UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

ý ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2009~~ 2010.

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to ~~_______~~_________.

Commission file number: 000-49725

~~Constitution Mining~~Goldsands ~~Corp.~~Development Company

(Exact name of registrant as specified in its charter)

Delaware		88-0455809
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
Pasaje Martir Olaya 129, Oficina 1203, Centro Empresarial Jose Pardo Torre A, Miraflores, Lima, Peru
Calle Juan Fanning 219, Miraflores, Lima, Perú
(Address of principal executive offices) (Zip Code)
Registrant’s telephone, including area code: +54-1-446-6807

Securities registered under Section 12(b) of the Exchange Act: None.

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $0.001 par value		Not Applicable
(Title of class)		(Name of each exchange on which registered)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ý

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the ~~past~~ preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if ~~disclosure~~any, ofevery ~~delinquent~~Interactive ~~filers~~Data File required to be submitted and posted pursuant to ~~Item~~Rule 405 of Regulation S-KT (~~229~~§232.405 of this chapter) isduring ~~not contained herein, and will be contained, to~~ the ~~best~~preceding of12 ~~registrant’s~~months ~~knowledge, in definitive proxy~~ (or ~~information~~ ~~statements~~for ~~incorporated~~such byshorter ~~reference~~period inthat ~~Part~~the ~~III~~registrant ofwas ~~this~~required ~~Form~~to ~~10-K or~~submit ~~any~~and ~~amendment~~post tosuch ~~this~~files.) ~~Form~~Yes ¨ No ~~10-K. ý~~¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer ¨ (Do not check if a smaller reporting company) Smaller reporting company ý

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

As of June 30, ~~2009~~2010, the aggregate market value of the Company’s common equity held by non-affiliates computed by reference to the closing price ($0.6070) was: $3655,~~131~~994,~~674~~538

The number of shares of our common stock outstanding as of ~~March~~May 112, 2011 ~~2010~~ was: 78187,~~055~~517,~~985~~618

Documents Incorporated by Reference: Parts of our definitive proxy statement to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, 2009 are incorporated by reference into Part III of this Form 10-K.None

Table of Contents

FORM 10-K

~~CONSTITUTION MINING~~GOLDSANDS ~~CORP.~~DEVELOPMENT COMPANY

DECEMBER 31, ~~2009~~2010

Table of Contents

	Page
PART I
Item 1. Business.	5
Item 1A. Risk Factors.	10
Item 1B. Unresolved Staff Comments.	1719
Item 2. Properties.	1719
Item 3. Legal Proceedings.	3031
Item 4. (Removed and Reserved).	3031

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 32 Item 6. Selected Financial Data. 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 40 Item 8. Financial Statements and Supplementary Data. 40 Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure. 40 Item 9A. Controls and Procedures. 40 Item 9B. Other Information. 41

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	32
Item 6. Selected Financial Data.	34
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	35
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.	41
Item 8. Financial Statements and Supplementary Data.	41
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.	41
Item 9A. Controls and Procedures.	41
Item 9B. Other Information.	43

PART III

Item 10. Directors, Executive Officers and Corporate Governance. 42 Item 11. Executive Compensation. 42 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. 42 Item 13. Certain Relationships and Related Transactions, and Director Independence. 42 Item 14. Principal Accounting Fees and Services. 42

Item 10. Directors, Executive Officers and Corporate Governance.	44
Item 11. Executive Compensation.	48
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	54
Item 13. Certain Relationships and Related Transactions, and Director Independence.	55
Item 14. Principal Accounting Fees and Services.		56

PART IV

Item 15. Exhibits, Financial Statement Schedules.	4357
Glossary
Signature Page
Exhibit Index

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Cautionary Note Regarding Forward Looking Statements

This annual report contains forward-looking statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," "intends," and other variations of these words or comparable words. In addition, any statements that refer to expectations, projections or other characterizations of events, circumstances or trends and that do not relate to historical matters are forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. A wide variety of factor could cause or contribute to such differences and could adversely impact revenues, profitability, cash flows and capital needs. There can be no assurance that the forward-looking statements contained in this document will, in fact, transpire or prove to be accurate. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:

·● ~~risk~~potential ~~that~~or wepending ~~fail to meet the requirements of the agreement under which we acquired our options~~investigations, ~~including~~proceedings ~~any payments~~ or ~~any~~litigation ~~exploration obligations~~ that weinvolves ~~have~~or ~~regarding~~affects ~~these properties, which could result in the loss of our right to exercise the options to acquire the mineral and mining rights underlying these properties~~us;

·● risk that we will not be able to ~~complete~~remediate ~~the~~identified ~~possible~~material ~~acquisition~~weaknesses ofin ~~additional~~our ~~mineral~~internal ~~deposits~~control ~~pursuant~~over tofinancial ~~terms~~reporting and ~~conditions~~disclosure ~~outlined~~controls inand ~~a letter of intent~~procedures;

·● ~~risk~~risks ~~that~~related weto ~~cannot~~failure ~~attract,~~to ~~retain~~obtain ~~and~~adequate ~~motivate~~financing ~~qualified~~on ~~personnel,~~a ~~particularly~~timely ~~employees,~~basis ~~consultants~~ and ~~contractors~~on acceptable terms for our ~~operations~~planned inexploration ~~Peru~~and development projects;

·● ~~risks~~risk ~~and~~that ~~uncertainties~~we ~~relating~~fail to fulfill the ~~interpretation~~payment obligations set forth in the agreement we entered into with Temasek Investments Inc. ("Temasek"), a company incorporated under the laws of ~~drill~~Panama, ~~results~~under which we acquired three separate options, each providing for the ~~geology~~acquisition of an approximately one-third interest in certain mineral rights to certain properties in Peru that abut the other property interests we acquire, ~~grade~~which ~~and~~could ~~continuity~~result in the loss of our right to exercise the options to acquire the mineral ~~deposits~~and mining rights underlying these properties;

·● ~~results~~risk ofthat ~~initial~~we ~~feasibility~~cannot attract, ~~pre-feasibility~~retain and ~~feasibility~~motivate ~~studies~~qualified personnel, ~~and~~particularly ~~the possibility that future exploration~~employees, ~~development~~consultants orand ~~mining~~contractors ~~results~~for ~~will~~our ~~not~~operations bein ~~consistent with our expectations~~Peru;

·● ~~mining~~risks and ~~development~~uncertainties ~~risks,~~relating ~~including~~to ~~risks~~the ~~related~~interpretation toof ~~accidents~~drill results, ~~equipment~~the ~~breakdowns~~geology, ~~labor~~grade ~~disputes~~and orcontinuity ~~other~~of ~~unanticipated~~mineral ~~difficulties with or interruptions in production~~deposits;

·● ~~the~~results ~~potential~~of ~~for~~initial ~~delays~~feasibility, inpre-feasibility and feasibility studies, and the possibility that future exploration, development or ~~development~~mining ~~activities~~results orwill ~~the~~not ~~completion~~be ofconsistent ~~feasibility~~with ~~studies~~our expectations;

·● mining and development risks, including risks related to ~~the~~accidents, ~~inherent~~equipment ~~uncertainty~~breakdowns, oflabor ~~production~~disputes ~~and~~or ~~cost~~other ~~estimates~~unanticipated ~~and~~difficulties ~~the~~with ~~potential~~or ~~for~~interruptions ~~unexpected~~in ~~costs and expenses~~production;

·● ~~risks~~the ~~related~~potential tofor ~~commodity~~delays ~~price~~in ~~fluctuations~~exploration or development activities or the completion of feasibility studies;

·● risks related to the inherent uncertainty of ~~profitability~~production ~~based~~and ~~upon~~cost ~~our~~estimates ~~history~~and ofthe ~~losses~~potential for unexpected costs and expenses;

·● risks related to ~~failure~~commodity toprice ~~obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects~~fluctuations;

·● ~~risks~~the ~~related~~uncertainty toof ~~environmental~~profitability ~~regulation~~based ~~and~~upon ~~liability~~our history of losses;

·● risks ~~that~~related ~~the~~to ~~amounts reserved or allocated for~~ environmental ~~compliance,~~regulation ~~reclamation, post-closure control measures, monitoring~~ and ~~on-going maintenance may not be sufficient to cover such costs~~liability;

· risks related to tax assessments;

· political and regulatory risks associated with mining development and exploration; and

· other risks and uncertainties related to our prospects, properties and business strategy.

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●	risks that the amounts reserved or allocated for environmental compliance, reclamation, post-closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;

●	risks related to tax assessments;

●	political and regulatory risks associated with mining development and exploration; and

●	other risks and uncertainties related to our prospects, properties and business strategy.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except as required by law, we do not undertake to update or revise any of the forward-looking statements to conform these statements to actual results, whether as a result of new information, future events or otherwise.

As used in this annual report, “~~Constitution~~Goldsands ~~Mining~~Development,” the “Company,” “we,” “us,” or “our” refer to ~~Constitution~~Goldsands ~~Mining~~Development ~~Corp.~~Company, unless otherwise indicated.

If you are not familiar with the mineral exploration terms used in this report, please refer to the definitions of these terms under the caption “Glossary” at the end of Item 15 of this report.

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PART I

ITEM 1. Business.

Corporate History

We were incorporated in the state of Nevada under the name Crafty Admiral Enterprises, Ltd. on March 6, 2000. Our original business plan was to sell classic auto parts to classic auto owners ~~all~~worldwide ~~over the world~~ through an Internet site/ and online store; however, we were unsuccessful in implementing the online store and were unable to afford the cost of purchasing, warehousing and shipping the initial inventory required to get the business started. As a result, we ceased operations in approximately July 2002.

During our fiscal year ended December 31, 2006, we reorganized our operations to pursue the exploration, development, acquisition and operation of oil and gas properties. On June 27, 2006, we acquired a leasehold interest in a mineral, oil and gas property located in St. Francis County, Arkansas for a cash payment of $642,006, pursuant to an oil and gas agreement we entered into on April 29, 2006 (the “Tombaugh Lease”). Shortly after acquiring the Tombaugh Lease, we suspended our exploration efforts on the property covered by the Tombaugh Lease in order to pursue business opportunities developing nickel deposits in Finland, Norway and Western Russia. On January 18, 2008, we assigned all of our right, title and interest in and to the Tombaugh Lease to Fayetteville Oil and Gas, Inc., which agreed to assume all of our outstanding payment obligations on the Tombaugh Lease as consideration for the assignment. On March 9, 2007, we changed our name to better reflect our business to “Nordic Nickel Ltd.” pursuant to a parent/subsidiary merger with our wholly-owned non-operating subsidiary, Nordic Nickel Ltd., which was established for the purpose of giving effect to this name change. We were not successful pursuing business opportunities developing nickel deposits in Finland, Norway and Western Russia and again sought to reorganize our operations in November 2007.

In November 2007, we reorganized our operations and changed our name to “Constitution Mining Corp.” to better reflect our current focus, which is the acquisition, exploration, and potential development of mining properties. Since November 2007, we have entered into agreements to secure options to acquire the mineral and mining rights underlying properties located in the Salta and Mendoza provinces of Argentina (the "“Argentinean Properties"”) and in northeastern Peru. In 2009, we determined that it was in our best interest to nodispose ~~longer~~of ~~pursue~~our ~~the~~interests ~~exploration~~in ~~and development of~~ the Argentinean Properties and ~~terminated~~we ~~our option agreements to acquire the mineral and mining rights underlying these properties. We~~ are now ~~exclusively~~ pursuing ~~the~~ exploration and development ofexclusively on our ~~property~~properties ~~interests~~ in Peru.

On October 21, 2009, we completed a reincorporation merger from the State of Nevada to the State of Delaware.

~~Our common~~On ~~stock~~February is24, ~~quoted~~2011, we filed a Certificate of Ownership and Merger with the Secretary of State of Delaware to effectuate a merger whereby we merged with our wholly-owned subsidiary, Goldsands Development Company, through a parent/subsidiary merger, with us as the surviving corporation. This merger, which became effective at 11:59 p.m. on March 31, 2011 (the ~~OTC~~“Effective ~~Bulletin~~Time”) ~~Board~~ is pursuant to Section 253 of the General Corporation Law of Delaware. Shareholder approval for this merger was not required under Section 253 of the ~~symbol “CMIN~~General Corporation Law of Delaware. Upon the Effective Time of this merger, our name changed to “Goldsands Development Company” . We ~~conduct~~decided to change our corporate name in order to reflect management’s decision during the first quarter of 2011 to expand our business ~~from~~plan ~~Pasaje~~in ~~Martir~~order ~~Olaya~~to ~~129,~~pursue ~~Oficina 1203,~~opportunities ~~Centro~~to ~~Empresarial~~consult ~~Jose~~on ~~Pardo~~development ~~Torre~~projects A,in ~~Miraflores,~~the ~~Lima,~~same approximate geographical area as our property interest in Peru. ~~Our telephone~~As ~~number~~a isresult of our operations in Peru, we have gained significant experience and knowledge as to the local processes and procedures involved in the planning of development projects in Peru and we intend to leverage and market this expertise to other companies seeking to engage in development projects in Peru. ~~+54-1-446-6807~~It is our belief that changing our corporate name will minimize public perception in marketing this expertise that we are strictly a company engaged in mineral exploration.

~~Exploration Stage~~Our ~~Company~~common stock is quoted on the OTC Bulletin Board under the symbol “GSDC.” We conduct our business from Calle Juan Fanning 219, Miraflores, Lima, Peru. Our telephone number is +54-1-446-6807.

We are considered an exploration or exploratory stage company because we are involved in the examination and investigation of land that we believe may contain valuable minerals, for the purpose of discovering the presence of ore, if any, and its extent. There is no assurance that a commercially viable mineral deposit exists on the properties underlying our mineral property interests and a great deal of further exploration will be required before a final evaluation as to the economic and legal feasibility for our future exploration is determined. We have no known reserves of any type of mineral. To date, we have not discovered an economically viable mineral deposit on the property underlying our mineral property interests, and there is no assurance that we will discover one. If we cannot acquire or locate mineral deposits, or if it is not economical to recover any mineral deposits that we do find, our business and operations will be materially and adversely affected.

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~~Surplus Strategy~~Exploration Stage Company

~~Our current~~We ~~business~~are ~~plan~~considered ~~calls~~an ~~for~~exploration ~~investing~~or ~~any~~exploratory ~~surplus~~stage ~~operating~~company ~~capital resulting~~because ~~from~~we ~~retained~~are ~~earnings~~involved ~~into~~in ~~bullion~~the ~~accounts~~examination and ~~does~~investigation ~~not~~of ~~include holding~~land ~~retained~~that ~~earnings,~~we ifbelieve ~~any,~~may incontain ~~cash~~valuable orminerals, ~~cash~~for ~~equivalents. In~~ the ~~event~~purpose ~~that~~of ~~commercially~~discovering ~~exploitable~~the ~~reserves~~presence of ~~minerals~~ore, ~~exist~~if on any, ~~of our property interests~~ and weits ~~are~~extent. There ~~able~~is tono ~~make~~assurance that a ~~profit,~~commercially ~~our~~viable ~~business plan is to sell enough~~ mineral ~~reserves~~deposit toexists ~~satisfy~~on ~~all~~any of ~~our~~the ~~expenses~~properties ~~and~~underlying ~~invest~~our ~~all retained~~ mineral ~~reserves~~property ininterests ~~bullion~~and ~~accounts~~a ~~established~~great indeal ~~Zurich, Switzerland. The price~~ of ~~precious~~further ~~and~~exploration ~~base~~will ~~metals~~be ~~such~~required asbefore ~~gold~~a ~~and silver~~final ~~has~~evaluation ~~fluctuated~~as ~~widely~~to inthe ~~recent~~economic ~~years,~~ and islegal ~~affected~~feasibility byfor ~~numerous factors beyond~~ our ~~control,~~future ~~including~~exploration ~~international,~~is ~~economic~~determined. We ~~and~~have ~~political trends,~~no ~~expectations~~known reserves of ~~inflation,~~any ~~currency~~type ~~exchange~~of ~~fluctuations,~~mineral. For ~~interest rates,~~this ~~global or regional consumptive patterns~~reason, ~~speculative~~the ~~activities~~proposed ~~and increased~~plan ~~production~~of ~~due~~exploration todescribed ~~new~~below ~~extraction~~is ~~developments~~exploratory ~~and~~in ~~improved extraction and production methods~~nature. ~~The~~To ~~effect~~date, ofwe ~~these~~have ~~factors~~not ondiscovered ~~the~~an ~~price~~economically ~~of base~~viable ~~and~~mineral ~~precious~~deposit ~~metals,~~on ~~and,~~any ~~therefore,~~of the ~~change~~properties inunderlying ~~the value of~~ our ~~retained~~ ~~earnings,~~mineral ifproperty ~~any~~interests, ~~held~~and inthere ~~bullion~~is ~~accounts~~no ~~cannot~~assurance ~~accurately~~that ~~be predicted~~we ~~and~~will isever ~~subject~~discover ~~to significant fluctuation~~one. ~~There~~If ~~can~~we becannot ~~no assurance~~acquire ~~that~~or ~~the~~locate ~~value~~mineral ofdeposits, ~~any~~or ~~bullion~~if ~~accounts~~it ~~established~~is bynot useconomical ~~in the future~~ to ~~hold~~recover ~~retained~~any mineral ~~reserves,~~deposits ifthat ~~any,~~we ~~will~~do ~~not~~find, beour ~~adversely~~business ~~impacted~~and ~~by fluctuations~~operations inwill ~~the~~be ~~price~~materially ofand ~~base~~adversely affected and ~~precious~~we ~~metals~~may ~~resulting~~have into ~~significant losses~~cease operations.

Previous Surplus Strategy

We previously disclosed that our business plan was to invest any surplus operating capital resulting from retained earnings into bullion accounts as opposed to holding retained earnings, if any, in cash or cash equivalents. Bullion accounts operate like traditional banking accounts with the exception that bullion account balances represent the ounces of gold and/or silver owned by the account holder instead of representing dollars or other national currencies. Bullion account holders may buy, hold or sell any amount of bullion from their account at any time, and may also take physical possession of some or all of their bullion. We have reconsidered this plan and have decided to no longer pursue this strategy due to recent significant fluctuations in the prices of precious metals which are completely unpredictable. In the event that commercially exploitable reserves of minerals exist on any of our property interests and we are able to make a profit, our business plan is to sell enough mineral reserves to satisfy all of our expenses and retain all earnings in cash or cash equivalents for use in financing our future operations.

Summary of our Mineral Property Interests

A description of each of our options to acquire the mineral and mining rights underlying properties located in Peru and the conditions that we must meet to exercise these options is set forth in Item 2 of this annual report.

Effect of Governmental Regulation on Our Business

We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in Peru. The discussion that follows is a summary of the most significant government regulations which we anticipate will impact our operations.

Peru is located on the western coast of South America and has a population of approximately 28 million people. It covers a geographic area of approximately 1.3 million square ~~kilometres~~kilometers and is bordered by Bolivia, Brazil, Chile, Colombia and Ecuador. Lima is ~~Peru's~~the capital of Peru and its principal city ~~and~~with ~~has~~ a population of approximately 7 million people.

Peru has become a leading country for mining activities. No special taxes or registration requirements are imposed on foreign-owned companies and foreign investment is treated as equal to domestic capital. Peruvian law allows for full repatriation of capital and profits and the country’s mining legislation provides access to mining concessions under an efficient registration system.

Peruvian Mining Law

~~Under Peru’s~~According ~~Uniform~~to ~~Text~~the ofPeruvian Mining ~~Law (“UTM”)~~Act, the right to explore ~~for~~ and/or exploit minerals is granted by the government by way of concessions. A Under Peruvian regulations a mining concession is a property right, independent from the ownership of surface land on which it is located. There are no restrictions or special requirements applicable to foreign companies or individuals regarding the holding of mining concessions in Peru unless the concessions are within 50 ~~kilometres~~ kilometers of Peru's borders. The rights granted by a mining concession can be transferred, or sold and, in general, may be the subject of any transaction or contract. Mining concessions may be privately owned and no state participation is required.

The application for a mining concession involves the filing of documents before the mining administrative authority. The mining concession boundaries are specified in the application documents, with no requirement to mark the concession boundaries in the field since the boundaries are fixed by UTM coordinates. In order to conduct exploration or mining activities, the holder of a mining concession must purchase the surface land required for the project or reach agreement with the owner for its temporary use. If any of this is not possible, a legal easement may be requested from the mining authorities, although these easements have been rarely granted.

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The application for a mining concession involves the filing of certain documents before the mining administrative authority. The mining concession boundaries are specified in the application documents, with no requirement to mark the concession boundaries in the field since the boundaries are fixed by UTM coordinates. In order to conduct exploration or mining activities, the holder of a mining concession must purchase the surface land required for the project or reach an agreement with the owner for its temporary use. If any of this is not possible, a legal easement may be requested from the mining authorities, although these easements have been rarely granted.

Mining concessions are irrevocable as long as their holders pay an annual fee of US $3 per hectare and reach minimum production levels within the terms set forth by law or otherwise pay penalties, as applicable. Non-compliance with any of these mining obligations for two consecutive years will result in the cancellation of the mining concession.

Pursuant to the original legal framework in force since 1992, holders of mining concessions are obliged to achieve a minimum production of US $100 per hectare per year within six years following the year in which the respective mining concession title is granted. If this minimum production is not reached, as of the first six months of the seventh year, the holder of the concession shall pay a US $6 penalty per hectare per year until such production is reached and penalties increase to US $20 in the twelfth year. Likewise, it is possible to avoid payment of the penalty if evidence is submitted to the mining authorities that an amount ten times the applicable penalty or more had been invested.

However, this regime has been recently and partially amended providing for, among other matters, increased minimum production levels, new terms for obtaining such minimum production, increased penalties in case such minimum production is not reached, and even the cancellation of mining concessions if minimum production is not reached within certain terms. Pursuant to this new regime, the holder of the mining concession should achieve a minimum production of at least one tax unit (S/. 3,~~500,~~600.00 approximately US $ 1,~~100~~309) per hectare per year, within a ten-year term following the year in which the mining concession title is granted. If such minimum production is not reached within the referred term, the holder of the concession shall pay penalties equivalent to 10% of the tax unit.

If the minimum production is not reached within a fifteen-year term following the granting of the concession title, the mining concession shall be cancelled by the mining authority, unless (i) a qualified force majeure event is evidenced to and approved by the mining authority, or (ii) by paying the applicable penalties and concurrently evidencing minimum investments of at least ten times the amount of the applicable penalties; in which cases the concession may not be cancelled up to a maximum term of five additional years. If minimum production is not reached within a twenty-year term following the granting of the concession title, the concession shall inevitably be cancelled.

This amended regime is currently applicable to all new mining concessions granted since October 11, 2008. Regarding those mining concessions existing prior to such date, the new term for obtaining the increased minimum production level or otherwise being required to pay the increased penalties pursuant to the amended regime shall be counted as from the first business day of 2009. Nevertheless, until such new term for obtaining the increased minimum production level does not expire, the minimum production level, the term for obtaining such minimum production, the amount of the penalties and the causes for cancellation of the mining concessions shall continue to be those provided in the original legal framework existing since 1992.

The amended regime shall not be applicable to ~~(i)~~ those concessions handed by the Peruvian State through private investment promotion procedures, which shall maintain the production and investment obligations contained in their respective agreements, ~~and/~~or ~~(ii)~~ to titleholders of concessions with mining stability agreements in force.

Environmental Laws

The Peruvian Ministry of Energy and Mines ("MEM") regulates environmental affairs in the mining sector, including establishing an environmental protection regulations; while the Organism for Supervising Investment in Energy and Mining verifies environmental compliance and imposes administrative sanctions, although it is likely that in the near future this functions be assumed by the recently created Ministry of Environment.

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~~Each stage of exploration or mining requires some type of authorization or permit, beginning with an application for an environmental permit for initial exploration and continuing with an~~ Environmental ~~Impact Assessment ("EIA") for mining, which includes public hearings.~~Laws

The Peruvian Ministry of Energy and Mines (“MEM”) regulates environmental affairs in the mining sector, including establishing an environmental protection regulations while the Environmental Assessment and Supervisory Bureau (“OEFA”), which forms part of the Ministry of the Environment, is in charge of supervising compliance with, and sanctioning any violation of, environmental regulations.

Each stage of exploration or mining requires some type of authorization or permit, beginning with an application for an environmental permit for initial exploration and continuing with an Environmental Impact Assessment (“EIA”) for mining, which includes public hearings.

For permitting purposes, exploration activities in Peru are classified in two categories:

Category I projects: Mining exploration activities that comprise any of the following: (i) a maximum of twenty drilling platforms; (ii) a disturbed area of less than ten hectares considering drilling platforms, trenches, auxiliary facilities and access means; and, (iii) the construction of tunnels with a total maximum length of fifty meters. Holders of these projects must submit an Environmental Impact Statement (“EIS”) before the MEM, which in principle, is subject to automatic approval upon its filing, and subject to subsequent (ex post) review by the latter. Nevertheless, in any of the following cases, the project shall not be subject to automatic approval and shall necessarily obtain an express prior approval by MEM, which should be granted, in principle, within a term of two months since filing the EIS: (i) the project is located in a protected natural area or its buffer zone; (ii) the project is oriented to determining the existence of radioactive minerals; (iii) the platforms, drill holes, trenches, tunnels or other components would be located within certain specially environmental sensitive areas specified in the applicable regulations (e.g., glaciers, springs, water wells, groundwater wells, protection lands, primary woods, etc.); (iv) the project covers areas where mining environmental contingencies or non-environmental rehabilitated previous mining works, already exist.

· Category II projects: Mining exploration activities that comprise any of the following: (i) more than twenty drilling platforms; (ii) a disturbed area of more than ~~ten~~10 hectares considering drilling plants, trenches, auxiliary facilities and access means; and, (iii) the construction of tunnels over a total length of fifty meters. These projects require an authorization that should be granted once the semi-detailed Environmental Impact Assessment ("EIA") is approved by the MEM. Such authorization should, in principle, take approximately four months.

Before initiating construction or exploitation activities orand before the expansion of existing operations, an EIA approval should be ~~approved~~obtained. This process of authorization involves public hearings in the place where the project is located and, in general, should conclude within a term of 120 calendar days, although such process can require between eight months and one year.

Holders of mining activities performing mining exploration ~~shall~~are required to conduct remediation works of disturbed areas, as part of the progressive closure of the project. Likewise, they are required to undertake the final closure and post closure actions as set forth in the terms and conditions in the approved environmental instrument.

If the holder carries out mining exploration activities involving the removal of more than 10,000 tonnes of material, or more than 1,000 tonnes of material with a potential neutralization ("“PN"”) over potential acidity (“PA”) relation lower than 3 (PN/PA<3), then they shall be required to file a Mine Closure Plan ~~(“MCP”)~~ along with the corresponding environmental instrument, as well as to establish a financial guarantee to secure compliance with such ~~MCP~~Mine Closure Plan.

Holders of mining exploitation activities must file a ~~MCP~~Mine Closure Plan with before the MEM within one year of the approval of their EIA. The ~~MCP~~Mine Closure Plan must be implemented from the beginning of the mining operation. Semi-annual reports must be filed evidencing compliance with the ~~MCP~~Mine Closure Plan. An environmental guarantee covering the ~~MCP’~~Mine Closure Plan 's estimated costs is also required to be granted.

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Mining Royalties

Peruvian law requires that concession holders pay a mining royalty as consideration for the extraction of mineral resources. The mining royalty is payable monthly on a variable cumulative rate of 1% to 3% of the value of the ore concentrate or equivalent, calculated in accordance with price quotations in international markets, subject to certain deductions such as indirect taxes, insurance, freight and other specified expenses. The mining royalty payable is determined based on the following schedule: (i) under US $60 million of annual sales of concentrates: 1% royalty; (ii) in excess of US $60 million and up to US $120 million of annual sales: 2% royalty; and (iii) in excess of US $120 million of annual sales: 3% royalty.

Competition

We are an exploration stage mineral resource exploration company that competes with other mineral resource exploration companies for financing and for the acquisition of new mineral properties. Many of the mineral resource exploration companies with whom we compete have greater financial and technical resources than those available to us. Accordingly, these competitors may be able to spend greater amounts on acquisitions of mineral properties of merit, on exploration of their mineral properties and on development of their mineral properties. In addition, they may be able to afford more geological expertise in the targeting and exploration of mineral properties. This competition could result in competitors having mineral properties of greater quality and interest to prospective investors who may finance additional exploration and development. This competition could adversely impact on our ability to achieve the financing necessary for us to conduct further exploration of our mineral properties. We will also compete with other mineral exploration companies for financing from a limited number of investors that are prepared to make investments in mineral exploration companies. The presence of competing mineral exploration companies may impact on our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors. We will also be compete with other mineral companies for available resources, including, but not limited to, professional geologists, camp staff, mineral exploration supplies and drill rigs.

Intellectual Property

We do not own, either legally or beneficially, any patent or trademark.

Employees

We have no full-time employees at the present time. Our executive officers do not devote their services full time to our operations. We engage contractors from time to time to consult with us on specific corporate affairs or to perform specific tasks in connection with our exploration programs. As of December 31, ~~2009~~2010, we engaged approximately 21 contractors that provided work to us on a recurring basis.

Research and Development Expenditures

We have not incurred any research or development expenditures since our incorporation.

Subsidiaries

Constitution Mining Argentina SA is a subsidiary entity which was registered with the General Inspection of Corporations in Argentina on March 4, 2008 that ~~and~~is ~~formed~~in ~~for~~ the ~~purpose~~ process of ~~acquiring~~being ~~and~~dissolved ~~exploring~~because ~~natural~~of ~~resource~~our ~~properties~~decision in to not pursue opportunities within Argentina.

We own a 50% interest in the issued and outstanding stock of Bacon Hill Invest Inc. (“Bacon Hill”), a corporation incorporated under the laws of Panama. The remaining 50% interest in the issued and outstanding stock of Bacon Hill is owned by Temasek Investments Inc., a company incorporated under the laws of Panama. Bacon Hill indirectly owns the mineral and mineral rights to certain properties located in Peru held by its subsidiary, Compañía Minera Marañón S.A.C.

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We own a 100% interest in the issued and outstanding stock of Bacon Hill Invest Inc. (“Bacon Hill”), a corporation incorporated under the laws of Panama. Bacon Hill indirectly owns the mineral and mineral rights to certain properties located in Peru held by its subsidiary, Compañía Minera Marañón S.A.C.

ITEM 1A. Risk Factors.

You should carefully consider the following risk factors in evaluating our business and us. The factors listed below represent certain important factors that we believe could cause our business results to differ. These factors are not intended to represent a complete list of the general or specific risks that may affect us. It should be recognized that other risks may be significant, presently or in the future, and the risks set forth below may affect us to a greater extent than indicated. If any of the following risks occur, our business, financial condition or results of operations could be materially and adversely affected. You should also consider the other information included in this annual report and subsequent quarterly reports filed with the SEC.

Risk Factors

Risks Associated With Our Business

Our accountants have raised substantial doubt with respect to our ability to continue as a going concern.

As noted in our consolidated financial statements, we have incurred a net loss of $1643,~~662~~877,~~828~~689 for the period from inception on March 6, 2000 to December 31, ~~2009~~2010 and we have no present source of revenue. At December 31, ~~2009~~2010, we had a working capital deficiency of $143,~~807~~165,~~730~~504. As of December 31, ~~2009~~2010, we had cash and cash equivalents in the amount of US $~~205~~4,~~125~~181. We will have to raise additional funds to meet our currently budgeted operating requirements for the next twelve months. No assurance can be given that sources of debt or equity financing will be available to the Company to fund these operating requirements.

The audit report of James Stafford, Inc., Chartered Accountants, for the fiscal year ended December 31, ~~2009~~2010 and ~~2008~~2009 contained a paragraph that emphasizes the substantial doubt as to our continuance as a going concern. This is a significant risk that we may not be able to generate and/or raise enough resources to remain operational for an indefinite period of time.

~~We own~~A ~~the~~pending ~~options~~SEC toinvestigation ~~acquire~~may ~~the~~subject ~~mining~~us ~~and~~to ~~mineral~~significant ~~rights~~costs ~~underlying certain properties~~ and ifcould wedivert ~~fail~~management’s ~~to perform the obligations necessary to exercise these options we will lose our options and cease operations~~attention.

WeOn ~~hold options~~March to30, ~~acquire~~2011, ~~the~~we ~~mineral~~received ~~and~~a ~~mining~~copy ~~rights~~of ~~underlying~~a ~~certain~~formal ~~properties located~~order inof ~~northeastern~~investigation ~~Peru,~~issued ~~subject~~by tothe ~~certain~~United ~~conditions. If~~States ~~we fail~~Securities toand ~~meet~~Exchange ~~the~~Commission ~~requirements~~(“SEC”) regarding possible violations of the ~~amended~~securities ~~agreement~~laws ~~under~~including ~~which~~securities weregistration ~~acquired such options~~requirements, ~~including~~financial ~~any~~reporting ~~payments~~ and/or ~~any~~market ~~exploration~~manipulation ~~obligations~~believed ~~that~~to we have ~~regarding~~been ~~these~~committed ~~properties~~by us, weour ~~may~~officers, ~~lose~~directors, ~~our~~employees, ~~right~~partners, tosubsidiaries, ~~exercise~~affiliates ~~the~~and/or ~~options to~~other ~~acquire~~persons. We received a subpoena requesting the ~~mineral~~delivery ~~and~~of ~~mining~~certain ~~rights~~documents ~~underlying~~to ~~these properties~~the SEC. If We wehave dobeen ~~not~~cooperating ~~fulfill~~fully, ~~these~~and ~~conditions,~~intend ~~then~~to ~~our~~continue ~~ability~~ to ~~commence~~cooperate orfully, ~~continue~~with ~~operations~~the ~~could~~SEC bein ~~materially~~regards ~~limited. In addition,~~to ~~substantially~~this ~~all~~investigation. At ofthis ~~our~~time, ~~assets~~it ~~will~~is benot ~~put~~possible ~~into~~to ~~commercializing~~predict ~~our rights~~the tooutcome of the ~~areas~~investigation ~~covered~~or byits ~~these~~impact ~~options~~on us. ~~Accordingly,~~ In ~~any adverse~~the ~~circumstances~~event ~~that~~the ~~affect~~SEC ~~the~~investigation ~~areas~~leads ~~covered~~to byaction ~~these~~against ~~option~~any ~~agreements and~~of our ~~rights~~current ~~thereto~~or ~~would~~former ~~affect~~directors usor ~~and~~officers, ~~your~~or ~~entire~~the ~~investment~~Company initself, ~~shares~~the trading price of our common stock~~. If~~ ~~any~~may ofbe ~~these~~adversely ~~situations~~impacted. In ~~were to arise~~addition, wethe ~~would need~~SEC toinvestigation ~~consider~~may ~~alternatives,~~result ~~both~~ in ~~terms~~the incurrence of ~~our~~significant ~~prospective~~legal ~~operations~~expense, both directly and ~~for~~ as the ~~financing~~result of ~~our~~any ~~activities~~indemnification obligations. ~~Management~~ This ~~cannot~~investigation ~~provide assurance~~may ~~that~~also wedivert ~~will~~management’s ~~ultimately~~attention ~~achieve~~from ~~profitable~~our operations or ~~become cash~~limit our ability to obtain financing to fund our on-~~flow~~going ~~positive~~operating requirements, orwhich ~~raise~~could ~~additional~~cause ~~debt~~our ~~and/or~~business ~~equity capital~~to suffer. If we are ~~unable~~subject to ~~raise~~any ~~additional~~adverse ~~capital~~findings, inwe ~~the~~could ~~near future,~~be werequired ~~will~~to ~~experience~~pay ~~liquidity~~damages ~~problems~~or ~~and~~penalties ~~management~~or ~~expects~~have ~~that~~other ~~we will~~remedies ~~need~~imposed toon ~~curtail~~us ~~operations,~~which ~~liquidate~~could ~~assets,~~have ~~seek~~a ~~additional~~material ~~capital~~adverse effect on ~~less~~ ~~favorable~~our ~~terms~~business. We ~~and/~~have no insurance coverage to cover any portion of our defense cost or ~~pursue~~any ~~other~~amounts ~~remedial~~that ~~measures,~~we ~~including~~may ~~ceasing operations~~be required to pay in connection with the resolution of this investigation.

~~We have~~In apreparing ~~limited~~our ~~operating~~consolidated ~~history~~financial ~~and~~statements ~~have~~for ~~incurred~~fiscal ~~losses~~2010, ~~that~~our wemanagement ~~expect~~identified material weaknesses in our internal control over financial reporting, and our failure to ~~continue~~ ~~into~~remedy these or other material weaknesses could result in material misstatements in our consolidated financial statements and the ~~future~~loss of investor confidence in our reported financial information. 

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to Our ~~face the~~management ~~risks,~~is ~~uncertainties,~~responsible ~~expenses~~for establishing and ~~difficulties~~maintaining ~~frequently~~adequate ~~encountered~~internal ~~by companies~~control atover ~~the~~our ~~start~~financial reporting, as defined in Rule 13a-up15(f) ~~stage~~under ofthe ~~their~~Exchange ~~business~~Act. ~~development~~Our management identified material weaknesses in our internal control over financial reporting as of December 31, 2010. WeA ~~cannot~~material beweakness ~~sure that~~is wedefined ~~will~~as bea ~~successful~~deficiency, or combination of deficiencies, in ~~addressing~~internal ~~these~~control ~~risks~~over ~~and~~financial ~~uncertainties~~reporting, ~~and~~such ~~our failure~~that tothere dois soa ~~could~~reasonable ~~have~~possibility that a ~~materially~~material ~~adverse~~misstatement ~~effect~~of on our annual or interim consolidated financial ~~condition~~ statements will not be prevented or detected on a timely basis.

The material weaknesses identified by management as of December 31, 2010 consisted of ineffective controls over the period-end financial close and reporting process and oversight and monitoring of certain international locations as of December 31, 2010 and lack of resources to manage the financial close process. As a result of these material weaknesses, our management concluded that as of December 31, 2010, our internal control over financial reporting was not effective based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—An Integrated Framework.

As a result of management’s assessment of internal control over financial reporting, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information required to be disclosed is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We are in the process of considering the appropriate remedial measures to be taken to address these material weaknesses. We cannot be certain that the measures we take will be effective or will ensure that restatements will not occur in the future. If remedial measures are insufficient to address these material weaknesses, or if additional material weaknesses or significant deficiencies in our internal control are discovered or occur in the future, our consolidated financial statements may contain material misstatements and we could be required to restate our financial results. Any future restatement of consolidated financial statements could place a significant strain on our internal resources and harm our operating results. Further, any additional or unremedied material weakness may preclude us from meeting our reporting obligations on a timely basis. As a result of our inability to timely file our annual report on Form 10-K for the year ended December 31, 2010, we were not in compliance with SEC reporting requirements.

Any failure to address the identified material weaknesses or any additional material weaknesses in our internal control could also adversely affect the results of the periodic management evaluations regarding the effectiveness of our internal control over financial reporting that are required to be included in our annual reports on Form 10-K. Internal control deficiencies could also cause investors to lose confidence in our reported financial information. We can give no assurance that the measures we may take in the future will remediate the material weaknesses identified or that any additional material weaknesses or restatements of financial results will not arise in the future due to a failure to implement and maintain adequate internal control over financial reporting or circumvention of these controls. In addition, even if we are successful in strengthening our controls and procedures, in the future those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our consolidated financial statements.

We own the options to acquire the mining and mineral rights underlying certain properties and if we fail to perform the obligations necessary to exercise these options we will lose our options and may cease operations.

We hold options to acquire the mineral and mining rights underlying properties located in northeastern Peru, subject to certain conditions. If we fail to meet the requirements of the agreement under which we acquired such options, including any payments and/or any exploration obligations that we have regarding these properties, we may lose our right to exercise the options to acquire the mineral and mining rights underlying these properties. If we do not fulfill these conditions, then our ability to commence or continue operations could be materially limited. In addition, substantially all of our assets will be put into commercializing our rights to the areas covered by these options. Accordingly, any adverse circumstances that affect the areas covered by these option agreements and our rights thereto would affect us and your entire investment in shares of our common stock. If any of these situations were to arise, we would need to consider alternatives, both in terms of our prospective operations and for the financing of our activities. Management cannot provide assurance that we will ultimately achieve profitable operations or become cash-flow positive, or raise additional debt and/or equity capital. If we are unable to raise additional capital in the near future, we will experience liquidity problems and management expects that we will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures, including ceasing operations.

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We have a limited operating history and have incurred losses that we expect to continue into the future.

We have not yet located any mineral reserve, nor are there any proven reserves on any of the properties for which we hold options, and we have never had any revenues from our operations. In addition, we have a very limited operating history upon which an evaluation of our future success or failure can be made. We have only recently taken steps in a plan to engage in the acquisition of interests in exploration and development properties, and it is too early to determine whether such steps will prove successful. Our business plan is in its early stages and faces numerous regulatory, practical, legal and other obstacles. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start-up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties, and our failure to do so could have a materially adverse effect on our financial condition.

No assurances can be given that we will be able to successfully complete the purchase of mining rights to any properties, including the ones for which we currently hold options. Our ability to achieve and maintain profitability and positive cash flow over time will be dependent upon, among other things, our ability to (i) identify and acquire properties or interests therein that ultimately have probable or proven mineral reserves, (ii) sell such mining properties or interests to strategic partners or third parties or commence the production of a mineral deposit, (iii) produce and sell minerals at profitable margins and (iv) raise the necessary capital to operate during this possible extended period of time. At this stage in our development, it cannot be predicted how much financing will be required to accomplish these objectives.

We have no known reserves and we may not find any mineral resources or, if we find mineral resources, the deposits may be uneconomic or production from those deposits may not be profitable.

Our due diligence activities have been limited, and to a great extent, have relied upon information provided to us by third parties. We have not established that any of the properties for which we hold options contain adequate amounts of gold or other mineral reserves to make mining any of the properties economically feasible to recover that gold or other mineral reserves, or to make a profit in doing so. If we do not, our business will fail. If we cannot find economic mineral resources or if it is not economic to recover the mineral resources, we will have to cease operations.

We may not have access to all of the supplies and materials we need to begin exploration that could cause us to delay or suspend operations.

Competition and unforeseen limited sources of supplies in the industry could result in occasional spot shortages of supplies, such as explosives, and certain equipment, such as bulldozers and excavators, that we might need to conduct exploration. We have not attempted to locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials. If we cannot find the products and equipment we need, we will have to suspend our exploration plans until we do find the products and equipment we need.

We do not have enough money to complete our exploration and consequently may have to cease or suspend our operations unless we are able to raise additional financing.

We presently do not have sufficient capital to exercise our options to acquire the mineral and mining rights underlying ~~certain~~ property located in northeastern Peru~~. Although~~ ~~management~~and ~~believes~~complete ~~that~~our ~~sources~~planned ofexploration ~~financing~~programs ~~are available~~on toour ~~complete the acquisition of these~~ property interests. No ~~over~~assurance ~~time, no assurances~~ can be given that ~~these~~sources of financing ~~sources~~are ~~will~~available ~~ultimately~~to ~~be sufficient~~complete orthe ~~available~~acquisition ~~when~~of ~~required~~these property interests. Other forms of financing, if available, may be on terms that are unfavorable to our stockholders.

As we cannot assure a lender that we will be able to successfully explore and develop our mineral properties, we may find it difficult to raise debt financing from traditional lending sources. We have traditionally raised our operating capital from sales of equity and debt securities, but there can be no assurance that we will continue to be able to do so. If we cannot raise the money that we need to continue exploration of our mineral properties, we may be forced to delay, scale back, or eliminate our exploration activities. If any of these were to occur, there is a substantial risk that our business would fail.

~~Our proposed~~In ~~acquisition~~order ofto ~~certain~~raise ~~mining~~any ~~claims~~financing ~~and~~from ~~leasehold~~the ~~interests~~sale ~~for exploration~~of ~~properties~~equity ~~located~~securities, inwe ~~Nevada~~need isto ~~subject~~increase toour ~~numerous~~authorized ~~conditions~~capital ~~and contingencies~~stock.

~~On December~~We 2are presently authorized to issue 300,000,000 ~~2009~~shares of common stock, weof ~~entered~~which ~~into~~approximately a187,517,618 ~~letter~~shares were issued and outstanding as of ~~intent~~May ~~with~~12, ~~Seabridge~~2011 ~~Gold~~and ~~Inc.~~approximately all of our remaining unissued shares are reserved for issuance to cover issuance obligations and the potential exercise of outstanding options, warrants and conversion of notes. We presently do not have sufficient available authorized capital to make securing additional financing from the sale of our common stock a ~~Canadian~~ ~~corporation~~viable ~~(“Seabridge”),~~option. We intend to ~~acquire~~submit ~~all~~a proposal to our shareholders to amend our Certificate of ~~Seabridge’s~~Incorporation ~~interests~~for ~~in certain~~the ~~mining~~purpose ~~claims~~of increasing the authorized shares of our common stock, but have not done so yet and ~~leasehold~~can ~~interests~~provide ~~for~~no ~~certain~~assurance ~~exploration~~that ~~properties located~~such inproposal ~~Nevada~~would be supported by our shareholders. ~~The~~ ~~parties~~Accordingly, ~~are~~we ~~negotiating~~may not have sufficient authorized capital available to raise the ~~final~~funds ~~terms~~necessary ofto ~~a definitive~~execute ~~agreement~~our business plan beyond the short term. ~~The~~

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~~terms~~We ~~of the~~have ~~definitive~~no ~~agreement~~known ~~being~~reserves ~~negotiated~~and ~~between~~we ~~the~~may ~~parties~~not ~~contemplates~~find ~~that closing~~any ofmineral ~~the~~reserves ~~transaction~~or, isif ~~anticipated~~we tofind ~~occur~~mineral ~~on or about May 15~~reserves, ~~2010. Closing~~ of the ~~transaction~~deposits ismay ~~subject~~be touneconomic aor ~~number~~production offrom ~~conditions and~~those ~~contingences,~~deposits ~~including~~may ~~the~~not ~~following:~~be profitable.

·Our ~~the~~due ~~approval~~diligence activities have been limited, and to a great extent, have relied upon information provided to us by third parties. We have not established that any of the ~~parties’~~properties ~~respective~~for ~~board~~which we own or hold options contain adequate amounts of ~~directors;~~gold ~~and~~or other mineral reserves to make mining any of the properties economically feasible to recover that gold or other mineral reserves, or to make a profit in doing so. If we do not, our business will fail. If we cannot find economic mineral resources or if it is not economic to recover the mineral resources, we will have to cease operations.

·We ~~receipt~~may ofnot ~~all~~have ~~necessary~~access ~~third~~to ~~party~~all ~~consents,~~of ~~approval~~the supplies and ~~waivers~~materials we need to begin exploration that could cause us to delay or suspend operations.

WeCompetition ~~can give~~and nounforeseen ~~assurance~~limited ~~that~~sources ~~these~~of supplies in the industry could result in occasional spot shortages of supplies, such as explosives, and ~~other~~certain ~~conditions~~equipment, ~~will~~such ~~ever~~as bebulldozers ~~satisfied~~and excavators, that we might need to ~~allow~~ usconduct exploration. We have not attempted to ~~complete~~locate or negotiate with any suppliers of products, equipment or materials. We will attempt to locate products, equipment and materials. If we cannot find the ~~proposed~~products ~~acquisition~~and inequipment ~~accordance~~we ~~with~~need, we will have to suspend our exploration plans until we do find the ~~proposed terms~~products orand atequipment ~~all~~we need.

In the event that we successfully complete the proposed acquisition of certain mining claims and leasehold interests for exploration properties located in Nevada, the consideration payable on the closing of this transaction would have a significant adverse impact on our resources.

On December 2, 2009, we entered into a letter of intent with Seabridge to acquire all of Seabridge’s interests in certain mining claims and leasehold interests for certain exploration properties located in Nevada. The consideration for these exploration properties was contemplated in the letter of intent to consist of the following: staged cash payments totaling $3 million; a $1 million convertible debenture; and 3 million shares of our common stock. We have to raise additional funds to meet our currently budgeted operating requirements for the next twelve months and presently would be unable to meet any obligations we may incur in connection with the contemplated acquisition of Seabridge’s interests in certain mining claims and leasehold interests for exploration properties located in Nevada. If we are unable to raise additional capital in the near future, we will experience liquidity problems and management expects that we will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures including ceasing operations. Even if we succeed in raising additional capital in the near future, the consideration payable on the closing of the contemplated transaction with Seabridge would have a significant adverse impact on our resources and may still result in the need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures including ceasing operations

Our success is dependent upon a limited number of people.

The ability to identify, negotiate and consummate transactions that will benefit us is dependent upon the efforts of our management team. The loss of the services of any member of our management could have a material adverse effect on us.

Our business will be harmed if we are unable to manage growth.

Our business may experience periods of rapid growth that will place significant demands on our managerial, operational and financial resources. In order to manage this possible growth, we must continue to improve and expand our management, operational and financial systems and controls, particularly those related to subsidiaries that will be doing business in Peru. We will need to expand, train and manage our employee base and/or retain qualified contractors. We must carefully manage our mining exploration activities. No assurances can be given that we will be able to timely and effectively meet such demands.

We may not be able to attract and retain qualified personnel necessary for the implementation of our business strategy and mineral exploration programs.

Our future success depends largely upon the continued service of board members, executive officers and other key personnel. Our success also depends on our ability to continue to attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations in Peru. Personnel represents a significant asset, and the competition for such personnel is intense in the mineral exploration industry. We may have particular difficulty attracting and retaining key personnel in the initial phases of our operations, particularly in Peru.

-Our ~~12 -~~officers and directors do not devote full time to the our operations.

Our officers do not devote full time to our operations. Until such time that we can afford executive compensation commensurate with that being paid in the marketplace, our officers will not devote their full time and attention to our operations. No assurances can be given as to when we will be financially able to engage our officers on a full-time basis.

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~~Our~~ As some of our officers and directors are located outside of the United States, you may have ~~conflicts~~no ofeffective ~~interest~~recourse against our us or our management for misconduct and domay not ~~devote~~be ~~full time~~able to ~~the~~enforce judgment and civil liabilities against our ~~operations~~officers, directors, experts and agents.

Our officers and directors may have conflicts of interest in that they are and may become affiliated with other mining companies. In addition, our officers do not devote full time to our operations. Until such time that we can afford executive compensation commensurate with that being paid in the marketplace, our officers will not devote their full time and attention to our operations. No assurances can be given as to when we will be financially able to engage our officers on a full-time basis.

Some of our officers and directors are located outside of the United States, you may have no effective recourse against our us or our management for misconduct and may not be able to enforce judgment and civil liabilities against our officers, directors, experts and agents.

Some of our directors and officers are nationals and/or residents of countries other than the United States, and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

Indemnification of officers and directors.

Our Certificate of Incorporation and Bylaws contain broad indemnification and liability limiting provisions regarding our officers, directors and employees, including the limitation of liability for certain violations of fiduciary duties. Our stockholders therefore will have only limited recourse against the individuals.

Risks Associated With Mining

All of our properties are in the exploration stage. There is no assurance that we can establish the existence of any mineral ~~resource~~reserve on any of our properties in commercially exploitable quantities. Until we can do so, we cannot earn any revenues from operations and if we do not do so we will lose all of the funds that we expend on exploration. If we do not discover any mineral resource in a commercially exploitable quantity, our business will fail.

We have not established that any of our properties contain any commercially exploitable mineral reserve, nor can there be any assurance that we will be able to do so. If we do not, our business will fail. A mineral reserve is defined by the ~~Securities~~SEC ~~and Exchange Commission~~ in its Industry Guide 7 (which can be viewed over the Internet at http://www.sec.gov/divisions/corpfin/forms/industry.htm#secguide7) as that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. The probability of an individual prospect ever having a “reserve” that meets the requirements of the ~~Securities and Exchange Commission~~SEC’s Industry Guide 7 is extremely remote; in all probability, our mineral resource property does not contain any ‘reserve’ and any funds that we spend on exploration will probably be lost.

Even if we do eventually discover a mineral reserve on one or more of our properties, there can be no assurance that we will be able to develop our properties into producing mines and extract those ~~resources~~reserves. Both mineral exploration and development involve a high degree of risk and few properties that are explored are ultimately developed into producing mines. If we do discover mineral ~~resources~~reserves in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to establish the extent of the ~~resource~~reserve, develop processes to extract it and develop extraction and processing facilities and infrastructure.

The commercial viability of an established mineral deposit will depend on a number of factors including, by way of example, the size, grade and other attributes of the mineral deposit, the proximity of the ~~resource~~reserve to infrastructure, such as a smelter, roads and a point for shipping, government regulation and market prices. Most of these factors will be beyond our control, and any of them could increase costs and make extraction of any identified mineral ~~resource~~ deposit unprofitable.

Mineral operations are subject to applicable law and government regulation. Even if we discover a mineral ~~resource~~reserve in a commercially exploitable quantity, these laws and regulations could restrict or prohibit the exploitation of that mineral ~~resource~~ deposit. If we cannot exploit any mineral ~~resource~~deposit that we might discover on our properties, our business may fail.

Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our business could fail.

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waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. There can be no assurance that we will be able to obtain or maintain any of the permits required for the continued exploration of our mineral properties or for the construction and operation of a mine on our properties at economically viable costs. If we cannot accomplish these objectives, our business could fail.

We believe that we are in compliance with all material laws and regulations that currently apply to our activities, but there can be no assurance that we can continue to do so. Current laws and regulations could be amended and we might not be able to comply with them, as amended. Further, there can be no assurance that we will be able to obtain or maintain all permits necessary for our future operations, or that we will be able to obtain them on reasonable terms. To the extent such approvals are required and are not obtained, we may be delayed or prohibited from proceeding with planned exploration or development of our mineral properties.

If we establish the existence of a mineral reserve on any of our properties, we will require additional capital in order to develop the property into a producing mine. If we cannot raise this additional capital, we will not be able to exploit the reserve and our business could fail.

If we do discover a mineral reserve on any of our properties, we will be required to expend substantial sums of money to establish the extent of the reserve, develop processes to extract it and develop extraction and processing facilities and infrastructure. Although we may derive substantial benefits from the discovery of a reserve, there can be no assurance that it will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis. If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail.

Because our property interest and exploration activities in Peru are subject to political, economic and other uncertainties, situations may arise that could have a significantly adverse material impact on us.

Our activities in Peru are subject to political, economic and other uncertainties, including the risk of expropriation, nationalization, renegotiation or nullification of existing contracts, mining licenses and permits or other agreements, changes in laws or taxation policies, currency exchange restrictions, changing political conditions and international monetary fluctuations. Future government actions concerning the economy, taxation, or the operation and regulation of nationally important facilities such as mines could have a significant effect on our plans and on our ability to operate. No assurances can be given that our plans and operations will not be adversely affected by future developments in those jurisdictions where we hold property interests.

Because we presently do not carry title insurance and do not plan to secure any in the future, we are vulnerable to loss of title.

We do not maintain insurance against title. Title on mineral properties and mining rights involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history characteristic of many mining properties. Disputes over land ownership are common, especially in the context of resource developments. We cannot give any assurance that title to such properties will not be challenged or impugned and cannot be certain that we will have or acquire valid title to these mining properties. The possibility also exists that title to existing properties or future prospective properties may be lost due to an omission in the claim of title. As a result, any claims against us may result in liabilities we will not be able to afford, resulting in the failure of our business.

Because we are subject to various governmental regulations and environmental risks, we may incur substantial costs to remain in compliance.

Our activities in Peru are subject to Peruvian and local laws and regulations regarding environmental matters, the abstraction of water, and the discharge of mining wastes and materials. Any significant mining operations will have some environmental impact, including land and habitat impact, arising from the use of land for mining and related activities, and certain impact on water resources near the project sites, resulting from water use, rock disposal and drainage run-off. No assurances can be given that such environmental issues will not cause our operations in the future to fail.

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The Peruvian and/or local government in the jurisdictions where we currently hold property interests could require us to remedy any negative environmental impact. The costs of such remediation could cause us to fail. Future environmental laws and regulations could impose increased capital or operating costs on us and could restrict the development or operation of any mines.

We have, and will in the future, engage consultants to assist us with respect to our operations in Peru. We are beginning to address the various regulatory and governmental agencies, and the rules and regulations of such agencies, in connection with the options for the properties in Peru. No assurances can be given that we will be successful in our efforts. Further, in order for us to operate and grow our business in Peru, we need to continually conform to the laws, rules and regulations of such country and local jurisdiction where we operate. It is possible that the legal and regulatory environment pertaining to the exploration and development of mining properties will change. Uncertainty and new regulations and rules could dramatically increase our cost of doing business, or prevent us from conducting our business; both situations could cause us to fail.

Mineral exploration and development is subject to extraordinary operating risks. We do not currently insure against these risks. In the event of a cave-in or similar occurrence, our liabilities may exceed our resources, which could cause our business to fail.

Mineral exploration, development and production involves many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Our operations will be subject to all the hazards and risks inherent in the exploration, development and production of ~~resources~~reserves, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence could cause us to fail.

Mineral prices are subject to dramatic and unpredictable fluctuations.

We expect to derive revenues, if any, from the extraction and sale of precious and base metals such as gold and silver. The price of those commodities has fluctuated widely in recent years, and is affected by numerous factors beyond our control including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of base and precious metals, and, therefore, the economic viability of any of our exploration projects, cannot accurately be predicted.

The mining industry is highly competitive and there is no assurance that we will continue to be successful in acquiring property interests. If we cannot continue to acquire interests in properties to explore for mineral ~~resources~~ reserves, we may be required to reduce or cease operations.

The mineral exploration, development, and production industry is largely unintegrated. We compete with other exploration companies looking for mineral resource properties. While we compete with other exploration companies in the effort to locate and license mineral resource properties, we will not compete with them for the removal or sales of mineral products from our properties if we should eventually discover the presence of them in quantities sufficient to make production economically feasible. Readily available markets exist worldwide for the sale of gold and other mineral products. Therefore, we will likely be able to sell any gold or mineral products that we identify and produce.

We compete with many companies possessing greater financial resources and technical facilities. This competition could adversely affect our ability to acquire suitable prospects for exploration in the future as well as our ability to recruit and retain qualified personnel. Accordingly, there can be no assurance that we will acquire any interest in additional mineral resource properties that might yield reserves or result in commercial mining operations.

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Risks Associated With Our Common Stock

Trading on the over-the-counter bulletin board may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is quoted on the over-the-counter bulletin board service of the Financial Industry Regulatory Authority (the “OTCBB”). Trading in stock quoted on the OTCBB is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTCBB is not a stock exchange, and trading of securities on the OTCBB is often more sporadic than the trading of securities listed on a quotation system like Nasdaq or a stock exchange like Amex. These factors may result in investors having difficulty reselling any shares of our common stock.

Because our common stock is quoted and traded on the OTCBB, short selling could increase the volatility of our stock price.

Short selling occurs when a person sells shares of stock which the person does not yet own and promises to buy stock in the future to cover the sale. The general objective of the person selling the shares short is to make a profit by buying the shares later, at a lower price, to cover the sale. Significant amounts of short selling, or the perception that a significant amount of short sales could occur, could depress the market price of our common stock. In contrast, purchases to cover a short position may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of our common stock. As a result, the price of our common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the OTCBB or any other available markets or exchanges. Such short selling if it were to occur could impact the value of our stock in an extreme and volatile manner to the detriment of our shareholders.

Our stock price is likely to be highly volatile because of several factors, including a limited public float.

The market price of our common stock is likely to be highly volatile because there has been a relatively thin trading market for our stock, which causes trades of small blocks of stock to have a significant impact on our stock price. You may not be able to resell shares of our common stock following periods of volatility because of the market’s adverse reaction to volatility.

Other factors that could cause such volatility may include, among other things:

·	potential or pending investigations, proceedings or litigation that involves or affects us;

·	risk that we will not be able to remediate identified material weaknesses in our internal control over financial reporting and disclosure controls and procedures;

·	risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration and development projects;

·	actual or anticipated fluctuations in our operating results;

·	the absence of securities analysts covering us and distributing research and recommendations about us;

·	we expect our actual operating results to continue to fluctuate;

·	we may have a low trading volume for a number of reasons, including that a large amount of our stock is closely held;

·	overall stock market fluctuations;

·	economic conditions generally and in the mining industries in particular;

·	announcements concerning our business or those of our competitors or vendors;

·	our ability to raise capital when we require it, and to raise such capital on favorable terms;

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·	changes in financial estimates by securities analysts or our failure to perform as anticipated by the analysts;

·	conditions or trends in the industry;

·	litigation;

·	changes in market valuations of other similar companies;

·	announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships or joint ventures;

·	future sales of common stock;

·	actions initiated by the SEC or other regulatory bodies;

·	existence or lack of patents or proprietary rights;

·	departure of key personnel or failure to hire key personnel; and

·	general market conditions.

Any of these factors could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

Because the SEC imposes additional sales practice requirements on brokers who deal in our shares that are penny stocks, some brokers may be unwilling to trade them. This means that you may have difficulty in reselling your shares and may cause the price of the shares to decline.

Our stock is a penny stock. The ~~Securities~~SEC ~~and Exchange Commission~~ has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.

In addition to the “penny stock” rules promulgated by the SEC, Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer 16 must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

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~~In addition~~ITEM to the “penny stock” rules promulgated by the Securities and Exchange Commission, Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer1B. ~~Prior~~Unresolved toStaff recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other informationComments. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

Indemnification of officers and directors.

Our Articles of Incorporation and Bylaws contain broad indemnification and liability limiting provisions regarding our officers, directors and employees, including the limitation of liability for certain violations of fiduciary duties. Our stockholders therefore will have only limited recourse against the individuals.

ITEM 1B. Unresolved Staff Comments.

None.

ITEM 2. Properties.

Description of our Mineral Property Interests

The Peru Property

Our property interests located in Peru are in the exploration stage and we refer to these properties as the "Peru Property." These properties are without known reserves and the proposed plan of exploration detailed below is exploratory in nature. These properties are described below.

We entered into a Mineral Right Option Agreement with Temasek Investments Inc. (“Temasek”), a company incorporated under the laws of Panama, on September 29, 2008 (the “Effective Date”), as amended and supplemented by Amendment No. 1, dated May 12, 2009 (“Amendment No. 1”), ~~and~~ Amendment No. 2, dated October 29, 2009 (“Amendment No. 2”), and Amendment No. 3, dated April 8, 2010 (“Amendment No. 3” and collectively, the “Option Agreement”), in order to acquire four separate options from Temasek, each providing for the acquisition of a twenty-five percent interest in certain mineral rights (the “Mineral Rights”) in certain properties in Peru, that ~~potentially resulting~~after ineach ~~the Company's acquisition~~ of ~~one hundred percent of~~ the ~~Mineral Rights upon exercise of all four~~ options~~. The~~ ~~Mineral~~were ~~Rights~~exercised ~~are currently~~would ~~owned~~result byin ~~Compañía~~our Minera Marañón S.A.C. (“Minera Marañón”). Bacon Hill Invest Inc. (“Bacon Hill”), a corporation incorporated under the laws of Panama, owns 999 shares of the 1,000 shares of Minera Marañón that are issued and outstanding. Temasek owns the single remaining share of Minera Marañón. The acquisition of ~~each twenty-five~~an ~~percent~~aggregate ~~interest~~one inhundred ~~the Mineral Rights will occur through the transfer by Temasek to us of twenty-five~~ percent of the ~~outstanding~~Mineral ~~shares of Bacon Hill upon exercise of each option~~Rights.

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A description of the Mineral Rights is set forth below:

Name	Area (hectares)	Dept.	Province	~~Province~~District	Observation
Aixa 2	1000	Loreto	Datem del Marañon	Manseriche
Alana 10	900	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 11	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 12	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 13	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 14	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 15	800	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 16	800	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 17	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 18	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 19	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 4	900	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 5	700	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 6	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 7	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 8	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Alana 9	1000	Loreto	Datem del Marañon	Manseriche	Fully overlap Zona de Amortiguamiento ANP
Bianka 5	1000	Loreto	Datem del Marañon	Manseriche
Castalia 1	1000	Loreto	Datem del Marañon	Manseriche
Castalia 2	1000	Loreto	Datem del Marañon	Manseriche
Castalia 3	500	Loreto	Datem del Marañon	Manseriche
Delfina 1	900	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 2	900	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 3	1000	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 4	700	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 5	1000	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Mika 1	600	Loreto	Datem del Marañon	Manseriche

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Name	Area (hectares)	Dept.	Province	Province	Observation
Delfina 1	900	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 2	900	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 3	1000	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 4	700	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Delfina 5	1000	Amazonas	Condorcanqui	Nieva	Partially overlap Zona de Amortiguamiento ANP
Mika 1	600	Loreto	Datem del Marañon	Manseriche
Mika 10	900	Loreto	Datem del Marañon	Manseriche	Partially overlap Zona de Amortiguamiento ANP
Mika 2	1000	Loreto	Datem del Marañon	Manseriche
Mika 3	900	Loreto	Datem del Marañon	Manseriche
Mika 4	1000	Loreto	Datem del Marañon	Manseriche
Mika 5	1000	Loreto	Datem del Marañon	Manseriche
Mika 6	1000	Loreto	Datem del Marañon	Manseriche
Mika 7	900	Loreto	Datem del Marañon	Manseriche
Mika 8	1000	Loreto	Datem del Marañon	Manseriche	Partially overlap Zona de Amortiguamiento ANP
Mika 9	1000	Loreto	Datem del Marañon	Manseriche
Rosalba 1	900	Loreto	Datem del Marañon	Manseriche
Rosalba 2	900	Loreto	Datem del Marañon	Manseriche
Rosalba 3	1000	Loreto	Datem del Marañon	Manseriche
Rosalba 4	1000	Loreto	Datem del Marañon	Manseriche
Rosalba 5	1000	Loreto	Datem del Marañon	Manseriche - Barranca

We exercised the initial twenty-five percent option, which provided for the acquisition of a twenty-five percent interest in the Mineral Rights, by paying Temasek a total of $750,000 and issuing 2,000,000 shares of our common stock to Temasek, on or about October 23, 2008 in accordance with the terms of the Option Agreement.

We exercised the second twenty-five percent option, resulting in our acquisition of an aggregate of a fifty percent interest in the Mineral Rights, by paying Temasek an additional $750,000 and issuing an additional 2,500,000 shares of our common stock to Temasek, on or about November 2, 2009 in accordance with the terms of the Option Agreement.

-On 19 April 23, 2010, we announced that we completed the exercise of the third and fourth twenty-five percent options, resulting in our acquisition of an aggregate 100% interest in the Mineral Rights, by fulfilling the following conditions:

~~Table~~· Payment to Temasek of ~~Contents~~US$1,000,000;

~~Under~~· ~~the terms~~Issuance ofto ~~the~~Temasek ~~Option~~of ~~Agreement,~~a wetotal ~~may~~of ~~exercise the third twenty-five percent option~~6,000,000 ~~resulting~~shares inof our ~~acquisition~~common stock (of awhich ~~seventy-five~~Temasek ~~percent~~acknowledged ~~interest~~that in2,000,000 ~~the Mineral~~shares ~~Rights,~~were ~~after~~previously weissued ~~have~~to ~~fulfilled~~Temasek ~~the~~in ~~following~~November ~~conditions:~~2009); and

· ~~Exercise~~Issuance of ~~the second twenty-five percent option, resulting in our acquisition of~~ a ~~fifty~~convertible ~~percent~~note ~~interest~~for ~~in the Mineral Rights~~US$7,000,000 ~~within 13 months from~~ (the ~~Effective~~“Convertible ~~Date (October 29, 2009~~Note”) orpayable asto ~~soon~~the asorder ~~practicable~~and ~~thereafter,~~the ~~(which~~direction ~~event~~of ~~occurred November 2, 2009);~~Temasek.

·Subsequent ~~Issuance~~to ofthe anreporting ~~additional~~period 2on January 20,~~000~~ 2011, $6,300,000 ~~shares~~of the principal of ~~our~~the Convertible Note was extinguished and converted into units (the “Units”) using the conversion price of $0.10 per Unit. Each Unit consists of one (1) share of common stock, topar ~~Temasek,~~value or$0.001 per share (“Common Stock”) and one (1) warrant to anpurchase ~~assignee~~one as(1) ~~indicated~~share byof ~~Temasek,~~Common ~~within~~Stock 13(“Warrant”). ~~months~~Each asWarrant is exercisable for a period of eight (8) months from the ~~Effective~~date ~~Date~~of ~~(October~~issuance 29at a price of $0.10 per share. The $700,000 ~~2009)~~remaining orprincipal asof ~~soon~~the asConvertible ~~practicable~~Note ~~thereafter~~outstanding has a term of three years and accrues interest at a rate of 12% per annum. Interest under the Convertible Note is payable annually and the principal is payable upon maturity. Any interest and principal due under the Convertible Note is convertible (~~which~~at ~~shares~~Temasek's ~~were~~option) ~~issued~~into inunits ~~November~~which ~~2009~~consist of one (1); share of our common stock and one (1) warrant to purchase one (1) share of our common stock at an exercise price of $1.10 per share. The conversion price per unit is fixed at $0.80 per unit.

·In ~~Payment~~connection with our acquisition of an ~~additional~~aggregate $3100% interest in the Mineral Rights,~~000,000~~ Temasek is entitled to ~~Temasek~~an onannual or2.5% ~~before~~net ~~March~~returns ~~31,~~royalty ~~2010~~related to the Mineral Rights.

WeThe ~~will require~~Mineral ~~additional~~Rights ~~financing~~are inowned ~~order~~by toCompañía beMinera ~~able~~Marañón toS.A.C. ~~exercise~~(“Minera ~~the~~Marañón”). Bacon ~~third twenty-five~~Hill ~~percent~~Invest ~~option~~Inc. ~~There~~ ~~can~~(“Bacon beHill”), noa ~~assurance~~corporation ~~that~~incorporated weunder ~~will~~the ~~be successful~~laws inof ~~securing~~Panama, ~~the~~owns ~~necessary~~999 ~~funding~~shares toof ~~exercise~~ the ~~third~~1,000 ~~twenty-five percent~~shares ~~option. Provided~~of weMinera ~~are~~Marañón ~~successful~~that inare ~~securing~~issued ~~additional financing,~~and weoutstanding. The ~~intend~~single toremaining ~~exercise~~share ~~the~~of ~~third~~Minera ~~twenty-five~~Marañón ~~percent~~by ~~option~~Temasek onas ~~or before~~nominee ~~March~~and ~~31,~~on ~~2010. In~~trust ~~the~~for ~~event~~our ~~that~~exclusive weand ~~are~~sole ~~unable~~benefit toand ~~secure additional~~interest. Temasek ~~financing~~is inobligated ~~order~~at toall betimes ~~able~~ to exercise ~~the~~all ~~third~~rights ~~twenty-five percent~~in ~~option~~respect inof the ~~time~~share ~~frame~~of ~~set~~Minera ~~forth~~Marañón ~~above~~it orholds ~~secure~~strictly anin ~~extension~~accordance ~~for payment,~~with our ~~ownership~~instructions. The acquisition of 100% interest in the Mineral Rights ~~may~~occurred bethrough ~~limited~~the transfer by Temasek to ~~our current~~us ~~fifty~~of ~~percent~~all ~~interest~~of the outstanding shares of Bacon Hill.

We may exercise the fourth twenty-five percent option, resulting in our acquisition of a one hundred percent interest in the Mineral Rights, after fulfilling the following conditions within eighteen months of the Effective Date (March 29, 2010):

· Payment of an additional $5,000,000 to Temasek, and

· Issuance of an additional 4,000,000 additional shares of our common stock to Temasek.

We will require additional financing in order to be able to exercise the fourth twenty-five percent option. There can be no assurance that we will be successful in securing the necessary funding to exercise the fourth twenty-five percent option. Provided we are successful in securing additional financing, we intend to exercise the fourth twenty-five percent option within eighteen months of March 29, 2010. In the event that we have exercised the third twenty-five percent option, but are unable to secure sufficient financing in order to be able to exercise the fourth twenty-five percent option in the time frame set forth above, our ownership interest in the Mineral Rights may be limited to a seventy-five percent interest, provided we have completed the exercise of the third twenty-five percent option.

If we are able to fulfill the conditions set forth above, resulting in our acquisition of a one hundred percent interest in the Mineral Rights, Temasek will hold its single share of Minera Marañón in trust for our sole benefit and hold the share strictly in accordance with our instructions.

In the event that we are able to acquire a one hundred percent interest in the Mineral Rights, Temasek would then be entitled to an annual 2.5% net returns royalty related to the Mineral Rights. However, if we pay Temasek $2,000,000 within ninety days of our acquisition of a one hundred percent interest in the Mineral Rights, Temasek will only be entitled to an annual 1.0% net returns royalty related to the Mineral Rights.

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If we fail to exercise the third twenty-five percent option, resulting in our continuing to hold our current fifty percent interest in the Mineral Rights but failing to acquire a one hundred percent interest in the Mineral Rights, the Option Agreement provides that we and Temasek will form a joint venture for the purpose of placing the Peru Property into commercial production. In the event that we enter into a joint venture agreement with Temasek, our responsibilities under the joint venture would include developing a feasible mining project and all necessary facilities and Temasek shall retain a carried free interest in the mining rights. If we enter into a joint venture with Temasek, but do not develop a feasible mining project within three years of the Effective Date (September 29, 2011), we will be required to pay Temasek an advance minimum mining royalty of $500,000 per year, which will be deducted from Temasek’s net return royalty on the Mineral Rights.

Expansion of Peru Property

On January 25, 2010 (the “Effective Date”), we entered into a Mineral Rights Option Agreement (the “Option Agreement”) with Temasek. Pursuant to the Option Agreement, we acquired three separate options from Temasek, each providing for the acquisition of an approximately one-third interest in certain mineral rights (the “Mineral Rights”), in certain properties in Peru ~~(the “Peru Property”)~~ that abut the other property interests we ~~already~~own ~~have~~ in Peru described above. Pursuant to the Option Agreement, the exercise of all three options would result in our acquisition of one hundred percent of the Mineral Rights. The Mineral Rights are currently owned by Minera Saramiriza S.A.C. (“Minera Saramiriza”), a corporation incorporated under the laws of Peru. Woodburn Investments, Inc. (“Woodburn”), a wholly-owned subsidiary of Temasek, owns 999 shares of the 1,000 shares of Minera Saramiriza that are issued and outstanding. Temasek owns the single remaining share of Woodburn. Our acquisition of each thirty-three percent interest in the Mineral Rights is structured to occur through the transfer to us of thirty-three percent of the outstanding shares of Woodburn upon the exercise of each of the three options.

A description of the Mineral Rights is set forth below:

Name	Area (ha)	Department	Province	District	Observation
Aixa 1	1000	Loreto	Datem del Marañon	Manseriche
Alana 1	600	Loreto	Datem del Marañon	Manseriche-Morona	Overlaps 010188704, 010188604, 010188504
Alana 2	600	Loreto	Datem del Marañon	Manseriche- Morona
Alana 3	800	Loreto	Datem del Marañon	Manseriche	Overlaps 010045107
Casandra 1	1000	Loreto	Datem del Marañon	Barranca-Manseriche
Casandra 2	1000	Loreto	Datem del Marañon	Barranca- Morona
Casandra 3	900	Loreto	Datem del Marañon	Barranca- Morona
Casandra 4	1000	Loreto	Datem del Marañon	Barranca
Casandra 5	1000	Loreto	Datem del Marañon	Barranca

We may exercise the initial option to acquire a thirty-three percent interest in the Mineral Rights by fulfilling the following conditions:

·	Issuance of 500,000 shares of our common stock to Temasek within thirty (30) days from the Effective Date (issued March 19, 2010);

· Payment of $250,000 to Temasek within twelve months of the Effective Date (paid on January 24, 2011); and

· Issuance of 1,000,000 shares of our common stock to Temasek or its designee within twelve months of the Effective Date (issued January 27, 2011).

Subsequent to the reporting period, we exercised the initial thirty-three percent option and acquired a thirty-three percent interest in the Mineral Rights by paying to Temasek the balance of the consideration required to exercise the initial thirty-three percent option. Since the execution of the Option Agreement, we have paid a total of $250,000 and have issued 1,500,000 shares of our common stock to Temasek in accordance with the terms of the Option Agreement.

We may exercise the second option to acquire the second, thirty-three percent interest in the Mineral Rights, resulting in the acquisition of a sixty-six percent interest in the Mineral Rights, by fulfilling the following conditions:

· Exercise of the initial option to acquire a thirty-three percent interest in the Mineral Rights;

· Payment of an additional $1,000,000 to Temasek within twenty-four months of the Effective Date; and

· Issuance of an additional 1,000,000 shares of our common stock to Temasek or its designee within twenty-four months from the Effective Date.

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·	Exercise of the initial option to acquire a thirty-three percent interest in the Mineral Rights;

·	Payment of an additional $1,000,000 to Temasek within twenty-four months of the Effective Date (January 25, 2012); and

·	Issuance of an additional 1,000,000 shares of our common stock to Temasek or its designee within twenty-four months from the Effective Date (January 25, 2012).

We may exercise the third option to acquire the final, thirty-four percent interest in the Mineral Rights, resulting in the acquisition of a one-hundred percent interest in the Mineral Rights, by fulfilling the following conditions:

·	Exercise of the first and second options to acquire an aggregate sixty-six percent interest in the Mineral Rights;

· Payment of an additional $2,000,000 to Temasek within thirty-six months of the Effective Date (January 25, 2013); and

· Issuance of an additional 2,000,000 shares of our common stock to Temasek or its designee within thirty-six months from the Effective Date (January 25, 2013).

Upon our acquisition of a 100% interest in the Mineral Rights, Temasek is entitled to an annual 2.5% net returns royalty. However, if we pay Temasek an additional $2,000,000 within ninety (90) days of its acquisition of a 100% interest in the Mineral Rights, Temasek will only be entitled to an annual 1.0% net returns royalty from us.

If we exercise the second, thirty-three percent option, resulting in the acquisition of a sixty-six percent interest in the Mineral Rights, but fail to exercise the final option and fail to acquire a 100% interest in the Mineral Rights, we and Temasek will form a joint venture in which we will be wholly responsible for developing a feasible mining project and all necessary facilities and Temasek shall retain a carried free interest in the mining rights. If we do not develop a feasible mining project within three years of the Effective Date, we will be required to pay Temasek an advance minimum mining royalty of $500,000 per year, which will be deducted from Temasek's net return royalty.

Exploration Program

Shortly after our initial acquisition of the ~~Peru~~ property interests in Peru in September 2008, we commenced the initial stages of our exploration and development program and ~~have~~ carried out the following activities ~~to date~~:

·	Completed an initial social base line study to document all surface rights owners and people resident in the project area;

·	Implemented a community relations program to inform local communities of the project and what potential opportunities that may exist for community involvement in the implementation phases of the development program;

·	Submitted a Declaración de Impacto Ambiental to the Ministry of Mines and Energy in Peru and received approval to start the exploration;

·	Completed the field work for the Evaluación de Impacto Ambiental semidetallado which, if approved by the Peruvian Ministry of Mines & Energy, will allow us to undertake extensive drilling and bulk sampling programs;

·	Acquired churn drilling equipment for further evaluation and development of resources;

· Set-up an operational base in the project area in the town of Saramiriza to continuously review the exploration program and prior experiences gained operating in this difficult terrain;

·	Contracted various consulting firms and experienced and knowledgeable individuals with specific skills in the exploration of alluvial deposits to assist us with the exploration and development of the Peru property; and

·	Commissioned and subsequently received a preliminary master plan which indicated the size and scope of our projected operations and areas where more information is required.

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The principle objective of our planned exploration and development program is to bring a dredge and appropriately matched floating plant onto the property to assist us in conducting trial mining tests which requires that we undertake the following actions:

·	Drill an area on the property where known mineralization exists at closely-spaced centers in accordance with mining industry standards;

·	Extend the resource though a wider-spaced program of reconnaissance drilling so as to indicate the potential size of the deposit;

·	Perform additional geotechnical and metallurgical studies to complement existing information in order to prepare the optimum processing route to be adopted in the exploitation phase; and

·	Prepare scoping, prefeasibility, and full feasibility studies.

~~An exploration~~In ~~base~~the ~~and~~first quarter of 2009, a ~~field~~churn ~~laboratory~~drill ~~have~~and ~~been~~ancillary ~~set~~equipment upwere purchased in the ~~town~~United ~~of Saramiriza~~States and shipped to Peru. The equipment cost approximately $85,000 and we ~~are~~acquired ~~currently~~such ~~reviewing~~funds through the ~~on-going~~issuance ~~exploration~~of ~~program~~securities ~~given~~ in private equity offerings. After the ~~experience~~process ~~gained~~of inimportation and transport to site, the ~~last~~initial ~~year~~phase of ~~operating~~the drilling program on the project commenced in ~~this~~late ~~difficult terrain~~July 2009. Drilling capabilities were increased by the purchase of a second-hand bangka drilling rig at a cost of $15,000.

InGold ~~the first~~bearing ~~quarter~~gravels ofwere ~~2009,~~intersected ain ~~Churn~~virtually ~~drill~~all ~~and~~of ~~ancillary equipment were purchased in~~ the ~~United~~twenty-six ~~States~~(26) ~~and~~holes ~~shipped~~drilled toas ~~Peru. The~~part ~~equipment~~of ~~cost approximately~~this ~~$85,000~~initial ~~and~~drilling weprogram ~~acquired~~with ~~such~~the ~~funds~~better ~~through~~mineralized ~~the~~horizons ~~issuance~~returning ~~of securities~~values in ~~private equity offerings. After~~ the ~~process~~60 ~~of importation~~to ~~and~~200 ~~transport~~mg/m3 torange ~~site~~(generally, ~~the~~grades ~~initial~~in ~~phase~~excess of ~~the~~60 ~~drilling~~mg/m3 ~~program~~are ~~on the~~considered ~~project~~economically ~~commenced~~viable) inwith ~~late~~reconnaissance ~~July~~holes ~~2009. Drilling~~up ~~capabilities~~to ~~were increased~~15 bykm ~~the~~apart ~~purchase~~indicating ofthe awidespread ~~second-hand~~distribution ~~Bangka drilling rig at a cost~~ of ~~$15,000. Two~~ ~~addditional~~gold ~~Bangka~~throughout ~~drill~~the ~~are~~Marañón ~~being manufactured for delivery in April 2010~~basin.

~~Gold bearing~~Concurrent ~~gravels~~with ~~were~~the ~~intersected~~drilling, pitting was carried out at locations where significant gold mineralization was encountered in ~~virtually~~drilling. Pitting ~~all~~on the same site as one of the ~~twenty~~bangka ~~seven~~holes ~~(27)~~gave ~~holes drilled~~comparable togold ~~date~~values ~~with~~for the ~~better~~bulk ~~mineralized~~sample ~~horizons~~from ~~returning~~the ~~values~~pit inand the ~~60 to~~bangka ~~200~~drill sample, 213 mg/m3 ~~range (generally~~and 208 mg/m3 respectively, ~~grades~~indicating that bangka drilling appears to be an effective evaluation method. In addition, river bank gravel outcrops and artisanal mine workings have been channel sampled and sedimentological studies have been carried out. Again, virtually all samples taken in ~~excess~~these programs have contained some level of 60gold. Channel ~~mg/m3~~sampling ~~are considered~~of ~~economically~~exposures ~~viable)~~in ~~with~~artisanal ~~reconnaissance~~workings ~~holes~~in uppaleo tochannels 15indicate kmaverage ~~apart indicating~~grades in the ~~widespread~~range ~~distribution~~of 120 to 350 mg/m3 with local accumulations of gold ~~throughout~~up ~~the~~to ~~Marañón basin~~550 mg/m3.

Concurrent with the drilling, pitting has been carried out at locations where significant gold mineralization was encountered in drilling. Pitting on the same site as one of the Bangka holes gave comparable gold values for the bulk sample from the pit and the Bangka drill sample, 213 mg/m3 and 208 mg/m3 respectively, indicating that Bangka drilling appears to be an effective evaluation method. In addition, river bank gravel outcrops and artisanal mine workings have been channel sampled and sedimentological studies have been carried out. Again, virtually all samples taken in these programs have contained some level of gold. Channel sampling of exposures in artisanal workings in paleo channels indicate average grades in the range of 120 to 350 mg/m3 with local accumulations of gold up to 550 mg/m3.

We believe that additional drilling is required to better quantify the boundaries of the alluvial gold mineralization and identify concentrations associated with paleo channels. We caution that the drill results previously reported do not in any way indicate the presence of a commercially viable mineral deposit. There is no assurance that a commercially viable mineral deposit exists on the properties underlying our mineral property interests in Perú and a great deal of further exploration is required before a final evaluation as to the economic and legal feasibility of future exploration is determined.

Detailed processing of the heavy mineral concentrates from the samples indicates a relationship between gold values and magnetite content, the two minerals being deposited together in “alluvial traps” (paleo channels) within the Marañón’s immense braided river system. The association of the gold with magnetic minerals provides a potential means of locating concentrations of mineralization. During the first quarter of 2010, we completed ground magnetic surveys over areas where mineralized gravels have been identified in order to obtain a “magnetic fingerprint”. Based on these results, we are planning an aggressive three month drill program at an estimated cost of US$300,000 As a further aid in understanding the sedimentological history of the Marañón river system and identifying target areas, we are obtaining Palsar Synthetic Aperture Radar imagery. This radar based satellite technology penetrates vegetation cover and is superior to multispectral satellite imagery in providing detailed surface morphology, essential when interpreting paleo river systems.

In the fourth quarter of 2009, we retained the services of an internationally recognized alluvial expert to direct and monitor the on-going exploration program, review results and ensure procedures conform to industry standards.

Detailed processing of the heavy mineral concentrates from the samples indicated a relationship between gold values and magnetite content, the two minerals being deposited together in “alluvial traps” (paleo channels) within the Marañón’s immense braided river system. The association of the gold with magnetic minerals provides a potential means of locating concentrations of mineralization. During the first quarter of 2010, we completed ground magnetic surveys over areas where mineralized gravels have been identified in order to obtain a “magnetic fingerprint”.

Based on the results from the initial phase of the drilling program and the ground magnetic surveys, we planned a Phase II drilling campaign that commenced in April 2010 and was recently completed in October 2010. In preparation for commencing this second phase of drilling activity, we further increased our drilling capabilities by purchasing two additional bangka drills that were manufactured and delivered to the property site in April 2010. The objective of this drilling was to determine if we can define reserves of sufficient size to sustain a fleet of high capacity dredges and floating plants in the future. The Phase II drilling campaign cost approximately US$500,000 to complete. The Phase II 100-hole program consisted of definition drilling within a 2.5 square kilometer grid “GSDG1” situated over a large paleo channel that was successfully drilled during the 26-hole initial phase of the drilling program referenced above. The grid was comprised of 4 lines, equally spaced at 250 meters apart. Along each line, holes were drilled every 100 meters to depths of up to 15 meters. Bulk samples collected by excavating small pits and shafts were used for metallurgical testing as well as to confirm drill results.

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WeAs a result of the Phase II drilling campaign, we have ~~developed~~ ~~and~~been ~~outline~~able ~~above~~to ~~the~~identify ~~initial~~three ~~stages~~large, variable-grade systems of mineralization. These systems lie near the surface and are at least 100 meters wide, an ~~extensive~~average ~~plan~~of 2.5 meters deep and no less than 600 meters in length. The first system of ~~exploration~~ ~~with~~gold mineralization, which we refer to as “HBD-33”, was discovered near the ~~principal~~mid-point ~~objective~~of GSDG1. Five holes were drilled using hand Banka drills at 20-meter spacing. The drilling yielded average gold grades of ~~determining~~159.3mg/cubic ~~whether~~meter ~~minerals~~(within ~~that exists~~a onrange of 101.1 to 216.0 mg/cubic meter). The width of the ~~property~~potential ~~are~~pay horizons averages 3.07 meters (10.07 feet) with a range of ~~sufficient~~2.2 ~~quantity~~meters to ~~support~~4.70 ~~commercial production~~meters. We ~~have~~The ~~commenced~~gold ~~our~~is ~~planned~~contained ~~exploration~~in ~~program~~volcanic-quartz type fluvial gravels beneath an average of only 2.73 meters (8.95 feet) of sandy overburden. The second system of gold mineralization, ~~but must~~which ~~secure~~we ~~additional~~refer ~~financing~~to inas “HBD-XX” trends northeast-southwest through GSDG1. Drilling, at 30-meter spacing, during the ~~near~~Phase ~~future~~II inprogram ~~order~~outlined toan beaverage ~~able~~grade ~~to sustain~~of ~~any~~86 ~~drilling~~mg/cubic ~~activity~~meter oralong wea ~~will~~linear be110 ~~forced~~meter to(361 ~~cease~~feet) ~~our~~channel ~~exploration~~with an average width of 40 meters (131 feet). The third system of gold mineralization returned values as high as 286.5 mg/m3 over a width of 60m and ~~development~~ ~~program~~a thickness of 2.0 meters.

In ~~addition~~ to the ~~foregoing,~~absence ~~we intend to carry out the geophysical evaluation~~ of ~~the~~ ~~property~~significant ~~and plan to continue drilling and test pitting for a period of at least 18 months. If we are unable to secure~~ additional ~~financing in the near future~~drilling, we will be unable to ~~sustain~~quantify ~~any~~the ~~drilling~~boundaries ~~activity~~of ~~and~~the ~~be forced~~alluvial togold ~~cease~~mineralization ~~our~~and ~~exploration~~identify ~~and~~concentrations ~~development~~associated ~~program~~with paleo channels. ~~Our~~We ~~plans currently~~caution ~~anticipate~~ that anresults ~~additional~~we ~~two~~received ~~hundred~~from ~~(200)~~the ~~holes~~Phase ~~will~~II bedrilling ~~drilled to~~campaign ado ~~depth~~not ofin ~~50m~~any atway ~~100m~~indicate ~~centers in~~ the ~~area~~presence of ~~known mineralization, with~~ a ~~view~~ ~~toward~~commercially ~~developing~~viable amineral ~~reserve~~deposit. ~~The~~Our ~~objective~~exploration ofprogram ~~this drilling~~ is to ~~define~~building ~~resources~~data ofin ~~sufficient~~order ~~size~~ to ~~sustain~~compile aan ~~fleet~~estimate of ~~high~~probable ~~capacity dredges~~reserves and ~~floating~~make ~~plants~~a inlater ~~the~~determination ~~future. Bulk~~as ~~samples~~to ~~collected~~whether ~~by excavating~~a ~~small~~commercially ~~pits~~viable ~~and~~mineral ~~shafts~~deposit ~~will~~exists beon ~~required~~the ~~for~~properties ~~metallurgical~~underlying ~~testing~~our ~~as well~~mineral asproperty tointerests ~~confirm~~in ~~drill results~~Perú. AtA ~~the~~great ~~same~~deal ~~time,~~of ~~mine~~further ~~development planning,~~exploration ~~process~~is ~~design,~~required ~~and~~before ~~other engineering studies will be conducted with~~ a ~~view~~ tofinal ~~completing~~evaluation aas ~~feasibility study within a twenty-four month period. Permitting is anticipated~~ to ~~be initiated as early in~~ the ~~exploration~~ economic and ~~development~~legal ~~cycle~~feasibility asof ~~possible,~~future soexploration ~~that~~is ~~trial or pilot dredging can be started as soon as feasibility has been established~~determined.

~~Our current~~Based ~~cash~~ on ~~hand~~these isresults, ~~insufficient~~we sought to ~~complete~~implement ~~any~~a ofsmall-scale test mining operation on the ~~activities~~2.5 ~~set~~square ~~forth in~~kilometer grid that was the subject of our ~~planned~~Phase ~~exploration~~II ~~program. If~~drilling wecampaign ~~are~~as ~~unable~~a topreliminary ~~secure additional~~step ~~financing~~towards indetermining the ~~near~~feasibility ~~future,~~of wefull-scale ~~will~~production. We bebelieve ~~forced~~that toa ~~cease~~pilot ~~our exploration~~operation should deliver important data that reflects on the potential dredging and ~~development~~gold ~~program~~separation possibilities of this project. ~~Provided~~A ~~that~~small-scale wetest ~~are~~mining ~~able~~operation will also be helpful to ~~secure~~ ~~additional~~determine ~~financing,~~if wethe ~~anticipate~~proposed ~~that~~gold weseparation ~~will~~equipment ~~incur~~is viable in the ~~following costs~~project's ~~for~~environment and if the ~~next~~recoverable ~~twelve~~grades ~~months:~~of gold are sufficient to sustain such an operation.

Activity	$USD
PROJECT COSTS:
Property-related costs		148,800
Environmental/Social permits		593,100
Exploration		1,015,094
Field costs		263,708
Travel expenses		154,160
Community Relations		211,429
Administration on site		69,857
Personnel		439,674
ADMINISTRATION		268,480
EQUIPMENT PURCHASE		334,000
TOTAL	$	3,498,302

On January 18, 2011, we entered into an Agreement (the “Agreement”) with Swiss Mining S.A., a limited liability company organized and incorporated under the laws of Perú (“Swiss Mining”). Pursuant to the Agreement, Swiss Mining will carry out a test mining operation on the MIKA 2 concession located in the Peruvian Province of Datem del Marañon, District of Manseriche (the “MIKA 2 Concession”). The area encompassing the MIKA 2 concession is the 2.5 square kilometer grid that was the subject of the our Phase II drilling campaign.

~~Location~~ Swiss Mining will be responsible and ~~Access~~liable for all work, services, labor, materials, equipment, supplies and other related costs necessary to implement the test mining operation. The costs related to this test mining operation, which is expected to involve the processing of approximately 150,000 cubic meters of placer material, are anticipated to be approximately US $425,000. The parties have agreed to an allocation of revenues, if any, from the sale or other disposition of ores, concentrates or minerals produced from the MIKA 2 concession (“Net Returns”) equal to thirty percent (30%) to us and seventy percent (70%) to Swiss Mining until the agreed upon costs of US $425,000 are fully covered. Thereafter, any Net Returns beyond this cost recovery shall be divided equally between Swiss Mining and us on a 50/50 basis. Notwithstanding the foregoing, we agree to negotiate a different allocation of Net Returns so long as Swiss Mining has not recovered its costs of US $425,000 should the price of gold drop below US $1300 per ounce or increase above $1500 per ounce for at least 5 consecutive business days.

AtThe ~~this time,~~test ~~the~~mining ~~Gold~~operation ~~Sands~~commenced ~~Project~~on inMarch ~~Peru is our principal project. It comprises an area of 46~~28,~~100~~ ~~ha (461~~2011 ~~square kilometers) along the interface of the Andean chain~~ and ~~the Amazon~~we ~~foreland~~anticipate ~~basin~~it inwill ~~northeastern~~continue ~~Peru. We~~for ~~have~~a ~~established~~duration ~~land positions in two out~~ of ~~the~~six ~~three alluvial camps that exist in this area (the Alegría, Condorcanqui, and Manseriche Alluvial Camps)~~months. Of ~~these,~~Under the ~~Manseriche~~ ~~Camp~~terms isof the ~~largest. These~~Agreement, ~~camps~~we ~~straddle~~have the ~~boundary~~right ~~of the~~to ~~Loreto~~monitor, ~~(eastern)~~at ~~and~~our ~~Amazonas~~own ~~(western)~~expense, ~~departments~~all ofactivities ~~Northeastern~~performed ~~Peru approximately~~by ~~350~~Swiss ~~kilometers~~Mining ~~from~~or ~~the~~its ~~regional~~subcontractors ~~center~~under ofthis ~~Iquitos~~Agreement ~~(population 400~~including,~~000)~~ ~~which~~but ~~lies~~not onbe ~~the~~limited ~~Amazon River. Both Iquitos~~ to, the ~~east,~~right ~~as well as Tarapoto~~ to ~~the~~make ~~south~~site ~~are~~inspections ~~served~~at ~~with~~any ~~daily~~time, ~~flights~~to ~~from Lima. The~~bring ~~project~~experts ~~area can be reached from either of these towns by charter flights while supplies~~ and ~~heavy~~consultants ~~equipment~~onsite ~~can~~to beexamine ~~barged in from either Yurimaguas (on the Rio Huallaga)~~ or ~~Iquitos,~~evaluate orwork ~~trucked~~ in ~~from~~progress ~~Bagua~~or oncompleted awork, ~~fair weather road~~ to ~~the~~examine ~~village of Saramiriza located in~~ the ~~center~~books, ofledgers, ~~the Manseriche~~documents, ~~Alluvial Camp along the southwestern bank of the Rio Marañón~~papers, ~~roughly in~~and ~~the~~records ~~center~~pertinent ofto ~~the~~this ~~project~~Agreement ~~area. We have established a logistics~~ and ~~administration~~to ~~base~~observe ~~and~~personnel ~~field laboratory~~ in ~~the~~every ~~village~~phase of ~~Saramiriza located~~their inperformance ~~the center~~ of the ~~Manseriche~~related ~~field on the southeastern bank of the Rio Marañón~~work.

Initial results from the test mining operation appear to be favorable, but we caution that these results have not been independently verified and could be the product of isolated hot spots indicating higher than usual gold yields in the material mined. For this reason, we are not going to extrapolate any data based upon the yields to date or reach any conclusions about potential alluvial gold yields based on the limited data we have received from just a few weeks from the test mining operation. We will require significantly more data in order to determine whether the objectives of the test mining operations have been satisfied.

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~~The following~~In ~~map~~the ~~shows~~event that the ~~general~~foregoing ~~location~~test mining operation on the MIKA 2 concession provides data that reflects positively on the potential dredging and gold separation possibilities of this project, we plan to design a Phase III drilling campaign to expand the ~~Mineral~~Phase ~~Rights~~II drill program beyond the initial 2.5 square kilometer exploration area to other areas of suspected high mineralization within the Peru Property consisting of a total of 461 square kilometers in order to further define the resource and potential of the project. However, the implementation of any further drilling activity is dependent on our ability to a secure additional financing. If we ~~initially acquired:~~are unable to secure additional financing for these activities, we will be unable to commence a Phase III drilling campaign until such time that we are able to secure sufficient financing.

In addition to the foregoing drilling program, we intend to carry out the geophysical evaluation of the property and plan to continue drilling and test pitting for a period of at least 18 months. We are also conducting mine development planning, process design, and other engineering studies will be conducted with a view toward completing a feasibility study within a twenty-four month period. Permitting is anticipated to be initiated as early in the exploration and development cycle as possible, so that trial or pilot dredging can be started as soon as feasibility has been established.

In May 2010, we initiated the process for expanding our drill permits and also are concluding the Environmental Impact permit, which will allow us to explore the entire area that comprises the Peru Property and allow for drilling of up to 428 additional holes.

While we have commenced our planned exploration program, we must secure additional financing in order to be able to sustain drilling activity beyond the scope of the foregoing test mining operation and commence a Phase III drilling campaign or we will be forced to cease our exploration and development program. We anticipate that we will incur the following exploration costs for the year ending December 31, 2011:

Activity	$USD
PROJECT COSTS:
Property-related costs		12,000
Environmental/Social permits		159,300
Exploration		108,000
Field costs		84,000
Travel expenses		134,000
Administration on site		174,000
ADMINISTRATION		279,600
TOTAL	$	950,900

Location and Access

At this time, the Gold Sands Project in Peru is our principal project. It comprises an area of 46,100 ha (461 kilometers) along the interface of the Andean chain and the Amazon foreland basin in northeastern Peru. We have established land positions in two out of the three alluvial camps that exist in this area (the Alegría, Condorcanqui, and Manseriche Alluvial Camps). Of these, the Manseriche Camp is the largest. These camps straddle the boundary of the Loreto (eastern) and Amazonas (western) departments of Northeastern Peru approximately 350 kilometers from the regional center of Iquitos (population 400,000) which lies on the Amazon River. Both Iquitos to the east, as well as Tarapoto to the south are served with daily flights from Lima. The project area can be reached from either of these towns by charter flights while supplies and heavy equipment can be barged in from either Yurimaguas (on the Rio Huallaga) or Iquitos, or trucked in from Bagua on a fair weather road to the village of Saramiriza located in the center of the Manseriche Alluvial Camp along the southwestern bank of the Rio Marañón, roughly in the center of the project area. We have established a logistics and administration base in the village of Saramiriza located in the center of the Manseriche field on the southeastern bank of the Rio Marañón.

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The following map shows the general location of the ~~mineral rights that abut the~~ Mineral Rights ~~depicted above which~~ we initially acquired ~~to expand our property interests~~ in Peru:

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The following map shows the general location of the mineral rights that abut the Mineral Rights depicted above which we acquired to expand our property interests in Peru:

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Previous Exploration History

A description of the work carried out on the property which comprises the Mineral Rights since its discovery is as follows:

Year	~~Description of Prior Exploration Work~~	Description of Prior Exploration Work
1940s	~~A German company operated a 10 meter dragline some 10 kilometers downstream from Saramiriza at Puerto Elisa. This company left as a consequence of World War II.~~	A German company operated a 10 meter dragline some 10 kilometers downstream from Saramiriza at Puerto Elisa. This company left as a consequence of World War II.
1979-80	~~Cia Panasa exploited the El Banco Island, 14 kilometers northwest from Saramiriza. Heavy earth moving equipment was used with positive results.~~	Cia Panasa exploited the El Banco Island, 14 kilometers northwest from Saramiriza. Heavy earth moving equipment was used with positive results.
1983	~~A group of Canadians operated a small suction dredge south of Saramiriza near the oil pipeline. They retired for technical and judicial reasons resulting from their proximity to the pipeline.~~	A group of Canadians operated a small suction dredge south of Saramiriza near the oil pipeline. They retired for technical and judicial reasons resulting from their proximity to the pipeline.
1989	~~Mutiferros SA, a Brazilian company, introduced four suction dredges, but discovered that suction dredges were inappropriate.~~	Mutiferros SA, a Brazilian company, introduced four suction dredges, but discovered that suction dredges were inappropriate.
1990-92	Cia Monica de Iquitos drilled off a 1000 ha lease and proved-up grades of some 300mg/m3 to a depth of 32 meters. They were unable to finance the project, and the lease was abandoned. This lease was subsequently picked-up by Lomas del Marañón SA in 1995.	Cia Monica de Iquitos drilled off a 1000 ha lease and proved-up grades of some 300mg/m3 to a depth of 32 meters. They were unable to finance the project, and the lease was abandoned. This lease was subsequently picked-up by Lomas del Marañón SA in 1995.
1994	Matsag Minerals, a company controlled by Glencor of Switzerland, acquired a number of leases near Puerto Elisa covering a large abandoned meander where the river had straightened its course subsequent to 1954. They installed a three-foot bucket line dredge which was intended as a bulk sampling tool, although no drilling was done. These leases were subsequently acquired by Lomas del Marañón.	Matsag Minerals, a company controlled by Glencor of Switzerland, acquired a number of leases near Puerto Elisa covering a large abandoned meander where the river had straightened its course subsequent to 1954. They installed a three-foot bucket line dredge which was intended as a bulk sampling tool, although no drilling was done. These leases were subsequently acquired by Lomas del Marañón.
1995-97	~~Lomas del Marañón installed a good camp and operated a floating backhoe/ washing plant which was operated despite a poorly designed treatment plant of sluices which gave low recoveries.~~	Lomas del Marañón installed a good camp and operated a floating backhoe/ washing plant which was operated despite a poorly designed treatment plant of sluices which gave low recoveries.
1998	~~IHC Meerwede of Holland undertook preliminary metallurgical test work and engineering studies.~~	IHC Meerwede of Holland undertook preliminary metallurgical test work and engineering studies.
1999-2000	Brazilian private interests, under the technical direction of an experienced and well regarded alluvial engineer Peter Rich, established viability and attempted to get the project financed in Canada. This work was then checked by a Russian consulting company, Sojuzkarta, which used a ten inch rotary helicoid drill to check holes down to 18 meters. In addition, they took bulk samples by backhoe. Their drill results as well as those from the collection of 85 m3 bulk samples were used to estimate a grade of 295 mg/m3 using a finess of 850 for correction to pure gold. This number is considered to be an underestimate as recovery was done utilizing 12 m X 0.7m sluices with jute carpets which would not have been effective for the recovery of fine gold. Due to the low gold price at the time, as well as the conservative approach adopted by major mining companies, the project failed to get traction.	Brazilian private interests, under the technical direction of an experienced and well regarded alluvial engineer Peter Rich, established viability and attempted to get the project financed in Canada. This work was then checked by a Russian consulting company, Sojuzkarta, which used a ten inch rotary helicoid drill to check holes down to 18 meters. In addition, they took bulk samples by backhoe. Their drill results as well as those from the collection of 85 m3 bulk samples were used to estimate a grade of 295 mg/m3 using a fineness of 850 for correction to pure gold. This number is considered to be an underestimate as recovery was done utilizing 12 m X 0.7m sluices with jute carpets which would not have been effective for the recovery of fine gold. Due to the low gold price at the time, as well as the conservative approach adopted by major mining companies, the project failed to get traction.
2007-08	Temasek Investments Inc, reacting to recommendations originally made by Peter Rich, consolidated the project area by staking additional ground in the Alegria, Condorcanqui, and Manseriche Alluvial Camps.	Temasek Investments Inc, reacting to recommendations originally made by Peter Rich, consolidated the project area by staking additional ground in the Alegria, Condorcanqui, and Manseriche Alluvial Camps.

Geology and Mineralization

According to reports of the Ministry of Mines & Energy (MEM), Peru annually produces some six million ounces of gold. Of this, nearly fifty percent is derived from Peru’s largest gold mine, Yanacocha (Newmont), and close to ten percent comes from the alluvial workings in the Madre de Dios river system. Alluvial production in Peru has recently risen from about 200000 oz Au in 1991 to over 500000 oz Au in 2005.

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Although Peru has numerous small alluvial gold occurrences, it is generally agreed that there are only four major alluvial gold fields: Marañón-Santiago, Iquitos, Ucayali, and Madre de Dios. Large scale alluvial gold deposits tend to form in environments associated with convergent plate boundaries, particularly at the interface between fold belts and foreland basins. In addition, a necessary requirement for the development of such gold deposits is a metaliferous (gold-rich) hinterland and a river system that can transfer gold from the zone of production in the upper reaches of the drainage basin, along the main trunk of the river system (zone of transfer) to the zone of deposition, usually where the river profile flattens-out at the limit between the highlands and alluvial plains.

In the case of the Manseriche Alluvial Camp, the Marañón and Santiago rivers rise from peak elevations of 2900 meters and 3500 meters respectively, and travel a distance of some 900 kilometers before converging at the Manseriche Gorge which lies at an elevation of 170 m asl. From there, the Marañón (and later the Amazon) must travel another 4000 kilometers before reaching the Atlantic Ocean. With respect to a metalliferous hinterland, the Marañón-Santiago drainage basin is home to some of the largest gold deposits and gold mining operations in the world. These include Newmont’s Yanacocha (40 m oz Au), Goldfield’s Cerro Corona (which currently produce 350000 oz Au per annum), and Aurelian’s Fruta del Norte deposit (14 m oz Au).

While the geology of the project area has no effect on the gold mineralization other than the morphological control of the Rio Marañón, it is the sequence of geological events which has importance in the formation of the “gold sands” in the Manseriche Camp.

The age of most of the gold mineralization in the highlands of the Marañón-Santiago river system is tertiary, and specifically Miocene. However, Eocene-aged tectonism resulted in the formation of the eastern foothills of the Andes which effectively formed a barrier directing all erosion from the hinterland towards a basin on the western side of the Manseriche Gorge. Glacial erosion of the gold deposits in the hinterland resulted in tills and moraines which were subsequently concentrated in glacio-fluvial deposits by melting ice and intense rains in interglacial periods of which a number have been identified in Peru. These sediments were retained by the eastern fold belt of anticlines.

What may have been a key event was the Pajacuas thrust event during the Pliocene Era, which led to the breaching of the closed basin and the subsequent formation of the Manseriche Gorge. This released the gold-rich glacio-fluvial sediments to be reconcentrated and deposited in the Rio Marañón flood plain east of the Gorge.

The sequence of constant erosion, glacio-fluvial concentration, fluvial transport, collection in an intermediate (or series of intermediate) basin(s), and final alluvial concentration in the Rio Marañón flood plain, provided the mixing and concentration which accounts for the regular gold values in the sands and gravels as indicated by the ~~report compiled by~~ Cia Monica de Iquitos report.

Termination of Agreement Relating to Possible Acquisition of Nevada Mineral Claims and Leasehold Interests

On September 27, 2010, we announced the mutual termination of the previously announced Asset Purchase Agreement, dated as of April 1, 2010, as amended by Amendment No. 1, dated as of July 13, 2010 (collectively, the “Purchase Agreement”), with Seabridge Gold Corporation, a Nevada corporation (“Seabridge”), Pacific Intermountain Gold Corporation, a Nevada corporation (“PIGC”), and Seabridge Gold Inc., a Canadian corporation (“SEA”) (collectively, Seabridge, PIGC and SEA are referred to as “Seabridge”). The Purchase Agreement set forth the terms under which we were to have purchased all of Seabridge’s interests in certain exploration properties located in Nevada, along with certain data and contracts related thereto. The parties agreement to terminate the Purchase Agreement was effective as of September 23, 2010. Under the terms of the Purchase Agreement, we are not entitled to recover: (i) our $302,260 payment to Seabridge for property fees due to the Bureau of Land Management in July 2010, (ii) our $200,000 payment to Seabridge made in exchange for a no-shop provision in the letter of intent entered into between the parties, and (iii) our $25,000 payment made on August 20, 2010, or a total of $527,260.

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Termination of Assignment Agreements for Argentinean Properties

On December 12, 2007, we entered into an assignment agreement with Proyectos Mineros S.A. (“PMSA”) (formerly Recursos Maricunga S.A.) to acquire PMSA’s right to explore and an option to purchase certain mineral rights on properties known as the Atena Gold Project located in the Salta Province of Argentina (the “Atena Property”). Effective March 17, 2008, we entered into an assignment agreement with PMSA, whereby PMSA assigned to us PMSA’s right to explore and an option to purchase a 90% interest in the mineral rights of three mining properties referred to as “Amira”, “Amira Norte” and “Esparta II”, located in the Province of Salta, Argentina (the “Amira-Esparta Properties”). On January 8, 2008, we entered into an assignment agreement with PMSA to acquire PMSA’s right to explore and option to purchase certain mineral rights on properties known as the Cerro Amarillo Property located in the Departamento Malargue, Province of Mendoza, Argentina (the “Cerro Amarillo Property”). We collectively refer to the Atena, Amira-Esparta and Cerro Amarillo Properties as the “Argentinean Properties.”

In light of the current economic environment, our management, in the second quarter of fiscal 2009, determined that it was necessary to reassess the Company’s current direction and proposed plans for exploration. In connection with this review, we announced that we were suspending our exploration program on the Argentinean Properties for at least the remainder of 2009 and would allocate our resources exclusively to pursue the exploration and development of our property interests in northeastern Peru.

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We continued to monitor the current economic environment globally and within Argentina and noted an increasing trend toward instability within Argentina. Rising and excessive inflation rates in Argentina significantly increased the costs of our proposed operations in Argentina beyond our initial expectations. After further evaluation, we noted that Argentinean governmental bodies were pursing policies and regulations which would have adversely impacted our planned operations in Argentina. The existence of a working capital deficiency added support to our conclusion that it is presently not the best allocation of our resources to conduct exploration activities in two different countries. For the foregoing reasons, we determined it to be in our best interest to seek to dispose of our interests in the Argentinean Properties as soon as practicable so as to prevent any default on any of these underlying option agreements.

We reviewed our available alternatives and canvassed a number of qualified parties in an attempt to dispose of our interests in the Argentinean properties for value. As a result of our inability to locate an interested party to enter into a transaction to dispose of our interests in the Argentinean Properties for value, we determined to terminate each of the assignment agreements under which we held the option to acquire the mineral and mining rights underlying these Argentinean properties. We determined that terminating these assignment agreements at this time was in our best interests in order to avoid incurring any additional obligations under each of the respective assignment agreements. In November 2009, we sent each of the notice of termination letters. The termination of the assignment agreement relating to Atena and Amira-Esparta Properties was effective immediately and the termination date of the assignment agreement relating to the Cerro Amarillo Property was effective thirty days following the date of the termination notice.

As a result of our termination of each of the assignment agreements under which we held the option to acquire the mineral and mining rights underlying properties located in the Salta and Mendoza provinces of Argentina, our rights under these agreements reverted back to the assignor and we are not be entitled to recover any of the consideration we have paid, which is an aggregate of 4,100,000 shares of our common stock and $70,000 in cash. Proyectos Mineros S.A. (“PMSA”) (formerly Recursos Maricunga S.A.) is the assignor for each of the properties located in the Salta and Mendoza provinces of Argentina. Dr. Willem Fuchter, who served as our Chief Executive Officer and member of our board of directors from January 10, 2008 until his resignation from both positions on September 25, 2009, is the president and director of PMSA and holds a 50% ownership interest in the voting securities of PMSA.

~~Letter of~~- ~~Intent~~30 -

On December 2, 2009, we entered into a letter of intent with Seabridge Gold Inc., a Canadian corporation (“Seabridge”), to acquire all of Seabridge’s interests in certain mining claims and leasehold interests for exploration properties located in Nevada. The properties subject to the contemplated transaction comprise interests in 2,141 claims in Nevada covering more than 30 exploration projects with known gold occurrences. Most of the claims are situated in Nevada's prolific Walker Lane gold belt. Closing of the transaction, which was anticipated to occur on or about January 31, 2010, is subject to satisfactory completion of both parties’ due diligence, regulatory approval and the execution of a binding definitive agreement.

On February 24, 2010, we extended the letter of intent we entered into with Seabridge in recognition that final documentation and legal due diligence for the transaction has not yet been completed. The parties are negotiating the final terms of a definitive agreement. The terms of the definitive agreement being negotiated between the parties contemplates that closing of the transaction is anticipated to occur on or about May 15, 2010. Closing of the transaction is subject to a number of conditions and contingences, including the following:

Based on the letter of intent, the purchase price for the exploration properties is anticipated to consist of three elements: (1) staged cash payments totaling $3,000,000; (2) a $1,000,000 million convertible debenture; and (3) 3,000,000 shares of our common stock.

The letter of intent and the subsequent extension contemplates that $3,000,000 in cash would be payable as follows: $200,000 payable immediately upon execution of the letter of intent; $800,000 payable upon the closing of the sale of the exploration properties; $1,000,000 payable on April 30, 2010 and the final $1,000,000 would be payable pursuant to the terms of a secured promissory note due on the first anniversary of the closing, of the transaction, with accrued interest at 8% per year.

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The letter of intent contemplates that the $1,000,000, two-year secured convertible debenture would be due on the second anniversary of the closing of the transaction and would accrue interest at 8% per year, payable quarterly. The debenture would be redeemable by us at any time prior to maturity upon payment of $1,250,000. If not redeemed, the debenture and any accrued interest are convertible by Seabridge into common shares of our common stock at $1.00 per share. Our obligations as contemplated under the promissory note and the debenture would be secured by the exploration properties purchased in the transaction.

The letter of intent contemplates that 3,000,000 shares of our common stock would be issued in two separate tranches. The first tranche, consisting of 1,000,000 shares, would be issued on the closing of the sale of the properties. The second tranche, consisting of 2,000,000 shares, would be issued, but held in escrow until the third anniversary of the closing or until confirmation that the properties host a measured and indicated gold resource of 1 million ounces or more, whichever occurs first.

Closing of the transaction, which is anticipated to now occur on or about May 15, 2010, is subject to a number of conditions and contingences, including the following:

· the negotiation of a definitive merger agreement on terms acceptable to both parties;

· the approval of the parties’ respective board of directors; and

· receipt of all necessary third party consents, approval and waivers.

We are in the process of negotiating towards the successful completion of the proposed acquisition, but we can give you no assurance that these and other conditions will ever be satisfied to allow us to complete the proposed acquisition.

ITEM 3. Legal Proceedings.

~~None~~On March 30, 2011, we received a copy of a formal order of investigation issued by the United States Securities and Exchange Commission (“SEC”) regarding possible violations of the securities laws including securities registration requirements, financial reporting and/or market manipulation believed to have been committed by us, our officers, directors, employees, partners, subsidiaries, affiliates and/or other persons. We received a subpoena requesting the delivery of certain documents to the SEC. We have been cooperating fully, and intend to continue to cooperate fully, with the SEC in regards to this investigation.

At this time, it is not possible to predict the outcome of the investigation. In the event the SEC investigation leads to action against any of our current or former directors or officers, or the Company itself, the trading price of our common stock may be adversely impacted. In addition, the SEC investigation may result in the incurrence of significant legal expense, both directly and as the result of any indemnification obligations. This investigation may also divert management’s attention from our operations which may cause our business to suffer. If we are subject to any adverse findings, we could be required to pay damages or penalties or have other remedies imposed on us which could have a material adverse effect on our business. We have no insurance coverage to cover any portion of our defense cost or any amounts that we may be required to pay in connection with the resolution of this investigation.

In January 2008, a contractor was critically injured in an automobile accident while working for us in the area referred to as the Atena Project located in northwestern Argentina. The contractor’s family has filed a claim in the Argentina court system seeking monetary damages in the amount of $300,000 from the driver of the automobile, who is considered an employee under Argentinean labor law. Although we were not been named as a party in this action, we have anticipated that we may be named as a defendant in this action. During the year ended December 31, 2008, we recorded provisions for potential legal claims relating to this incident in the amount of $200,000. During 2009, we agreed to make scheduled payments totaling $65,000 in settlement of any potential legal claims arising out of the accident described above. We commenced making the scheduled payments and are currently negotiating a modification of the terms for the remaining payments. Our indebtedness on this matter is included in the accounts payable recorded at December 31, 2010.

ITEM 4. (Removed and Reserved).

Executive Officers of the Registrant

Name	Age	Officers
Michael Stocker	41	Dr. Michael Stocker has served as our President, Chief Executive Officer, and Principal Executive Officer since January 2010. Dr. Stocker also served as Chairman of our board of directors from October 2008 to January 2010. Dr. Stocker holds an MBA, and a PhD in Impact Analysis for Small and Medium Sized Company Development Programs from the University of Saint Gallen, Switzerland. He also holds an MBA from the Community of European Management Schools, EVADE University, Barcelona, Spain. Between 1992 and 1995, Dr. Stocker was responsible for the development of methodologies and the execution of impact analysis in Latin America for FUNDES International, a private organization for the sustainable development of small and medium sized companies in Latin America. Between 1995 and 1997, he was Regional Manager of PROPEL, a private eco-efficient technologies consulting firm in Latin America, with headquarters in Bogotá, Colombia. From 1997 to 2000, he worked as Senior Consultant for the Boston Consulting Group (BCG), in its offices in Mexico, Spain and Switzerland. His main focus was on the development of Knowledge Management (KM) strategies, e-business, and effective financial programs for several Fortune 500 companies. Starting October, 2000, Dr. Stocker became international e-business and KM manager for FUNDES International in Chile. He was in charge of KM, e-business strategy, and set-up and implementation of all technology-related projects..

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		As leader of the Transference Unit, Michael was also responsible for the implementation of all projects outside of Latin America, including the transfer of knowledge from CFIs to PDFs. In January, 2004, Dr. Stocker became founding manager of The Stocker Group, in Santiago, Chile, as a result of a management buy out of the FUNDES International Consulting’s e-business team. The Stocker Group is present in 11 countries in Latin America, and works for various international clients such as ONUDI, the Swiss Government (SECO), the World Bank, USAID, IDB , FUNDES and AVINA
Kenneth Phillippe	56	Kenneth Phillippe has served as our Chief Financial Officer, Secretary and Treasurer since May 14, 2009 and previously served as our Secretary, Treasurer, Chief Financial Officer and Principal Accounting Officer from December 13, 2007 to August 20, 2008. Mr. Phillippe is a Chartered Accountant with over 25 years experience working with public companies in the capacities of director, officer, financial advisor or consultant. Mr. Phillippe obtained a Bachelor of Commerce degree from the University of British Columbia in 1976. He articled with Thorne Riddell (now KPMG) and obtained his professional accounting designation in 1981. In 1982, Mr. Phillippe established his own accounting practice. Between February 2000 and August 2005, he served in various positions including director, officer and chair of the audit committee of MDX Medical Inc., a Vancouver-based medical device company. Between January and December 2006, Mr. Phillippe served as Chief Financial Officer of Columbia Goldfields Ltd., a junior gold mining company that is a reporting company under the Exchange Act. Since March 2006, Mr. Phillippe has served as Chief Financial Officer of Exchequer Resource Corp. (TSX-V (NEX)). Since October 2006, Mr. Phillippe has served as Chief Financial Officer and Secretary of Bold Ventures Inc., which was listed on the TSX-V on October 29, 2007. In addition, Mr. Phillippe served as the Secretary, Treasurer, Chief Financial Officer and Principal Accounting Officer of Amazon Goldsands Ltd. (f/k/a FinMetal Mining Ltd.), a reporting company under the Exchange Act, from October 2006 to September 2008. Mr. Phillippe has served as Chief Financial Officer, Director and Secretary of Discovery Ventures Inc. (TSX-DVN.V), which was listed on the TSX-V on October 30, 2009. Since March 10, 2009, Mr. Phillippe has served as the Chief Financial Officer of Advanced Proteome Therapeutics Corp. (TSX-APC.V).
Gary Artmont	59	Mr. Artmont has served on our board of directors since September 2007. Mr. Artmont previously served as our President, Chief Executive Officer and Principal Executive Officer from September 2007 to January 2008 and September 2009 to January 2009. Mr. Artmont has served as our Vice President of Exploration since January 2010 and previously held this position from March 2007 until September 2007. In the late 1990s, as Indonesian-based chief geologist for Freeport-McMoRan, Mr. Artmont was responsible for the management and coordination of a large helicopter-supported regional reconnaissance program. His duties included coordinating 600 field staff, 55 geologists and 7 contracting groups, budget formulation and data evaluation. During his tenure, in excess of 120,000 meters of drilling was completed on 17 prospect areas. In the mid-2000s, Mr. Artmont evaluated acquisition opportunities in Eastern Europe, South America, Southeast Asia and Mongolia. His work focused on a wide range of commodities including copper, iron, coal and nickel. During his career, Mr. Artmont has conducted over 150 site visits to producing mines located throughout the world. Mr. Artmont was a director of Pac Rim (PRL) from 2000 to 2006.

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PART II

ITEM 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Prices

Our common stock is currently quoted on the OTCBB under the symbol “~~CMIN~~GSDC.”

The following table sets forth the range of high and low bid quotations for our common stock for each of the periods indicated as reported by the OTCBB. These quotations below reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Fiscal Year Ended December 31, 2010
	High Bid	Low Bid
Fiscal Quarter Ended:
March 31, 2010	$1.90	$0.70
June 30, 2010	$1.12	$0.55
September 30, 2010	$1.11	$0.21
December 31, 2010	$0.415	$0.10
Fiscal Year Ended December 31, 2009
	High Bid	Low Bid
Fiscal Quarter Ended:
March 31, 2009	$1.20	$0.25
June 30, 2009	$0.89	$0.31
September 30, 2009	$1.91	$0.55
December 31, 2009	$1.76	$0.85
Fiscal Year Ended December 31, 2008
	High Bid	Low Bid
Fiscal Quarter Ended:
March 31, 2008	$1.33	$0.71
June 30, 2008	$1.3499	$0.91
September 30, 2008	$1.64	$0.96
December 31, 2008	$1.25	$0.67

Holders of Common Stock

As of ~~February~~ 15May 12, ~~2009~~2011, we had approximately three hundred ~~and~~ten ~~seven~~ (~~307~~310) holders of record of our common stock and several other stockholders hold shares in street name. In many instances, a record holder is a broker or other entity holding shares in street name for one or more customers who beneficially own the shares.

Dividend Policy

To date, we have not declared or paid cash dividends on our shares of common stock. The holders of our common stock will be entitled to non-cumulative dividends on the shares of common stock, when and as declared by our board of directors, in its discretion. We intend to retain all future earnings, if any, for our business and do not anticipate paying cash dividends in the foreseeable future.

Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, general business conditions and such other factors as our board of directors may deem relevant.

Securities Authorized for Issuance under Equity Compensation Plans

Our board of directors adopted the 2007 Stock Incentive Plan (the “Stock Incentive Plan”) on August 3, 2007. The Board approved an amendment of the Stock Incentive Plan and shareholder approval of the amended Stock Incentive Plan that increased the number of shares of common stock issuable under the Stock Incentive Plan from 10,000,000 to 20,000,000 was received at the 2009 annual shareholder meeting. Grants of 65,~~075~~120,000 options have been made under the Stock Incentive Plan and remain outstanding as of December 31, ~~2009~~ 2010. As of December 31, ~~2009~~2010, 1314,~~925~~880,000 shares remain available under the Stock Incentive Plan for future equity grants.

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The Stock Incentive Plan authorizes us to grant awards in the form of shares of common stock, including unrestricted shares of common stock; options to purchase shares of common stock; stock appreciation rights or similar rights with a fixed or variable price related to the fair market value of the shares of common stock and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions; any other security with the value derived from the value of the shares of common stock, such as restricted stock and restricted stock units; deferred stock units; dividend equivalent rights; or any combination of the foregoing. Our Compensation Committee administers the Plan by making recommendations to the board or determinations regarding the persons to whom awards should be granted and the amount, terms, conditions and restrictions of the awards.

The Plan allows for the grant of incentive stock options, non-qualified stock options and restricted stock awards. The exercise price of any option shall be determined at the time the option is granted by the Compensation Committee. However, the exercise price may generally not be less than 100 percent of the fair market value of the shares of common stock on the date of the grant. Each option expires on the date determined by the Compensation Committee, but not later than ten years after the grant date. The Compensation Committee may determine in its discretion whether any option shall be subject to vesting and the terms and conditions of any such vesting. The Stock Incentive Plan also provides for the immediate vesting of options, as well as authorizes the Compensation Committee to cancel outstanding options or to make adjustments to the transfer restrictions on those options in the event of certain changes in corporate control of the company. Awards, including options, made under the Stock Incentive Plan are not assignable and also subject to any restrictions and conditions imposed by the Compensation Committee.

The following table sets forth certain information regarding the Stock Incentive Plan as of December 31, ~~2009~~2010:

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)	~~Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)~~
Equity compensation plans approved by stockholders	65,~~075~~120,000	$0.98	~~$0.85~~	14,880,000	~~13,925,000~~
Equity compensation plans not approved by stockholders 1	-	-	-	-	-
Total	65,~~075~~120,000	$0.98	~~$0.85~~	14,880,000	~~13,925,000~~

1 The Stock Incentive Plan, as amended, was approved by our board of directors and shareholders in 2009 and authorizes us to grant up to 20,000,000 shares under its terms and conditions.

Recent Issuances of Unregistered Securities

OnDuring ~~or about~~the ~~December~~reporting 1period, ~~2009,~~ we sold 30,000 units (the “Units”) to a ~~total~~single ofnon-U.S. 33person (the “Investor”),~~462~~ ~~units~~as that term in defined in Regulation S promulgated under the Securities Act, at a purchase price of $0.65 per Unit (the ~~"Units"~~ “Unit Price”). The toaggregate ~~two~~purchase ~~investors~~price we received from the sale of these Units was $19,500. Each unit ~~consisted~~is comprised of one (1) share of common stock, par value $0.001, and one (1) common stock purchase warrant (the “Warrant”) to purchase one (1) share of our common stock, exercisable commencing six months from the ~~date of~~ issuance date and terminating one year from the issuance date. The ~~of issuance~~exercise price for the Warrant is priced at $0.80 per share. As a result, we ~~issued~~sold to the Investor a total of 3330,~~462~~000 shares of common stock and warrants to purchase 3330,~~462~~000 shares of common stock ~~in connection with these sales of securities~~. The ~~exercise~~Units ~~price~~were ~~for~~not ~~the~~sold ~~Warrant~~through ~~is priced~~an atunderwriter ~~$1.00~~and ~~per~~accordingly, ~~share. We~~there ~~received~~were ~~gross~~no ~~proceeds~~underwriting ofdiscounts ~~$21,750~~or ~~from the~~commissions ~~sale of these securities~~involved. No registration rights were granted to ~~either~~ ~~investor~~the Investor.

Subsequent to the reporting period and pursuant to the terms of that certain Mineral Rights Option Agreement (the “Option Agreement”) entered into with Temasek Investments Inc. (“Temasek”) on January 25, 2010 relating to an expansion of our property interests in Peru, we issued to Temasek a total of 1,000,000 shares of our common stock as part of the consideration required to exercise the initial thirty-three percent option to acquire the mineral rights underlying the property that is the subject of the Option Agreement. These shares were issued pursuant to Section 4(2) of the Securities Act and Regulation S promulgated thereunder. We did not engage in any general solicitation or advertising. The stock certificate was issued with the appropriate legends affixed to the restricted stock.

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~~These securities~~Subsequent ~~were~~to ~~offered~~the ~~and~~reporting ~~sold~~period, inwe ~~reliance~~entered oninto a Subscription Agreement (the ~~following~~“Subscription ~~exemptions~~Agreement”) ~~from registration~~with ~~under~~24 ~~the~~accredited ~~Securities~~investors ~~Act~~that ofare ~~1933,~~U.S. asPersons ~~amended~~and 11 non-U.S. persons (collectively, the ~~"Securities Act"~~“Investors”):, ~~(a) Section 4(2)~~pursuant ofto ~~the~~which ~~Securities~~we ~~Act~~sold orto ~~Regulation~~the ~~D promulgated~~Investors ~~thereunder~~an aggregate of 6,410,000 ~~and~~units (bthe “Units”) ~~Regulation~~ Sat ~~promulgated~~a ~~under~~purchase ~~the Securities~~price ~~Act~~of $0. In10 ~~connection~~per ~~with~~Unit ~~these~~(the ~~sales~~“Unit ofPrice”) ~~securities,~~in ~~we relied~~an onsecond ~~each~~closing of a private placement (the ~~investors'~~“Private ~~written~~Placement”). The ~~representations~~aggregate ~~that~~purchase ~~they~~price ~~were~~we ~~not~~received ~~a "U.S.~~from ~~person"~~the assale ~~that~~of ~~term~~these Units was $641,000. Each unit is ~~defined~~comprised inof ~~Rule~~one ~~902~~(k1) share of ~~Regulation~~common Sstock, ~~under~~par ~~the Securities~~value ~~Act~~$0.001, and ~~were~~one ~~acquiring~~(1) ~~the~~common ~~securities~~stock ~~for~~purchase ~~investment~~warrant ~~only~~(the ~~and~~“Warrant”) ~~not with~~to apurchase ~~view~~one ~~toward~~(1) ~~resale~~share orof ~~distribution. We requested~~ our common stock ~~transfer~~, ~~agent~~exercisable tocommencing ~~affix~~on ~~appropriate~~the ~~restricted~~date ~~legends~~of toissuance ~~the~~and ~~stock~~terminating ~~certificate issued~~eight to(8) ~~each~~months ~~investor. Each~~from ~~investor~~the ~~was~~closing ~~given~~date ~~adequate~~of ~~access~~issuance. The ~~to sufficient~~exercise ~~information~~price ~~about~~for usthe toWarrant ~~make~~is anpriced ~~informed~~at ~~investment decision~~$0.10 per share. ~~Neither~~As a result, we ~~nor~~sold ~~anyone~~in ~~acting~~the oninitial ~~our~~closing ~~behalf~~of ~~offered~~the orPrivate ~~sold these~~Placement ~~Units~~a bytotal ~~any~~of ~~form~~6,410,000 shares of ~~general~~common ~~solicitation~~stock orand ~~general advertising~~warrants to purchase 6,410,000 shares of common stock.

~~ITEM 6~~The Units were not sold through an underwriter and accordingly, there were no underwriting discounts or commissions involved. ~~Selected Financial~~ No ~~Data~~registration rights were granted to the any of the Investors.

The Units offered and sold in connection with the initial closing of this Private Placement were in reliance on the following exemptions from registration under the Securities Act of 1933, as amended (the “Securities Act”): (a) in the case of U.S. persons, Section 4(2) of the Securities Act or Rule 506 of Regulation D promulgated thereunder, and (b) in the case of non-U.S. persons, Regulation S promulgated under the Securities Act. In connection with this Private Placement, we relied on each of the Investors’ written representations. With respect to the Units sold to U.S. persons, sales were made only to persons who represented that they were “accredited investors” as that term is defined in Rule 501(a) under the Securities Act. With respect to the securities sold to non-U.S. persons, sales were made to persons who represented that they were not a “U.S. person” as that term is defined in Rule 902(k) of Regulation S under the Securities Act. Each Investor represented that they were acquiring the Units for investment only and not with a view toward resale or distribution. We requested our stock transfer agent to affix appropriate restricted legends to the stock certificate issued to each Investor. Each Investor was given adequate access to sufficient information about us to make an informed investment decision. Neither we nor anyone acting on our behalf offered or sold these Units by any form of general solicitation or general advertising.

ITEM 6.Selected Financial Data.

Not applicable.

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ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report on Form 10-K. This discussion contains forward-looking statements reflecting our current expectations, estimates and assumptions concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” appearing elsewhere in this annual report on Form 10-K.

Recent Developments for the Company

Overview

In November 2007, we reorganized our operations and changed our name to “Constitution Mining Corp.” to better reflect our current focus which is the acquisition, exploration, and potential development of mining properties. Since November 2007, we have entered into agreements to secure options to acquire the mineral and mining rights underlying properties located in the Salta and Mendoza provinces of Argentina (the “Argentinean Properties”) and in northeastern Peru. In 2009, we determined that it was in our best interest to dispose of our interests in the Argentinean Properties and we are now pursuing exploration and development exclusively of our properties in Peru.

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rights to the Argentinean Properties and in northeastern Peru. In 2009, we determined that it was in our best interest to no longer pursue the exploration and development of the Argentinean Properties and terminated our option agreements to acquire the mineral and mining rights underlying these properties. We are now exclusively pursuing the exploration and development of our property interests in Peru.

We are an exploration stage company and there is no assurance that commercially exploitable reserves of gold or other minerals exist on any of our property interests. In the event that commercially exploitable reserves of gold or other minerals exist on any of our property interests, we cannot guarantee that we will make a profit. If we cannot acquire or locate mineral deposits, or if it is not economical to recover the mineral deposits, our business and operations will be materially and adversely affected.

On October 21, 2009, we completed a reincorporation merger from the State of Nevada to the State of Delaware.

~~For~~ On February 24, 2011, we filed a Certificate of Ownership and Merger with the ~~Years~~Secretary ~~Ended~~of ~~December~~State of Delaware to effectuate a merger whereby we merged with our wholly-owned subsidiary, Goldsands Development Company, through a parent/subsidiary merger, with us as the surviving corporation. This merger, which became effective at 11:59 p.m. on March 31, ~~2009~~2011 (the “Effective Time”), pursuant to Section 253 of the General Corporation Law of Delaware. Shareholder approval for this merger was not required under Section 253 of the General Corporation Law of Delaware. Upon the Effective Time of this merger, our name was changed to “Goldsands Development Company”. We decided to change our corporate name in order to reflect management’s decision during the first quarter of 2011 to expand our business plan in order to pursue opportunities to consult on development projects in the same approximate geographical area as our property interests in Peru. As a result of our operations in Peru, we have gained significant experience and ~~2008~~knowledge as to the local processes and procedures in planning to engage in development projects in Peru and we intend to leverage and market this expertise to other companies seeking to engage in development projects in Peru. It is our belief that changing our corporate name will minimize public perception in marketing this expertise that we are strictly a company engaged in mineral exploration.

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On January 18, 2011, we engaged Swiss Mining to carry out a test mining operation on the MIKA 2 Concession. The area encompassing the MIKA 2 Concession is the 2.5 square kilometer grid that was the subject of the our Phase II drilling campaign. Swiss Mining will be responsible and liable for all work, services, labor, materials, equipment, supplies and other related costs necessary to implement the test mining operation. The test mining operation commenced at the end of March 2011 and we anticipate it will continue for a duration of six months. Under the terms of our agreement, we have the right to monitor, at our own expense, all activities performed by Swiss Mining or its subcontractors including, but not be limited to, the right to make site inspections at any time, to bring experts and consultants onsite to examine or evaluate work in progress or completed work, to examine the books, ledgers, documents, papers, and records pertinent to this agreement and to observe personnel in every phase of their performance of the related work.

For the Years Ended December 31, 2010 and 2009

Revenues

We have not generated any revenues from operations since our inception. Subsequent to the year end on March 28, 2011, we commenced a test mining operation on the MIKA 2 Concession. We engaged Swiss Mining to carry out this test mining operation. The parties have agreed to an allocation of revenues, if any, from the sale or other disposition of ores, concentrates or minerals produced from the MIKA 2 concession (“Net Returns”) equal to thirty percent (30%) to us and seventy percent (70%) to Swiss Mining until the agreed upon costs of US $425,000 are fully covered. Thereafter, any Net Returns beyond this cost recovery shall be divided equally between Swiss Mining and us on a 50/50 basis. Due to the commencement and progress of the test mining operation, we anticipate that we will generate some revenue in the second quarter of 2011 attributable to the production and sale of gold from this test mining operation.

Operating Expenses

We incurred operating expenses in the amount of $1427,~~743~~521,~~959~~739 for the year ended December 31, ~~2009~~2010, as compared to operating expenses of $514,~~479~~743,~~705~~959 for the year ended December 31, ~~2008~~2009. The substantial increase in our operating expenses for the year ended December 31, ~~2009~~2010, as compared to the year ended December 31, ~~2008~~2009, is primarily attributable to ~~increased exploration costs and stock based compensation together with~~ a significant write down of mineral property ~~acquisition~~ ~~costs during the reporting period. The write down of mineral property~~ acquisition costs ~~during the reporting period in the amount of $4,339,330 primarily related to the termination of our options to acquire the mineral~~ and ~~mineral~~increased ~~rights to the Argentinean Properties. During fiscal 2009, we have exercised the second twenty-five percent option, resulting in our acquisition of an aggregate of a fifty percent~~ interest ~~the~~expense ~~mineral and mining rights underlying certain properties located in Northeastern Peru. We have~~ incurred ~~significant expenditures~~ during the ~~year~~reporting ~~ended December 31, 2009 in connection with the exploration and associated administrative costs required to support our operations~~period. In 2009, we disposed of the Argentinean Properties, and are pursuing exploration and development exclusively on our properties in Peru. In addition, we have entered into a letter of intent in relation to acquiring mineral and mining rights underlying certain properties located in Nevada.

We ~~incurred~~ ~~exploration~~recorded ~~costs~~the ofwrite ~~$2,810,496~~down ~~for~~of ~~the~~mineral ~~year~~property ~~ended~~acquisition ~~December~~costs ~~31,~~in ~~2009, and~~the ~~exploration~~amount ~~costs~~ of $~~924~~18,~~961~~272,629 ~~during~~for the year ended December 31, ~~2008. Exploration~~ ~~costs incurred during the year ended December 31~~2010, ~~2009~~as ~~related~~compared to ~~the~~write ~~initial~~down ~~phases~~ of ~~the~~mineral ~~exploration~~property ~~programs on~~acquisition ~~the Peru Property, whereas exploration~~ costs ~~incurred during the year ended December 31, 2008 related to the initial phases~~ of ~~our exploration programs on the Atena Project and Cerro Amarillo Property. We incurred professional fees of~~ $~~986~~4,~~356~~339,330 for the year ended December 31, 2009,. During ~~compared to professional fees of $909,483 for~~ the year ended December 31, ~~2008. Professional~~ ~~fees~~2010, ~~which~~we ~~primarily~~recorded ~~include~~a ~~legal~~provision ~~and~~for ~~accounting expenses,~~write-down ~~increased because our legal and accounting needs increased as a result~~ of ~~increase~~mineral ~~exploration~~property ~~and~~costs ~~financing activities. We reported stock-based compensation~~ of $418,~~461~~272,~~838~~629 ~~for~~related to the ~~year~~Seabridge ~~ended December~~Gold 31Claims, ~~2009,~~the ~~compared~~Saramiriza toProperties ~~$2,033,607~~and ~~for~~ the ~~year~~Peru ~~ended December 31, 2008~~Property. ~~This~~We ~~increase~~are isactively ~~attributable~~exploring tothe anproperties ~~increase~~located in ~~the~~Peru, ~~number~~both ~~of stock~~directly ~~options~~and ~~issued~~indirectly tothrough ~~employees~~test ~~and~~mining ~~non-employees~~programs ~~during~~with ~~the~~third ~~year ended December 21~~parties, ~~2009. We~~and ~~reported~~intend ~~management~~to ~~fees~~continue ofto ~~$291,367~~explore ~~for~~these ~~the year~~properties ~~ended~~to ~~December~~our ~~31,~~fullest ~~2009~~capabilities. However, ~~compared~~there tocan ~~$346,583~~be ~~for~~no ~~the~~assurance ~~year~~that ~~ended~~we ~~December 31,~~will ~~2008. The~~be ~~decrease~~able into ~~management~~do ~~fee~~so ~~and~~in ~~stock-based~~the ~~compensation is~~future ~~attributable~~due to athe change in ~~management~~business inclimate ~~the~~and ~~year~~other ~~ended~~legal ~~December 31, 2009~~factors. WeConsequently, ~~incurred~~we ~~investor~~recorded ~~relations~~a ~~expenses~~provision ~~of $1,326,379~~ for ~~the year~~write-down ~~ended~~of ~~December~~mineral ~~31,~~property ~~2009,~~costs ~~compared~~resulting toin ~~$668,992~~a ~~for~~carrying ~~the~~value ~~year~~of ~~ended December 31, 2008~~$0. ~~This~~The ~~increase~~write indown ~~investor~~of ~~relations~~mineral property acquisition costs during the year ended December 31, 2009, asrelated ~~compared~~ to ~~the~~our ~~prior~~decision ~~year,~~to isdispose ~~attributable~~of our interest to ~~expenditures~~ ~~associated~~acquire ~~with~~the ~~increasing~~mineral ~~awareness~~rights ofto ~~our~~certain ~~current~~properties ~~and~~located ~~future operations~~in Argentina.

-We ~~35 -~~accrued interest expense of $2,100,829 for the year ended December 31, 2010, as compared to interest expense of $38,802 during the year ended December 31, 2009. This significant increase in interest during the reporting period was primarily attributable to interest accrued at the rate of 12% per annum on a $7,000,000 convertible promissory note (“Convertible Promissory Note”) issued to Temasek Investment Inc. (“Temasek”) in April 2010 as part of the consideration required for our acquisition of 100% of the mining and mineral rights underlying the Peru Property. Subsequent to the reporting period in January 2011, an aggregate of $7,578,950 in debt, including $6,300,000 of the initial principal balance evidenced by the Convertible Promissory Note, was extinguished in exchange for the issuance of units (the “Units”) consisting of one (1) share of our common stock, par value $0.001 per share (“Common Stock”) and one (1) warrant to purchase one (1) share of our Common Stock using the conversion price of $0.10 per Unit. As a result of this exchange of debt for equity, we anticipate that we will incur reduced interest expenditures during 2011.

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We incurred exploration costs of $1,663,096 for the year ended December 31, 2010, and exploration costs of $2,810,496 during the year ended December 31, 2009. Exploration costs incurred during the year ended December 31, 2010 related to the implementation of the 26-hole Phase I exploratory drill program and 100-hole Phase II exploratory drill program on the Peru Property, whereas exploration costs incurred during the year ended December 31, 2009 related to the initial phases of our exploration programs on the Peru Property. The decrease in exploration costs resulted from our focus on the drill program combined with limited financial resources available in the reporting period to fund exploration in 2010.

We incurred professional fees of $740,162 for the year ended December 31, 2010, compared to professional fees of $986,356 for the year ended December 31, 2009. Professional fees, which primarily include legal and accounting expenses, declined due to a reduction in the number of independent professionals we utilized in 2010.

We reported stock-based compensation of $3,572,749 for the year ended December 31, 2010, compared to $4,461,838 for the year ended December 31, 2009. This decrease is attributable to a decrease in the number of stock options issued to employees and non-employees during the year ended December 31, 2010. We reported management fees of $379,968 for the year ended December 31, 2010, compared to $291,367 for the year ended December 31, 2009. The increase in management fees is attributable to a increase in the number of management personnel and an increase in rates paid to management.

We incurred investor relations expenses of $406,338 for the year ended December 31, 2010, compared to $1,326,379 for the year ended December 31, 2009. This decrease in investor relations costs during the year ended December 31, 2010, as compared to the prior year, is attributable to the elimination of high cost investor relations programs in 2010.

Other Items

We received other income of $~~162~~228,~~945~~158 during the year ended December 31, ~~2009~~2010, as compared to other income of $~~174~~162,~~872~~945 for the year ended December 31, ~~2008~~ 2009. The ~~decrease~~increase in other income is attributable to a ~~gain~~recovery of ~~$307,115~~ ~~attributable~~write-down toof ~~our~~mineral ~~assignment~~property costs of ~~all~~$210,070 ofduring ~~our~~2010. During ~~right,~~the ~~title~~year ~~and~~ended ~~interest in~~December ~~and~~31, to2009, we executed a ~~leasehold~~termination ~~interest~~agreement inand ansettled ~~oil~~the ~~and~~required ~~gas~~payments ~~property~~on ~~located~~the inCerro ~~St.~~Amarillo ~~Francis County,~~property ~~Arkansas~~during tothe anyear ~~assignee~~ended ~~who~~December ~~agreed~~31, to2010. As ~~assume~~a ~~all~~result, ofwe ~~our~~recorded ~~outstanding payment~~a ~~obligations~~recovery asfor ~~consideration~~provision for ~~the~~write-down ~~assignment~~of inmineral ~~2008~~property costs.

During the year ended December 31, 2009, our provision for potential legal claims was $135,000, as compared to December 31, 2008, where potential legal claims of $(200,000) related to a legal proceeding disclosed in our prior annual report on Form 10-K. The change in provision for legal claims for the year ended December 31, 2009, as compared to December 31, 2008, is attributable to us entering into a settlement agreement of potential legal claims during 2009 in an amount which was $135,000 less than the provision amount for potential legal claims of $200,000 which we recorded in 2008. During the year ended December 31, 2010, we recorded no provision for potential legal claims, as compared to December 31, 2009 where potential legal claims of $135,000 related to us entering into a settlement agreement of potential legal claims during 2009 in an amount which was $135,000 less than the provision amount for potential legal claims of $200,000 which we recorded in 2008.

~~During the~~We ~~year~~reported ~~ended~~foreign ~~December~~exchange ~~31,~~income ~~2009,~~of ~~our provision for potential legal claims was~~ $~~135~~18,~~000,~~088 ~~as compared to December 31, 2008, where potential legal claims of $(200,000) related to a legal proceeding disclosed in our prior annual report on Form 10-K. The change in provision~~ for ~~legal claims for~~ the year ended December 31, ~~2009~~2010, as compared to ~~December 31~~$27,941 ~~2008,~~for isthe ~~attributable~~prior toyear. The ~~us entering~~exchange ~~into~~income aresults ~~settlement~~from ~~agreement~~the translation of ~~potential~~monetary ~~legal~~assets ~~claims~~and ~~during~~liabilities ~~2009~~denominated in ~~an amount~~foreign ~~which~~currencies. A ~~was~~decrease ~~$135,000~~in ~~less~~foreign ~~than~~currency ~~the~~denominated ~~provision~~monetary ~~amount~~assets ~~for~~and ~~potential~~liabilities ~~legal claims~~in 2010 ofresulted ~~$200,000~~in ~~which~~the wedecrease ~~recorded~~exchange income in ~~2008~~2010.

Net Loss

As a result of the above, for the year ended December 31, ~~2009~~2010 we reported a net loss operating loss before income taxes of $928,~~749~~007,~~164,~~081 asand ~~compared to~~ a net loss of $527,~~304~~254,~~833~~861 for the ~~year~~reporting ~~ended December~~period ~~31,~~after ~~2008. The~~offsetting ~~increase~~a infuture ~~our~~income ~~net~~tax ~~loss~~recovery ~~was~~of ~~primarily attributable~~$752,220. For ~~to increased operating expenses incurred in connection with~~ the ~~acquisition~~ ofyear ~~our~~ended ~~mineral~~December ~~property rights in Northeastern Peru~~31, ~~related exploration~~2009 ~~expenditures~~we ~~incurred~~reported ~~during~~a ~~the~~net ~~reporting~~loss ~~period,~~operating ~~the~~loss ~~associated administrative~~before ~~costs~~incomes ~~required~~taxes toof ~~support~~$14,581,014 ~~our operations~~ and ~~the~~a ~~write~~net ~~down~~loss of ~~mineral~~ ~~property~~$9,749,164 ~~acquisition~~for ~~costs~~the ~~relating~~reporting toperiod ~~our~~after ~~termination~~offsetting ofa ~~option agreements~~future toincome ~~acquire~~tax ~~the~~recovery ~~Argentinean~~of ~~Properties~~$4,831,850.

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We had a future income tax recovery of $752,220 and $4,831,850 for the years ended December 31, 2010 and December 31, 2009 respectively as a result of the reserves established due to our operating loss history and the tax benefits related to our mineral property costs activities. The amount of future income tax recovery benefits has decreased for the year ended December 31, 2010 as a result of the write down of mineral property acquisition costs related to the termination of the asset purchase agreement with Seabridge Gold Corporation.

Basic and Diluted Loss per Share

As a result of the above, the basic and diluted loss per common share was $0.~~152~~328 and $0.~~100~~152 for the years ended December 31, ~~2009~~2010 and ~~2008~~2009, respectively.

Liquidity and Capital Resources

At December 31, ~~2009~~2010, we had cash and cash equivalents of $~~205~~4,~~125~~181 (December 31, ~~2008~~ 2009 - $66205,~~580~~125) and working capital deficit of $13,~~480~~165,~~730~~504 (December 31, ~~2008~~2009 - $~~162~~1,~~440~~480,730).

~~During~~Subsequent ~~the~~to ~~twelve month period following~~ the ~~date~~reporting ~~of this report~~period, we ~~anticipate that~~issued wean ~~will~~aggregate ~~not generate any revenue. Our proposed plan~~ of ~~exploration~~ ~~anticipates that we will incur exploration related expenditures of $3~~75,~~500~~789,~~000~~500 ~~over~~units (the ~~next~~“Units”) ~~twelve~~to ~~months. We~~seventeen ~~anticipate~~(17) ~~spending approximately~~accredited ~~$200~~investors,~~000~~ inthat ~~ongoing~~were ~~general~~also ~~and~~creditors, ~~administrative~~in ~~expenses~~exchange ~~per month~~ for ~~the~~these ~~next~~creditors ~~twelve~~converting ~~months,~~and ~~for~~extinguishing aan ~~total~~aggregate ~~anticipated expenditure~~ of $27,~~400~~578,~~000 over~~950 ~~the~~in ~~next~~debt ~~twelve~~owed ~~months. The~~by ~~general~~us ~~and~~using ~~administrative expenses for~~ the ~~year~~conversion ~~will~~price ~~consist primarily~~ of ~~professional~~$0.10 ~~fees~~per ~~for~~Unit. Each ~~the~~Unit ~~audit~~consists ~~and~~of ~~legal work~~one ~~relating~~(1) toshare ~~our~~of ~~regulatory~~common ~~filings~~stock ~~throughout~~of the ~~year~~Company, aspar ~~well~~value ~~as transfer agent fees and general office expenses~~$0. ~~Our~~001 ~~current~~per ~~cash~~share on(“Common ~~hand~~Stock”) ~~is insufficient to be able to make our planned exploration expenditures~~ and toone ~~pay for~~(1) ~~our~~warrant ~~general administrative expenses over the next twelve months. Accordingly, we must obtain additional financing in order~~ to ~~continue~~ ~~our~~purchase ~~plan~~one of(1) ~~operations~~share ~~during and beyond the next twelve months. We believe that debt financing will not be an alternative for funding additional phases~~ of ~~exploration~~Common asStock ~~we do not have limited tangible assets to secure any debt financing. We anticipate that additional funding will be in the form~~ of ~~equity financing from~~ the ~~sale~~Company ~~of our common stock~~(“Warrant”). WeEach ~~are currently~~Warrant ~~seeking~~is ~~additional~~exercisable ~~funding~~for ina ~~the~~period ~~form~~ of ~~equity~~eight ~~financing~~(8) ~~from~~months ~~the sale of our common stock, but cannot provide investors with any assurance that we will be able to raise sufficient funding~~ from the ~~sale~~date of ~~our~~issuance ~~common~~at ~~stock~~a ~~to fund~~price ~~our~~of ~~complete~~$0.10 ~~exploration~~per ~~program~~share. InAs ~~the~~a ~~absence of such financing~~result, we ~~will~~issued ~~not~~a betotal ~~able to pursue our exploration program and maintain our mineral property interests in good standing. If we do not fulfill the terms~~ of ~~any of these option agreements according to our business plan~~75, then our ability to commence or continue operations could be materially limited. We also may be forced to abandon our mineral property interests. If we are unable to raise additional capital in the near future789,500 weshares ~~will~~of ~~experience~~Common ~~liquidity~~Stock ~~problems~~ and ~~management~~Warrants ~~expects that we will need~~ to ~~curtail~~purchase ~~operations~~75, ~~liquidate assets~~789,500 ~~seek~~shares ~~additional~~of ~~capital~~the ~~on less~~our ~~favorable~~Common ~~terms and/or pursue other remedial measures~~Stock. ~~We may consider entering into a~~

-On ~~36 -~~June 30, 2010, we entered into a Loan Agreement (the “Loan Agreement”) with St. Lawrence Alluvial Services and Logistics Corp. (the “Lender”). Under the terms of the Loan Agreement, the Lender agreed to loan us Three Hundred Twenty Thousand Dollars ($320,000) (the “Loan”). We received the Loan on July 9, 2010 and agreed to repay the Loan within a maximum term of ninety (90) days from the execution of the Loan Agreement together with interest at a rate of twelve percent (12%) per year. As of December 31, 2010, we had not repaid the Loan and were in default of the Loan Agreement. Subsequent to the reporting period, the Lender converted all outstanding indebtedness under the Loan Agreement into Units in accordance with the debt to equity conversions described above.

During the twelve month period following the date of this report, it is unknown whether the test mining operation on the MIKA 2 concession will be successful and the extent to which we will be able to generate any revenue. Our proposed plan of exploration anticipates that we will incur exploration related expenditures of $950,900 over the next twelve months. We anticipate spending approximately $200,000 in ongoing general and administrative expenses per month for the next twelve months, for a total anticipated expenditure of $2,400,000 over the next twelve months. The general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to our regulatory filings throughout the year, as well as transfer agent fees and general office expenses. We also anticipate that we may incur significant costs and expenses in connection with an SEC investigation. We are unable, at this time, to estimate the costs and expenses we may incur or our potential liability resulting from this investigation. If we are subject to any adverse findings, we could be required to pay damages or penalties or have other remedies imposed on us which could have a material adverse effect on our business and financial condition. We have no insurance coverage to cover any portion of our defense cost or any amounts that we may be required to pay in connection with the resolution of this investigation.

Subsequent to the reporting period, we received gross proceeds of $2,257,000 from sales of equity securities in a private placement. Notwithstanding the aforementioned conversions of debt to equity and proceeds received from our private equity offering, our current cash on hand is insufficient to be able to make our planned exploration expenditures and to pay for our general administrative expenses over the next twelve months even without taking into account to extent to which we may incur significant costs and expenses in connection with an SEC investigation. Accordingly, we must obtain additional financing in order to continue our plan of operations during and beyond the next twelve months. We are considering a debt financing, but ultimately believe that it will not be an alternative for funding additional phases of exploration as we do not have limited tangible assets to secure any debt financing. We presently do not have sufficient available authorized capital to make securing additional financing in the form of equity financing from the sale of our common stock a viable option. We intend to submit a proposal to our shareholders to amend our Certificate of Incorporation for the purpose of increasing the authorized shares of our common stock, but have not done so yet and can provide no assurance that such proposal would be supporting by our shareholders. In the absence of such financing, we will not be able to pursue our exploration program and may not be able to maintain our mineral property interests in good standing. If we do not fulfill the terms of any of these option agreements according to our business plan, then our ability to commence or continue operations could be materially limited. We also may be forced to abandon our mineral property interests. If we are unable to raise additional capital or generate revenue from our test mining operation within the next twelve months, we will experience liquidity problems and management expects that we will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. We may consider entering into a joint venture arrangement to provide the required funding to explore the properties underlying our mineral property interests. We have not undertaken any efforts to locate a joint venture participant. Even if we determine to pursue a joint venture participant, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of the properties underlying our mineral property interests. If we enter into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral property interests to the joint venture participant.

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joint venture arrangement to provide the required funding to explore the properties underlying our mineral property interests. We have not undertaken any efforts to locate a joint venture participant. Even if we determine to pursue a joint venture participant, there is no assurance that any third party would enter into a joint venture agreement with us in order to fund exploration of the properties underlying our mineral property interests. If we enter into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral property interests to the joint venture participant.

Cash Used in Operating Activities

Operating activities for the year ended December 31, ~~2009~~2010 and ~~2008~~2009 used cash of $52,~~361~~880,~~659~~ 100 and $35,~~279~~361,~~958~~659 respectively, which reflect our recurring operating losses. Our net losses of $927,~~749~~254,~~164~~861 and $59,~~304~~749,~~833~~164 for the years ended December 31, ~~2009~~2010 and ~~2008~~2009, respectively, were the primary reasons for our negative operating cash flow in both years. Our reporting negative operating cash flows for the year ended December 31, 2010 was offset by a write down of mineral property costs of $18,272,629, stock-based compensation of $3,572,749 and accrued interest of $2,067,264 for the reporting period.

Cash Used in Investing Activities

For the year ended December 31, ~~2009~~2010, we used $1,~~199~~399,~~790~~234 in investing activities, as compared to $1,~~139~~199,~~983~~790 used in investing activities during the year ended December 31, ~~2008~~2009. For the year ended December 31, ~~2009~~2010, we purchased $8971,~~560~~974 in equipment, ~~and~~ expended $1327,~~110,230~~260 in connection with the acquisition of mineral property interests and paid $1,000,000 for the acquisition of a thirty-three percent (33%) equity interest in Woodburn Investments, Inc. pursuant to the Option Agreement entered into with Temasek, as compared to the year ended December 31, ~~2008~~2009, in which we purchased $~~125~~89,~~030~~560 in equipment, ~~expended $64,693 for website development costs~~ and expended $~~950~~1,~~260~~110,230 in connection with the acquisition of mineral property interests.

Cash from Financing Activities

As we have had no revenues since inception, we have financed our operations primarily by using existing capital reserves and through private placements of our common stock. Net cash flows provided by financing activities for the year ended December 31, ~~2009~~2010 was $64,~~699~~078,~~994~~390, as compared to $46,~~431~~699,~~879~~994 for the year ended December 31, ~~2008~~2009. An increase in the cash flow provided by financing activities was primarily due to $6,615,069 we received as net proceeds from the issuance of common stock and warrants and $70,000 in share subscriptions received in advance during the reporting period.

Off Balance Sheet Arrangements

We do not have any off-balance sheet debt nor did we have any transactions, arrangements, obligations (including contingent obligations) or other relationships with any unconsolidated entities or other persons that may have material current or future effect on financial conditions, changes in the financial conditions, results of operations, liquidity, capital expenditures, capital resources, or significant components of revenue or expenses.

Going Concern

We have incurred net losses for the period from inception on March 6, 2000 to December 31, ~~2009~~2010 of $1643,~~434~~877,~~682~~689 and have no source of revenue. The continuity of our future operations is dependent on our ability to obtain financing and upon future acquisition, exploration and development of profitable operations from our mineral properties. These conditions raise substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe the following critical accounting estimates affect our more significant judgments and estimates used in the preparation of our consolidated financial statements:

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Mineral property costs

Mineral property acquisition costs are initially capitalized as tangible assets when purchased. At the end of each fiscal quarter end, we assess the carrying costs for impairment. If proven and probable reserves are established for a property and it has been determined that a mineral property can be economically developed, costs will be amortized using the units-of-production method over the estimated life of the probable reserve.

Mineral property exploration costs are expensed as incurred.

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

As of the date of the consolidated financial statements, we have not established any proven or probable reserves on its mineral properties and incurred only acquisition and exploration costs.

Although we have taken steps to verify title to mineral properties in which we have an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title. Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Equipment

Equipment is recorded at cost and amortization is provided over its estimated economic life at 30% or on a straight line basis over its economic life.

Website development costs

The costs of computer software developed or obtained for internal use, during the preliminary project phase, as defined under ASC 350-40, “Internal-Use Software”, will be expensed as incurred. The costs of website development during the planning stage, as defined under ASC 350-50, “Website Development Costs”, will also be expensed as incurred.

Computer software, website development incurred during the application and infrastructure development stage, including external direct costs of materials and services consumed in developing the software and creating graphics and website content, will be capitalized and amortized over the estimated useful life, beginning when the software is ready for use and after all substantial testing is completed and the website is operational.

Segments of an ~~enterprise~~Enterprise and ~~related~~Related ~~information~~Information

ASC 280, “Segment Reporting” establishes guidance for the way that public companies report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. ~~We have evaluated this Codification and does not believe it is applicable at this time.~~

Start-up ~~38 -~~Expenses

We have adopted ASC 720-15, “Start-Up Costs”, which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with our formation have been included in our expenses for the period from the date of inception on March 6, 2000 to December 31, 2010.

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Start-up expenses

Stock-Based Compensation

Effective 1 January 2006, we adopted the provisions of ASC 718, “Compensation – Stock Compensation”, which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant). We adopted ASC 718 using the modified prospective method, which requires us to record compensation expense over the vesting period for all awards granted after the date of adoption, and for the unvested portion of previously granted awards that remain outstanding at the date of adoption. Accordingly, financial statements for the periods prior to 1 January 1, 2006 have not been restated to reflect the fair value method of expensing share-based compensation. Adoption of ASC 718 does not change the way we account for share-based payments to non-employees, with guidance provided by ASC 505-50, “Equity-Based Payments to Non-Employees”.

Foreign Currency Translation

Our functional and reporting currency is U.S. dollars. Our consolidated financial statements are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. We have not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Use of ~~estimates~~Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.

Comparative ~~figures~~ Figures

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

~~Recent Accounting~~ITEM ~~Pronouncements~~7A.Quantitative and Qualitative Disclosures About Market Risk.

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 167, “Amendments to FASB Interpretation No. 46(R)”. SFAS No. 167, which amends ASC 810-10, “Consolidation”, prescribes a qualitative model for identifying whether a company has a controlling financial interest in a variable interest entity (“VIE”) and eliminates the quantitative model. The new model identifies two primary characteristics of a controlling financial interest: (1) provides a company with the power to direct significant activities of the VIE, and (2) obligates a company to absorb losses of and/or provides rights to receive benefits from the VIE. SFAS 167 requires a company to reassess on an ongoing basis whether it holds a controlling financial interest in a VIE. A company that holds a controlling financial interest is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. SFAS No. 167, which is referenced in ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative. SFAS No. 167 is effective 1 January 2010. We do not expect that the adoption of SFAS No. 167 will have a material impact on ourconsolidated financial statements.

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In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfer of Financial Assets – an amendment of FASB Statement”. SFAS No. 166 removes the concept of a qualifying special-purpose entity from ASC 860-10, “Transfers and Servicing”, and removes the exception from applying ASC 810-10, “Consolidation”. This statements also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. SFAS No. 166, which is referenced in ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative. This statement is effective 1 January 2010. We do not expect that the adoption of SFAS No. 166 will have a material impact on ourconsolidated financial statements.

In August 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-05, “Fair Value Measurement and Disclosure (Topic 820) – Measuring Liabilities at Fair Value”, which provides valuation techniques to measure fair value in circumstances in which a quoted price in an active market for the identical liability is not available. The guidance provided in this update is effective 1 January 2010. We do not expect that the adoption of this guidance will have a material impact on our consolidated financial statements.

International Financial Reporting Standards

In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, we would be required to prepare consolidated financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. We are currently assessing the potential impact of IFRS on our consolidated financial statements and will continue to follow the proposed roadmap for future developments.

ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable

ITEM 8. Financial Statements and Supplementary Data.

The financial statements are listed in Part IV Item 15 of this annual report on Form 10-K and are incorporated by reference in this Item 8.

ITEM 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

~~ITEM~~- ~~9A. Controls~~41 ~~and Procedures.~~-

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on their evaluation as of December 31, 2009, the end of the period covered by this annual report on Form 10-K, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, including this annual report, were recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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ITEM 9A.Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on their evaluation as of December 31, 2010, the end of the period covered by this annual report on Form 10-K, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level to ensure that the information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, including this annual report, were recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and was accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. The conclusion of our management was based on the material weaknesses described below is Management’s Report on Internal Control Over Financial reporting.

We are in the process of considering changes in our disclosure controls and procedures and compiling a plan to remediate these material weaknesses.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

·	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

Provide reasonable assurance that the transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

·	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the filing of our annual report on Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, ~~2009~~2010. In making this assessment, our management used the criteria set forth by Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on our assessment using those criteria, management believes that, as of December 31, ~~2009~~2010, our internal control over financial reporting is not effective based on those criteria because of the material weaknesses discussed below.

~~This annual~~- ~~report~~42 does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and exchange Commission that permit us to provide only management’s report in this annual report.-

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Financial Statement Close Process: Internal controls over the financial statement close process were not effective and represented a material weakness in internal control over financial reporting at December 31, 2010. The primary factors contributing to this material weakness were: (i) a change in accounting personnel during the year, including the Chief Financial Officer, (ii) the Company direct and indirect subsidiaries did not maintain a sufficient complement of personnel with a level of knowledge of the Company’s accounting records and technical competence to ensure proper application of U.S. generally accepted accounting principles, and (iii) the Company did not maintain sufficient written policies and procedures, and support.

Oversight and Monitoring of Certain International Locations: During the year end financial statement close process, we concluded that a material weakness continued to exist with regard to our accounting procedures at certain foreign subsidiaries and our corporate oversight and review of these locations as of December 31, 2010.

Lack of resources to Manage Financial Close: As a small company, we historically have retained between one to three outside consultants to provide accounting and finance services. As a result, we did not have a sufficient complement of personnel with the appropriate level of expertise to assist with the financial close process.

Notwithstanding the conclusion that our disclosure controls and procedures and internal control over financial reporting were not effective as of the end of the period covered by this report, the Chief Executive Officer and the Chief Financial Officer believe that the consolidated financial statements and other information contained in this annual report present fairly, in all material respects, our business, financial condition and results of operations.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting during the quarter ended December 31, ~~2009~~2010, that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

~~ITEM~~We 9Bare in the process of considering changes in our internal controls over financial reporting and compiling a plan to remediate these material weaknesses. ~~Other Information.~~

ITEM 9B.Other Information.

None.

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PART III

ITEM 10. Directors, Executive Officers and Corporate Governance.

The ~~information~~ ~~required~~following ~~by Item 10 concerning directors, corporate governance and executive officers of the Company is incorporated herein by reference to the~~ information ~~set~~sets forth ~~in our definitive proxy statement for~~ the ~~2010~~names ~~Annual Meeting~~ of ~~Stockholders~~our ~~under~~current ~~the~~director ~~headings “Election of Directors”~~ and ~~“Executive~~ ~~Officers”,~~executive ~~respectively~~officers, ~~which~~their ~~proxy~~ages ~~statement we expect to file with the Securities~~ and ~~Exchange~~their ~~Commission~~present ~~within 120 days after the end of our fiscal year ended December 31, 2009 (the “Proxy Statement”)~~positions.

The information concerning compliance with Section 16(a) of the Exchange Act is incorporated herein by reference to the information set forth in our Proxy Statement under the heading “Section 16(a) Beneficial Ownership Reporting.”

Name of Nominee	Age	Position	Director Since
Michael Stocker (4)(5)	42	President, Chief Executive Officer, Principal Executive Officer, Director	2008
Pat Gorman (1)(2)(3)	55	Director	2007
Robert Van Tassell (1)(4)(5)	75	Director	2009
Peter Wiget (2)(3)	47	Chief Financial Officer, Principal Financial Officer, Director	2010
Alois Wiget (1)(2)(3)	74	Director, Chairman	2008
Sam Storey	76	Director	2010

The information concerning significant employees and family relationships is incorporated herein by reference to the information set forth in our Proxy Statement under the heading “Family Relationships.”__________________

~~The information~~(1) Member ~~concerning our code~~ of ~~ethics~~Audit ~~is incorporated herein by reference to the information set forth in our Proxy Statement under the heading “Code of Ethics and Conduct.”~~Committee

(2) Member of Compensation Committee

(3) Member of Nominating and Corporate Governance Committee

(4) Member of Technical Committee

(5) Member of Environmental, Health and Safety Committee

Michael Stocker. Dr. Michael Stocker served as Chairman of our board of directors from October 2008 to January 2010 and has served as our Chief Executive Officer since January 2010. Dr. Michael Stocker holds an MBA, and a PhD in Impact Analysis for Small and Medium Sized Company Development Programs from the University of Saint Gallen, Switzerland. He also holds an MBA from the Community of European Management Schools, EVADE University, Barcelona, Spain. Between 1992 and 1995, Dr. Stocker was responsible for the development of methodologies and the execution of impact analysis in Latin America for FUNDES International, a private organization for the sustainable development of small and medium sized companies in Latin America. Between 1995 and 1997, he was Regional Manager of PROPEL, a private eco-efficient technologies consulting firm in Latin America, with headquarters in Bogotá, Colombia. From 1997 to 2000, he worked as Senior Consultant for the Boston Consulting Group (BCG), in its offices in Mexico, Spain and Switzerland. His main focus was on the development of Knowledge Management (KM) strategies, e-business, and effective financial programs for several Fortune 500 companies. Starting October, 2000, Dr. Stocker became international e-business and KM manager for FUNDES International in Chile. He was in charge of KM, e-business strategy, and set-up and implementation of all technology-related projects. As leader of the Transference Unit, Michael was also responsible for the implementation of all projects outside of Latin America, including the transfer of knowledge from CFIs to PDFs. In January, 2004, Dr. Stocker became founding manager of The Stocker Group, in Santiago, Chile, as a result of a management buy out of the FUNDES International Consulting’s e-business team. The Stocker Group is present in 11 countries in Latin America, and works for various international clients such as ONUDI, the Swiss Government (SECO), the World Bank, USAID, IDB, FUNDES and AVINA.

Dr. Stocker founded a company that provides risk and knowledge management to international clients in Latin America. He brings to the Board perspective on companies facing the same set of current external economic and social issues in Peru. Moreover, Dr. Stocker’s day to day leadership and intimate knowledge of our business and operations provide the Board with company-specific experience and expertise. These attributes led the Board to conclude, as of the time of this annual report, that he should continue to serve as a director.

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Patrick Gorman. Mr. Gorman has served as a member of our board of directors since November 2007 and previously served as Chairman of our board of directors. Since 2000, Mr. Gorman has served as President of his private company, Resource Consultants Inc., a family owned and operated precious metals, hard-money assets brokerage firm. Mr. Gorman is the author of “The Value of Honest Money,” an investment book that offers capital preservation and wealth building strategies. Mr. Gorman also writes a newsletter outlining precious metals strategies within the context of domestic/global economic and political realities. For 18 years, he has hosted an internet-based talk radio show called “Hard Money Watch.” Mr. Gorman is also the host to boutique-style investment conferences held in Tempe, Arizona. Mr. Gorman has recently released a new book entitled “The Personal Responsibility Handbook: The Power of You.”

Mr. Gorman has experience running a brokerage firm specializing in precious metals and is widely respected as an expert on the markets for gold and silver. Mr. Gorman’s leadership skills in consensus-building and executive management add an important dimension to our Board’s composition. These attributes led the Board to conclude, as of the time of this annual report, that he should continue to serve as a director.

Robert Van Tassell. Mr. Van Tassell has served as a member of our board of directors since April 2009. Mr. Van Tassell has served on the board of directors of Amazon Goldsands Ltd. since December 2006. Mr. Van Tassell has been involved in the Canadian mining industry for over fifty years. Before retiring from full-time ventures in 1998, he spent the prior sixteen years (1982-1998) as Vice President of Exploration for the precious metals venture Goldcorp Inc., formerly known as Dickenson Mines. Exploration teams led by Mr. Van Tassell are credited with such significant discoveries as the Husky Mine, the Minto copper deposit currently being mined by Capstone Mining, and more recently, Goldcorp’s High Grade Zone. From 1984 through 1993, Mr. Van Tassell served as a board member of the Prospectors and Developers Association of Canada (PDAC), including as Chairman of the PDAC’s Program and Environmental Committees. Mr. Van Tassell also served as a director of the Yukon Chamber of mines for eleven years, two of them as President. He served four terms on the board of the Northern Resource Conferences, two of them as Chairman, and has taught introductory and advanced prospecting courses for the Chamber of Mines. He is a Life Member of the CIM and a member of the Geological Association of Canada.

Mr. Van Tassell has been credited with leading the discovery of several mines in Canada and has served as Vice President of Exploration with a world leading mining company. Mr. Van Tassell brings to our Board a depth of understanding as to our company’s business, history and organization and the various challenges we face in the current economic environment. These attributes led the Board to conclude, as of the time of this annual report, that he should continue to serve as a director.

Peter Wiget. Peter Wiget has served as our Chief Financial Officer, Principal Financial Officer, Secretary and Treasurer since July 2010 and previously served as our Chief Financial Officer from August 2008 to May 2009 .Mr. Wiget was appointed to serve as a member of the board of directors in January 2010. Mr. Wiget serves as an Account Manager for WITRAG Management Consultants AG, a position he has held since 1989. Mr. Wiget also serves as a Director, Chief Financial Officer, and/or Chief Executive Officer of several private companies in Switzerland.

Mr. Wiget’s experience in finance and administration along with his broad network of contacts in North American and European financial markets serves the company well as it continues to grow forward and increase its financing needs. These attributes led the Board to conclude, as of the time of this annual report, that he should continue to serve as a director.

Alois Wiget. Mr. Wiget has served as a member of our board of directors since August 2008 and has served as Chairman of our board of directors since January 2010. Mr. Wiget has served, and continues to serve, as President and/or Chief Executive Officer for the following private companies: ICAT Consulting SA., Haustadt & Timmermann AG., Imprego AG., GIFI Finanzierungs-AG. and Vittoria Finanz AG. Mr. Wiget is a co-owner of the consulting and accounting firm WITRAG Management Consultants SA since 1989. Over the past 20 years, Mr. Wiget has served as an independent business consultant and tax advisor to various companies in Europe. He is currently a senior member of the Swiss Economic Association in Zurich.

Mr. Wiget has extensive business experience in the areas of banking and accounting. Mr. Wiget’s experience with accounting principles, financial reporting, and evaluating financial results makes him an asset to our board of directors. These attributes led the Board to conclude, as of the time of this annual report, that he should continue to serve as a director.

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Sam Storey. On October 11, 2010, the board of directors appointed Sam Storey to serve as a member of the board of directors. Mr. Storey has served as a director of Sniper Resources Ltd., a private mineral exploration company based in Vancouver, British Columbia, since September 2006. Mr. Storey served as a director of Tone Resources Limited, a private mineral exploration company based in Vancouver, British Columbia, from May 2004 to April 2007. Mr. Storey served as President, CEO and Chairman of the Board of COMSERV Inc. Communications Company, a private communications company based Memphis, Tennessee, from September 1995 to January 2000. Mr. Storey’s prior professional experience includes service as a Captain in the United States Navy and a commercial airline captain for Northwest Airlines.

Mr. Storey has over forty-five years of leadership and business negotiations experience from overlapping careers in the military and business sectors. Mr. Storey, with his broad background holding senior leadership positions in the military, airline, insurance, communications and resource industries, provides experience in risk management and negotiation skills. These attributes led the Board to conclude, as of the time of this annual report, that he should continue to serve as a director.

Family Relationships

Mr. Peter Wiget is the son of Mr. Alois Wiget. With the exception of this relationship, there are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers.

Audit Committee

On September 16, 2008, our board of directors unanimously resolved to create an Audit Committee and adopted an audit committee charter. Our Audit Committee appoints our independent auditors, reviews audit reports and plans, accounting policies, financial statements, internal controls, audit fees, and certain other expenses and oversees our accounting and financial reporting process. Specific responsibilities include selecting, hiring and terminating our independent auditors; evaluating the qualifications, independence and performance of our independent auditors; approving the audit and non-audit services to be performed by our auditors; reviewing the design, implementation, adequacy and effectiveness of our internal controls and critical accounting policies; overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; reviewing any earnings announcements and other public announcements regarding our results of operations, in conjunction with management and our public auditors.

The Audit Committee is comprised of three Directors. The Audit Committee held four meetings during the year-ended December 31, 2010. The members of our Audit Committee are Patrick C. Gorman, Robert Van Tassell and Alois Wiget. Mr. Wiget was the Chairman of the Audit Committee during the fiscal year ended December 31, 2010. Our board of directors determined that Mr. Wiget qualifies as an “audit committee financial expert,” as defined under the rules and regulations of the Securities and Exchange Commission, but is not considered independent because his son currently serves as our Chief Financial Officer.

Under the Sarbanes-Oxley Act of 2002, all audit and non-audit services performed by our independent accountants must be approved in advance by the Audit Committee to assure that such services do not impair the accountants’ independence. The Audit Committee may delegate authority to pre-approve audit and non-audit services to any member of the Audit Committee, but may not delegate such authority to management.

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For the fiscal year ended December 31, 2010, the Audit Committee:

·	reviewed and discussed with management our audited consolidated financial statements for the fiscal year ended December 31, 2010;

discussed with James Stafford, Inc., Chartered Accountants, our independent registered public accounting firm for fiscal year 2010, the matters the Audit Committee is required to discuss pursuant to Statement on Auditing Standards No. 61 (Communications with Audit Committees), which includes, among other items, matters related to the conduct of the audit of our consolidated financial statements; and

received the written disclosures and the letter from James Stafford, Inc., Chartered Accountants required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with James Stafford, Inc., Chartered Accountants any relationships that may impact its independence, and satisfied itself as to the independent registered public accounting firm’s independence.

Based on the review and discussions referred to above, the Audit Committee recommended to the board of directors that our audited consolidated financial statements for the fiscal year ended December 31, 2010 be included in this Annual Report on Form 10-K for the fiscal year ended December 31, 2010 for filing with the Securities and Exchange Commission.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Act of 1934, as amended, requires our executive officers and directors, and persons who own more than ten percent (10%) of our common stock, to file with the Securities and Exchange Commission reports of ownership of, and transactions in, our securities and to provide us with copies of those filings. To our knowledge, based solely on our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that during the year ended December 31, 2010, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with, with the following exceptions: Mr. Alois Wiget failed to file a Form 4 reporting one transaction in a timely fashion.

Code of Ethics and Conduct

Our board of directors has adopted a Code of Ethics and Conduct that is applicable to all of our employees, officers and directors. Our Code of Ethics and Conduct is intended to ensure that our employees act in accordance with the highest ethical standards. The Code of Ethics and Conduct is available on the Investor Relations page of our website at http://www.goldsandsco.com. and the Code of Ethics and Conduct has been filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

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ITEM 11. Executive Compensation.

The ~~information~~ ~~required~~table bybelow ~~Item~~sets 11forth ~~concerning~~all ~~executive~~cash compensation ~~is incorporated~~paid ~~herein~~or proposed to be paid by ~~reference~~us to the ~~information~~chief ~~set~~executive ~~forth~~officer and the most highly compensated executive officers, and key employees for services rendered in ~~our~~all ~~Proxy Statement~~capacities ~~under~~to ~~the~~us ~~heading~~during ~~“Executive~~fiscal ~~Compensation~~years 2010 and 2009.”

~~The information~~Summary ~~required by Item 11 concerning compensation of directors is incorporated herein by reference to the information set forth in our Proxy Statement under the heading “~~Compensation ~~of Directors.”~~Table

As of December 31, 2010

Name (a)	Year	Salary ($) (1)	Bonus ($)	Option Awards ($) (2)	All Other Compensation ($) (3)	Total ($)
Michael Stocker President and CEO (4)	2010 2009	- -	- -	932,436 188,025	240,000 90,000	1,172,436 278,025

Peter Wiget CFO (5)	2010 2009	- -	- -	103,604 -	15,968 3,857	119,572 3,857

Kenneth Phillippe Former CFO (6)	2010 2009	- -	- -	- 156,688	27,000 24,000	27,000 180,688

Gary Artmont Former CEO and President, Vice President of Exploration (7)	2010 2009	- -	- -	259,010 62,675	30,000 33,535	289,010 96,210

_______

(1) Executive officers did not receive any salary during the fiscal years ended December 31, 2010 or 2009.

(2) The amounts in the table reflect the grant date fair value of options and stock awards to the named executive officer in accordance with Accounting Standards Codification Topic 718. The ultimate values of the options and stock awards to the executives generally will depend on the future market price of our common stock, which cannot be forecasted with reasonable accuracy. The actual value, if any, that an optionee will realize upon exercise of an option will depend on the excess of the market value of the common stock over the exercise price on the date the option is exercised. See the “Outstanding Equity Awards at Fiscal Year-End” table below for information regarding all outstanding awards.

(3) The amounts listed under the Column entitled “All Other Compensation” in the “Summary Compensation Table” related to consulting fees earned during the period reported.

(4) Dr. Michael Stocker was appointed to serve as our Chief Executive Officer, Principal Executive Officer and President on January 13, 2010. Compensation reported for Dr. Stocker during the year ended December 31, 2009 was not paid in connection with his service as an executive officer.

(5) Mr. Peter Wiget served as our Chief Financial Officer, Secretary, and Treasurer from August 2008 to May 2009 and was appointed to serve in these same positions in July 2010.

(6) Mr. Phillippe served as our Chief Financial Officer, Principal Financial Officer, Secretary and Treasurer from May 2009 until his resignation in July 2010.

(7) Mr. Artmont served as our President, Chief Executive Officer and Principal Executive Officer from September 2009 until his resignation in January 2010 and served as a director from September 2007 until his resignation in October 2010.

Compensation Components.

Base Salary. At this time, we do not compensate our executive officers by the payment of base salaries. We do pay our executive officers consulting fees which is described in more detail below.

Bonuses. At this time, we do not compensate our executive officers by the payment of bonus compensation.

Stock Options. Stock option awards are determined by the Compensation Committee based on numerous factors, some of which include responsibilities incumbent with the role of each executive to the Company and tenure with the Company.

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At no time during the last fiscal year was any outstanding option repriced or otherwise modified. There was no tandem feature, reload feature, or tax-reimbursement feature associated with any of the stock options we granted to our executive officers or otherwise.

Other. At this time, we have no profit sharing plan in place.

Consulting Fees. We pay our executive officers consulting fees for services rendered.

During 2010, Dr. Stocker received $240,000 in compensation for his service as our President and CEO. During 2010, we paid consulting fees to Stocker International Inc., a company under the control of Dr. Stocker. The fees paid to Stocker International Inc. are described in this Annual Report under the heading “Transactions With Related Persons.” On January 29, 2010 (the “Effective Date”), we entered into a Consulting Agreement (the “Consulting Agreements”) with Michael Stocker, our Chief Executive Officer. The Consulting Agreements supersedes and replace all prior compensatory agreements, understandings and commitments that previously existed between us and Dr. Stocker. The Consulting Agreement commenced as of the Effective Date and continues for a period of two years; provided, however, that the term shall be extended for an additional one-year period on each anniversary of the Effective Date of the Consulting Agreement, unless either party notifies the other in writing at least thirty days prior to such anniversary. The Consulting Agreement may be terminated for any reason upon thirty days written notice. If the Consulting Agreement is terminated, other than for a violation of the Consulting Agreement or a related federal or state law or regulation, Dr. Stocker is entitled to compensation until the expiration of the notice period. If Dr. Stocker violates the Consulting Agreement or a related federal or state law or regulation, we may terminate the Consulting Agreement immediately, without notice, and without further payment of compensation to Dr. Stocker. Dr. Stocker is subject to a covenant not to compete during the term of the Consulting Agreement and for twelve months thereafter. In exchange for services rendered which include providing us with leadership, Dr. Stocker is entitled to receive $20,000 on a monthly basis as compensation.

During 2010, we did not directly compensate Mr. Wiget for his service as our CFO. Mr. Wiget received a fee of $3,000 for each month of service as our CFO during 2010 indirectly through compensation paid to Witrag Management Consultants SA, a company under his control. We did not enter into a written consulting or other compensatory agreement with Mr. Wiget relating to the compensation or consulting fees paid to him in connection with his service as an executive officer of the Company.

·	During 2010, Mr. Phillippe received $3,000 in January 2010 and $4,000 on a monthly basis from February 2010 thru July 2010 for his service as our CFO.

·	During 2010, Mr. Artmont was paid a monthly consulting fee of $10,000 from January 2010 thru March 2010.

The following table presents information concerning the outstanding equity awards for the Named Executive Officers as of December 31, 2010:

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Outstanding Equity Awards

Fiscal Year-Ended December 31, 2010

Option Awards
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)	Number of Securities Underlying Unexercised Options (#) Unexercisable (c)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)	Option Exercise Price ($) (e)	Option Expiration Date (f)
Michael Stocker CEO	1,200,000 300,000 900,000	0 0 0	- - -	$1.05 $0.70 $1.10	11/10/2018 5/20/2019 1/22/2020

Peter Wiget CFO	125,000 100,000	0 0	- -	$1.05 $1.10	11/10/2018 1/22/2020

Kenneth Phillippe Former CFO (1)	-	-	-	-	-

Gary Artmont (2) Former CEO and President, Vice President of Exploration	100,000 125,000	- -	- -	$0.70 $1.10	5/20/2019 1/22/2020

(1) Mr. Phillippe resigned as our Chief Financial Officer, Principal Financial Officer, Secretary and Treasurer in July 2010. All outstanding equity awards granted to Mr. Phillippe were terminated as of December 31, 2010 as a result of his resignation as an executive officer and director.

(2) Mr. Artmont served as our President, Chief Executive Officer and Principal Executive Officer from September 2009 until his resignation in January 2010 and served as a director from September 2007 until his resignation in October 2010. All vested equity awards granted to Mr. Artmont were outstanding as of December 31, 2010, but were terminated subsequent to December 31, 2010 as a result of his resignation as an executive officer and director.

Stock Option Plans

The 2007 Stock Incentive Plan (the “Stock Incentive Plan”) was initially adopted by the board of directors on August 3, 2007. The Board, with shareholder approval, amended the Stock Incentive Plan to increase the number of shares of common stock issuable under the Plan from 10,000,000 shares to 20,000,000 shares. Grants of 5,120,000 options have been made under the Stock Incentive Plan to date.

The Stock Incentive Plan authorize us to grant (i) to the key employees incentive stock options to purchase shares of common stock and non-qualified stock options to purchase shares of common stock and restricted stock awards, and (ii) to non-employee directors and consultants’ non-qualified stock options and restricted stock. Our Compensation Committee administers the Stock Incentive Plan by making recommendations to the board or determinations regarding the persons to whom options or restricted stock should be granted and the amount, terms, conditions and restrictions of the awards.

Incentive stock options granted under the Stock Incentive Plan must have an exercise price at least equal to 100% of the fair market value of the common stock as of the date of grant. Incentive stock options granted to any person who owns, immediately after the grant, stock possessing more than 10% of the combined voting power of all classes of our stock, or of any parent or subsidiary corporation, must have an exercise price at least equal to 110% of the fair market value of the common stock on the date of grant. Non-statutory stock options may have exercise prices as determined by our Compensation Committee.

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The Compensation Committee is also authorized to grant restricted stock awards under Stock Incentive Plan. A restricted stock award is a grant of shares of the common stock that is subject to restrictions on transferability, risk of forfeiture and other restrictions and that may be forfeited in the event of certain terminations of employment or service prior to the end of a restricted period specified by the Compensation Committee.

Equity Compensation Plan Information

As of Fiscal Year End December 31, 2010

The following table sets forth information as of December 31, 2010 with respect to compensation plans under which equity securities of the Company are authorized for issuance.

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights	Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column)
Equity compensation plans approved by security holders	5,120,000	$0.98	14,880,000
Equity compensation plans not approved by security holders (1)	-	-	-
Total	5,120,000	$0.98	14,880,000

______

1 The Stock Incentive Plan, as amended, was approved by our board of directors and shareholders and authorizes

us to grant up to 20,000,000 shares under its terms and conditions.

The following paragraphs provide a summary of the principal features of the Stock Incentive Plan and its operation.

Objectives. The purpose of the Stock Incentive Plan is to advance our interests by encouraging those eligible to participate in the Stock Incentive Plan to acquire our shares, thereby increasing their proprietary interest in the Company so as to encourage them to remain associated with us, and to furnish them with additional incentive in their efforts on our behalf in the conduct of their affairs.

Oversight. Authority to control and manage the operation and administration of the Stock Incentive Plan is vested in a committee (the “Committee”) consisting of two or more of our members of the board of directors who are non-employees and “outside directors” (within the meaning of Section 162(m) of the Internal Revenue Code). Members of the Committee are appointed by the board of the directors.

Eligibility. Any person who is an officer, a director, an employee or a consultant is eligible to participate in the Stock Incentive Plan. The number of stock options and restricted stock awards that an employee, director, or consultant may receive under our Stock Incentive Plan is in the discretion of the Committee and therefore cannot be determined in advance. To date, only stock options have been granted under the Stock Incentive Plan.

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The following table sets forth (a) the aggregate number of shares subject to options granted under the Stock Incentive Plan during the year-ended December 31, 2010 to persons who served as either an executive officer or director and (b) the average per share exercise price of such options.

Stock Option Grants

Name of Individual or Group	Number of Options Granted (1)	Average per Share Exercise Price
Patrick C. Gorman	100,000	$1.10
Alois Wiget	600,000	$1.10
Michael Stocker	900,000	$1.10
Robert Van Tassell	100,000	$1.10
Peter Wiget	100,000	$1.10
Sam Storey	0	-

_____________

(1)

Excludes options granted during the year ended December 31, 2010 to Messrs. Artmont and Phillippe, which have either expired or were forfeited during the fiscal year as a result of their resignation as an executive officer and/or director.

Please see our “Compensation Tables” above for more information about option grants.

Types of Grants

Awards under the Stock Incentive Plan may be in the form of shares of common stock, including unrestricted shares of common stock; options to purchase shares of common stock; stock appreciation rights or similar rights with a fixed or variable price related to the fair market value of the shares of common stock and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions; any other security with the value derived from the value of the shares of common stock, such as restricted stock and restricted stock units; deferred stock units; dividend equivalent rights; or any combination of the foregoing.

Stock Option Awards. The exercise price of any option shall be determined at the time the option is granted by the Committee. However, the exercise price may generally not be less than one hundred percent of the fair market value of the shares of common stock on the date of the grant. Each option expires on the date determined by the Committee, but not later than ten years after the grant date. The Committee may determine in its discretion whether any option shall be subject to vesting and the terms and conditions of any such vesting. The Stock Incentive Plan also provides for the immediate vesting of options, as well as authorizes the Committee to cancel outstanding options or to make adjustments to the transfer restrictions on those options in the event of certain changes in corporate control of the company. Awards, including options, made under the Stock Incentive Plan are not assignable. Options may be exercised only by delivery to us of a stock option exercise agreement, together with payment in full of the exercise price for the number of shares being purchased.

Grants of Other Incentive Awards. The Stock Incentive Plan also authorizes us to grant other incentive awards of the nature described in “Stock Incentive Plan--Types of Grants.” These other incentive awards may be made to any person who is an officer, a director, an employee or a consultant of the Company. Restricted stock awards may be subject to restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions, as determined by the Committee. Other incentive awards that the Committee may grant under the Stock Incentive Plan, with the exception of grants of unrestricted common stock, are also subject to any restrictions and conditions imposed by the Committee.

Shares Available. A maximum of 20,000,000 shares are available for issuance under the Stock Incentive Plan, all of which may be granted as Incentive Stock Options. Shares subject to awards that lapse become available again for award under the Stock Incentive Plan. An individual may not be granted options and/or stock appreciation rights for more than 5,000,000 shares in any one calendar year. Further, an individual may not be granted any other awards covering more than 5,000,000 shares in any one calendar year.

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Adjustments Upon Change in Capitalization. The number of shares covered by each outstanding award, and the number of shares which have been authorized for issuance under the Stock Incentive Plan but as to which no awards have yet been granted or which have been returned to the Stock Incentive Plan, the exercise or purchase price of each such outstanding award, as well as any other terms that the Committee determines require adjustment shall be proportionately adjusted for (a) any increase or decrease in the number of issued shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the shares, or (b) any other increase or decrease in the number of issued shares.

Amendment and Termination. Our board of directors may from time to time amend, modify, suspend or terminate the Stock Incentive Plan; provided, however, that no such action shall impair without the grantee’s consent any award theretofore granted under the Stock Incentive Plan or be made without shareholder approval where such approval would be required as a condition of compliance with the Code or other applicable laws or regulatory requirements. Unless sooner terminated by the board of directors, the Stock Incentive Plan will terminate ten years after the date the Plan amendment date of March 3, 2009.

Compensation of Directors for Year Ended December 31, 2010

Set forth below is a summary of the compensation paid to each person that served as a director that was not an executive officer or employee in fiscal 2010. The following table does not include Dr. Michael Stocker, Mr. Peter Wiget and Mr. Gary Artmont who each served as executive officers, as well as directors, during part of 2010 and who did not receive compensation for service on our board of directors in 2010. The compensation arrangements for Dr. Michael Stocker, Mr. Peter Wiget and Mr. Gary Artmont are discussed above.

We have no standard arrangement in place to compensate directors for their services in their capacity as directors. Directors are not paid for meetings attended. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.

Director Compensation

Name	Fees Earned Or Paid in Cash ($)	Stock Awards ($)	Option Awards ($) (1)	All Other Compensation ($) (2)	Total ($)
Patrick Gorman	-	-	103,604	20,000	123,604
Hernan Zaballa (3)	-	-	-	-	-
Sam Storey (4)	-	-	-	-	-
Alois Wiget	-	-	621,624	55,000 (5)	676,624
Robert Van Tassell	-	-	103,604	-	103,604

___________

(1)

The amounts in the table reflect the grant date fair value of options and stock awards to the named directors in accordance with Accounting Standards Codification Topic 718. The ultimate values of the options and stock awards to the executives generally will depend on the future market price of our common stock, which cannot be forecasted with reasonable accuracy. The actual value, if any, that an optionee will realize upon exercise of an option will depend on the excess of the market value of the common stock over the exercise price on the date the option is exercised.

(2)

The amounts listed under the Column entitled “All Other Compensation” in the “Summary Compensation Table” related to consulting fees earned during the period reported.

(3)

Mr. Zaballa resigned as a director on April 6, 2010.

(4)

Mr. Storey was appointed to serve as a director on October 11, 2010.

(5)

Reflects fees paid for consulting services to Vittoria Finance Limited, an entity controlled by Mr. Wiget.

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ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The ~~information~~ ~~required~~following bytable ~~Item~~sets 12forth, ~~concerning~~as ~~security~~of ~~ownership~~March of3, ~~certain beneficial~~2011, ~~owners~~the number and ~~management~~percentage isof ~~incorporated~~outstanding ~~herein~~shares of common stock beneficially owned by ~~reference~~(a) each person known by us to ~~the information~~beneficially ~~set~~own ~~forth~~more inthan ~~our~~five ~~Proxy~~percent ~~Statement~~of ~~under~~such ~~the~~stock, ~~heading~~(b) each ~~“Security Ownership~~director of ~~Certain~~the ~~Beneficial~~Company, ~~Owners~~(c) each named officer of the Company, and ~~Management~~(d) all our directors and ~~related~~executive ~~Stockholder Matters~~officers as a group.” We have no other class of capital stock outstanding.

	Amount and Nature of Beneficial Ownership

Name and Address of Beneficial Owner (1)	Shares Owned (2)		Options Exercisable Within 60 Days (3)		Percent of Class
Patrick C. Gorman		1,000,000		450,000		0.1	%
Sam Storey (4)		2,317,254		2,300,000		2.5	%
Robert Van Tassell		-		200,000		*
Alois Wiget (5)		719,500		1,519,500		1.2	%
Peter Wiget (6)		214,500		430,000		0.4	%
Michael Stocker		-		2,400,000		1.3	%
All current directors and executive officers as a group (six persons)		4,251,254		7,299,500		6.1	%

__________

Represents less than one percent of the class.

(1)

The address of these persons is c/o Pasaje Mártir Olaya 129, Oficina 1203, Centro Empresarial José Pardo Torre A, Miraflores, Lima, Perú

(2)

Except as otherwise indicated, all shares shown in the table are owned with sole voting and investment power.

(3)

This column represents shares not included in “Shares Owned” that may be acquired by the exercise of options within sixty days of the date of April 6, 2010.

(4)

Shares and Options owned are held by Mr. Storey as Trustee for Sammy M. Storey & Mary Ellen Revocable Trust 05/01/01.

(5)

Includes 350,000 shares and options to purchase 350,000 shares held by Vittoria Finance Limited and 164,500 shares and options to purchase 164,500 shares held by Witrag Management Consultants SA.

(6) Includes 9,500 shares held by Mr. Wiget’s spouse.

The above beneficial ownership information is based on information furnished by the specified persons and is determined in accordance with Rule 13d-3 under the Exchange Act, as required for purposes of this Annual Report; accordingly, it includes shares of our common stock that are issuable upon the exercise of stock options exercisable within sixty days of March 3, 2011. Such information is not necessarily to be construed as an admission of beneficial ownership for other purposes.

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ITEM 13. Certain Relationships and Related Transactions, and Director Independence.

~~The information~~Agreements ~~required~~Involving byStocker ~~Item~~International 13 concerning certain relationships and related party transactions and director independence is incorporated herein by reference to the information set forth in our Proxy Statement under the headings “Certain Relationships and Related Person Transactions” and “Director IndependenceInc.”

We retained Stocker International Inc. to provide consulting services to us in the form of a social outreach program in connection with our operations in Peru. Michael Stocker, our Chief Executive Officer and a member of our board of directors, is the sole owner of Stocker International Inc. On or about October 1, 2009, we entered into a consulting and services contact with Stocker International Inc. for a one year term. Pursuant to the terms of this consulting and services contract, consultants are to be paid $200 per hour for less than a half a day of service and $1,300 per day for each day of service that exceeds a half a day of work, which is the maximum amount payable in any business day. We can terminate the consulting and services contract upon providing to three month’s written notice to Stocker International, Inc. For the year ended December 31, 2009, we paid Stocker International Inc. a total of $257,130 for consulting services and reimbursement of expenditures. For the year ended December 31, 2010, we paid Stocker International Inc. a total of $210,741 for consulting services and reimbursement of expenditures.

Director Independence

Our board of directors undertook its annual review of the independence of the directors and considered whether any director had a material relationship with us or our management that could compromise his ability to exercise independent judgment in carrying out his responsibilities. As a result of this review, the Board affirmatively determined that Patrick Gorman, Sam Storey and Robert Van Tassell are “independent directors” as such term is used under defined under NASDAQ Marketplace Rule 4200(a)(15).

Our Audit Committee Charter requires that membership of the Audit Committee consists of at least three independent directors, each of whom must be independent as such term is used under defined under NASDAQ Marketplace Rule 4200(a)(15). The Audit Committee is comprised of three Directors, including Mr. Alois Wiget who serves as Chairman of the Audit Committee during the fiscal year ended December 31, 2010. Our board of directors determined that Mr. Wiget is not considered independent because his son currently serves as our Chief Financial Officer.

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ITEM 14. Principal Accounting Fees and Services.

~~The information~~Audit ~~required by Item 14 is incorporated by reference to the information in our Proxy Statement under the headings “Ratification of Appointment of Independent Registered Public Accounting Firm”~~ and ~~“Audit Committee.”~~Related Fees

-The ~~42 -~~following table is a summary of the fees billed to us by James Stafford, Inc., Chartered Accountants for professional services for the fiscal years ended December 31, 2010 and December 31, 2009:

	Fiscal 2010 Fees		Fiscal 2009 Fees
Fee Category
Audit Fees	$	16,833	$	11,988
Audit-Related Fees	$	14,438	$	9,732
Tax Fees		-		-
All Other Fees		-		-

Total Fees	$	31,271	$	21,720

Audit Fees. Consists of fees billed for professional services rendered for the audit of our consolidated financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by our independent registered public accounting firms in connection with statutory and regulatory filings or engagements.

Audit-Related Fees. Consists of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit Fees.” These services include employee benefit plan audits, accounting consultations in connection with acquisitions, attest services that are not required by statute or regulation, and consultations concerning financial accounting and reporting standards.

Tax Fees. Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance regarding federal, state and international tax compliance, tax audit defense, customs and duties, mergers and acquisitions, and international tax planning.

All Other Fees. Consists of fees for products and services other than the services reported above. In fiscal 2010 and 2009, these services included administrative services.

The Audit Committee’s practice is to consider and approve in advance all proposed audit and non-audit services to be provided by our independent registered public accounting firm. All of the fees shown above were pre-approved by the Audit Committee.

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PART IV

ITEM 15. Exhibits, Financial Statement Schedules.

(a)(1)

Index to Financial Statements		Page (s)
Report of Independent Registered Public Accounting Firm		F-1
Financial Statements:
	Consolidated Balance Sheets - December 31, 2009 and 2008	F-2
	Consolidated Statements of Loss and Comprehensive Loss for the Years Ended December 31, 2009 and 2008 and from Inception on March 6, 2000 to December 31, 2009	F-3
	Consolidated Statements of Changes in Stockholders’ Equity from Inception on March 6, 2000 to December 31, 2009	F-4
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2009 and 2008 and from Inception on March 6, 2000 to December 31, 2009	F-5
Notes to Consolidated Financial Statements		F-6

Index to Financial Statements

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		Page (s)
Report of Independent Registered Public Accounting Firm		F-1

Financial Statements:
	Consolidated Balance Sheets - December 31, 2010 and 2009	F-2

	Consolidated Statements of Loss and Comprehensive Loss for the Years Ended December 31, 2010, 2009 and 2008 and from Inception on March 6, 2000 to December 31, 2010	F-3

	Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) from Inception on March 6, 2000 to December 31, 2010	F-4

	Consolidated Statements of Cash Flows for the Years Ended December 31, 2010, 2009 and 2008 and from Inception on March 6, 2000 to December 31, 2010	F-5

Notes to Consolidated Financial Statements		F-6

(a)(2) Not Applicable.

(a)(3) Exhibits.

See (b) below.

(b) Exhibits.

See the Exhibit Index following the signature page of this report, which is incorporated herein by reference. Each management contract and compensatory plan or arrangement required to be filed as an exhibit to this report is identified in the Exhibit Index by an asterisk following its exhibit number.

Not Applicable.

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James Stafford

Chartered Accountants

Suite 350 – 1111 Melville Street

Vancouver, British Columbia

Canada V6E 3V6

Telephone +1 604 669 0711

Facsimile +1 604 669 0754

* Incorporated professional, James Stafford, Inc.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Goldsands Development Company (formerly Constitution Mining Corp.)

(An Exploration Stage Company)

We have audited the accompanying consolidated balance sheets of Goldsands Development Company (formerly Constitution Mining Corp. ) (An Exploration Stage Company) ~~(the~~and ~~“Company”)~~subsidiaries as atof 31 December ~~2009~~2010 and ~~2008~~2009, and the related consolidated statements of loss and comprehensive loss, cash flows and changes in stockholders’ equity for the years ended 31 December ~~2009~~2010, ~~2008~~ 2009 and ~~2007~~2008. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ~~the~~Goldsands Development Company and subsidiaries as of 31 December ~~2009~~2010 and ~~2008~~2009, and the results of ~~its~~their operations, ~~its~~and their cash flows ~~and its changes in stockholders’ equity~~ for the years ended 31 December ~~2009~~2010, ~~2008~~2009 and ~~2007~~ 2008 in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, conditions exist which raise substantial doubt about the Company’s ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its obligations and sustain its operations. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ James Stafford

James Stafford

Chartered Accountants

Vancouver, Canada

~~26 February~~6 ~~2010~~May 2011, except as to Note 1822 which is as of 2610 ~~March~~May ~~2010~~2011.

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~~Constitution Mining~~Goldsands ~~Corp.~~Development Company

(formerly Constitution Mining Corp.)

(An Exploration Stage Company)

Consolidated Balance Sheets

(Expressed in U.S. Dollars)

As at 31 December

	2009			2008
	2010			2009
		$			$
Assets
Current
Cash and cash equivalents		~~205~~4,~~125~~181			66205,~~580~~125
Amounts receivable (Note 5)		125,352			60,000
Amounts receivable (Note 4)		110,709			125,352
Prepaid expense		2220,~~724~~072			~~271~~22,~~250~~724
		353,201			397,830
		134,962			353,201
Property and equipment (Note 6)		150,758			102,049
Equipment (Note 5)		159,509			150,758
Website development cost (Note 7)		25,731			47,295
Website development cost (Note 6)		4,167			25,731
Mineral property costs (Note 8)		19,900,368			5,120,260
Mineral property costs (Note 7)		-			19,900,368
		20,430,058			5,667,434
		298,638			20,430,058
Liabilities
Current
Accounts payable and accrued liabilities (Note 9)		867,027			547,891
Accounts payable and accrued liabilities (Note 8)		1,969,623			867,027
Due to related parties (Note 10)		966,904			12,379
Current portion of convertible promissory note (Note 13)		614,466			-
		1,833,931			560,270
Loans payable (Note 14)		393,312			-
Future income tax liabilities (Note 14)		752,220			-
Due to related parties (Note 9)		323,065			966,904
		2,586,151			560,270
		3,300,466			1,833,931
Convertible promissory note (Note 13)		2,566,986			-
Deferred tax liabilities (Note 15)		-			752,220
		5,867,452			2,586,151
Stockholders’ equity
Capital stock (Note 12)
Capital stock (Note 11)
Authorized
300,000,000 common shares, par value $0.001 and
50,000,000 preferred shares, par value $0.001
Issued and outstanding
31 December 2009 – 78,055,985 common shares, par value $0.001
31 December 2010 – 88,158,118 common shares, par value $0.001
31 December 2008 – 58,469,456 common shares, par value $0.001		78,056			58,469
31 December 2009 – 78,055,985 common shares, par value $0.001		88,158			78,056
Share subscriptions received in advance (Note 12)		70,000			-
Share subscriptions received in advance (Note 11)		240,000			70,000
Additional paid in capital		2533,~~336~~448,~~424~~191			725,~~945~~336,~~496~~424
Warrants (Note 12)		3,572,255			3,976,863
Warrants (Note 11)		4,532,526			3,572,255
Deficit, accumulated during the exploration stage		(1643,~~622~~877,~~828~~689	)		(616,~~873~~622,~~664~~828	)
		12,433,907			5,107,164
		(5,568,814	)		12,433,907
Non-controlling interest		~~5,410,000~~-			-5,410,000
		17,843,907			5,107,164
		(5,568,814	)		17,843,907
		20,430,058			5,667,434
		298,638			20,430,058

Nature, Basis of Presentation and Continuance of Operations (Note 1), Commitments (Note 1618) , Contingencies (Note 19) and Subsequent Events (Note 1822)

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

F - 2

Table of Contents

~~Constitution Mining~~Goldsands ~~Corp.~~Development Company

(formerly Constitution Mining Corp.)

(An Exploration Stage Company)

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in U.S. Dollars)

	For the period from the date of inception on 6 March 2000 to 31 December 2009 (Unaudited)			For the year ended 31 December 2009			For the year ended 31 December 2008			For the year ended 31 December 2007
	For the period from the date of inception on 6 March 2000 to 31 December 2010 (Unaudited)			For the year ended 31 December 2010			For the year ended 31 December 2009			For the year ended 31 December 2008
		$			$			$			$
Expenses
Amortization expense (Notes 6 and 7)		275,049			74,168			40,379			32,100
Amortization expense (Notes 5 and 6)		359,836			84,787			74,168			40,379
Default on oil and gas deposit		25,000			-			-			-
Exploration costs (Note 8)		3,735,457			2,810,496			924,961			-
Exploration costs (Notes 7 and 10)		5,398,553			1,663,096			2,810,496			924,961
Interest		165,327			38,802			-			74,770
Interest (Notes 9, 13 and 14)		2,266,156			2,100,829			38,802			-
Investor relations		2,095,097			1,326,379			668,992			99,726
Investor relations (Note 10)		2,501,435			406,338			1,326,379			668,992
Management fees (Note 11)		782,450			291,367			346,583			132,500
Management fees (Note 10)		1,162,418			379,968			291,367			346,583
Office and miscellaneous		~~434~~550,~~383~~566			~~196~~116,~~225~~182			~~212~~196,~~290~~225			8212,~~608~~290
Professional fees		2,191,925			986,356			909,483			182,793
Professional fees (Note 10)		2,932,087			740,162			986,356			909,483
Rent (Note 11)		165,330			60,525			89,722			12,683
Rent		196,381			31,051			60,525			89,722
Stock-based compensation (Note 13)		7,120,480			4,461,838			2,033,607			625,035
Stock-based compensation (Note 12)		10,693,228			3,572,749			4,461,838			2,033,607
Travel		~~439~~593,~~436~~384			~~131~~153,~~862~~948			~~253~~131,~~688~~862			53253,~~886~~688
Write-down of mineral property acquisition costs (Note 8)		4,339,330			4,339,330			-			-
Write-down of equipment (Note 5)		26,611			-			26,611			-
Write-down of property and equipment (Note 6)		26,611			26,611			-			-
Write-down of mineral property costs (Note 7)		22,611,959			18,272,629			4,339,330			-
Net operating loss before other items		(2149,~~795~~317,~~875~~614	)		(1427,~~743~~521,~~959~~739	)		(514,~~479~~743,~~705~~959	)		(15,~~222~~479,~~101~~705	)
Other items
Foreign exchange income (loss)		26,287			27,941			393			(2,047	)
Foreign exchange income		44,375			18,088			27,941			393
Gain on sale of oil and gas property (Notes 4 and 15)		307,115			-			307,115			-
Gain on sale of oil and gas property		307,115			-			-			307,115
Interest income		12,795			4-			~~7,364~~4			57,~~427~~364
Provision for potential legal claims (Note 9)		(65,000	)		135,000			(200,000	)		-
Provision for potential legal claims (Note 8)		(65,000	)		-			135,000			(200,000	)
Project management fees		60,000			-			~~60,000~~-			-60,000
		341,197			162,945			174,872			3,380
Recovery of mineral property costs (Note 7)		210,070			210,070			-			-
Net operating loss before income taxes		(21,454,678	)		(14,581,014	)		(5,304,833	)		(1,218,721	)
Warrant expense (Note 11)		(713,500	)		(713,500	)		-			-
Future income tax recovery (Note 14)		4,831,850			4,831,850			-			-
		(144,145	)		(485,342	)		162,945			174,872
Net loss and comprehensive loss for the period		(16,622,828	)		(9,749,164	)		(5,304,833	)		(1,218,721	)
Net operating loss before income taxes		(49,461,759	)		(28,007,081	)		(14,581,014	)		(5,304,833	)
Basic and diluted loss per common share					(0.152	)		(0.100	)		(0.025	)
Future income tax recovery (Note 15)		5,584,070			752,220			4,831,850			-
Weighted average number of common shares used in per share calculations					64,212,477			52,812,105			47,875,502
Net loss and comprehensive loss for the period		(43,877,689	)		(27,254,861	)		(9,749,164	)		(5,304,833	)
Basic and diluted loss per common share					(0.328	)		(0.152	)		(0.100	)
Weighted average number of common shares used in per share calculations					82,979,799			64,212,477			52,812,105

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

F - 3

Table of Contents

~~Constitution Mining~~Goldsands ~~Corp.~~Development Company

(formerly Constitution Mining Corp.)

(An Exploration Stage Company)

Consolidated Statements of ~~Changes~~Cash ~~in Stockholders’ Equity~~Flows

(Expressed in U.S. Dollars)

	For the period from the date of inception on 6 March 2000 to 31 December 2010 (Unaudited)			For the year ended 31 December 2010			For the year ended 31 December 2009			For the year ended 31 December 2008
		$			$			$			$

Cash flows used in operating activities
Net loss for the period		(43,877,689	)		(27,254,861	)		(9,749,164	)		(5,304,833	)
Adjustments to reconcile loss to net cash used by operating activities
Accrued interest (Notes 9, 13 and 14)		2,193,789			2,067,264			-			-
Amortization (Notes 5 and 6)		359,836			84,787			74,168			40,379
Contributions to capital by related party expenses (Notes 10 and 16)		15,000			-			-			-
Future income tax recovery (Note 15)		(5,584,070	)		(752,220	)		(4,831,850	)		-
Warrant expense (Note 11)		713,500			713,500			-			-
Common shares issued for services (Note 11)		24,199			-			-			24,199
Warrants issued for services (Notes 11 and 16)		25,252			-			-			25,252
Gain on sale of oil & gas property		(307,115	)		-			-			(307,115	)
Stock-based compensation (Note 12)		10,693,228			3,572,749			4,461,838			2,033,607
Write-down of mineral property costs (Note 7)		22,611,959			18,272,629			4,339,330			-
Write-down of equipment (Note 5)		26,611			-			26,611			-
Recovery of mineral property costs (Note 7)		(210,070	)		(210,070	)		-			-
Changes in operating assets and liabilities
(Increase) decrease in prepaid expenses		(20,072	)		2,652			248,526			(221,542	)
(Increase) decrease in amounts receivable (Note 4)		(76,432	)		14,643			(31,075	)		(56,000	)
Increase (decrease) in accounts payable and accrued liabilities (Note 8)		1,696,647			1,312,666			(163,910	)		485,104
Increase (decrease) in due to related parties (Note 9)		(439,972	)		(703,839	)		263,867			-

		(12,155,399	)		(2,880,100	)		(5,361,659	)		(3,280,949	)

Cash flows used in investing activities
Acquisition of mineral property interest (Note 7)		(887,842	)		(327,260	)		(360,322	)		(200,260	)
Business acquisition, net of cash received (Note 20)		(2,499,908	)		(1,000,000	)		(749,908	)		(750,000	)
Purchase of equipment (Note 5)		(286,564	)		(71,974	)		(89,560	)		(125,030	)
Website development costs (Note 6)		(64,693	)		-			-			(64,693	)
Purchase of oil and gas property		(642,006	)		-			-			-

		(4,381,013	)		(1,399,234	)		(1,199,790	)		(1,139,983	)

Cash flows from financing activities
Issuance of common shares, net of share issue costs (Note 11)		7,814,443			3,163,581			3,305,602			692,309
Increase in due to related parties (Note 9)		87,304			60,000			14,925			991
Issuance of warrants (Note 11)		7,363,846			314,809			3,309,467			3,739,570
Convertible debentures		665,000			-			-			-
Loans payable (Note 14)		370,000			370,000			-			-
Share subscriptions received in advance (Note 11)		240,000			170,000			70,000			-

		16,540,593			4,078,390			6,699,994			4,432,870

Increase in cash and cash equivalents		4,181			(200,944	)		138,545			11,938

Cash and cash equivalents, beginning of period		-			205,125			66,580			54,642

Cash and cash equivalents, end of period		4,181			4,181			205,125			66,580

~~For the~~Supplemental ~~years~~Disclosures ~~ended~~with 31Respect ~~December~~of ~~2009,~~Cash ~~2008~~Flows ~~and 2007~~ (~~Audited),~~Note ~~and~~16)

	Number of shares issued		Share capital		Additional paid-in capital		Share subscriptions received in advance		Warrants		Deficit, accumulated during the exploration stage		Non- controlling interest		Total stockholders’ equity
				$		$		$	$			$		$		$
Balance at 6 March 2000 (inception)
Common shares issued – cash		2,000,000		2,000		1,000	-		-			-		-		3,000
Net loss for the period		-		-		-		-		-		(2,291)		-		(2,291)
Balance at 31 December 2000		2,000,000		2,000		1,000	-		-			(2,291)		-		709
Common shares issued – cash		5,000,000		5,000		42,000	-		-			-		-		47,000
Net loss for the year		-		-		-		-		-		(10,571)		-		(10,571)
Balance at 31 December 2001		7,000,000		7,000		43,000			-			(12,862)		-		37,138
Net loss for the year		-		-		-		-		-		(12,097)		-		(12,097)
Balance at 31 December 2002		7,000,000		7,000		43,000	-		-			(24,959)		-		25,041
Net loss for the year		-		-		-		-		-		(11,019)		-		(11,019)
Balance at 31 December 2003		7,000,000		7,000		43,000	-		-			(35,978)		-		14,022
3 for 1 forward split		14,000,000		14,000		(14,000)	-		-			-		-		-
Net loss for the year		-		-		-		-		-		(6,451)		-		(6,451)
Balance at 31 December 2004		21,000,000		21,000		29,000	-		-			(42,429)		-		7,571
or 1 forward split		21,000,000		21,000		(21,000)	-		-			-		-		-
Net loss for the year		-		-		-		-		-		(18,338)		-		(18,338)
Balance at 31 December 2005		42,000,000		42,000		8,000	-		-			(60,767)		-		(10,767)
Common shares issued – cash		4,000,000		4,000		76,000	-		-			-		-		80,000
Contributions to capital by related party – expenses (Notes 11 and 15)		-		-		14,400	-		-			-		-		14,400
Net loss for the year		-		-		-		-		-		(289,343)		-		(289,343)
Balance at 31 December 2006		46,000,000		46,000		98,400	-		-			(350,110)		-		(205,710)
Contributions to capital by related party – expenses (Notes 11 and 15)		-		-		600	-		-			-		-		600
Common shares issued – debt		1,145,300		1,145		21,761	-		-			-		-		22,906
Common shares issued – cash		1,437,000		1,437		501,513	-		-			-		-		502,950
Stock-based compensation (Note 13)		-		-		625,035	-		-			-		-		625,035
Net loss for the year		-		-		-		-		-		(1,218,721)		-		(1,218,721)
Balance at 31 December 2007		48,582,300		48,582		1,247,309	-		-			(1,568,831)		-		(272,940)
Common shares issued – mineral properties (Notes 8, 12 and 15)		3,800,000		3,800		4,166,200	-		-			-		-		4,170,000
Common shares issued – cash (Note 11)		6,016,511		6,016		4,706,272	-		-			-		-		4,712,288
Common shares issued – services (Notes 12 and 15)		70,645		71		49,380	-		-			-		-		49,451
Value assigned to warrants (Note 12)		-		-		(3,739,570)	-		3,739,570			-		-		-
Share issuance costs		-		-		(517,702)	-		237,293			-		-		(280,409)
Stock-based compensation (Note 13)		-		-		2,033,607	-		-			-		-		2,033,607
Net loss for the year		-		-		-		-		-		(5,304,833)		-		(5,304,833)
Balance at 31 December 2008		58,469,456		58,469		7,945,496	-		3,976,863			(6,873,664)		-		5,107,164
Common shares issued – mineral properties (Notes 8, 12 and 15)		2,300,000		2,300		1,676,700	-		-			-		-		1,679,000
Common shares issued – cash (Note 12)		12,786,529		12,787		6,812,536	-		-			-		-		6,825,323
Value assigned to warrants (Note 12)		-		-		(3,309,467)	-		3,309,467					-		-
Warrants expired (Note 12)		-		-		3,739,570	-		(3,739,570)			-		-		-
Agent compensation warrants expired (Note 12)		-		-		237,293	-		(237,293)			-		-		-
Share issuance costs		-		-		(473,042)	-		262,788			-		-		(210,254)
Share subscription received in advance (Note 12)		-		-		-	70,000		-			-		-		70,000
Business acquisition (Notes 8, 12, 15 and 17)		4,500,000		4,500		4,245,500	-		-			-		5,410,000		9,660,000
Stock-based compensation (Note 13)		-		-		4,461,838	-		-			-		-		4,461,838
Net loss for the year		-		-		-		-		-		(9,749,164)		-		(9,749,164)
Balance at 31 December 2009		78,055,985		78,056		25,336,424		70,000		3,572,255		(16,622,828)		5,410,000		17,843,907

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

F - 4

Table of Contents

~~Constitution Mining~~Goldsands ~~Corp.~~Development Company

(formerly Constitution Mining Corp.)

(An Exploration Stage Company)

Consolidated Statements of ~~Cash~~Changes ~~Flows~~in Stockholders’ Equity

	For the period from the date of inception on 6 March 2000 to 31 December 2009 (Unaudited)			For the year ended 31 December 2009			For the year ended 31 December 2008			For the year ended 31 December 2007
		$			$			$			$
Cash flows used in operating activities
Net loss for the period		(16,622,828	)		(9,749,164	)		(5,304,833	)		(1,218,721	)
Adjustments to reconcile loss to net cash used by operating activities
Accrued interest		126,525			-			-			74,770
Amortization (Notes 6 and 7)		275,049			74,168			40,379			32,100
Contributions to capital by related party expenses		15,000			-			-			600
Future income tax recovery		(4,831,850	)		(4,831,850	)		-			-
Shares issued for services (Notes 12 and 15)		24,199			-			24,199			-
Warrants issued for services (Notes 12 and 15)		25,252			-			25,252			-
Gain on sale of oil & gas property (Notes 4 and 15)		(307,115	)		-			(307,115	)		-
Stock-based compensation (Note 13)		7,120,480			4,461,838			2,033,607			625,035
Write-down of mineral property acquisition costs (Note 8)		4,339,330			4,339,330			-			-
Write-down of property and equipment (Note 6)		26,611			26,611			-			-
Changes in operating assets and liabilities
(Increase) decrease in prepaid expenses		(22,724	)		248,526			(221,542	)		(49,708	)
Increase in amounts receivable		(91,075	)		(31,075	)		(56,000	)		(4,000	)
Increase in accounts payable and accrued liabilities		383,981			(163,910	)		485,104			55,054
Increase in due to related parties		263,867			263,867			-			-
		(9,275,298	)		(5,361,659	)		(3,279,958	)		(475,780	)
Cash flows used in investing activities
Acquisition of mineral property interest (Note 8)		(560,582	)		(360,322	)		(200,260	)		-
Business acquisition, net of cash received (Note 17)		(1,499,908	)		(749,908	)		(750,000	)		-
Purchase of equipment (Note 6)		(214,590	)		(89,560	)		(125,030	)		-
Website development costs (Note 7)		(64,693	)		-			(64,693	)		-
Purchase of oil and gas property (Note 4)		(642,006	)		-			-			-
		(2,981,779	)		(1,199,790	)		(1,139,983	)		-
Cash flows from financing activities
Issuance of common shares, net of share issue costs (Note 12)		4,650,861			3,305,602			692,309			502,950
Increase in due to related parties		27,304			14,925			991			9,090
Issuance of warrants (Note 12)		7,049,037			3,309,467			3,739,570			-
Convertible debentures		665,000			-			-			-
Share subscriptions received in advance (Note 12)		70,000			70,000			-			-
		12,462,202			6,699,994			4,431,879			502,950
Increase in cash and cash equivalents		205,125			138,545			11,938			27,170
Cash and cash equivalents, beginning of period		-			66,580			54,642			27,472
Cash and cash equivalents, end of period		205,125			205,125			66,580			54,642

(Expressed in U.S. Dollars)

~~Supplemental~~For ~~Disclosures~~the ~~with~~years ~~Respect of~~ended ~~Cash~~31 ~~Flows~~December ~~(Note~~2010, 152009 and 2008 (Audited), and

For the period from the date of inception on 6 March 2000 to 31 December 2010 (Unaudited)

	Number of shares issued		Share capital		Additional paid-in capital			Share subscriptions received in advance		Warrants			Deficit, accumulated during the exploration stage			Non- controlling interest		Total stockholders’ equity
				$		$			$		$			$			$		$
Balance at 6 March 2000 (inception)
Common shares issued – cash		2,000,000		2,000		1,000			-		-			-			-		3,000
Net loss for the period		-		-		-			-		-			(2,291	)		-		(2,291	)

Balance at 31 December 2000		2,000,000		2,000		1,000			-		-			(2,291	)		-		709
Common shares issued – cash		5,000,000		5,000		42,000			-		-			-			-		47,000
Net loss for the year		-		-		-			-		-			(10,571	)		-		(10,571	)

Balance at 31 December 2001		7,000,000		7,000		43,000					-			(12,862	)		-		37,138
Net loss for the year		-		-		-			-		-			(12,097	)		-		(12,097	)

Balance at 31 December 2002		7,000,000		7,000		43,000			-		-			(24,959	)		-		25,041
Net loss for the year		-		-		-			-		-			(11,019	)		-		(11,019	)

Balance at 31 December 2003		7,000,000		7,000		43,000			-		-			(35,978	)		-		14,022
3 for 1 forward split		14,000,000		14,000		(14,000	)		-		-			-			-		-
Net loss for the year		-		-		-			-		-			(6,451	)		-		(6,451	)

Balance at 31 December 2004		21,000,000		21,000		29,000			-		-			(42,429	)		-		7,571
2 for 1 forward split		21,000,000		21,000		(21,000	)		-		-			-			-		-
Net loss for the year		-		-		-			-		-			(18,338	)		-		(18,338	)

Balance at 31 December 2005		42,000,000		42,000		8,000			-		-			(60,767	)		-		(10,767	)
Common shares issued – cash		4,000,000		4,000		76,000			-		-			-			-		80,000
Contributions to capital by related party – expenses (Notes 10 and 16)		-		-		14,400			-		-			-			-		14,400
Net loss for the year		-		-		-			-		-			(289,343	)		-		(289,343	)
Balance at 31 December 2006		46,000,000		46,000		98,400			-		-			(350,110	)		-		(205,710	)
Contributions to capital by related party – expenses (Notes 10 and 16)		-		-		600			-		-			-			-		600
Common shares issued – debt		1,145,300		1,145		21,761			-		-			-			-		22,906
Common shares issued – cash		1,437,000		1,437		501,513			-		-			-			-		502,950
Stock-based compensation		-		-		625,035			-		-			-			-		625,035
Net loss for the year		-		-		-			-		-			(1,218,721	)		-		(1,218,721	)

Balance at 31 December 2007		48,582,300		48,582		1,247,309			-		-			(1,568,831	)		-		(272,940	)
Common shares issued – mineral properties (Notes 7, 11 and 16)		3,800,000		3,800		4,166,200			-		-			-			-		4,170,000
Common shares issued – cash (Note 11)		6,016,511		6,016		4,706,272			-		-			-			-		4,712,288
Common shares issued – services (Notes 11 and 16)		70,645		71		49,380			-		-			-			-		49,451
Value assigned to warrants (Note 11)		-		-		(3,739,570	)		-		3,739,570			-			-		-
Share issuance costs		-		-		(517,702	)		-		237,293			-			-		(280,409	)
Stock-based compensation (Note 12)		-		-		2,033,607			-		-			-			-		2,033,607
Net loss for the year		-		-		-			-		-			(5,304,833	)		-		(5,304,833	)

Balance at 31 December 2008		58,469,456		58,469		7,945,496			-		3,976,863			(6,873,664	)		-		5,107,164
Common shares issued – mineral properties (Notes 7, 11 and 16)		2,300,000		2,300		1,676,700			-		-			-			-		1,679,000
Common shares issued – cash (Note 11)		12,786,529		12,787		6,812,536			-		-			-			-		6,825,323
Value assigned to warrants (Note 11)		-		-		(3,309,467	)		-		3,309,467						-		-
Warrants expired (Note 11)		-		-		3,739,570			-		(3,739,570	)		-			-		-
Agent compensation warrants expired (Note 11)		-		-		237,293			-		(237,293	)		-			-		-
Share issuance costs		-		-		(473,042	)		-		262,788			-			-		(210,254	)
Share subscription received in advance (Note 11)		-		-		-			70,000		-			-			-		70,000
Business acquisition (Notes 7, 11, 16 and 20)		4,500,000		4,500		4,245,500			-		-			-			5,410,000		9,660,000
Stock-based compensation (Note 12)		-		-		4,461,838			-		-			-			-		4,461,838
Net loss for the year		-		-		-			-		-			(9,749,164	)		-		(9,749,164	)

Balance at 31 December 2009		78,055,985		78,056		25,336,424			70,000		3,572,255			(16,622,828	)		5,410,000		17,843,907

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

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~~Constitution Mining~~Goldsands ~~Corp.~~Development Company

(formerly Constitution Mining Corp.)

(An Exploration Stage Company)

~~Notes to~~ Consolidated ~~Financial~~ Statements of Changes in Stockholders’ Equity

(Expressed in U.S. Dollars)

1.For ~~Nature,~~the ~~Basis~~years ofended ~~Presentation~~31 December 2010, 2009 and ~~Continuance~~2008 of(Audited), ~~Operations~~and

For the period from the date of inception on 6 March 2000 to 31 December 2010 (Unaudited)

Constitution Mining Corp. (the “Company”) was incorporated in the State of Nevada under the name “Crafty Admiral Enterprises, Ltd.” on 6 March 2000. On 9 March 2007, the Company changed their name to “Nordic Nickel Ltd.”. The Company changed their name pursuant to a parent/subsidiary merger between the Company (as Crafty Admiral Enterprises, Ltd.) and its wholly-owned non-operating subsidiary, Nordic Nickel Ltd., which was established for the purpose of giving effect to this name change. On 15 November 2007, the Company changed its name to “Constitution Mining Corp.”. The Company changed their name pursuant to a parent/subsidiary merger between the Company (as Nordic Nickel Ltd.) and its wholly-owned non-operating subsidiary, Constitution Mining Corp., which was established for the purpose of giving effect to this name change. On 21 October 2009, the Company reincorporated in the State of Delaware. The Company is in the exploration stage as its operations principally involve the examination and investigation of land that may contain valuable minerals, for the purpose of discovering the presence of ore, if any, and its extent.

	Number of shares issued		Capital stock		Additional paid–in capital			Share subscriptions received in advance			Warrants			Deficit accumulated during the exploration stage			Non- controlling interest			Total stockholders’ equity
				$		$			$			$			$			$			$
Balance at 31 December 2009		78,055,985		78,056		25,336,424			70,000			3,572,255			(16,622,828	)		5,410,000			17,843,907
Common shares issued – mineral properties (Notes 7, 11 and 16)		500,000		500		404,500			-			-			-			-			405,000
Common shares issued – cash (Note 11)		5,141,421		5,141		3,336,778			(70,000	)		-			-			-			3,271,919
Value assigned to warrants (Note 11)		-		-		(314,809	)		-			314,809			-			-			-
Modification of warrants (Note 11)		-		-		-			-			713,500			-			-			713,500
Warrants expired (Note 11)		-		-		24,629			-			(24,629	)		-			-			-
Share issuance costs		-		-		(191,438	)		-			5,413			-			-			(186,025	)
Warrants exercised (Note 11)		460,712		461		370,859			-			(48,822	)		-			-			322,498
Business acquisition (Notes 7, 11, 16 and 20)		4,000,000		4,000		(4,954,000	)		-			-			-			(5,410,000	)		(10,360,000	)
Stock-based compensation (Note 12)		-		-		3,572,748			-			-			-			-			3,572,748
Beneficial conversion feature (Note 13)		-		-		5,862,500			-			-			-			-			5,862,500
Share subscriptions received in advance (Note 11)		-		-		-			240,000			-			-			-			240,000
Net loss for the year		-		-		-			-			-			(27,254,861	)		-			(27,254,861	)

Balance at 31 December 2010		88,158,118		88,158		33,448,191			240,000			4,532,526			(43,877,689	)		-			(5,568,814	)

The ~~Company~~ isaccompanying annotes ~~exploration~~are ~~stage~~an ~~enterprise,~~integral aspart ~~defined in Accounting Standards Codification (the “Codification” or “ASC”) 915-10, “Development Stage Entities”. The Company is devoting all~~ of ~~its~~these ~~present~~consolidated ~~efforts~~financial ~~in securing and establishing a new business, and its planned principle operations have not commenced, and, accordingly, no revenue has been derived during the organization period~~statements.

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to exploration stage enterprises, and are expressed in U.S. dollars. The Company’s fiscal year end is 31 December.

The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, Constitution Mining Argentina SA, a company incorporated under the laws of Argentina, since its date of incorporation on 4 March 2008. The Company also follows ASC 810-10 and fully consolidates the assets, liabilities, revenues and expenses of Bacon Hill Invest Inc. (“Bacon Hill”), a company incorporated under the law of Panama. The Company owns a 50% interest in Bacon Hill. It recognizes the other owner’s equity under the heading noncontrolling interest.

The Company’s consolidated financial statements as at 31 December 2009 and for the year then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company had a loss of $9,749,164 for the year ended 31 December 2009 (31 December 2008 – $5,304,833) and has working capital deficit of $1,480,730 at 31 December 2009 (31 December 2008 – $162,440).

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 31 December 2010. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

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Table of Contents

~~Constitution Mining~~Goldsands ~~Corp.~~Development Company

(formerly Constitution Mining Corp.)

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2010

~~On 27 June 2006, the Company acquired a 100% interest in an oil and gas property lease located in St~~1. ~~Francis County~~ Nature, ~~Arkansas~~Basis ~~(the “Tombaugh Lease”) for cash payment~~ of ~~$642,006~~Presentation ~~(Note 4). In 2007, the Company shifted its focus from oil~~ and ~~gas~~Continuance ~~sector~~of ~~to mineral exploration.~~Operations

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