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FOCUS GOLD Corp
0001360564
10-Q
2012-05-31
true
--02-28
No
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<p style="margin: 0pt"></p>
<p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<p style="text-align: left; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">1.</td>
<td style="width: 95%">Organization and Description of Business</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Focus Gold Corporation (the "Company") was 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’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’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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<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 completed on the acquisition of 98.65% ownership of Metallum Resources Plc., an England &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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">All significant intercompany accounts and transactions are eliminated
in consolidation.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">2.</td>
<td style="width: 95%">Significant accounting policies</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black">This summary of significant accounting
policies of the Company is presented to assist in understanding the Company’s financial statements. </font>This condensed
summary should be read in conjunction with the disclosure of accounting policies in the Company’s audited financial statements
for the year ended February 29, 2012</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(a)</td><td>Mineral Properties, Leases and Exploration and Development Costs</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black">The Company accounts for mineral
properties in accordance with ASC 930: <i>Extractive Activities-Mining</i>.  Costs of acquiring mineral properties and
leases are capitalized by project area upon purchase of the associated claims </font>(see Note 3)<font style="color: black">. 
Mineral properties are periodically assessed for impairment of value and any diminution in value.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for mineral exploration and development
costs in accordance with ASC 932: <i>Extractive Activities</i>.  All exploration expenditures are expensed as incurred,
previously capitalized costs are expensed in the period the property is abandoned.  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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><br />
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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(b)</td><td>Derivative instruments</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Derivative instruments consist of common stock warrants and
certain instruments embedded in certain notes payable and related agreements. These financial instruments are recorded in the
balance sheets at fair value as liabilities. Changes in fair value are recognized in earnings in the period of change.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(c)</td><td>Impairment of long-lived assets</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(d)</td><td>Stock-based compensation</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for stock based compensation to employees
as required by ASC 718: <i>Compensation-Stock Compensation </i>and stock based compensation to non-employees as required by
ASC 505-50: <i>Equity-Based Payments to Non-Employees</i>.  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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(e)</td><td>Warrants</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company accounts for warrants issued in conjunction with
stock issuances under private placement using the fair value method.  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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="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 instrument</font>.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(f)</td><td>Recent accounting pronouncements</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In May 2011, the FASB issued Accounting Standards Update No.
2011-04 (ASU No. 2011-04) “Fair Value Measurement” (Topic 820): Amendments to Achieve Common Fair Value Measurement
and Disclosure Requirements in U.S. GAAP and IFRSs. As a result of the new guidance, U.S. GAAP and the IFRSs have the same definition
and meaning of fair value and the same substantive disclosure requirements about fair value measurements (with minor differences
in wording and style). ASU No. 2011-04 amends Topic 820 in two ways. Specifically, some of the amendments clarify how to apply
the existing fair value measurement and disclosure requirements, while some of the amendments change a particular principle or
requirement for measuring fair value or disclosing information about fair value measurements. ASU No. 2011-04 and IFRS 13 do not
extend the use of fair value accounting, but rather provide guidance on how it should be applied where its use is already required
or permitted by other standards within U.S. GAAP or the IFRS. ASU No. 2011-04 supersedes much of the guidance in ASC Topic 820,
but also clarifies existing guidance and changes certain wording in order to align ASC Topic 820 with IFRS 13. IFRS 13 provides,
for the first time, a precise definition of fair value and a single source of fair value measurement requirements, disclosure requirements,
and related guidance for use across the IFRSs. The Company’s adoption of this policy did not have a material effect on the
Company’s consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<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">“</font>Comprehensive Income (Topic 220): Presentation of Comprehensive
Income”. 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. The adoption of this ASU did not have a material impact on our consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<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"> “</font>Intangibles – Goodwill & Other” (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. The adoption of ASU 2011-08 did not expected to have a material impact
on the Company's financial position or results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In December 2011, the FASB issued ASU No. 2011- 12, “Comprehensive
Income – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated
Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011-12”). 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). The adoption of ASU
2011-12 did not have a material impact on our results of operations, financial condition, or cash flows.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has implemented all new accounting pronouncements
that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed,
and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have
a material impact on its financial position or results of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(g)</td><td>Going concern</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black">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 </font>loss of $1,315,241 during<font style="color: black">
the three month period ended May 31, 2012, and an accumulated deficit </font>of $7,869,386<font style="color: black"> since entry
into the exploration stage. 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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’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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(h)</td><td>Fair value measurements.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The FASB’s Accounting Standards Codification defines fair
value as the amount that would be received for selling an asset or paid to transfer a liability in an orderly transaction between
market participants and requires that assets and liabilities carried at fair value are classified and disclosed in the following
three categories:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 92.15pt; text-indent: -35.4pt"> </p>
<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: 83pt; text-align: right">Level 1</td><td style="width: 5pt"> – </td><td style="text-align: justify"> Quoted prices for identical instruments in active markets.</td>
</tr></table>
<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: 83pt; text-align: right">Level 2</td><td style="width: 5pt"> – </td><td style="text-align: left">Quoted prices for similar instruments in active or inactive markets and valuations
derived from models where all significant inputs are observable in active markets.</td>
</tr></table>
<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: 83pt; text-align: right">Level 3</td><td style="width: 5pt"> – </td><td style="text-align: left">Valuations derived from valuation techniques in which one or more significant
inputs are unobservable in any market.</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Given the conditions surrounding the trading of the Company’s
equity securities, the Company values its derivative instruments related to embedded conversion features and warrants from the
issuance of convertible debentures in accordance with the Level 3 guidelines. For the three month period ended May 31, 2012, the
following table reconciles the beginning and ending balances for financial instruments that are recognized at fair value in these
condensed consolidated financial statements. The fair value of warrants and embedded conversion features that have exercise reset
features are estimated using an adjusted Black-Scholes model based on the Company’s estimation of the likelihood of the occurrence
of a reset.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<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="padding-bottom: 1pt"></td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Balance at<br />
February 29, 2012</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">New<br />
Issuances</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">Changes in<br />
Fair Values</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Balance at <br />
May 31,<br />
2012</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>Level 3 –</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 5.4pt"> Derivative liabilities from:</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 40%; text-align: left; padding-left: 5.4pt">   Conversion features</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">–</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">1,325,021</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">(952,531</td><td style="width: 1%; text-align: left">)</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">372,490</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1pt; padding-left: 5.4pt">   Warrants</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">–</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">418,531</td><td style="padding-bottom: 1pt; text-align: left"> </td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">(139,499</td><td style="padding-bottom: 1pt; text-align: left">)</td><td style="padding-bottom: 1pt"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">279,032</td><td style="padding-bottom: 1pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left; padding-bottom: 2.5pt"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">–</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">1,743,552</td><td style="padding-bottom: 2.5pt; text-align: left"> </td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">(1,092,030</td><td style="padding-bottom: 2.5pt; text-align: left">)</td><td style="padding-bottom: 2.5pt"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">651,522</td><td style="padding-bottom: 2.5pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">Changes in the unobservable input values
would likely cause material changes in the fair value of the Company’s Level 3 financial instruments. The significant unobservable
input used in the fair value measurement is the estimation of the likelihood of the occurrence of a change to the contractual
terms of the financial instruments. A significant increase (decrease) in this likelihood would result in a higher (lower) fair
value measurement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">4.</td>
<td style="width: 95%">Mineral property rights</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The continuity of expenditures on mineral property acquisitions
is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<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="border-bottom: Black 1pt solid">Mineral property</td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">February 29, <br />
2012</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Additions</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Disposals</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">May 31,<br />
2012</td><td style="border-bottom: Black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Canada</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 40%; text-align: left; padding-left: 11pt"> Watabeag, Russell Creek,</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">50,000</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">–</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">–</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">50,000</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>Mexico</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="padding-left: 11pt">Huicicila</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,086,002</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,086,002</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">United Kingdom & Ireland</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left; border-bottom: Black 1pt solid; padding-left: 11pt">Metallum Claims</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6,142,038</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">–</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">–</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">6,142,038</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; border-bottom: Black 2.5pt double"> </td><td style="border-bottom: Black 2.5pt double"> </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="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">–</td><td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double"> </td>
<td style="border-bottom: Black 2.5pt double; text-align: left">$</td><td style="border-bottom: Black 2.5pt double; text-align: right">–</td><td style="border-bottom: Black 2.5pt double; text-align: left"> </td><td style="border-bottom: Black 2.5pt double"> </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="border-bottom: Black 2.5pt double; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On November 10, 2010, the Company signed a definitive agreement
to acquire Fairfields Gold S.A. de CV. Fairfields owns an option to acquire 100% of the Huicicila gold claims in Nayarit Mexico
(see Note 8(b)). The Huicicila claims contain a high grade gold-silver mesothermal vein.  The property is located 25
kilometers southeast of Tepic and 10 kilometers northwest of Compostela in the State of Nayarit. The Project is covered by
five mining claims with a surface of 1012 hectares.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(b)</td><td>Watabeag & Russell Creek Claims – Ontario, Canada</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On October 1, 2010 the Company and Victoria Gold Corp. entered
into an option agreement (see Note 7(a)) covering 16 gold mining claims in the Province of Ontario.  Under the option agreement,
the Company has the right to acquire Victoria Gold Corp.’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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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’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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Russell Creek property is a total of 128 hectares and is
located approximately 70 kilometers east of Timmins.  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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">As at May 31, 2012, the Company had not commenced exploration
activities on these properties.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in">(c)</td><td>San Nicholas & Santa Fe - Mexico</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black">In May 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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Includes thirty one exploration licenses in Northern Ireland,
Scotland and Ireland covering in excess of 388,000 hectares owned by Metallum, the Company’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’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>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">5.</td>
<td style="width: 95%">Notes payable</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black">In July 2011, the Company entered
into a Demand Promissory Note (the “Note”) with a private investor as the lender with the principal amount of $200,000.
The 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 was initially recorded as a discount to the Note. The Note has a provision that if 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’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 any
other right of the lender under the Note. On March 29, <font style="color: black">2012</font>, the Company reached a settlement
agreement on its Note, to settle the amount owing at $400,000. The 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’s common stock, at the holder’s option, at a conversion price, equal to 80%
of the average of the three lowest trade prices for the Company’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’s common stock. No interest or principal payments are required
until the maturity date. Principal and interest may be prepaid prior to maturity. The number of shares reserved for issue under
the Note is 6,000,000 shares of the Company’s common stock. The Company determined that the resulting modifications of the
Note was not substantial in accordance with ASC 470-50, “Modifications and Extinguishments”, thus modification accounting
was applied. The Note has been determined to have a derivative liability related to its conversion feature with a fair value of
$457,552. The fair value of the derivative liability was determined using the Black-Scholes option pricing model with the following
assumptions: expected life of 0.51 years; volatility of 91.7%; no dividend yield; and a risk free interest rate of 0.14%. The
fair value of the derivative liability was recorded as a discount to the debt of $400,000 and $57,552 of interest and financing
fees. The discount is being amortized to amortization of debt discount over the term of the Note. The unamortized discount at
May 31, 2012 was $170,953. At May 31, the fair value of the derivative liability on the remaining principal of $259,232 was determined
to be $102,491. The fair value of the derivative liability at May 31, 2012 was determined using the Black-Scholes option pricing
model with the following assumptions: expected life of 0.34 years; volatility of 77.6%; no dividend yield; and a risk free interest
rate of 0.09%. The Company tests the fair value of this derivative liability at each reporting period and records any change in
the fair value of the derivative liability to the statement of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black; background-color: white">In September
2011, the Company entered into two Demand Promissory Notes (the “Notes”) in the aggregate amount of $270,000. 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 $525,427 as at May 31, 2012 </font><font style="font-size: 10pt">has</font><font style="color: black; background-color: white">
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 May 31, 2012, the Notes were due and
payable to the note holders subject to demand. </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt"><font style="background-color: white"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black; background-color: white">On October
25, 2011, the Company issued a 6% convertible redeemable secured note (the “6% Note”) 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, 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’s common stock as reported on the National Quotations
Bureau Pink Sheets on which the Company’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 </font><font style="font-size: 10pt">adjusted</font><font style="color: black; background-color: white">
to a lower amount where within the three business days after the exercise the closing bid for the Company’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 May 31, 2012 was $19,630.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On February 17, 2012, Celtic entered into a convertible debenture
agreement (“Convertible Debenture”) for an amount of $300,000 (Canadian, US$303,183). The Convertible Debenture has
a term of 6 months or the earlier of Celtic’s RTO on the Toronto Stock Exchange. 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 balance
of the fair value of the warrants of $128,670 will be amortized over the remaining life of the Convertible Debenture.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 22, 2012 the Company issued a Convertible
Promissory Note to JMJ Financial (“JMJ”) in aggregate principal amount of $2,110,000 (the “JMJ Note”)
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 (total of $356,000 through May 31, 2012). The JMJ Note bears interest at 10%, matures three years from the date
of issuance, is secured by 25% of the company’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’s
common stock, at JMJ’s option, at a conversion price, equal to 80% of the average of the three lowest trade prices for
the Company’s common stock during the 20 trading days prior to the conversion. The Note was issued with a 10% original
issue discount. The original issue discount of $39,556 is being accreted to interest and financing fees over the remaining
term of the note. 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’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’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’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. The Company has determined that the warrants and the convertible
feature of the JMJ Note are derivative liabilities with fair values of $418,531 and $804,777 respectively. The fair value of
the derivative liability was calculated using the Black-Scholes option pricing model with the following assumptions: expected
life of 3.0 years; volatility of 102.6%; no dividend yield; and a risk free interest rate of 0.56%. The fair value of the
derivative liability was recorded as a discount to the debt of $337,692 and $948,308 of interest and financing fees. The
discount is being amortized to amortization of debt discount over the term of the JMJ Note. The unamortized discount at May
31, 2012 was $319,998. At May 31, the fair value of the derivative liability on the warrants and conversion feature was
determined to be $549,031. The fair value of the derivative liability at May 31, 2012 was determined using the Black-Scholes
option pricing model with the following assumptions: expected life of 2.8 years; volatility of 91.4%; no dividend yield; and
a risk free interest rate of 0.38%. The Company tests the fair value of this derivative liability at each reporting period
and records any change in the fair value of the derivative liability to the statement of operations.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">6.</td>
<td style="width: 95%">Share capital</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: right">(a)</td><td style="width: 0.25in"></td><td style="text-align: justify">Authorized capital</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: -1.5pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt">The Company is authorized to issue:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt">100,000,000 Preferred shares of stock, $0.00001
par value</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt">250,000,000 Common shares of stock, $0.00001 par
value</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: right">(b)</td><td style="width: 0.25in"></td><td style="text-align: justify">Share issuances, returns and cancellations during the three month period ended May
31, 2012</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">During the three month period ended May 31,
2012, the Company issued 3,668,438 shares of its common stock for the exercise of conversions under the Company’s
convertible securities in the amount of $180,768 including 1,931,562 shares of common stock reserved for issuance upon
exercise of conversions under the Company’s convertible securities.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in">During the three month period ended May 31, 2011,
the Company received and approved subscriptions for 3,235,750 units at $0.40 per unit for gross proceeds of $1,294,300 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 entitled the holder to purchase one additional common share at $0.50 per share for a period of one year.
The net proceeds of the financing of $1,227,720 was allocated on a relative fair value basis as $1,055,852 to common shares and
$171,868 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 1.07 years; volatility of 84%; no dividend yield; and a risk free interest rate
of 0.18 to 0.23%. <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’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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top">
<td style="width: 0.25in; text-align: right">(c)</td><td style="width: 0.25in"></td><td>Stock options</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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. The Plan is intended to advance the best interests of the Company by providing those persons
who have a substantial responsibility for its management and growth with additional incentive and by increasing their proprietary
interest in the success of the Company, thereby encouraging them to maintain their relationships with the Company. Further, the
availability and offering of stock options and common stock under the Plan supports and increases the Company's ability to attract
and retain individuals of exceptional talent upon whom, in large measure, the sustained progress, growth and profitability of
the Company depends. The Board reserved 10,000,000 shares of common stock for issuance under the Plan. As of the fiscal year end,
February 29, 2011, the Board had granted options to purchase 6,400,000 shares of common stock at $.50 per share to 7 persons.
Through the three month period ended May 31, 2012 and 2011, no further grants of options have been made under this plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<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="border-bottom: Black 1pt solid">Expiry date</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="text-align: center; border-bottom: Black 1pt solid">Exercise<br />
price <br />
per share</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="text-align: center; border-bottom: Black 1pt solid">Balance <br />
February 29,<br />
2012</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="text-align: center; border-bottom: Black 1pt solid">Granted</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="text-align: center; border-bottom: Black 1pt solid">Forfeited</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="text-align: center; border-bottom: Black 1pt solid">Expired/<br /> Cancelled</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="text-align: center; border-bottom: Black 1pt solid">Balance<br /> May, 31<br /> 2012</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 22%">February 24, 2016</td><td style="width: 2%"> </td>
<td style="width: 11%; text-align: center">$0.50</td><td style="width: 2%"> </td>
<td style="width: 11%; text-align: right">6,400,000</td><td style="width: 2%"> </td>
<td style="width: 11%; text-align: center">-</td><td style="width: 2%"> </td>
<td style="width: 11%; text-align: center">-</td><td style="width: 2%"> </td>
<td style="width: 11%; text-align: center">-</td><td style="width: 2%"> </td>
<td style="width: 11%; text-align: right">6,400,000</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: Black 1pt solid"> December 31, 2012</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center">$0.49</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: right">21,121,094</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center">-</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center">-</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center">-</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: right">21,121,094</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left; border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: right">27,521,094</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center">-</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center">-</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: center">-</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: right">27,521,094</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">All 6,400,000 stock options granted were exercisable
at May 31, 2012.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 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.  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%.  The Company recorded aggregate stock-based compensation expense of $nil ($453,050) for
options based on a twelve month service period from January 1, 2011.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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>Share purchase warrants</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The continuity of share purchase warrants is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<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="border-bottom: Black 1pt solid">Expiry date</td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Exercise <br /> price per <br /> share</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Balance<br /> February 29, <br /> 2012</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Issued</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Exercised</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Expired</td><td style="border-bottom: Black 1pt solid"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Balance<br /> May 31 ,<br /> 2012</td><td style="border-bottom: Black 1pt solid"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left; padding-left: 11pt; width: 28%">Class A</td><td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td><td style="text-align: right; width: 8%"> </td><td style="text-align: left; width: 1%"> </td><td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td><td style="text-align: right; width: 8%"> </td><td style="text-align: left; width: 1%"> </td><td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td><td style="text-align: right; width: 8%"> </td><td style="text-align: left; width: 1%"> </td><td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td><td style="text-align: right; width: 8%"> </td><td style="text-align: left; width: 1%"> </td><td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td><td style="text-align: right; width: 8%"> </td><td style="text-align: left; width: 1%"> </td><td style="width: 2%"> </td>
<td style="text-align: left; width: 1%"> </td><td style="text-align: right; width: 8%"> </td><td style="text-align: left; width: 1%"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>March 1, 2012</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.40</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">66,450</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">66,450</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>December 19, 2012</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.15</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">133,332</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">133,332</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>June 12, 2014</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.40</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">100,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>October 14, 2016</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">150,000</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">150,000</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 11pt">Class B</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>April 24, 2012</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">118,419</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">118,419</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>April 24, 2012</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,446,625</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,446,625</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>May 24, 2012</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">76,250</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">76,250</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>July 20, 2012</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">682,500</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">682,500</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>December 15, 2013</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.25</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">666,667</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">666,667</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-left: 11pt">Promissory Note Warrant</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td>October 25, 2014</td><td> </td>
<td colspan="2" style="text-align: center">$ 0.15</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">666,666</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">666,666</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="border-bottom: Black 1pt solid">March 22, 2015</td><td style="border-bottom: Black 1pt solid"> </td>
<td colspan="2" style="border-bottom: Black 1pt solid; text-align: center">$ 0.20</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">–</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2,500,000</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">–</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">–</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2,500,000</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left; border-bottom: Black 1pt solid">Total Warrants Outstanding</td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right"></td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">4,106,909</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">2,500,000</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">–</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">1,707,744</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid"> </td>
<td style="border-bottom: Black 1pt solid; text-align: left"> </td><td style="border-bottom: Black 1pt solid; text-align: right">4,899,165</td><td style="border-bottom: Black 1pt solid; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 11pt; text-indent: -11pt">Weighted average exercise price</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0.30</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0.20</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0.50</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">0.25</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td colspan="2" style="padding-left: 11pt; text-indent: -11pt">Average remaining<br /> contractual term (years)</td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"></td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2.21</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The Company has issued the following classes of warrants
as set out below:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse">
<tr style="vertical-align: top">
<td style="width: 18%; padding-right: 5.4pt; padding-bottom: 10pt; padding-left: 5.4pt">Class A warrant</td>
<td style="width: 82%; padding-right: 5.4pt; padding-bottom: 10pt; padding-left: 5.4pt">Are non-transferrable, exercisable for cash and have no acceleration of the expiry date.</td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-bottom: 10pt; padding-left: 5.4pt">Class B warrant</td>
<td style="padding-right: 5.4pt; padding-bottom: 10pt; padding-left: 5.4pt">Are transferrable, each warrant entitles the holder
to purchase one additional common share at the exercise price per share set out in the table above, 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>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-left: 5.4pt">Promissory Note</td>
<td style="padding-right: 5.4pt; padding-left: 5.4pt"> </td></tr>
<tr style="vertical-align: top">
<td style="padding-right: 5.4pt; padding-bottom: 10pt; padding-left: 5.4pt"> Warrant</td>
<td style="padding-right: 5.4pt; padding-bottom: 10pt; padding-left: 5.4pt">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’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’s common stock on the day immediately preceding the conversion.</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; text-align: left; margin-bottom: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">During the three month period ended May31, 2012, the Company
approved unit subscriptions and warrant commissions for an aggregate of nil (2011- 166,640) Class A warrants and nil (2011 –
1,617,875) Class B warrants as part of a private placement of units.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: right">(e)</td><td style="width: 0.25in"></td><td style="text-align: justify">Class A Options</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Each Class A Option entitles the holder to purchase one additional
common share at US$0.49 per share through December 31, 2012. Holders of Class A Options may elect to exercise Class A Options by
means of common cashless exercise provision based upon the 20 day volume weighted average price (VWAP) prior to exercise. Holders
of Class A Options electing cashless exercise will receive that number of shares equal to (the 20 day VWAP minus $0.49) divided
by the 20 day VWAP multiplied by the number of Options held.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="color: black">During the year ended February 29,
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>£0.10 per share through
December 31, 2012. No Class A Options have been exercised. The Class A Options have a remaining live of 0.58 years and an exercise
price of $0.49 per share.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">7.</td>
<td style="width: 95%">Commitments and Contingencies</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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">(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.  Under the agreement the Company has the right to acquire Victoria’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’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.  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.  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. </td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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">(b)</td><td>On November 10, 2010, the Company signed a definitive agreement to acquire Fairfields Gold S.A. de CV.  Fairfields
owns an option to acquire 100% of the Huicicila gold project in Nayarit Mexico.  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>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b> </b></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 32%; font-weight: bold; text-decoration: underline">Resource Estimate Date</td>
<td style="width: 1%"> </td>
<td style="width: 35%; font-weight: bold; text-decoration: underline">Indicated Reserves</td>
<td style="width: 2%"> </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> </td>
<td>475,000 oz Au (equivalent)</td>
<td> </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> </td>
<td>750,000 oz Au (equivalent)</td>
<td> </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> </td>
<td>1,025,000 oz Au (equivalent)</td>
<td> </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> </td>
<td>1,300,000 oz Au (equivalent)</td>
<td> </td>
<td style="text-align: center">$1,250,000</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt">Any future payments would be made in shares based
on the 20 day average price of the Company’s common stock prior to the required payment date.  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 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) $5,000,000, (ii) the dollar value of all payments
made in respect of the deferred payments outlined above as at the date of exercise of the option, and (iii) the dollar value of
any shareholders’ equity contributed into Fairfields after December 31, 2010 until the date of exercise of the option. The
option may only be exercised for cash.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in">(c)</td><td>Option on Huicicila mining concession - Mexico</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt">On May 19, 2010, prior to its acquisition by the
Company, Fairfields, entered into an exploration, exploitation and purchase option agreement with Ramón Farías García,
a Mexico City geologist for the mining lots denominated “CILA”, “CILA 1”, “CILA 2”, “CILA
3” “and CILA 5”, located in Compostela, Nayarit Mexico under the following terms:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">·</font></td><td><font style="font-family: Times New Roman, Times, Serif">US$ 100,000 plus applicable VAT, paid on May 24, 2010 (paid).</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt; text-indent: 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">·</font></td><td><font style="font-family: Times New Roman, Times, Serif">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.</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">·</font></td><td><font style="font-family: Times New Roman, Times, Serif">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.</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.75in"></td><td style="width: 0.25in"><font style="font-family: Symbol">·</font></td><td><font style="font-family: Times New Roman, Times, Serif">A Net Smelter Return Royalty (“NSR”) calculated at a rate
of the 2.5% above the concentrate sales, payable every quarter over the life of the mines.</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt">This option agreement has an initial 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 $725,537 at May 31,
2012 (after payment of $200,000 in each of August 2011 and February 2012) and $1,033,703 at May 31, 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 May31, 2012 was $117,670 (2011 - 43,680).</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.25in"></td><td style="width: 0.25in">(d)</td><td>UK, Ireland mineral properties</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt">The Company’s properties in UK and Ireland
are held under prospecting licenses which are subject to commitments by the Company’s subsidiary to conduct mineral exploration
activities on its licenses. During the period to renewal of its properties, the Company has committed to the following exploration
expenditures in the fiscal years then ending:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 71.45pt; text-indent: 0.55pt">2013     £178,770
(US$ 285,156)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.9pt; text-indent: 0.55pt">2014     £243,770
(US$ 388,838)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 70.9pt; text-indent: 0.55pt"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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>Legal contingency</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt; text-indent: 0.55pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 35.45pt; text-indent: 0.55pt">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’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’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.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">8.</td>
<td style="width: 95%">Related party transactions</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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">a)</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
(informally extended month to month in 2012.) During the
three month period ended May 31, 2012, the Company paid $63,064
(2011 - $65,122) as compensation for such management services.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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">b)</td><td>Effective January 1, 2011, the Company entered into an agreement
with the former director of exploration of the Company to provide
services in exchange for $12,000 per month through December 31,
2011 (informally extended month to month in 2012.) During
the three month period ended May 31, 2012, the Company recorded
$36,000 (2011 - $36,000) as compensation for such management services.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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"><font style="color: black">c)</font></td><td><font style="color: black">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 three
month period ended May 31, 2012). During the three month period ended May 31,2012 , the Company recorded $101,221 (2011 -
$</font> 76,258<font style="color: black">) as compensation for such management services.</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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><font style="color: black">During the three month period ended May 31, 2011 the Company agreed to pay a monthly fee of $1,500
to a former director as compensation for serving as corporate secretary. The Company paid $nil (2011 - $4,500) in the quarter ended
May 31, 2012 under this commitment. A law firm of which the former director is a partner is paid a monthly fee of $10,000 under
a retainer agreement to provide legal services. Total fees were nil (2011 - $30,000) in the three month period ended May 31, 2012.
</font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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>During the three month period ended May 31, 2012, the Company recorded nil (2011 - $5,250) as compensation to a company controlled
by a former director of the Company for exploration services provided pursuant to a consulting agreement with the Company.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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>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’s mineral properties as well as management services in exchange for a fee of
£5,000 each month ($7,957 monthly at the average rates of exchange during the <font style="color: black">three month
period ended May 31, 2012 </font>). During the <font style="color: black">three month period ended May 31, 2012 </font>, the
Company recorded $33,061 (2011 - $nil) as compensation for such management services.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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"><font style="color: black">g)</font></td><td><font style="color: black">Included in accounts payable and accrued liabilities – related at May 31, 2012 is
$350,996 (2011 - $<font style="background-color: white"> </font></font>38,159<font style="color: black">) 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>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"></p>
<p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">9.</td>
<td style="width: 95%">Subsequent events</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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">a)</td><td>On June 14 and 19, 2012 the company entered into a Promissory Note Amending Agreement 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 and to settle outstanding Commitment, Arrangement and Placement fees of $554,825 in exchange for 4,000,000 shares
of the Company’s common stock, and eliminate any future Commitment, Arrangement and Placement fees under these promissory
notes.</td></tr></table>
<p></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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">b)</td><td>The Company has issued 12,156,807 shares of its common stock upon exercise of convertible provisions of its notes payable in
settlement of $197,854 of such notes payable.</td></tr></table>
<p></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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">c)</td><td>On June 13, 2012 with the Company’s failure to file
its Form 10-K for the year ended February 29, 2012, the Company
entered into technical default on the JMJ Note.</td></tr></table>
<p></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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>Subsequent to the year end, the Company’s mineral lease in Scotland representing approximately 20% of the fair value
of the Company’s UK and Republic of Ireland mineral claims expired June 30th, 2012. The Company is in the process of renewing
this mineral claim and management fully expects this mineral claim to be renewed.</td></tr> <tr style="vertical-align: top">
<td> </td><td> </td><td> </td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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>On August 17, 2012, the Company failed to make payment on its <font style="color: black">Option on Huicicila mining
concession – Mexico in the amount of $200,000 and is in breach of its obligations under this Option. Should the
Company receive notice of default the Company intends to pay
within the 30 day cure period. </font></td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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>On July 30, 2012  the Company issued a 6% Redeemable Convertible Note (the “GEL Note”) to GEL
Properties LLC. (“GEL”) in the amount of
$100,000. The Company received net proceeds of $88,485. The GEL Note is due and payable July 23, 2012 and
accrues interest
on the outstanding principal balance at the rate of 6% per
annum. The GEL Note is convertible at any time after January
23, 2013, 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’s common stock as reported on the National Quotations Bureau Pink Sheets on which the Company’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. At any time, the Company has the option to redeem the GEL Note and pay to the note holder 150% of the
unpaid principal amount of the GEL Note, in full. As part of the loan, the Company issued to the note holder 1,428,571
transferable warrants to purchase one common share per warrant at $0.07 per share for a period of three years.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><font style="background-color: white"> </font></p>
<table cellpadding="0" cellspacing="0" style="width: 100%; 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 style="text-align: left">On July 23, 2012 the Company’s subsidiary Celtic, issued a convertible debenture (the
“Debenture”) to RYM Capital Corp (“RYM”) in the amount of $50,000 Canadian dollars. The Debenture
earns compound interest accruing annually at 10% per annum and is due the earlier of (i) 6 months from the date of the
Debenture; or (ii) the business day immediately preceding the closing of the reverse takeover between the Company’s
subsidiary Celtic, and Pacific Orient Capital, Inc. The
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. RYM 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
(Canadian) per common share or 25% below the RTO price. As part of the loan, the Company issued to the lender 222,222 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.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"> </p>
<p style="margin: 0pt"> </p>
Restated and revised financials
114850249
651522
1092030
0
1092030
-1092030
0
-1092030
<p style="margin: 0pt"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<table cellpadding="0" cellspacing="0" border="0" style="width: 100%; margin-top: 0pt; margin-bottom: 0pt; font: bold 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: top">
<td style="width: 5%">3.</td>
<td style="width: 95%">Restatements</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 29, 2012, the Company reached a settlement agreement
on its July 2012 Note, to settle the amount owing at $400,000. The 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 this 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’s common stock, at the holder’s option, at a conversion price, equal to 80%
of the average of the three lowest trade prices for the Company’s common stock during the 20 trading days prior to the conversion.
On March 22, 2012 the Company issued a Convertible Promissory Note to JMJ Financial (“JMJ”) in aggregate principal
amount of $2,110,000 (the “JMJ Note”) 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 (total of $356,000 through May 31, 2012). The JMJ Note bears interest at
10%, matures three years from the date of issuance, is secured by 25% of the company’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’s common stock, at JMJ’s option, at a conversion price, equal to 80% of the average of the three
lowest trade prices for the Company’s common stock during the 20 trading days prior to the conversion. The Note was issued
with a 10% original issue discount.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">On March 22 through May 30, 2012 for subsequent receipts from
the lender, the Company determined the aggregate fair values of the conversion feature and warrants to be $867,469 and $418,531
respectively. On March 29<sup>th</sup> the Company determined the fair value of the conversion feature to this convertible promissory
note to be $457,552. In its original consolidated financial statements as of and for the three months ended May 31, 2012, the
Company determined that it had not recorded the effect of the convertible feature related to the March 29 note and had not correctly
recorded the derivative liability and original issue discount for the March 22 note and subsequent receipts under this note. Further,
as a result of the Company granting these conversion features (which were not accounted for by the Company in its original May
31, 2012 financial statements), the calculation of the fair value of the related derivative instruments changed from $nil to $
1,743,552 and with revaluation at May 31, 2012 the change in derivative liabilities changed from $nil to $1,092,030.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">In addition, the Company erred in determining the capital contribution
for 1,400,000 common shares issued for conversion under the March 29<sup>th</sup> note as $20,000 when the correct amount of notes
paid through this issuance was $54,208. The additional consideration of $34,208 has been recorded as additional paid-in capital.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">A summary of the Company’s condensed consolidated balance
sheet and statement of operations as originally reported and as restated is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
<tr style="vertical-align: bottom">
<td style="text-align: center"></td><td> </td>
<td colspan="10" style="text-align: center"> As of, and for the Three Months ended,</td><td> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1pt"></td><td style="padding-bottom: 1pt"> </td>
<td colspan="10" style="text-align: center; border-bottom: Black 1pt solid"> May 31, 2012</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="text-align: center; padding-bottom: 1pt"></td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">As Restated</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">As Originally Reported</td><td style="padding-bottom: 1pt"> </td><td style="padding-bottom: 1pt"> </td>
<td colspan="2" style="text-align: center; border-bottom: Black 1pt solid">Change</td><td style="padding-bottom: 1pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="width: 55%; text-align: left">Current Assets</td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">808,015</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">808,015</td><td style="width: 1%; text-align: left"> </td><td style="width: 2%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 11%; text-align: right">–</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,220,656</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">13,220,656</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Notes payable, net of discounts</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,209,508</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,391,335</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(181,827</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Derivative liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">651,522</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">651,522</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Current liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,525,270</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,063,144</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">462,126</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Total liabilities</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,868,652</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">3,406,526</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">462,126</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Additional paid-in capital</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17,588,607</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">17,910,399</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(321,792</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Accumulated deficit during exploration stage</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7,869,386</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7,729,052</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(140,334</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Total stockholders’ equity</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,352,004</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">9,814,130</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(462,126</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Total operating expenses</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">752,691</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">752,691</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Amortization of debt discount</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(433,699</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(207,195</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(226,504</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Interest and financial fees</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,221,902</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(216,042</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,005,860</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Change in derivative liability</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,092,030</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1,092,030</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(238,238,238)">
<td style="text-align: left">Net loss attributable to Focus Gold stockholders</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,315,241</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,174,907</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(140,334</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Basic and diluted net loss per share</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(0.01</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(0.01</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">–</td><td style="text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">The original condensed consolidated financial statements for
the three month period ended May 31, 2012 were not reviewed by the Company’s independent auditors. These restated condensed
consolidated financial statements have been reviewed by the Company’s independent auditors (see Review Report).</p>
<p style="margin: 0pt"> </p>
1221902
0
1687054