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<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Titan
Iron Ore Corp. (the Company) (formerly Digital Yearbook, Inc.) was incorporated in the State of Nevada on June 5, 2007.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Effective
June 15, 2011, the Company completed a merger with its subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated
solely to effect a change in our name from “Digital Yearbook Inc.” to “Titan Iron Ore Corp.” effective
becoming an exploration stage company. The Company’s principal business includes the acquisition, and exploration of mineral
properties.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Also
effective June 15, 2011, the Company effected a 37 to one forward stock split of our authorized and issued and outstanding common
stock.  As a result, 5,151,000 shares of common stock outstanding increased to 190,587,000 shares of common stock. Subsequently,
on June 20, 2011, the Company issued 2,100,000 common shares pursuant to a private placement unit offering, increasing the number
of shares of common stock outstanding to 192,687,000. Effective June 30, 2011 and in connection with the acquisition of an option
to purchase a mineral property, certain shareholders surrendered 142,950,000 common shares of the Company. As a result of the
Company’s cancellation of these shares, the Company’s outstanding shares of common stock decreased to 49,737,000.
During the nine-months ended September 30, 2012 the Company issued 1,334,000 shares in a private placement and issued 550,000
shares for services received, brining the total outstanding shares to 51,621,000.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which implies that
the Company would continue to realize its assets and discharge its liabilities in the normal course of business. The Company has
never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. As at September
30, 2012 the Company has accumulated losses of $3,901,143 since inception and its operations continue to be funded primarily from
sales of its stock. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The
ability of the Company to continue as a going concern, including completion of the acquisition, exploration and development of
its mineral properties is dependent on the Company’s ability to obtain the necessary financing from sales of its stock financings.
The financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the Company be unable to continue as a going concern.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Titan Iron Ore Corp. (the Company) (formerly Digital Yearbook,
Inc.) was incorporated in the State of Nevada on June 5, 2007. At its inception, the Company was engaged in developing and offering
software products for the creation of interactive digital yearbook software for high schools.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective June 15, 2011, the Company completed a merger with
its subsidiary, Titan Iron Ore Corp., a Nevada corporation, which was incorporated solely to effect a change in our name from “Digital
Yearbook Inc.” to “Titan Iron Ore Corp.” effective becoming an exploration stage company. The Company’s
principal business includes the acquisition, and exploration of mineral properties.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Also effective June 15, 2011, the Company effected a 37 to
one forward stock split of our authorized and issued and outstanding common stock.  As a result, 5,151,000 shares of
common stock outstanding increased to 190,587,000 shares of common stock. Subsequently, on June 20, 2011, the Company issued 2,100,000
common shares pursuant to a private placement unit offering, increasing the number of shares of common stock outstanding to 192,687,000.
Effective June 30, 2011 and in connection with the acquisition of an option to purchase a mineral property, certain shareholders
surrendered 142,950,000 common shares of the Company. As a result of the Company’s cancellation of these shares, the Company’s
outstanding shares of common stock decreased to 49,737,000.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The accompanying financial statements have been prepared
assuming the Company will continue as a going concern, which implies that the Company would continue to realize its assets and
discharge its liabilities in the normal course of business. The Company has never paid any dividends and is unlikely to pay dividends
or generate earnings in the immediate or foreseeable future. As at December 31, 2011, the Company has accumulated losses of $1,030,196
since inception and its operations continue to be funded primarily from sales of its stock. These factors raise substantial doubt
about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern, including
completion of the acquisition, exploration and development of its mineral properties is dependent on the Company’s ability
to obtain the necessary financing from sales of its stock financings. The financial statements do not include any adjustments to
the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should
the Company be unable to continue as a going concern.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Basis
of Presentation</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">These
financial statements and related notes are presented in accordance with accounting principles generally accepted in the United
States, and are expressed in US dollars. The Company’s fiscal year end is December 31.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Interim
Financial Statements</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United
States for interim financial information and with the instructions for Securities and Exchange Commission (“SEC”)
Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete
financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial
statements and notes thereto for the year ended December 31, 2011, included in the Company’s Annual Report on Form 10-K
filed on April 16, 2012, with the SEC.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
interim financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments
that, in the opinion of management, are necessary to present fairly the Company’s financial position as at September 30,
2012 and the results of its operations and cash flows for the nine months ended September 30, 2012 and September 30, 2011. The
results of operations for the nine months ended September 30, 2012 are not necessarily indicative of the results to be expected
for future quarters or the full year ending December 31, 2012. </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Use
of Estimates</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
preparation of these statements in accordance with United States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions
related to useful life and recoverability of long-lived assets, deferred income tax asset valuations, asset retirement obligations,
financial instrument valuations, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical
experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are
not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from
the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future
results of operations will be affected. </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Revenue
Recognition</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Advertising
Costs</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company’s policy regarding advertising is to expense advertising when incurred.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Cash
and Cash Equivalents</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Impairment
of Long-Lived Assets</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may
not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived
assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">If
the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss
based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying amount or the fair value less costs to sell.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Stock-based
Compensation</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, which
requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made
to employees and directors, including stock options.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">ASC
718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The
Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s
stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not
limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee
stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an
expense in the statement of operations over the requisite service period.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Mineral
Property Costs</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company is in the exploration stage and has not yet realized any revenues from its planned operations. It is primarily engaged
in the acquisition and exploration of mineral properties. Mineral property exploration costs are expensed as incurred. Mineral
property acquisition costs are capitalized.  The Company assesses the carrying costs for impairment, whenever events
or changes in circumstances indicate that the carrying cost may not be recoverable under ASC 360, Property, Plant, and Equipment
at each reporting date. When it has been determined that a mineral property can be economically developed as a result of establishing
proven and probable reserves, the costs then incurred to develop such property, will be capitalized. Such costs will be amortized
using the units-of-production method over the estimated recoverable reserves. If mineral properties are subsequently abandoned
or impaired, any capitalized costs will be charged to operations.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Asset
Retirement Obligations</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company records asset retirement obligations in accordance with ASC 410-20, Asset Retirement Obligations, which addresses financial
accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement
costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition,
construction, development and normal use of the asset. ASC 410-20 requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value
of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over
the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation
is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. As at
September 30, 2012, the Company has not incurred any asset retirement obligation related to the exploration of its mineral property
option.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Comprehensive
Loss</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">ASC
220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the
consolidated financial statements.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Financial
Instruments</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">FASB
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally
accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Valuation techniques used to measure fair value, as required by ASC 820, must maximize the use of observable
inputs and minimize the use of unobservable inputs.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company’s assessment of the significance of a particular input to the fair value measurements requires judgment, and may
affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The carrying
values of cash, accounts payable, and due to related parties approximates fair values because of the short-term maturity of these
instruments. The fair value of the Company’s promissory note approximate carrying value as the underlying imputed interest
rate approximates the market rate. Unless otherwise noted, it is management’s opinion that the Company is not exposed to
significant interest, currency or credit risks arising from these financial instruments.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Basic
and Diluted Net Loss Per Share</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company computes net loss per share in accordance with ASC 260, Earnings per Share.  ASC 260 requires presentation of
both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing
net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury
stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price
for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Shares underlying these securities totaled
approximately 6,667,000 as of September 30, 2012.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Income
Taxes</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and
liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of
temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit
carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to
the amount that is believed more likely than not to be realized.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Recent
Accounting Pronouncements</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company has implemented all other new accounting pronouncements that are in effect and that may impact its financial statements
and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Basis of Presentation</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">These financial statements and related notes are presented
in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. The Company’s
fiscal year-end is December 31, 2011.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Use of Estimates</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The preparation of these statements in accordance with United
States generally accepted accounting principles requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the
reporting period. The Company regularly evaluates estimates and assumptions related to useful life and recoverability of long-lived
assets, deferred income tax asset valuations, asset retirement obligations, financial instrument valuations, and loss contingencies.
The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes
to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of
assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results
experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material
differences between the estimates and the actual results, future results of operations will be affected. </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Revenue Recognition</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recognizes revenue when products are fully delivered
or services have been provided and collection is reasonably assured.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Advertising Costs</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s policy regarding advertising is to expense
advertising when incurred.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Cash and Cash Equivalents</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company considers all highly liquid instruments purchased
with a maturity of three months or less to be cash equivalents.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Impairment of Long-Lived Assets</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company continually monitors events and changes in circumstances
that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances
are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets
will be recovered through undiscounted expected future cash flows.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">If the total of the future cash flows is less than the carrying
amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value
of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Stock-based compensation</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company records stock-based compensation in accordance
with ASC 718, <i>Compensation – Stock Based Compensation</i>, which requires the measurement and recognition of compensation
expense based on estimated fair values for all share-based awards made to employees and directors, including stock options.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC 718 requires companies to estimate the fair value of
share-based awards on the date of grant using an option-pricing model. The Company uses the Black-Scholes option pricing model
as its method in determining fair value. This model is affected by the Company’s stock price as well as assumptions regarding
a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock
price volatility over the terms of the awards, and actual and projected employee stock option exercise behaviors. The value of
the portion of the award that is ultimately expected to vest is recognized as an expense in the statement of operations over the
requisite service period.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Mineral Property Costs</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is in the exploration stage and has not yet realized
any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mineral properties. Mineral
property exploration costs are expensed as incurred. Mineral property acquisition costs are capitalized.  The Company
assesses the carrying costs for impairment, whenever events or changes in circumstances indicate that the carrying cost may not
be recoverable under ASC 360, Property, Plant, and Equipment at each reporting date. When it has been determined that a mineral
property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop
such property, will be capitalized. Such costs will be amortized using the units-of-production method over the estimated recoverable
reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Asset Retirement Obligations</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company records asset retirement obligations in accordance
with ASC 410-20, Asset Retirement Obligations, which addresses financial accounting and reporting for obligations associated with
the retirement of tangible long-lived assets and the associated retirement costs. The standard applies to legal obligations associated
with the retirement of long-lived assets that result from the acquisition, construction, development and normal use of the asset.
ASC 410-20 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which
it is incurred if a reasonable estimate of fair value can be made. The fair value of the liability is added to the carrying amount
of the associated asset and this additional carrying amount is depreciated over the life of the asset. The liability is accreted
at the end of each period through charges to operating expense. If the obligation is settled for other than the carrying amount
of the liability, the Company will recognize a gain or loss on settlement. As at December 31, 2011, the Company has not incurred
any asset retirement obligation related to the exploration of its mineral property option.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Comprehensive Loss</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC 220, Comprehensive Income establishes standards for the
reporting and display of comprehensive loss and its components in the consolidated financial statements. As at December 31, 2011
and December 31, 2010, the Company has no items that represent other comprehensive loss and, therefore, has not included a schedule
of other comprehensive loss in the financial statements.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Financial Instruments</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">FASB ASC 820, Fair Value Measurements and Disclosures, defines
fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures
about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair
value, as required by ASC 820, must maximize the use of observable inputs and minimize the use of unobservable inputs.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company’s assessment of the significance of a particular
input to the fair value measurements requires judgment, and may affect the valuation of the assets and liabilities being measured
and their placement within the fair value hierarchy. The carrying values of cash, accounts payable, and due to related parties
approximate fair values because of the short-term maturity of these instruments. Unless otherwise noted, it is management’s
opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Basic and Diluted Net Loss Per Share</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company computes net loss per share in accordance with
ASC 260, Earnings per Share.  ASC 260 requires presentation of both basic and diluted earnings per share (EPS) on the
face of the statement of operations. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator)
by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the
if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares
assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their
effect is anti-dilutive. Shares underlying these securities totaled approximately 5,000,000 as of December 31, 2011.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Income Taxes</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for income taxes using the asset and
liability method in accordance with ASC 740, Income Taxes. The asset and liability method provides that deferred tax assets and
liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and
tax bases of assets and liabilities and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are
measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The
Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Recent Accounting Pronouncements</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Comprehensive Income</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2011, ASC guidance was issued related to comprehensive
income. Under the updated guidance, an entity will have the option to present the total of comprehensive income either in a single
continued statement of comprehensive income or in two separate but consecutive statements. In addition, the update requires certain
disclosure requirements when reporting other comprehensive income. The update does not change the items reported in other comprehensive
income or when an item of other comprehensive income must be reclassified to income. The update is effective for the Company’s
fiscal year beginning January 1, 2012. The Company does not expect the updated guidance to have an impact on the balance sheets,
results of operations or cash flows.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Fair Value Accounting</u></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">In May 2011, ASC guidance was issued related to disclosures
around fair value accounting. The updated guidance clarifies different components of fair value accounting including the application
of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting
entity’s shareholders’ equity and disclosing quantitative information about the unobservable inputs used in fair value
measurements that are categorized in Level 3 of the fair value hierarchy. The update is effective for the Company’s fiscal
year beginning January 1, 2012. The Company does not expect the updated guidance to have a significant impact on the balance sheets,
results of operations or cash flows.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has implemented all other
new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are
any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results
of operations.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Strong
Creek and Iron Mountain Properties</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Effective
June 30, 2011 and in connection with the entry into an agreement (the “Acquisition Agreement”) with J2 Mining
Ventures Ltd. (“J2 Mining”) dated June 13, 2011, the Company completed the acquisition of a 100% right, title and
interest in and to a properties (Strong Creek and Iron Mountain) option agreement (the “Option Agreement”) from J2
Mining with respect to an iron ore mineral property located in Albany County, Wyoming by entering into an assignment of mineral
property option agreement with J2 Mining and Wyomex LLC (the “Assignment Agreement”), whereby the Company was assigned
the 100% right, title and interest in and the Option Agreement from J2 Mining.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Option Agreement assigned to the Company from J2 Mining on June 30, 2011, was originally entered into on May 26, 2011 between
J2 Mining and Wyomex LLC, pursuant to which Wyomex LLC (“Optionor”), granted to J2 Mining, as optionee, an exclusive
right and option to acquire 100% undivided legal and beneficial interests in and to certain unpatented lode mining claims, fee
lands, leased lands, and other interests in real property situated in Albany County, Wyoming (the “Wyoming Iron Complex”).
Pursuant to the Assignment Agreement, J2 Mining agreed to assign all its rights and interests in the property and the Option Agreement,
and transfer all of its obligations under the Option Agreement, to the Company.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
term of the option commenced on May 26, 2011 and could be extended for a maximum of six successive one-month periods, at the sole
election of the Company, through notice to Wyomex LLC and tender of $5,000 from the Company to Wyomex LLC for each of the first
three additional months and $15,000 for each additional month for months four through six. As at September 30, 2012, total payments
of $145,000 had been made.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Prior
to December 31, 2011, the Company provided written notice to the Optionor of its intent to exercise its option. On April 10, 2012,
the Company executed an asset purchase agreement to exercise its option for consideration of $7,000,000, consisting of the following:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">a)</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">A
cash payment at closing of $85,000 as an initial payment (paid on March 30, 2012);</font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">b)</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">$60,000
of consideration previously paid and received by the Optionor (see above);</font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top; font: 8pt Times New Roman, Times, Serif">
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">c)</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">A
$6,855,000 promissory note with an estimated fair value of $1,081,676 on the date of issuance. See Note 6 for details.</font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Commencing
six (6) months from the date of the initial payment and every six (6) months thereafter, Titan shall pay seller, as advance production
payment, the initial amount of $62,500 , as adjusted by CPI, until commencement of commercial production from the property. At
the commencement of commercial production, the semi-annual advance production payment shall convert to a 4.5% gross metal value
royalty on iron ore, concentrates, and/or other mineral materials produced and sold from the property by Titan. Upon full settlement
of the promissory note, the production royalty shall be reduced, and the Company shall pay the Optionor a gross metal value royalty
of 1.5% for all iron product and/or other mineral materials mined and sold from the property.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"><u>Labrador
Trough Property</u></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
July 19, 2011, the Company entered into an option agreement with Globex Mining Enterprises Inc. ("Globex") effective
July 12, 2011 (the "Agreement"), pursuant to which Globex granted the Company the right (the "Option") for
a period of 90 days from July 12, 2011 to acquire an undivided 100% interest in and to 144 mining claims (the "Property")
located in the Labrador trough area in the Province of Quebec, Canada.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
October 12, 2011, the Company notified the owner of the Labrador Trough iron ore property that the Company would not be exercising
the option to acquire the property. The Company recorded an impairment of mineral property charge of $50,124 during the year ended
December 31, 2011.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><u>Strong Creek and Iron Mountain Properties</u></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective June 30, 2011 and in connection with the entry
into an agreement (the “Acquisition Agreement”) with J2 Mining Ventures Ltd. (“J2 Mining”) dated June
13, 2011, the Company completed the acquisition of a 100% right, title and interest in and to a properties (Strong Creek and Iron
Mountain) option agreement (the “Option Agreement”) from J2 Mining with respect to an iron ore mineral property located
in Albany County, Wyoming by entering into an assignment of mineral property option agreement with J2 Mining and Wyomex LLC (the
“Assignment Agreement”), whereby the Company was assigned the 100% right, title and interest in and the Option Agreement
from J2 Mining.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Option Agreement assigned to the Company from J2 Mining
on June 30, 2011, was originally entered into on May 26, 2011 between J2 Mining and Wyomex LLC, pursuant to which Wyomex LLC (“Optionor”),
granted to J2 Mining, as optionee, an exclusive right and option to acquire 100% undivided legal and beneficial interests in and
to certain unpatented lode mining claims, fee lands, leased lands, and other interests in real property situated in Albany County,
Wyoming (the “Wyoming Iron Complex”). Pursuant to the Assignment Agreement, J2 Mining agreed to assign all its rights
and interests in the property and the Option Agreement, and transfer all of its obligations under the Option Agreement, to the
Company.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The term of the option commenced on May 26, 2011 and could
be extended for a maximum of six successive one-month periods, at the sole election of the Company, through notice to Wyomex LLC
and tender of $5,000 from the Company to Wyomex LLC for each of the first three additional months and $15,000 for each additional
month for months four through six. As at December 31, 2011, total payments of $60,000 had been made.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Prior to December 31, 2010, the Company provided written
notice to the Optionor of its intent to exercise its option. Subsequent to the balance sheet date, on April 10, 2012, the Company
executed an asset purchase agreement (see Note 12) to exercise its option for consideration of $7,000,000, consisting of the following:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px; line-height: 115%; text-align: justify"> </td>
<td style="width: 24px; line-height: 115%; text-align: justify">a)</td>
<td style="line-height: 115%; text-align: justify">A cash payment at closing of $85,000 as an initial payment (paid);</td></tr>
<tr style="vertical-align: top">
<td style="line-height: 115%; text-align: justify"> </td>
<td style="line-height: 115%; text-align: justify">b)</td>
<td style="line-height: 115%; text-align: justify">$60,000 of consideration previously paid and received by the Optionor (see above);</td></tr>
</table>
<p style="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0; text-align: justify"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px; line-height: 115%; text-align: justify"> </td>
<td style="width: 24px; line-height: 115%; text-align: justify">c)</td>
<td style="line-height: 115%; text-align: justify">A $6,855,000 promissory note (issued), non-interest bearing, secured by the Strong Creek and Iron Mountain properties. The note is repayable through advance minimum royalty payments of $62,500 commencing six months from the date of closing and after receipt of the initial payment, and every six months thereafter, until the commencement of commercial production from the property. At the commencement of commercial production from the properties, the semi-annual advance minimum royalty shall convert to a 4.5% gross metal value royalty on iron ore and/or other mineral materials produced and sold from the property and, except for events of force majeure, in no event shall the production royalty paid to the Optionor be less than $150,000 in any given calendar year. Repayment of the promissory note may be demanded by the Optionor upon an event of default as defined in the agreement.</td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon full settlement of the promissory note, the production
royalty shall be reduced, and the Company shall pay the optionor a gross metal value royalty of 1.5% for all iron product and/or
other mineral materials mined and sold from the property.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><u>Labrador Trough Property</u></b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 19, 2011, the Company entered into an option agreement
with Globex Mining Enterprises Inc. ("Globex") effective July 12, 2011 (the "Agreement"), pursuant to which
Globex granted the Company the right (the "Option") for a period of 90 days from July 12, 2011 to acquire an undivided
100% interest in and to 144 mining claims (the "Property") located in the Labrador trough area in the Province of Quebec,
Canada.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 12, 2011, the Company notified the owner of the
Labrador Trough iron ore property that the Company would not be exercising the option to acquire the property. The Company recorded
an impairment of mineral property charge of $50,124 during the year ended December 31, 2011.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
January 11, 2012, the Company closed a private placement for 1,334,000 units at a price of $0.75 per unit for proceeds of $1,000,500.
Each unit consists of one share of our common stock and one-half of one share purchase warrant. Each whole share purchase warrant
entitles the holder to purchase one share of our common stock at a purchase price of $1.00 for a period of three years.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
September 12, 2012, the Company issued 50,000 shares to a consultant under a contract entered into on July 18, 2012 to provide
fund raising services to the Company. Per substance of the agreement, the shares are valued at the contract date. The closing
price of the Company’s stock on July 18, 2012 was $0.43 and therefore the transaction was valued at $21,500.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
September 25, 2012, the Company issued 500,000 shares to a consultant under a contract to provide various corporate finance advisory
services to the Company. Per substance of the agreement, the shares were valued at the contract date. The closing price of the
Company’s stock on September 5, 2012 was $0.21 and therefore the transaction was valued at $105,000.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective June 15, 2011 the Company effected a 37 to 1 forward
stock split of the Company’s authorized and outstanding commons stock. As a result, the 5,151,000 shares outstanding increased
to 190,587,000.  All share amounts have been retroactively adjusted for all periods presented.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 20, 2011, the Company closed a private placement
for 2,100,000 units at a price of $0.50 per units for net proceeds of $1,045,436 after share issue costs. Each unit consists of
one share of our common stock and one-half of one share purchase warrant. Each whole share purchase warrant entitles the holder
to purchase one share of our common stock at a purchase price of $0.75 for a period of three years.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective June 30, 2011 and in connection with the acquisition
of an option to purchase a mineral property, certain shareholders surrendered 142,950,000 common shares of the Company. As a result
of the Company’s cancellation of these shares, the Company’s outstanding shares of common stock decreased to 49,737,000.</p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
Average</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number
of</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Exercise</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Warrants</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Price</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> Balance,
December 31, 2011</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,050,000</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.75</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="width: 54%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> Warrants
granted with private placement</font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 20%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">667,000</font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 20%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.00</font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> Balance,
September 30, 2012   </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,717,000</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.85</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">Details
of share purchase warrants outstanding as of September 30, 2012 are:</font> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td colspan="6" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number
of Warrants Outstanding and Exercisable</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Number</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Exercise
Price per Share</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center; text-indent: 0.25in"><font style="font: 8pt Times New Roman, Times, Serif">Expiry
Date</font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 35%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,050,000</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 21%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.75</font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 39%; font: 8pt/115% Times New Roman, Times, Serif; text-align: center; text-indent: 0.25in"><font style="font: 8pt Times New Roman, Times, Serif">June
20, 2014</font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">667,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1.00</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center; text-indent: 0.25in"><font style="font: 8pt Times New Roman, Times, Serif">January
10, 2015</font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,717,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.85</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%; text-align: center">Weighted Average</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%; text-align: center">Number of</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%; text-align: center">Exercise</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Warrants</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Price</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> Balance, December 31, 2010 and 2009</td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%; text-align: right">-</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%; text-align: right">-</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 54%; line-height: 115%"> Warrants granted with private placement</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="width: 20%; border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">1,050,000</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td>
<td style="width: 20%; border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">0.75</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> Balance, December 31, 2011   </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">1,050,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">0.75</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">Details of share purchase warrants outstanding as of December
31, 2011 are:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td colspan="6" style="line-height: 115%; font-weight: bold; text-align: center">Number of Warrants Outstanding and Exercisable</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; font-weight: bold; text-align: center">Exercise Price</td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; font-weight: bold; text-align: center">2011</td>
<td nowrap="nowrap" style="line-height: 115%; font-weight: bold"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; font-weight: bold; text-align: center">per Share</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; font-weight: bold; text-align: center">Expiry Date</td></tr>
<tr style="vertical-align: bottom">
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">1,050,000</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">$</td>
<td style="line-height: 115%; text-align: right">0.75</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center; text-indent: 0.25in">June 20, 2014</td></tr>
<tr>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td>
<td> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
April 10, 2012 the Company issued a non-interest bearing promissory note in the amount of $6,855,000 to Wyomex Limited Liability
Company (“Wyomex”) secured by the Strong Creek and Iron Mountain properties. The note is repayable through advance
minimum royalty payments of $62,500 (adjusted for the consumer price index in successive period) beginning six months from March
30, 2012 (“closing date”) and after receipt of the initial payment, and every six months thereafter, until the commencement
of commercial production from the property. At the commencement of commercial production from the properties, the semi-annual
advance minimum royalty shall convert to a 4.5% gross metal value royalty on iron ore and/or other mineral materials produced
and sold from the property and, except for events of force majeure, in no event shall the production royalty paid to Wyomex be
less than $150,000 in any given calendar year. Repayment of the promissory note may be demanded by Wyomex upon an event of default
as defined in the agreement. Upon full settlement of the promissory note, the production royalty shall be reduced, and the Company
shall pay Wyomex a gross metal value royalty of 1.5% for all iron product and/or other mineral materials mined and sold from the
property. The estimated fair value of the note (based on estimated 14.03% interest rate) was calculated to be $1,081,676 on April
10, 2012. The Company recorded an accretion expense of $75,880 for the nine months ended September 30, 2012. As of September 30,
2012, the carrying value of the promissory note is $1,157,556.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">  </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">At
September 30, 2012, estimated contractual principal payments due on the promissory note for the next five years are as follows:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 48%; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September
30, 2013</font></td>
<td style="width: 2%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 2%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 46%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">189,853</font></td>
<td nowrap="nowrap" style="width: 2%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September
30, 2014</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">130,557</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September
30, 2015</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">133,841</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September
30, 2016</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">137,208</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">September
30, 2017</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">140,660</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Total</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">732,119</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
November 22, 2011, the Board of Directors approved a stock option plan (“2011 Stock Option Plan”), the purpose of
which is to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the
Company’s officers, directors, key employees, consultants and its affiliates and to encourage stock ownership by such individuals
by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership. Under
the 2011 Stock Option Plan, officers, directors, employees and consultants who provide services to the Company may be granted
options to acquire common shares of the Company.   <font style="background-color: white">The aggregate number of
options authorized by the plan shall not exceed 9,947,400 common shares of the Company. </font></font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif; background-color: white">During
the year ended December 31, 2011, the Company granted 3,450,000 and 500,000 stock options at an exercise price of $0.84 per share
for 10 years and 3 years respectively. The fair value of the options has been estimated using the Black Scholes option pricing
model using the following assumptions: risk free interest rate of 1.63%, dividend yield of 0%, volatility of 113% and expected
life of 10 years.  During the nine months ended September 30, 2012, the Company granted 1,000,000 stock options at an
exercise price of $0.20 for 10 years. During the nine months ended September 30, 2012, the Company recorded stock-based compensation
of $1,851,782 related to the vesting period for these stock options.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
following table summarizes the options outstanding as at September 30, 2012:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Option
Price</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Expiry
Date</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">Per
Share</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">Number</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 42%; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">December
21, 2021</font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 17%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.84</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 35%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,450,000</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">December
21, 2014</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.84</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">500,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">June
21, 2022</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.20</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,000,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.71</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,950,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 -200pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">     </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 -240pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">      The
following table summarizes the continuity of the Company’s stock options:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 -200pt; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Number
of Options</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Weighted
Average Exercise Price</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Weighted-Average
Remaining Contractual Term (years)</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Aggregate
Intrinsic Value</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="width: 52%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding,
December 31, 2011</font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">3,950,000</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.84</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8.33</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 9%; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">869,000</font></td>
<td nowrap="nowrap" style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Options
granted</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">1,000,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.20</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">9.73</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Outstanding,
September 30, 2012</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">4,950,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.71</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8.62</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">110,000</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: white; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Exercisable,
September 30, 2012</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">987,500</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">0.84</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">8.33</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif">-</font></td>
<td nowrap="nowrap" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">As
at September 30, 2012, there was $583,296 of unrecognized compensation cost related to non-vested stock options. This cost is
expected to be recognized over a weighted average period of 0.83 years.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On November 22, 2011, the Board of Directors approved a stock
option plan (“2011 Stock Option Plan”), the purpose of which is to enhance the Company’s stockholder value and
financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees, consultants
and its affiliates and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary
interest in the Company’s success through stock ownership. Under the 2011 Stock Option Plan, officers, directors, employees
and consultants who provide services to the Company may be granted options to acquire common shares of the Company.   <font style="background-color: white">The
aggregate number of options authorized by the plan shall not exceed 9,947,400 common shares of the Company. </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31, 2011, the Company granted
3,450,000 and 500,000 stock options at an exercise price of $0.84 per share for 10 years and 3 years respectively.  During
the year ended December 31, 2011, the Company recorded stock-based compensation of $107,772.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">The weighted average
grant date fair value of stock options granted during the year ended December 31, 2011 was $0.80.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="background-color: white">The weighted average
assumptions used for each of the years ended December 31, are as follows:</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">2011</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 77%; line-height: 115%">Expected dividend yield</td>
<td style="width: 1%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 20%; line-height: 115%; text-align: right">0</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">Risk-free interest rate</td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">1.64</td>
<td nowrap="nowrap" style="line-height: 115%">%</td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%">Expected volatility</td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">115</td>
<td nowrap="nowrap" style="line-height: 115%">%</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">Expected option life (in years)</td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">8.41</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The following table summarizes the options outstanding as
at December 31, 2011:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center">Option Price</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="6" style="line-height: 115%; text-align: center">Number of shares</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Expiry Date</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Per Share</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">2011</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">2010</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 15%; line-height: 115%; text-align: center">December 21, 2021</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center">0.84</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 9%; line-height: 115%; text-align: right">3,450,000</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 9%; line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%; text-align: center">December 21, 2014</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center">0.84</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">500,000</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">The following table summarizes the continuity of the Company’s
stock options:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Number of Options</td>
<td nowrap="nowrap" style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Weighted Average Exercise Price</td>
<td nowrap="nowrap" style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Weighted-Average Remaining Contractual Term (years)</td>
<td nowrap="nowrap" style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Aggregate Intrinsic Value</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 40%; line-height: 115%">Outstanding, December 31, 2010 and 2009</td>
<td style="width: 1%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 12%; line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 12%; line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 12%; line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 12%; line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="border-bottom: black 1.5pt solid; line-height: 115%">Granted</td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">3,950,000</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">0.84</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="border-bottom: black 2.25pt double; line-height: 115%">Outstanding, December 31, 2011</td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">3,950,000</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">0.84</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">9.08</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">869,000</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="border-bottom: black 2.25pt double; line-height: 115%">Exercisable, December 31, 2011</td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">-</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">As at December 31, 2011, there was $6,058,492
of unrecognized compensation cost related to non-vested stock option agreements. This cost is expected to be recognized over a
weighted average period of 1.47 years.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 30, 2011, the Company entered into an employment agreement with an officer to serve as President and Chief Executive Officer
of our company for a term of two years with automatic renewals for similar two year periods pursuant to the terms of the agreement. 
Under the agreement, the officer receives monthly remuneration at a gross rate of $15,000. The Company can terminate the agreement
within 60 days of notice. If the executive is terminated without cause, the executive shall be entitled to one month’s severance
pay for each one month of service up to a maximum of two years. The officer shall also be entitled to receive 2.4 million options
to purchase shares of the Company’s common stock pursuant to the Company’s Stock Option Plan, with 1.0 million of
the options being granted in calendar year 2011 (completed) and 1.4 million option (800,000 options granted) being granted after
December 31, 2011.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 30, 2011, the Company entered into consulting agreements with a management company managed by the CEO, for consulting fee
of $2,500 per month to provide office space and administrative services. The Company can terminate the agreement within 15 days
written notice. The agreement commences on June 30, 2011 for a one year period and shall automatically renew from year to year
unless terminated.<br />
 </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 30, 2011, the Company entered into a consulting agreement with a firm to provide the services of the Company’s Vice
President, Exploration, who will provide and perform certain geological advisory services. Under the agreement, the firm receives
monthly compensation at a gross rate of $6,000. The Company can terminate the consulting agreement at any time. The agreement
commences on June 30, 2011 and shall automatically renew from year to year unless terminated.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
June 30, 2011, the Company entered into a consulting agreement with a consulting firm to provide certain geological, engineering,
marketing and project management services as may be requested by Company at monthly rate of $8,000. The Company can terminate
the consulting agreement at any time. The agreement commences on June 30, 2011 and shall automatically renew from year to year
unless terminated.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
November 1, 2011, the Company entered into a consulting agreement with a financial public relations firm for a term of 1 year.
Under the agreement, the consultant receives $8,000 per month, and 500,000 options (granted) to purchase common stock of the Company.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">On September
5, 2012, the Company entered into a consulting and professional service agreement with a consultant to provide corporate advisory,
corporate finance, strategic planning, marketing and related advisory services in consideration for the issuance of 500,000 shares
of restricted common stock. The 500,000 shares were issued on September 25, 2012. The term of the agreement is for a period of
6 months, provided, however, that the Company may extend the agreement for a successive 6 month period for an additional 500,000
shares of restricted stock.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 30, 2011, the Company entered into an employment
agreement with an officer to serve as President and Chief Executive Officer of our company for a term of two years with automatic
renewals for similar two year periods pursuant to the terms of the agreement.  Under the agreement, the officer receives monthly
remuneration at a gross rate of $15,000. The Company can terminate the agreement within 60 days of notice. If the executive is
terminated without cause, the executive shall be entitled to one month’s severance pay for each one month of service up to
a maximum of two years. The officer shall also be entitled to receive 2.4 million options to purchase shares of the Company’s
common stock pursuant to the Company’s Stock Option Plan, with 1.0 million of the options being granted in calendar year
2011 (completed) and 1.4 million option being granted after December 31, 2011.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 30, 2011, the Company entered into consulting agreements
with a management company managed by the CEO, for consulting fee of $2,500 per month to provide office space and administrative
services. The Company can terminate the agreement within 15 days written notice. The agreement commences on June 30, 2011 for a
one year period and shall automatically renew from year to year unless terminated.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><br />
On June 30, 2011, the Company entered into a consulting agreement with a firm to provide the services of the company’s Vice
President, Exploration, who will provide and perform for the benefit of our company certain geological advisory services as may
be requested by our company. Under the agreement, the firm receives monthly compensation at a gross rate of $6,000. The Company
can terminate the consulting agreement at any time. The agreement commences on June 30, 2011 and shall automatically renew from
year to year unless terminated.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On June 30, 2011, the Company entered into a consulting agreement
with a consulting firm who will provide and perform for the benefit of our company certain geological, engineering, marketing and
project management services as may be requested by our company at monthly rate of $8,000. The Company can terminate the consulting
agreement at any time. The agreement commences on June 30, 2011 and shall automatically renew from year to year unless terminated.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On November 1, 2011, the Company entered into a consulting
agreement with a financial public relations firm for a term of 1 year. Under the agreement, the consultant receives $8,000 per
month, and 500,000 options (granted) to purchase common stock of the Company.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">During
the <font style="background-color: white">year ended December 31, 2011</font> the Company advanced $25,000 to a management
firm managed by the Company’s CEO and this amount was outstanding as at <font style="background-color: white">September
30, 2012</font>. This advance for expenses to be incurred on the Company’s behalf was recorded as prepaid expenses.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">During
the <font style="background-color: white">nine months ended September 30, 2012</font> the Company incurred $22,500 in
management fees and $7,355 in rent expense to the  management firm managed by the Company’s CEO (2011: $7,500)
with such costs being recorded as general and administrative costs. As at September 30, 2012, the Company owed $17,086 including
unreimbursed expenses to this firm (2011: $Nil).</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">During
the <font style="background-color: white">nine months ended September 30, 2012</font> the Company incurred $278,979
in management fees to officers and directors of the Company (2011: $128,511) with such costs being recorded as general and administrative
costs.<br />
 </font></p>
<p style="margin: 0; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">The above
transactions were recorded at their exchange amounts, being the amounts agreed by the related parties.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31, 2011
the Company advanced $25,000 at December 31, 2011 to a management firm managed by the Company’s CEO (2010: $0). This advance
for expenses to be incurred on the Company’s behalf was recorded as prepaid expenses.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><b> </b></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31, 2010
a former officer provided $10,078 in advances to the Company and this amount was owing as at December 31, 2010. This amount was
assumed by previous management during the year ended December 31, 2011 in connection with the acquisition of an option to purchase
a mineral property.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31, 2011
the Company incurred $30,000 (2010: $0) in management fees to a former officer and director.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31, 2011
the Company incurred $15,000 in management fees and $7,355 in rent expense to a management firm managed by the Company’s
CEO (2010: $0) with such costs being recorded as general and administrative costs. As at December 31, 2011, the Company owed $430
including unreimbursed expenses to this firm (2010: $0).</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">During the year ended December 31, 2011
the Company incurred $194,797 in management fees to officers and director of the Company (2010: $0) with such costs being recorded
as general and administrative costs. As at December 31, 2011, the Company owed $217 in unreimbursed expenses to an officer (2010:
$0).</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><br />
During the year ended December 31, 2011 the Company incurred $10,000 in management fees to a director (2010: $0) with such costs
being recorded as general and administrative costs.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><br />
The above transactions were recorded at their exchange amounts, being the amounts agreed by the related parties.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">ASC
820, Fair Value Measurements and Disclosures require an entity to maximize the use of observable inputs and minimize the use of
unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective
evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value
hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs
into three levels that may be used to measure fair value:</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
1</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. Valuations
are based on quoted prices that are readily and regularly available in an active market and do not entail a significant degree
of judgment.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
2</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
2 applies to assets or liabilities for which there are other than Level 1 observable inputs such as quoted prices for similar
assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume
or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can
be derived principally from, or corroborated by, observable market data.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
2 instruments require more management judgment and subjectivity as compared to Level 1 instruments. For instance: determining
which instruments are most similar to the instrument being priced requires management to identify a sample of similar securities
based on the coupon rates, maturity, issuer, credit rating and instrument type, and subjectively select an individual security
or multiple securities that are deemed most similar to the security being priced; and determining whether a market is considered
active requires management judgment.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
3</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Level
3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to
the measurement of the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires
the most management judgment and subjectivity.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Pursuant
to ASC 825, cash is based on "Level 1" inputs. The Company believes that the recorded values of accounts payable approximate
their current fair values because of their nature or respective relatively short durations. The fair value of the Company’s
promissory note approximates carrying value as the underlying imputed interest rate approximates the market rate.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Assets
measured at fair value on a recurring basis were presented on the Company’s balance sheet as of September 30, 2012, as follows.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="10" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Fair
Value Measurements Using</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Quoted
Prices in</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Significant</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Active
Markets</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Other</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Significant</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">For
Identical</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Observable</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Unobservable</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Balance
as of</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Instruments</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Inputs</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Inputs</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">September
30,</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(Level
1)</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(Level
2)</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">(Level
3)</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td colspan="2" style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">2012</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="width: 40%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">$</font></td>
<td style="width: 12%; border-bottom: black 1.5pt solid; font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="width: 1%; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; font: 8pt Times New Roman, Times, Serif">
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Assets:</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif; text-align: right"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF; font: 8pt Times New Roman, Times, Serif">
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">Cash</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">275,162</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">–</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td>
<td style="border-bottom: black 2.25pt double; font: 8pt/115% Times New Roman, Times, Serif; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif">275,162</font></td>
<td style="font: 8pt/115% Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif"> </font></td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">As
at September 30, 2012, there were no liabilities measured at fair value on a recurring basis presented on the Company’s
balance sheet. </font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">ASC 820, Fair Value Measurements and Disclosures require
an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820
establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure
fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input
that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure
fair value:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 1</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 1 applies to assets or liabilities for which there
are quoted prices in active markets for identical assets or liabilities. Valuations are based on quoted prices that are readily
and regularly available in an active market and do not entail a significant degree of judgment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 2</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 2 applies to assets or liabilities for which there
are other than Level 1 observable inputs such as quoted prices for similar assets or liabilities in active markets; quoted prices
for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived
valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market
data.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 2 instruments require more management judgment and
subjectivity as compared to Level 1 instruments. For instance: determining which instruments are most similar to the instrument
being priced requires management to identify a sample of similar securities based on the coupon rates, maturity, issuer, credit
rating and instrument type, and subjectively select an individual security or multiple securities that are deemed most similar
to the security being priced; and determining whether a market is considered active requires management judgment.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 3</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Level 3 applies to assets or liabilities for which there
are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or
liabilities. The determination of fair value for Level 3 instruments requires the most management judgment and subjectivity.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Pursuant to ASC 825, cash is based on "Level 1"
inputs. The Company believes that the recorded values of accounts payable approximate their current fair values because of their
nature or respective relatively short durations.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Assets measured at fair value on a recurring basis were presented
on the Company’s balance sheet as of December 31, 2011, as follows.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="10" style="line-height: 115%">Fair Value Measurements Using</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Quoted Prices in</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Significant</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Active Markets</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Other</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Significant</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">For Identical</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Observable</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Unobservable</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Balance as of</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Instruments</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Inputs</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">Inputs</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">December 31,</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">(Level 1)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">(Level 2)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">(Level 3)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%">2011</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="width: 44%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td>
<td style="width: 11%; border-bottom: black 1.5pt solid; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td>
<td style="width: 11%; border-bottom: black 1.5pt solid; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td>
<td style="width: 11%; border-bottom: black 1.5pt solid; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; border-bottom: black 1.5pt solid; line-height: 115%">$</td>
<td style="width: 11%; border-bottom: black 1.5pt solid; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%">Assets:</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="border-bottom: black 2.25pt double; line-height: 115%">Cash</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: center">118,066</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: center">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: center">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: center">118,066</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">As at December 31, 2011, there were no liabilities measured
at fair value on a recurring basis presented on the Company’s balance sheet.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="font: 8pt Times New Roman, Times, Serif">During
the nine months ended September 30, 2012 and 2011 the following project costs were incurred: </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 8pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Nine months Ended September 30, 2012</td><td style="padding-bottom: 1pt"> </td>
<td colspan="3" style="text-align: center; border-bottom: Black 1pt solid">Nine Months Ended September 30, 2011</td></tr>
<tr style="vertical-align: bottom">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left">Strong Creek and Iron Mountain:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 56%; text-align: left; text-indent: 0.25in">Technical Report</td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">73,137</td><td style="width: 1%; text-align: left"> </td><td style="width: 8%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 12%; text-align: right">12,879</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 0.25in">Claims</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,230</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,255</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-indent: 0.25in">Drilling</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11,655</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 0.25in">Travel</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,678</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left; text-indent: 0.25in">Aeromagnetic Survey</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">20,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left; padding-bottom: 1pt; text-indent: 0.25in">Lease payments</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">5,000</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"> </td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-bottom: 1pt">TOTAL</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">133,700</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">16,134</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="text-align: left">Labrador Trough:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-indent: 0.25in">Reconnaissance</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">—  </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">71,335</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="text-align: left; padding-bottom: 2.5pt">Total Exploration Costs</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">133,700</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">87,469</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0">During the year ended December 31, 2011 the following project
costs were incurred:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"><b> </b></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Year ended December 31, 2011</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: center">Year ended December 31, 2010</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%; font-weight: bold">Strong Creek and Iron Mountain:</td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 54%; line-height: 115%; text-indent: 0.25in">Technical Report</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 20%; line-height: 115%; text-align: right">49,767</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 20%; line-height: 115%; text-align: right">-</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%; text-indent: 0.25in">Drilling</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">202,098</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%; text-indent: 0.25in">Travel</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">2,652</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">-</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%; text-indent: 0.25in">Claims</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">3,255</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">-</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%; font-weight: bold">TOTAL</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">257,772</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">-</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%; font-weight: bold">Labrador Trough:</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%; text-indent: 0.25in">Reconnaissance</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">71,335</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">-</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%; font-weight: bold">Total Exploration Costs</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">329,107</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">-</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
October 1, 2012, the Company made the first advance royalty payment of $63,563 under the Strong Creek and Iron Mountain asset
purchase agreement.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
October 19, 2012 the Company announced that it had entered into an agreement with an accredited investor (the “Investor”)
to secure equity line financing. Separately, the Company also received funding from convertible debentures.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">Under
a Securities Purchase Agreement, upon Titan registering its common shares under a registration statement, the Investor will make
equity financing available to the Company over a 36-month commitment, allowing the Company to sell up to $10,000,000 in value
of its common shares. The Company will determine, at its own discretion, the timing and amount of its sales of stock, subject
to certain conditions and limitations. Shares will be priced at the lesser of a 10% discount from the Volume Weighted Average
Prices ("VWAP") for the Company's common stock during the five consecutive trading days following a sales notice and
the price that is $0.01 below the VWAP on the date in question, but are limited to $250,000 per pricing period or result in the
investor beneficially owning more than 9.99% of the then outstanding common stock. The Investor will also receive Commitment shares
up to a total of 3% of the $10 million commitment amount for the equity line. On October 22, 2012 the Investor received 150,015
shares as the first tranche of commitment shares. The Company can terminate the line at any time.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">In
addition to equity line financing, the Company received bridge loans in the form of convertible debentures with gross proceeds
to the Company of $200,000. These debentures carry an interest rate of 5%, with an original issue discount of 15%, and are convertible
at the lesser of: (a) $0.27 during the six months following the closing date, and $.35 thereafter, and (b) 70% of the average
daily VWAP for the common stock during the ten (10) consecutive trading days immediately preceding the applicable conversion date.
The investors also collectively received 3-year warrants to purchase a total of 705,901 shares at an exercise price of $0.25,
exercisable on a cashless basis. A finder's fee of 9% of the purchase price in cash and 9% in warrants was paid  to
an affiliate of the Investor with respect to a portion of the convertible debenture financing.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">On
October 25 and 26, 2012, the investors and the finder collectively exercised their full allotment of warrants on a cashless basis
and received a total of 556, 183 restricted shares of the Company.</font></p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 12, 2012 the Company completed
a non-brokered private placement of 1,334,000 units at $0.75 per unit, for total gross proceeds of $1,000,500. Each unit consists
of one common share in the capital of the Company and one half common share purchase warrant entitling the purchaser to acquire
one additional common share at the exercise price of $1.00 per common share until January 10, 2015.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 10, 2012, the Company exercised
its option to purchase the Strong Creek and Iron Mountain mineral properties located in Albany County, Wyoming for consideration
totaling $7,000,000 (see Note 3).</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">These
financial statements and related notes are presented in accordance with accounting principles generally accepted in the United
States, and are expressed in US dollars. The Company’s fiscal year end is December 31.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United
States for interim financial information and with the instructions for Securities and Exchange Commission (“SEC”)
Form 10-Q. They do not include all of the information and footnotes required by generally accepted accounting principles for complete
financial statements. Therefore, these financial statements should be read in conjunction with the Company’s audited financial
statements and notes thereto for the year ended December 31, 2011, included in the Company’s Annual Report on Form 10-K
filed on April 16, 2012, with the SEC.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
interim financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments
that, in the opinion of management, are necessary to present fairly the Company’s financial position as at September 30,
2012 and the results of its operations and cash flows for the nine months ended September 30, 2012 and September 30, 2011. The
results of operations for the nine months ended September 30, 2012 are not necessarily indicative of the results to be expected
for future quarters or the full year ending December 31, 2012.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
preparation of these statements in accordance with United States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions
related to useful life and recoverability of long-lived assets, deferred income tax asset valuations, asset retirement obligations,
financial instrument valuations, and loss contingencies. The Company bases its estimates and assumptions on current facts, historical
experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are
not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from
the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future
results of operations will be affected. </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company’s policy regarding advertising is to expense advertising when incurred.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may
not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived
assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">If
the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss
based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower
of the carrying amount or the fair value less costs to sell.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation, which
requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made
to employees and directors, including stock options.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">ASC
718 requires companies to estimate the fair value of share-based awards on the date of grant using an option-pricing model. The
Company uses the Black-Scholes option pricing model as its method in determining fair value. This model is affected by the Company’s
stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not
limited to the Company’s expected stock price volatility over the terms of the awards, and actual and projected employee
stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an
expense in the statement of operations over the requisite service period.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company is in the exploration stage and has not yet realized any revenues from its planned operations. It is primarily engaged
in the acquisition and exploration of mineral properties. Mineral property exploration costs are expensed as incurred. Mineral
property acquisition costs are capitalized.  The Company assesses the carrying costs for impairment, whenever events
or changes in circumstances indicate that the carrying cost may not be recoverable under ASC 360, Property, Plant, and Equipment
at each reporting date. When it has been determined that a mineral property can be economically developed as a result of establishing
proven and probable reserves, the costs then incurred to develop such property, will be capitalized. Such costs will be amortized
using the units-of-production method over the estimated recoverable reserves. If mineral properties are subsequently abandoned
or impaired, any capitalized costs will be charged to operations.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company records asset retirement obligations in accordance with ASC 410-20, Asset Retirement Obligations, which addresses financial
accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated retirement
costs. The standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition,
construction, development and normal use of the asset. ASC 410-20 requires that the fair value of a liability for an asset retirement
obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The fair value
of the liability is added to the carrying amount of the associated asset and this additional carrying amount is depreciated over
the life of the asset. The liability is accreted at the end of each period through charges to operating expense. If the obligation
is settled for other than the carrying amount of the liability, the Company will recognize a gain or loss on settlement. As at
September 30, 2012, the Company has not incurred any asset retirement obligation related to the exploration of its mineral property
option.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">ASC
220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the
consolidated financial statements.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">FASB
ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value under generally
accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined as the price that
would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date. Valuation techniques used to measure fair value, as required by ASC 820, must maximize the use of observable
inputs and minimize the use of unobservable inputs.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif"> </font></p>
<p style="margin: 0; font: 8pt Times New Roman, Times, Serif"><font style="font: 8pt Times New Roman, Times, Serif">The Company’s
assessment of the significance of a particular input to the fair value measurements requires judgment, and may affect the valuation
of the assets and liabilities being measured and their placement within the fair value hierarchy. The carrying values of cash,
accounts payable, and due to related parties approximates fair values because of the short-term maturity of these instruments.
The fair value of the Company’s promissory note approximate carrying value as the underlying imputed interest rate approximates
the market rate. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest,
currency or credit risks arising from these financial instruments.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company computes net loss per share in accordance with ASC 260, Earnings per Share.  ASC 260 requires presentation of
both basic and diluted earnings per share (EPS) on the face of the statement of operations. Basic EPS is computed by dividing
net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury
stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price
for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants.
Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. Shares underlying these securities totaled
approximately 6,667,000 as of September 30, 2012.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income Taxes. The asset and
liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of
temporary differences between the financial reporting and tax bases of assets and liabilities and for operating loss and tax credit
carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in
effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to
the amount that is believed more likely than not to be realized.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify"><font style="font: 8pt Times New Roman, Times, Serif">The
Company has implemented all other new accounting pronouncements that are in effect and that may impact its financial statements
and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.</font></p>
3950000
4950000
1050000
1717000
1050000
667000
3450000
500000
1000000
1000000
667000
3450000
500000
0.84
0.71
0.75
0.85
0.75
1.00
0.84
0.84
0.20
0.20
1.00
0.84
0.84
2014-06-20
2015-01-10
189853
130557
133841
137208
140660
732119
2021-12-21
2014-12-21
2022-06-21
987500
0.84
P8Y3M3D
P8Y6M2D
P9Y7M3D
P8Y3M3D
869000
110000
275162
275162
0
0
73137
12879
3230
3255
11655
0
20678
0
20000
0
5000
0
133700
16134
0
71335
133700
87469
6667000
75880
1157556
145000
P10Y
P10Y
P3Y
0.0163
0
1.13
P10Y
583296
P9M29D
P2Y
15000
P60D
P15D
2400000
8000
2500
25000
22500
7355
7500
17086
0
278979
128511
6000
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has adopted the provisions of ASC 740, Income
Taxes. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. The
potential benefit of net operating losses have not been recognized in the financial statements because the Company cannot be assured
that it is more likely than not that it will utilize the net operating losses carried forward in future years. The Company has
approximately $846,905 of net operating losses to carry forward which are available to offset taxable income in future years which
expire through fiscal 2031. For the years ended December 31, 2011, and 2010, the valuation allowance established against the deferred
tax assets increased by $296,417, and $3,320 respectively.</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The components of the net deferred tax
asset at December 31, 2011, and 2010, the statutory tax rate, the effective tax rate, and the amount of the valuation allowance
are indicated below:</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">December 31,</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">2011</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">$</p></td>
<td nowrap="nowrap" style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">December 31,</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">2010</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">$</p></td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="width: 54%; line-height: 115%">Net loss before taxes</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 20%; line-height: 115%; text-align: right">(954,677</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%">)</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 20%; line-height: 115%; text-align: right">(9,485</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%">)</td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 2.25pt double; line-height: 115%">Statutory rate</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">35</td>
<td nowrap="nowrap" style="line-height: 115%">%</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">35</td>
<td nowrap="nowrap" style="line-height: 115%">%</td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">Computed expected tax (recovery)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">(334,137</td>
<td nowrap="nowrap" style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">(3,320</td>
<td nowrap="nowrap" style="line-height: 115%">)</td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%">Stock-based compensation</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">37,720</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1.5pt solid; line-height: 115%">Increase in valuation allowance:</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">296,417</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">3,320</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 2.25pt double; line-height: 115%">Reported income taxes</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
</table>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">December 31,</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">2011</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">$</p></td>
<td nowrap="nowrap" style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td colspan="2" style="border-bottom: black 1.5pt solid">
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">December 31,</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">2010</p>
<p style="font: 10pt/normal Times New Roman, Times, Serif; margin: 0; text-align: center">$</p></td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%">Potential deferred tax asset</td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="2" style="line-height: 115%"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 54%; line-height: 115%"> - Net operating losses</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 20%; line-height: 115%; text-align: right">194,729</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 20%; line-height: 115%; text-align: right">26,431</td>
<td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%">-  Mineral properties</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">128,119</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> - Less valuation allowance</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">(322,848</td>
<td nowrap="nowrap" style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1.5pt solid; line-height: 115%; text-align: right">(26,431</td>
<td nowrap="nowrap" style="line-height: 115%">)</td></tr>
<tr style="vertical-align: bottom; background-color: #CCEEFF">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="border-bottom: black 2.25pt double; line-height: 115%">Net deferred tax asset</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td nowrap="nowrap" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td nowrap="nowrap" style="line-height: 115%"> </td></tr>
</table>