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<p style="margin: 0pt"></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">All significant intercompany accounts and transactions are
eliminated in consolidation.</p>
<p style="margin: 0pt"> </p>
123850249
<p style="margin: 0pt"></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(a) </td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Mineral Properties, Leases and Exploration and Development Costs</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 4)<font style="color: black">. Mineral
properties are periodically assessed for impairment of value and any diminution in value.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The amounts shown for mineral properties do not necessarily
represent present or future values. Their recoverability is dependent upon the discovery of economically recoverable reserves,
the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds
from the disposition thereof.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(b)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Derivative instruments</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(c)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Impairment of long-lived assets</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company reviews and evaluates its long-lived assets for
impairment at each balance sheet date and documents such impairment testing. The tests include an evaluation of the assets and
events or changes in circumstances that would indicate that the related carrying amounts may not be recoverable. Mineral properties
in the exploration stage are monitored for impairment based on factors such as the Company's continued right to explore the area,
exploration reports, assays, technical reports, drill results and the Company's continued plans to fund exploration programs on
the property, whether sufficient work has been performed to indicate that the carrying amount of the mineral property cost carried
forward as an asset will not be fully recovered, even though a viable mine has been discovered.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The tests for long-lived assets in the exploration, development
or producing stage that would have a value beyond proven and probable reserves would be monitored for impairment based on factors
such as current market value of the mineral property and results of exploration, future asset utilization, business climate, mineral
prices and future undiscounted cash flows expected to result from the use of the related assets. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows
expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company's policy is to record an impairment loss in the
period when it is determined that the carrying amount of the asset may not be recoverable either by impairment or by abandonment
of the property. The impairment loss is calculated as the amount by which the carrying amount of the assets exceeds its fair value.
While the Company incurred losses from operations, these losses have not been in excess of planned expenditures on the specific
mineral properties in order to ultimately realize their value.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">During the three months ended August 31, 2012, the Company
recorded an impairment charge on its Metallum properties. See Note 4.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(d)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Stock-based compensation</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 nonemployees 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. 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(e)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Warrants</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company accounts for warrants issued in conjunction with
stock issuances under private placement using the fair value method. 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(f)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Recent accounting pronouncements</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(g)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Going concern</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 $5,717,835 during<font style="color: black">
the six month period ended August 31, 2012, and has an accumulated deficit </font>of $12,271,981<font style="color: black"> since
entry into the exploration stage. Additionally, the Company is in default of various notes aggregating $895,408. 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">In order to continue as a going concern, develop a reliable
source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital
resources. Management’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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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. </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(h)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Fair value measurements.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 92.15pt; text-indent: -35.4pt">Level 1 – Quoted prices
for identical instruments in active markets.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 92.15pt; text-indent: -35.4pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt">Level 2 – Quoted
prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are
observable in active markets.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt">Level 3 – Valuations
derived from valuation techniques in which one or more significant inputs are unobservable in any market.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="color: black">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 six month
period ended August 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. </font>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>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance at February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">New Issuances</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Changes in Fair Values</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance at  August 31, 2012</td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 5.4pt; line-height: 115%">Level 3 –</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt; line-height: 115%">Derivative liabilities from:</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 41%; padding-left: 22pt; line-height: 115%">Conversion features</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 9%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">1,325,021</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">(582,284</td>
<td style="width: 1%; line-height: 115%">)</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">742,737</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 22pt; line-height: 115%">Warrants</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">418,531</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">355,481</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">774,012</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 5.4pt; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">1,743,552</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">(226,803</td>
<td style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">1,516,749</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">(i)</td>
<td style="line-height: 115%">Reclassification of Certain Securities under FASB ASC 815-40</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">If the Company were required to settle its outstanding warrants
and convertible debt as of August 31, 2012, the Company would be required to issue 182,035,039 common shares (103,093,891 for the
settlement of warrants and 78,941,148 for the settlement of outstanding convertible debt). The Company determined that the settlement
of these outstanding financial instruments would exceed its authorized shares by 55,885,288 common shares. Pursuant toFASB ASC
815-40, Accounting for Contracts in Entity’s Own Equity, the Company would be required to reclassify these contracts from
equity to liabilities. As permitted by EITF 00-19, the Company’s policy with regard to settling outstanding financial instruments
is to settle those with the earliest maturity date first which essentially sets the order of preference for settling the financial
instruments. As a result of the Company’s policy of settlement the Company determined that the changes in fair value for
financial instruments initially recorded in equity were not required to be reclassified in the quarter ended August 31, 2012.</p>
<p style="margin: 0pt"> </p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The continuity of expenditures on mineral property acquisitions
is as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Mineral property</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Additions</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Disposals and Impairments</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">August 31, 2012</td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Canada</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 40%; padding-left: 11pt; line-height: 115%">Watabeag, Russell Creek,</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">50,000</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">50,000</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Mexico</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt; line-height: 115%">Huicicila</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">6,086,002</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">6,086,002</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">United Kingdom & Ireland</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt; line-height: 115%">Metallum Claims</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,142,038</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">(2,841,879</td>
<td style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">3,300,159</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">12,278,040</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">(2,841,879</td>
<td style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">9,436,161</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">There are no proven reserves on any of the claims or leases
which the Company has under option or has an ownership interest in. The Company has interests in the following properties:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.25in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">(a)</td>
<td style="line-height: 115%">Huicicila Claims - Mexico</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">On November 10, 2010, the Company signed a definitive agreement
to acquire Fairfields Gold S.A. de CV. Fairfields owns an option to acquire 100% of the Huicicila gold claims in Nayarit Mexico
(see Note 7(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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">Since the acquisition at December 31, 2010, the Company through
its subsidiary Fairfields has conducted an exploration program to determine the extent of prior workings and mineralization on
the property.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">(b)</td>
<td style="line-height: 115%">Watabeag & Russell Creek Claims – Ontario, Canada</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">As at August 31, 2012, the Company had not commenced exploration
activities on these properties.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">(c)</td>
<td style="line-height: 115%">San Nicholas & Santa Fe - Mexico</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">(d)</td>
<td style="line-height: 115%">Focus 1 to 3 - Mexico</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="color: black">During the year ended February
28, 2011, 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">(e)</td>
<td style="line-height: 115%">Metallum properties - United Kingdom and Ireland</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 90.80% 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) (expired); Sperrins, N. Ireland
(gold) (gold and silver licenses, expired) and Clogher Valley, Ireland and N. Ireland (base metals).</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">During the quarter ended August 31, 2012, certain of the licenses
held by Metallum had expired and management has determined that there is a material doubt about the renewal or re-acquisition of
such licenses and were written down to their fair value of $3,300,159, resulting in an impairment charge of $2,841,879 which was
included in operations for the period.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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, 2012, 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 at March 29, 2012. 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 August 31, 2012 was $30,691.
At August 31, 2012, the fair value of the derivative liability on the remaining principal of $93,592 was determined to be $130,408.
The fair value of the derivative liability at August 31, 2012 was determined using the Black-Scholes option pricing model with
the following assumptions: expected life of 0.09 years; volatility of 91.95%; no dividend yield; and a risk free interest rate
of 0.08%. 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. 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 Note.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 Notes
require 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. </font>On June 14 and 19, 2012 the
Company entered into a Promissory Note Amending Agreement with the 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. In the event of non-payment by the
Company a maturity, the holders of the September notes the interest rate on the notes increases to 5% per month and the Company
would be required to issue 1,100,000 and 400,000 shared of the Company’s common stock respectively in advance for each month
of non-payment of the Notes.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="background-color: white"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="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 adjusted 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 August 31, 2012 was $nil. The
6% Note and accrued interest of $3,914 were fully paid by August 15, 2012 through the conversion of the 6% Note to 5,375,245 shares
of the Company’s common stock.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 21.3pt"><font style="background-color: white"> </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 relative fair value of the 1,333,333 warrants and
the debt at February 17, 2012 was determined to be $120,246 and $182,937 respectively. The fair value of each warrant issued was
calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 2.33 years; volatility
of 90.7%; no dividend yield; and a risk free interest rate of 1.12%. The aggregate relative fair value of the debt and warrant
of $303,183 has been amortized to amortization of debt discount over the life of the Convertible Debenture. The Convertible Debenture
matured August 17, 2012 without payment to the note holder. The Company is in discussions with the note holder regarding extentions
or amendments to the Convertible Debenture.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 21.3pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 August 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 at March 22, 2012. 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 August 31, 2012 was $290,088.
At August 31, the fair value of the derivative liability on the warrants and conversion feature was determined to be $774,012 and
$612,329 respectively. The fair value of the derivative liability at August 31, 2012 was determined using the Black-Scholes option
pricing model with the following assumptions: expected life of 2.55 years; volatility of 89.46%; 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. 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.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">On July 23, 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 $ 94,485. The GEL Note is due and payable July 23, 2013 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 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. <font style="color: black; background-color: white">The fair value of the 1,428,571 warrants was $25,738. 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 91.32%; no dividend yield; and a risk free interest rate of 0.34%. The relative fair value of the warrants
was $20,470 and was recorded as a discount to the debt. The unamortized discount at August 31, 2012 was $18,283.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 19, 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 take
over 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. The fair value of the 222,222
warrants and the debt at July 19, 2012 was determined to be $40,809 and $30,050 respectively. The fair value of each warrant issued
was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 2.45 years; volatility
of 89.11%; no dividend yield; and a risk free interest rate of 0.31%. The relative fair value of the debt and warrants at July
19, 2012 of $50,531 was recorded as a discount to the debt. The unamortized discount at August 31, 2012 was $38,592 and is being
amortized to amortization of debt discount over the life of the Debenture.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 38px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(a)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Authorized capital</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: -1.5pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is authorized to issue:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt">100,000,000 Preferred shares of stock, $0.00001
par value</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt">250,000,000 Common shares of stock, $0.00001 par
value</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-align: justify">Share issuances, returns and cancellations
during the six month periods ended August 31, 2012 and 2011:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 20.15pt; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in">During the six month period ended August 31, 2012,
the Company issued 20,825,245 shares of its common stock for the exercise of conversions under the Company’s convertible
securities in the amount of $499,089 and 4,000,000 of its common stock as settlement for $554,826 of accrued fees on the Company’s
September 14 and 19, 2012 promissory notes.</p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr>
<td style="width: 100%; font: 8pt/115% Times New Roman, Times, Serif; text-align: center">15</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in">During the six month period ended August 31, 2011,
the Company received and approved subscriptions for 4,410,750 units at $0.40 per unit for gross proceeds of $1,764,300 less cash
issue costs of $66,580 by way of private placement. Each unit consisted of one common share and one-half non-transferable share
purchase warrant that entitled the holder to purchase one additional common share at $0.50 per share for a period of one year.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in">The net proceeds of the financing of $1,679,720
was allocated on a relative fair value basis as $1,444,653 to common shares and $235,067 to warrants. The fair value of each warrant
issued was calculated using the Black-Scholes option pricing model with the following assumptions: expected life of 1.0 to 1.25
years; volatility of 84 - 88%; no dividend yield; and a risk free interest rate of 0.18 – 0.23%. In connection with this
private placement, the Company's agents received a selling commission of $66,580 of the proceeds of the units sold and 166,450
warrants to purchase an additional share of the Company’s 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. 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: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 38px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(b)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Treasury stock</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">Pursuant to an agreement dated August 24, 2012 with a former
director of the Company, the Company acquired 3,400,000 shares of its common stock at an aggregate purchase price of $129,200.
The acquired 3,400,000 shares of the Company’s common stock have been recorded as treasury stock using the cost method.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 38px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(c)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Stock options</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company has an incentive share option plan (the "Plan")
that it adopted February 7, 2011, that allows it to grant incentive stock options to its officers, directors, employees and other
persons associated with the Company. 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 of directors reserved 10,000,000 shares of common stock for issuance under the Plan. As of the fiscal
year end, February 29, 2011, the board of directors had granted options to purchase 6,400,000 shares of common stock at $.50 per
share to 7 persons. Through the six month period ended August 31, 2012 and 2011, no further grants of options have been made under
this plan.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Expiry date</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercise price per share</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Granted</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Forfeited</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Expired/<br /> Cancelled</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance<br /> August, 31<br /> 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">February 24, 2016</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">All 6,400,000 stock options granted and were exercisable at
August 31, 2012.  </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">As the Company does not have historical experience to estimate
the expected life of options, the Company used the project development life of its Huicicila concession as its estimate. 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; line-height: 115%">(d)</td>
<td style="line-height: 115%">Share purchase warrants</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The continuity of share purchase warrants is as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Expiry date</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercise price per share</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance February 29, 2012</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Issued</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercised</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Expired</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance<br /> August 31 ,<br /> 2012</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Class A</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 40%; line-height: 115%">March 1, 2012</td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 6%; line-height: 115%; text-align: right">0.40</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">66,450</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">66,450</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">December 19, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.15</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">133,332</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">133,332</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">June 12, 2014</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.40</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">100,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">100,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">October 14, 2016</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">150,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">150,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Class B</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">April 24, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">118,419</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">118,419</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">April 24, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">1,446,625</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">1,446,625</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">May 24, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">76,250</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">76,250</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">July 20, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">682,500</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">682,500</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">December 15, 2013</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.25</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,667</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,667</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">Promissory Note Warrants</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">October 25, 2014</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.15</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,666</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,666</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">March 22, 2015</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.20</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">2,500,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">2,500,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">July 23, 2015</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.07</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">1,428,571</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">1,428,571</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Total Warrants Outstanding</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">4,106,909</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">3,928,571</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">2,390,244</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">5,645,236</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Weighted average exercise price</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.39</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.18</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.18</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Average remaining contractual term (years)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">2.44</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company has issued the following classes of warrants as
set out below:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 15%; line-height: 115%">Class A warrant</td>
<td style="width: 75%; line-height: 115%">Are non-transferrable, exercisable for cash and have no acceleration of the expiry date.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 15%; line-height: 115%">Class B warrant</td>
<td style="width: 75%; line-height: 115%">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>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 106.35pt; text-indent: -85.05pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 15%; line-height: 115%">Promissory Note Warrants</td>
<td style="width: 75%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 15%; line-height: 115%">October 24, 2014 & July 19, 2015</td>
<td style="width: 75%; line-height: 115%">Are transferrable and entitles the holder to purchase one additional common 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: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 106.35pt; text-indent: -85.05pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 15%; line-height: 115%">March 22, 2015</td>
<td style="width: 75%; line-height: 115%">Transferable with the approval of the Company. At any time after September 22, 2012, 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 VWAP 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 VWAP of the Company’s common stock on the day immediately preceding the conversion. The March 22, 2015 warrants provide the warrant holder with down round protection where the Company issues any shares or grants and warrant or convertible security or re-prices a security at less than the effective exercise price of the March 22, 2015 warrant at that time, then the effective exercise price shall be lowered to such lesser amount.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 106.35pt; text-indent: -85.05pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="color: black">During the six month period ended
August 31, 2012, the Company approved unit subscriptions and warrant commissions for an aggregate of nil (2011- 166,640) Class
A warrants and nil (2011 – </font>2,205,375<font style="color: black">) Class B warrants as part of a private placement of
units. </font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 38px; line-height: 115%"> </td>
<td style="width: 24px; line-height: 115%">(e)</td>
<td style="line-height: 115%">Class A Options</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The continuity of Class Options is as follows:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Expiry date</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercise price per share</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Issued</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercised</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Expired</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance<br /> August 31 ,<br /> 2012</td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 40%; padding-left: 10pt; line-height: 115%; text-indent: -10pt">December 31, 2012</td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 6%; line-height: 115%; text-align: right">0.49</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">21,121,094</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">21,121,094</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Total Class A Options Outstanding</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">21,121,094</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">21,121,094</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Weighted average exercise price</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.49</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">S               0.49</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Average remaining contractual term (years)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.25</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(a)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">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. As of August 31, 2012, the Company was in arrears in payment under this option agreement for $25,000. The Company and Victoria Gold Corp. are in duscussions to address the outstanding payment.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 27pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">(b)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">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: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><b> </b></p>
<table align="center" cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 33%; line-height: 115%; font-weight: bold; text-decoration: underline">Resource Estimate Date</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 32%; line-height: 115%; font-weight: bold; text-decoration: underline">Indicated Reserves</td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 32%; line-height: 115%; font-weight: bold; text-decoration: underline">Payment Obligation</td></tr>
<tr style="vertical-align: top; background-color: #EEEEEE">
<td style="line-height: 115%">18 months after Closing Date</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">475,000 oz Au (equivalent)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center">$1,250,000</td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="line-height: 115%">24 months after Closing Date</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">750,000 oz Au (equivalent)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center">$1,250,000</td></tr>
<tr style="vertical-align: top; background-color: #EEEEEE">
<td style="line-height: 115%">36 months after Closing Date</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">1,025,000 oz Au (equivalent)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center">$1,250,000</td></tr>
<tr style="vertical-align: top; background-color: white">
<td style="line-height: 115%">48 months after Closing Date</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">1,300,000 oz Au (equivalent)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: center">$1,250,000</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt">Any future payments would be made in shares based
on the 20 day average price of the Company’s common stock prior to the required payment date.  </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt">In addition, Fairfields shareholders received
an option to acquire up to 25% of Focus Gold Mexico Corporation, a wholly owned subsidiary of the Company, created to acquire Fairfields.  The
option price payable upon the exercise of the option shall be 25% of the sum of (i) $5,000,000, (ii) the dollar value of all payments
made in respect of the deferred payments outlined above as at the date of exercise of the option, and (iii) the dollar value of
any shareholders’ equity contributed into Fairfields after December 31, 2010 until the date of exercise of the option. The
option may only be exercised for cash.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; line-height: 115%">(c)</td>
<td style="line-height: 115%">Option on Huicicila mining concession - Mexico</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt">On May 19, 2010, prior to its acquisition by the
Company, Fairfields, entered into an exploration, exploitation and purchase option agreement with Ramón Farías García,
a Mexico City geologist for the mining lots denominated “CILA”, “CILA 1”, “CILA 2”, “CILA
3” “and CILA 5”, located in Compostela, Nayarit Mexico under the following terms:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">·</td>
<td style="line-height: 115%">US$ 100,000 plus applicable VAT, paid on May 24, 2010 (paid).</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt; text-indent: 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">·</td>
<td style="line-height: 115%">US$ 1,200,000 plus applicable VAT, on six semester payment of US$ 200,000 each one, payable on every August and February month from August 17, 2011 (paid) to February 17, 2114.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">·</td>
<td style="line-height: 115%">The issue to the optionee that number of shares of common stock of Fairfields at the end of the option agreement that is 3% of its issued and outstand capital at that time.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 72px"> </td>
<td style="width: 24px; line-height: 115%">·</td>
<td style="line-height: 115%">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.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 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 condensed 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%) and $725,537 at
August 31, 2012 (after payment of $200,000 in each of August 2011 and February 2012) and $860,453 at August 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 August 31, 2012 was $136,179 (2011
- 70,429).</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt">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 $200,000 and is
in breach of its obligations under this Option. The Company has not received notice of default from the Optionor and is working
with the Optionor to address this outstanding option payment.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; line-height: 115%">(d)</td>
<td style="line-height: 115%">UK, Ireland mineral properties</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt">The Company’s properties in UK and Ireland
are held under prospecting licenses which are subject to commitments by the Company’s subsidiary to conduct mineral exploration
activities on its licenses. During the period to renewal of its properties, the Company has committed to the following exploration
expenditures in the fiscal years then ending:</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 10%; line-height: 115%">2013</td>
<td style="width: 80%; line-height: 115%">£148,345 (US$ 235,335)</td></tr>
</table>
<p style="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 10%; line-height: 115%"> </td>
<td style="width: 10%; line-height: 115%">2014</td>
<td style="width: 80%; line-height: 115%">£148,345 (US$ 235,335)</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 70.9pt; text-indent: 0.55pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; line-height: 115%">(e)</td>
<td style="line-height: 115%">Legal contingency</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt; text-indent: 0.55pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 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="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 35.45pt; text-indent: 0.55pt"> </p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; line-height: 115%">(f)</td>
<td style="line-height: 115%">Purchase contingency</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in">In the event that the contemplated RTO with Pacific
Orient Capital Corp. by Celtic or similar go public event does not occur before October 28, 2012, the Company will forthwith thereafter
purchase the 1,800,000 shares of Celtic’s common stock the Company transferred July 1, 2012 (see Note 3), at the option of
the holder (i) cash in the aggregate amount of $190,000, or (ii) for shares of the Company’s common stock with a per share
valuation equal to the 10 day VWAP of such shares at the time of exercise.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">a)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">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 through June 30, 2012 and thereafter at the rate of $10,000 per month CDN by the Company’s subsidiary). During the six month period ended August 31, 2012, the Company paid $103,486 (2011 - $130,308) as compensation for such management services.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">b)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">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 six month period ended August 31, 2012, the Company recorded $nil (2011 - $72,000) as compensation for such management services.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">c)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">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 ($16,078 monthly at the average rates of exchange during the six month period ended August 31, 2012). During the six month period ended August 31, 2012, the Company recorded $192,940 (2011 - $ 151,868) as compensation for such management services.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">d)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">During the six month period ended August 31, 2012 the Company paid $nil (2011 - $9,000) to a director for compensation for serving as corporate secretary. A law firm of which a director is a partner was payable fees of $7,097 (2011 - $60,000) for the six month period ended August 31, 2012.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">e)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">During the six month period ended August 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: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">f)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">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 ($7,886 monthly at the average rates of exchange during the <font style="color: black">six month period ended August 31, 2012)</font>. During the <font style="color: black">six month period ended August 31, 2012,</font> the Company recorded $67,5802 (2011 - $nil) as compensation for such management services.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 0.5in"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 24px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">g)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">Included in accounts payable and accrued liabilities – related at August 31, 2012 is $455,829 (2011 - $ 75,312 ) payable to the firms and persons referred to in this Note 8 and persons or firms related with these persons and firms.</td></tr>
</table>
<p style="font: 11pt/normal Calibri, Helvetica, Sans-Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="font: bold 8pt/115% Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt/115% Times New Roman, Times, Serif"> </td>
<td style="font: bold 8pt/115% Times New Roman, Times, Serif"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 0px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">a)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">The Company has issued 4,000,000 shares of its common stock upon exercise of convertible provisions of notes payable in settlement of $40,096 of the principal amount of such notes payable.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 0px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">b)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">On September 5, 2012, the Company issued an 8% convertible promissory note (the “8% Note”) for a principal amount of $68,000. The Company received net proceeds of $ 61,600. The 8% Note is due and payable June 7, 2013 and accrues interest on the outstanding principal balance at the rate of 8% per annum. Any time after 180 days following the date of this note, the 8% Note is convertible into shares of the Company's common stock at a conversion price that is equal to 58% of the average of the lowest three trading prices during the ten trading days preceding the date of conversion. The exercise price may be adjusted to a lower amount where the Company grants or sells shares or options or other convertible securities at a price that is lower than the then in effect conversion price. At any time up and until 180 days from the date of the 8% Note, the Company has the option to redeem the 8% Note for payment to the note holder of ranging from 115% to 140% of the unpaid principal amount of the 6% Note, in full. In event of default, the Company is required to pay the note holder the greater of (i) 150% of the principal as well as interest and other amounts payable to the note holder or (ii) parity value of the common shares that would be issuable upon conversion multiplied by the highest closing price for the common stock during the period beginning on the date of the first occurrence of the default and ending one day prior to the mandatory payment date. In the event of default interest on the 8% Note accrues at 22% per annum. The 8% Note is secured with 3,400,000 of the Company’s common shares held in treasury. The 8% note is in technical default as a result of the Company’s defaults on payments of other notes payables.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 0px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">c)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">On September 13, 2012, the Company’s board of directors approved a plan to implement a 20:1 reverse split of the Company’s common stock by decreasing the number of authorized shares of common stock and correspondingly decreasing the number of issued and outstanding shares of the common stock held by each stockholder of record at the effective date and time of the change, by a resolution adopted by the board of directors, without obtaining the approval of the stockholders. The effective date of the change (20:1 reverse split) shall be as soon as practical following October 4, 2012 and after proper notice and coordination with FINRA.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 0px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">d)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">On September 14, 2012 and September 19, 2012 notes payable in the principal amount of $270,000 matured without payment and are in default. The default under these notes payable is a cause of default under the terms of the Company’s promissory notes and accordingly, the Company is in technical default on all promissory notes.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 0px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">e)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">On October 1, 2012 convertible notes with a remaining principal amount of $93,592 matured without payment and is in default at the option of the holder.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 0px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">f)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">On October 5, 2012 the Company entered an agreement with European Resource Capital Inc. for the sale of the Company’s 24,420,000 shares of common stock of Celtic and amounts receivable from Celtic of approximately $217,392 in exchange for $2,500,000 (Canadian) (approximately $2,549,651 at exchange rates at the date of this transaction). European Resource Capital Inc. issued the Company an eight percent (8%) 5 year $2,500,000 (Canadian) promissory note payable that is secured by the 24,420,000 shares of Celtic common stock. Prior to this transaction, the Company owned 92.15% of Celtic. The sales agreement acknowledges that JMJ Financial has an unperfected lien against 25% of the purchased shares. Where the Company is unsuccessful in removing JMJ Financials’ unperfected lien, European Resource Capital may settle such lien and reduce the $2,500,000 promissory note by 35% of its present value.</td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<table cellspacing="0" cellpadding="0" style="width: 100%">
<tr style="vertical-align: top">
<td style="width: 0px"> </td>
<td style="width: 24px; font: 8pt/115% Times New Roman, Times, Serif">g)</td>
<td style="font: 8pt/115% Times New Roman, Times, Serif">On October 12, 2012 the board of directors of the Company adopted the 2012 Stock & Stock Option Compensation Plan (the "2012 Plan"), that allows the Company to issue stock options or common stock to employees, directors and other persons associated with the Company and 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. The board of directors reserved 50,000,000 shares of the Company’s common stock for issuances under the 2012 Plan.</td></tr>
</table>
<p style="font: 8pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt"> </p>
<p style="margin: 0pt"></p>
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<p style="margin: 0pt"></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">On August 24, 2012, the Company settled the amount of $70,629
of amounts payable in exchange for 280,000 common shares of the Company’s subsidiary Celtic. The Company recognized a gain
of $44,041 on this transaction. The 280,000 shares of common stock transferred in this settlement represent 1.06% of the issued
and outstanding shares of common stock of Celtic.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">Effective July 1, 2012, the Company settled the amount of
$47,303 of amounts payable in exchange for 440,000 common shares of the Company’s subsidiary Celtic and in consideration
of the surrender of 3,400,000 shares of the Company’s common stock with a fair value of $129,200, 1,360,000 shares of Celtic
owned by the Company. The Company recognized a loss of $111,736 on the disposition of the 1,800,000 common shares of Celtic’s
common stock transferred by the Company in this transaction. The 1,800,000 shares of common stock transferred in this settlement
represent 6.79% of the issued and outstanding shares of common stock of Celtic.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">As at August 31, 2012, the Company has a 92.16% interest in
Celtic.</p>
<p style="margin: 0pt"></p>
111736
111736
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">If the Company were required to settle its outstanding warrants
and convertible debt as of August 31, 2012, the Company would be required to issue 182,035,039 common shares (103,093,891 for the
settlement of warrants and 78,941,148 for the settlement of outstanding convertible debt). The Company determined that the settlement
of these outstanding financial instruments would exceed its authorized shares by 55,885,288 common shares. Pursuant toFASB ASC
815-40, Accounting for Contracts in Entity’s Own Equity, the Company would be required to reclassify these contracts from
equity to liabilities. As permitted by EITF 00-19, the Company’s policy with regard to settling outstanding financial instruments
is to settle those with the earliest maturity date first which essentially sets the order of preference for settling the financial
instruments. As a result of the Company’s policy of settlement the Company determined that the changes in fair value for
financial instruments initially recorded in equity were not required to be reclassified in the quarter ended August 31, 2012.</p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 4)<font style="color: black">. Mineral
properties are periodically assessed for impairment of value and any diminution in value.</font></p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The amounts shown for mineral properties do not necessarily
represent present or future values. Their recoverability is dependent upon the discovery of economically recoverable reserves,
the ability of the Company to obtain the necessary financing to complete the development, and future profitable production or proceeds
from the disposition thereof.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company reviews and evaluates its long-lived assets for
impairment at each balance sheet date and documents such impairment testing. The tests include an evaluation of the assets and
events or changes in circumstances that would indicate that the related carrying amounts may not be recoverable. Mineral properties
in the exploration stage are monitored for impairment based on factors such as the Company's continued right to explore the area,
exploration reports, assays, technical reports, drill results and the Company's continued plans to fund exploration programs on
the property, whether sufficient work has been performed to indicate that the carrying amount of the mineral property cost carried
forward as an asset will not be fully recovered, even though a viable mine has been discovered.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The tests for long-lived assets in the exploration, development
or producing stage that would have a value beyond proven and probable reserves would be monitored for impairment based on factors
such as current market value of the mineral property and results of exploration, future asset utilization, business climate, mineral
prices and future undiscounted cash flows expected to result from the use of the related assets. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows
expected to be generated by the asset, including evaluating its reserves beyond proven and probable amounts.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company's policy is to record an impairment loss in the
period when it is determined that the carrying amount of the asset may not be recoverable either by impairment or by abandonment
of the property. The impairment loss is calculated as the amount by which the carrying amount of the assets exceeds its fair value.
While the Company incurred losses from operations, these losses have not been in excess of planned expenditures on the specific
mineral properties in order to ultimately realize their value.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">During the three months ended August 31, 2012, the Company
recorded an impairment charge on its Metallum properties. See Note 4.</p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 nonemployees 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. 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="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">The Company accounts for warrants issued in conjunction with
stock issuances under private placement using the fair value method. 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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 $5,717,835 during<font style="color: black">
the six month period ended August 31, 2012, and has an accumulated deficit </font>of $12,271,981<font style="color: black"> since
entry into the exploration stage. Additionally, the Company is in default of various notes aggregating $895,408. 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">In order to continue as a going concern, develop a reliable
source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital
resources. Management’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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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. </p>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 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: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 92.15pt; text-indent: -35.4pt">Level 1 – Quoted prices
for identical instruments in active markets.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 92.15pt; text-indent: -35.4pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt">Level 2 – Quoted
prices for similar instruments in active or inactive markets and valuations derived from models where all significant inputs are
observable in active markets.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt">Level 3 – Valuations
derived from valuation techniques in which one or more significant inputs are unobservable in any market.</p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0 0 0 99.25pt; text-indent: -42.55pt"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"><font style="color: black">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 six month
period ended August 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. </font>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>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance at February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">New Issuances</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Changes in Fair Values</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance at  August 31, 2012</td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 5.4pt; line-height: 115%">Level 3 –</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt; line-height: 115%">Derivative liabilities from:</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 41%; padding-left: 22pt; line-height: 115%">Conversion features</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 9%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">1,325,021</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">(582,284</td>
<td style="width: 1%; line-height: 115%">)</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">742,737</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 22pt; line-height: 115%">Warrants</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">418,531</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">355,481</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">774,012</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 5.4pt; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">1,743,552</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">(226,803</td>
<td style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">1,516,749</td>
<td style="line-height: 115%"> </td></tr>
</table>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0"> </p>
<p style="font: 8pt/normal Times New Roman, Times, Serif; margin: 0">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="margin: 0pt"></p>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance at February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">New Issuances</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Changes in Fair Values</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance at  August 31, 2012</td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 5.4pt; line-height: 115%">Level 3 –</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt; line-height: 115%">Derivative liabilities from:</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 41%; padding-left: 22pt; line-height: 115%">Conversion features</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 9%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">1,325,021</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">(582,284</td>
<td style="width: 1%; line-height: 115%">)</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">742,737</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 22pt; line-height: 115%">Warrants</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">418,531</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">355,481</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">774,012</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 5.4pt; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">1,743,552</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">(226,803</td>
<td style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">1,516,749</td>
<td style="line-height: 115%"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Mineral property</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Additions</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Disposals and Impairments</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">August 31, 2012</td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Canada</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 40%; padding-left: 11pt; line-height: 115%">Watabeag, Russell Creek,</td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">50,000</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 3%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 10%; line-height: 115%; text-align: right">50,000</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Mexico</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt; line-height: 115%">Huicicila</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">6,086,002</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">6,086,002</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">United Kingdom & Ireland</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 11pt; line-height: 115%">Metallum Claims</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,142,038</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">(2,841,879</td>
<td style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">3,300,159</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">12,278,040</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">(2,841,879</td>
<td style="line-height: 115%">)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 2.25pt double; line-height: 115%">$</td>
<td style="border-bottom: black 2.25pt double; line-height: 115%; text-align: right">9,436,161</td>
<td style="line-height: 115%"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Expiry date</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercise price per share</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Issued</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercised</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Expired</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance<br /> August 31 ,<br /> 2012</td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="width: 40%; padding-left: 10pt; line-height: 115%; text-indent: -10pt">December 31, 2012</td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 6%; line-height: 115%; text-align: right">0.49</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">21,121,094</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">21,121,094</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Total Class A Options Outstanding</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">21,121,094</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">21,121,094</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Weighted average exercise price</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.49</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">S               0.49</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Average remaining contractual term (years)</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.25</td>
<td style="line-height: 115%"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Expiry date</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercise price per share</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance February 29, 2012</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Issued</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercised</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Expired</td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance<br /> August 31 ,<br /> 2012</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Class A</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="width: 40%; line-height: 115%">March 1, 2012</td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%">$</td>
<td style="width: 6%; line-height: 115%; text-align: right">0.40</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">66,450</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">66,450</td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right">–</td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">December 19, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.15</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">133,332</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">133,332</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">June 12, 2014</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.40</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">100,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">100,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">October 14, 2016</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">150,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">150,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">Class B</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">April 24, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">118,419</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">118,419</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">April 24, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">1,446,625</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">1,446,625</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">May 24, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">76,250</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">76,250</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">July 20, 2012</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">682,500</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">682,500</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">December 15, 2013</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.25</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,667</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,667</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">Promissory Note Warrants</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">October 25, 2014</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.15</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,666</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">666,666</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%">March 22, 2015</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.20</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">2,500,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">2,500,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">July 23, 2015</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.07</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">1,428,571</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">1,428,571</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Total Warrants Outstanding</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">4,106,909</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">3,928,571</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">2,390,244</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">5,645,236</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Weighted average exercise price</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.39</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.18</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%">$</td>
<td style="line-height: 115%; text-align: right">0.18</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="padding-left: 10pt; line-height: 115%; text-indent: -10pt">Average remaining contractual term (years)</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%; text-align: right">2.44</td>
<td style="line-height: 115%"> </td></tr>
</table>
<table cellspacing="0" cellpadding="0" style="font: 8pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
<tr style="vertical-align: bottom">
<td style="border-bottom: black 1pt solid; line-height: 115%">Expiry date</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Exercise price per share</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance February 29, 2012</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Granted</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Forfeited</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Expired/<br /> Cancelled</td>
<td style="line-height: 115%"> </td>
<td colspan="3" style="border-bottom: black 1pt solid; line-height: 115%; text-align: center">Balance<br /> August, 31<br /> 2012</td></tr>
<tr style="vertical-align: bottom">
<td style="width: 40%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 2%; line-height: 115%"> </td>
<td style="width: 1%; line-height: 115%"> </td>
<td style="width: 6%; line-height: 115%; text-align: right"> </td>
<td style="width: 1%; line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: #EEEEEE">
<td style="line-height: 115%">February 24, 2016</td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%">$</td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">0.50</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td></tr>
<tr style="vertical-align: bottom; background-color: white">
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right"> </td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">–</td>
<td style="line-height: 115%"> </td>
<td style="line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%"> </td>
<td style="border-bottom: black 1pt solid; line-height: 115%; text-align: right">6,400,000</td>
<td style="line-height: 115%"> </td></tr>
</table>
1325021
-582284
742737
1743552
-226803
1516749
418531
355481
774012
50000
50000
6086002
6086002
6142038
-2841879
3300159
12278040
-2841879
9436161
2500000
1428571
3928571
66450
1565044
76250
682500
2390244
.5
.40
.15
.40
.50
1
.50
.5
.25
.15
.20
.07
0.18
.49
21121094
21121094
21121094
21121094
66450
133332
100000
150000
1565044
76250
682500
666667
666666
4106909
133332
100000
150000
666667
666666
2500000
1428571
5645236
6400000
6400000
30691
290088
18283
38592
130408
774012
.9216
226804
226804
-865227
1330962
1796114
895408
70629
44041
0.49
0.49
.39
0.18
P2Y5M9D
P3Y
200000
270000
300000
2110000
100000
50000
2012-10-01
2012-09-19
2012-08-17
2012-06-13
2013-07-23
2500000
1428571
222222
612329
25738
40809
25000
200000
136179
103486
192940
67580
130308
151868
0
0
72000
0
9000
455829
75312
7097
60000