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incorporated on December 23, 2005 under the laws of the state of Nevada under the name Real Estate Referral Center Inc. On April 21, 2009, the Company changed its name to Gold Bag, Inc. and effective June 6, 2011 to Focus Gold Corporation. Since inception through April 2009, the Company&#8217;s principal business was the matching of real estate customers with realtors in Canada through its website and word-of mouth contacts. In April 2009, the Company relocated to the United States of America and changed its business plan to purchase gold coins, broken jewellery or other items containing precious metals. On May 22, 2009 the Company effected a forward stock split on a 10:1 basis of its stock. In October 2010 the Company entered into an option agreement with Victoria Gold Inc. for the right to explore and purchase mineral claims located in Ontario Canada and since that time the Company&#8217;s principal business has been the acquisition and exploration of mineral resources. The Company is considered an exploration stage company and its financial statements are presented in a manner similar to a development stage company as defined in FASC 915-10-05, and interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On December 31, 2010, the Company acquired 100% ownership of Fairfields Gold S.A. de CV, a Mexican corporation involved in the exploration and expansion of its mineral properties. On October 25, 2011, the Company&#8217;s newly formed subsidiary, Focus Celtic Gold Corporation completed the acquisition of 98.65% ownership of Metallum Resources Plc., an England &amp;Wales corporation which is also involved in the exploration and expansion of its mineral properties. The Company has not presently determined whether its properties contain mineral reserves that are economically recoverable. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> All significant intercompany accounts and transactions are eliminated in consolidation. </p><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 2. </td> <td> Significant accounting policies </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> This summary of significant accounting policies of the Company is presented to assist in understanding the Company&#8217;s financial statements. The financial statements and notes are representations of the Company&#8217;s management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (a) </td> <td> Basis of presentation </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements represent the consolidation of the Company with its Mexican subsidiary Fairfields Gold S.A. de CV (&#8220;Fairfields&#8221;) at February 29, 2012 and February 28, 2011 and for the period since December 31, 2010 and Focus Celtic Gold Corporation (&#8220;Celtic&#8221;) and Metallum Resources Plc. (&#8220;Metallum&#8221;) at February 29, 2012 and for the period since October 25, 2011. All significant intercompany transactions have been eliminated. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <font style="color: black">The Company is considered an exploration stage company and its financial statements are presented in a manner similar to a development stage company as defined in ASC 915&#8221; Development stage entities&#8221;, and interpreted by the Securities and Exchange Commission for mining companies in Industry Guide 7. Pursuant to the rules and regulations of the Securities and Exchange Commission, a mining company in the exploration stage should not refer to itself as a development stage company in its financial statements. The Company is required to provide additional disclosures from its date of inception, or the date the Company was reactivated to undertake exploration stage activities; therefore, the statement of operations, stockholders&#8217; equity and comprehensive loss and cash flows include cumulative amounts from October 1, 2010</font> to February 29, 2012. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company is in the process of exploring and developing its mineral properties and has not yet determined whether the properties contain ore reserves that are economically recoverable. The recoverability of the amounts shown for mineral properties and related deferred exploration costs are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain necessary financing to complete the development of those reserves and upon future profitable production. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (b) </td> <td> Cash and cash equivalents </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Cash and cash equivalents include highly liquid investments with original maturities of three months or less. To limit its credit risk exposure for amounts in excess of federally insured limits, the Company places its deposits with financial institutions of high credit standing. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (c) </td> <td> Fair Value of Financial Instruments </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <font style="color: black">The Company's financial instruments as defined by FASB ASC 825-10-50, include cash, receivables, accounts payable and accrued expenses. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments,</font> approximates fair value at February 29, 2012. All these items were determined to be Level 1 fair value measurements. The recorded value of long-term debt<font style="color: black">approximates its fair value as the terms and rates approximate market rates.</font> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> FASB ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles, and expands disclosures about fair value measurements. FASB ASC 820 establishes a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows: </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Level 1. Observable inputs such as quoted prices in active markets; </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Level 2. Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Level 3. Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (d) </td> <td> Equipment </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Equipment is recorded at cost less accumulated depreciation. Depreciation is provided on a straight-line basis over three to five years, which represents the estimated useful lives of the assets. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (e) </td> <td> Mineral Properties, Leases and Exploration and Development Costs </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <font style="color: black">The Company accounts for mineral properties in accordance with ASC 930:&#160;<i>Extractive Activities-Mining</i>.&#160; Costs of acquiring mineral properties and leases are capitalized by project area upon purchase of the associated claims</font> (see Note 5)<font style="color: black">.&#160; Mineral properties are periodically assessed for impairment of value and any diminution in value.</font> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company accounts for mineral exploration and development costs in accordance with ASC 932:&#160;<i>Extractive Activities</i>.&#160; All exploration expenditures are expensed as incurred, previously capitalized costs are&#160;expensed in the period the property is abandoned.&#160; Expenditures to develop new mines, to define further mineralization in existing ore bodies, and to expand the capacity of operating mines, are capitalized and amortized on units of production basis over proven and probable reserves. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Any option payments received by the Company from third parties or tax credits refunded to the Company are credited to the capitalized cost of the mineral property or to exploration costs as applicable. If payments received exceed the capitalized cost of the mineral property or the exploration costs incurred, the excess is recognized as income in the year received. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The amounts shown for mineral properties do not necessarily represent present or future values. Their recoverability is dependent upon the discovery of economically recoverable reserves, the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds from the disposition thereof. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (f) </td> <td> Impairment of long-lived assets </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company reviews and evaluates its long-lived assets for impairment at each balance sheet date and documents such impairment testing. The tests include an evaluation of the assets and events or changes in circumstances that would indicate that the related carrying amounts may not be recoverable. Mineral properties in the exploration stage are monitored for impairment based on factors such as the Company's continued right to explore the area, exploration reports, assays, technical reports, drill results and the Company's continued plans to fund exploration programs on the property, whether sufficient work has been performed to indicate that the carrying amount of the mineral property cost carried forward as an asset will not be fully recovered, even though a viable mine has been discovered. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The tests for long-lived assets in the exploration, development or producing stage that would have a value beyond proven and probable reserves would be monitored for impairment based on factors such as current market value of the mineral property and results of exploration, future asset utilization, business climate, mineral prices and future undiscounted cash flows expected to result from the use of the related assets. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company's policy is to record an impairment loss in the period when it is determined that the carrying amount of the asset may not be recoverable either by impairment or by abandonment of the property. The impairment loss is calculated as the amount by which the carrying amount of the assets exceeds its fair value. While the Company incurred losses from operations, these losses have not been in excess of planned expenditures on the specific mineral properties in order to ultimately realize their value. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (g) </td> <td> Stock-based compensation </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company accounts for stock based compensation to employees as required by ASC 718:&#160;<i>Compensation-Stock Compensation</i> and stock based compensation to nonemployees as required by ASC 505-50:&#160;<i>Equity-Based Payments to Non-Employees</i>.&#160; Stock awards have been valued at fair value using recent share issuance prices for cash, in arms-length transactions. Options and warrants are valued using the Black-Scholes pricing model (See Note 7). The offset to the recorded stock based compensation cost is to additional paid-in capital. Consideration received on the exercise of stock options is recorded as share capital and additional paid-in capital and the related additional paid-in capital is transferred to share capital. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (h) </td> <td> Comprehensive Income </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> ASC 220: Comprehensive Income, establishes standards for the reporting and display of comprehensive income and its components in the financial statements. As at February 29, 2012 and February 28, 2011, the Company&#8217;s only component of comprehensive income was foreign currency translation adjustments. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (i) </td> <td> Income taxes </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25: Income Taxes &#8211; Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the &#8220;more likely than not&#8221; standard imposed by ASC 740-10-25-5 to allow recognition of such an asset. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company follows the provisions of uncertain tax positions as addressed in ASC 740-10-65-1. The Company recognized no increase in the liability for unrecognized tax benefits. The Company has no tax position at February 29, 2012 or February 28, 2011 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility. The Company recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. No such interest or penalties were recognized during the periods presented. The Company had no accruals for interest and penalties at February 29, 2012 or February 28, 2011. The Company&#8217;s utilization of any net operating loss carry forward may be unlikely as a result of its exploration stage activities. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (j) </td> <td> Net loss per share </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <font style="color: black">The Company computes earnings (loss) per share in accordance with ASC Topic 260 Earnings Per Share. ASC Topic 260 requires presentation of both basic and diluted earnings per share (&#8220;EPS&#8221;) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders by the weighted average number of shares outstanding during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At February 29, 2012, the total number of potentially dilutive shares of common stock excluded from basic net loss per share as anti-dilutive was 27,521,094 from options and 4,106,909 from</font> warrants. Respectively, on February 28, 2011, the total number was 2,500,000 from options and 118,419 from warrants. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (k) </td> <td> Foreign currency translation </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company&#8217;s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC Topic 830: Foreign Currency Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <font style="color: black">The functional currency of the Company&#8217;s subsidiary Fairfields, is the Mexican Peso.</font> The functional currency of the company&#8217;s subsidiary Metallum is the British Pound .<font style="color: black">The financial statements of the foreign subsidiaries are translated to United States dollars in accordance with ASC Topic 830 using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders&#8217; equity. Foreign currency transaction gains and losses are included in current operations.</font> </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (l) </td> <td> Share capital </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company records proceeds from share issuances, net of issue costs. Shares issued for consideration other than cash are valued in accordance with ASC 845: nonmonetary transactions, at the fair value of the nonmonetary assets acquired or the fair value of the nonmonetary asset given up. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (m) </td> <td> Flow-through shares </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Canadian tax legislation permits a company to issue flow-through instruments whereby the deduction for tax purposes relating to qualified resource expenditures is claimed by the investors rather than the company. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Flow-through shares are recognized in share capital based on the fair value attributed to common shares without a flow-through feature on the date the Company and the investors agree to the transaction. The difference (&#8220;premium&#8221;) between the amount recognized in common shares and the amount the investors pay for the flow-through shares is recognized as a flow-through share related liabilities which is reversed into the statement of loss within other income when the eligible expenditures are incurred. The amount recognized as flow-through share related liabilities represents the difference between the fair value of the common shares and the amount the investor pays for the flow-through shares. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (n) </td> <td> Warrants </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company accounts for warrants issued in conjunction with stock issuances under private placement using the fair value method. &#160;Under this method, the value of warrants issued is measured at fair value at the grant date using the Black-Scholes valuation model and recorded as share capital and additional paid-in capital. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; color: #252525"> The Company recognized the value of detachable warrants issued in conjunction with issuance of the convertible debenture using the Black-Scholes pricing model. The Company recorded the relative fair value of the warrant as an increase to additional paid-in capital and discount against the related debt. The discount attributed to the value of the warrants is being amortized over the term of the underlying debt using. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (o) </td> <td> Estimates </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> &#160;The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant areas requiring the use of management estimates include the determination of impairment of mineral properties and equipment, useful lives for amortization, valuation allowances for future income tax assets, fair value of non-cash stock-based compensation and reclamation and environmental obligations. Actual results, as determined by future events, may differ from these estimates. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (p) </td> <td> Recently accounting pronouncements </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In December 2010, the FASB issued Accounting Standard Update No. 2010-28 (ASU No. 2010-28) &#8220;Intangibles &#8211; Goodwill and Other (Topic 350).&#8221; ASU No. 2010-28 addresses questions about entities with reporting units with zero or negative carrying amounts because some entities concluded that Step 1 of the goodwill impairment test, as stated in Topic 350, is passed in those circumstances because the fair value of their reporting unit will generally be greater than zero. The amendments in this update do not provide guidance on how to determine the carrying amount or measure the fair value of the reporting unit. The amendments in this update modify Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For public entities, the amendments in this update are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. Early adoption is permitted. . The adoption of ASU No. 2010-28 did not have a material effect on the consolidated financial statements. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In December 2010, the FASB issued Accounting Standard Update No. 2010-29 (ASU No. 2010-29) &#8220;Business Combinations (Topic 805).&#8221; ASU No. 2010-29 addresses the diversity in practice about the interpretation of the pro forma revenue and earnings disclosure requirements for business combinations. The amendments in this update specify that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments in this update also expand the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. The amendments in this update are effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of ASU No. 2010-29 did not have a material effect on the consolidated financial statements. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <font style="color: black">In May 2011, the FASB issued Accounting Standards Update No. 2011-04 (&#8220;ASU No. 2011-04&#8221;)</font> <font style="color: #252525">&#8221;), which updated the guidance in ASC Topic 820, <font style="font-family: Times New Roman, Times, Serif"><i>Fair Value Measurement.</i></font> The amendments in ASU 2011-04 generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. ASU 2011-04 results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and International Financial Reporting Standards. The amendments in ASU 2011-04 are to be applied prospectively. For public entities, the amendments are effective for interim and annual periods beginning after December 15, 2011, and early application is not permitted. ASU 2011-04 is not expected to have a material impact on the Company&#8217;s financial position or results of operations<font style="font-size: 10pt">.</font></font> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In June 2011, the FASB issued Accounting Standards Update No 2011-05 (ASU No 2011-05), <font style="color: black">&#8220;</font>Comprehensive Income (Topic 220): Presentation of Comprehensive Income&#8221;. ASU 2011-05 eliminates the option that permits the presentation of other comprehensive income in the statement of changes in equity and requires presenting components of net income and comprehensive income in either a one-statement approach with totals for both net income and comprehensive income, or a two-statement approach where a statement presenting the components of net income and total net income must be immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The guidance provided in ASU No. 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 and should be applied retrospectively. We do not expect the adoption of this ASU to have a material impact on our consolidated financial statements. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In September 2011, the FASB issued ASU No. 2011-08, which updates the guidance in ASC Topic 350, <font style="color: black">&#8220;</font>Intangibles &#8211; Goodwill &amp; Other&#8221; (ASU-2011-08). The amendments in ASU 2011-08 permit an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than the carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test described in ASC Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. If, after assessing the totality of events or circumstances, an entity determines that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary. The amendments in ASU 2011-08 include examples of events and circumstances that an entity should consider in evaluating whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, however the examples are not intended to be all-inclusive and an entity my identify other relevant events and circumstances to consider in making the determination. The examples in this ASU 2011-08 supersede the previous examples under ASC Topic 350 of events and circumstances an entity should consider in determining whether it should test for impairment between annual tests, and also supersede the examples of events and circumstances that an entity having a reporting unit with a zero or negative should consider in determining whether to perform the second step of the impairment test. Under the amendments in ASU 2011-08, an entity is no longer permitted to carry forward its detailed calculation of a reporting unit's fair value from a prior year as previously permitted under ASC Topic 350. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. ASU 2011-08 is not expected to have a material impact on the Company's financial position or results of operations.&#160; </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In December 2011, the FASB issued ASU No. 2011- 12, &#8220;Comprehensive Income &#8211; Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05&#8221; (&#8220;ASU 2011-12&#8221;). ASU 2011-12 defers changes in Update 2011-05 that relate to the presentation of reclassification adjustments. ASU 2011-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011 (November 30, 2012 for the Company). We do not expect the adoption of ASU 2011-12 to have a material impact on our results of operations, financial condition, or cash flows. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> In December 2011, the Financial Accounting Standards Board (&#8220;FASB&#8221;) issued ASU No. 2011-11, &#8220; <font style="font-family: Times New Roman, Times, Serif"><i>Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities</i></font> &#8221; (&#8220;ASU 2011-11&#8221;). <font style="font-family: Times New Roman, Times, Serif"><i></i></font>ASU 2011-11 enhances current disclosures about financial instruments and derivative instruments that are either offset on the statement of financial position or subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset on the statement of financial position. Entities are required to provide both net and gross information for these assets and liabilities in order to facilitate comparability between financial statements prepared on the basis of U.S. GAAP and financial statements prepared on the basis of IFRS. ASU 2011-11 is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. ASU 2011-11 is not expected to have a material impact on the Company&#8217;s financial statements. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> Management does not believe there would have been a material effect on the accompanying financial statements had any other recently issued, but not yet effective, accounting standards been adopted in the current period.&#160; </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (q) </td> <td> Comparative figures </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Certain of the comparative figures have been reclassified to conform to the presentation in the current year. These reclassification had no impact on the company&#8217;s balance sheet, results of operations, stockholder&#8217;s equity of cash flows. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (r) </td> <td> Going Concern </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0"> The Company's financial statements are prepared using the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America, and have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. The Company incurred a net loss of $5,574,068 during <font style="color: black">the year ended February 29, 2012, and an accumulated deficit</font> of $6,968,428 <font style="color: black">since inception. The Company changed its principal business to the development and exploitation of mineral properties in October 2010, but has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.</font> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources. Management&#8217;s plans to continue as a going concern include raising additional capital through sales of common stock and or a debt financing. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0"> The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.<font style="font-size: 10pt">&#160;</font> </p><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 3. </td> <td> Acquisitions </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (a) </td> <td> <b>Metallum Resources Plc.</b> </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> On February 23, 2011, the Company entered into definitive acquisition agreement (the &#8220;Metallum Acquisition Agreement&#8221;) to purchase all outstanding shares of Metallum Resources Plc. (&#8220;Metallum&#8221;), a gold and base metals explorer with a focus in Northern Ireland, Republic of Ireland and Scotland. Metallum, founded in 2006, is an unlisted public company incorporated under the laws of England and Wales. Under the terms of this agreement, the Company agreed to purchase all of Metallum's outstanding shares at a price of GBP &#163;0.10 per share through the issuance of the Company&#8217;s common stock. The number of shares of common stock to be issued at the Agreement's closing was to be calculated by multiplying GBP &#163;0.10 by the GBP/USD exchange rate on the day of closing, divided by the average closing price of the Company&#8217;s shares on the OTCBB for the 10-day period ended five trading days prior to the closing date. Effective June 29, 2011 the parties agreed to a conversion ratio of .325 shares of the Company&#8217;s common stock for each Metallum common shares based on a 5 day average trading price of the Company of $0.493 per share and a conversion rate of &#163; to $ of 1.60:1. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On October 25, 2011, the Company closed on the Metallum Acquisition agreement. The acquisition was accounted for as an asset acquisition. In consideration, based on arms-length negotiations, the Company issued 23,715,730 shares of its common stock to stockholders of Metallum at an agreed price of $0.49 per share for 72,971,475 or 98.65% of Metallum&#8217;s outstanding shares and issued 21,121,094 options for the purchase of common shares of the Company with an exercise price of $0.49 per share expiring December 31, 2012 for 64,987,982 or approximately 99.5% of Metallum&#8217;s 64,987,982 outstanding options. This acquisition further expands the Company&#8217;s geographical scope as well as its mineral property acreage. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <b><i>Fair Value Determination and Allocation of Consideration Transferred&#160;</i></b> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The fair value of the 23,715,730 common shares was determined to be $0.19 per share based on the fair value of the company&#8217;s stock on October 25, 2011, the acquisition date. The options were valued at $654,464 using a Black Scholes valuation model. The following assumptions were used in the Black Scholes calculation: expected life of 1.18 years; volatility of 98.5%; no dividend yield; and a risk free interest rate of 0.11%. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The following is a summary of the estimates of the fair value of the acquired assets less assumed liabilities at the acquisition date: </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Net assets acquired and liabilities assumed: </p><br/><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 80%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 67%"> &#160;&#160;Cash </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 3,303 </td> <td style="width: 1%; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"> &#160;&#160;Taxes recoverable and prepaid expenses </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 69,217 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td> &#160;&#160;Equipment </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 10,850 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"> &#160;&#160;Mineral property rights </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 6,142,038 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"> &#160;&#160;Accounts payable and accrued liabilities </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> (994,336 </td> <td style="text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td> &#160;&#160;Non-controlling interest </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> (70,619 </td> <td style="text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 1pt"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt"> Paid by issuance of 23,715,730 shares of common stock, 21,121,094 options to purchase shares of the Company&#8217;s common stock until December 31, 2012 </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 5,160,453 </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (a) </td> <td> <b>Fairfields Gold S.A. de CV</b> </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> &#160;On November 10, 2010, the Company entered into a definitive agreement (the &#8220;Fairfields Acquisition Agreement&#8221;) to acquire all of the issued and outstanding common shares of Fairfields Gold S.A. de CV (&#8220;Fairfields&#8221;). Fairfields owns an option to acquire 100% of the Huicicila gold project in Nayarit Mexico. In consideration, based on arms-length negotiations, the Company issued 16,000,000 shares of its common stock to stockholders of Fairfields for the $5,000,000 of consideration payable to Fairfields&#8217; selling stockholders. This acquisition expands the Company&#8217;s geographical scope as well as its mineral property acreage. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> In addition to the acquisition price consideration the Fairfields Acquisition Agreement includes the following additional terms (1) a contingent payment to the selling stockholders of Fairfields of up to $5,000,000 payable in the Company&#8217;s common shares based on the 20 day average price of the Company&#8217;s common stock prior to the required payment date. The amount of contingent payment is based on Fairfields having indicated reserves of between 475,000 and 1,300,000 ounces of gold on the Resource Estimate Dates of 18, 24, 36 and 48 months after December 31, 2010; and (2) an option to acquire up to 25% of Focus Gold Mexico Corporation, a wholly owned subsidiary of the Company, created to acquire Fairfields. The option price payable upon the exercise of the option shall be 25% of the sum of (i) $5,000,000, (ii) the dollar value of all payments made in respect of the deferred payments outlined above as at the date of exercise of the option, and (iii) the dollar value of any shareholders&#8217; equity contributed into Fairfields after December 31, 2010 until the date of exercise of the option. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <b><i>Fair Value Determination and Allocation of Consideration Transferred</i></b> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> In accordance with ASC 805: <i>Business Combinations</i>, the Company allocated the purchase price to the tangible and intangible assets acquired and liabilities assumed based on their fair values at the acquisition date of December 31, 2010. The excess purchase price over those fair values is recorded as mineral property rights. At February 28, 2011, the Company has not yet determined whether there are any proven reserves on the property. The fair values assigned to tangible and intangible assets acquired and liabilities assumed, are based on an independent third party valuation analysis using estimates and assumptions provided by management, and other information complied by management. In making these assessments, the Company has recognized as a liability the amount of $1,200,000 due to the optionee of Fairfields&#8217; mineral properties at December 31, 2010 as its payment is likely to be made in management&#8217;s assessment. The amount of this liability has been recorded at the discounted basis of $990,024 using a discount rate of 11% (being management&#8217;s assessment of the interest rate then applicable to borrowings by the company of three year debt) over the period of such option payments. In recording contingent liabilities attending the acquisition of Fairfields, the Company did not include the payment of the contingent payments to Fairfields selling shareholders as noted below due to its assessment of the likeliness of such payment not being payable over the term such contingent payment may be required to be paid. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The following is a summary of the estimates of the fair value of the acquired assets less assumed liabilities at the acquisition date: </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Net assets acquired and liabilities assumed: </p><br/><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 77%"> &#160;&#160;Cash </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 70,048 </td> <td style="width: 1%; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"> &#160;&#160;Taxes recoverable </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 33,418 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td> &#160;&#160;Equipment </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 573 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left"> &#160;&#160;Mineral property rights </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 6,086,002 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left"> &#160;&#160;Accounts payable and accrued liabilities </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> (17 </td> <td style="text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"> &#160;&#160;Mineral option payment liability </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="text-align: left; border-bottom: Black 1pt solid"> &#160; </td> <td style="text-align: right; border-bottom: Black 1pt solid"> (990,024 </td> <td style="text-align: left; padding-bottom: 1pt"> ) </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 2.5pt"> Paid by issuance of 16,000,000 shares of common stock and $200,000 cash loans pre acquisition </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 5,200,000 </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <b>Fairfields Results of Operations</b> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The following table presents the amount of revenues, loss from operations and net loss of Fairfields included in the Company&#8217;s consolidated statements of operations from the date of the acquisition December 31, 2010 through the year ended February 28, 2011: </p><br/><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 77%"> Revenues </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> &#8211; </td> <td style="width: 1%; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt"> Net loss from operations </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (183,106 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 2.5pt"> Net loss </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (183,106 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The following table presents the estimated unaudited pro forma consolidated results as if the business combination occurred as of March 1, 2010 and 2009, respectively. 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</td> <td style="font-weight: bold"> &#160; </td> <td style="font-weight: bold; text-align: left"> &#160; </td> <td style="font-weight: bold; text-align: center"> February 28, </td> <td style="font-weight: bold; text-align: left"> &#160; </td> <td style="font-weight: bold"> &#160; </td> <td style="font-weight: bold; text-align: left"> &#160; </td> <td style="font-weight: bold; text-align: center"> February 28, </td> <td style="font-weight: bold; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom"> <td style="padding-left: 0.75pt"> &#160; </td> <td style="font-weight: bold"> &#160; </td> <td style="font-weight: bold; text-align: left"> &#160; </td> <td style="font-weight: bold; text-align: center"> 2011 </td> <td style="font-weight: bold; text-align: left"> &#160; </td> <td style="font-weight: bold"> &#160; </td> <td style="font-weight: bold; text-align: left"> &#160; </td> <td style="font-weight: bold; text-align: center"> 2010 </td> <td style="font-weight: bold; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 60%; padding-left: 0.75pt"> Revenues </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 11%; text-align: right"> &#8211; </td> <td style="width: 1%; text-align: left"> &#160; </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 11%; text-align: right"> &#8211; </td> <td style="width: 1%; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 0.75pt"> (Loss) from operations </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (1,347,519 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (135,958 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 0.75pt"> Net loss </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (1,347,519 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> (135,958 </td> <td style="padding-bottom: 2.5pt; text-align: left"> ) </td> </tr> </table><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 4. </td> <td> Equipment </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" align="center" style="border-collapse: collapse; width: 90%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="11" style="text-align: center; border-bottom: Black 1pt solid"> February 29, 2012 </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="11" style="text-align: center; border-bottom: Black 1pt solid"> February 28, 2011 </td> </tr> <tr style="vertical-align: bottom"> <td> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Cost </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Accumulated depreciation </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Net book value </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Cost </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Accumulated depreciation </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Net book value </td> </tr> <tr style="vertical-align: bottom"> <td> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 24%; text-align: left"> Computer and office equipment </td> <td style="width: 2%"> &#160; 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text-align: right"> 4,114 </td> <td style="width: 1%; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-bottom: 1pt"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; 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</td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 6,142,038 </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 6,136,002 </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 6,142,038 </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> - </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> $ </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> 12,278,040 </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> There are no proven reserves on any of the claims or leases which the Company has under option or has an ownership interest in. The Company has interests in the following properties: </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (a) </td> <td> Huicicila Claims - Mexico </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> On November 10, 2010, the Company signed a definitive agreement to acquire Fairfields Gold S.A. de CV.&#160;Fairfields owns an option to acquire 100% of the Huicicila gold claims in Nayarit Mexico (see Note 8(b)).&#160;The Huicicila claims contain a high grade gold-silver mesothermal vein.&#160; The property is located 25 kilometers southeast of Tepic and 10 kilometers northwest of Compostela in the State of Nayarit.&#160;The Project is covered by five mining claims with a surface of 1012 hectares. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Since the acquisition at December 31, 2010, the Company through its subsidiary Fairfields has conducted an exploration program to determine the extent of prior workings and mineralization on the property. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (b) </td> <td> Watabeag &amp; Russell Creek Claims &#8211; Ontario, Canada </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> On October 1, 2010 the Company and Victoria Gold Corp. entered into an option agreement (see Note 8(a)) covering 16 gold mining claims in the Province of Ontario.&#160; Under the option agreement, the Company has the right to acquire Victoria Gold Corp.&#8217;s ownership interest in eight (8) mining claims located in Currie Township, Timmins Mining District, Ontario known as the Watabeag property and eight (8) mining claims located in Bowman Township, Timmins Mining District, Ontario known as the Russell Creek property. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> The Watabeag property comprises a total of 131 hectares and is located approximately 60km east of Timmins, Ontario. Exploration on the property began in 1973 with additional drilling in the 80&#8217;s. Four overburden holes were drilled in 1980 to follow up anomalous gold values. An additional 11 overburden holes were completed in 1981 to define two anomalies with well defined head and tail features. The initial drill hole intersected mixed dacite and feldspar with a brecciated and altered zone assaying 8.9g/t Au across a 0.9m interval. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> The Russell Creek property is a total of 128 hectares and is located approximately 70 kilometers east of Timmins.&#160; Minor exploration for gold commenced in 1980 when Asarco (Cook Joint Venture) completed ground magnetic and EM surveys in the area of two weak airborne EM conductors. The surveys defined a north west trending fault structure along Russell Creek. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> As at February 29, 2012, the Company had not commenced exploration activities on these properties. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (c) </td> <td> San Nicholas &amp; Santa Fe - Mexico </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> <font style="color: black">On February 11, 2011, the Company, through its wholly-owned subsidiary Fairfields entered into an agreement, with the owner of the Santa Fe and San Nicholas mineral claims to acquire an 80% interest in such claims for no cost. The Santa Fe property strategically extends the Company's historic Miravalles Vein. The San Nicolas property includes the caldera border that lies adjacent to the Huicicila property. The properties have a collective surface area of 220 hectares and are being evaluated with the work programs undertaken for the</font> Huicicila Claims<font style="color: black">.</font> </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (d) </td> <td> Focus 1 to 3 - Mexico </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> <font style="color: black">In February 2011 and the year ended February 29, 2012, the Company, through its wholly-owned subsidiary Fairfields, staked and applied for additional mineral claims for property contiguous with its</font> Huicicila and San Nicholas and Santa Fe Claims. These claims are pending. The properties have a surface area of 18,289.05 hectares for the Focus 1 claims, 10,850 hectares for the Focus 2 claims and 2,367.78 hectares for the Focus 3 claims. The Company has conducted limited geological work on these claims. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> (e) </td> <td> Metallum properties - United Kingdom and Ireland </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin-right: 0; margin-left: 0"> Includes thirty one exploration licenses in Northern Ireland, Scotland and Ireland covering in excess of 388,000 hectares owned by Metallum, the Company&#8217;s 98.65% owned subsidiary. The licenses cover areas of known mineral occurrences and geochemical anomalies in terrain that is geologically prospective for a number of deposit types for a variety of metals. The main emphasis will be on advancing gold and gold-copper targets though there is also the potential for poly-metallic massive sulphides. The Company&#8217;s extensive review of data on the Metallum licenses has identified 3 priority areas that will be the focus of initial exploration: Fore Burn, Scotland (gold-copper); Sperrins, N. Ireland (gold) and Clogher Valley, Ireland and N. Ireland (base metals). </p><br/> <table cellpadding="0" cellspacing="0" style="width: 100%; font: bold 10pt Times New Roman, Times, Serif; margin-bottom: 0; margin-top: 24pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 6. </td> <td> Notes payable </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> <font style="color: black">In July 2011, the Company entered into a Demand Promissory Note (the &#8220;Demand Note&#8221;) with a private investor as the lender with the principal amount of $200,000. The Demand Note is payable on demand by the lender after August 30, 2011 and accrues interest at the rate of 2% per month calculated and compounded monthly until maturity. A commitment, arrangement and placement fee of $59,000 is payable at maturity. The commitment, arrangement and placement fee of $59,000 has been included in notes payable net of discount on the balance sheet. The Demand Note has a provision that if the Demand Loan is not repaid upon demand within 3 days, the lender may elect to receive as full repayment for the loan in restricted common stock of the Company at the rate of five times the principal divided by the 10 day average closing price of the Company&#8217;s common stock prior to the date of demand</font>. On March 1, 2012, the Company finalized a settlement agreement with the lender for an amount of $400,000 as full and complete satisfaction of principal, interest, commitment arrangement, placement fees and the any other right of the lender under the Demand Loan. As at February 29, 2012, the Company has recognized the sum of $108,659 as a loss on settlement of the Demand Loan in respect of this settlement. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <font style="background-color: white">In September 2011, the Company entered into two Demand Promissory Notes (the &#8220;Notes&#8221;) in the aggregate amount of $270,000 from a related party of a financial firm that has been engaged by the Company on an international basis for global capital raises and institutional marketing. The Notes are due upon demand after November 14, 2011 ($200,000) and November 19, 2011 ($70,000) and immediately, upon demand, where the Company is in default or non-compliance under the respective note or default or non-compliance with other parties customarily including but not limited to, insolvency, bankruptcy or judgements against the Company. The Notes bear interest at the rate of 2% per month calculated and compounded monthly and a commitment arrangement and placement fee of $67,500 per month (less interest). The commitment arrangement and placement fee of $341,414 and interest of $30,310 as at February 29, 2012 have been included in</font> notes payable net of discount <font style="background-color: white">on the balance sheet. The Notes requires that the first use of any financing provided to the Company of greater than $200,000 be first used to retire the September 19 Note in whole or in part and greater than $305,000 in the case of the September 14 Note. As at February 29, 2012, the Notes were due and payable to the note holders subject to demand. As of this date no demand for payment has been made and the Company is in ongoing discussions with the note holders.</font> </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On October 25, 2011, the Company issued a 6% convertible redeemable secured note (the &#8220;6% Note&#8221;) for a principal amount of $100,000. The 6% Note is due and payable October 25, 2012 and accrues interest on the outstanding principal balance at the rate of 6% per annum. The 6% Note is convertible at any time after April 25, 2012, <b></b>into shares of the Company's common stock at a conversion price that is equal to 70% of the lowest closing bid price of the Company&#8217;s common stock as reported on the National Quotations Bureau Pink Sheets on which the Company&#8217;s shares are traded, for any of the five trading days including the day upon which a Notice of Conversion is received by the Company. The Exercise price may be adjusted to a lower amount where within the three business days after the exercise the closing bid for the Company&#8217;s common stock is 5% lower than the price set out in the notice. At any time, the Company has the option to redeem the 6% Note and pay to the note holder 150% of the unpaid principal amount of the 6% Note, in full. As part of the loan, the Company issued to the note holder 666,666 transferable warrants to purchase one common share per warrant at $0.15 per share for a period of three years. The fair value of the 666,666 warrants was $96,372. The fair value of the warrants was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 3.0 years; volatility of 126.9%; no dividend yield; and a risk free interest rate of 0.43%. The relative fair value of the warrants was $49,076 and was recorded as a discount to the debt. The unamortized discount at February 29, 2012 was $32,000. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> On February 17, 2012, Celtic entered into a convertible debenture agreement (&#8220;Convertible Debenture&#8221;) for an amount of $300,000 (Canadian, US$303,183 at February 29, 2012). The Convertible Debenture has a term of 6 months or the earlier of Celtic&#8217;s RTO on the Toronto Stock Exchange (Note 13). The Convertible Debenture is secured against the accounts of Celtic, including its accounts, chattel paper, books and records, equipment, instruments, intangibles, inventory, money, proceeds, securities and undertakings and is guaranteed by Celtic and its subsidiaries. The interest rate is 10% accrued daily, compound annually and paid at maturity date. The holder has the right to convert the principal amount outstanding into the common shares of Celtic at the conversion price which is the lower of $0.20 per common share or 25% below the RTO price. As part of the loan, the Company issued to the lender 1,000,000 common share purchase warrants with an exercise price per share equal to the lower of $0.30 (Canadian) and the RTO price for a period of two years and 333,333 common share purchase warrants with an exercise price per common share equal to $0.45 (Canadian) for a period of two years. The fair value of the 1,333,333 warrants was $197,152. The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 2.0 years; volatility of 90.7%; no dividend yield; and a risk free interest rate of 1.12%. The fair value of the liability at February 29, 2012 is $199,244. The balance of the fair value of the warrants of $177,588 will be amortized over the remaining life of the Convertible Debenture. </p><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 7. </td> <td> Share capital </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (a) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> Authorized capital<br /> <br /> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0"> The Company is authorized to issue: </p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> &#160; </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0"> 100,000,000 Preferred shares of stock, $0.00001 par value </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0"> 250,000,000 Common shares of stock, $0.00001 par value </p> </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (b) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> Share issuances, returns and cancellations during the years ended February 29, 2012 and February 28, 2011 </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (i) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> In March 2010, the Company issued 100,000 shares of common stock pursuant to a contract for services with a director of the Company at a price of $0.30 per share. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (ii) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> On July 21, 2010, the Company issued 150,000 shares of common stock at a price of $0.22 per share in settlement of $33,000 in fees arising pursuant to a contract for services with a director of the Company. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (iii) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> On October 1, 2010, the Company issued 250,000 shares of common stock at a value of $50,000 pursuant to a lease assignment of mining claims for the Watabeag and Russell Creek properties. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (iv) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> On October 26, 2010, the Company received 26 million shares for cancellation.&#160; The Company did not provide this shareholder with any consideration for this cancellation. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (v) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> On November 4, and 15, 2010, the Company entered into thirteen separate agreements for consulting services. Pursuant to these agreements, the Company agreed to issue to the consultants 969,000 shares of the Company&#8217;s common stock as a payment for services under the agreement. The agreements have a term of 12 months. The Company recorded the stock payment of $193,800 as a period expense of $57,933 in the year ended February 28, 2012 and $135,867 in the year ended February 29, 2012 which reflected the number of shares issued multiplied by the fair value of services renderable under the agreement, prorated for such sevices renderable in the respective periods. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (vi) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> In November and December, 2010, the Company issued 4,700,000 shares of common stock in a private placement at $0.20 per share for proceeds of $940,000. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (vii) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> On December 31, 2010 and February 17, 2010, the Company issued an aggregate 16,000,000 common shares at a fair value of $5,000,000 pursuant to a stock acquisition agreement of the Company to acquire 100% of the common shares of Fairfields Gold, S.A. de CV. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (viii) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> In February, 2011 the Company issued 200,000 shares of common stock pursuant to a consulting agreement. The agreement had a term of 12 months. The Company recorded the stock payment of $80,000 as a period expense of $6,667 in the year ended February 28, 2011 and $73,333 in the year ended February 28, 2012 which reflected the number of shares issued multiplied by the fair market value of services renderable under the agreement, prorated for such services renderable in the respective periods. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (ix) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> In February 2011, the Company issued 236,838 units at $0.40 per unit for proceeds of $94,735 by way of a private placement. Each unit consisted of one common share and one-half non-transferable share purchase warrant that entitled the holder to purchase one additional common share at $0.50 per share until April 24, 2012. The proceeds of the financing of $94,735 was allocated on a relative fair value basis as $66,515 to common shares and $28,220 as to warrants. The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 1.18 years; volatility of 116%; no dividend yield; and a risk free interest rate of 1.70%. No warrants were exercised in fiscal year 2011. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (x) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> On October 25, 2011, the Company issued an aggregate 23,715,730 common shares at a fair value of $4,505,989 pursuant to a definitive stock acquisition agreement of the Company dated February 23, 2011, to acquire 98.65% of the common shares of Metallum Resources Plc and<font style="font: 10pt Times New Roman, Times, Serif; color: black">, the approved the granting of 21,121,094 Class A Options in exchange for 64,987,982 Metallum options providing the Company with the option to acquire an additional 64,987,982 common shares of Metallum for</font> &#163;0.10 per share through December 31, 2012. In addition, at October 25, 2011, the Company issued an aggregate 369,343 common shares at a fair value of $181,762 in exchange for debt due to current and former directors and officers by one of the Company&#8217;s subsidiaries in the amount of $181,762. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (xi) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> Effective October 15, 2011, the Company issued 250,000 shares of common stock pursuant to a consulting agreement. The agreement has a term of 12 months. The Company recorded the stock payment of $57,500 as a period expense of $21,582 and prepaid expenses at February 29, 2012 of $35,918 which reflected the number of shares issued multiplied by the fair value of services renderable under the agreement, prorated for such services renderable after February 29, 2012. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (xii) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> During December 2011, the Company received and approved subscriptions for 1,333,333 units at $0.15 per unit for gross proceeds of $200,000 less cash issue costs of $20,000 by way of private placement of &#8220;flow-through&#8221; common shares. Each unit consisted of one common share and one-half non-transferable share purchase warrant that entitles the holder to purchase one additional common share at $0.25 per share for a period of two years.<br /> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 6pt"> </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0"> <font style="color: black">In connection with this private placement, the Company's agents received a selling commission of $20,000 and 133,332 warrants to purchase an additional 133,332 shares of the Company&#8217;s common stock for a period of two years at $0.15 per share. The fair value of the 133,332 warrants was $5,019.</font> The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 2.0 years; volatility of 91%; no dividend yield; and a risk free interest rate of 0.43%. </p> </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (xiii) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> In December, 2011, the Company entered into three separate consulting agreements for consulting services. Pursuant to these agreements, the Company agreed to issue to the consultants 6,250,000 shares of the Company&#8217;s common stock as a payment for services under the agreements. The agreements have a term of 12 months. The Company recorded the stock payment of $815,000 as a period expense of $188,233 and prepaid expenses at February 29, 2012 of $626,767 which reflected the number of shares issued multiplied by the fair value of services renderable under the agreement, prorated for such services renderable after February 29, 2012. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (xiv) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> In January, 2012, the Company entered into a consulting agreement for consulting services. Pursuant to this agreement, the Company issued 3,750,000 shares of common stock pursuant to a consulting agreement. The agreement has a term of 24 months. The Company recorded the stock payment of $375,000 as a period expense of $36,986 and prepaid expenses at February 29, 2012 of $338,014 which reflected the number of shares issued multiplied by the fair value of services renderable under the agreement, prorated for such services renderable after February 29, 2012. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 6pt"> <tr style="vertical-align: top; text-align: justify"> <td style="width: 39pt; text-align: right"> (xv) </td> <td style="width: 5pt"> </td> <td style="text-align: justify"> During the year ended February 29, 2012, the Company received and approved subscriptions for 4,410,750 units at $0.40 per unit for gross proceeds of $1,764,300 less cash issue costs of $66,580 by way of private placement. Each unit consisted of one common share and one-half non-transferable share purchase warrant that entitles the holder to purchase one additional common share at $0.50 per share for a period of one year.<br /> <br /> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 6pt"> The net proceeds of the financing of $1,679,720 was allocated on a relative fair value basis as $1,444,653 to common shares and $235,067 to warrants. The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 1.0 to 1.25 years; volatility of 84 - 88%; no dividend yield; and a risk free interest rate of 0.18 &#8211; 0.23%. </p> <p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; text-align: left; margin-bottom: 0"> <font style="color: black">In connection with this private placement, the Company's agents received a selling commission of $</font>66,580 <font style="color: black">and</font> 166,450<font style="color: black">warrants to purchase an additional 166,450 shares of the Company&#8217;s common stock for a period of one to three years at $0.40 per share. The fair value of the 166,450 warrants was $41,002.</font> The fair value of each warrant issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 1.0 and 3.25 years; volatility of 84% and 144% respectively; no dividend yield; and a risk free interest rate of 0.25% and 0.71% respectively. </p> </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> (b) </td> <td> Stock options </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company has an incentive share option plan (the "Plan") that it adopted February 7, 2011, that allows it to grant incentive stock options to its officers, directors, employees and other persons associated with the Company. 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margin: 0"> As the Company does not have historical experience to estimate the expected life of options, the Company used the project development life of its Huicicila concession as its estimate. &#160;The $0.28 fair value of each stock option grant in the year ended February 28, 2011 was calculated using the Black-Scholes option pricing model with the following weighted average assumptions: expected life of 2.5 years; volatility of 141%; no dividend yield; and a risk free interest rate of 0.95%. &#160;The Company recorded aggregate stock-based compensation expense of $1,812,200 ($1,510,167 - 2012, and $302,033 &#8211; 2011) for options based on a twelve month service period from January 1, 2011. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> <font style="color: black">During the year ended February29, 2012, the Company approved the issuance of 21,121,094 Class A Options in exchange for 64,987,982 Metallum options providing the Company with the option to acquire an additional 64,987,982 common shares of Metallum for</font> &#163;0.10 per share through December 31, 2012. 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</td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 10pt"> The Company has issued two classes of warrants as set out below: </p><br/><table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-bottom: 10pt; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: top"> <td style="text-align: left; padding-left: 16pt; text-indent: -10pt; width: 15pc"> Class A warrant </td> <td style="text-align: left"> Are non-transferrable, exercisable for cash and have no acceleration of the expiry date. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-bottom: 10pt; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: top"> <td style="text-align: left; padding-left: 15pt; text-indent: -10pt; width: 15pc"> Class B warrant </td> <td style="text-align: left"> Are transferrable, each warrant entitles the holder to purchase one additional common share at the exercise price per, subject to acceleration provisions and with a cashless exercise provision based upon the 20 day volume weighted average price per share at closing day (VWAP) the day prior to exercise. Holders of warrants electing cashless exercise will receive that number of shares equal to the 20 day VWAP minus the exercise price divided by the 20 day VWAP multiplied by the number of warrants exercised. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" border="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: top"> <td style="text-align: left; padding-left: 15pt; text-indent: -10pt; width: 15pc"> Promissory Note Warrant </td> <td style="text-align: left"> Are transferrable and entitles the holder to purchase one additional common share at $0.15 per share for a period of three years. In lieu of the cash payment the holder has the right to convert this warrant in whole or in part without payment of any kind into that number of shares of common stock of the Company equal to the quotient obtained by dividing the aggregate of the closing price of the Company&#8217;s common stock on the day immediately preceding the conversion less the aggregate purchase price of the shares being exercised divided by the closing price of the Company&#8217;s common stock on the day immediately preceding the conversion. </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> During the year ended February 29, 2012, the Company approved unit subscriptions and warrant commissions for an aggregate of 449,782 Class A warrants and 2,872,042 Class B warrants as part of a private placement of units. In addition the Company approved an additional 666,666 warrants as part of a promissory note financing (see Note 6). </p><br/> <table cellpadding="0" cellspacing="0" style="width: 100%; font: bold 10pt Times New Roman, Times, Serif; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 8. </td> <td> Commitments and Contingencies </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> (a) </td> <td> On October 1, 2010, the Company entered into an option agreement with Victoria Gold Corp, covering 16 gold mining claims in the Province of Ontario.&#160; Under the agreement the Company has the right to acquire Victoria&#8217;s ownership interest in the sixteen mining claims known as Watabeag and Russel Creek properties. On November 9, 2011 the agreement was amended. Under the amended agreement, the Company has the right to acquire Victoria&#8217;s ownership interest in the sixteen mining claims known as the Watabeag and Russell Creek properties. To exercise the option and receive the exclusive right to earn a 100% interest in the Watabeag and Russell Creek properties, the Company has issued 250,000 shares of its common stock and must complete $2,000,000 of cumulative exploration and maintenance expenditures on or before the fourth anniversary date of the agreement.&#160; Of the $2,000,000 of cumulative exploration and maintenance expenditures, $375,000 must be incurred on or before the second anniversary date of the agreement and $25,000 must be paid to Victoria Gold Corp. on or before December 31, 2011 (unpaid) and on each of the second and third anniversary dates of the agreement.&#160;&#160;Upon the commencement of commercial production, the Company will pay a royalty equal to 3.0% of Net Smelter Returns. The Company has the ability to buy back 1% of the Royalty at any time for $1 million.&#160; </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> (b) </td> <td> On November 10, 2010, the Company signed a definitive agreement to acquire Fairfields Gold S.A. de CV.&#160;&#160;Fairfields owns an option to acquire 100% of the Huicicila gold project in Nayarit Mexico.&#160;&#160;Under the terms of the definitive agreement, Fairfields selling stockholders have the opportunity to receive additional shares based on performance as per the following schedule: </td> </tr> </table><br/><table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%"> <tr style="vertical-align: top"> <td style="width: 32%; font-weight: bold; text-decoration: underline"> Resource Estimate Date </td> <td style="width: 1%"> &#160; </td> <td style="width: 35%; font-weight: bold; text-decoration: underline"> Indicated Reserves </td> <td style="width: 2%"> &#160; </td> <td style="width: 30%; font-weight: bold; text-decoration: underline; text-align: center"> Payment Obligation </td> </tr> <tr style="vertical-align: top; background-color: rgb(238,238,238)"> <td> 18 months after Closing Date </td> <td> &#160; </td> <td> 475,000 oz Au (equivalent) </td> <td> &#160; </td> <td style="text-align: center"> $1,250,000 </td> </tr> <tr style="vertical-align: top; background-color: White"> <td> 24 months after Closing Date </td> <td> &#160; </td> <td> 750,000 oz Au (equivalent) </td> <td> &#160; </td> <td style="text-align: center"> $1,250,000 </td> </tr> <tr style="vertical-align: top; background-color: rgb(238,238,238)"> <td> 36 months after Closing Date </td> <td> &#160; </td> <td> 1,025,000 oz Au (equivalent) </td> <td> &#160; </td> <td style="text-align: center"> $1,250,000 </td> </tr> <tr style="vertical-align: top; background-color: White"> <td> 48 months after Closing Date </td> <td> &#160; </td> <td> 1,300,000 oz Au (equivalent) </td> <td> &#160; </td> <td style="text-align: center"> $1,250,000 </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> Any future payments would be made in shares based on the 20 day average price of the Company&#8217;s common stock prior to the required payment date.&#160;&#160; </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> In addition, Fairfields shareholders received an option to acquire up to 25% of Focus Gold Mexico Corporation, a wholly owned subsidiary of the Company, created to acquire Fairfields. The option price payable upon the exercise of the option shall be 25% of the sum of (i) $5,000,000, (ii) the dollar value of all payments made in respect of the deferred payments outlined above as at the date of exercise of the option, and (iii) the dollar value of any shareholders&#8217; equity contributed into Fairfields after December 31, 2010 until the date of exercise of the option. The option may only be exercised for cash. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> (c) </td> <td> Option on Huicicila mining concession - Mexico </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> On May 19, 2010, prior to its acquisition by the Company, Fairfields, entered into an exploration, exploitation and purchase option agreement with Ram&#243;n Far&#237;as Garc&#237;a, a Mexico City geologist for the mining lots denominated &#8220;CILA&#8221;, &#8220;CILA 1&#8221;, &#8220;CILA 2&#8221;, &#8220;CILA 3&#8221; &#8220;and CILA 5&#8221;, located in Compostela, Nayarit Mexico under the following terms: </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> <font style="font-family: Symbol">&#183;</font> </td> <td> US$ 100,000 plus applicable VAT, paid on May 24, 2010 (paid). </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> <font style="font-family: Symbol">&#183;</font> </td> <td> US$ 1,200,000 plus applicable VAT, on six semester payment of US$ 200,000 each one, payable on every August and February month from August 17, 2011 (paid) to February 17, 2114. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> <font style="font-family: Symbol">&#183;</font> </td> <td> The issue to the optionee that number of shares of common stock of Fairfields at the end of the option agreement that is 3% of its issued and outstand capital at that time. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.75in"> </td> <td style="width: 0.25in"> <font style="font-family: Symbol">&#183;</font> </td> <td> A Net Smelter Return Royalty (&#8220;NSR&#8221;) calculated at a rate of the 2.5% above the concentrate sales, payable every quarter over the life of the mines. </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> This option agreement has an initially maturity of 3 years and 6 months from May 19, 2010. The company has recorded the fair value of the $1,200,000 of payments under this option in these consolidated financial statements as the discounted value of the cash payments using a rate based on the prevailing market rates of interest available to the Company (the average of interest rates used was estimated to be 11.0%) of $905,727 at February 29, 2012 (after payment of $200,000 in August 2011) and $1,006,867 at February 28, 2011. The carrying amounts of option payment liabilities owing approximates their fair values. The interest is accrued over the estimated payment period of the option payments. The aggregate amount of interest accrued from acquisition through February 29, 2012 was $98,860 and February 28, 2011 $16,843. </p><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> (d) </td> <td> UK, Ireland mineral properties </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> The Company&#8217;s properties in UK and Ireland are held under prospecting licenses which are subject to commitments by the Company&#8217;s subsidiary to conduct mineral exploration activities on its licenses. During the period to renewal of its properties, the Company has committed to the following exploration expenditures in the fiscal years then ending: </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 71.45pt; text-indent: 0.55pt"> 2013 &#163;178,770 (US$ 285,156) </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0 0 0 70.9pt; text-indent: 0.55pt"> 2014 &#163;243,770 (US$ 388,838) </p><br/> <table cellpadding="0" cellspacing="0" style="width: 100%; font: bold 10pt Times New Roman, Times, Serif; margin-bottom: 0; margin-top: 24pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 9. </td> <td> Related party transactions </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> a) </td> <td> During the year ended February 29, 2012 the Company agreed to pay a monthly fee of $1,500 to a director as compensation for serving as corporate secretary. The Company paid or accrued $14,371 in the year ended February 29, 2012 (2011 - $18,000) under this commitment.&#160; A law firm of which the director is a partner is paid a monthly fee of $10,000 under a retainer agreement to provide legal services that was effective since March 1, 2010.&#160;Total fees were $95,000 through December 18, 2011 (2011 - $120,000).&#160;Mr. Weed was also issued 100,000 shares of restricted common stock, as designee for Law firm at a valuation of $0.30 per share or a total of $30,000 <font style="background-color: white"></font>and an additional 150,000 were issued on July 31, 2010 with a value of $33,000 as payment toward his monthly retainer. As of December 18, 2011 Mr. Weed is no longer a director or officer of the Company. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 6pt; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> b) </td> <td> Commencing August 27, 2010, the Company entered into agreements with the president and CEO of the Company to provide services in exchange for $15,000 per month through December 31, 2010 and $21,000 CDN per month during the year ended December 31, 2011. During the year ended February 29, 2012, the Company paid $253,245 (2011 - $191,838) as compensation for such management services. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 6pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> c) </td> <td> Effective January 1, 2011, the Company entered into an employment agreement with the director of exploration of the Company to provide services in exchange for $12,000 per month through December 31, 2011. During the year ended February 29, 2012, the Company recorded $159,000 (2011 - $24,000) as compensation for such management services. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 6pt; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> d) </td> <td> Effective January 1, 2011, the Company has paid fees to directors and management of its Mexican subsidiary Fairfields, to provide services related to developing Fairfields mineral properties as well as management services in exchange for a fee of 214,284 pesos each month ($16,666 monthly at the average rates of exchange during the year ended February 29, 2012). During the year ended February 29, 2012, the Company recorded $408,398 (2011 - $49,564) as compensation for such management services. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 6pt; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> e) </td> <td> During the fiscal year ended February 28, 2011, the Company recorded $5,250 (2010 - $nil) as compensation to a company controlled by a director of the Company for exploration services provided pursuant to a consulting agreement with the Company. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 6pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> f) </td> <td> Effective October 25, 2011, the Company has paid fees to directors and officers of its UK subsidiary Metallum, to provide services related to developing Metallum&#8217;s mineral properties as well as management services in exchange for a fee of &#163;5,000 each month ($7,957 monthly at the average rates of exchange during the year ended February 29, 2012). During the year ended February 29, 2012, the Company recorded $32,610 (2011 - $nil) as compensation for such management services. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 6pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> <font style="color: black">g)</font> </td> <td> <font style="color: black">Included in accounts payable and accrued liabilities &#8211; related at February 29, 2012 is $286,506 (2011 - $ <font style="background-color: white">$50,714</font>) payable to the firms and persons referred to in this</font> Note 9 <font style="color: black">and persons or firms related with these persons and firms.</font> </td> </tr> </table><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 10. </td> <td> Supplemental disclosure with respect to cash flows </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The significant non-cash transaction for the year ended February 29, 2012 consisted of the issuance of 23,715,730 shares of the Company&#8217;s common stock for the acquisition of 98.65% of the common shares of Metallum of $5,160,453 (Note 3), the issuance of 10,250,000 shares of the Company&#8217;s common stock for services of $1,247,501, the recording of $1,510,167 for the fair value of options granted in the year ended February 28, 2011; and the issuance of 1,369,343 shares of the Company&#8217;s common stock for settlement of the Company&#8217;s subsidiaries debts in the amount of $284,249. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The significant non-cash transactions for the year ended February 28, 2011 consisted of the issuance of 16,000,000 shares of the Company&#8217;s common stock for the acquisition of 100% of the common shares of Fairfields of $5,000,000 (Note 3), the issue of 250,000 common shares for an option payment for a mineral property in the amount of $50,000 (Note 8(a)), the issuance of 1,419,000 shares of the Company&#8217;s common stock for services of $256,880, the recording of $302,033 for the fair market value of options granted in the year, and the gifting of 26,000,000 shares of the Company&#8217;s common stock for cancellation. </p><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 11. </td> <td> Income taxes </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company has adopted the provision of ASC740. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried forward. 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</td> <td colspan="2" style="text-align: center; padding-bottom: 1pt"> February 28, 2011 </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 1pt"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="width: 70%; text-align: left; padding-bottom: 1pt; padding-left: 1pt"> Net loss before income taxes </td> <td style="width: 2%; padding-bottom: 1pt"> &#160; </td> <td style="width: 1%; border-bottom: Black 1pt solid; text-align: left"> $ </td> <td style="width: 11%; 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</td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> - </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> - </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 1pt"> Deferred tax asset </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> &#160; </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt"> Cumulative net operating losses </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 1,700,987 </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> 369,173 </td> <td style="padding-bottom: 1pt; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="text-align: left; padding-bottom: 1pt; padding-left: 6pt"> Less valuation allowance </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (1,700,987 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> <td style="padding-bottom: 1pt"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: left"> &#160; </td> <td style="border-bottom: Black 1pt solid; text-align: right"> (369,173 </td> <td style="padding-bottom: 1pt; text-align: left"> ) </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-bottom: 2.5pt; padding-left: 1pt"> Net deferred tax asset </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> - </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> <td style="padding-bottom: 2.5pt"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: left"> &#160; </td> <td style="border-bottom: Black 2.5pt double; text-align: right"> - </td> <td style="padding-bottom: 2.5pt; text-align: left"> &#160; </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> At February 29, 2012, the Company has net operating loss carry-forwards of approximately $6,610,202 (2011 - $1,054,782), the majority of which expire through 2032 if not utilized. Deferred tax assets of approximately $1,700,987, assuming an effective tax rate of 35%, were offset by a valuation allowance, which increased by approximately $1,331,814 and $280,142 during the years ended February 29, 2012 and February 28, 2011, respectively. </p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> Future tax benefits, which may arise as a result of those losses, have not been recognized in these financial statements. They have been offset by a valuation allowance as management does not believe their realization is more likely than not. </p><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 12. </td> <td> Segment disclosures </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> The Company considers itself to operate in a single segment, being mineral exploration and development. Geographic information is as follows: </p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: center"> </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Canada </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> United Kingdom &amp; Ireland </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> United States </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Mexico </td> <td style="padding-bottom: 1pt"> &#160; </td> <td colspan="3" style="text-align: center; border-bottom: Black 1pt solid"> Total </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td> February 29, 2012 </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> <td> &#160; </td> <td colspan="3"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="width: 35%; padding-left: 10pt"> Equipment </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 3,015 </td> <td style="width: 1%; text-align: left"> &#160; </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 9,486 </td> <td style="width: 1%; text-align: left"> &#160; </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> - </td> <td style="width: 1%; text-align: left"> &#160; </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 403 </td> <td style="width: 1%; text-align: left"> &#160; </td> <td style="width: 2%"> &#160; </td> <td style="width: 1%; text-align: left"> $ </td> <td style="width: 9%; text-align: right"> 12,904 </td> <td style="width: 1%; text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="padding-left: 10pt"> Mineral property rights </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 50,000 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 6,142,038 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> - </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 6,086,002 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> </td> <td style="text-align: right"> 12,278,040 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td> February 28, 2011: </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: White"> <td style="padding-left: 10pt"> Equipment </td> <td> &#160; </td> <td style="text-align: left; vertical-align: middle"> $ </td> <td style="text-align: right"> 3,302 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> - </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> - </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> 812 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> $ </td> <td style="text-align: right"> 4,114 </td> <td style="text-align: left"> &#160; </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(238,238,238)"> <td style="text-align: left; padding-left: 10pt"> Mineral property rights </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 50,000 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 6,086,002 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> &#160; </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 6,086,002 </td> <td style="text-align: left"> &#160; </td> <td> &#160; </td> <td style="text-align: left"> &#160; </td> <td style="text-align: right"> 6,136,002 </td> <td style="text-align: left"> &#160; </td> </tr> </table><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 13. </td> <td> Focus Celtic Gold Corporation proposal for public listing </td> </tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0"> On February 27, 2012, the Company entered into a Share Exchange Agreement with Pacific Orient Capital Inc. (&#8220;POC&#8221;), a company listed on the TSX Venture Exchange, for the exchange of its 26,500,000 common shares of Celtic to POC in exchange for 26,500,000 common shares of POC. Thereafter the Company will own approximately 84.13% of POC prior to giving effect to financing. POC has committed to fund Celtic at closing with a minimum of $1 million which it proposes to raise from investors at $0.30 per share. </p><br/> <table cellpadding="0" cellspacing="0" width="100%" style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 24pt; margin-bottom: 0"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> 14. </td> <td> Subsequent events </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> a) </td> <td> On March 22, 2012 the Company issued a Convertible Promissory Note to JMJ Financial (&#8220;JMJ&#8221;) in aggregate principal amount of $2,110,000 (the &#8220;JMJ Note&#8221;) advanced over time. In consideration for issuing of the JMJ Note and the 2,500,000 warrants, JMJ provided the initial funding of $275,000. The JMJ Note bears interest at 10%, matures three years from the date of issuance, is secured by 25% of the company&#8217;s investment property and ownership or other equity interests the Company holds in Focus Celtic Gold Corporation, its wholly owned subsidiary, and is convertible into shares of the Company&#8217;s common stock, at JMJ&#8217;s option, at a conversion price, equal to 80% of the average of the three lowest trade prices for the Company&#8217;s common stock during the 20 trading days prior to the conversion. The Note was issued with a 10% original issue discount. JMJ has agreed to restrict their ability to convert the JMJ Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company&#8217;s common stock. No interest or principal payments are required until the maturity date. The Note may be prepaid at any time prior to Maturity Date at 150%. The 2,500,000 warrants issued to JMJ entitle JMJ to purchase up to 2,500,000 shares of the Company&#8217;s common stock at $0.20 per share, subject to adjustment maintain an aggregate exercise price of $500,000. The 2,500,000 common share purchase warrants may in certain circumstances be exercised in whole or part in a cashless exercise equal to the difference between the VWAP on the trading day immediately preceding the date on which the holder elects to exercise the warrant and the exercise price of the warrant times the number of warrants so being exercised. The warrant exercise price may be adjusted to a lesser amount than $0.20 where at any time while the warrant is outstanding and the Company sells or grants an option to purchase or sell or grant any right to re-price, or issue and share of common stock or security convertible into the Company&#8217;s common stock at an effective price less than the $0.20 exercise price, the exercise price shall be reduced to that lesser amount. The warrant is non-transferrable. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> b) </td> <td> On March 29, 2012, the Company reached a settlement agreement on its Demand Note (described in Note 6) to settle the amount owing at $400,000. The Demand Note was further amended to remove any provisions that allowed for payment of the loan through penalty shares which was replaced with a convertible feature. Under the amendments the Note now bears interest, at the election of the holder at 1%, per month compounded monthly, matures October 1, 2012, and is convertible at any time into shares of the Company&#8217;s common stock, at the Holder&#8217;s option, at a conversion price, equal to 80% of the average of the three lowest trade prices for the Company&#8217;s common stock during the 20 trading days prior to the conversion. The Holder has agreed to restrict their ability to convert the Note and receive shares of common stock such that the number of shares of common stock held by them in the aggregate and their affiliates after such conversion or exercise does not exceed 4.99% of the then issued and outstanding shares of the Company&#8217;s common stock. No interest or principal payments are required until the maturity date. Principal and interest may be prepaid prior to Maturity Date. The number of shares reserved for issue under the Note is 6.000.000 shares of the Company&#8217;s common stock. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 10pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> c) </td> <td> On June 14 and 19, 2012 the company entered into Promissory Note Amending Agreements with the note holders of the Notes where by the note holders have agreed to extend the $200,000 promissory note to September 14, 2012 and the $70,000 promissory note to September 19, 2012, settle outstanding Commitment, Arrangement and Placement fees of $554,825 in exchange for 4,000,000 shares of the Company&#8217;s common stock, and eliminate any future Commitment, Arrangement and Placement fees under these promissory notes. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> d) </td> <td> The Company has issued 8,350,000 shares of its common stock upon exercise of convertible provisions of its notes payable in settlement of $232,960 of notes payable. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> e) </td> <td> Subsequent to the year end, the Company&#8217;s mineral lease in Scotland representing approximately 20% of the fair value of the Company&#8217;s UK and Republic of Ireland mineral claims expired June 30^th, 2012. The Company is in the process of renewing this mineral claim and management fully expects this mineral claim to be renewed. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> f) </td> <td> The Company was named as a defendant in an action filed on March 12, 2012 in the United States District Court, Southern District of New York. Also named in this action was the Company&#8217;s wholly owned subsidiary Fairfields and certain of its directors and officers. The plaintiff alleges that the defendants engaged the plaintiff as a finder in connection with financing for or the sale of Fairfields and was entitled to a finder&#8217;s fee of 10% of monies raised or the value of the deal. The plaintiff alleges that he completed his obligation and has not been paid for his services. The Company contends that it did not engage the plaintiff for any services. At this time, no discovery has been conducted and the Court has not yet ruled on the pending motion. Accordingly it is not possible at this time to make any assessment as to the possible outcome of the action. The Company intends to vigorously defend the action if it is not dismissed. </td> </tr> </table><br/><table cellpadding="0" cellspacing="0" width="100%" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"> <tr style="vertical-align: top"> <td style="width: 0.25in"> </td> <td style="width: 0.25in"> g) </td> <td> On June 13, 2012 with the Company&#8217;s failure to file its Form 10-K for the year ended February 29, 2012, the Company entered into technical default on the JMG&#160;Note. </td> </tr> </table><br/>