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FORM 51-102

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF OPERATING RESULTS AND FINANCIAL CONDITION OF

TERYL RESOURCES CORP.

FOR THE THREE MONTHS ENDED AUGUST 31, 2009

Management’s Responsibility for Financial Statements

The preparation of the financial statements, conforming with GAAP, requires the Company's management to

make estimates and assumptions in order to make a determination of the future values for certain assets or

liabilities. Management believes such estimates have been based on careful judgments and have been

properly reflected in the accompanying financial statements. Actual results may differ from those estimates.

Management maintains a system of internal controls to provide reasonable assurance that the Company’s

assets are safeguarded and to facilitate the preparation of relevant and timely information.

1.1 Dated as of October 30, 2009

The following discussion of the results of operations of the Company for the three months ended August 31,

2009, and in comparison to the same period of the prior year, should be read in conjunction with the

Company’s Audited Financial Statements and accompanying notes for the years ended May 31, 2009 and

2008.

1.2 Overall Performance

Teryl Resources Corp. (“Teryl” or the “Company”) is engaged in the acquisition, exploration and

development of natural resource properties. The Company currently has mineral property interests in

Arizona, Alaska and British Columbia. The main exploration and development work over the last several

years has taken place on the Gil claims (gold prospect) located in the Fairbanks Mining District, Alaska. The

Gil joint venture, with Kinross Gold Corporation, is divided into several mineralized zones including the

Main Gil and the North Gil. The Gil claims are adjacent to the producing Fort Knox deposit owned by

Kinross Gold Corporation. Teryl, Inc., a subsidiary of the Company, owns a 20% working interest and

Kinross Gold has an 80% working interest in the Gil joint venture.

The Company, through its subsidiary, Teryl, Inc., owns a 100% interest in the West Ridge claims, subject to

a 1% NSR to the State of Alaska, located in the Fairbanks Alaska mining district. Also through its subsidiary,

Teryl, Inc., the Company owns 28 claim blocks, consisting of 602 acres in the Warren Mining District,

Cochise County, Arizona.

Period Highlights

Mining and Exploration Operations

Gil Mineral Claims

The Company owns a 20% interest in the Gil Mineral Claims. Kinross Gold Corporation owns the other 80%

of the claims and Kinross acts as operator of the project. Kinross and the Company each contribute to annual

exploration costs, if any, on an 80:20 ratio with net profits distributed in that same proportion in the event of

production.

Kinross, as the operator of the Gil Mineral Claims, determines whether exploration work will occur from

year to year. During the fiscal year ended May 31, 2009 a total of $120,241 ($104,476 US) was spent on the

Gil Mineral Claims. Expenditures for annual exploration work were incurred by the Company during the

fiscal years ended May 31, 2008, 2007 and 2006. Total exploration expenditures for 2006 and 2007 were

$124,592.96 and $30,909.41, respectively, with Teryl’s obligation being $24,918.53 in 2006 and $6,181.89

in 2007. Exploration expenditures for the year ended May 31, 2008 were $291,245, with Teryl’s share

amounting to $58,249.12

In March, 2009, our joint venture partner, Fairbanks Gold Mining, Inc. (FGMI), a subsidiary of Kinross Gold

Corporation, reported the Gil joint venture exploration summary.

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FGMI approved the 2009 exploration budget of US$1,644,000 as follows:

The 2009 Gil Project Exploration Program has three major goals:

1. Ground magnetometer survey concentrating on Sourdough Ridge.

2. Delineate mineralized zones and establish a resource base at Sourdough Ridge.

3. Expand resource at North Gil.

The goal of the 2009 program is to further delineate the strike extension of the mineralized zone, and to infill

between step-out holes, in order to gain a better understanding of ore-zone continuity, and to establish a

resource base. The 2009 work plan calls for ground geophysics, 10,000 feet of RC drilling, and 6,000 feet of

HQ-NQ core drilling. Drillhole collar locations will be selected upon completion of the geophysical survey.

In addition, samples will be collected for a preliminary column leach study.

The geophysical survey began in March 2009 and the remainder of the program began in mid-April, and will

extend through the end of 2009. The bulk of the expenditures will occur between March and September,

2009.

In July 2009, preliminary significant gold results were received from FGMI from the reverse circulation

drilling program. A total of 17 reverse circulation drill holes were completed from the North Gil and the

Sourdough zones. The best holes reported were Hole 513 on the Sourdough which assayed 60 feet of .05

ounces per ton gold from 15 to 75 feet and 15 feet of .04 ounces per ton (approx. 1.13 grams per ton) gold

from 105 feet to 120 feet.

Hole 521 also on the Sourdough zone assayed 65 feet of .1 ounces per ton (approx. 3 grams per ton) gold

from 220 feet to 285 feet.

In August 2009, additional significant gold assays were received from FGMI. A total of 33 R/C drill holes

and 6 core drill holes have been completed during the 2009 exploration program. Certified assays are

pending on all drill holes. The main focus of the drilling is on the Sourdough Ridge zone, which is similar in

geology to the Main Gil zone. The Main Gil zone has been drilled extensively in the past over a 3,000 ft

strike length with an average grade of .04 ounces gold per ton.

Preliminary assays from the following holes are as follows:

Hole Number Feet

Oz. P/T Gold

GVR-09-540

105' (from 145’-250’)

.14

GVR-09-534

75’ (from 15’-90’)

.09

GVR-09-523

110’ (from 125’-230’)

.04

As of July 2, 2009 the Gil Project is an advanced exploration program controlled by Teryl Resources and

Kinross Gold Corporation. The exploration area is located 19 miles north of Fairbanks, Alaska and 8 miles

northeast of Alaska’s largest gold producer, the Fort Knox Mine (owned by Kinross Gold). The Gil Project

consists of three adjacent prospect areas; the Main Gil Zone, the North Gil Zone and Sourdough Ridge.

A total of US$9,000,000 has been expended by the joint venture partners between 1992 and 2009, with Teryl

and Kinross accounting for 20% and 80% respectively of total expenditures. Lode prospects at the Gil have

been tested by 86 core holes totaling 33,354 feet, 327 reverse circulation drill holes, totaling 93,804 feet, and

21 trenches with a combined length of approximately 7,420 feet.

Management believes the current gold assay results are extremely favorable compared to the adjacent

producing property, Fort Knox Mine, with its values of .03 ounces per ton.

West Ridge Claims

The West Ridge Property is made up of 53 State mining claims held by the Company north of Fairbanks,

Alaska, a distance of 22 miles by road. The West Ridge property adjoins Kinross Gold Corp.’s True North

gold deposit and lies approximately eight miles northwest of the producing Fort Knox gold mine. The

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property was submitted to Kinross early in the summer of 1998 and a joint venture was signed and later

terminated. No field work was conducted on the West Ridge property during the fiscal years ended 2009 and

2008.

Fish Creek Claims

The Company owns a 50% joint venture interest in 30 State of Alaska mining claims, comprising 1,032 acres,

known as the Fish Creek Prospect, in the Fairbanks Mining District in Alaska, located 25 miles north of

Fairbanks, Alaska.

These claims are subject to an option agreement with Linux Gold Corp. The Company may purchase the 5%

net royalty for $500,000 U.S. within 1 year after production on a 25% working interest. Teryl also agrees to

expend a minimum of $500,000 U.S. after three years from the date of the agreement. The claims are legally

maintained by recording an affidavit of annual labor for a minimum expenditure and by paying annual rental

to the State of Alaska. The Company is permitted to conduct exploration by drilling. The Company currently

holds a valid exploration permit on the project. Additional permits for future work will be acquired from the

Division of Mining, Alaska Department of Fish and Game, and the U.S. Corps of Engineers on an as-needed

basis.

On January 25, 2008 the Company announced that it would be arranging a drill program on the Fish Creek

claims in Alaska to test several gold geophysical anomalies, from the geophysical survey completed by Fugro

Airborne Survey, Inc. The drilling has been postponed due to lack of drills available in Alaska in 2008.

The technical disclosure for the Fish Creek Property is prepared under the supervision of Curt Freeman, a

qualified person as that term is defined in NI 43-101, Standards of Disclosure for Mineral Projects.

Gold Hill Property, Arizona

On June 10, 2006, the Company and Frederic & John Rothermel (the Vendors) entered into an agreement

whereby the Company purchased a 100% interest in the Gold Hill Patented Claim Group located in the

Warren Mining District, Cochise County, Arizona, USA, subject to a 10% Net Profit royalty to the vendors,

for the following considerations:



$5,655 ($ 5,000 US) for a 90 day option and $ 11,268 ($ 10,000 US) to complete a due diligence within

90 days (paid),



$7,000 ($ 6,000 US) paid January 5, 2007 to the Vendors, with $ 6,000 US payments to be made each

quarter, (all required quarterly payments have been paid),



to complete a $ 50,000 US first phase exploration program conducted by the Vendors,



$ 250,000 US per year upon commencement of production.

On August 1, 2006 six additional unpatented lode mining claims were filed with the Arizona State office of

the Bureau of Land Management on behalf of the Company. On October 16, 2006, the Company exercised its

option and have a 10 year option to purchase up to a 10% net profit interest from the Vendors for US$1.5

million per 5% net profit interest, therefore, having an option on a 100% interest in the Bisbee, Arizona

patented claims. The Gold Hill Project is located approximately 4.5 miles southeast of Bisbee Arizona in the

Warren Mining District of Cochise County (Township 23 South, Range 25 East sections 25 30, 31, and 32).

The Gold Hill Project consists of fourteen patented claims comprising 250 acres.

On July 3, 2008 the Company announced that it has terminated the principle agreement for the Gold Hill

Prospect. Following compilation and review of results of mapping, geochemical sample results and drilling

carried out to July 2008, it was determined that there was insufficient economic mineralization to justify

further exploration expenditures. Property and exploration costs of $273,889 were written off.

The Company has staked 8 claims in Arizona (Cochise County).

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Oil and Gas Properties

Jancik, C-S and Herrmann Wells, Fayette County, Texas

The Company owns 6.5% working interest (4.680% net revenue interest) in the Peters No. 1 Well, in Fayette

County, Texas, and a 7.5% working interest (5.79375% net revenue interest) in each of the C-S #1, Jancik #2

and Herrmann #4 wells, located in Burleson County, Texas. During the fiscal year ended May 31, 2009

revenues of $15,582 ($13,478 US) were recorded from the Texas properties.

Gas Wells, Knox County, Kentucky

On April 7, 2008, the Company entered into an agreement with IAS Energy, Inc., a company with common

directors, to purchase 40% the remaining interest (subject to 40% net revenue interests to others), in the three

gas wells located in Knox and Laurel Counties, Kentucky: the Ken Lee #1 (May 18/06) natural gas well for

$103,045 ($92,500 US); in the Elvis Farris #2 (June 8/06) natural gas well for $104,461 ($92,500 US); and in

the Clarence Bright #1 (July 31/06) natural gas well for $104,673 ($92,500 US).

In consideration, the Company received an initial payment of $25,000 and the balance was to be determined

after an independent valuation report prepared by a qualified petroleum geologist. Subsequent to the fiscal

year ended May 31, 2008, both parties agreed to indefinitely suspend the agreement due to the difficulty of

obtaining an independent valuation report due to the vertical fracture of the wells. As such, the $25,000 paid

to IAS will be applied against future revenue until the balance is fully depleted.

As there has been no determination as to the gas reserves done on any of the wells, the wells were being

depleted straight-line over 10 years, which is their estimated pay-out term. However, due to new reporting

regulations, these wells were written off at May 31, 2008, as there were no proven reserves.

The new operator, Young Oil and Gas, has gone into receivership. Prior to that, the Company earned $5,286

in well revenues during the fiscal year ended May 31, 2009.

Appointment of New Director

On October 30, 2009, Larry Gold was appointed to the board of directors of the Company. Larry Gold is a

self employed barrister and solicitor whose practice is located in downtown Vancouver. A graduate of the

University of British Columbia law school, he was called to the bar in 1974. He has practiced in several areas

of law including securities, commercial and civil and criminal litigation. Over the past 5 years his area of

practice has mainly focused on commercial litigation and consulting related to business contracts and other

business related matters.

Private Placement

On August 18, 2009, the Company closed the non-brokered private placement announced June 25, 2009 and

July 2, 2009. The private placement was oversubscribed by 42,092 Units. The Company has now issued

7,042,092 common share units (the “Units”) as described in the June 25, 2009 and July 2, 2009 news releases.

Units were priced at $0.075 per Unit, for gross proceeds to the Company of $528,157. Each Unit consists of

one common share and one share purchase warrant. Each Warrant is exercisable at a price of $0.10 per share

in the first year or at a price of $0.15 in the second year. If the closing price for the Issuer’s shares on the

TSXV is $0.25 or greater for a period of 20 consecutive days, then the if the issuer gives the Warrant holders

notice, within five trading days of the end of such 20 trading day period, of the new expiry date of the

Warrants, the Warrant holders will have 30 days to exercise their Warrants; otherwise the Warrants will

expire on the 31st day. The aforementioned acceleration conditions shall only apply following the date being

four months and one day from the date of closing the Private Placement. Net proceeds of approximately

$493,679.50 from this private placement will be used for drilling of the Gil claims, accounts payable,

including intercompany payables, and working capital purposes. In connection with the non-brokered

private placement, Teryl has paid finders’ fee of $34,478 in cash.

Subsequent Events

Subsequent to the period ended August 31, 2009, on September 10, 2009, the Company entered into a public

relations agreement with Maximus Strategic Consulting Inc. for a term of three months. The Company has

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paid $26,250 upon commencement of the contract. On September 21, 2009, the Company entered into a

second public relations agreement with KCrew Communications Inc. for a term of three months for service

fees of $7,500 per month.

In October 2009, we announced that the 2009 work program on the Gil Mineral claims completed 15,295 feet

of drilling, primarily targeting the joint venture’s Sourdough Ridge prospect near its Gil deposit. The current

drilling along Sourdough Ridge has drill indicated a mineralized zone at least 1,500 feet long which remains

open to the east. The Sourdough Ridge zone is adjacent to and east of the Main Gil zone, which is part of the

joint venture property. The Main Gil zone has a 2,500 foot long mineralized zone with an average of 0.04

ounces of gold per ton. Further details are set out in our news release dated October 20, 2009.

Risks and Uncertainties

The Company is subject to a number of risk factors due to the nature of its business and the present stage of

development. The following risk factors should be considered:

RISK FACTORS RELATED TO OUR BUSINESS

The Company is subject to a number of risk factors due to the nature of its business and the present stage of

development. The following risk factors should be considered:

General

The Company is listed on the TSX Venture Exchange and trades on the OTC BB. We are engaged in the

acquisition, exploration and development of natural resource properties. We currently have mineral property

interests in Arizona, Alaska and British Columbia. The main exploration and development work over the last

several years has taken place on the Gil claims (gold prospect) located in the Fairbanks Mining District,

Alaska.

During the three months August 31, 2009, the Company received an aggregate of $571,281 from the

completion of two private placements which closed on June 8, 2009 and August 18, 2009, respectively. In

the final quarter of the year ended May 31, 2009, a further $115,875 was received for share subscriptions, for

total proceeds from financing of $687,156. These proceeds have been allocated to the administrative

operations of the Company and towards exploration and development of the Gil Mining Claims.

The amount of the Company’s exploration and development and administrative expenditures is related to the

level of financing activities that are being conducted. Consequently, the Company may be unable to fulfill its

commitments to Fairbanks Gold Mining, Inc. There may not be predictable or observable trends in the

Company’s business activities and comparisons of financial operating results with prior years may not be

meaningful.

Trends

Our financial success is dependent upon the ability to bring our mineral properties to production. There can

be no assurances that our properties have defined ore bodies with reserves and resources, and our proposed

exploration programs are only an exploratory search for ore. Other than as disclosed herein, the Company is

not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have

a material effect on the Company’s sales or revenues, income from continuing operations, profitability,

liquidity or capital resources, or that would cause reported financial information not necessarily to be

indicative of future operating results of financial condition.

We may not be able to secure the financing necessary to explore, develop and produce our mineral

properties.

There is no assurance that we will be able to secure the financing necessary to continue our exploration and

development and operations. We do not presently have sufficient financial resources or operating cash-flow

to undertake solely all of our planned exploration and development programs. The development of our

properties depends on our ability to obtain additional required financing or obtaining joint venture partners.

Our cash needs may vary materially from those now planned because of results of exploration or changes in

the focus and direction of our exploration program, results of laboratory and field testing, requirements of

regulatory agencies and other factors.

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We have no credit facility or other committed sources of capital. To the extent capital resources are

insufficient to meet future capital requirements, we will have to raise additional funds to continue our

development and operations. There can be no assurance that such funds will be available on favorable terms,

or at all. To the extent that additional capital is raised through the sale of equity or convertible debt

securities, the issuance of such securities could result in dilution to our shareholders. If adequate funds are

not available, we may be required to curtail operations significantly or to obtain funds on unattractive terms.

Our inability to raise capital would have a material adverse effect on us.

As noted in our consolidated financial statements for the three months ended August 31, 2009 we have

incurred significant operating losses and have an accumulated deficit of $9,617,158 at August 31, 2009.

Furthermore, we have a working capital deficiency of $213,849 as at August 31, 2009. This is not sufficient

to achieve our planned business objectives. Our ability to continue as a going concern is dependent on

continued financial support from our shareholders and other related parties, our ability to raise equity capital

financing, and the attainment of profitable operations, external financings and further share issuance to meet

our liabilities as they become payable and satisfy working capital and operating.

Management and directors

The Company is dependent on a relatively small number of directors and officers. The loss of certain

members of our management and staff could adversely affect our business and the successful exploration,

development and production of our mineral properties. Our present officers and directors have other full-

time positions or part-time employment unrelated to our business. Some officers and directors will be

available to participate in management decisions on a part-time or as-needed basis only. Our management

may devote time to other companies or projects which may compete directly or indirectly with us. We do not

have “key man” life insurance on such officers and currently have no plans to obtain such assurance.

Certain of the Company’s directors and officers are also directors and/or officers and/or shareholders of

potential competitors of the Company, giving rise to potential conflicts of interest.

Several of the Company’s directors and officers are also directors, officers or shareholders of other

companies. In particular, Mr. Robertson, Ms. Lorette, Mrs. Robertson and Ms. van Oord are directors and/or

officers of Linux Gold Corp., a public natural resource exploration company that shares office space and

administrative staff with the Company. We entered into an agreement with Linux Gold Corp. whereby the

Company could earn up to 50% of the Fish Creek claim. In addition, Mrs. Robertson and Mr. Robertson are

directors and officers of SMR Investments Ltd., which, together, hold approximately 15.75% of the Common

Shares of the Company. Some of our directors and officers are engaged and will continue to be engaged in

the search for additional business opportunities on behalf of other corporations, and situations may arise

where these directors and officers will be in direct competition with the Company. Such associations may

give rise to conflicts of interest from time to time. Such a conflict poses the risk that the Company may enter

into a transaction on terms which could place the Company in a worse position than if no conflict existed.

Conflicts, if any, will be dealt with in accordance with the relevant provisions of the BCA. The Board has

resolved that any transaction involving a related party to the Company is required to be reviewed and

approved by the Company’s Audit Committee. The Company’s directors are required by law to act honestly

and in good faith with a view to the best interests of the Company and to disclose any interest which they

many have in any project or opportunity in respect of which the Company is proposing to enter into a

transaction.

Our business may be affected by such matters as changes in general economic conditions, changes in

laws, regulations, and other factors.

From time to time, and presently, during the current economic downtown, our business may be affected by

such matters as changes in general economic conditions, changes in laws and regulations, taxes, tax laws,

prices and costs, and other factors of a general nature which may have an adverse effect on our business.

Our mineral resources competitors have greater financial and technical measures and we may not be able

to acquire additional attractive mineral properties on acceptable terms.

Significant and increasing competition exists for mineral opportunities in Canada and the United States.

There are a number of large established mineral companies with substantial capabilities and greater financial

and technical resources than us. We may be unable to acquire additional attractive mineral properties on

terms we consider acceptable. Accordingly, our exploration programs may not yield any new reserves or

result in any commercial mineral operations.

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We face strong competition from larger oil and gas companies, which could harm our business and ability

to operate profitably.

The oil and gas exploration and production business is highly competitive. Many of our competitors have

substantially larger financial resources, staffs and facilities. Major oil and gas companies are often better

positioned to obtain the rights to exploratory acreage for which we may compete. If we are unable to

adequately address our competition, including, but not limited to, finding ways to secure profitable oil and

gas producing properties, our ability to earn revenues will suffer.

RISK FACTORS RELATED TO THE NATURAL RESOURCE INDUSTRY

The Company faces risks related to the exploration and potential development of its properties.

The exploration and development of mineral deposits involves significant risks. It is impossible to ensure

that the current and future exploration programs and/or feasibility studies on the Company’s existing mineral

properties will establish reserves, or whether any of the Company’s exploration stage properties can be

brought into production. Few properties that are explored are ultimately developed into producing mines. At

present, none of our properties have defined ore bodies with reserves and resources, and our proposed

exploration programs are an exploratory search for ore. Whether an ore body will become commercially

viable depends on many factors, including: the characteristics of the deposit, such as size, grade and

proximity to infrastructure; metal prices, which cannot be predicted and which have been highly volatile in

the past; mining, processing and transportation costs; and the willingness of lenders and investors to provide

project financing; and governmental regulations, including, without limitation, regulations relating to prices,

taxes, royalties, land tenure, land use, importing and exporting materials, foreign exchange, environmental

protection, employment, worker safety, transportation, and reclamation and closure obligations.

The Company is also subject to the risks normally encountered in the mining industry, such as: unusual or

unexpected geological formations; natural disasters; power outages and water shortages; cave-ins, land

slides, and other similar mining hazards; inability to obtain suitable or adequate machinery, equipment, or

labour; and other known and unknown risks involved in the operation of mines and the conduct of

exploration.

Substantial expenditures are required to establish reserves through drilling, to develop metallurgical

processes to extract metal from ore and to develop the mining and processing facilities and infrastructure at

any site chosen for mining. Depending on the price of minerals, the Company may determine that it is

impractical to commence, or, if commenced, continue exploration into commercial production. Such a

decision would negatively affect the Company’s profits and may affect the value of its equity.

We have no current mining operations and if we ever commence mining operations we face certain risks,

any of which could result in our ceasing operations.

We have no current mining operations and no revenue from mining operations. If we ever commence actual

mining operations, such operations would face the risk of changing circumstances, including but not limited

to: failure of production to achieve metal recovery levels indicated by pre-production testing of drill core and

bulk samples; estimates of reserves being adversely affected by encountering unexpected or unusual

geological formations; production costs being adversely affected by unforeseen factors such as substantial

adverse changes in exchange rates or changes in environmental protection requirements, breakdowns and

other technical difficulties, slides, cave-ins or other natural disasters, work interruptions or labor strikes; the

grade of ore actually mined being lower than that indicated by drilling results; persistently lower market

prices of the products mined than those used to determine the feasibility of mining a mineral occurrence;

adverse changes in interest rates that may apply to project development debt. In addition, we have no

experience in developing mining properties into production and its ability to do so will be dependent upon

securing the services of appropriately experienced personnel or entering into agreements with other major

mining companies which can provide such expertise.

Our estimates of any mineral deposits on our properties may not change.

Our estimates of any mineral deposits on our properties may not change. We have prepared all figures with

respect to the size and grade of mineralized deposits included herein, or, in some instances have been

prepared, reviewed or verified by independent mining experts, these amounts are estimates only and any

identified mineralized deposit may not ever qualify as a commercially viable mineable ore body that can be

legally and economically exploited.

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The seasonality in Alaska can be extreme and can cause interruptions or delays in our activities.

Certain of our properties are located in Alaska. The weather during the colder seasons in these areas can be

extreme and can cause interruptions or delays in our activities. As a result, our activities in these regions are

seasonal and the preferred time for work is limited to the spring and summer when costs are more reasonable

and access to the properties is easier.

Any oil and gas we may discover or produce may not be readily marketable at the time of production,

delaying our ability to generate meaningful revenue.

Crude oil, natural gas, condensate and other oil and gas products are generally sold to other oil and gas

companies, government agencies and other industries. The availability of ready markets for oil and gas that

we might discover and the prices obtained for such oil and gas depend on many factors beyond our control,

including: the extent of local production and imports of oil and gas; the proximity and capacity of pipelines

and other transportation facilities; fluctuating demand for oil and gas; the marketing of competitive fuels; and

the effects of governmental regulation of oil and gas production and sales. Natural gas associated with oil

production is often not marketable due to demand or transportation limitations and is often flared at the

producing well site. Pipeline facilities do not exist in certain areas of exploration and, therefore, any actual

sales of discovered oil and gas might be delayed for extended periods until such facilities are constructed.

We are subject to extensive and changing environmental legislation, regulation and actions.

We are subject to extensive and changing environmental legislation, regulation and actions in connection

with our operations and properties. We cannot predict what environmental legislation, regulation or policy

will be enacted or adopted in the future or how future laws and regulations will be administered or

interpreted. The recent trend in environmental legislation and regulation, generally, is toward stricter

standards and this trend is likely to continue in the future. This recent trend includes, without limitation, laws

and regulations relating to air and water quality, mine reclamation, waste handling and disposal, the

protection of certain species and the preservation of certain lands. These regulations may require the

acquisition of permits or other authorizations for certain activities. These laws and regulations may also limit

or prohibit activities on certain lands. Compliance with more stringent laws and regulations, as well as

potentially more vigorous enforcement policies or stricter interpretation of existing laws, may necessitate

significant capital outlays, may materially affect the Company’s results of operations and business, or may

cause material changes or delays in the Company’s intended activities.

Our operations may require additional analysis in the future including environmental and social impact and

other related studies. We may not be able to obtain or maintain all necessary permits that may be required to

continue our operation or our exploration of our properties or, if feasible, to commence development,

construction or operation of mining facilities at such properties on terms which enable operations to be

conducted at economically justifiable costs.

We may have no direct contractual relationship in certain mineral properties that have been granted by

third parties.

Our rights to acquire interests in certain mineral properties have been granted by third parties who

themselves hold only an option to acquire such properties. As a result, we may have no direct contractual

relationship with the underlying property holder.

UNCERTAINTIES AND RISKS RELATING TO COMMON SHARES

There is only a limited public market for our common shares on the TSX Venture Exchange and the OTC

Bulletin Board and that market is extremely volatile.

There is only a limited public market for our common shares on the TSX Venture Exchange and the OTC

Bulletin Board, and there is a risk that a broader or more active public trading market for our common shares

will never develop or be sustained, or that current trading levels will not be sustained. The market price for

the common shares on the TSX Venture Exchange and the OTC Bulletin Board has been and we anticipate

will continue to be extremely volatile and subject to significant price and volume fluctuations in response to a

variety of external and internal factors. This is especially true with respect to emerging companies such as

ours.

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1.4 Results of Operations

The following analysis of the Company's operating results for the three months ended August 31, 2009

includes a comparison against the same period for the previously completed financial year ended May 31,

2008.

Revenue

The Company experienced a reduction in revenues from oil and gas sales from $7,873 in 2008 to $1,007 in

2009. This is the result of the operator of the Kentucky gas wells, Young Oil and Gas, going into

receivership during the previous fiscal year.

Expenses

Period ending August 31

Variance

2009

2008

Operating expenses consist of the following:

(Percentage)

Amortization of equipment

578

757

(23.6)

Bad debts

828

0.0

Filing and regulatory fees

1,093

4,039

(72.9)

Foreign exchange loss (gain)

(10,017)

4,314

332.2

Management and directors fees

24,510

22,358

9.6

Office and sundry

4,422

2,603

69.9

Office rent and utilities

3,630

3,035

19.6

Oil and gas production, royalties and other

179

6,505

(97.2)

Professional fees

4,765

14,670

(67.5)

Publicity, promotion and investor relations

24,212

54,269

(55.4)

Secretarial and employee benefits

12,490

10,439

19.6

Telephone

1,835

2,831

(35.2)

Transfer agent fees

1,320

967

36.5

Travel, auto and entertainment

7,463

7,145

4.5

Results of Operations for the three months ended August 31, 2009 (“2009”) compared to three months

ended August 31, 2008 (“2008”)

For the three months ended August 31, 2009, the Company realized a net loss of $86,794 or $0.002 per share,

as compared to a net loss of $105,713 or $0.002 per share for the three months ended August 31, 2008. This

decrease in net loss is mainly the result of lower general and administrative expenses and reduced amounts

for oil and gas revenues and interest expense, as well as a decrease in recoverable expenditures over the prior

year.

Total general and administrative expenses decreased from $133,932 in 2008 to $77,308 in 2009.

Amortization of equipment decreased from $757 in 2008 to $578 in 2009 as there was a lower cost base from

which to depreciate. There were no purchases or disposals of equipment during the quarter. Bad debts

expense increased to $828 in 2009 from $nil in 2008. With Young Oil and Gas in receivership and

infrequent receipts from the operator of the other wells, the Company made the decision to set up an

allowance against the oil and gas revenues. Filing and regulatory fees decreased from $4,039 in 2008 to

$1,093 in 2009. The majority of the expenditures in the early part of the last fiscal year were related to

getting the Company listed on the OTC-BB and Frankfurt stock exchanges. No similar expenses were

incurred in 2009. The strengthening Canadian dollar resulted in a foreign exchange gain of $10,017 in 2009

compared to a loss of $4,314 in 2008. Management and directors’ fees increased to $24,510 in 2009 from

$22,358 in 2008. The difference is mainly the result of an increase in the number of staff and the dollar

amounts of wages and benefits paid, as well as the addition of an individual responsible for financial

reporting and compliance. Office and sundry expense increased from $2,603 in 2008 to $4,422 in 2009.

Courier, postage costs and related office expenses were higher in 2009 as a result of increased activity in the

Company and the purchase of computer equipment. Office rent and utilities increased to $3,630 in 2009 from

$3,035 in 2008 as the result of a modest increase in rent in the latter half of fiscal 2009. Oil and gas

production expenses decreased from $6,505 in 2008 to $179 in 2009 as a result of reduced activity on the oil

and gas properties. Professional fees decreased to $4,765 in 2009 from $14,670 in 2008. Legal fees declined

-9-

as a result of decreased work relating to the OCT-BB and Frankfurt stock exchange listings. Accounting and

auditing fees decreased due to lower than expected billings in the first quarter. Publicity, promotion and

investor relations decreased from $54,269 in 2008 to $24,212 in 2009 as a result of reduced promotional

efforts in light of the economic downturn. Secretarial and employee benefits increased to $12,490 in 2009

compared to $10,439 in 2008. The difference is mainly the result of an increase in the number of staff and

the dollar amounts of wages and benefits paid. Telephone expense declined to $1,835 in 2009 from $2,831

in 2008, due to reduced promotional efforts in the current period. Transfer agent fees increased to $1,320 in

2009 from $967 in 2008 as a result of the financings that were completed during the current quarter. Travel,

auto and entertainment fees increased slightly from $7,145 in 2008 to $7,463 in 2009, resulting from

increased travel costs during the period.

In addition to the decrease in general and administrative expenses, there was also a reduction in other income

(expenses) for the current three month period. Oil and gas revenues decreased from $7,873 in 2008 to $1,007

in 2009 as a result of reduced activity on the oil and gas properties. Interest income decreased from $678 in

2008 to $10 in 2009 as a result of lower cash balances in the Company. Interest expense increased to $611 in

2009 from $187 in 2008 as a result of interest payments on the convertible loans. The recovery of previously

written off receivables decreased from $26,577 in 2008, as there were no similar recoveries in the current

quarter. Write-offs of exploration expenditures increased from $6,722 in 2008 to $9,892 in 2009. This is the

result of increased activity on mineral properties during the current period.

During the three month period ended August 31, 2009 the Company raised $571,281 through subscriptions to

its common shares, compared to $nil raised from the issuance of common shares for cash during same period

in 2008.

The Company made net repayments to related parties of $33,116 during the three month period ended August

31, 2009, compared to net repayments $28,615 during the same period in 2008.

Significant Projects Without Operating Revenue

Mining and Exploration Operations

Gil Mineral Claims

The Company owns a 20% interest in the Gil Mineral Claims. Kinross Gold Corporation owns the other 80%

of the claims and Kinross acts as operator of the project. Kinross, as the operator of the Gil Mineral Claims,

determines whether exploration work will occur from year to year. Kinross and the Company each contribute

to annual exploration costs, if any, on an 80:20 ratio with net profits distributed in that same proportion in the

event of production.

During the three month period ended August 31, 2009 a total of $258,600 ($226,927 US) was spent on the

Gil Mineral Claims. No expenditures or annual exploration expenses were incurred by the Company during

the fiscal years ended May, 2008 or 2007 as Kinross did not provide us with a formal Budget and work

program for these fiscal years.

In March, 2009, our joint venture partner, Fairbanks Gold Mining, Inc. (FGMI), a subsidiary of Kinross Gold

Corporation, reported it had approved the 2009 exploration budget of US$1,644,000 with the following

major goals:

1. Ground magnetometer survey concentrating on Sourdough Ridge;

2. Delineate mineralized zones and establish a resource base at Sourdough Ridge.; and

3. Expand resource at North Gil..

These goals are to further delineate the strike extension of the mineralized zone, and to infill between step-

out holes, in order to gain a better understanding of ore-zone continuity, and to establish a resource base. The

2009 work plan calls for ground geophysics, 10,000 feet of RC drilling, and 6,000 feet of HQ-NQ core

drilling. Drillhole collar locations will be selected upon completion of the geophysical survey. In addition,

samples will be collected for a preliminary column leach study.

10- -

The geophysical survey began in March 2009 and the remainder of the program began in mid-April, and will

extend through the end of 2009. The bulk of the expenditures will occur between March and September,

2009. See above “Period Highlights” for further information.

A total of US$9,000,000 has been expended by the joint venture partners between 1992 and 2009, with Teryl

and Kinross accounting for 20% and 80% respectively of total expenditures.

Management believes the current gold assay results are extremely favorable compared to the adjacent

producing property, Fort Knox Mine, with its values of .03 ounces per ton.

During the three months ended August 31, 2009, the Company’s efforts have been focused on the exploration

of the Gil Venture Claims.

1.5 Summary of Quarterly Results

The following is a summary of the Company’s financial results for each of the Company’s eight most

recently completed quarters:

The following information is provided for each of the Company’s eight most recently completed quarters:

Quarter Ending

Net Earnings (Loss)

Diluted per share

Per Share

August 31, 2009

(86,794)

(0.002)

May 31, 2009

(152,928)

(0.003)

February 28, 2009

(65,557)

(0.001)

November 30, 2008

(130,375)

(0.003)

August 31, 2008

(105,713)

(0.002)

May 31, 2008

(774,025)

(0.02)

February 29, 2008

(165,272)

(0.004)

November 30, 2007

(124,427)

(0.003)

The changes in revenue during the above eight quarters are due to fluctuations in oil and gas prices and the

reduction in activity on the oil and gas properties due to the bankruptcy of the operators of one of the wells.

The changes in net loss are due to availability of funds from share issuances and the timing of the receipt of

supplier invoices for goods and services. There is no seasonality in the company’s business except for

mineral claim exploration and development being restricted to appropriate weather constraints.

1.6 Liquidity

During the three months ended August 31, 2009, we financed our operations and received $623,677 by:

 private placement funds received in the net amount of $532,314; and

 proceeds received from a convertible loan of $91,363.

The Company’s cash position increased to $119,271 at August 31, 2009 as compared to $79,159 at May 31,

2009. These proceeds will mainly be used to fund the 2009 Gil property exploration project.

The planned expenditures or deferred costs for the Company’s portion of the 2009 Gil Exploration program

is estimated at approximately at US$330,000 being 20% of the 2009 budget.

1.7 Capital Resources

As at August 31, 2009, the Company had a working capital deficit of $213,849 as compared to a working

capital deficit of $393,518 at May 31, 2009.

During the three months ended August 31, 2009, we used cash in the amount of $208,983 on operating

activities as compared to $100,798 for the same period last year for an increase of $108,185. The completion

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of two private placements and the proceeds from a convertible loan have provided the Company with

sufficient funding to settle some of its outstanding accounts payable.

During the three moths ended August 31, 2009, the Company completed a private placement, whereby we

issued 2,120,000 units at a price of $0.075 per unit for gross proceeds to the Company of $159,000. Each

unit consisted of one common share and one-half non-transferable share purchase warrant, two one-half

warrants entitling the holder to acquire one additional common share of the Company for a period of one

year at a price of $0.10 per share for a period of one year. The Company incurred finders’ fees of $3,675 in

connection with the private placement, which will be included in share issuance costs. Share subscriptions

totaling $115,875 were received during the first quarter of the 2009 fiscal year.

During the period ended August 31, 2009, on August 18, 2009, the Company completed a private placement,

whereby we issued 7,042,092 units at a price of $0.075 per unit for gross proceeds to the Company of

$528,157. Each unit consisted of one common share and one non-transferable share purchase warrant,

entitling the holder to acquire one additional common share of the Company at a price of $0.10 per share in

the first year and $0.15 per share in the second year. The Company incurred finders’ fees of $34,478 in

connection with the private placement, which will be included in share issuance costs.

During the period ended August 31, 2009, on July 15, 2009, the Company entered into two promissory note

agreements with a related party for $60,000 and US$27,000 to be paid on or before June 30, 2010. The two

promissory notes have an interest rate of 8% per annum to be paid monthly commencing on August 15, 2009.

The principal amounts are convertible into shares of the Company at $0.20 per share upon regulatory

approval. As at August 31, 2009, the equity component of the convertible loan was valued at $2,770 (2008 -

$nil). As of August 31, 2009, $596 (2008 - $nil) of interest has been paid to the lender.

Since its incorporation, the Company has financed its operations almost exclusively through the sale of its

common shares to investors. The Company expects to finance operations through the sale of equity in the

foreseeable future as it generates limited revenue from business operations. There is no guarantee that the

Company will be successful in arranging financing on acceptable terms. To a significant extent, the

Company’s ability to raise capital is affected by trends and uncertainties beyond its control. These include the

market prices for base and precious metals and results from the Company’s exploration programs. The

Company’s ability to attain its business objectives may be significantly impaired if prices for metals fall or if

results from exploration programs on its properties are unsuccessful.

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a

going concern in order to pursue the exploration and development of its mineral and oil and gas properties

and to maintain a flexible capital structure for its projects for the benefit of its stakeholders. As the Company

is not earning significant revenues from operations, its principal source of funds is from the issuance of

common shares.

We have been successful in the past in acquiring capital through the issuance of shares of our Common

Stock, and through advances from related parties. Although we intend to continue utilizing these sources,

there has been no assurance in the past that these sources and methods would continue to be available in the

future. In the event that no other sources of capital were available to us in the future, on a reasonable

financial basis, we would face the same obstacles as many small, undercapitalized companies do, and, in the

worst case, we could be forced to reorganize or liquidate, either of which consequence would likely have an

adverse financial effect upon our shareholders.

In the management of capital, the Company includes the component of shareholders’ equity as well as cash,

receivables, related party receivables and short-term investment balances.

The Company manages the capital structure and makes adjustments to it in light of changes in economic

conditions and the risk characteristics of the underlying assets. To maintain or adjust the capital structure,

the Company may attempt to issue new shares, acquire or dispose of assets or adjust the amount of cash and

short-term investments, if any.

The Company plans to continue raising funds through sale of capital stock and advances from related parties.

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1.9 Transactions with Related Parties

Pursuant to a management agreement dated May 1, 1996, the Company engaged SMR Investments Ltd. to

provide services to the Company. SMR is a private company which is controlled by Susanne Robertson, a

director of the Company and the spouse of the Company’s president. The Company’s President is also a

director and officer of SMR. SMR provides management services to the Company in consideration of a

monthly fee of $2,500 plus applicable taxes. These services include providing general management services

and ongoing operations. The agreement may be terminated by the mutual consent of the parties. The

Company was charged management fees by SMR of $7,500 during the three month period ended August 31,

2009 (2008 - $7,500). As of August 31, 2009, $nil (May 31, 2009 - $77,883) was payable to SMR by the

Company, and the amount was included in accounts payable and accrued liabilities.

The Company shares office space, staff and service providers with a number of private and public companies

with several directors in common. On June 15, 2006, the Company entered into a lease agreement with

Linux Gold Corp. a company with common officers and directors, to lease office premises for the period of

three years and the option to renew the lease for an additional three-year term, in consideration for $16,994

per year. During the three months ended August 31, 2009 $3,630 (2008 - $3,035) was paid.

In addition to the above, the Company incurred the following related party transactions during the three

month period ended August 31, 2009: directors fees of $4,500 (2008 - $4,500) were paid to the President of

the Company; administration consulting fees of $5,100 (2008 - $6,600) were paid to a director of the

Company; and secretarial and consulting fees of $2,850 (2008 - $2,850) were paid to a director of the

Company. Fees of $2,512 (2008 - $3,758) were paid to KLR Petroleum Ltd. (which is controlled by an

officer of the Company) for administration of the Company payroll and benefit plan.

During the period ended August 31, 2009, on July 15, 2009, the Company entered into two promissory note

agreements with a related party for $60,000 and US$27,000 to be paid on or before June 30, 2010. The two

promissory notes have an interest rate of 8% per annum to be paid monthly commencing on August 15, 2009.

The principal amounts are convertible into shares of the Company at $0.20 per share upon regulatory

approval. As at August 31, 2009, the equity component of the convertible loan was valued at $2,770 (2008 -

$nil). As of August 31, 2009, $596 (2008 - $nil) of interest has been paid to the lender.

The above transactions have been in the normal course of operations and are recorded at their exchange

amounts.

1.13 Changes in Accounting Policies including Initial Adoption

Accounting policies implemented effective June 1, 2008

On June 1, 2008, the Company adopted CICA Handbook Section 3862, “Financial Instruments –

Disclosures” (“Section 3862”) and Section 3863, “Financial Instruments – Presentation” (“Section 3863”).

Section 3862 requires disclosure of detail by financial asset and liability categories. Section 3863 establishes

standards for presentation of financial instruments and non-financial derivatives. Section 3863 deals with the

classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the

classification of related interest, dividends, losses and gains, and the circumstances in which financial assets

and financial liabilities are offset. See Note 3 for additional details.

On June 1, 2008, the Company adopted CICA Handbook Section 1535, “Capital Disclosures”. This section

establishes standards for disclosing information about an entity’s objectives, policies, and processes for

managing capital. See Note 15 for additional details.

On June 1, 2008, the Company adopted CICA Handbook Section 3031, “Inventories”, which provides more

guidance on the measurement and disclosure requirements for inventories. Specifically, the new

pronouncement requires inventories to be measured at the lower of cost and net realizable value, and

provides guidance on the determination of cost and its subsequent recognition as an expense, including any

write-down to net realizable value. The new section had no material change to the Company’s financial

position or results of operation.

Accounting policies to be implemented effective June 1, 2009

13- -

In February 2008, the CICA issued Handbook Section 3064, “Goodwill and Intangible Assets”, which

replaces CICA HB Section 3062, “Goodwill and Intangible Assets”, and CICA HB Section 3450, “Research

and Development Costs”; and amendments to Accounting Guideline (“AcG”) 11, “Enterprises in the

Development Stage”, EIC-27, “Revenues and Expenditures during the Pre-operating Period”, and CICA HB

Section 1000, “Financial Statement Concepts.” The standard intends to reduce the differences with

International Financial Reporting Standards (“IFRS”) in the accounting for intangible assets and results in

closer alignment with U.S. GAAP. Under current Canadian standards, more items are recognized as assets

than under IFRS or U.S. GAAP. The objectives of Section 3064 are to reinforce the principle-based

approach to the recognition of assets only in accordance with the definition of an asset and the criteria for

asset recognition; and clarify the application of the concept of matching revenues and expenses such that the

current practice of recognizing assets that do not meet the definition and recognition criteria are eliminated.

The standard will also provide guidance for the recognition of internally developed intangible assets

(including research and development activities), ensuring consistent treatment of all intangible assets,

whether separately acquired or internally developed.

The new section will be applicable to the Company’s financial statements for its fiscal year beginning June 1,

2009. The Company is currently evaluating the impact of the adoption of this new section on its consolidated

financial statements.

Accounting policies not yet adopted

In October 2008, the CICA issued Handbook Section 1582, “Business Combinations”, which establishes new

standards of accounting for business combinations. This is effective for business combinations for which the

acquisition date is on or after the beginning of the first annual reporting period beginning on or after January

1, 2011. The Company is considering early adoption to coincide with the adoption of IFRS. This adoption is

not expected to have an impact on the Company’s financial position, earnings or cash flows.

In October 2008, the CICA issued Handbook Section 1601, “Consolidated Financial Statements”, and

Section 1602, “Non-controlling Interests”, to provide guidance on the preparation of consolidated financial

statements and accounting for non-controlling interests subsequent to a business combination. The section is

effective for fiscal years beginning on or after January 2011. This adoption is not expected to have an impact

on the Company’s financial position, earnings or cash flows.

In January 2009, the CICA approved EIC-173, “Credit Risk and the Fair Value of Financial Assets and

Financial Liabilities.” This guidance clarified that an entity’s own credit risk and the credit risk of the

counterparty should be taken into account in determining the fair value of financial assets and financial

liabilities including derivative instruments. The Company has evaluated the new section and determined that

adoption of these new requirements will have no impact on the Company’s consolidated financial statements.

International Financial Reporting Standards

In February 2008, the Accounting Standards Board announced that publicly accountable entities will be

required to prepare financial statements in accordance with IFRS for interim and annual financial statements

for fiscal years beginning on or after January 1, 2011. The Company is assessing the impact of the

conversion from GAAP to IFRS on the financial statements and will develop a conversion implementation

plan.

1.14 Fair Value of Financial Instruments

Financial instruments carrying value and fair value

The Company’s financial instruments consist of cash, receivables, investments, advances to and from related

parties, and accounts payable and accrued liabilities.

Cash is designated as “held-for-trading” and measured at fair value. Receivables are designated as “loans

and receivables”. Investments are designated as “available-for-sale”. Accounts payable and accrued

liabilities are designated as “other financial liabilities”.

14- -

The carrying value of cash, receivables, and accounts payable and accrued liabilities approximate their fair

values due to their immediate or short-term maturity. Investments are recorded at fair value based on quoted

market prices at the balance sheet date.

Foreign exchange risk

The Company is primarily exposed to currency fluctuations relative to the Canadian dollar through

expenditures that are denominated in US dollars. Also, the Company is exposed to the impact of currency

fluctuations on its monetary assets and liabilities.

The operating results and the financial position of the Company are reported in Canadian dollars.

Fluctuations in exchange rates will, consequently, have an impact upon the reported operations of the

Company and may affect the value of the Company’s assets and liabilities.

The Company currently does not enter into financial instruments to manage foreign exchange risk.

The Company is exposed to foreign currency risk through the following financial assets and liabilities

denominated in currencies other than Canadian dollars:

Accounts

payable and

accrued

August 31, 2009

Cash

liabilities

US dollars

493 $

23,326

Accounts

payable and

accrued

May 31, 2009

Cash

liabilities

US dollars

1,210 $

106,319

At August 31, 2009, with other variables unchanged, a +/-10% change in exchange rates would

increase/decrease pre-tax loss by +/- $2,563.

Interest rate risk

The Company is not exposed to significant interest rate risk.

Market risk

The Company is exposed to market risk arising from its investments in and holdings of marketable equity

securities. Marketable securities are classified as available-for-sale. The Company intends to liquidate the

marketable securities when market conditions are conducive to a sale of these securities. At August 31,

2009, with other variables unchanged, a +/- 10% change in equity prices would increase/decrease pre-tax loss

by +/- $8.

Credit risk

The Company is exposed to credit risk in the amount of its receivables.

15- -

Liquidity risk

The Company has no recent history of profitable operations and its present business is at an early stage. As

such, the Company is subject to many risks common to such enterprises, including under-capitalization, cash

shortages and limitations with respect to personnel, financial and other resources, and the lack of revenues.

The Company has no investments in asset backed commercial paper.

In order to finance the Company’s exploration programs and to cover administrative and overhead expenses,

the Company raises money through equity sales, from the exercise of convertible securities, and from the sale

of investments. There can be no such assurance that it will be able to obtain adequate financing in the future

or that the terms of any financing will be favourable. Many factors influence the Company’s ability to raise

funds, including the state of the resource market and commodities prices, the climate for mineral exploration,

the Company’s track record, and the experience and calibre of its management.

1.15 Other MD&A Requirements

Additional Disclosure for Venture Issuers without Significant Revenue

Additional disclosures concerning the Company’s deferred exploration and development costs and general

and administrative expenses are provided as follows:

During the quarter ended August 31, 2009, the Company incurred $258,600 in exploration and development

costs.

Disclosure of Outstanding Share Data:

The Company’s authorized share capital consists of:

100,000,000

Common shares without par value

5,000,000

Preferred shares with a $1 par value.

The Preferred Shares have attached thereto a right to receive dividends as determined by the Directors. The

Preferred Shares may be issued in series, with special rights and restrictions therefore being determined by

the Directors, subject to regulatory approval.

Commitments:

Outstanding Stock Options

Options outstanding at August 31, 2009 are as follows:

Number of

Exercise

Number

Options

Expiry Date

Price

of Options

Exercisable

November 2, 2011

0.18

25,000

6,250

April 24, 2012

0.15

1,650,000

412,500

November 7, 2012

0.22

25,000

6,250

March 10, 2013

0.21

75,000

18,750

April 23, 2014

0.10

50,000

12,500

1,825,000

456,250

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Outstanding Share Purchase Warrants

Share purchase warrants outstanding August 31, 2009 are as follows:

Exercise

Number

Expiry Date

Price

of Warrants

June 8, 2010

0.10

1,060,000

August 18, 2011

0.10/0.15

7,042,092

8,102,092

As of August 31, 2009, 58,749,620 common shares were issued and outstanding. There were no preferred

shares issued.

Directors and Officers

As at August 31, 2009, the Company had the following directors and officers:

John Robertson

Director, President, Chief Executive Officer and Secretary

Jennifer Lorette

Director

Susanne Robertson

Director

Monique Van Oord

Director and Chief Financial Officer

On October 30, 2009, Mr. Larry Gold was appointed to the Board of Directors of the Company.

The Company is dependent on a small number of key directors and officers. Loss of any one of those persons

could have an adverse affect on the Company; however, the Company does not maintain “key-man”

insurance with respect to any of its management.

Conflicts of Interest

Officers and directors of the Company are officers and/or directors of, or are associated with other public

companies. Such associations may give rise to conflicts of interest. The directors are required by law,

however, to act honestly and in good faith with a view to the best interests of the Company and its

shareholders and to disclose any personal interest which they may have in any material transaction which is

proposed to be entered into with the Company and to abstain from voting as a director for the approval of any

such transaction.

Disclosure Controls and Procedures

The Company realizes the importance of establishing and maintaining internal controls and has designed, or

has caused to be designed under its supervision, disclosure controls and procedures in order to provide

reasonable assurance that material information relating to the Company is made known to them.

The internal controls are reviewed periodically by the Audit Committee and the Board of Directors and

potential weaknesses have become apparent, namely that the Company's small size prohibits:

1. the complete separation of incompatible duties; and

2. retaining specialized staff with respect to current income tax, complex accounting matters and

financial reporting,

and therefore the Company has chosen to utilize outside assistance with respect to these matters to ensure

weaknesses are rectified as they become known. There has been no change in the Company’s disclosure

controls and procedures or in the Company’s internal control over financial reporting that occurred during the

most recently completed quarter that has materially affected, or is reasonably likely to materially affect, the

Company’s disclosure controls and procedures or internal control over financial reporting.

17- -

Caution on Forward-Looking Statements

Certain statements contained in this report on Form 51-102F1 constitute "forward-looking statements." These

statements, identified by words such as “plan,” "anticipate," "believe," "estimate," "should," "expect" and

similar expressions include our expectations and objectives regarding our future financial position, operating

results and business strategy. These statements reflect the current views of management with respect to future

events and are subject to risks, uncertainties and other factors. The Company's actual results, performance or

achievements could differ materially from those expressed in, or implied by, these forward-looking

statements, including those described in the Company's Financial Statements, Management Discussion and

Analysis and Material Change Reports filed with the Canadian Securities Administrators and available at

www.sedar.com, and those described in the Company’s Form 20-F for the fiscal year ended May 31, 2008,

and other current reports, filed with the Securities and Exchange Commission, available at www.sec.gov.

Accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements

will transpire or occur, or if any of them do so, what benefits, including the amount of proceeds, that the

Company will derive therefrom.

Readers are cautioned that the list of factors is not exhaustive. All subsequent forward-looking statements,

whether written or oral, attributable to the Company or persons acting on its behalf are expressly qualified in

their entirety by these cautionary statements. Furthermore, the forward-looking statements contained in this

document are made as at the date of this document and the Company does not undertake any obligation to

update publicly or to revise any of the included forward-looking statements, whether as a result of new

information, future events or otherwise, except as may be required by applicable securities laws.

Approval

The Board of Directors of the Company has approved the disclosure contained in this MD&A. A copy of

this MD&A will be provided to anyone who requests it.

Additional Information

Additional Information relating to the Company is on SEDAR at www.sedar.com

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