Filed by sedaredgar.com - Liberty Star Uranium & Metals Corp.

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

LIBERTY STAR URANIUM & METALS CORP.
(Exact name of registrant as specified in its charter)

3024 E. Fort Lowell Road, Tucson, Arizona 85716
(Address of principal executive offices)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

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 preceding12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

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 filer”, “accelerated filer” and “smaller reporting
company” in Rule 12b-2 of the Exchange Act. (Check one):

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

The number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
61,575,549 common shares issued and outstanding as of September 10, 2008.

This quarterly report contains forward-looking statements as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled "Risk Factors", that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

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

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

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS

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

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

														Cumulative from
														date of inception
		For the three			For the three			For the six			For the six			(August 20, 2001)
		months ended			months ended			months ended			months ended			to
		July 31, 2008			July 31, 2007			July 31, 2008			July 31, 2007			July 31, 2008
Revenues	$	-		$	-		$	-		$	-		$	-

Expenses:
Geological and geophysical
costs		319,822			335,576			447,023			949,071			10,341,100
Salaries and benefits		270,101			126,491			405,702			260,526			1,845,994
Accounting and auditing		39,920			38,802			92,844			92,278			780,515
Public relations		40,323			89,985			75,936			100,369			666,049
Depreciation		71,336			30,042			143,433			57,266			394,712
Legal		29,609			40,680			46,751			81,567			513,982
Professional services		-			-			-			-			143,992
General and administrative		65,526			87,371			114,749			170,715			1,305,308
Travel		2,430			7,351			2,430			7,751			137,354
Impairment loss		-			-			-			-			15,907,500
Net operating expenses		839,067			756,298			1,328,868			1,719,543			32,036,506

Loss from operations		( 839,067	)		( 756,298	)		( 1,328,868	)		( 1,719,543	)		( 32,036,506	)

Other income (expense):
Interest income		2,893			38,249			8,495			43,875			190,200
Interest expense		( 499,067	)		( 460,862	)		( 1,012,728	)		( 463,227	)		( 2,712,734	)
Debt conversion expense		( 58,474	)		-			( 67,474	)		-			( 67,474	)
Loss on sale of assets		-			-			-			-			( 406	)
Other income		-			-			-			-			100,000
Income from Elle Venture		300,000			-			300,000			-			300,000
Foreign exchange gain		-			-			-			-			505
Gain on settlement of debt
to related party		-			-			-			-			7,366
Total other income (expense)		( 254,648	)		( 422,613	)		( 771,707	)		( 419,352	)		( 2,182,543	)

Loss before income taxes		( 1,093,715	)		( 1,178,911	)		( 2,100,575	)		( 2,138,895	)		( 34,219,049	)

Income tax expense		-			-			-			-			-

Net loss	$	( 1,093,715	)	$	( 1,178,911	)	$	( 2,100,575	)	$	( 2,138,895	)	$	( 34,219,049	)

Basic and diluted net loss per
share of common stock	$	( 0.02	)	$	( 0.03	)	$	( 0.05	)	$	( 0.05	)	$	( 1.04	)

Basic and diluted weighted
average number of shares
of common stock
outstanding		47,898,682			42,868,781			46,262,936			42,382,349			32,767,219

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

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)

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

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

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

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Liberty Star Uranium & Metals Corp. (the “Company” or “We” or “Liberty Star”) was formerly Liberty Star Gold Corp. and formerly Titanium Intelligence, Inc. (“Titanium”). Titanium was incorporated on August 20, 2001 under the laws of the State of Nevada. On February 5, 2004 we commenced operations in the acquisition and exploration of mineral properties business. Big Chunk Corp. (“Big Chunk”) is our wholly owned subsidiary and was incorporated on December 14, 2003 in the State of Alaska. Big Chunk is engaged in the acquisition and exploration of mineral properties business in the State of Alaska. Redwall Drilling Inc. (“Redwall”) is our wholly owned subsidiary and was incorporated on August 31, 2007 in the State of Arizona. Redwall is a drilling contractor. On December 1, 2007 Redwall began performing drilling services on the Company’s mineral properties. In April 2007, the Company changed its name to Liberty Star Uranium & Metals Corp. to reflect the Company’s current concentrated efforts on uranium exploration. The Company is considered to be an exploration stage company, as it has not generated any revenues from operations.

In December 2006, the Company entered into a joint venture agreement (“Elle Venture”) with XState Resources Limited (“XState”). The Company holds a 50% interest in the Elle Venture, a general partnership with XState that was formed to explore and, if warranted, develop certain US Federal lode mining claims within the 22 square mile joint venture area.

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

These condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America with the on-going assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. However, certain conditions noted below currently exist which raise substantial doubt about the Company’s ability to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should the Company be unable to continue as a going concern. The operations of the Company have primarily been funded by the issuance of common stock and debt. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings, joint venture agreements or debt. Such financings may not be available, may not be available on reasonable terms, or the Company may be prevented from obtaining further financings because of restrictions that apply to it pursuant to the Unsecured Convertible Promissory Notes discussed in Note 7.

The condensed consolidated financial statements included herein have been prepared by Liberty Star Uranium & Metals Corp. without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and should be read in conjunction with our annual report on Form 10-KSB for the year ended January 31, 2008 as filed with the SEC under the Securities and Exchange Act of 1934. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, as permitted by the SEC, although we believe the disclosures which are made are adequate to make the information presented not misleading. The condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary to present fairly our financial position at July 31, 2008 and the results of our operations and cash flows for the periods presented.

Interim results are subject to significant seasonal variations and the results of operations for the three and six month periods ended July 31, 2008 are not necessarily indicative of the results to be expected for the full year.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

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

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

The valuation of stock-based compensation, valuation of common stock purchase warrants, value of beneficial conversion feature, and the determination of useful lives of depreciable assets are significant estimates made by management. It is at least reasonably possible that a change in these estimates may occur in the near term.

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

The Company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents. The Company maintains its cash in bank deposit accounts which, for periods of time, may exceed federally insured limits. At July 31, 2008 and January 31, 2008, the amount of cash in bank deposit accounts that exceeded federally insured limits was approximately $343,000 and $1,202,000, respectively.

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

Investment in Elle Venture, a general partnership in which the Company is a 50% partner, is accounted for by the equity method as effective control of the venture rests with XState Resources Limited, our joint venture partner.

Property and equipment is stated at cost. The Company capitalizes all purchased equipment over $500 with a useful life of more than one year. Depreciation is calculated using the straight line method over the estimated useful lives of the assets. Leasehold improvements are stated at cost and are amortized over their estimated useful lives or the lease term, whichever is shorter. Maintenance and repairs are expensed as incurred while betterments or renewals are capitalized. Property and equipment is reviewed periodically for impairment. The estimated useful lives range from 2 to 7 years.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The Company capitalizes costs incurred to issue new debt as deferred finance charges. Amortization is calculated using the straight line method over the life of the related debt instrument and is included in interest expense. At July 31, 2008 and January 31, 2008 the Company has capitalized deferred finance charges of $432,538 and accumulated amortization of debt issuance costs was $260,855 and $152,882, respectively.

Discounts on convertible promissory notes include the fair value of detachable common stock purchase warrants issued with convertible promissory notes and the intrinsic value of the embedded beneficial conversion feature of the convertible promissory notes. These amounts are being amortized to interest expense using the effective interest method over the term of the convertible promissory notes. At July 31, 2008 and January 31, 2008 the Company has recorded discounts on convertible promissory notes of $3,014,956 and accumulated amortization of discounts on convertible promissory notes was $1,821,536 and $1,067,797, respectively.

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

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

The Company records rent expense from noncancelable operating leases on the straight-line basis over the life of the lease. The Company records an asset and a related capital lease obligation for property and equipment acquired by capital lease. The asset is amortized and amortization expense is included in depreciation.

The Company accounts for convertible promissory notes in accordance with Statement of Financial Accounting Standards No. 150 (“SFAS 150”) requiring the convertible promissory notes to be reported as liabilities at fair value. When convertible promissory notes are converted into shares of the Company’s common stock in accordance with the debt’s original terms, no gain or loss is recognized. The Company accounts for inducements to convert as an expense in the period incurred, included in debt conversion expense.

The operations of the Company have been and may in the future be affected from time to time in varying degree by changes in environmental regulations, including those for future removal and site restoration costs. The likelihood of new regulations and their overall effect upon the Company are not predictable. The Company will provide for any reclamation costs in accordance with Financial Accounting Standard No. 143 “Accounting for Asset Retirement Obligations”. It is management’s opinion that the Company is not currently exposed to significant environmental and reclamation liabilities and has recorded no reserve for environmental and reclamation expenditures at July 31, 2008 and January 31, 2008.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The Company’s stock-based compensation arrangements are designed to attract and retain employees and non-employee consultants. The amount, frequency, and terms of stock-based awards may vary based on competitive practices, company operating results, and government regulations. The Company may grant non-qualified and incentive stock options to employees and non-qualified stock options to non-employee consultants. New shares are issued upon option exercises.

On February 1, 2006 the Company adopted the provisions of Statement of Financial Accounting Standards No. 123R (“SFAS 123R”) requiring the measurement and recognition of all stock-based compensation under the fair value method. The Company charges stock-based compensation expense for options granted to employees to earnings using the straight-line method over the option’s requisite service period. The Company implemented SFAS 123R using the modified prospective transition method. Prior to February 1, 2006 the Company accounted for stock options granted to employees under Accounting Principles Board Opinion 25 (“APB 25”) intrinsic value method. Under APB 25, there was generally no charge to earnings for employee stock option awards because the options granted had an exercise price at least equal to the market value of the underlying common stock on the grant date. The fair value of options granted to employees prior to February 1, 2006 had been determined to be $0, based on the Black-Scholes Valuation method. The Company determines the measurement date for stock options granted to non-employee consultants using EITF 96-18. Periods prior to February 1, 2006 in the consolidated financial statements have not been adjusted to reflect fair value stock-based compensation expense under SFAS 123R for options issued to employees as there is no effect.

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

Basic net loss per share is computed by dividing net loss attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. The calculation of basic loss per share gives retroactive effect to an eight for one forward stock split which resulted in 20,000,000 common shares outstanding. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic loss per share) and potentially dilutive shares of common stock that are not anti-dilutive. At July 31, 2008 and January 31, 2008, there were 15,751,297 and 12,345,047, respectively, potentially dilutive instruments outstanding. Additionally at July 31, 2008 and January 31, 2008 if settlement of the Convertible Promissory Notes were completed by the issuance of common shares there would be 53,307,836 and 9,754,498 shares, respectively required to convert the notes. These instruments were not included in the determination of diluted loss per share as their effect was anti-dilutive.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 162 “The Hierarchy of Generally Accepted Accounting Principles”. This statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statement of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States of America. This statement is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”. The Company does not believe that the adoption of SFAS No. 162 will have a material effect on its results of operations or financial position.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

In March 2008, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 161 “Disclosures about Derivative Instruments and Hedging Activities – an amendment of FASB Statement No. 133”. This statement changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement No. 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early adoption encouraged. This statement encourages, but does not require, comparative disclosures for earlier periods at initial adoption. The Company does not believe that the adoption of SFAS No. 160 will have a material effect on its results of operations or financial position.

At July 31, 2008 the Company held a 100% interest in 1,757 standard Federal lode mining claims spanning approximately 60 square miles on the Colorado Plateau Province of Northern Arizona (the “North Pipes Claims”).

At July 31, 2008 the Company held a 50% interest in 37 standard Federal lode mining claims on the Colorado Plateau Province of Northern Arizona. These claims are owned through the Elle Venture, a general partnership in which the Company is a 50% partner.

At July 31, 2008 the Company held an option to explore 59 standard Federal lode mining claims located at the East Silver Bell and Walnut Creek region of Arizona. The Company also held an option to explore 2 private patented parcels of land in the Beatty Area of Nevada. The mineral claims are owned by JABA US Inc, an Arizona Corporation in which two directors of the Company are owners.

At July 31, 2008 the Company held a 100% interest in 707 Alaska State mining claims spanning approximately 177 square miles in the Iliamna region of Southwestern Alaska, located on the north side of the Cook Inlet, approximately 200 miles southwest of the city of Anchorage, Alaska (the “Big Chunk Claims”). At July 31, 2008 the Company held a 100% interest in 56 Alaska State mining claims spanning approximately 13.5 square miles in the Iliamna region of Southwestern Alaska, located on the north side of the Cook Inlet approximately 60 miles north of Lake Iliamna (the “Bonanza Hills Claims”).

Title to mineral claims involves certain inherent risks due to difficulties of determining the validity of certain claims as well as potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral properties. The Company has investigated titles to all its mineral properties and, to the best of its knowledge; titles to all properties are in good standing as of July 31, 2008.

The Company holds a 50% interest in Elle Venture, a general partnership with XState Resources Limited (“XState”) that was formed to explore, develop and, if warranted, mine certain US Federal lode mining claims within the 22 mile joint venture area. The Elle Venture commenced on December 15, 2006 when XState deposited $2,900,000 (“sole funding amount”) into the joint venture bank account. XState has the right of first refusal to buy or joint venture in relation to the other pipes and claims later staked in the Elle Venture area. On July 31, 2008 the Company entered into an agreement to amend the joint venture agreement and terminate the subcontracting agreement. The Company received a $300,000 liquidating distribution in relation to the termination of the agreement. The Elle Venture mineral claims will continue to be owned 50% each by the Company and XState and the Company may be obligated to contribute funds if exploration activities were to resume on those claims.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

On February 19, 2008 the Company entered into an amendment to the joint venture agreement. The amendment defines the alternate joint venture breccia pipe targets and allows the joint venture funds to be expended on exploration of the initial three joint venture breccia pipe targets as well as the four alternate joint venture breccia pipe targets. When the sole funding amount contributed by XState is expended, XState will have the right to select a total of three of either the initial or alternate joint venture breccia pipe targets to retain a 50% interest in. The initial and alternate joint venture breccia pipe targets consist of 7 breccia pipe targets and 37 standard Federal lode mining claims.

After the initial $2,900,000 is expended each party agrees to contribute to the Elle Venture expenditures in proportion to their joint venture interests until the exploration operations are completed. If a partner is unable to make a proportional contribution then that party’s interest will be diluted.

In October 2006, the Company entered into a Subcontracting Agreement with XState to perform the duties as the Manager of the Elle Venture including maintaining the joint venture bank account, paying joint venture expenses, and performing the duties necessary to execute the approved work program for the joint venture claims. During the six months ended July 31, 2008 and 2007, the Company incurred $599,566 and $251,124, respectively as compensation from the Elle Venture pursuant to the subcontracting agreement which is reported as a reduction of our geological and geophysical exploration costs.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

On May 11, 2007, the Company issued senior unsecured convertible two year promissory notes (“Unsecured Convertible Promissory Notes” or “May Notes”) for gross proceeds of $4,400,000 in a private placement of its securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The net proceeds received after placement agent fee, due diligence fee and legal fees was $4,010,238. The Unsecured Convertible Promissory Notes bear interest at 8%. Repayment of the Unsecured Convertible Promissory Notes began in February 2008 and will consist of sixteen monthly principal payments of $259,375 plus accrued unpaid interest.

Under the original note terms holders of the Unsecured Convertible Promissory Notes could elect to convert all or a portion of their note balance before the scheduled repayment dates at a fixed rate of $0.65 per share. The Company may elect to make repayments of the Unsecured Convertible Promissory Notes in cash or by the issuance of common stock of the Company. The conversion price for the monthly payments is the lesser of the fixed conversion price of $0.65 per share or 85% of the volume weighted average price for 10 days preceeding the repayment date, but not less than $0.45 per share. Stock payment cannot be made if the amount of shares to be issued would exceed 33% of the aggregate daily trading volume for 7 trading days preceding the repayment date, unless waived by the holders of the Unsecured Convertible Promissory Notes. Stock payment cannot be made if the holders of the Unsecured Convertible Promissory Notes own more than 4.99% of the then outstanding common stock of the Company.

In February 2008, the Company entered into the first modification agreement with the holders of the Unsecured Convertible Promissory Notes. The modification agreement is effective from February 2008 through April 2008. The fixed conversion price was reduced from $0.65 to $0.50. The calculation of the maximum allowable shares to be issued for the February, March and April monthly payments was increased to 200% of the aggregate daily trading volume for the 15 trading days preceding the Repayment Date multiplied by the VWAP for the 7 trading days preceding the repayment date. If the monthly payment amount cannot be paid in full with the maximum allowable shares then an excess amount results. The note holders may elect to receive cash, additional stock, or defer the excess amount. For deferred excess amounts, the conversion price shall be the lowest conversion price that could be calculated for any repayment date until such deferred amount is actually paid. The Company issued 30,000 shares of common stock on April 8, 2008 to holders of the Unsecured Convertible Promissory Notes as consideration for entering into the modification agreement. The Company recorded debt conversion expense of $9,000 related to this modification agreement.

On May 11, 2008, the Company entered into the second modification agreement with the holders of the Unsecured Convertible Promissory Notes. The exercise price of the detachable stock purchase warrants issued in connection with the Unsecured Convertible Promissory Notes was reduced from $0.75 per share to $0.50 per share. The second modification agreement changes the payment of the monthly amount in cash or common stock for May 2008 through June 2008. The revised formula allows payment in cash or common stock at a conversion price of the lesser of $0.50 per share or 75% of the volume weighted average price (“VWAP”) for the ten trading days preceding the Repayment Date. The volume trading restrictions used to calculate the maximum allowable shares to be issued was removed for the May and June monthly payments. The note holders may elect to defer all or a portion of the monthly payments until demand for such payment is made by the holders. For deferred amounts, the conversion price shall be the lowest conversion price that could be calculated for any repayment date until such deferred amount is actually paid. On July 29, 2008, the Company entered into the third modification agreement with the holders of the Unsecured Convertible Promissory Notes. The third modification agreement extended the terms of the second modification agreement through the July 2008 monthly payment. During the six months ended July 31, 2008 the Company recorded debt conversion expense of $58,474 related to the additional 10% discount on the conversion price provided to the note holders as an inducement to convert the note into shares of common stock.

The Company was required to file and have declared effective a registration statement with the SEC within 140 days of the sale of the Unsecured Convertible Promissory Notes. The Company filed the registration statement and it was declared effective on September 28, 2007. The registration statement has not been amended to reflect the three modifications to the Unsecured Convertible Promissory Notes. The Company is required to maintain the effectiveness of the registration statement for up to two years, or until all shares have been traded by the holders of the Unsecured Convertible Promissory Notes. The proceeds of the private placement have been and will be used for working capital, exploration of mineral properties and/or acquiring additional mineral properties.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The Company incurred deferred financing costs of $457,454 in connection with the issuance of the Unsecured Convertible Promissory Notes. The deferred financing costs consist of $389,762 paid for broker fees, legal fees and due diligence fee. The deferred financing costs also consist of 338,461 of common stock purchase warrants issued as a broker fee to Hunter Wise Securities. The warrants have an exercise price of $0.50 and a life of 5 years. The exercise price may be adjusted if the Company issues other shares, warrants or stock options before the expiration of the warrants at a price less than $0.45 per share. The warrants were assigned a value of $67,692 estimated using the Black-Scholes valuation model. The following assumptions were used to determine the fair value of the warrants using the Black-Scholes valuation model: a term of 5 years, risk-free rate of 4.56%, volatility of 60%, and dividend yield of zero. The Company reported $107,866 and $47,651 of interest expense for the amortization of deferred financing costs during the six months ended July 31, 2008 and 2007, respectively.

The holders of the Unsecured Convertible Promissory Notes were issued 6,769,228 detachable common stock purchase warrants with an exercise price of $0.50 and a life of 5 years. The exercise price may be adjusted if the Company issues other shares, warrants or stock options before the expiration of the warrants at a price less than $0.45 per share. In the event that a delay in delivery of exercised shares occurs, as defined in the subscription agreement, the Company agrees to pay liquidated damages of $100 per business day for each $10,000 of purchase price of shares subject to the delivery default. In the event that the Company fails to deliver the exercised shares within 7 business dates of the Delivery Date and the selling security holder purchases shares of common stock of the Company in an open market, then the Company shall pay in cash to the selling security holder the amount by which the selling security holders’ total purchase price including brokers commissions exceeds the aggregate purchase price of the shares issuable together with interest at 15% per annum.

The Unsecured Convertible Promissory Notes are reported net of discounts. Discounts were recorded for the detachable common stock purchase warrants as well as the beneficial conversion feature. The beneficial conversion feature recorded of $1,842,734 represents the difference between the conversion price and the fair market value of the common stock on the commitment date (May 11, 2007). The 6,769,228 detachable common stock purchase warrants were assigned a value of $1,353,846, estimated using the Black-Scholes valuation model. The following assumptions were used to determine the fair value of the warrants using the Black-Scholes valuation model: a term of 5 years, risk-free rate of 4.56%, volatility of 60%, and dividend yield of zero. The discounts on the Unsecured Convertible Promissory Notes for the beneficial conversion feature and the detachable common stock purchase warrants are being amortized to interest expense, using the effective interest method, over the term of the Unsecured Convertible Promissory Notes.

The Company reported $753,740 and $332,977 of interest expense relating to the beneficial conversion feature and the warrants discount during the six months ended July 31, 2008 and 2007, respectively.

During the year ended January 31, 2008 one note holder converted $250,000 of the principal balance of their Unsecured Convertible Promissory Note and $9,699 of unpaid accrued interest at a conversion price of $0.65 per share pursuant to the original terms of the notes. The Company issued 399,537 shares of common stock related to these conversions. The debt converted was allocated $25,991 of deferred finance charges and $181,624 of discounts, and the unamortized portion of $157,269 was recorded as interest expense.

During the six months ended July 31, 2008 the Company issued 6,306,269 shares of common stock and $407,349 of cash for the monthly payments on the Unsecured Convertible Promissory Notes. At July 31, 2008 the note holders have a balance of $449,419 of monthly payment amounts that have been deferred.

The principal balance of the Unsecured Convertible Promissory Notes outstanding was $2,593,750 and $4,150,000 at July 31, 2008 and January 31, 2008, respectively. If settlement of the Unsecured Convertible Promissory Notes occurred on July 31, 2008 the Company would have been obligated to pay $2,593,750 principal payments, $11,370 accrued interest, and $449,419 deferred amount for a total of $3,054,539 in cash. If the settlement were completed by the issuance of common shares the conversion price at July 31, 2008 would have been $0.0573 per share for a total of 53,307,836 shares required to convert the notes.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The following is a summary of the principal maturities of Unsecured Convertible Promissory Notes:

As of July 31, 2008, there were 9,051,047 whole share purchase warrants outstanding and exercisable. The warrants have a weighted average remaining life of 3.32 years and a weighted average exercise price of $0.735 per whole warrant for one common share.

On May 2, 2007 the Company issued 50,000 shares to Equititrend Advisors LLC pursuant to an agreement to perform public and investor relations services. The shares were issued to an accredited investor pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act. The transactions were reported at fair value. Fair value of the shares issued was determined by a review of the Company’s stock trading price around the date of issuance and was determined to be $0.57 per share for the shares issued on May 2, 2007. The Company recorded $28,500 of public relations expense related to the stock issuance.

The Company issued 62,000 common shares to three public relations consultants on August 27, 2007 as compensation for public relations services performed. The issuance of common stock is reported at fair value. Fair value was determined to be the closing trading price on August 27, 2007, or $0.42 per common share. The Company recorded $26,040 of public relations expense related to the stock issuances.

During the year ended January 31, 2008, the Company issued 1,718,799 shares to Cornell Capital Partners pursuant to a Standby Equity Distribution Agreement (“SEDA”) in exchange for proceeds of $1,074,417, net of fees of $56,500. Cornell Capital Partners paid us 96%, or a 4% discount, of the lowest volume weighted average per share purchase price of our common stock on our principal trading market for the 5 days following each request for an advance. Shares of common stock issued pursuant to the SEDA are reported as permanent equity pursuant to SFAS No. 150 at the discounted price paid for the shares by Cornell Capital Partner, LP. Expenses of shares issued pursuant to the SEDA are reported as a reduction of additional paid-in capital. In May 2007,

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued ed

pursuant to the Unsecured Convertible Promissory Notes subscription agreement, the Company agreed that it would not exercise its rights under the SEDA without written consent from the Unsecured Convertible Promissory Note Holders. The Company has not issued any shares to Cornell Capital Partners after April 2007 and the SEDA expired in March 2008.

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

The Company granted 425,000 non-qualified stock options to non-employee consultants and 3,050,000 incentive stock options to employees, officers and directors on May 21, 2008. The options have an exercise price of $0.22 per option. On June 26, 2008 the board eliminated the vesting period so the options would be fully vested effective on that date. The options have a life of ten years. The options were granted pursuant to the 2007 Stock Option Plan. The fair value of the stock option grant was determined using the Black-Scholes valuation model.

The Company used the following assumptions to estimate the fair value of the stock option grant at $0.10 per option:

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

The Company entered into the following transactions with related parties during the period ended July 31, 2008: Paid or accrued $2,796 in rent. We rented an office from an officer on a month-to-month basis for $459 per month. Accrued $27,500 of unpaid wages to Jim Briscoe our President and CEO.

The Company has a receivable balance due from Elle Venture, a general partnership in which the Company is a 50% partner, for subcontracting costs incurred by the Company. The receivable is unsecured, non-interest bearing and due on demand. Balance at July 31, 2008 and January 31, 2008 is $2,830 and $277,665, respectively.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The Company entered into an option agreement in April 2008 with JABA US Inc, an Arizona Corporation in which two directors of the Company are owners of JABA US Inc. The option agreement grants the Company the exclusive right and option to acquire a 100% undivided interest in 26 Federal lode mining claims in the East Silver Bell area northwest of Tucson, AZ, 33 Federal lode mining claims in the Walnut Creek area near Tombstone, AZ, and 2 private parcels in the Beatty area of Nevada. In the event that there is a commencement of commercial production a royalty ranging from 2% to 10% of net smelter returns will be payable to JABA US Inc. The Company is required to maintain the claims in good standing and pay the annual rentals of up to $8,000 during the option period which ends no later than January 1, 2011. The Company agrees to make $175,000 in exploration expenditures on or before dates to be determined by the Company, but no later than January 1, 2011. No exploration expenditures have been paid or incurred during the six months ended July 31, 2008 and 2007. During the six months ended July 31, 2008 annual rentals of $7,375 were paid to extend the life of the 33 Federal lode mining claims through September 2009.

The Company is required to perform annual assessment work in order to maintain the Big Chunk and Bonanza Hills Alaska State mining claims. If annual assessment work is not performed the Company must pay the assessment amount in cash in order to maintain the claims. Completion of annual assessment work in the amount of $400 per ¼ section (160 acre) claim or $100 per ¼ -¼ section (40 acre) claim extends the claims for a one-year period from the staking of claims. Assessment work performed in excess of the required amount may be carried forward for up to four years to satisfy future obligations. The Company estimates that the required annual assessments to maintain the claims for 2008 will be approximately $298,600. At July 31, 2008 the Company has labor carry-forwards of prior assessment work available to offset some of the 2008 assessment year liability and estimates that approximately $28,000 of assessment work will need to be performed in 2008 in order to maintain the current claims in good standing.

The annual state rentals for the Big Chunk and Bonanza Hills Alaska State mining claims are $100 for each ¼ section (160 acres) claim and $25 for each ¼ -¼ section (40 acres) claim. The rental period begins at noon September 1^st through the following September 1^st and annual rental payments are due on November 30^th of each year. Annual rent is due in full within 45 days of staking a new claim and covers the period from staking until the next September 1^st. Claims that are staked in accordance with AS 38.05.195(b)(1) meridian, township, range, section and claim system location “MTRSC” receive a one-time only credit of 50% of the second year’s rent payment. Our Alaska claims are all MTRSC claims eligible for the 50% rental credit in the second rental year. Rentals for the period from September 1, 2007 through September 1, 2008 of $74,650 have been paid. The estimated state rentals due by November 30, 2008 for the period from September 1, 2008 through September 1, 2009 are $74,650. Alaska State production royalty is three percent of net income. State law prescribes that after a 3.5 -year exemption from state taxes a metal mine is liable for a 15% state licensing tax on net income from the mine.

The Company is required to pay annual rentals for its Federal lode mining claims for the North Pipes project in the State of Arizona. The rental period begins at noon on September 1^st through the following September 1^st and rental payments are due by the first day of the rental period. The annual rental is $125 per claim. Additional fees of $45 per claim are due in the first year of filing a Federal lode mining claim along with the first year’s rent. Rentals, and initial filing fees for new claims, for the period from September 1, 2007 through September 1, 2008 have been paid in the amount of $230,425. During the six months ended July 31, 2008 the Company paid $44,500 of rental fees to renew 356 claims for the period from September 1, 2008 to September 1, 2009. The estimated rentals due for the period from September 1, 2008 to September 1, 2009 due by the first day of the rental period are $175,125.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The significant non-cash investing and financing transactions for the six month period ended July 31, 2008 were as follows:

Issued 30,000 shares of common stock valued as $9,000 of debt conversion expense to investors who participated in the first modification agreement to the Unsecured Convertible Promissory Notes.

Issued 6,306,269 shares of common stock as repayment of $820,605 principal portion and $240,275 interest portion of the monthly payments on the Unsecured Convertible Promissory Notes.

Recorded $58,474 of debt conversion expense for additional discount to original conversion price extended to the holders of the Unsecured Convertible Promissory Notes as an inducement to convert.

Stock option compensation recorded at $518,452 for options issued to employees and consultants.

The significant non-cash investing and financing transactions for the six month period ended July 31, 2007 were as follows:

Purchased a vehicle in exchange for long-term financing of $30,975 and cash of $1,000.

Issued 50,000 shares of common stock in exchange for public relations consulting services reported at fair value of $28,500.

Issued 338,461 whole share common stock purchase warrants valued at $67,692 for a broker fee paid in connection with the sale of the Unsecured Convertible Promissory Notes.

Issued 6,769,228 whole share common stock purchase warrants valued at $1,353,846 in connection with the sale of the Unsecured Convertible Promissory Notes.

The Company recorded $389,762 of deferred financing charges that were net against the proceeds from the sale of Unsecured Convertible Promissory Notes.

The Company recorded a beneficial conversion feature in the amount of $1,842,734 in relation to the sale of Unsecured Convertible Promissory Notes.

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

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

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The Company issued 10,881,688 shares of common stock for the August monthly payment and conversion of deferred amounts on the Unsecured Convertible Promissory Notes.

On August 27, 2008 the Company issued Secured Convertible Promissory one year notes (“August Notes”) for gross proceeds of $414,184.29 to the holders of the Senior Unsecured Convertible Promissory Notes issued in May 2007 (“May Notes”) in a private placement of its securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The August Notes bear interest at 12%. Repayment of the August Notes begins in February 2009 with seven monthly principal payments of $59,146 plus accrued unpaid interest. The entire balance of the August Notes and May Notes becomes due immediately upon the Company’s receipt of net proceeds from a sale of debt or equity with a gross amount of up to $3,000,000. The holders of the August Notes may elect to convert all or a portion of their note balance before the scheduled repayment dates at a fixed rate of $0.05 per share. The Company may elect to make repayments of the August Notes in cash at 110% of the principal amount due and 100% of the other amounts then due or by the issuance of common stock of the Company. The conversion price for the monthly payments is the lesser of the fixed conversion price of $0.05 per share or 80% of the average of the closing bid prices of the common stock for the five trading days prior to the monthly payment date. Stock payment cannot be made if the holders of the August Notes own more than 4.99% of the then outstanding common stock of the Company. Stock payment cannot be made if the stock is not timely issued, an event of default has occurred, an exemption from registration of the resale of shares of Common Stock to be issued in payment of the Monthly Amount is not available to the Holder, or if the amount of Common Stock that would be issued in satisfaction of the Monthly Amount exceeds for the Holder and Other Holders, in the aggregate, more than 33% of the aggregate daily trading volume of the Common Stock for the seven trading days preceding such Repayment Date, as reported by Bloomberg L.P. for the Principal Market. The Company may use the proceeds for lease payments, offering expenses and other designated purposes.

On August 27, 2008 the Company entered into a modification agreement with the holders of the May 2007 Senior Unsecured Convertible Promissory Notes (“May Notes”). The modification agreement increased the interest rate on the May Notes to 12%. The modification agreement also reduced the fixed conversion price to $0.05 and reduced the exercise price on the detachable common stock purchase warrants issued in connection with the May Notes to $0.05 per share. The Company was granted an exemption from making any of the monthly payments in connection with the May Notes in cash until February 2009. The Company may elect to make repayments of the May Notes in cash at 110% of the principal amount due and 100% of the other amounts then due or by the issuance of common stock of the Company. The conversion price for the monthly payments is the lesser of the fixed conversion price of $0.05 per share or 80% of the average of the closing bid prices of the common stock for the five trading days prior to the monthly payment date.

The Company granted a security interest to the holders of the August Notes as well as the holders of the May Notes to all now owned and hereafter acquired right, title and interest of the Company in, to and in respect of all: Accounts, interests in goods represented by Accounts, returned, reclaimed or repossessed goods with respect thereto and rights as an unpaid vendor; contract rights; Chattel Paper; investment property; General Intangibles, Documents, Instruments, letters of credit, bankers’ acceptances or guaranties, cash moneys, deposits; securities, bank accounts, deposit accounts, credits and other property now or hereafter owned or held in any capacity by the Company, as well as agreements or property securing or relating to any of the items referred to above.

In August 2008, the Company subscribed to purchase 527,500 shares of the common stock in Mayo Gold Explorations, Ltd for $26,375. The common stock certificate is not issued yet.

LIBERTY STAR URANIUM & METALS CORP.
(FORMERLY LIBERTY STAR GOLD CORP.)
(AN EXPLORATION STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) - continued

The Company is in the exploration stage, has incurred losses from operations, and requires additional funds for further exploratory activity prior to attaining a revenue generating status. There are no assurances that a commercially viable mineral deposit exists on any of our properties. In addition, the Company may not find sufficient ore reserves to be commercially mined. As such, the Company's auditors have expressed an uncertainty about the Company's ability to continue as a going concern in their opinion attached to our audited financial statements for the fiscal year ended January 31, 2008.

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

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

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

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

The following Management’s Discussion and Analysis is intended to help the reader understand the results of operations and financial condition of Liberty Star Uranium & Metals Corp. Management’s Discussion and Analysis is provided as a supplement to, and should be read in conjunction with, our condensed consolidated financial statements and the accompanying notes to the condensed consolidated financial statements.

Liberty Star Uranium & Metals Corp. (the “Company” or “We”) is in the acquisition and exploration of mineral properties business. Big Chunk Corp. (“Big Chunk”) is our wholly owned subsidiary and is engaged in the acquisition and exploration of mineral properties business in the State of Alaska. Redwall Drilling Inc. (“Redwall”) is our wholly owned subsidiary and is a drilling contractor. We are an exploration stage company, as we have not generated revenues from operations. The Company’s significant projects are:

North Pipes Super Project (“NPSP”): Located in Northern Arizona on the Arizona Strip, we plan to ascertain whether the North Pipes Super Project claims possess commercially viable deposits of uranium. We have approximately 300 potential breccia pipe targets. We have not identified any ore reserves to date.

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

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

On September 11, 2008, we announced that we and XState Resources have agreed that XState will maintain a 50% interest in three uranium exploration targets at North Pipes. The three areas can be chosen from all the targets over which exploration has been conducted by the joint venture in the last 18 months.

Both parties agree to enter into a formal 50/50 contributing joint venture in relation to the three targets chosen by XState. The previous "earn-in" agreement is terminated. The Company retains former JV funds to complete minor rehabilitation on exploration sites and conclude administrative tasks.

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

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

Material Changes in Financial Condition from January 31, 2008 to July 31, 2008

We had cash and cash equivalents in the amount of $385,392 as of July 31, 2008 compared to $1,265,187 as of January 31, 2008. We had negative working capital of $(1,434,724) as of July 31, 2008 compared to $(505,662) as of January 31, 2008. The reduction in our cash and working capital balances resulted from operating expenses incurred, repayments on the Unsecured Convertible Promissory Notes, and no cash inflows from financing activities. During the six months ended July 31, 2008 we paid approximately $400,000 cash and issued 6,306,269 shares of our common stock to the holders of the Unsecured Convertible Promissory Notes for the monthly payment of principal and accrued interest. During the six months ended July 31, 2008 we paid approximately $733,000 in operating expenses, purchased equipment costing approximately $75,000 and make approximately $56,000 in debt service payments on debt obtained to purchase equipment in prior years.

We will require additional funds to implement our exploration operations. These funds may be raised through equity financing, debt financing, or other sources, which may result in further dilution in the equity ownership of our shares. The Unsecured Convertible Promissory Notes entered into in May 2007 contained restrictions on raising new capital from the sale of registered stock to other investors. We are also limited to raising up to $7,000,000 in private placement funds during the 2 year term of the Unsecured Convertible Promissory Notes. These restrictions may make it difficult for us to raise the cash required to proceed with our planned exploration activities.

We had a net loss of $(2,100,575) for the six months ended July 31, 2008 compared to a net loss of $(2,138,895) for the six months ended July 31, 2007 resulting in a decrease in net loss of $38,320. Our results of operations can vary greatly from period to period depending on the type and location of exploration activities being performed. The decrease in net loss was largely due to these factors:

The condensed consolidated financial statements of Liberty Star Uranium & Metals Corp. (formerly Liberty Star Gold Corp.) have been prepared in conformity with accounting principles generally accepted in the United States of America. Our significant accounting policies are described in Note 3 to the condensed consolidated financial statements included in Item 1 in this Form 10-Q. The critical accounting policies adopted by our company are as follows:

Since we have not generated any revenue, we have negative cash flows from operations, and negative working capital we have included a reference to our ability to continue as a going concern in connection with our consolidated financial statements for the period ended January 31, 2008. Our total stockholders’ equity at July 31, 2008 was $(237,249). All exploration costs are expensed as incurred.

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

The Company accounts for costs incurred to acquire, maintain and explore mineral properties as charged to expense in the period incurred until the time that a proven mineral resource is established at which point development of the mineral property would be capitalized. Currently, the company does not have any proven mineral resources on any of its mineral properties.

The Company accounts for convertible promissory notes in accordance with Statement of Financial Accounting Standards No. 150 (“SFAS 150”). The Company reviewed the convertible promissory notes and the related subscription agreement to determine the appropriate reporting within the financial statements. The notes are reported as liabilities stated at fair value. The Company determined that reporting the notes as equity would not be appropriate as the conversion of the notes into common stock was not guaranteed. No gain or loss is reported when the notes are converted into shares of the Company’s common stock in accordance with the note’s original terms.

As required by Rule 13a-15 under the Exchange Act, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures at July 31, 2008, which is the end of the period covered by this report. This evaluation was carried out by our principal executive officer and principal financial officer, Mr. James Briscoe. Based on this evaluation, Mr. Briscoe has concluded that the design and operation of our disclosure controls and procedures are effective as at the end of the period covered by this report. There were no changes in our internal control over financial reporting, other than the change discussed below, or in other factors that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting in our most recent fiscal quarter.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by our company in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and

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

During the quarter ended July 31, 2008 there were no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting other than the resignation of our CFO, Mr. Jon Young effective July 31, 2008. The CFO duties have been taken on by our CEO, Mr. Jim Briscoe on a temporary basis.

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder are an adverse party or has a material interest adverse to us.

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

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

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

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

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

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

Various permits from government bodies are required for drilling operations to be conducted; no assurance can be given that such permits will be received. Environmental and other legal standards imposed by federal, state, or local authorities may be changed

and any such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have material adverse effects on our business. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons. Any laws, regulations or policies of any government body or regulatory agency may be changed, applied or interpreted in a manner which will alter and negatively affect our ability to carry on our business.

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

We have not found any mineral reserves on our claims and there can be no assurance that any of our mineral claims contain commercial quantities of any minerals. Even if we identify commercial quantities of minerals in any of our claims, there can be no assurance that we will be able to exploit the reserves or, if we are able to exploit them, that we will do so on a profitable basis.

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

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

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

We have a limited operating history and must be considered in the exploration stage. Our company's operations will be subject to all the risks inherent in the establishment of an exploration stage enterprise and the uncertainties arising from the absence of a significant operating history. Potential investors should be aware of the difficulties normally encountered by mineral exploration companies and the high rate of failure of such enterprises, especially those with a limited operating history. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineral deposits. Problems such as unusual or unexpected formations of rock or land and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claim and acquire new claims for new exploration or cease operations. The acquisition of additional claims will be dependent upon us possessing capital resources at the time in order to purchase such claims. If no funding is available, we may be forced to abandon our operations. No assurance can be given that we will ever operate on a profitable basis.

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

We had cash in the amount of $385,392 and negative working capital of $(1,434,724) as of July 31, 2008. We currently do not generate revenues from our operations. Our business plan calls for substantial investment and cost in connection with the acquisition and exploration of our mineral properties currently under lease and option. Any direct acquisition of any of the claims under lease or option is subject to our ability to obtain the financing necessary for us to fund and carry out exploration programs on the subject properties. The requirements are substantial. We do not currently have any arrangements for financing in addition to the senior unsecured two year convertible promissory notes (“Unsecured Convertible Promissory Notes”), further described in the notes to the condensed consolidated financial statements included in this form, and we can provide no assurance to investors that we will be able to find such financing if required. Obtaining additional financing would be subject to a number of factors, including market prices for minerals, investor acceptance of our properties, contractual restrictions on our ability to enter into further financing arrangements, and investor sentiment. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us and our business could fail.

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

We have not earned any revenues as of the date of this filing and have never been profitable. We do not have an interest in any revenue generating properties. We were incorporated on August 20, 2001 and took over our current business on February 5, 2004. To date we have been involved primarily in organizational activities and limited exploration activities. We will incur substantial operating and exploration expenditures without realizing any revenues. We therefore expect to incur significant losses into the foreseeable future. We have limited operating history upon which an evaluation of our future success or failure can be made. Our net loss from inception to July 31, 2008 is $(34,219,049). We recognize that if we are unable to generate significant revenues from our activities, we will not be able to earn profits or continue operations. Based upon current plans, we also expect to incur significant operating losses in the future. We cannot guarantee that we will be successful in raising capital to fund these operating losses or generate revenues in the future. We can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations. If we are unsuccessful in addressing these risks, our business will most likely fail and our investors could lose their investment.

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

Our independent registered public accounting firm, Semple, Marchal & Cooper, LLP, state in their audit report attached to our audited financial statements for the fiscal year ended January 31, 2008 that since we are an exploration stage company, have no established source of revenue and are dependent on our ability to raise capital from shareholders or other sources to sustain operations, there is a substantial doubt that we will be able to continue as a going concern.

Inability of our Secretary to devote sufficient time to the operation of the business may limit our Company's success.

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

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

Investors’ interests in our company will be diluted and investors may suffer dilution in their net book value per share when we issue additional shares. Our constating documents authorize the issuance of up to 200,000,000 shares of common stock with a par value of $0.001. As of July 31, 2008, there were 49,667,674 of our common shares issued and outstanding. We anticipate that all or at least some of our future funding will be in the form of equity financing from the sale of our common stock. If we do sell more common stock, investors’ investment in our company will likely be diluted. Dilution is the difference between what you pay for your stock and the net tangible book value per share immediately after the additional shares are sold by us. If dilution occurs, any investment in our company’s common stock could seriously decline in value.

Dilution will likely occur because of the Unsecured Convertible Promissory Notes and related common share purchase warrants that we issued on May 11, 2007. First, the entire amount of money owed under the Unsecured Convertible Promissory Notes for a total of $3,043,169 plus 12% interest per year, may be converted into shares of our common stock at a price that is the lesser of $0.05 per share or 80% of the average closing bid price for the five trading dates prior to the repayment date. The Unsecured Convertible Promissory Notes mature on May 11, 2009. Second, the 6,769,228 common share purchase warrants that we issued to the holders of the Unsecured Convertible Promissory Notes on May 11, 2007 may be exercised at $0.05 per share until they expire on May 11, 2012. Third, the 338,461 common share purchase warrants that we issued to the broker of the Unsecured Convertible Promissory Notes as a broker fee on May 11, 2007 may be exercised at $0.05 per share until they expire on May 11, 2012. Because additional common shares will be issued as a result of some of or all of these factors, there likely will be significant dilution of investment in our company. This would cause a reduction in the proportionate ownership and voting power of all other shareholders and may result in a change in our control.

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

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

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

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

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

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

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

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

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

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

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

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

ability of brokers to sell our shares of common stock and may affect the secondary market for our shares of common stock. These rules could also hamper our ability to raise funds in the primary market for our shares of common stock.

During the year ended January 31, 2008, we issued 1,718,799 shares to Cornell Capital Partners pursuant to the SEDA in exchange for proceeds of $1,074,417, net of fees of $56,500. The units were issued to an accredited investor pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933.

On May 2, 2007 we issued 50,000 shares to Equititrend Advisors LLC for the performance of public and investor relations services as an independent contractor. The contract with Equititrend Advisors LLC was terminated on July 27, 2007. The shares were issued to an accredited investor pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act.

We issued 40,000 common shares to Friedland Investment Events LLC on August 27, 2007 pursuant to the public relations agreement the Company entered into in June 2007. The shares were issued to an accredited investor pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act.

We issued 12,000 shares of restricted stock on August 27, 2007 to LDV Corporation (“LDV”) to arrange and conduct a meeting with brokers and/or accredited investors to increase investor awareness of the Company. The shares were issued to an accredited investor pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act.

We issued 10,000 common shares to SCIA National Small Cap Syndicate’s designated agent Cherry Kau on August 27, 2007 pursuant to the agreement with SCIA for attendance as a presenter at a capital conference hosted by SCIA. The shares were issued to an accredited investor pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act.

On May 11, 2007, we issued senior unsecured convertible two year promissory notes (“Unsecured Convertible Promissory Notes” or “May Notes”) for gross proceeds of $4,400,000 in a private placement of its securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the Securities Act of 1933. The net proceeds received after placement agent fee, due diligence fee and legal fees was $4,010,238.

On May 11, 2007 we also issued 338,461 whole share purchase warrants to Hunter Wise Securities as a broker fee for the sale of the Unsecured Convertible Promissory Notes. The warrants have an exercise price of $0.50 and a life of 5 years. The exercise price may be adjusted if the Company issues other shares, warrants or stock options before the expiration of the warrants at a price less than $0.45 per share.

On May 11, 2007 we also issued 6,769,228 whole share purchase warrants to the holders of the Unsecured Convertible Promissory Notes. The warrants have an exercise price of $0.50 and a life of 5 years. The exercise price may be adjusted if the Company issues other shares, warrants or stock options before the expiration of the warrants at a price less than $0.45 per share.

In October 2007 a note holder converted $45,000 of the principal balance of their Unsecured Convertible Promissory Note and $8,333 of unpaid accrued interest at a conversion price of $0.65 per share pursuant to the original terms of the notes. The Company issued 82,050 shares of common stock related to this conversion. The debt converted was allocated $4,678 of deferred finance charges and $32,692 of discounts, the unamortized portion of $29,585 was recorded as interest expense.

The Unsecured Convertible Promissory Notes bear interest at 8%. Repayment of the Unsecured Convertible Promissory Notes begins in February 2008 with sixteen monthly principal payments of $259,375 plus accrued unpaid interest. Under the original terms of the note, holders of the Unsecured Convertible Promissory Notes could elect to convert all or a portion of their note balance before the scheduled repayment dates at a fixed rate of $0.65 per share. We may elect to make repayments of the Unsecured Convertible Promissory Notes in cash or by the issuance of common stock of the Company. The conversion price for the monthly payments will be the lesser of the fixed conversion price of $0.65 per share or 85% of the volume weighted average price for 10 days preceeding the repayment date, but not less than $0.45 per share. Stock payment cannot be made if the amount of shares to be issued would exceed 33% of the aggregate daily trading volume for 7 trading days preceding the repayment date, unless

waived by the holders of the Unsecured Convertible Promissory Notes. Stock payment cannot be made if the holders of the Unsecured Convertible Promissory Notes own more than 4.99% of the then outstanding common stock of the Company.

In February 2008, we entered into the first modification agreement with the holders of the Unsecured Convertible Promissory Notes. The modification agreement is effective from February 2008 through April 2008. The fixed conversion price was reduced from $0.65 to $0.50. The calculation of the maximum allowable shares to be issued for the February, March and April monthly payments was increased to 200% of the aggregate daily trading volume for the 15 trading days preceding the Repayment Date multiplied by the VWAP for the 7 trading days preceding the repayment date. If the monthly payment amount cannot be paid in full with the maximum allowable shares then an excess amount results. The note holders may elect to receive cash, additional stock, or defer the excess amount. For deferred excess amounts, the conversion price shall be the lowest conversion price that could be calculated for any repayment date until such deferred amount is actually paid. We issued 30,000 shares of common stock on April 8, 2008 to holders of the Unsecured Convertible Promissory Notes as consideration for entering into the modification of the Unsecured Convertible Promissory Notes in February 2008. We recorded debt conversion expense of $9,000 related to this modification agreement.

On May 11, 2008, we entered into the second modification agreement with the holders of the Unsecured Convertible Promissory Notes. The exercise price of the detachable stock purchase warrants issued in connection with the Unsecured Convertible Promissory Notes was reduced from $0.75 per share to $0.50 per share. The second modification agreement changes the payment of the monthly amount in cash or common stock for May 2008 through June 2008. The revised formula allows payment in cash or common stock at a conversion price of the lesser of $0.50 per share or 75% of the volume weighted average price (“VWAP”) for the ten trading days preceding the Repayment Date. The volume trading restrictions used to calculate the maximum allowable shares to be issued was removed for the May and June monthly payments. The note holders may elect to defer all or a portion of the monthly payments until demand for such payment is made by the holders. For deferred amounts, the conversion price shall be the lowest conversion price that could be calculated for any repayment date until such deferred amount is actually paid. On July 29, 2008, we entered into the third modification agreement with the holders of the Unsecured Convertible Promissory Notes. The third modification agreement extended the terms of the second modification agreement through the July 2008 monthly payment. During the six months ended July 31, 2008 we recorded debt conversion expense of $58,474 related to the additional 10% discount on the conversion price provided to the note holders as an inducement to convert the note into shares of common stock.

On August 28, 2008 we entered into a modification agreement with the holders of the May 2007 Senior Unsecured Convertible Promissory Notes (“May Notes”). The modification agreement increased the interest rate on the May Notes to 12%. The modification agreement also reduced the fixed conversion price to $0.05 and reduced the exercise price on the detachable common stock purchase warrants issued in connection with the May Notes to $0.05 per share. We were granted an exemption from making any of the monthly payments in connection with the May Notes in cash until February 2009. We may elect to make repayments of the May Notes in cash at 110% of the principal amount due and 100% of the other amounts then due or by the issuance of common stock of the Company. The conversion price for the monthly payments is the lesser of the fixed conversion price of $0.05 per share or 80% of the average of the closing bid prices of the common stock for the five trading days prior to the monthly payment date.

During the six months ended July 31, 2008 we issued 6,306,269 shares of common stock and $407,349 of cash for the monthly payments on the Unsecured Convertible Promissory Notes. At July 31, 2008 the note holders have a balance of $449,419 of monthly payment amounts that have been deferred.

We issued 10,881,688 shares of common stock for the August monthly payment and conversion of deferred amounts on the Unsecured Convertible Promissory Notes.

We were required to file and have declared effective a registration statement with the SEC within 140 days of the sale of the Unsecured Convertible Promissory Notes. We filed the registration statement and it was declared effective on September 28, 2007. The registration statement has not been amended to reflect the three modifications to the Unsecured Convertible Promissory Notes. We are required to maintain the effectiveness of the registration statement for up to two years, or until all shares have been traded by the holders of the Unsecured Convertible Promissory Notes.

On August 27, 2008 we issued Secured Convertible Promissory one year notes (“August Notes”) for gross proceeds of $414,184.29 to the holders of the Senior Unsecured Convertible Promissory Notes issued in May 2007 (“May Notes”) in a private placement of its securities to institutional investors pursuant to exemptions from registration set out in Rule 506 of Regulation D under the

Securities Act of 1933. The August Notes bear interest at 12%. Repayment of the August Notes begins in February 2009 with seven monthly principal payments of $59,146 plus accrued unpaid interest. The entire balance of the August Notes and May Notes becomes due immediately upon our receipt of net proceeds from a sale of debt or equity with a gross amount of up to $3,000,000. The holders of the August Notes may elect to convert all or a portion of their note balance before the scheduled repayment dates at a fixed rate of $0.05 per share. We may elect to make repayments of the August Notes in cash at 110% of the principal amount due and 100% of the other amounts then due or by the issuance of common stock of the Company. The conversion price for the monthly payments is the lesser of the fixed conversion price of $0.05 per share or 80% of the average of the closing bid prices of the common stock for the five trading days prior to the monthly payment date. Stock payment cannot be made if the holders of the August Notes own more than 4.99% of the then outstanding common stock of the Company. Stock payment cannot be made if the stock is not timely issued, an event of default has occurred, an exemption from registration of the resale of shares of Common Stock to be issued in payment of the Monthly Amount is not available to the Holder, or if the amount of Common Stock that would be issued in satisfaction of the Monthly Amount exceeds for the Holder and Other Holders, in the aggregate, more than 33% of the aggregate daily trading volume of the Common Stock for the seven trading days preceding such Repayment Date, as reported by Bloomberg L.P. for the Principal Market. We may use the proceeds for lease payments, offering expenses and other designated purposes.

We granted a security interest to the holders of the August Notes as well as the holders of the May Notes to all now owned and hereafter acquired right, title and interest of the Company in, to and in respect of all: Accounts, interests in goods represented by Accounts, returned, reclaimed or repossessed goods with respect thereto and rights as an unpaid vendor; contract rights; Chattel Paper; investment property; General Intangibles, Documents, Instruments, letters of credit, bankers’ acceptances or guaranties, cash moneys, deposits; securities, bank accounts, deposit accounts, credits and other property now or hereafter owned or held in any capacity by the Company, as well as agreements or property securing or relating to any of the items referred to above.

All proceeds received have been and will be used for exploration of our mineral properties and working capital.

Exhibit Number	Description of Exhibit
3.1	Articles of Incorporation⁽¹⁾
3.2	Bylaws⁽²⁾
3.3	Certificate of Change to Authorized Capital⁽³⁾
3.4	Articles of Merger⁽³⁾
10.10	Registration Rights Agreement dated as of March 8, 2006, by and between Liberty Star and Cornell Capital Partners LP⁽⁴⁾
10.11	Standby Equity Distribution Agreement dated as of March 8, 2006, by and between Liberty Star and Cornell Capital Partners, LP⁽⁴⁾
10.12	Placement Agent Agreement dated as of March 8, 2006, by and between Liberty Star and Newbridge Securities Corporation⁽⁴⁾

Exhibit Number	Description of Exhibit
10.13	Joint Venture Agreement dated October 6, 2006, by and between Liberty Star and Xstate Resources Limited ⁽⁵⁾
10.14	Subcontracting Agreement dated October 24, 2006, by and between Liberty Star and Xstate Resources Limited ⁽⁶⁾
10.15	Form of Securities Purchase Agreement for May 11, 2007 Senior Unsecured Convertible Promissory Notes ⁽⁷⁾
10.16	Form of Convertible Promissory Note for May 11, 2007 Senior Unsecured Convertible Promissory Notes ⁽⁷⁾
10.17	Form of Common Stock Purchase Warrant for May 11, 2007 Senior Unsecured Convertible Promissory Notes ⁽⁷⁾
10.18	List of Subscribers for May 11, 2007 Senior Unsecured Convertible Promissory Notes ⁽⁷⁾
10.19	Form of First Modification and Amendment Agreement to the Senior Unsecured Convertible Promissory Notes on February 11, 2008 ⁽⁸⁾
10.20	Form of Second Modification and Amendment Agreement to the Senior Unsecured Convertible Promissory Notes on May 11, 2008 ⁽⁹⁾
10.21	Form of Third Modification and Amendment Agreement to the Senior Unsecured Convertible Promissory Notes ⁽¹⁰⁾
10.22	Form of Subscription Agreement for August 28, 2008 Secured Convertible Promissory Notes ⁽¹¹⁾
10.23	Form of Secured Convertible Promissory Notes dated August 28, 2008 ⁽¹¹⁾
10.24	Form of Security Agreement for August 28, 2008 Secured Convertible Promissory Notes ⁽¹¹⁾
10.25	Form of Third Modification and Amendment Agreement to the Senior Unsecured Convertible Promissory Notes ⁽¹¹⁾
14.1	Code of Ethics⁽³⁾
21.1	Subsidiaries: Big Chunk Corp.
31.1*	Section 302 Certification under Sarbanes-Oxley Act of 2002 of James Briscoe
32.1*	Section 906 Certification under Sarbanes-Oxley Act of 2002 of James Briscoe

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

James Briscoe, President,
Chairman,
Chief Executive Officer,
Chief Financial Officer, and
Director
(Principal Executive Officer) and (Principal Financial Officer)

Nevada	90-0175540
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

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

		Page
	PART I

Item 1.	Condensed Consolidated Financial Statements	3
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	23

	PART II

Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	30
Item 4.	Submission of Matters to a Vote of Security Holders	30
Item 5.	Other Information	30
Item 6.	Exhibits	30
	Signatures	32

ASSETS

		July 31, 2008			January 31, 2008
		(Unaudited)			(Audited)
Current:
Cash and cash equivalents	$	385,392		$	1,265,187
Prepaid expenses and supplies		220,583			183,525
Due from related parties		2,830			277,665
Deposits		6,171			6,707
Other current assets		15,536			-
Total current assets		630,512			1,733,084

Property and equipment, net		1,038,542			1,107,275
Certificates of deposit		265,515			260,906
Deposits		-			10,000
Investment in Elle Venture		-			-
Deferred financing charges, net		171,683			279,656

Total assets	$	2,106,252		$	3,390,921

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current:
Current portion of long-term debt	$	113,949		$	107,866
Current portion of capital lease obligation		-			2,760
Current portion of convertible promissory notes, net of discounts		1,849,749			1,605,022
Accounts payable and accrued liabilities		62,668			283,574
Accrued wages to related party		27,500			-
Accrued interest		11,370			239,524
Total current liabilities		2,065,236			2,238,746

Long-term debt, net of current portion		278,265			337,836
Convertible promissory notes, net of current portion and discounts		-			597,819

Total liabilities		2,343,501			3,174,401

Stockholders’ equity (deficit)
Common stock - $.001 par value; 200,000,000 shares authorized;
49,667,674 and 43,331,405 issued and outstanding		49,668			43,331
Additional paid-in capital		22,732,132			21,091,663
Deficit accumulated during the exploration stage		( 23,019,049	)		( 20,918,474	)
Total stockholders’ equity (deficit)		( 237,249	)		216,520

Total liabilities and stockholders’ equity (deficit)	$	2,106,252		$	3,390,921

										Deficit			Total
										accumulated during			stockholders’
	Common stock						Additional paid-in			the exploration			equity
	Shares			Amount			capital			stage			(deficit)
Balance, August 20, 2001 (Date of inception)	-		$	-		$	-		$	-		$	-
Common stock issued for cash	20,000,000			20,000			80,000			-			100,000
Net loss for the period from inception, August 20, 2001, to
January 31, 2004	-			-			-			( 132,602	)		( 132,602	)
Balance, January 31, 2004	20,000,000			20,000			80,000			( 132,602	)		( 32,602	)
Acquisition, February 3, 2004	17,500,000			17,500			15,907,500			-			15,925,000
Issuance of common stock private placement	1,000,000			1,000			999,000			-			1,000,000
Issuance of common stock and warrants private placement	1,600,000			1,600			1,998,400			-			2,000,000
Options issued for services	-			-			94,350			-			94,350
Return of shares	( 7,000,000	)		( 7,000	)		( 11,193,000	)		11,200,000			-
Net loss for the year ended January 31, 2005	-			-			-			( 18,392,024	)		( 18,392,024	)
Balance, January 31, 2005	33,100,000			33,100			7,886,250			( 7,324,626	)		594,724
Issuance of common stock and warrants private placement	3,886,717			3,887			5,048,845			-			5,052,732
Issuance of common stock and warrants private placement	1,970			2			( 2	)		-			-
Net loss for the year ended January 31, 2006	-			-			-			( 4,627,965	)		( 4,627,965	)
Balance, January 31, 2006	36,988,687			36,989			12,935,093			( 11,952,591	)		1,019,491
Issuance of common stock private placement	256,637			256			289,744			-			290,000
Issuance of common stock private placement	8,850			9			9,991			-			10,000
Issuance of common stock	3,696,895			3,697			2,242,298						2,245,995
Issuance of common stock for services	150,000			150			92,850						93,000
Expenses of common stock issuance	-			-			( 320,000	)		-			( 320,000	)
Options granted to consultants	-			-			610,560			-			610,560
Options granted to employees	-			-			221,783			-			221,783
Net loss for the year ended January 31 2007	-			-			-			( 3,267,948	)		( 3,267,948	)
Balance, January 31, 2007	41,101,069			41,101			16,082,319			( 15,220,539	)		902,881
Issuance of common stock	1,718,799			1,719			1,072,698			-			1,074,417
Issuance of common stock for services	112,000			112			54,428			-			54,540
Issuance of common stock for conversion of promissory note	399,537			399			259,300			-			259,699
Options granted to employees and consultants	-			-			358,646			-			358,646
Issuance of common stock purchase warrants	-			-			1,421,538			-			1,421,538
Beneficial conversion feature of convertible promissory notes	-			-			1,842,734			-			1,842,734
Net loss for the year ended January 31, 2008	-			-			-			( 5,697,935	)		( 5,697,935	)
Balance, January 31, 2008	43,331,405			43,331			21,091,663			( 20,918,474	)		216,520
Issuance of common stock for conversion of promissory note	6,306,269			6,307			1,054,573			-			1,060,880
Issuance of common stock for inducement to convert
promissory note	30,000			30			8,970			-			9,000
Reduction of conversion price for inducement to convert
promissory note	-			-			58,474			-			58,474
Stock based compensation	-			-			518,452			-			518,452
Net loss for the six month period ended July 31, 2008	-			-			-			( 2,100,575	)		( 2,100,575	)
Balance, July 31, 2008	49,667,674		$	49,668		$	22,732,132		$	( 23,019,049	)	$	( 237,249	)

								Cumulative from
								date of inception
		For the six months			For the six months			(August 20, 2001)
		ended			ended			to
		July 31, 2008			July 31, 2007			July 31, 2008
Net change in cash and cash equivalents
Cash flows from operating activities:
Net loss	$	( 2,100,575	)	$	( 2,138,895	)	$	( 34,219,049	)
Adjustments to reconcile net loss to net cash from operating
activities:
Depreciation		143,433			57,266			395,723
Amortization of deferred financing charges		107,973			47,651			286,846
Amortization of discount on convertible promissory notes		753,740			332,977			2,003,161
Mineral claim costs		-			-			343,085
Impairment loss		-			-			15,907,500
Loss (gain) on sale of fixed asset		-			-			406
Share based compensation		518,452			151,069			1,709,441
Share based payments		307,749			28,500			464,988
Changes in assets and liabilities:
Prepaid expenses and supplies		( 37,058	)		( 9,895	)		( 132,733	)
Other current assets		(15,536	)		6,230			( 23,411	)
Deposits		10,536			( 9,500	)		( 6,171	)
Certificates of deposit		-			( 3,000	)		( 56,109	)
Accounts payable and accrued expenses		( 220,906	)		86,640			56,653
Accrued wages related party		27,500			-			27,500
Accrued interest		( 228,154	)		78,115			11,370
Net cash used in operating activities		( 732,846	)		( 1,372,842	)		( 13,230,800	)

Cash flows from investing activities:
Proceeds from the sale of fixed asset		-			-			8,005
Purchase of certificate of deposit		( 4,609	)		-			( 209,406	)
Purchase of equipment		( 74,700	)		( 166,925	)		( 1,098,950	)
Net cash used in investing activities		( 79,309	)		( 166,925	)		( 1,300,351	)

Cash flows from financing activities:
Principal activity on long-term debt		( 53,488	)		( 6,074	)		( 104,339	)
Principal activity on capital lease obligation		( 2,760	)		( 13,259	)		( 39,298	)
Principal activity on convertible promissory notes		( 286,227	)		-			( 286,227	)
Net (advances) repayments from related parties		274,835			(14,345	)		( 2,830	)
Proceeds from the issuance of common stock, net of expenses		-			1,074,417			11,140,074
Proceeds from the sale of convertible promissory notes		-			4,010,238			4,010,238
Proceeds from long-term debt		-			-			198,925
Net cash provided by (used in) financing activities		( 67,640	)		5,050,977			14,916,543

Net increase (decrease) in cash and cash equivalents for period		( 879,795	)		3,511,210			385,392

Cash and cash equivalents, beginning of period		1,265,187			676,309			-

Cash and cash equivalents, end of period	$	385,392		$	4,187,519		$	385,392

Interest paid during the period	$	129,303		$	2,119		$	161,562

		July 31, 2008			January 31, 2008
Current assets	$	870,634		$	2,054,884
Other assets		105,091			102,858
Total assets	$	975,725		$	2,157,742
Current liabilities	$	2,830		$	277,665
Total liabilities		2,830			277,665
Partners’ capital		972,895			1,880,077
Total liabilities and partners’ capital	$	975,725		$	2,157,742
Net loss from inception (December 15, 2006) to the period ended	$	(1,627,105	)	$	(1,019,923	)

		July 31, 2008			January 31, 2008
Geology equipment	$	418,802		$	418,802
Drilling equipment		538,400			463,700
Vehicles and transportation equipment		355,950			355,950
Office furniture and equipment		93,375			93,375
Leasehold improvements		24,302			24,302
		1,430,829			1,356,129
Less accumulated depreciation and amortization		(392,287	)		(248,854	)

	$	1,038,542		$	1,107,275

For the twelve months ended July 31, 2009		2,593,750
Plus deferred amounts due on demand		449,419
Less discounts for warrants and beneficial conversion feature		( 1,193,420	)

Current portion of convertible promissory notes	$	1,849,749

	Number of whole share			Weighted average
	purchase warrants			exercise price per share
Outstanding, January 31, 2007	1,944,342		$	1.50

Issued	7,107,689			0.75
Forfeited or expired	(984	)		1.50

Outstanding, January 31, 2008	9,051,047		$	0.91

Issued	-			-

Outstanding, July 31, 2008	9,051,047		$	0.735
Exercisable, July 31, 2008	9,051,047		$	0.735

		Expected dividend
Grant date	Expected volatility	yield	Expected term	Risk-free interest rate
May 21, 2008	90%	0%	5 years	3.09%

		Three months		Three months		Six months	Six months		From inception
		ended		ended July 31,		ended	ended July 31,		(August 20, 2001) to
		July 31, 2008		2007		July 31, 2008	2007		July 31, 2008
Geological and
geophysical costs	$	207,500	$	51,621	$	255,739	51,621	$	1,115,511
Salaries and benefits		185,450		44,720		226,463	99,448		637,134
Public relations		28,125		-		36,250	-		51,146

	$	421,075		96,341	$	518,452	151,069	$	1,803,791

1)	A decrease in net loss from operations of $390,675 is largely due to three factors:

	a.	Reduction of geological and geophysical exploration costs. Our ability to perform exploration activities during the six months ended July 31, 2008 was limited due to the lack of cash available, while last year we had the cash resources available to perform exploratory drilling at our North Pipes project. Also during the second quarter of 2007 a one- time geochemical sampling campaign was performed at the North Pipes project, no such project occurred in 2008. We spent approximately $675,000 less on exploration activities this year.

	b.	In May 2008 we granted stock options to employees and consultants and in June 2008 we granted full vesting of those options, as a result we recorded $347,500 in shares based compensation expense. This additional expense was not incurred last year because the granting of stock options is not performed on a routine basis and option grants do not typically vest so quickly.

	c.	The remaining reduction in net loss from operations is due to a reduction in staff size and reduction in overall spending that began in 2008.

2)	An increase in other expenses of $352,355 is mostly due to three factors:

	a.	The Unsecured Convertible Promissory Notes bear interest at 8% and have discounts for beneficial conversion feature and detachable stock purchase warrants that are being amortized to interest expense. The Unsecured Convertible Promissory Notes were not issued until May 2007 and therefore, only 2.5 months of interest costs for these items were recognized in the July 31, 2007 statement of operations as opposed to 6 months of interest and amortization recognized in the July 31, 2008 statement of operations. We also incurred expenses to modify the Unsecured Convertible Promissory Notes to induce the holders to convert their notes to shares of our common stock as repayment of the note in cash represented a financial strain. The inducements were effected by offering reductions in the conversion price and issuing additional shares of common stock. Both of these items represent approximately $615,000 increase in other expenses.

	b.	Interest income was $35,000 less than last year due to the reduction in cash balance that could earn interest this year.

⁽¹⁾	Filed as an exhibit to our Registration Statement on Form SB-2, filed with the SEC on May 14, 2002.

⁽²⁾	Files as an exhibit to our Quarterly Repor on Form 10-QSB, filed with the SEC on December 14, 2007.

⁽³⁾	Filed as an exhibit to our Annual Report on Form 10-KSB, filed with the SEC on March 31, 2004.

⁽⁴⁾	Filed as an exhibit to our Registration Statement on Form SB-2, filed with the SEC on March 23, 2006.

⁽⁵⁾	Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on October 16, 2006.

⁽⁶⁾	Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on October 27, 2006.

⁽⁷⁾	Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on May 15, 2007.

⁽⁸⁾	Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on April 22, 2008.

⁽⁹⁾	Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on May 23, 2008.

⁽¹⁰⁾	Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on July 31, 2008.

⁽¹¹⁾	Filed as an exhibit to our Current Report on Form 8-K, filed with the SEC on September 3, 2008.

*	Filed herewith.