UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549




FORM
10-Q


________




[
      X ]
            QUARTERLY
      REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended: July 31,
2010





[   
      ]
            TRANSITION
      REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from_______to_______





Commission
file number 000-52055





RED METAL RESOURCES LTD.(Exact
      name of small business issuer as specified in its
  charter)





Nevada
              (State
      or other jurisdiction
              of
      incorporation or organization)
            20-2138504
              (I.R.S.
      Employer
              Identification
      No.)195 Park Avenue, Thunder Bay Ontario, Canada P7B
      1B9
              (Address
      of principal executive offices) (Zip Code)(807) 345-5380
              (Issuer’s
      telephone number)





Indicate
by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.     [ X ] 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). The registrant is not
yet required to comply with this requirement.





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





Large
      accelerated filer
            o
            
            Accelerated
      filer
            oNon-accelerated
      filer
            o
            (Do
      not check if a smaller reporting company)
            Smaller
      reporting company
            x





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





Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.  As of September 10, 2010
the number of shares of the registrant’s classes of common stock outstanding was
10,216,301.











TABLE OF
CONTENTS




PART
      I—FINANCIAL INFORMATION
              1ITEM
      1.  FINANCIAL STATEMENTS
              1CONSOLIDATED
      BALANCE SHEETS JULY 31, 2010 (UNAUDITED) AND JANUARY 31,
    2010
              1CONSOLIDATED
      STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDEDJULY
      31, 2010 AND 2009 (UNAUDITED),
                AND
      THE PERIOD FROM INCEPTION (JANUARY 10, 2005)
              2CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROMJANUARY
      10, 2005 (INCEPTION) TO JULY 31, 2010
              3CONSOLIDATED
      STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED JULY 31, 2010 AND 2009
      (UNAUDITED),
                AND
      THE PERIOD FROM INCEPTION (JANUARY 10, 2005)
              4NOTES
      TO THE CONSOLIDATED FINANCIAL STATEMENTS
              5ITEM
      2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
      AND RESULTS OF OPERATIONS
              5ITEM
      3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
      RISK
              18ITEM
      4.  CONTROLS AND PROCEDURES
              18PART
      II—OTHER INFORMATION
              18ITEM
      1.  LEGAL PROCEEDINGS
              18ITEM
      1A.  RISK FACTORS
              19ITEM
      2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
      PROCEEDS
              19ITEM
      3.  DEFAULTS UPON SENIOR SECURITIES
              19ITEM
      4.  (REMOVED AND RESERVED)
              19ITEM
      5.  OTHER INFORMATION
              19ITEM
      6.  EXHIBITS
              19









PART
I—FINANCIAL INFORMATION




Item
1.  Financial Statements





RED
      METAL RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      BALANCE SHEETSJuly
      31, 2010
                  (unaudited)
                
                
                January
      31,
                  2010ASSETSCurrent
      assetsCash
                
                $
                29,101
                
                
                $
                7,951Prepaids
      and other receivables
                
                
                18,052
                
                
                
                17,175Total
      current assets
                
                
                47,153
                
                
                
                25,126Unproved
      mineral properties
                
                
                658,425
                
                
                
                643,481Total
      assets
                
                $
                705,578
                
                
                $
                668,607LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      liabilitiesAccounts
      payable
                
                $
                184,725
                
                
                $
                129,534Accrued
      liabilities
                
                
                62,603
                
                
                
                92,485Due
      to related parties
                
                
                245,281
                
                
                
                99,682Notes
      payable to related party
                
                
                51,329
                
                
                
                -Total
      liabilities
                
                
                543,938
                
                
                
                321,701Stockholders'
      equityCommon
      stock, $0.001 par value, authorized 500,000,000,10,216,301
      and 9,676,301 issued and outstanding at July 31, 2010and
      January 31, 2010
                
                
                10,217
                
                
                
                9,677Additional
      paid in capital
                
                
                2,913,300
                
                
                
                2,778,840Deficit
      accumulated during the exploration stage
                
                
                (2,699,331
                )
                
                
                (2,384,201
                )Accumulated
      other comprehensive loss
                
                
                (62,546
                )
                
                
                (57,410
                )Total
      stockholders' equity
                
                
                161,640
                
                
                
                346,906Total
      liabilities and stockholders' equity
                
                $
                705,578
                
                
                $
                668,607The
      accompanying notes are an integral part of these consolidated financial
      statements.
  1
  RED
      METAL RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF OPERATIONS(UNAUDITED)Three
      months ended
                
                
                Six
      months ended
                
                
                From
      January 10,July
      31,
                
                
                July
      31,
                
                
                2005
      (Inception)2010
                
                
                2009
                
                
                2010
                
                
                2009
                
                
                to
      July 31, 2010RevenueRoyalties
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                15,658Operating
      ExpensesAdministration
                
                
                11,008
                
                
                
                20,290
                
                
                
                38,715
                
                
                
                38,741
                
                
                
                226,473Advertising
      and promotion
                
                
                17,338
                
                
                
                4,208
                
                
                
                57,609
                
                
                
                30,800
                
                
                
                270,884Automobile
                
                
                5,185
                
                
                
                6,291
                
                
                
                12,637
                
                
                
                11,031
                
                
                
                54,232Bank
      charges and interest
                
                
                10,194
                
                
                
                1,499
                
                
                
                16,349
                
                
                
                2,764
                
                
                
                28,743Consulting
      fees
                
                
                36,072
                
                
                
                8,656
                
                
                
                68,995
                
                
                
                45,572
                
                
                
                361,605Interest
      on notes payable
                
                
                768
                
                
                
                15,064
                
                
                
                1,329
                
                
                
                27,852
                
                
                
                71,321Mineral
      exploration costs
                
                
                12,416
                
                
                
                21,204
                
                
                
                12,971
                
                
                
                45,141
                
                
                
                739,164Office
                
                
                898
                
                
                
                851
                
                
                
                3,227
                
                
                
                2,553
                
                
                
                22,449Professional
      development
                
                
                -
                
                
                
                -
                
                
                
                4,008
                
                
                
                -
                
                
                
                4,008Professional
      fees
                
                
                15,387
                
                
                
                2,860
                
                
                
                52,517
                
                
                
                36,943
                
                
                
                408,918Rent
                
                
                3,107
                
                
                
                3,006
                
                
                
                6,233
                
                
                
                6,123
                
                
                
                34,942Regulatory
                
                
                6,925
                
                
                
                1,429
                
                
                
                11,440
                
                
                
                4,833
                
                
                
                45,086Travel
      and entertainment
                
                
                155
                
                
                
                5,333
                
                
                
                28,708
                
                
                
                11,407
                
                
                
                174,919Salaries,
      wages and benefits
                
                
                -
                
                
                
                4,529
                
                
                
                1,015
                
                
                
                10,903
                
                
                
                47,210Foreign
      exchange "gain"
                
                
                (1,174
                )
                
                
                (183
                )
                
                
                (623
                )
                
                
                (201
                )
                
                
                (650
                )Write-down
      of unproved mineral properties
                
                
                -
                
                
                
                16,125
                
                
                
                -
                
                
                
                126,888
                
                
                
                225,685Total
      operating expenses
                
                
                118,279
                
                
                
                111,162
                
                
                
                315,130
                
                
                
                401,350
                
                
                
                2,714,989Net
      loss
                
                $
                (118,279
                )
                
                $
                (111,162
                )
                
                $
                (315,130
                )
                
                $
                (401,350
                )
                
                $
                (2,699,331
                )Net
      loss per share - basic and diluted
                
                $
                (0.01
                )
                
                $
                (0.03
                )
                
                $
                (0.03
                )
                
                $
                (0.10
                )Weighted
      average number of sharesoutstanding
      - basic and diluted
                
                
                10,216,301
                
                
                
                4,156,002
                
                
                
                10,040,168
                
                
                
                4,156,002The
      accompanying notes are an integral part of these consolidated financial
      statements.
  2
 RED
      METAL RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      STATEMENT OF STOCKHOLDERS' EQUITYFOR
      THE PERIOD FROM JANUARY 10, 2005 (INCEPTION) TO JULY 31,
      2010(UNAUDITED)Common
      Stock Issued
                
                
                
                
                
                AccumulatedNumber

                  of
                
                
                
                
                
                Additional

                  Paid-in
                
                
                Accumulated
                
                
                Other

                  ComprehensiveShares
                
                
                Amount
                
                
                Capital
                
                
                Deficit
                
                
                Loss
                
                
                TotalBalance
      at January 10,  2005 (Inception)
                
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -
                
                
                $
                -Net
      loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (825
                )
                
                
                -
                
                
                
                (825
                )Balance
      at January 31, 2005
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (825
                )
                
                
                -
                
                
                
                (825
                )Common
      stock issued for cash
                
                5,525,000
                
                
                
                5,525
                
                
                
                53,725
                
                
                
                -
                
                
                
                -
                
                
                
                59,250Common
      stock adjustment
                
                45
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -Donated
      services
                
                -
                
                
                
                -
                
                
                
                3,000
                
                
                
                -
                
                
                
                -
                
                
                
                3,000Net
      loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (12,363
                )
                
                
                -
                
                
                
                (12,363
                )Balance
      at January 31, 2006
                
                5,525,045
                
                
                
                5,525
                
                
                
                56,725
                
                
                
                (13,188
                )
                
                
                -
                
                
                
                49,062Donated
      services
                
                -
                
                
                
                -
                
                
                
                9,000
                
                
                
                -
                
                
                
                -
                
                
                
                9,000Net
      loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (43,885
                )
                
                
                -
                
                
                
                (43,885
                )Balance
      at January 31, 2007
                
                5,525,045
                
                
                
                5,525
                
                
                
                65,725
                
                
                
                (57,073
                )
                
                
                -
                
                
                
                14,177Donated
      services
                
                -
                
                
                
                -
                
                
                
                2,250
                
                
                
                -
                
                
                
                -
                
                
                
                2,250Return
      of common stock to treasury
                
                (1,750,000
                )
                
                
                (1,750
                )
                
                
                1,749
                
                
                
                -
                
                
                
                -
                
                
                
                (1
                )Common
      stock issued for cash
                
                23,810
                
                
                
                24
                
                
                
                99,976
                
                
                
                -
                
                
                
                -
                
                
                
                100,000Net
      loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (232,499
                )
                
                
                -
                
                
                
                (232,499
                )Balance
      at January 31, 2008
                
                3,798,855
                
                
                
                3,799
                
                
                
                169,700
                
                
                
                (289,572
                )
                
                
                -
                
                
                
                (116,073
                )Common
      stock issued for cash
                
                357,147
                
                
                
                357
                
                
                
                1,299,643
                
                
                
                -
                
                
                
                -
                
                
                
                1,300,000Net
      loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (1,383,884
                )
                
                
                -
                
                
                
                (1,383,884
                )Foreign
      currency exchange loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (21,594
                )
                
                
                (21,594
                )Balance
      at January 31, 2009
                
                4,156,002
                
                
                
                4,156
                
                
                
                1,469,343
                
                
                
                (1,673,456
                )
                
                
                (21,594
                )
                
                
                (221,551
                )Net
      loss for the six months ended July 31, 2009
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (401,350
                )
                
                
                -
                
                
                
                (401,350
                )Foreign
      currency exchange loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (49,645
                )
                
                
                (49,645
                )Balance
      at July 31, 2009
                
                4,156,002
                
                
                
                4,156
                
                
                
                1,469,343
                
                
                
                (2,074,806
                )
                
                
                (71,239
                )
                
                
                (672,546
                )Common
      stock issued for cash
                
                1,678,572
                
                
                
                1,678
                
                
                
                160,822
                
                
                
                -
                
                
                
                -
                
                
                
                162,500Common
      stock issued for debt
                
                3,841,727
                
                
                
                3,843
                
                
                
                1,148,675
                
                
                
                -
                
                
                
                -
                
                
                
                1,152,518Net
      loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (309,395
                )
                
                
                -
                
                
                
                (309,395
                )Foreign
      currency exchange gain
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                13,829
                
                
                
                13,829Balance
      at January 31, 2010
                
                9,676,301
                
                
                
                9,677
                
                
                
                2,778,840
                
                
                
                (2,384,201
                )
                
                
                (57,410
                )
                
                
                346,906Common
      stock issued for cash
                
                540,000
                
                
                
                540
                
                
                
                134,460
                
                
                
                -
                
                
                
                -
                
                
                
                135,000Net
      loss for the six months ended July 31, 2010
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (315,130
                )
                
                
                -
                
                
                
                (315,130
                )Foreign
      currency exchange loss
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                -
                
                
                
                (5,136
                )
                
                
                (5,136
                )Balance
      at July 31, 2010
                
                10,216,301
                
                
                $
                10,217
                
                
                $
                2,913,300
                
                
                $
                (2,699,331
                )
                
                $
                (62,546
                )
                
                $
                161,640The
      accompanying notes are an integral part of these consolidated financial
      statements.
  3
  RED
      METAL RESOURCES LTD.(AN
      EXPLORATION STAGE COMPANY)CONSOLIDATED
      STATEMENTS OF CASH FLOWS(UNAUDITED)For
      the six months
                
                
                From
      January 10,Ended
      July 31,
                
                
                2005
      (Inception)2010
                
                
                2009
                
                
                to
      July 31, 2010Cash
      flows used in operating activities:Net
      loss
                
                $
                (315,130
                )
                
                $
                (401,350
                )
                
                $
                (2,699,331
                )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Donated
      services and rent
                
                
                -
                
                
                
                -
                
                
                
                14,250Write-down
      of unproved mineral properties
                
                
                -
                
                
                
                126,888
                
                
                
                225,685Changes
      in operating assets and liabilities:Prepaids  and
      other receivables
                
                
                (877
                )
                
                
                (24,903
                )
                
                
                (18,052
                )Accounts
      payable
                
                
                55,191
                
                
                
                206,775
                
                
                
                194,510Accrued
      liabilities
                
                
                (29,882
                )
                
                
                (144,798
                )
                
                
                201,658Due
      to related parties
                
                
                145,599
                
                
                
                133,307
                
                
                
                573,521Accrued
      interest on notes payable to related party
                
                
                1,329
                
                
                
                27,852
                
                
                
                71,321Net
      cash used in operating activities
                
                
                (143,770
                )
                
                
                (76,229
                )
                
                
                (1,436,438
                )Cash
      flows used in investing activities:Acquisition
      of unproved mineral properties
                
                
                (14,944
                )
                
                
                (35,521
                )
                
                
                (1,023,165
                )Net
      cash used in investing activities
                
                
                (14,944
                )
                
                
                (35,521
                )
                
                
                (1,023,165
                )Cash
      flows provided by financing activities:Cash
      received on issuance of notes payable to related party
                
                
                50,000
                
                
                
                139,500
                
                
                
                794,500Proceeds
      from issuance of common stock
                
                
                135,000
                
                
                
                -
                
                
                
                1,756,750Net
      cash provided by financing activities
                
                
                185,000
                
                
                
                139,500
                
                
                
                2,551,250Effects
      of foreign currency exchange
                
                
                (5,136
                )
                
                
                (49,645
                )
                
                
                (62,546
                )Increase
      in cash
                
                
                21,150
                
                
                
                (21,895
                )
                
                
                29,101Cash,
      beginning
                
                
                7,951
                
                
                
                26,115
                
                
                
                -Cash,
      ending
                
                $
                29,101
                
                
                $
                4,220
                
                
                $
                29,101Supplemental
      disclosures:Cash
      paid for:Income
      tax
                
                $
                -
                
                
                $
                -
                
                
                $
                -Interest
                
                $
                -
                
                
                $
                -
                
                
                $
                -Non-cash
      financing transactions:Conversion
      of debt to related parties to shares of common stock
                
                $
                -
                
                
                $
                -
                
                
                $
                (338,026
                )Conversion
      of notes payable to shares of common stock
                
                $
                -
                
                
                $
                -
                
                
                $
                (744,500
                )Conversion
      of accrued interest to shares of common stock
                
                $
                -
                
                
                $
                -
                
                
                $
                (69,992
                )The
      accompanying notes are an integral part of these consolidated financial
      statements.




4




RED
METAL RESOURCES LTD.


(AN
EXPLORATION STAGE COMPANY)


NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS


JULY
31, 2010


(UNAUDITED)








NOTE
1 – ORGANIZATION AND BASIS OF PRESENTATION





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





Unaudited
Interim Consolidated Financial Statements





The
unaudited interim financial statements of Red Metal Resources Ltd have been
prepared in accordance with United States generally accepted accounting
principles (“GAAP”) for interim financial information and the rules and
regulations of the Securities and Exchange Commission (“SEC”). They do not
include all information and footnotes required by GAAP for complete financial
statements. However, except as disclosed herein, there have been no material
changes in the information disclosed in the notes to the financial statements
for the year ended January 31, 2010 included in the Company’s Annual Report on
Form 10-K, filed with the SEC. The interim unaudited financial statements should
be read in conjunction with those financial statements included in Form 10-K. In
the opinion of management, all adjustments considered necessary for fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the six month period ended July 31, 2010 are not
necessarily indicative of the results that may be expected for the year ending
January 31, 2011.





Recent
Accounting Pronouncements





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





Subsequent
Events





The
Company has evaluated subsequent events through the date of issuance of these
unaudited interim financial statements. During this period, the Company did not
have any material recognizable or reportable subsequent events.





NOTE
2 – RELATED-PARTY TRANSACTIONS





Due
to Related Parties





The
following amounts are due to related parties:





5




July
      31,
              2010
            
            
            January
      31,
              2010Due
      to a company owned by an officer
            
            $
            103,385
            
            
            $
            26,324Due
      to a company controlled by directors
            
            
            127,138
            
            
            
            48,920Due
      to a company owned by a major shareholder and a relative of the
      president
            
            
            12,168
            
            
            
            18,594Due
      to a major shareholder
            
            
            1,919
            
            
            
            5,719Due
      to a relative of the president
            
            
            125
            
            
            
            125Due
      to a company owned by a major shareholder and a relative of the
      president
            
            
            546
            
            
            
            -Total
      due to related parties (a)
            
            $
            245,281
            
            
            $
            99,682Note
      payable to a related party (b)
            
            $
            51,329
            
            
            $
            -





(a)
Amounts due to related parties are unsecured and are due on demand. Outstanding
amounts due to a company controlled by directors bear interest at 2% compounded
monthly.





(b) The
principal amount of the note is $50,000, is payable on demand, is unsecured and
bears interest at 6% per annum.  Interest of $1,329 had accrued as at
July 31, 2010.





Transactions
with Related Parties





During
the six months ended July 31, 2010 and 2009 the Company incurred the following
expenses with related parties:




•
            $65,933
      and $66,044, respectively, in consulting and other business expenses with
      a company owned by the chief financial officer of the
    Company.




•
            $77,468
      and $68,830, respectively, in administration, advertising and promotion,
      mineral exploration, travel and other business expenses with a company
      controlled by two directors.




•
            $30,202
      and $32,650, respectively, in administration, automobile, rental, and
      other business expenses with a company owned by a major shareholder and a
      relative of the president.




•
            $12,591
      and $12,011, respectively, in administration expenses with a major
      shareholder.




•
            $483 and $0, respectively, in
      reimbursable expenses with a company owned by a major shareholder and a
      relative of the president.





NOTE
3 – UNPROVED MINERAL PROPERTIES





July
      31,
              2010
            
            
            January
      31,
              2010Unproved
      mineral properties, beginning
            
            $
            643,481
            
            
            $
            753,519Acquisition
            
            
            14,944
            
            
            
            58,702Unproved
      mineral properties written down
            
            
            -
            
            
            
            (168,740
            )Unproved
      mineral properties, ending
            
            $
            658,425
            
            
            $
            643,481




6





Farellon
Property





Farellon
Alto Uno al Ocho Mineral Claim





On April
25, 2008, the Company acquired the Farellon Alto Uno al Ocho mining claim
located in the Commune of Freirina, Province of Huasco, III Region of Atacama,
Chile for $550,000. The claim is subject to a 1.5% royalty on the net sales of
minerals extracted from the property to a total of $600,000.  The
royalty payments are due monthly once exploitation begins, and are subject to
minimum payments of $1,000 per month.  The Company has no obligation
to pay the royalty if it does not commence exploitation.  The Company had
spent a total of $551,005 on the acquisition of this claim at July 31, 2010, and
$550,253 at January 31, 2010.





Cecil
Mineral Claims





On
September 17, 2008, the Company acquired the Cecil mining claims for
$20,000.  The properties are located near the Farellon property in
commune of Freirina, Province of Huasco, III Region of Atacama, Chile.  At
July 31, 2010, the Company had spent a total of $32,803 on the acquisition of
these claims and accrued $3,096 in unpaid property taxes. At January 31, 2010,
the Company spent $27,676 on the acquisition of these claims and accrued $3,096
in unpaid property taxes.





Mateo
Property





Margarita
Claim





On
November 27, 2008, the Company purchased the Margarita mining claim for
$16,072. At July 31, 2010 the Company had spent a total of $17,078 on the
acquisition of this claim and accrued $667 in unpaid property taxes. At
January 31, 2010, the Company had spent $16,678 on the acquisition of this claim
and accrued $667 in unpaid property taxes.





Che
Claims





On
October 10, 2008, the Company entered into an option to purchase contract with a
related company to acquire an option to purchase the Che Uno and Che Dos mining
claims.  Under the terms of the option, as amended, the Company agreed
to pay $444 on December 2, 2008 as consideration for the option agreement and
$20,000 by April 10, 2011 to acquire the Che claims.  On December 2,
2008, the Company paid the consideration and acquired the option agreement. The
claims are subject to a 1% royalty on the net sales of minerals extracted from
the property to a total of $100,000. The royalty payments are due monthly
once exploitation begins and are not subject to minimum payments. The
Company has no obligation to pay the royalty if it does not commence
exploitation. At July 31, 2010 the Company had spent a total of $1,313 on
the acquisition of these claims and accrued $1,264 in unpaid property taxes. At
January 31, 2010, the Company spent $778 on the acquisition of these claims and
accrued $1,264 in unpaid property taxes.





Mateo
Exploration Claims





At July
31, 2010 the Company had spent a total of $6,833 on the acquisition of these
claims and accrued $8,304 in unpaid property taxes and other costs. At January
31, 2010, the Company spent $3,839 on the acquisition of these claims and
accrued $8,304 in unpaid property taxes and other costs.





Other
Property Costs





At July
31, 2010 and January 31, 2010, the Company had spent or accrued a total of
$5,209 and $4,364, respectively in acquisition costs for other generative
claims.





At July
31, 2010 and January 31, 2010, the Company capitalized $30,853 and $26,561,
respectively in Chilean value added tax as part of the unproved mineral claims.
This VAT is recoverable from future VAT payable.





7





NOTE
4 – COMMON STOCK





On March
23, 2010, the Company engaged in a private offering of units pursuant to which
it issued 200,000 units at $0.25 per unit for cash of $50,000. Each unit
consisted of one common share and one share purchase warrant.  Each
share purchase warrant is exercisable at $0.30 for two years.  A fair
value of $0 has been assigned to the warrants.





On March
29, 2010, the Company engaged in a private offering of units pursuant to which
it issued 200,000 units at $0.25 per unit for cash of $50,000. Each unit
consisted of one common share and one share purchase warrant.  Each
share purchase warrant is exercisable at $0.30 for two years.  A fair
value of $0 has been assigned to the warrants.





On April
14, 2010, the Company engaged in a private offering of units pursuant to which
it issued 40,000 units at $0.25 per unit for cash of $10,000. Each unit
consisted of one common share and one share purchase warrant.  Each
share purchase warrant is exercisable at $0.30 for two years.  A fair
value of $0 has been assigned to the warrants.





On April
20, 2010, the Company engaged in a private offering of units pursuant to which
it issued 100,000 units at $0.25 per unit for cash of $25,000. Each unit
consists of one common share and one share purchase warrant.  Each
share purchase warrant is exercisable at $0.30 for two years.  A fair
value of $0 has been assigned to the warrants.




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




Forward-Looking
Statements





This
quarterly report on form 10-Q filed by Red Metal Resources Ltd. contains
forward-looking statements. These are statements regarding financial and
operating performance and results and other statements that are not historical
facts. The words “expect,” “project,” “estimate,” “believe,” “anticipate,”
“intend,” “plan,” “forecast,” and similar expressions are intended to identify
forward-looking statements. Certain important risks could cause results to
differ materially from those anticipated by some of the forward-looking
statements. Some, but not all, of these risks include, among other
things:





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


•
            our
      ability to raise enough money to continue our
  operations


•
            changes
      in regulatory requirements that adversely affect our
    business


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


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


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





We
caution you not to place undue reliance on these forward-looking statements,
which reflect our management’s view only as of the date of this report. We
are not obligated to update these statements or publicly release the results of
any revisions to them to reflect events or circumstances after the date of this
report or to reflect the occurrence of unanticipated events. You should
refer to and carefully review the information in future documents we file with
the Securities and Exchange Commission.





General





You
should read this discussion and analysis in conjunction with our interim
unaudited consolidated financial statements and related notes included in this
form 10-Q and the audited consolidated financial statements and related notes
included in our annual report on form 10-K for the fiscal year ended January 31,
2010. The inclusion of supplementary analytical and related information may
require us to make estimates and assumptions to enable us to fairly present, in
all material respects, our analysis of trends and expectations with respect to
our results of operations and financial position taken as a whole. Actual
results may vary from the estimates and assumptions we make.





8





Overview





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





We have
no revenue-generating operations and are entirely dependent upon the equity
markets for our working capital. The collapse of the equity markets late in 2008
and the economic uncertainty and market instability that followed and persist
have affected our ability to raise equity capital despite the generally positive
market prices of copper and gold in 2009 and 2010.





In
response to the difficulty in raising equity capital, we have reduced our costs
in Chile by abandoning certain mineral claims that we hadn’t the capital to
maintain or explore; reduced our administration, travel and promotion costs; and
even terminated our duty to file reports with the Securities and Exchange
Commission to save the legal and auditing costs. These measures significantly
reduced our operating costs. We own nothing in Chile except our claims and have
no long term commitments except the obligation to pay royalties if we exploit
our properties. All of our support there—vehicles, office and equipment, and
administrative personnel—is supplied under short-term contracts. We resumed
filing reports with the Securities and Exchange Commission by filing a
registration statement on Form 10 on April 14, 2010, which has increased
our legal and auditing costs for the six months ended July 31,
2010.





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





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





The cost
and timing of both phases are subject to the availability of qualified mining
personnel, such as consulting geologists and geo-technicians, and drillers and
drilling equipment. When we first started exploring in Chile in late 2007 and
early 2008, geologists, geo-technicians, drillers and drilling rigs were in
short supply, those that were available were often unreliable and very
expensive, and we had to work to their schedules rather than to ours. This
changed following the market collapse in 2008, but the increasing prices of
copper and gold—the price of copper increased steadily from a low of $1.26 per
pound in December 2008 to a high of $3.55 per pound in March, 2010, has
fluctuated somewhat since then, and is now approximately $3.40 per pound; and
the price of gold has increased from a low of $750 per ounce in December 2008 to
a high of more than $1,260 per ounce in June 2010—have caused mining companies
to increase their operations, reducing the availability of personnel and
equipment. Although Chile has a well-trained and qualified mining workforce from
which to draw, we have good contacts within the local mining community, and not
a lot of early-stage companies such as Red Metal are competing for the available
resources, if we are unable to find the personnel and equipment that we need
when we need them at the prices that we have estimated today, we might have to
revise or postpone our plans.





At July
31, 2010, we had a working capital deficit of $496,785 and maintained $29,101
cash. To complete our exploration programs, we will have to raise
approximately $2.1 million in capital. We will also have to raise
approximately $400,000 to cover our estimated expenditures for legal, audit and
other professional fees, administration, consulting, advertising and promotion,
office and vehicle rental that we will incur over the next 12 months. We
have engaged a broker-dealer to assist us with our capital raising efforts. We
cannot predict whether the equity markets will stabilize or whether we will be
able to raise the capital necessary to carry on operating or to execute our
proposed exploration programs. If we are unable to raise the capital that we
need to meet our operating needs, we might have to alter our business plan and
revise or postpone our exploration and development plans.





9





Results
of operations




summary
of financial condition





Table 1
summarizes and compares our financial condition at the six months ended
July 31, 2010 and the year ended January 31, 2010.





Table 1:
Comparison of financial condition


July
      31, 2010
            
            
            January
      31, 2010Working
      capital deficit
            
            $
            (496,785
            )
            
            $
            (296,575
            )Current
      assets
            
            $
            47,153
            
            
            $
            25,126Unproved
      mineral properties
            
            $
            658,425
            
            
            $
            643,481Total
      liabilities
            
            $
            543,938
            
            
            $
            321,701Common
      stock and additional paid in capital
            
            $
            2,923,517
            
            
            $
            2,788,517Deficit
            
            $
            (2,699,331
            )
            
            $
            (2,384,201
            )





comparison
of prior quarterly results





Tables
2.1 and 2.2 present selected financial information for each of the past eight
quarters.





Table
2.1: Summary of quarterly results (October 31, 2009 – July 31,
2010)


October
      31,
              2009
            
            
            January
      31,
              2010
            
            
            April
      30,
              2010
            
            
            July
      31,
              2010Revenue
            
            
            –
            
            
            
            –
            
            
            
            –
            
            
            
            –Net
      loss
            
            $
            (105,334
            )
            
            $
            (204,061
            )
            
            $
            (196,851
            )
            
            $
            (118,279
            )Basic
      and diluted loss per share
            
            $
            (0.02
            )
            
            $
            (0.03
            )
            
            $
            (0.02
            )
            
            $
            (0.01
            )





Table
2.2: Summary of quarterly results (October 31, 2008 – July 31,
2009)


October
      31,
              2008
            
            
            January
      31,
              2009
            
            
            April
      30,
              2009
            
            
            July
      31,
              2009Revenue
            
            $
            4,462
            
            
            $
            1,397
            
            
            
            –
            
            
            
            –Net
      loss
            
            $
            (374,250
            )
            
            $
            (371,841
            )
            
            $
            (290,188
            )
            
            $
            (111,162
            )Basic
      and diluted loss per share
            
            $
            (0.09
            )
            
            $
            (0.09
            )
            
            $
            (0.07
            )
            
            $
            (0.03
            )





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





During
the quarter ended October 31, 2008 we continued acquiring mineral claims, which
increased our administration, advertising, mineral exploration and professional
costs. Due to the downturn in the economy, we substantially decreased our
operations during the quarters ended April 30, 2009 and July 31, 2009. Excluding
the written down unproved mineral claims, our net losses for these quarters were
$179,425 and $95,037 respectively. During the quarter ended October 31, 2009 we
conducted a drilling program on one of our properties, which increased our
mineral exploration costs. Excluding the recovery of written down unproved
mineral property costs, our net loss for the third quarter of fiscal 2010 was
$202,537. During the quarter ended January 31, 2010, we filed a
registration statement on form 10 to resume our reporting obligations, which
resulted in a substantial increase in our professional fees. During the quarter
ended April 30, 2010, we filed an amendment to our form 10 and increased our
investor-related activities, which increased our travel and entertainment costs,
investor relations costs and professional fees. During the quarter ended July
31, 2010, we maintained our investor-related activities on a moderate level and
decreased our travel costs and professional fees, which resulted in a decrease
in our net loss for the quarter.





10





Selected
Financial Results





Three
and six months ended July 31, 2010 and 2009





Our
operating results for the three and six months ended July 31, 2010 and 2009 and
the changes in our operating results between those periods are summarized in
Table 3.





Table 3:
Changes in operating results


Three
      months
              ended
      July 31,
            
            Changes
      between the periods ended July 31,
            
            Six
      months
              ended
      July 31,
            
            Changes
      between the periods ended July 31,2010
            
            2009
            
            2010
      and 2009
            
            2010
            
            2009
            
            2010
      and 2009Operating
      ExpensesAdministration
            $
            11,008
            
            $
            20,290
            
            $
            (9,282
            )
            $
            38,715
            
            $
            38,741
            
            $
            (26
            )Advertising
      and promotion
            
            17,338
            
            
            4,208
            
            
            13,130
            
            
            57,609
            
            
            30,800
            
            
            26,809Automobile
            
            5,185
            
            
            6,291
            
            
            (1,106
            )
            
            12,637
            
            
            11,031
            
            
            1,606Bank
      charges and interest
            
            10,194
            
            
            1,499
            
            
            8,695
            
            
            16,349
            
            
            2,764
            
            
            13,585Consulting
      fees
            
            36,072
            
            
            8,656
            
            
            27,416
            
            
            68,995
            
            
            45,572
            
            
            23,423Interest
      on notes payable
            
            768
            
            
            15,064
            
            
            (14,296
            )
            
            1,329
            
            
            27,852
            
            
            (26,523
            )Mineral
      exploration costs
            
            12,416
            
            
            21,204
            
            
            (8,788
            )
            
            12,971
            
            
            45,141
            
            
            (32,170
            )Office
            
            898
            
            
            851
            
            
            47
            
            
            3,227
            
            
            2,553
            
            
            674Professional
      development
            
            –
            
            
            –
            
            
            –
            
            
            4,008
            
            
            –
            
            
            4,008Professional
      fees
            
            15,387
            
            
            2,860
            
            
            12,527
            
            
            52,517
            
            
            36,943
            
            
            15,574Rent
            
            3,107
            
            
            3,006
            
            
            101
            
            
            6,233
            
            
            6,123
            
            
            110Regulatory
            
            6,925
            
            
            1,429
            
            
            5,496
            
            
            11,440
            
            
            4,833
            
            
            6,607Travel
      and entertainment
            
            155
            
            
            5,333
            
            
            (5,178
            )
            
            28,708
            
            
            11,407
            
            
            17,301Salaries,
      wages and benefits
            
            –
            
            
            4,529
            
            
            (4,529
            )
            
            1,015
            
            
            10,903
            
            
            (9,888
            )Foreign
      exchange loss (gain)
            
            (1,174
            )
            
            (183
            )
            
            (991
            )
            
            (623
            )
            
            (201
            )
            
            (422
            )Written
      down unproved mineral properties
            
            –
            
            
            16,125
            
            
            (16,125
            )
            
            –
            
            
            126,888
            
            
            (126,888
            )Net
      loss
            $
            118,279
            
            $
            111,162
            
            $
            7,117
            
            $
            315,130
            
            $
            401,350
            
            $
            (86,220
            )





Operating expenses. Our
operating expenses increased by $7,117, or 6%, from $111,162 for the three
months ended July 31, 2009 to $118,279 for the three months ended July 31,
2010.





On a
year-to-date basis, our operating expenses decreased by $86,220, or 21%, from
$401,350 for the six months ended July 31, 2009 to $315,130 for the six months
ended July 31, 2010.





The most
significant year-to-date changes were:





•
            During
      the six months ended July 31, 2009, we wrote down $126,888 in mineral
      property acquisition costs after we wrote down several generative claims.
      During the six months ended July 31, 2010, we did not write down any of
      our properties.


•
            During
      the six months ended July 31, 2009, we contracted services the of a
      full-time geologist that resulted in mineral exploration expenditures of
      $45,141 as opposed to $12,971 during the same period of
    2010.


•
            Our
      advertising and promotion and travel and entertainment expenses increased
      by $26,809 and $17,301, respectively, as a result of increased investor
      relations activities.


•
            Our
      bank charges and interest costs increased by $13,585, to $16,349 during
      the six months ended July 31, 2010 compared to $2,764 for the six months
      ended July 31, 2009, reflecting interest accrued on some outstanding
      vendor invoices.


•
            On
      April 14, 2010, we resumed our duty to file reports with the Securities
      and Exchange Commission, which resulted in an increase of our professional
      and regulatory fees by $15,574 and $6,607,
  respectively.


•
            During
      the six months ended July 31, 2010 we accrued $1,329 in interest on the
      promissory note outstanding at July 31, 2010. During the six months ended
      July 31, 2009 we accrued $27,852 in interest on promissory notes
      outstanding at July 31, 2009.





11





Liquidity





going
concern





The
unaudited consolidated financial statements included in this form 10-Q have been
prepared on a going concern basis, which implies that we will continue to
realize our assets and discharge our liabilities in the normal course of
business. We have not generated any significant revenues from mineral sales
since inception, have never paid any dividends and are unlikely to pay dividends
or generate significant earnings in the immediate or foreseeable future. Our
continuation as a going concern depends upon the continued financial support of
our shareholders, our ability to obtain necessary equity or debt financing to
continue operations, and the attainment of profitable operations. Our ability to
achieve and maintain profitability and positive cash flow depends upon our
ability to locate profitable mineral claims, generate revenue from mineral
production and control our production costs. Based upon our current plans, we
expect to incur operating losses in future periods, which we plan to mitigate by
controlling our operating costs.  We plan to obtain sufficient working
capital through additional debt or equity financing and private loans, although
there is no guarantee that we will be successful in our efforts to raise working
capital.  At July 31, 2010, we had a working capital deficit of
$496,785 and accumulated losses of $2,699,331 since inception. These factors
raise substantial doubt about our ability to continue as a going concern. We
cannot assure you that we will be able to generate significant revenues in the
future. Our consolidated financial statements do not give effect to any
adjustments that would be necessary should we be unable to continue as a going
concern and therefore be required to realize our assets and discharge our
liabilities in other than the normal course of business and at amounts different
from those reflected in our financial statements.





internal
and external sources of liquidity





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





Sources
and uses of cash





Six
months ended July 31, 2010 and 2009





Table 4: Summary of sources and uses of
cash


July
      31,2010
            
            
            2009Net
      cash provided by financing activities
            
            $
            185,000
            
            
            $
            139,500Net
      cash used in operating activities
            
            
            (143,770
            )
            
            
            (76,229
            )Net
      cash used in investing activities
            
            
            (14,944
            )
            
            
            (35,521
            )Effect
      of foreign currency exchange
            
            
            (5,136
            )
            
            
            (49,645
            )Net
      increase in cash
            
            $
            21,150
            
            
            $
            (21,895
            )





Net cash provided by financing
activities. During the six months ended July 31, 2010, we issued 540,000
shares of our common stock to three subscribers for $135,000, and borrowed
$50,000 from a company owned by the father of a director. During the six months
ended July 31, 2009, we borrowed $139,500 from the father of a
director.





Net cash used in operating
activities. During the six months ended July 31, 2010, we used net cash
of $143,770 in operating activities. We used $315,130 to cover operating
costs and decreased our accrued liabilities and increased prepaid expenses and
accounts receivable by $29,882 and $877 respectively. These uses of cash were
offset by net increases in accounts payable of $55,191, consisting mainly of
legal and audit fees incurred in preparing and filing our form 10 and the
amendments to it; accounts payable to related parties of $145,599 for
administration, consulting, advertising and promotion, office, automobile,
mineral exploration, rental and travel expenses; and accrued interest on our
notes payable to a related party of $1,329.





12





During
the six months ended July 31, 2009, we used net cash of $76,229 in operating
activities. We used $401,350 to cover our operating costs for the period
and decreased our accrued liabilities by $144,798 and increased prepaid expenses
and accounts receivable by $24,903. We increased our accounts payable by
$206,775, mainly associated with the reclassification of accrued mineral
property costs; amounts due to related parties by $133,307; and interest
accrued on our notes payable by $27,852. We wrote down our unproved mineral
properties and wrote off acquisition costs for the unproved mineral properties
that we decided not to maintain for a total of $126,888.





Net cash used in investing
activities. During the six months ended July 31, 2010, we spent $14,944
on property taxes associated with our mineral claims, and capitalized Chilean
value-added tax as part of the unproved mineral claims. This VAT is recoverable
from future VAT payable.





During
the six months ended July 31, 2009, we spent $35,521 acquiring mineral claims
and options to acquire mineral claims.





Since
inception through July 31, 2010, we have invested $1,023,165 acquiring our
mineral claims.





Unproved
mineral properties





We have
two principal properties—the Farellon and Mateo—consisting of both mining claims
and exploration claims that we have assembled since the beginning of 2007 as
described in Table 5. These properties are accessible by road from Vallenar as
illustrated in Figure 1.





Table 5:
Principal properties


HectaresProperty
            Percentage,
      type of claim
            
            Per
      claim
            
            
            TotalFarellonFarellon
      1 – 8 claim
            100%,
      mensura
            
            
            66Farellon
      2 and 3 claims
            100%,
      pedimentoa
            
            
            
            
            
            
            500Cecil
      1 – 49 claims
            100%,
      mensura
            
            
            230Cecil
      1 – 40 and Burghley 1 – 60 claims
            100%,
      manifestacion
            
            
            500
            
            
            
            7301,230MateoMargarita
      claim
            100%,
      mensura
            
            
            56Che
      1 & 2 claims
            Option
      for 100%, mensura
            
            
            76Irene
      & Irene II claims
            Purchase
      agreement for 100%, mensura
            
            
            60Mateo
      claims
            100%,
      pedimentob
            
            
            
            
            
            
            2,2003,430aThese pedimentos are staked over the Farellon mensura to claim the
      mineral interests around it and include the 66 hectares covered by the
      mensura.
              bThis pedimento is staked over the Margarita, Che, and Irene
      mensuras to claim the mineral interests between them and includes the 192
      hectares covered by the mensuras.




13







Figure 1: Location and access to principal properties





Capital
resources





Our
ability to acquire and explore our Chilean claims is subject to our ability to
obtain the necessary funding. To assist us with our funding efforts, we
have retained the services of the following consultants:





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





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





•
            a
      cash fee equal to 10% of the proceeds that we receive from a
      financing


•
            warrants
      equal to 10% of the common stock or common stock equivalent that we issue
      in a financing on the same terms as any warrants that are a part of the
      financing


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





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





Contingencies
and commitments





We had no
contingencies at July 31, 2010.





14





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





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


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


•
            Irene
      option. Under the
      terms of our option agreement with Minera Farellon, we must pay 21 million
      Chilean pesos (approximately $40,500US) to exercise the option and
      purchase the Irene claims on the earlier of December 1, 2010 and five days
      after we complete a financing under the broker-dealer agreement dated
      April 22, 2010.





Equity
financing





To
generate working capital, between February 1, 2010 and September 8, 2010 we
issued 540,000 shares of our common stock and warrants for the purchase of
540,000 shares to raise $135,000 under Regulation S promulgated under the
Securities Act of 1933. See Table 6 below.





Table
      6: Sales of unregistered securitiesShares
            
            
            WarrantsDate
      of issue
            
            Number
            
            
            Price
            
            
            Proceeds
            
            
            Number
            
            
            Price
            
            ExpiryMarch
      23, 2010
            
            
            200,000
            
            
            
            $0.25
            
            
            
            50,000
            
            
            
            200,000
            
            
            
            $0.30
            
            March
      23, 2012March
      29, 2010
            
            
            200,000
            
            
            
            $0.25
            
            
            
            50,000
            
            
            
            200,000
            
            
            
            $0.30
            
            March
      29, 2012April
      14, 2010
            
            
            40,000
            
            
            
            $0.25
            
            
            
            10,000
            
            
            
            40,000
            
            
            
            $0.30
            
            April
      14, 2012April
      20, 2010
            
            
            100,000
            
            
            
            $0.25
            
            
            
            25,000
            
            
            
            100,000
            
            
            
            $0.30
            
            April
      20, 2012540,000
            
            
            
            
            
            
            $
            135,000
            
            
            
            540,000





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





Debt
financing





On
February 22, 2010, we borrowed $50,000 and issued a demand promissory note
payable to the lender for the principal sum together with interest at 6% per
annum.  See Table 8 below.





Challenges
and risks





Although
we have raised $185,000 since February 1, 2010, our cash position is inadequate
to satisfy our working capital needs for the next twelve months.  Over
the next twelve months we will need to raise capital to cover our operating
costs, fulfill the obligations due under our property agreements, and pay
exploration or development costs on our properties.





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





15





We do not
anticipate generating any revenue over the next twelve months. We plan to fund
our operations through any combination of equity or debt financing from the sale
of our securities, private loans, joint ventures or through the sale of a part
interest in our mineral properties. Other than the letter agreement dated April
22, 2010 relating to the private placement of our securities, we do not have any
financing arranged. We cannot assure you that we can raise significant funds
through this offering. Although we have succeeded in raising funds as we
have needed them, we cannot assure you that we will be able to raise sufficient
funds in order to cover our general and administrative expenses and acquire
and develop properties. Many factors affect the willingness of potential
investors to invest in risky ventures such as ours, but we believe that the
recession in the United States is currently the biggest factor impacting the
capital markets.  We believe that the recession has resulted in a
decline in the number of investors who could be interested in providing funding
to us and we are unsure how long the recession will continue.  We may
consider entering into a joint venture partnership with a more senior resource
company to provide the funding that we need to complete a mineral exploration
program in Chile. If we enter into a joint venture arrangement, we would
likely have to assign a percentage of our interest in our mineral claims to our
joint venture partner in exchange for the funding.





Investments
in and expenditures on mineral interests





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





Title to
mineral claims involves risks inherent in the difficulties of determining the
validity of claims as well as the potential for problems arising from the
ambiguous conveyancing history characteristic of many mineral claims. Our
contracts and deeds have been notarized, recorded in the registry of mines and
published in the mining bulletin. We regularly review the mining bulletin and
other records to discover whether any of our titles are jeopardized. To the best
of our knowledge, we have taken the steps necessary to ensure that we have good
title to our mineral claims.





Foreign
exchange





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





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





The
economic crisis in the United States and the resulting economic uncertainty and
market instability may make it harder for us to raise capital as and when we
need it and have made it difficult for us to assess the impact of the crisis on
our operations or liquidity and to determine if the prices we will receive on
the sale of minerals, assuming we begin production in the future, will exceed
the cost of mineral exploitation.  If we are unable to raise cash, we
may be required to cease our operations Other than as discussed in this
report, we know of no other trends, events or uncertainties that have or are
reasonably likely to have a material impact on our short-term or long-term
liquidity.





Off-balance
sheet arrangements





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





Related-party
transactions





Table 7
describes amounts that were due to related parties at the fiscal year ended
January 31, 2010 and the period ended July 31,
2010.





Table
      7: Due to related partiesJuly
      31, 2010
            
            
            January
      31, 2010Due
      to Da Costa Management Corp.
            
            $
            103,385
            
            
            $
            26,324Due
      to Fladgate Exploration Consulting Corporation
            
            $
            127,138
            
            
            $
            48,920Due
      to Minera Farellon Limitada
            
            $
            12,168
            
            
            $
            18,594Due
      to Kevin Mitchell
            
            $
            1,919
            
            
            $
            5,719




16


During
the six months ended July 31, 2010 and July 31, 2009 we recorded the expenses
described below with related parties:


●
              $65,933
      and $66,044, respectively, in consulting and other business expenses for
      services provided by Da Costa Management Corp., a company owned by our CFO
      and treasurer
 ●
              $77,468
      and $68,830, respectively, in administration, advertising and promotion,
      mineral exploration, travel and other business expenses for services
      provided by or paid on our behalf by Fladgate Exploration Consulting
      Corporation, a company controlled by our
  directors
 ●
              $30,202
      and $32,650, respectively, in administration, automobile, rental, and
      other business expenses for services provided by Minera Farellon Limitada,
      a company owned by Kevin Mitchell, a major shareholder, and Richard Jeffs,
      the father of our president
 ●
              $12,591
      and $12,011, respectively, in administration expenses for services
      provided by Kevin Mitchell
 
 Notes
payable to related party





Table 8
describes the promissory note and accrued interest payable to a company owned by
Richard Jeffs, the father of our president, at July 31, 2010, and January 31,
2010.





Table 8:
Note payable


July
      31,
              2010
            
            
            January
      31,
              2010Note
      payable on demand, unsecured, bearing interest at 6% per annum, compounded
      monthly
            
            $
            50,000
            
            
            
            –Accrued
      interest
            
            
            1,329
            
            
            
            –Total
      payable to the company owned by Mr. Jeffs
            
            $
            51,329
            
            
            
            –





Critical
accounting estimates





An
appreciation of our critical accounting judgments is necessary to understand our
financial results.  These policies may require that we make difficult
and subjective judgments regarding uncertainties, and as a result, such
estimates may significantly impact our financial results. The precision of
these estimates and the likelihood of future changes depend on a number of
underlying variables and a range of possible outcomes. Other than our
accounting for the fair value of our unproved mineral properties, accruals for
accounting, auditing, legal expenses and mineral property costs, our critical
accounting policies do not involve the choice between alternative methods of
accounting. We have applied our critical accounting judgments
consistently.





Reclassifications





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





Unproved
mineral property costs





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





17





Financial
instruments





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





Recently
Adopted Accounting Guidance





We have
reviewed recently issued accounting pronouncements and plan to adopt those that
apply to us. We do not expect the adoption of these pronouncements to have a
material impact on our financial position, results of operations or cash
flows.





Item 3.  Quantitative and Qualitative
Disclosures about Market Risk


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




Item
4.  Controls and Procedures




(a)
Disclosure Controls and Procedures





Caitlin
Jeffs, our chief executive officer and president, and John da Costa, our chief
financial officer, have evaluated the effectiveness of our disclosure controls
and procedures (as the term is defined in Rules 13a-15 and 15d-15 under the
Securities Exchange Act of 1934) as of the end of the period covered by this
report (the “evaluation date”).  Based on their evaluation, they have
concluded that, as of the evaluation date, our disclosure controls and
procedures are effective to ensure that information required to be disclosed by
us in the reports that we file or submit under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms.





(b)
Changes in Internal Control over Financial Reporting





During the period covered by this
report, there were no changes to our internal control over financial reporting
that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.




PART
II—OTHER INFORMATION




Item
1.  Legal Proceedings




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




Item
1A.  Risk Factors




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




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




None.




Item
3.  Defaults upon Senior Securities




None.




18





Item
4.  (Removed and Reserved)




Item
5.  Other Information




None




Item
6.  Exhibits





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





Exhibit
            Description3.1
            Articles
      of Incorporation13.2
            By-laws131.1
            Certification
      pursuant to Rule 13a-14(a) and 15d-14(a) (4)231.2
            Certification
      pursuant to Rule 13a-14(a) and 15d-14(a) (4)232
            Certification
      pursuant to Section 1350 of Title 18 of the United States Code21Incorporated by reference from the registrant’s report on Form SB-2
      filed with the Securities and Exchange Commission on May 22, 2006 as file
      number 333-134-363
              2Filed
      herewith


19
  SIGNATURES





Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.





September
13, 2010





RED
      METAL RESOURCES LTD.By:
            /s/Caitlin
      JeffsCaitlin Jeffs, Chief Executive Officer and PresidentBy:
            /s/
      John Da CostaJohn DaCosta, Chief Financial Officer