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TERYL RESOURCES CORP.

CONSOLIDATED FINANCIAL STATEMENTS

AS AT MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

[exhibit9914002.gif]

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of

Teryl Resources Corp.

We have audited the consolidated balance sheets of Teryl Resources Corp. as at May 31, 2009 and 2008, and the

consolidated statements of operations and comprehensive loss, cash flows, and shareholders’ equity for each of the years in

the three-year period ended May 31, 2009. These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public

Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain

reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a

test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the overall financial

statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the

Company as at May 31, 2009 and 2008, and the results of its operations and its cash flows for each of the years in the three-

year period ended May 31, 2009 in accordance with Canadian generally accepted accounting principles.

Vancouver, Canada

“Morgan & Company”

September 28, 2009

Chartered Accountants

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA-U.S. REPORTING DIFFERENCES

The reporting standards of the Public Company Accounting Oversight Board (United States) for auditors require the

addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by

conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those

described in Note 1 to the consolidated financial statements. Our report to the shareholders, dated September 28, 2009, is

expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions

in the auditor’s report when these are adequately disclosed in the consolidated financial statements.

Vancouver, Canada

“Morgan & Company”

September 28, 2009

Chartered Accountants

[exhibit9914004.gif] [exhibit9914006.gif] [exhibit9914008.gif] [exhibit9914010.gif]

TERYL RESOURCES CORP.

CONSOLIDATED BALANCE SHEETS

(Stated in Canadian Dollars)

May 31

2009

2008

ASSETS

Current

Cash

6,185

215,294

Amounts receivable and prepaid expenses

17,817

61,977

24,002

277,271

Advances to Related Parties (Note 8)

90,529

64,201

Investments (Note 4)

867

2,208

Equipment (Note 5)

10,253

13,283

Mineral Property Interests (Note 7)

196,855

196,855

Deferred Exploration Expenditures (Note 7)

3,052,479

2,932,238

3,374,985

3,486,056

LIABILITIES

Current

Accounts payable and accrued liabilities (Note 11)

286,140

107,364

Advances from related parties (Note 8)

131,380

92,070

417,520

199,434

SHAREHOLDERS’ EQUITY

Share Capital (Note 9)

Authorized:

100,000,000 common shares, voting, no par value

5,000,000 preferred shares, non-voting, $1 par value

Issued and outstanding:

49,587,528 (2008 – 49,587,528) common shares

12,030,233

12,031,827

Share Subscriptions Received

115,875

Contributed Surplus

344,878

332,404

Accumulated Other Comprehensive Loss

(3,157)

(1,818)

Deficit

(9,530,364)

(9,075,791)

2,957,465

3,286,622

3,374,985

3,486,056

Going Concern (Note 1) and Subsequent Events (Note 16)

Approved on behalf of the Board of Directors:

“John Robertson”

Director

“Jennifer Lorette”

Director

The accompanying notes are an integral part of these consolidated financial statements.

TERYL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Stated in Canadian Dollars)

Year Ended

May 31

2009

2008

2007

General and Administrative Expenses

Amortization of equipment

3,030

3,987

4,547

Bad debts

15,377

Filing and regulatory fees

16,785

58,530

18,961

Foreign exchange (gain) loss

(9,938)

2,678

(74)

Management and directors’ fees (Note 11)

110,189

76,284

75,396

Office and sundry

16,446

28,637

21,993

Office rent and utilities (Note 11)

15,471

13,325

10,171

Professional fees

110,201

89,476

87,395

Publicity, promotion and investor relations

97,415

203,580

110,525

Secretarial and employee benefits (Note 11)

45,635

24,630

38,083

Stock-based compensation

12,474

21,311

66,300

Telephone

11,261

11,560

8,417

Transfer agent fees

8,994

8,959

5,894

Travel, auto and entertainment

21,702

35,725

11,193

Operating Loss

(475,042)

(578,682)

(458,801)

Other Income (Expenses)

Miscellaneous income

8,261

19,832

3,029

Interest income

1,487

3,426

613

Oil and gas wells written off

(313,483)

Mineral properties written off

(60,705)

(9,381)

Recoverable expenditures

26,578

Exploration expenditures written off

(15,857)

(213,184)

(1,000)

20,469

(564,114)

(6,739)

Net Loss for the Year

(454,573)

(1,142,796)

(465,540)

Unrealized losses on available-for-sale investments

(1,339)

(649)

Comprehensive Loss for the Year

(455,912)

(1,143,445)

(465,540)

Loss per Share – Basic and Diluted

(0.01)

(0.03)

(0.01)

Weighted Average Number of Common Shares

Outstanding, Basic and Diluted

49,587,528

44,538,405

39,663,029

The accompanying notes are an integral part of these consolidated financial statements.

TERYL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Stated in Canadian Dollars)

Year Ended

May 31

2009

2008

2007

Cash flows from operating activities

Net loss for the year

(454,573)

(1,142,796)

(465,540)

Items not affecting cash

Amortization of equipment

3,030

3,987

4,547

Depletion of oil and gas wells

24,243

Exploration expenditures written off

15,857

213,184

1,000

Mineral properties written off

60,705

9,381

Oil and gas wells written off

313,483

Stock-based compensation

12,474

21,311

116,353

Changes in non-cash working capital items

Amounts receivable and prepaid expenses

44,160

23,140

(6,630)

Accounts payable and accrued liabilities

58,537

(20,734)

105,775

(320,515)

(527,720)

(210,871)

Cash flows from investing activities

Deferred exploration expenditures

(15,857)

(211,509)

(41,624)

Purchase of mineral property interests

(26,474)

(34,231)

Purchase of oil and gas well interests

(25,547)

(209,134)

Purchase of equipment

(5,773)

(15,857)

(263,530)

(290,762)

Cash flows from financing activities

Advances from (to) related parties

12,982

(144,311)

95,765

Share subscriptions received

115,875

Share issuance costs

(1,594)

Share capital issued for cash, net

1,147,908

199,151

127,263

1,003,597

294,944

(Decrease) increase in cash

(209,109)

212,347

(206,689)

Cash, beginning of year

215,294

2,947

209,636

Cash, end of year

6,185

215,294

2,947

Non-Cash Financing and Investing Activities:

Shares issued for mineral properties

16,000

The accompanying notes are an integral part of these consolidated financial statements.

TERYL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Stated in Canadian Dollars)

Share Capital

Accumulated

Share

Other

Subscriptions Contributed Comprehensive

Number

Amount

Received

Surplus

Loss

Deficit

Total

Balance, May 31,

2006

39,468,188 10,624,107

69,972

169,401

- (7,467,455)

3,396,025

Shares issued for cash

upon:

Exercise of

warrants

100,000

20,000

Private placements

1,194,340

179,151

Shares issued for

mineral properties

100,000

16,000

Stock-based

compensation

116,353

Foreign exchange

adjustments on

subscriptions received

Net loss for the year

(465,540)

Balance, May 31,

2007

40,862,528 10,839,258

70,000

285,754

- (7,932,995)

3,262,017

Revaluation of

investments to market

value at June 1, 2007

(1,169)

Unrealized losses on

available-for-sale

investments

(649)

Subscriptions refunded

(70,000)

Shares issued for cash

upon:

Exercise of

stock options

10,000

1,500

Private

placements

8,715,000

1,307,250

Share issuance costs

(90,842)

Stock-based

compensation

21,311

Fair value of brokers’

warrants granted

(25,339)

25,339

Net loss for the year

- (1,142,796) (1,142,796)

Balance, May 31,

2008

49,587,528 12,031,827

332,404

(1,818) (9,075,791)

3,286,622

The accompanying notes are an integral part of these consolidated financial statements.

TERYL RESOURCES CORP.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Stated in Canadian Dollars)

Accumulated

Share Capital

Share

Other

Subscriptions Contributed Comprehensive

Number

Amount

Received

Surplus

Loss

Deficit

Total

Balance, May 31,

2008

49,587,528 12,031,827

332,404

(1,818) (9,075,791)

3,286,622

Unrealized losses on

available-for-sale

investments

(1,339)

Share subscriptions

received

115,875

Share issuance costs

(1,594)

Stock-based

compensation

12,474

Net loss for the year

(454,573)

Balance, May 31,

2009

49,587,528 12,030,233

115,875

344,878

(3,157) (9,530,364)

2,957,465

The accompanying notes are an integral part of these consolidated financial statements.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

1. NATURE OF OPERATIONS AND GOING CONCERN

Teryl Resources Corp. (the “Company”) is a public c ompany incorporated under the British Columbia Business

Corporations Act on July 16, 1985. Its shares are listed on the TSX Venture Exchange (“TSXV”). The C ompany

makes expenditures on acquiring mineral properties and carries out exploration work. It also acquires oil and gas

property interests and participates in drilling wells.

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going

concern, which assumes that the Company will continue in operation for the foreseeable future and will be able to

realize its assets and discharge its liabilities in the normal course of operations. Several adverse conditions cast

substantial doubt on the validity of this assumption. The Company continues to incur operating losses, has limited

financial resources, limited sources of operating cash flow, and no assurances that sufficient funding, including

adequate financing, will be available to conduct further exploration and development of its mineral property projects.

The Company’s ability to continue as a going concern is dependent upon its ability to obtain the financing necessary to

complete its mineral projects by issuance of share capital or through joint ventures, and to realize future profitable

production or proceeds from the disposition of its mineral interests. The Company has a working capital deficiency of

$393,518 (2008 – working capital of $77,837) and ha s incurred a loss of $454,573 in the year ended May 31, 2009

(2008 - $1,142,796; 2007 - $465,540). These consolidated financial statements do not include adjustments that would

be necessary should it be determined that the Company may be unable to continue as a going concern.

If the going concern assumption was not appropriate for these financial statements, adjustments would be necessary in

the carrying values of assets, liabilities, reported income and expenses and the balance sheet classifications used. Such

adjustments could be material.

2. SIGNIFICANT CANADIAN ACCOUNTING POLICIES

a) Consolidation

These consolidated financial statements have been prepared in accordance with Canadian generally accepted

accounting principles (“GAAP”) and include the acco unts of the Company and its wholly-owned subsidiaries,

Argon Investment Corporation (inactive) and Teryl, Inc. Teryl, Inc. was incorporated on November 17, 1988 in the

state of Delaware and registered to do business in the USA, to hold and operate the Alaska mineral property

interests, the Texas oil and gas well interests and the Arizona mineral property interests.

All inter-company transactions are eliminated upon consolidation.

b) Equipment

The Company records its office and automotive equipment at cost and depreciates them on the declining-balance

basis over the estimated useful lives at the following rates:

Office equipment

20% per annum

Automotive equipment

30% per annum

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

2. SIGNIFICANT CANADIAN ACCOUNTING POLICIES (Continued)

c) Accounting for Oil and Gas Well Interests

The Company follows the successful efforts method of accounting for its oil and gas properties, and related

equipment. Costs of exploratory wells are initially capitalized pending determination of proved reserves. Costs of

wells which are assigned proved reserves remain capitalized, while costs of unsuccessful wells are charged to

operations. All other exploration costs, including geological and geophysical costs, are charged to operations as

incurred. Development costs, including the cost of all wells, are capitalized.

Producing properties and significant unproved properties are assessed annually, or as economic events dictate, for

potential impairment. Impairment is assessed by comparing the estimated net undiscounted future cash flows to the

carrying value of the asset. If required, the impairment recorded is the amount by which the carrying value of the

asset exceeds its fair value.

Depreciation and depletion of capitalized costs of oil and gas producing properties are calculated using the straight-

line method over 10 years, which is the estimated pay-out term.

On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation,

depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized.

On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation,

depletion, and amortization with a resulting gain or loss recognized in income. On the sale of an entire interest in

an unproved property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration

the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an

unproved property is sold, the amount received is treated as a reduction of the cost of the interest retained. In joint

ventured oil and gas exploration and production activities, the accounts reflect only the Company’s proportionate

interest in such activities.

d) Accounting for Mineral Property Interests

The Company capitalizes its acquisition costs of mineral properties (including finder’s fees) and the related

exploration and development expenditures by claim groups, or its share of costs on joint ventures, which are to be

amortized as follows:

i) If properties are sold outright – costs are written off entirely against proceeds.

ii) If properties are sold under option-type agreement – on the basis of cash or shares received over the

total undiscounted amount to be received under the agreement, exclusive of royalties or net profit

participation.

iii) If properties are brought into production - on the basis of units of production over the total estimated

reserves recoverable.

iv) If properties are retained, but have no proven economic reserves and are not currently being explored

or developed by the Company or joint venture partner – costs are written down to a nominal value.

v) If properties are abandoned – costs are writte n off entirely.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

2. SIGNIFICANT CANADIAN ACCOUNTING POLICIES (Continued)

e) Revenue Recognition

Revenue associated with the sales of oil and gas are recorded when title passes to the customer. Revenues from oil

and gas production from properties in which the Company has an interest with other producers are recognized on

the basis of the Company’s net working interest.

f) Foreign Exchange Translations

The Company’s functional currency is the Canadian dollar. Transactions recorded in United States dollars have

been translated into Canadian dollars using the temporal method as follows:

i) Monetary items at the rate prevailing at the balance sheet date.

ii) Non-monetary items at the historical exchange rate.

iii) Revenue and expense at the average rates in effect during the year.

Gains or losses arising from translation are included in the consolidated statements of operations.

g) Investments

The Company reports investments in debt and marketable equity securities at fair value based on quoted market

prices or, if quoted prices are not available, discounted expected cash flows using market rates commensurate with

credit quality and maturity of the investment. All investment securities are designated as available-for-sale with

unrealized gains and losses included in other comprehensive income (loss). All realized gains and losses are

recognized in net income (loss) in the period of disposition.

h) Use of Estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles

requires the Company’s management to make estimates and assumptions that affect the amounts reported in the

consolidated financial statements and related notes to the consolidated financial statements. Actual results may

differ from those estimates.

i) Income Taxes

The Company uses the liability method of accounting for future income taxes, whereby future income tax assets

and liabilities are computed based on the differences between the carrying amount of assets and liabilities on the

balance sheet, and their corresponding tax values, using the currently enacted or substantially enacted, income tax

rates expected to apply when these differences reverse. Future income tax assets also result from unused loss carry

forwards and other deductions. The valuation of future income tax assets is reviewed annually and adjusted, if

necessary, by the use of a valuation allowance, which is recorded against any future income tax asset, if it is more

likely that not that the asset will not be realized.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

2. SIGNIFICANT CANADIAN ACCOUNTING POLICIES (Continued)

j) Loss Per Share

Basic loss per share amount is computed using the weighted average number of common shares outstanding during

the year. The Company calculates diluted loss per share using the treasury stock method. Under the treasury stock

method, only instruments with exercise amounts less than the market prices impact the diluted calculations. In

computing diluted loss per share, no shares were added to the weighted average number of common shares

outstanding during the years ended May 31, 2009, 2008 and 2007 for the dilutive effect of employee stock options

and warrants, as they were all anti-dilutive. No adjustments were required to the reported loss from operations in

computing diluted per share amounts.

k) Stock Based Compensation

The Company follows the recommendations of the Canadian Institute of Chartered Accountants (“CICA”)

Handbook (“HB”) Section 3870 – “Stock Based Compens ation and Other Stock Based Payments” to account fo r

stock based transactions with officers, directors and outside consultants. Accordingly, the fair value of stock

options is charged to operations, with an offsetting credit to contributed surplus. The fair value of stock options,

which vest immediately, is recognized at the date of grant; the fair value of options, which vest in the future, is

recognized on a straight-line basis over the vesting period. Stock options granted to outside consultants that vest

over time are valued at the grant date and subsequently re-valued each vesting date. Any consideration received on

exercise of stock options, together with the related portion of contributed surplus, is credited to share capital.

l) Fair Value of Warrants

Proceeds from unit placements are allocated between shares and warrants issued according to their relative fair

value using the residual method to determine the fair value of warrants issued. Warrants issued to brokers are

evaluated by using the Black- Scholes model.

m) Asset Impairment

On an annual basis and when impairment indicators arise, the Company evaluates the future recoverability of its

long-lived assets. Impairment losses or write downs are recorded in the event the net book value of such assets

exceeds the estimated indicated future cash flow attributable to such assets.

n) Asset Retirement Obligations

The Company follows the recommendations in CICA Handbook Section 3110 – “Asset Retirement Obligations”

whereby the legal obligations associated with the retirement of tangible long-lived assets are recorded as liabilities.

The liabilities are calculated using the net present value of the cash flows required to settle the obligation. A

corresponding amount is capitalized to the related asset. Asset retirement costs are charged to earnings in a manner

consistent with the depreciation, depletion and amortization of the underlying asset. The liabilities are subject to

accretion over time for changes in the fair value of the liability through charges to accretion, which is included in

cost of sales and operating expenses. As at May 31, 2009 and 2008, the Company did not have any asset retirement

obligations.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

2. SIGNIFICANT CANADIAN ACCOUNTING POLICIES (Continued)

o) Variable Interest Entities

The CICA issued Accounting Guideline 15, “Consolida tion of Variable Interest Entities”, to provide acc ounting

guidance related to variable interest entities (“VI E”). A VIE exists when the entity’s equity investme nt is at risk.

When a VIE is determined to exist, the guidance requires the VIE to be consolidated by the primary beneficiary.

The Company has determined that it does not have a primary beneficiary interest in VIE.

p) Comparative Figures

Certain comparative figures have been reclassified to conform to the current year’s presentation.

q) Changes in Canadian Accounting Policies

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 Instr uments – Presentation” (“Section 3863”). Section 3 862

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.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

2. SIGNIFICANT CANADIAN ACCOUNTING POLICIES (Continued)

q) Changes in Canadian Accounting Policies (Continued)

Accounting policies to be implemented effective June 1, 2009

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

CICA HB Section 3062, “Goodwill and Intangible Asse ts”, and CICA HB Section 3450, “Research and

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

Stage”, EIC-27, “Revenues and Expenditures during t he Pre-operating Period”, and CICA HB Section 1000,

“Financial Statement Concepts.” The standard inten ds 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 Secti on

1602, “Non-controlling Interests”, to provide guida nce 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 entit y’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.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

2. SIGNIFICANT CANADIAN ACCOUNTING POLICIES (Continued)

q) Changes in Canadian Accounting Policies (Continued)

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.

3. 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 measur ed at fair value. Receivables are designated as “l oans and

receivables”. Investments are designated as “avail able-for-sale”. Accounts payable and accrued liabi lities are

designated as “other financial liabilities”.

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.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

3. FINANCIAL INSTRUMENTS (Continued)

Foreign exchange risk (Continued)

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

May 31, 2009

Cash

liabilities

US dollars

1,210 $

106,319

Accounts

payable and

accrued

May 31, 2008

Cash

liabilities

US dollars

(74,472) $

18,990

At May 31, 2009, with other variables unchanged, a +/-10% change in exchange rates would increase/decrease pre-tax

loss by +/- $11,745.

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 May 31, 2009, with other variables unchanged, a

+/- 10% change in equity prices would increase/decrease pre-tax loss by +/- $87.

Credit risk

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

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.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

3. FINANCIAL INSTRUMENTS (Continued)

Liquidity risk (Continued)

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.

4. INVESTMENTS

At May 31, 2009 and 2008, the Company owned 15,880 common shares of Linux Gold Corp., a company with

directors in common.

The Company classifies its investments as available-for-sale, with revaluation gains and losses recognized in

accumulated other comprehensive income (loss) and other-than-temporary losses recognized in net income (loss). As

of May 31, 2009, investments were measured at a fair value of $867 (2008 - $2,208) and resulted in an unrealized loss

of $1,339 during the year ended May 31, 2009 (2008 – $649).

5. EQUIPMENT

May 31

2009

2008

Furniture and fixtures – at cost

27,010

27,010

Less: Accumulated amortization

(19,367)

(17,456)

7,643

9,554

Automotive equipment – at cost

15,531

15,531

Less: Accumulated amortization

(12,921)

(11,802)

2,610

3,729

10,253

13,283

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

6. OIL AND GAS WELL INTERESTS

The Company owns a 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. The carrying cost of these wells has been completely depleted.

The Company entered into agreements with IAS Energy, Inc., a company with common directors, to purchase 40%

interests (subject to 40% net revenue interests to others) on May 18, 2006, in the Ken Lee #1 natural gas well for

$103,045 ($92,500 US), on June 8, 2006, in the Elvis Farris #2 natural gas well for $104,461 ($92,500 US) and on

July 31, 2006, in the Clarence Bright #1 natural gas well for $104,673 ($92,500 US). All three wells are located in

Knox and Laurel Counties, Kentucky. The three wells commenced production late in 2006. During the May 31, 2008

year end, the Company wrote off the carrying costs of the wells to $Nil, since the wells have no proven economic

reserves.

7. MINERAL PROPERTY INTERESTS

Balance

Balance

May 31

Write-

May 31

2008

Additions

Offs

2009

Property acquisition costs

Silverknife

Fish Creek

49,538

49,538

West Ridge

116,189

116,189

Gil Venture

31,127

31,127

196,855

196,855

Balance

May 31

Write-

May 31

2007

Additions

Offs

2008

Property acquisition costs

Silverknife

Fish Creek

49,538

Gold Hill

34,231

26,474

(60,705)

West Ridge

116,189

Gil Venture

31,127

231,086

26,474

(60,705)

196,855

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

7. MINERAL PROPERTY INTERESTS (Continued)

Silverknife, Laird, BC, Canada

Pursuant to agreements between Reg Technologies Inc. (“Reg”), SMR Investments Ltd. (“SMR”), Rapitan Re sources

Inc. (“Rapitan”), and Chevron Minerals Ltd. (“Chevr on”), the Company acquired a 30% working interest i n the Silver-

knife mineral claims, situated in the Liard Mining Division in the Province of British Columbia, subject to a 10% Net

Profit Royalty to Rapitan and a 1% Net Smelter Returns to SMR. The Company has written down their acquisition

costs to $1 and has written off their exploration and development expenditures entirely, since the claims are not

currently being explored and have no proven economic reserves.

Fish Creek, Fairbanks, Alaska, USA

The Company and Linux Gold Corp. (“Linux”) entered into an agreement on March 5, 2002, whereby the Company

may earn up to a 50% interest in the Fish Creek mineral claims, located in the Fairbanks district of Alaska, USA, by

expending $500,000 US within three years and issuing 200,000 common shares (issued on December 16, 2002 at $0.08

per share). An additional 100,000 shares were issued on February 14, 2007 at $0.16 per share in payment of an

extension of the expenditure date to March 5, 2007, which was further extended to March 5, 2010. Linux will have a

5% Net Royalty Interest until the Company pays $2,000,000 US.

Gold Hill, Cochise County, Arizona, USA

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 (7 claims) located in the Warren

Mining District, Cochise County, Arizona, USA, that are 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),

· $38,244 ($36,000 US) paid during 2008 and 2007 to the Vendors, with $6,000 US to be made each quarter (all

required quarterly payments have been made),

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

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

A further 28 claims were staked in the Company’s name for a cost of $5,538 ($5,214 US). The Company elected to

terminate its agreement with the Vendors on May 31, 2008 as to the original 7 patent claims and to abandon the other

28 claims; accordingly, $60,705 in property costs and $213,184 in exploration costs were written off at May 31, 2008.

Additional exploration expenditures of $13,570 were written off during the year.

West Ridge, Dome Creek, Alaska, USA

Pursuant to various agreements, the Company earned a 100% interest in the West Ridge mineral properties (approxi-

mately 5,200 acres) located in the Dome Creek area of the Fairbanks District of Alaska, USA. The Company has been

conducting an exploration program over the past few years.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

7. MINERAL PROPERTY INTERESTS (Continued)

Gil Venture, Dome Creek, Alaska, USA

Pursuant to various agreements, the Company acquired a 50% interest in 237 claims located in the Gilmore Dome area

of Fairbanks District of Alaska. On May 31, 1991, the Company, NERCO Exploration Company and Fort Knox

Venture entered into an agreement, which granted the Company a 20% participating interest in the claims. Under the

agreement, Fort Knox Venture paid the Company cash and funded approved programs, earning them an 80%

participating interest in the property, with the Company retaining a 20% participating interest. Fort Knox Venture,

through its operator Fairbanks Gold Mining, Inc., was doing exploration work on this property. No expenditures were

made in 2007. An exploration program was completed in late 2008.

Deferred Exploration Expenditures

May 31

May 31

2009

2008

Fish Creek Claims

Geophysical survey

1,876

Insurance, lease, property tax and assays

316

2,192

Gil Venture Claims

Drilling

120,241

Gold Hill Claims

Assays and reports

16,714

Drilling and roads

175,569

Travel, maps and rent

15,857

1,950

15,857

194,233

West Ridge Claims

Geophysical survey

8,932

Rent assessment

6,152

15,084

Exploration expenditures for the year

136,098

211,509

Exploration expenditures invoiced or written off

Invoiced to joint venture partner

(65,830)

Written off – terminated, abandoned or inactive cl aims

(15,857)

(213,184)

120,241

(67,505)

Exploration expenditures – beginning of year

2,932,238

2,999,743

Exploration expenditures – end of year

3,052,479

2,932,238

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

8. ADVANCES TO/ FROM RELATED PARTIES

Amounts due to/ from related parties are unsecured, non-interest bearing and have no fixed terms of repayment. Unless

otherwise indicated, the following table represents companies controlled by the President and CEO of the Company or

companies where he is the President and CEO.

Advances to related parties:

May 31

May 31

2009

2008

International Diamond Syndicate Ltd.

IAS Energy, Inc.

29,821

Linux Gold, Inc.

46,649

60,915

Reg Technologies Inc.

14,058

3,285

90,529

64,201

Advances from related parties:

May 31

May 31

2009

2008

IAS Energy, Inc.

1,317

Information-Highway.com, Inc.

28,146

24,146

JGR Petroleum, Inc.

24,456

24,456

John Robertson

19,308

17,609

KLR Petroleum

23,534

Rainbow Networks Inc.

23,531

23,227

REGI US, Inc.

12,405

428

SMR Investments Ltd.

887

131,380

92,070

9. SHARE CAPITAL

Authorized share capital consists of:

100,000,000 voting common shares with no par value

5,000,000 non-voting preferred shares with $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. No Preferred Shares have been issued to the date of these financial statements.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

9. SHARE CAPITAL (Continued)

On August 30, 2007, the Company issued 2,715,000 units of capital stock pursuant to a Private Placement with 36

placees at a price of $0.15 per unit. Each unit consists of one share and one share purchase warrant exercisable for

$0.20 per share in the first year and $0.25 per share in the second year.

On February 14, 2008, an employee exercised stock options for 10,000 shares at a price of $0.15 per share.

On February 22, 2008, the Company issued 6,000,000 units of capital stock pursuant to a Private Placement with 77

placees at a price of $0.15 per unit. Each unit consists of one share and one share purchase warrant exercisable within

one year for $0.20 per share. 238,400 broker’s share purchase warrants were issued as commissions valued at $25,339,

which has been recorded in contributed surplus on the balance sheet. The broker’s warrants were valued using the

Black-Scholes option pricing model with the following assumptions: risk-free interest rate of 1.84%, dividend yield of

nil, volatility of 99.05%, and expected life of 1 year.

Stock Options

The Company has a stock option plan to issue up to 10% of the issued common shares to certain directors and

employees. All options granted under the plan vest immediately upon grant, but are subject to the following exercise

conditions:

i) Up to 25% of the options may be exercised at any time during the term of the option; such initial exercise is

referred to as the “First Exercise”;

ii) The second 25% of the options may be exercised at any time after 90 days from the date of the First Exercise; such

second exercise is referred to as the “Second Exerc ise”;

iii) The third 25% of the options may be exercised at any time after 90 days from the date of the Second Exercise; such

third exercise is referred to as the “Third Exercis e”; and

iv) The fourth and final 25% of the options may be exercised at any time after 90 days from the date of the Third

Exercise.

On November 7, 2007, an employee was granted stock options to purchase up to 25,000 common shares at a price of

$0.22 per share for five years.

On January 25, 2008, the Company entered into an investor relations agreement with KCrew Communications Inc.

(“KCrew”) for three months at $8,500 per month. The Company granted KCrew stock options to purchase up to

300,000 common shares at a price of $0.15, which expired May 25, 2008.

On March 4, 2008, a consultant’s stock options for 75,000 common shares at a price of $0.40 expired unexercised, and

were replaced on March 10, 2008 with stock options for 75,000 common shares at a price of $0.21, expiring March 10,

2013.

On April 22, 2009, a director was granted stock options to purchase up to 50,000 common shares at a price of $0.10

per share for five years.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

9. SHARE CAPITAL (Continued)

Stock Options (Continued)

The following is a summary of the Company’s stock option activities during the years ended May 31, 2009 and 2008:

Weighted

Average

Number of

Exercise

Options

Price

Balance – May 31, 2007

2,487,500

0.21

Granted

400,000

0.17

Excercised

(10,000)

0.15

Expired

(625,000)

0.23

Balance – May 31, 2008

2,252,500

0.20

Granted

50,000

0.10

Expired

(477,500)

0.35

Balance – May 31, 2009

1,825,000

0.15

The following share purchase options were outstanding at May 31, 2009:

Remaining

Number of

Exercise

Number Contractual

Options

Expiry Date

Price

of Options Life (years)

Exercisable

November 2, 2011

0.18

25,000

2.42

6,250

April 24, 2012

0.15

1,650,000

2.90

412,500

November 7, 2012

0.22

25,000

3.44

6,250

March 10, 2013

0.21

75,000

3.78

18,750

April 23, 2014

0.10

50,000

4.90

12,500

1,825,000

456,250

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

9. SHARE CAPITAL (Continued)

Warrants

The following is a summary of the Company’s warrant activities during the years ended May 31, 2009 and 2008:

Weighted

Average

Number of

Exercise

Warrants

Price

Balance – May 31, 2007

2,418,340

0.28

Issued

8,953,400

0.20

Expired

(2,418,340)

0.28

Balance – May 31, 2008

8,953,400

0.20

Expired

(6,238,400)

0.20

Balance – May 31, 2009

2,715,000

0.25

The following share purchase warrants were outstanding at May 31, 2009:

Remaining

Exercise

Number

Contractual

Expiry Date

Price of Warrants

Life (years)

August 30, 2009

0.25

2,715,000

0.25

Subsequent to year-end, these warrants expired unexercised.

Stock-Based Compensation Expense

The fair value of each option granted is estimated on the grant date using the Black-Scholes option-pricing model

assuming no dividend yield and the following weighted average assumptions for options granted:

2009

2008

2007

Expected volatility

117%

126%

130%

Weighted average risk-free interest rate

1.94%

2.47%

4.11%

Expected life

5 years

1.50 years

4.73 years

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

10. INCOME TAXES

Future income taxes reflect the net tax effects of the temporary differences between the carrying amounts of assets and

liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of

the Company’s Canadian future tax assets as of May 31, 2009 and 2008 are as follows:

2009

2008

Non-capital loss carry forwards

923,000

818,000

Equipment

14,000

14,000

Resource deductions

306,000

306,000

Share issue costs

14,000

20,000

1,257,000

1,158,000

Valuation allowance

(1,257,000)

(1,158,000)

Future income tax assets

A reconciliation of the combined Canadian federal and provincial income taxes at statutory rates and the Company’s

effective income tax expense is as follows:

2009

2008

Statutory tax rate

30%

33%

Income tax recovery at statutory rate

(138,000)

(291,000)

Permanent differences and other

48,000

8,000

Effect of change in tax rate

61,000

38,000

Tax benefits not recognized

29,000

245,000

The Company has Canadian non-capital losses of approximately $3,690,000 (2008 - $3,145,000), which expire over

the years 2010 to 2029. The Company also has cumulative exploration expenses in the amount of $1,385,000 (2008 -

$1,338,000) in Canada, which can be carried forward indefinitely.

11. RELATED PARTY TRANSACTIONS

Related party transactions are in the normal course of operations and are measured at the exchange amount, which is

the amount of consideration established and agreed to by the related parties. Related party transactions not disclosed

elsewhere in these financial statements are as follows:

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

11. RELATED PARTY TRANSACTIONS (Continued)

SMR Investments Ltd. (“SMR”) is a private company c ontrolled by an officer of the Company. Under a management

contract with SMR, the Company agreed to pay up to $2,500 per month for management services. The Company was

charged management fees by SMR of $30,000 during the year ended May 31, 2009 (2008 - $30,000; 2007 - $30,000).

As of May 31, 2009, $77,883 (May 31, 2008 - $42,258) was payable to SMR by the Company, and the amount was

included in accounts payable and accrued liabilities.

During the year ended May 31, 2009, directors fees of $16,500 (2008 - $15,500; 2007 - $12,000) were paid to the

President of the Company. Administration consulting fees of $20,400 (2008 - $13,500; 2007 - $24,000) were paid to a

director of the Company. Secretarial and consulting fees of $11,400 (2008 - $5,700; 2007 - $15,000) were paid to a

director of the Company.

During the year ended May 31, 2009, fees of $9,409 (2008 - $6,508; 2007 - $9,396) were paid to KLR Petroleum Ltd.

(which is controlled by an officer of the Company) for administration of the Company payroll and benefit plan.

Office rent of $15,471 (2008 - $12,872; 2007 - $15,018) was paid to Linux Gold, Inc. for the year ended May 31,

2009.

12. TERYL, INC. TRASACTIONS (100% US Subsidiary)

In 1998, Teryl, Inc. offered a private placement for up to 1,000,000 shares at a price of $0.23 ($0.15 US) and

subscriptions of $146,044 ($96,750 US) were received by November 19, 1999. Since the offering was not fully

subscribed, the Companies negotiated with the subscribers to replace the Teryl, Inc. shares with Teryl Resources Corp.

shares. On October 17, 2006, the authorized capital for Teryl, Inc. was reduced to 10,000 common shares, which

resulted in a rollback to 1 common share for each 10,000 outstanding. On August 29, 2007, the final six subscribers

agreed to a settlement of $70,000 ($50,250 US).

13. SEGMENTED INFORMATION

The Company’s business consists of mineral properties and oil and gas property interests. Details on a geographic basis

are as follows:

United

Canada

States

Total

May 31, 2009

Total assets

124,638

3,250,347

3,374,985

Acquisition and exploration costs

3,249,333

3,249,334

Net loss

447,653

6,920

454,573

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

13. SEGMENTED INFORMATION (Continued)

United

Canada

States

Total

May 31, 2008

Total assets

352,894

3,133,162

3,486,056

Acquisition and exploration costs

3,129,092

3,129,093

Net loss

880,045

262,751

1,142,796

14. CAPITAL MANAGEMENT

The capital of the Company consists of the items included in shareholders’ equity. The Company manages the capital

structure and makes adjustments in light of changes in economic conditions and the risk characteristics of the

Company’s assets.

The Company’s objectives of capital management are intended to safeguard the entity’s ability to continue the

Company’s development and exploration of its mineral properties and support any expansionary plans.

To effectively manage the entity’s capital requirements, the Company has in place a planning and budgeting process to

help determine the funds required to ensure the Company has the appropriate liquidity to meet its development and

exploration objectives.

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES

These consolidated financial statements have been prepared in accordance with Canadian generally accepted

accounting principles (“Canadian GAAP”). Material v ariations in the accounting measurement principles, practices and

methods used in preparing these consolidated financial statements from measurement principles, practices and methods

accepted in the United States (“US GAAP”) are descr ibed and quantified below.

a) Oil and Gas Well Interests

Under Canadian and US GAAP, oil and gas well interests are carried at cost according to the successful efforts

method of accounting and written down if the value is impaired. Depreciation and depletion of capitalized costs of

oil and gas producing properties are calculated using the straight-line method over 10 years, which is the estimated

pay-out term. The Company has determined that there were no material differences in the measurement and

presentation of oil and gas well interests between Canadian GAAP and US GAAP as at May 31, 2009, 2008 and

2007.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (Continued)

b) Mineral Properties and Deferred Exploration Costs

Under Canadian GAAP, mineral property interests and deferred exploration costs, including acquisition and

exploration costs, are carried at cost and written down if the properties are abandoned, sold or if management

determines there to be an impairment in value. Under United States GAAP, mineral property interests are carried at

cost and deferred exploration costs are expensed as incurred.

c) Asset Retirement Obligations

Under US GAAP, Statement of Financial Accounting Standards No. 143, “Accounting for Asset Retirement

Obligations” (“SFAS 143”) requires companies to rec ord the fair value of the liability for closure and removal costs

associated with legal obligations upon the retirement or removal of any tangible long-lived assets effective June 1,

2003. Under this standard, the initial recognition of the liability is capitalized as part of the asset cost and amortized

over its estimated useful life. For Canadian GAAP purposes, effective June 1, 2004, the Company adopted the

provisions of CICA HB Section 3110, “Asset Retireme nt Obligations”, which are substantially similar to those of

SFAS 143. The Company has determined that there were no material differences in the measurement and

presentation of asset retirement obligations between Canadian GAAP and US GAAP as at May 31, 2009, 2008 and

2007.

d) Stock-Based Compensation

Under US GAAP, Statement of Financial Accounting Standard 123(R), “Share-Based Payments,” 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. In March 2005, the Securities and Exchange

Commission issued SAB 107 relating to SFAS 123(R). The Company applied the provisions of SAB 107 in its

adoption of SFAS 123(R).

SFAS 123(R) 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 of determining fair

value. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the

consolidated statements of operations over the requisite service period.

The Company has a stock-based compensation plan which is described in Note 9. The Company accounts for

stock-based compensation, including stock options and warrants, using the fair value based method, as prescribed

by CICA HB 3870 “Stock-based Compensation and Other Stock-Based Payments”, to account for stock based

transactions with officers, directors and consultants. Under this method, the fair value of the stock options and

warrants at the date of grant is amortized over the vesting period, with an offsetting credit recorded as an increase

in contributed surplus. If the stock options or warrants are exercised, the proceeds are credited to share capital and

the fair value at the date of the grant is reclassified from contributed surplus to share capital. Accordingly, there

were no material differences between Canadian GAAP and US GAAP for the years ended May 31, 2009, 2008 and

2007.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (Continued)

e) Marketable Securities and Investments

Under Canadian GAAP, for the year ended May 31, 2007, short-term marketable securities are carried at the lower

of aggregate cost or current market value, with any unrealized loss included in the consolidated statements of

operations. Long-term investments are carried on the cost or equity basis and are only written down when there is

evidence of a decline in value that is other than temporary. Under Canadian GAAP, for the years ended May 31,

2009 and 2008, the Company adopted the provisions of CICA HB Section 3855, “Financial Instruments –

Recognition and Measurement”, and CICA HB Section 1 530, “Comprehensive Income”, which are similar to t he

requirements of US GAAP.

Under US GAAP, Statement of Financial Accounting Standard No. 115, “Accounting for Certain Investments in

Debt and Equity Securities” (“SFAS 115”) requires t hat certain equity investments must be classified into

available-for-sale securities and carried at fair market value. Any unrealized holding gains or losses are reported as

a separate component of shareholders’ equity until realized for available-for-sale securities, and included in

earnings for trading securities. Under Canadian GAAP, as described in Note 2(g), and under US GAAP, the

Company’s investments are classified as available-for-sale securities.

f) Recent Accounting Pronouncements

In June 2009, the FASB issued SFAS No. 167, “Amendm ents to FASB Interpretation No. 46(R)” (“SFAS 167”) .

SFAS No. 167 is intended to establish general standards of financial reporting for companies with variable interest

entities. It requires timely and useful disclosure of information related to the Company’s involvement with variable

interest entities. This disclosure should alert all users to the effects on specific provisions of FASB Interpretation

No. 46 (revised December 2003), “Consolidation of V ariable Interest Entities”, related to the changes to the

special-purpose entity proposal in FASB Statement No. 166, “Accounting for Transfers of Financial Asse ts”, and

the treatment of specific provisions of Interpretation 46(R). SFAS No. 167 is effective for financial statements

issued for fiscal years and interim periods beginning after November 15, 2009. The Company has determined that

the adoption of SFAS No. 167 will have no impact on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, “Accoun ting for Transfers of Financial Assets—an amendment of

FASB Statement” (“SFAS 166”). SFAS No. 166 is inte nded to establish standards of financial reporting for the

transfer of assets and transferred assets to improve the relevance, representational faithfulness, and comparability.

SFAS 166 was established to clarify derecognition of assets under FASB Statement No. 140, “Accounting for

Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”. SFAS No. 166 is effe ctive for

financial statements issued for fiscal years and interim periods beginning after November 15, 2009. The Company

has determined that the adoption of SFAS No. 166 will have no impact on its consolidated financial statements.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (Continued)

f) Recent Accounting Pronouncements (Continued)

In May 2009, the FASB issued SFAS No. 165, “Subsequ ent Events” (“SFAS No. 165”). SFAS No. 165 is

intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet

date, but before financial statements are issued or are available to be issued. It requires the disclosure of the date

through which an entity has evaluated subsequent events and the basis for that date–that is, whether t hat date

represents the date the financial statements were issued or were available to be issued. This disclosure should alert

all users of financial statements that an entity has not evaluated subsequent events after that date in the set of

financial statements being presented. SFAS No. 165 is effective for financial statements issued for fiscal years and

interim periods ending after June 15, 2009. The Company is evaluating the impact that the adoption of SFAS No.

165 will have on its consolidated financial statements.

In May 2008, the FASB issued SFAS No. 163, “Account ing for Financial Guarantee Insurance Contracts – A n

interpretation of FASB Statement No. 60”. SFAS No. 163 requires that an insurance enterprise recognize a claim

liability prior to an event of default when there is evidence that credit deterioration has occurred in an insured

financial obligation. It also clarifies how Statement No. 60 applies to financial guarantee insurance contracts,

including the recognition and measurement to be used to account for premium revenue and claim liabilities, and

requires expanded disclosures about financial guarantee insurance contracts. It is effective for financial statements

issued for fiscal years beginning after December 15, 2008, except for some disclosures about the insurance

enterprise’s risk-management activities. SFAS No. 163 requires that disclosures about the risk-management

activities of the insurance enterprise be effective for the first period beginning after issuance. Except for those

disclosures, earlier application is not permitted. The adoption of this statement is not expected to have a material

effect on the Company’s consolidated financial statements.

In May 2008, the FASB issued SFAS No. 162, “The Hie rarchy of Generally Accepted Accounting Principles” .

SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles to be

used in the preparation of financial statements of nongovernmental entities that are presented in conformity with

generally accepted accounting principles in the United States. It is effective 60 days following the SEC’s approval

of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present

Fairly in Conformity With Generally Accepted Accounting Principles”. The adoption of this statement is not

expected to have a material effect on the Company’s consolidated financial statements.

In March 2008, the FASB issued SFAS No. 161, “Discl osures about Derivative Instruments and Hedging

Activities – an amendment to FASB Statement No. 133 ”. SFAS No. 161 is intended to improve financial st andards

for derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better

understand their effects on an entity's financial position, financial performance, and cash flows. Entities are

required to provide enhanced disclosures about: (a) how and why an entity uses derivative instruments; (b) how

derivative instruments and related hedged items are accounted for under Statement No. 133 and its related

interpretations; and (c) how derivative instruments and related hedged items affect an entity’s financial position,

financial performance, and cash flows. It is effective for financial statements issued for fiscal years beginning after

November 15, 2008, with early adoption encouraged. The adoption of this statement is not expected to have a

material effect on the Company’s consolidated financial statements.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (Continued)

f) Recent Accounting Pronouncements (Continued)

In December 2007, the FASB issued SFAS No. 141R, “B usiness Combinations”. This statement replaces SFAS

No. 141 and defines the acquirer in a business combination as the entity that obtains control of one or more

businesses in a business combination and establishes the acquisition date as the date that the acquirer achieves

control. SFAS No. 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any

noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. SFAS

No. 141R also requires the acquirer to recognize contingent consideration at the acquisition date, measured at its

fair value at that date. This statement is effective for fiscal years and interim periods within those fiscal years,

beginning on or after December 15, 2008, and earlier adoption is prohibited. The adoption of this statement is not

expected to have a material effect on the Company's consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, “No ncontrolling Interests in Consolidated Financial

Statements Liabilities – an Amendment of ARB No. 51 ”. This statement amends ARB No. 51 to establish

accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a

subsidiary. This statement is effective for fiscal years and interim periods within those fiscal years, beginning on or

after December 15, 2008, and earlier adoption is prohibited. The adoption of this statement is not expected to have

a material effect on the Company's consolidated financial statements.

On December 21, 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 110,

(“SAB 110”). SAB 110 provides guidance to issuers o n the method allowed in developing estimates of expected

term of “plain vanilla” share options in accordance with SFAS No. 123R, “Share-Based Payments”. The st aff will

continue to accept, under certain circumstances, the use of a simplified method beyond December 31, 2007 which

amends question 6 of Section D.2 as included in SAB 107, “Valuation of Share-Based Payment Arrangement s for

Public Companies”, which stated that the simplified method could not be used beyond December 31, 2007. SAB

110 is effective April 1, 2008. The adoption of this statement is not expected to have a material effect on the

Company's consolidated financial statements.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (Continued)

The impact of the differences between Canadian GAAP and US GAAP on the consolidated balance sheets would

be as follows:

2009

Balance

Canadian

GAAP

Adjustments GAAP

Current assets

24,002

Advances to related parties

90,529

Investments (Note 13(e))

867

Equipment

10,253

Mineral property interests (Note 13(b))

196,855

Deferred exploration expenditures (Note 13(b))

3,052,479

(3,052,479)

3,374,985

(3,052,479)

322,506

Current liabilities

417,520

Shareholders’ equity

2,957,465

(3,052,479)

(95,014)

3,374,985

(3,052,479)

322,506

2008

Balance

Canadian

GAAP

Adjustments GAAP

Current assets

277,271

Advances to related parties

64,201

Investments (Note 13(e))

2,208

Equipment

13,283

Mineral property interests (Note 13(b))

196,855

Deferred exploration expenditures (Note 13(b))

2,932,238

(2,932,238)

3,486,056

(2,932,238)

553,818

Current liabilities

199,434

Shareholders’ equity

3,286,622

(2,932,238)

354,384

3,486,056

(2,932,238)

553,818

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (Continued)

The impact of the differences between Canadian GAAP and US GAAP on the consolidated statements of

operations and comprehensive loss would be as follows:

2009

2008

2007

Net loss for the year, Canadian GAAP

(454,573)

(1,142,796)

(465,540)

Adjustment:

Deferred exploration costs (Note 13(b))

(120,241)

67,505

(40,624)

Net loss for the year, US GAAP

(574,814)

(1,075,291)

(506,164)

Basic and diluted loss per share, US GAAP

(0.01)

(0.02)

(0.01)

Weighted average number of common shares outstanding, basic

and diluted

49,587,528

44,538,405

39,663,029

The Company’s comprehensive loss is comprised as follows:

2009

2008

2007

Net loss for the year, US GAAP

(574,814)

(1,075,291)

(506,164)

Change in net unrealized losses on available-for-sale

investments (Note 13(e))

(1,339)

(649)

(1,170)

Comprehensive loss

(576,153)

(1,075,940)

(507,334)

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

15. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED

ACCOUNTING PRINCIPLES (Continued)

The impact of the differences between Canadian GAAP and US GAAP on the consolidated statements of cash

flows would be as follows:

2009

2008

2007

Cash flows used in operating activities, Canadian GAAP

(320,515)

(527,720)

(210,871)

Adjustment:

Exploration expenditures (Note 13(b))

(15,857)

(211,509)

(41,624)

Cash flows used in operating activities, US GAAP

(336,372)

(739,229)

(252,495)

Cash flows provided by financing activities, Canadian and US

GAAP

195,343

1,003,597

294,944

Cash flows used in investing activities, Canadian GAAP

(15,857)

(263,530)

(290,762)

Adjustment:

Exploration expenditures (Note 13(b))

15,857

211,509

41,624

Cash flows used in investing activities, US GAAP

(52,021)

(249,138)

(Decrease) increase in cash

(209,109)

212,347

(206,689)

Cash, beginning of year

215,294

2,947

209,636

Cash, end of year

6,185

215,294

2,947

16. SUBSEQUENT EVENTS

On June 8, 2009, the Company closed a private placement of 2,120,000 units at $0.075 per unit for total proceeds of

$159,000. Each unit consisted of one common share and one-half share purchase warrant, with two one-half warrants

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

year. Finders’ fees in connection with this non-brokered private placement were $3,675. As at May 31, 2009, the

Company received $115,875 in share subscriptions.

TERYL RESOURCES CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED MAY 31, 2009 AND 2008

(Stated in Canadian Dollars)

16. SUBSEQUENT EVENTS (Continued)

On July 15, 2009, the Company entered into two promissory note agreements with a related party for $27,000 US and

$60,000 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 regulating approval.

On August 18, 2009, the Company closed a private placement of 7,042,092 units at $0.075 per unit for total proceeds

of $528,157. Each unit consisted of one common share and one share purchase warrant, with one warrant entitling the

holder to acquire one additional common share at a price of $0.10 in the first year and $0.15 in the second year.

Finders’ fees in connection with this non-brokered private placement were $34,478. If the closing price of the shares

on the TSXV is $0.25 or greater for 20 consecutive days, the warrant holders will have 30 days to exercise their

warrants, as they will expire after that period. The acceleration conditions will apply four months and one day from the

date of closing the private placement.

On September 10, 2009, the Company entered into a public relations agreement with Maximus Stategic Consulting Inc.

for a term of three months. The Company has paid $26,250 upon commencement of the contract.

On September 21, 2009, the Company entered into a public relations agreement with KCrew Communications Inc. for

a term of three months for service fees of $7,500 per month.