamorphic rock, usually of the same composition as granite.




Granitemeansplutonic igneous rock having visibly crystalline texture; generally composed of feldspar and mica and quartz.




Graphiticmeans pertaining to, containing, derived from, or resembling, graphite.




Greywackemeans a variety of sandstone generally characterized by its hardness, dark color, and poorly-sorted, angular grains of quartz, feldspar, and small rock fragments set in a compact, clay-fine matrix.




Hematitemeans an iron ore that is a natural iron oxide that is reddish or brown in colour.




Hostmeans a rock or mineral that is older than rocks or minerals introduced into it.




Indicated Mineral Resource - is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics, can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.  This definition is from the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves adopted on December 11, 2005.




Inferred Mineral Resource - is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.  This definition is from the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Mineral Reserves adopted on December 11, 2005.




Intrusionmeans a rock formed by having moved while in a molten state into pre-existing rocks.




Limestone means a sedimentary rock consisting mainly of calcium that was deposited by the remains of marine animals.




Maficmeans relating to or being a dark-coloured igneous group of minerals that have high magnesium and iron content.




Mineral Resourcemeans a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth's crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge.




Mineralizationmeans the concentration of metals and their chemical compounds within a body of rock.




Mudstonemeansa detrital sedimentary rock composed of clay-sized particles.




Net Smelter Return and NSRmeansthe amount of the excess, if any, of Revenue, less Costs.  All or any exploration, development and mine construction costs and interest thereon are not to be charged or deducted from the NSR.




NI 43-101means National Instrument 43-101 Standards of Disclosure for Mineral Projects, as adopted by the Canadian Securities Administrators effective December 30, 2005.






119




Paleoproterozoic means adjective implying conditions between 1.6 billon years ago and 2.5 billion years ago.




Pyritemeansa cubic iron sulfide mineral with a brassy metallic luster that is used as an iron ore, as a source of sulfur, and in the production of sulfuric acid.




Quartzmeans a mineral composed of silicon dioxide.




Sandstonemeans a type of sedimentary rock made up of particles of sand, mostly quartz, bound together with a mineral cement, along with some feldspar, mica and rock debris.




Shalemeansa fine-grained detrital sedimentary rock, formed by the compaction of clay, silt, or mud




Siltstonemeans a form of fine-grained sandstone consisting of compressed silt.




Soil samplingmeans the systematic collection of soil samples at a series of different locations in order to study the distribution of soil geochemical values.




Stratigraphymeans Cultural remains and natural sediments become buried over time, forming strata.




Striaemeans grooves on a rock surface caused by the movement of a glacier over the rock.  Provides a direction for tracing boulders to their source.




Strikemeans the direction or trend of a geologic structure.




Synclinemeans a fold in rocks in which the rock layers dip inward from both sides toward the axis.




Tuffmeans hard volcanic rock composed of compacted volcanic ash.




UTM grid means Universal Transverse Mercator grid.




Veinmeans a thin sheet-like intrusion into a fissure or crack, commonly quartz-bearing.




Volcanicmeans a description of rocks originating from volcanic activity.












120





SIGNATURES





The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.








CROSSHAIR EXPLORATION & MINING CORP.








/s/ Stewart Wallis





By:           Stewart Wallis


Chief Executive Officer








Date: July 29, 2011








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