SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the Quarter Ended February 28, 2011

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM _______________________ TO _______________________

Commission File # 000-53375

GUINNESS EXPLORATION, INC.

(Exact name of registrant as specified in its charter)

Nevada

(State or other jurisdiction of incorporation or organization)

98-0465540

(IRS Employer Identification Number)

Suite 12E, Eclipse, 156 Vincent West

Auckland, New Zealand 1010

(Address of principal executive offices) (Zip Code)

(509) 252-9157

(Registrant’s telephone no., including area code)

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated file.

	Large accelerated filer	o	Accelerated filer	o
	Non-accelerated filer	o	Smaller reporting company	x

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

The issuer had 129,325,000 shares of common stock issued and outstanding as of April 19, 2011.

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GUINNESS EXPLORATION, INC.

(An Exploration Stage Company)

Table of Contents

			Page
PART I. Financial Information

	Item 1. Financial Statements.

		Consolidated Balance Sheets at February 28, 2011 (unaudited) and May 31, 2010 (audited)	1

		Unaudited Consolidated Statements of Operations for the three and nine month periods ended February 28, 2011 and February 28, 2010 and the Exploration Stage Period of July 15, 2005 to February 28, 2011	2

		Unaudited Consolidated Statements of Cash Flows for the nine month periods ended February 28, 2011 and February 28, 2010 and the Exploration Stage Period of July 15, 2005 to February 28, 2011	3

		Unaudited Consolidated Supplemental Disclosure of Cash Flow Information for the nine month periods ended February 28, 2011 and February 28, 2010 and the Exploration Stage Period of July 15, 2005 to February 28, 2011	4

		Unaudited Consolidated Supplemental Disclosure of Non-Cash Investing and Financing Activities for the nine month periods ended February 28, 2011 and February 28, 2010 and the Exploration Stage Period of July 15, 2005 to February 28, 2011	4

		Unaudited Notes to Consolidated Financial Statements	5

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		14

	Item 3. Quantitative and Qualitative Disclosures about Market Risk		32

	Item 4. Controls and Procedures		32

PART II. Other Information			34

	Item 1. Legal Proceedings		34

	Item 1a. Risk Factors		38

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		38

	Item 3. Defaults Upon Senior Securities		38

	Item 4. Submission of Matters to a Vote of Security Holders		38

	Item 5. Other Information		38

	Item 6. Exhibits		39

Signatures			39

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (unaudited)

QIII-11

Nine month Period Ended February 28, 2011

GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Balance Sheets

	February 28, 2011 (unaudited)			May 31, 2010 (See Note 1)
ASSETS
CURRENT ASSETS
Cash	$	24,535		$	973,227
Prepaid expenses		3,901			191,726
Total current assets		28,436			1,164,953

OTHER ASSETS
Mineral property (Notes 2, 4, 5, 6, 7, and 9)		-			-
Total other assets		-			-

Total assets	$	28,436		$	1,164,953

LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses	$	8,793		$	87,327
Note payable (Note 5)		-			471,934
Total current liabilities	$	8,793		$	559,261

COMMITMENTS AND CONTINGENCIES (Notes 3, 4, 5, 6, 7, 8 and 9)		-			-

STOCKHOLDERS’ EQUITY
Preferred shares, 100,000,000 shares authorized with par value $0.001 authorized, 0 shares issued and outstanding	$	-		$	-
Common shares, 500,000,000 shares with par value $0.001 authorized, 129,325,000 and 134,325,000 issued and outstanding at February 28, 2011 and May 31, 2010, respectively (Note 7)		129,325			134,325
Paid-in Capital		1,985,975			1,980,975
Accumulated deficit during the exploration stage		(2,097,984	)		(1,509,608	)
Accumulated other comprehensive income		2,327			-
Total stockholders’ equity	$	19,643		$	605,692

Total liabilities and stockholders’ equity	$	28,436		$	1,164,953

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

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Statements of Operations

(Unaudited)

	Three months ended February 28, 2011			Three months ended February 28, 2010			Nine months ended February 28, 2011			Nine months ended February 28, 2010			July 15, 2005 (inception) through February 28, 2011

EXPENSES:
Exploration costs	$	1,006		$	7,725		$	801,090		$	7,725		$	978,505
Professional fees		34,232			48,463			116,979			62,214			332,149
Administrative expenses		21,443			8,244			79,244			11,066			120,280
Investor relations		13,785			25,100			62,997			26,530			109,293
Impairments on mineral properties (Note 9)		-			1,005,668			-			1,005,668			1,021,653
Total expenses		70,466			1,095,200			1,060,310			1,113,203			2,561,880

Net (loss) from Operations	$	(70,466	)	$	(1,095,200	)	$	(1,060,310	)	$	(1,113,203	)	$	(2,561,880	)
OTHER INCOME (EXPENSE):
Cancelation of debt relating to property purchase		-			-			471,934			-			471,934
Interest expense		-			(1,170	)		-			(3,355	)		(8,038	)
NET (LOSS)	$	(70,466	)	$	(1,096,370	)	$	(588,376	)	$	(1,116,558	)	$	(2,097,984	)

Net Loss per common share, basic and diluted	$	Nil		$	(0.01	)	$	Nil		$	(0.01	)
Weighted average shares outstanding		129,325,000			116,887,500			132,676,648			86,680,770

OTHER COMPREHENSIVE (LOSS)

Net (loss)		(70,466	)		(1,096,370	)		(588,376	)		(1,116,558	)
Foreign currency translation adjustment		2,327			-			2,327			-
Other Comprehensive (Loss)		(68,139	)		(1,096,370	)		(586,049	)		(1,116,558	)

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

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

	Nine months ended February 28, 2011			Nine months ended February 28, 2010			July 15, 2005 (inception) through February 28, 2011

Cash flows from operating activities:
Net loss for the period	$	(588,376	)	$	(1,116,558	)	$	(2,097,984	)
Reconciling adjustments:
Adjustments to reconcile net loss
to net cash used in operating activities:
Gain on Cancelation of debt		(471,934	)		—			(471,934	)
Accrued interest on shareholder loans		—			3,355			—
Payments for interest on shareholder loans		—			(3,355	)
Mineral properties impairments		—			1,005,668			1,021,653
Net change in operating assets and liabilities
Prepaid expenses		187,825			(21,769	)		(3,901	)
Accounts payable and accrued expenses		(78,534	)		3,667			8,793
Net cash (used) by operating activities		(951,019	)		(128,992	)		(1,543,373	)

Cash flows from investing activities:
Payments for Mineral Properties		—			(471,934	)		(487,919	)
Net cash (used) by investing activities		—			(471,934	)		(487,919	)

Cash flows from financing activities:
Common stock issued for cash		—			1,500,000			2,053,500
Proceeds from shareholder loans		—			51,663			—
Payments to shareholder loans		—			(137,948	)		—
Net cash provided by financing activities		—			1,413,715			2,053,500

Effect of foreign currency exchange rates on cash		2,327			—			2,327

Net increase (decrease) in cash		(948,692	)		812,789			24,535

Cash, beginning of period		973,227			20,638			—

Cash, end of period	$	24,535		$	833,427		$	24,535

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

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Consolidated Supplemental Disclosure of Cash Flow Information

(Unaudited)

	Nine months ended February 28, 2011		Nine months ended February 28, 2010		July 15, 2005 (inception) through February 28, 2011

Cash paid for interest	$	—	$	—	$	8,038

Consolidated Supplemental Disclosure of Non-cash Investing and Financing Activities

(Unaudited)

	Nine months ended February 28, 2011			Nine months ended February 28, 2010		July 15, 2005 (inception) through February 28, 2011

Common stock issued for property purchase payment	$	—		$	—	$	61,800
Note payable issued for property purchase payment		—			—		471,934
Cancellation of debt		(471,934	)		—		(471,934	)
Cancellation of stock - adjustment to common shares		(5,000	)		—		(5,000	)
Cancellation of stock - adjustment to additional paid in capital		5,000			—		5,000

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

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 1 – Basis of Presentation

The financial statements included herein have been prepared by Guinness Exploration, Inc. (“Guinness”, “We”, the “Registrant”, or the “Company”) in accordance with accounting principles generally accepted in the United States for interim financial information. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted as allowed by such rules and regulations, and the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the May 31, 2010 audited financial statements and the accompanying notes included in the Company’s Form 10-K filed with the Commission. While management believes the procedures followed in preparing these financial statements are reasonable, the accuracy of the amounts are in some respects dependent upon the facts that will exist, and procedures that will be followed by the Company later in the year. The results of operations for the interim periods are not necessarily indicative of the results for the full year. In management’s opinion all adjustments necessary for a fair presentation of the Company’s financial statements are reflected in the interim periods included, and are of a normal recurring nature. Amounts shown for May 31, 2010 are based upon the audited financial statements of that date.

Exploration Stage Activities

The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations. The Company was formed for the purposes of acquiring exploration and development stage mineral properties. The Company began exploration operations during fiscal 2010 in Yukon, Canada.

Note 2 – Summary of Significant Accounting Policies

This summary of significant accounting policies is presented to assist in understanding Guinness Exploration Inc.’s financial statements. The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements, which are stated in U.S. Dollars.

The financial statements reflect the following significant accounting policies:

Exploration Stage Company

The Company is devoting substantially all of its present efforts to establish a new business and none of its planned principal operations have commenced. As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date.

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Exploration Costs and Mineral Property Right Acquisitions

The Company is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized when incurred. The Company assesses the carrying costs for impairment under Accounting Standards 930 Extractive Activities – Mining (AS 930) at each fiscal quarter end. An impairment is recognized when the sum of the expected undiscounted future cash flows is less than the carrying amount of the mineral property. Impairment losses, if any, are measured as the excess of the carrying amount of the mineral property over its estimated fair value. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs then incurred to develop such property, are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the proven and probable reserves. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.

Consolidation of Financial Statements

These financial statements include the accounts of the Company and its subsidiary Nantawa Resources Inc., on a consolidated basis. All inter-company accounts have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Basic and Diluted Net Loss per Share

Basic loss per share is calculated by dividing the net loss available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss available to common stockholders by common stock equivalents.

At February 28, 2011, common stock equivalents outstanding included 2,500,000 common share purchase warrants. These warrants were issued as part of two unit offerings which completed on February 10, 2010 and May 10, 2010. These offerings were respectively comprised of 1,875,000 Units priced at US$0.80 per Unit; and 625,000 Units priced at US$0.80 per Unit. In each offering, each Unit consisted of one share of common stock of Guinness (each, a "Share"); and one common share purchase warrant (each a “Warrant”) subject to adjustment for stock splits, or stock dividends. Each whole Warrant is non-transferable and entitles the holder to purchase one common share of Guinness (each, a “Warrant Share”), as presently constituted, for a period of twenty four months beginning February 10, 2010 and May 10, 2010, respectively, at a price per Warrant Share of US$2.00. These Units were issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Regulation S”) and Guinness did not engage in any general solicitation or advertising regarding this Unit offering.

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Diluted and Basic weighted average shares are the same, as any inclusion of the common stock equivalents would be anti-dilutive.

Estimated Fair Value of Financial Instruments

The carrying value of accounts payable, and other financial instruments reflected in the financial statements approximates fair value due to the short-term maturity of the instruments. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted rates in effect in the years during which the differences are expected to reverse and upon the possible realization of net operating loss carry-forwards. Additionally, the Company has not recognized any amount for a tax position taken or expected to be taken on its tax return, or for any interest or penalties.

Valuation of Long-Lived Assets

The Company periodically analyzes its long-lived assets for potential impairment, assessing the appropriateness of lives and recoverability of un-depreciated balances through measurement of undiscounted operation cash flows on a basis consistent with accounting principles generally accepted in the United States of America.

Start-up Costs

The Company expenses the cost of start-up activities, including organizational costs, as those costs are incurred.

Foreign Currency

The books of the Company are maintained in United States dollars and this is the Company’s functional and reporting currency. Transactions denominated in other than the United States dollar are translated as follows with the related transaction gains and losses being recorded in the Statements of Operations:

(i)

Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;

(ii)

Non-Monetary items including equity are recorded at the historical rate of exchange; and

(iii)

Revenues and expenses are recorded at the period average in which the transaction occurred.

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Cash and Cash Equivalents

The Company considers cash and cash equivalents to consist of cash on hand and demand deposits in banks with an initial maturity of 90 days or less.

Recent Accounting Pronouncements

We do not expect the adoption of any recent accounting pronouncements to have a material effect on the financial statements of the Company.

Note 3 – Going Concern

Generally accepted accounting principles in the United States of America contemplate the continuation of the Company as a going concern. However, the Company had a net loss for the nine month period ended February 28, 2011, of $(588,376). Additionally it has accumulated operating losses since its inception and has limited business operations, which raises substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company is dependent upon the continuing financial support of investors and stockholders of the Company. As of February 28, 2011, we projected the Company would need additional cash resources to operate during the upcoming 12 months. The Company intends to attempt to acquire additional operating capital through private equity offerings to the public and existing investors to fund its business plan. However, there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Note 4 – Acquisition of Mineral Properties

Nantawa Agreement, as amended

(NOTE: During the nine months ended February 28, 2011, the Nantawa Agreement has been superseded by The Nantawa Modification Agreement and the corresponding Ansell Agreement (see Note 5). Data regarding the Nantawa Agreement are provided here for reference.)

On November 19, 2009, and as amended on February 4, 2010, the Company signed the Nantawa Agreement for purchase of a 65% ownership interest in two exploration properties in Yukon, Canada. The agreement also includes an option (the “Option”) for Guinness to increase its ownership in the properties by 35%. A copy of which agreement, and the February 4, 2010 Amendment (collectively the “Agreement”), was filed as an Exhibit to a Form 8-K filed April 9, 2010. The terms of the Nantawa Agreement specify Guinness’ wholly owned Yukon subsidiary Nantawa Resources Inc. will receive a 65% interest in the Nantawa properties in

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

return for payment to Eagle Trail Properties Inc. (‘ETPI’) of $1,005,668 (comprised of: $943,868 cash, plus 60,000,000 restricted common shares of Guinness valued at US$0.00103 per share for a total share value of $61,800). These payments are to be made over a 12 month period in two equal installments of $471,934; plus immediate issuance to ETPI of the 60 million restricted common shares. Subsequently, Guinness was required to make a deposit of $951 to maintain the Option and then incur exploration expenditures of $1,895,735 million over a two year period to earn an additional 35% interest. ETPI will retain a 3% Net Smelter Royalty. To confirm the cash payments owed by us to ETPI, we provided ETPI with a Promissory Note (the “Note”), stating our indebtedness to ETPI in the amount of $943,868. This Promissory Note was filed as an Exhibit with a Current Report on Form 8-K on April 9, 2010. To account for this event, $1,005,668 was entered as a mineral property asset, with a corresponding note payable entry. As of May 31, 2010, the Company had insufficient geological evidence, and therefore performed an impairment analysis. Based on that analysis, the Company has recorded an impairment loss on the mineral property asset. On December 29, 2009, to fulfill payment terms of the Nantawa Agreement, the Company issued 60,000,000 restricted shares of its common stock valued at $0.00103 per share to ETPI and made payment of $951 to ETPI. Subsequently on February 12, 2010, the Company paid ETPI $471,934.

Nantawa Modification Agreement

On October 12, 2010, the Company signed the Nantawa Modification Agreement with ETPI in which Guinness received full vesting of a 49% interest in 175 full or fractional mineral claims/leases located in the Mount Nansen area of the Whitehorse Mining District of the Yukon Territory, Canada (the “Mineral Claims”). The other 51% interest in the Mineral Claims was retained by ETPI. The Mineral Claims had been part of the Nantawa Agreement signed between the Company and ETPI on November 19, 2009 and amended February 4, 2010, under which the Company acquired the right to purchase the Mineral Claims and an additional set of 47 mineral claims/leases (the “Tawa Claims”) from ETPI for total consideration of US$1,005,668 (comprised of: US$943,868 cash, plus 60,000,000 restricted common shares of Guinness valued at US$0.00103 per share for a total share value of $61,800). A remaining cash payment of $471,934 under the Nantawa Agreement was due by February 28, 2011 and the Company projected it would not have the resources to fulfill the second payment by February 28, 2011 and the Board determined it was in the best interests of the Company to negotiate revised purchase terms from ETPI for the Mineral Claims. To provide consideration to ETPI, the Company agreed to waive its rights under the Nantawa Agreement to the Tawa Claims, which had lapsed while in trust with ETPI. The Nantawa Modification Agreement had the net effect of resolving the Tawa Claims matter between Guinness and ETPI and has provided the Company an immediate vesting of a 49% interest in the Mineral Claims without the requirement to make further payments to ETPI.

Due to the elimination by ETPI on October 12, 2010 of the requirement for a payment by Guinness of $471,934 by November 30, 2010, these financial statements for the interim period ended February 28, 2011 include an entry to eliminate this liability. A corresponding cancelation of debt income of $471,934 has also been recorded. Per the terms of the Nantawa Modification Agreement, ETPI has also submitted to the Company, and the Company has cancelled, 5,000,000 of the 60,000,000 restricted common shares previously issued to ETPI as a property payment. This cancellation was recorded through a reduction in Paid in Capital of $5,150.

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Note 5 – Ansell Agreement

On March 4, 2011, the Company executed an option agreement (the “Ansell Agreement”) with Ansell Capital Corp. (“Ansell”), ETPI and two individuals (the “Additional Parties”) which will provide funding for the Charlotte Project (formerly named the “Nantawa Project”) in the Mount Nansen area of the Whitehorse Mining Division, of the Yukon Territory, Canada.

Subject to the terms of the Ansell Agreement (incorporated herein by reference), Guinness, ETPI and the Additional Parties (collectively the “CSG Group”), have agreed to grant Ansell an option to acquire up to an 85% undivided interest in the 128 mineral claims which form the Charlotte Project based on Ansell providing financing and expertise for development of the project. Under the Ansell Agreement, ETPI will hold the Charlotte Project claims (the “Properties”) in trust for all parties during the term of the Ansell Agreement. Upon Ansell earning an interest in the Properties, the parties have agreed to form a joint venture to further explore and develop the Properties, all upon and subject to the terms and conditions set out in the Ansell Agreement.

The Ansell Agreement is subject to Ansell obtaining any required approval, consent or acceptance of the Canadian TSX Venture Exchange and any other regulatory body having jurisdiction in connection with the Ansell Agreement, which as specified in the Ansell Agreement, must occur prior to June 1, 2011. Upon approval by the TSX Venture Exchange, Ansell will become the Operator of the project and will bear all project expenditures.

Note 6 – Note Payable

To confirm the cash payments owed by us to ETPI under the Nantawa Agreement, we provided ETPI with a Promissory Note, stating our indebtedness to ETPI in the amount of $943,868. To fulfill our first payment, on February 12, 2010 the Company paid to ETPI $471,934, which was prior to the first installment payment deadline of May 31, 2010. The second installment of $471,934 on the Note was waived by ETPI under that Nantawa Modification Agreement and no further property payments are owing to ETPI.

Note 7 – Common Stock

On February 7, 2006, the Company issued 3,000,000 shares of its common stock to its President for cash. This transaction was valued at a board approved value of $0.001 per share for total proceeds of $3,000.

During the fiscal year ending May 31, 2006, the Company issued 2,525,000 shares of its common stock in a private offering at $0.02 per share for total proceeds of $50,500.

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

On May 26, 2008, the Company declared a 12 for 1 stock dividend. The Record date and Payment date for this stock dividend were June 4, 2008 and June 6, 2008 respectively. The Company instructed its Transfer Agent to round up to one for any fractional interest which resulted in the calculation of the dividend. This dividend had the effect of increasing the issued and outstanding share capital of the Company from 5,525,000 shares to 71,825,000 shares. All references in these financial statements to stock issued and stock outstanding have been retroactively adjusted as if the stock dividend had taken place on July 15, 2005 (inception).

On November 30, 2009, the Company submitted to a vote of the Company's security holders a proposal to increase the authorized common shares limit of the Company from 75,000,000 to 500,000,000 and add authorization for issuance of up to 100,000,000 preferred shares, par value $0.001, for which the Board of Directors may fix and determine the designations, rights, preferences or other variation to each class or series within each class of preferred shares. Shareholder approval for this change was received November 26, 2009 and a Definitive 14C was filed with the Securities Exchange Commission on December 9, 2009.

On December 29, 2009 to fulfill one of the payment terms of the Nantawa Agreement, the Company issued 60,000,000 restricted shares of its common stock valued at $0.00103 per share to Eagle Trail Properties, Inc. representing aggregate proceeds of $61,800. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended and the Company did not engage in any general solicitation or advertising regarding these shares.

On February 10, 2010 Guinness completed a private placement which raised aggregate proceeds of $1,500,000 and was comprised a unit (‘Unit’) sale by Guinness of 1,875,000 Units priced at $0.80 per Unit. Each Unit consists of one common stock of Guinness (each, a "Share"); and one common share purchase warrant (each a “Warrant”) subject to adjustment for stock splits, or stock dividends. Each whole Warrant is non-transferable and entitles the holder to purchase one common share of Guinness (each, a “Warrant Share”), as presently constituted, for a period of twenty four months beginning February 10, 2010 at a price per Warrant Share of $2.00. These Units are being issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Regulation S”) and Guinness did not engage in any general solicitation or advertising regarding this Unit offering.

On May 10, 2010 the Company completed a Unit offering which raised aggregate proceeds of US$500,000 and was comprised a unit (‘Unit’) sale by Guinness of 625,000 Units priced at US$0.80 per Unit for one share of common stock in the capital of Guinness (each, a "Share"); and one common share purchase warrant (each a “Warrant”) subject to adjustment. The US$0.80 per Unit value was allocated US$0.75 to the common stock (closing price of the Company’s stock on the date the agreement was executed, April 22, 2010) and US$0.05 to the share purchase warrant. Each whole Warrant is non-transferable and entitles the holder to purchase one common share of Guinness (each, a “Warrant Share”), as presently constituted, for a period of twenty four months beginning May 10, 2010 at a price per Warrant Share of US$2.00. These Units are being issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Regulation S”) and Guinness did not engage in any general solicitation or advertising regarding this Unit offering.

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

Per the terms of the Nantawa Modification Agreement executed on October 12, 2010, ETPI submitted to the Company, and the Company has cancelled, 5,000,000 of the 60,000,000 restricted common shares previously issued to ETPI as a property payment.

Note 8 – Stock Options

On July 12, 2010, the board approved and adopted the Company’s 2010 Equity Incentive Plan (the “Plan”), pursuant to which up to an aggregate of 10,000,000 options with a maximum exercise term of 10 years for 10,000,000 shares of the Corporation’s common stock are reserved for issuance to employees and non-employees, directors of, and consultants to the Company in connection with their retention and/or continued employment by the Company. No options under the Plan have vested.

On September 19, 2010, the Board approved option grants to Directors, Officers and staff totalling 4,450,000 Options for purchase of 4,450,000 common shares of the Company. These Options have terms of between 5 to 10 years; exercise prices ranging between $0.33 to $0.363 per share; and all vest either in two equal parts on May 31, 2011 and May 31, 2012, or fully in the event of a takeover offer or sale of a significant body of assets of the Company. Total compensation expense for these options grants has been calculated as $454,952 based on a valuation using a Black-Scholes option pricing model.

Mr. Alastair Brown, who is President and CEO of the Company and who classifies as a ‘10% shareholder’ for regulatory purposes, has received a grant of 2,000,000 options to purchase 2,000,000 common shares of Guinness at a price of $0.363 per share, with vesting of 1,000,000 options on May 31, 2011 and 1,000,000 options on May 31, 2012.

At February 28, 2011, a total of 4,450,000 options to purchase 4,450,000 shares had been issued. These options were comprised of: 1,500,000 ‘Incentive Stock Options’ issued to employees; 950,000 ‘Non-Qualified Stock Options’ issued to non-employee contractors; and 2,000,000 to Alastair Brown, who is not eligible for ‘Incentive Option status’ because he is a 10% shareholder of the Company.

A summary of changes in issued and outstanding stock options for the nine month period ended February 28, 2011 is as follows:

	Options Outstanding		Weighted Average Exercise Price

Balance at May 31, 201	Nil			-
Granted		4,450,000	$	0.343
Exercised	Nil			-
Cancelled/expired	Nil			-

Balance at February 28, 2011		4,450,000	$	0.343

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GUINNESS EXPLORATION, INC. AND SUBSIDIARY

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

The following table summarizes information about the options issued and outstanding at February 28, 2011:

		Options Outstanding						Options Exercisable
Exercise Prices		Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)		Options Outstanding(1)		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)

$	0.33		1,500,000	$	0.330		9.6		Nil		n/a		n/a
$	0.36		2,950,000	$	0.363		9.6		Nil		n/a		n/a

Totals			4,450,000	$	0.343		9.6		Nil		n/a		n/a

Notes:

(1) No options vest until May 31, 2011.

Note 9 – Impairments on Mineral Properties

On July 17, 2008, the Company determined it should abandon the mineral property asset which consisted of 100% ownership of a uranium mineral property staked in Saskatchewan, Canada. An impairment loss of $15,985 is reflected in the attached statement of operations.

As of May 31, 2010, the Company formalized its debt to ETPI by signing a promissory note in the amount of $943,868 plus share payments with a deemed value of $61,800. To account for this event, $1,005,668 was entered as a mineral property asset, with a corresponding note payable entry. As of May 31, 2010, the Company had insufficient geological evidence, and therefore performed an impairment analysis. Based on that analysis, the Company has recorded an impairment loss on the mineral property asset of $1,005,668.

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ITEM 2. MANAGEMENTS’ DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This quarterly report on Form 10-Q contains "forward-looking statements" relating to the registrant which represent the registrant's current expectations or beliefs including, statements concerning registrant’s operations, performance, financial condition and growth. Certain information contained herein, including any information as to our strategy, plans or future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute "forward-looking statements.” All statements, other than statements of historical fact, are forward-looking statements. The words "believe," "expect," "will," "anticipate," "contemplate," "target," "plan," "continue,” "budget," "may," "intend," "estimate," “project” and similar expressions identify forward-looking statements. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays beyond the company's control with respect to mining operations, changes in the worldwide price of certain commodities; legislative, political or economic developments in the jurisdictions in which the Company carries on business; operating or technical difficulties in connection with mining or development activities; employee relations; contests over title to properties; and the risks involved in the exploration, development and mining business. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

Overview

Guinness Exploration, Inc. (“Guinness”, “We”, the “Registrant”, or the “Company”) was incorporated in the State of Nevada on July 15, 2005 and incorporated its subsidiary, Nantawa Resources Inc., in Yukon, Canada on November 6, 2009. Guinness Exploration Inc. trades on the OTC-BB under the symbol GNXP.

Our financial statements are prepared in accordance with U.S. generally accepted accounting principles and we have expensed all development expenses related to the establishment of the company. Our fiscal year end is May 31st.

Since inception the Company has not been involved in any bankruptcy, receivership or similar proceedings.

Since inception the Company has not been involved in any reclassification, consolidation, or merger arrangements.

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Assay Results

Assay results from the Company’s summer exploration program, as previously issued in press releases, are as follows:

Assays Set #1:

The Company reported it had completed its 2010 drill program at its Charlotte Project near Mt. Nansen in the Yukon Territory, Canada. Core drilling was conducted to confirm prior drill intercepts and to expand on known gold and silver mineralization along strike and down dip. The Company completed a total of 1,451.68 metres in fourteen diamond drill holes in the Flex zone, one of five known mineralized zones on the property.

The drill holes were chosen specifically to test a 450m strike length of the Flex Zone at various depths. The holes tested gold and silver grades and thicknesses to confirm previously drilled holes (to view a map of the property, drill hole locations and other information, visit www.guinnessexploration.com).

New holes confirmed and previous holes as set out below:

2010 confirmation holes	Previous holes
DDH 10-240	DDH 98-193
DDH 10-241	DDH 98-194
DDH 10-242	DDH 86-30
DDH 10-243	DDH 94-139
DDH 10-244	DDH 95-164
DDH 10-245	DDH 94-141

Results are tabulated below. The 2010 confirmation holes are shown in regular font, with increased widths shown in bold font. Results of the previous holes are shown in an italics font for comparison on a hole by hole basis.

Drill Hole #	Dip	Azimuth		From:	To:	Width	Au (g/t)	Ag (g/t)
DDH-10-240	-50 degrees	078		59.6	90.85	31.25	1.66	67.91
			Including	66.3	68	1.7	13.14	778.03
				73.5	74.35	0.85	3.09	81.6
				78.8	79.3	0.5	8.68	172.9
				89.9	90.85	0.95	2.21	103.6
			and	96	97.75	1.75	1.89	60
confirming DDH 98-193						12.3	6.82	266.65

(continued)

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Drill Hole #	Dip	Azimuth		From:	To:	Width	Au (g/t)	Ag (g/t)
DDH-10-241	-50 degrees	078		58.25	82.5	24.25	1.77	115.96
			Including	64.75	64.95	0.2	22.8	2946
				67.15	68.6	1.45	2.56	97.4
				81.6	82.5	0.9	23.81	973.44
confirming DDH 98-194						9.9	5.9	87.1

DDH-10-242	-50 degrees	045		15.85	21.5	5.65	8.61	186.2
			Including	15.85	17.95	2.1	9.73	337
				19.4	21.5	2.1	12.92	152.23
				36	36.7	0.7	3.56	58.8
confirming DDH 86-30						8.07	3.85	209.13

DDH-10-243	-50 degrees	045		19.45	48.35	28.9	5.06	138.09
			Including	28.35	31.4	3.05	14.02	28.57
				33.25	34.65	1.4	6.58	298
				37.5	40.55	3.05	14.3	55.5
				46.05	48.35	2.3	11.8	1215
confirming DDH 94-139						22.05	4.15	161.24

DDH-10-244	-50 degrees	045		12.2	20.75	8.55	2.19	64.2
			Including	14.55	15.75	1.2	4.37	193
confirming DDH 95-164						10.01	5.31	70.9

DDH-10-245	-60 degrees	045		57	62.35	5.35	20.91	131.54
			Including	58.8	61.85	3.05	35.6	18.1
confirming DDH 94-141						7.62	6.01	246.12

The Flex Zone occurs as two sub-parallel anastamosing quartz-sulfide vein systems, known historically as the “Hanging Wall” and “Footwall” veins. Veins host strong gold and silver mineralization associated primarily with pyrite and lesser arsenopyrite, stibnite, galena and sphalerite. Veins often exhibit propylitic, phyillic, argillic and silicic alteration in broad alteration envelopes.

The Flex Zone is hosted in an assemblage of metamorphic rocks comprised dominantly of quartz-feldspar+/-chlorite gneiss which grades locally into quartzite. Dark green amphbolite gneiss, comprised of equal parts plagioclase and actinolite, is commonly intercalated with the quartz-feldspar gneiss. These older rocks are cut by narrow quartz-feldspar dykes and sills. The north end of the Flex Zone, in the vicinity of 10-240 and 241, is underlain by a quartz-feldspar porphyry stock at depth.

Guinness management is extremely pleased with these initial results. Consulting geologist John Hiner commented, “We are well pleased with the level of gold and silver values, and the values match well with previous results. Although these intersections are not true widths, we have confirmed the mineralized zones in all five holes, and have increased

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mineralized thicknesses in three of the five holes reported to date. These zones are substantially wider than has been reported previously, and we believe we have now demonstrated that there is an excellent opportunity to define a bulk-mineable deposit at this project.”

Assays Set #2:

The Company reported on the final eight holes completed during its 2010 drill program at the Company’s Charlotte Project near Mt. Nansen in the Yukon Territory, Canada. As reported in the news release dated October 18, 2010, core drilling was conducted to confirm prior drill intercepts and to expand on known gold and silver mineralization along strike and downdip. The Company completed a total of 1,451.68 metres in fourteen diamond drill holes in the Flex zone, one of five known mineralized zones on the property.

Core holes DDH-10-246 through DDH-10-253 were drilled as twins of previous holes or infills along strike. Holes 246 and 247 were planned to confirm previously encountered mineralization at the southeast end of the Flex Zone. The other holes were drilled to test for extensions of gold and silver mineralization downdip from known mineralization. The holes are described in more detail as follows:

DDH-10-246 was drilled to confirm the southeast extension of the Flex Zone. However due to poor hole conditions, the hole was abandoned before intersecting the target mineralized zone.

DDH-10-247 was a 35 metre step out to the northwest of the prior hole, and was planned as an infill hole on the Flex Zone. This hole also had to be abandoned due to poor ground conditions prior to reaching the mineralized zone.

DDH-10-248 was drilled from the same drill pad as hole DDH-10-240, which was a twin of hole 98-193. This hole was steepened to pierce the mineralized zone 75 metres downdip from the surface and 25 metres below hole 98-193.

DDH-10-249 was located to test a 25 metre downdip extension of mineralization encountered in historic hole 98-192.

DDH-10-250 was located at the same location as DDH-10-249, but steepened to test mineralization 75 metres downdip from the surface and 25 metres below hole 98-192.

DDH-10-251 was drilled at the same location as historic hole 98-195, but steepened to test the mineralization at 75 metres depth.

DDH-10-252 was drilled at the same site as historic hole 98-196, but steepened to test the mineralized zone at 75 metres depth.

DDH-10-253 was located 50 metres west of DDH-10-240 and DDH-10-248 to test gold and silver mineralization at 125 metres depth.

Gold and silver assays for the holes are tabulated below:

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Hole Number	Azimuth (degrees)	Dip (Degrees)		From:	To:	Length (m)	Au (ppm)	Ag (ppm)
DDH-10-246	078	-50		26.3	42.05	15.75	0.71	49.0
			Including:	37.50	38.80	1.30	2.90	3.10
				38.80	39.25	0.45	5.68	7.40
Twin of hole 98-239						8.40	3.63	114
DDH-10-247	078	-50				No Significant Assays
35 metre step-out from of hole 98-239						8.40	3.63	114
DDH-10-248	078	-65		83.30	91.90	8.60	3.25	241
			Including:	83.30	84.00	0.70	1.36	13.1
				84.00	85.00	1.00	3.35	129
				86.70	87.45	0.75	5.00	188
				87.45	88.45	1.00	5.70	630
DDH-10-248	078	-65		101.4	115.65	14.25	2.13	82.8
			Including:	112.65	113.5	0.85	22.6	1078
Test Below 98-193						12.3	6.8	267
DDH-10-249	078	-48.8		76.15	83.65	7.50	3.81	38.2
			Including:	77.15	78.15	1	3.02	125
				78.15	78.65	0.50	6.06	22.5
DDH-10-249	078	-48.8		86.4	91.4	5.00	3.52	119
			Including:	87.40	87.90	0.50	24.4	1058
Test below 98-192						14.3	1.01	29.3
DDH-10-250	076	-65		83.00	100.40	17.40	2.34	78.7
			Including:	91.40	92.12	0.72	6.00	492
				92.99	93.65	0.66	4.56	8.70
				93.65	94.10	0.45	23.1	527
				94.72	96.95	2.23	5.10	149
DDH-10-250	076	-65		111.5	112.5	1.00	0.15	26.6
DDH-10-250	076	-65		115	119.8	4.80	0.51	22.9
Test Below 98-192						14.30	1.01	29.3
DDH-10-251	078	-65		101.5	116.74	15.24	0.72	34.5
			Including:	114.75	116.74	1.99	2.05	184
Test below 98-195						13.6	1.2	52.7
DDH-10-252	078	-65		96.15	101.6	5.45	1.12	39.9
			Including:	99	100.2	1.2	2.22	86.6
Test below 98-196						2.5	1.65	73.4
DDH-10-253	078	-65		157.55	163.98	6.43	1.40	17.8
			Including:	161.27	162.55	1.28	2.07	12.7
				162.55	163.98	1.43	3.02	4.00
Step-out test of 98-193						12.3	6.8	267

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Consulting geologist John Hiner commented, “Other than holes 246 and 247, which we had to abandon due to hole condition and mechanical problems, the drill holes encountered excellent gold and silver grades over potentially mineable widths. We are highly encouraged by the fact that all of the holes that tested mineralization downdip intersected strong mineralization.” Mr. Hiner continued, “we believe that the gold and silver mineralization we have encountered in both our confirmation drilling and our step outs along strike and downdip demonstrate the potential to develop a bulk-mineable resource at Charlotte.”

Assays Set #3:

The Company reported on the assay results from trenching numerous mineralized zones at the Company’s Charlotte Project, Yukon Territory, Canada. Trenches were cut at the Huestis, Webber, Cabin, Orloff-King, Dickson, and GRW zones. Trench results confirm or extend known mineralization at the Huestis and Webber zones. Trenches at the Cabin, Orloff-King, and GRW zones have successfully delineated new zones of gold and silver mineralization that is open to depth and along strike. In particular, trenching at the GRW zone identified gold and silver in structural settings similar to the Flex zone (although of lower grade), which was drilled earlier in 2010 and additionally disclosed the presence of copper in intrusive rocks that were identified in the GRW trenches. Selected trench results are presented in the table below:

Zone	Trench #	From	To	Width	Au (g/t)	Ag (g/t)
Orloff King	OK10-1	45.5	49.2	3.7	1.50	40.3
Orloff King	OK10-2	47.8	50.7	2.9	2.12	Na
Orloff King	OK10-5	11.4	12.1	0.7	7.05	34.7
Orloff King	OK10-9	57.5	65.5	8.0	1.57	5.17
Cabin	CAB10-1	40.1	43	2.9	1.353	15.7
Webber	WEB10-2	21.0	23.4	2.2	1.43	4.03

Virtually all of the trenches contained zones of anomalous gold and silver, ranging from 0.2 grams/tonne (‘g/t’) up to the level of results presented above. At Orloff King, Cabin, Webber, and GRW zones, the mineralized trends can be tracked from trench to trench. Work on trace element geochemistry continues, but early analysis suggests the presence of geochemical zonation that may be attributed to the presence of porphyry copper-gold mineralization in the vicinity of the GRW zone.

Trenching totalled 2,243 metres in 20 trenches. Of these, 16 trenches totalling 1,917 metres bottomed in bedrock while the remaining four trenches bottomed in permafrost and may be completed in following seasons. Ten trenches totalling 1,100 metres were cut on the Orloff-King Zone, of which 9 trenches totalling 1,052 metres reached bedrock. A total of five trenches, combined for 665 metres, were cut on the GRW zone and, of these, three bottomed in bedrock for a total of 466 metres completed to bedrock. The remaining five trenches were cut on the Webber, Huestis, and Cabin zones, and on geochemical anomalies scattered across the property. All but one of these five trenches reached bedrock for a total of 400 metres of trenching completed to bedrock. A total of 554 unique samples were collected from trenches and submitted for assay.

Consulting geologist John Hiner commented, “These results, both the high grade intervals and the surrounding envelopes of lower grade gold and silver in all the trenches, continue to strengthen the case that the Charlotte property offers bulk tonnage ore potential for gold and silver. We are additionally pleased to have found copper-gold mineralization in intrusive rocks, which may also offer a porphyry target yet to be fully evaluated.”

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Other Recent Developments

Nantawa Modification Agreement

On October 12, 2010, Guinness signed the Nantawa Modification Agreement with Eagle Trail Properties Inc. (“ETPI”) in which Guinness received full vesting of a 49% interest in 175 full or fractional mineral claims/leases located in the Mount Nansen area of the Whitehorse Mining District of the Yukon Territory, Canada (the “Mineral Claims”). The other 51% interest in the Mineral Claims was retained by ETPI. The Mineral Claims had been part of the Nantawa Agreement signed between the Company and ETPI on November 19, 2009 and amended February 4, 2010, under which the Company acquired the right to purchase the Mineral Claims and an additional set of 47 mineral claims/leases (the “Tawa Claims”) from ETPI for total consideration of US$1,005,668 (comprised of: US$943,868 cash, plus 60,000,000 restricted common shares of Guinness valued at US$0.00103 per share for a total share value of $61,800).

Cash payments under the Nantawa Agreement had been scheduled to be made in two equal installments of US$471,934, the first due by May 30, 2010 and the second due by February 28, 2011. The Company met its first payment, but projected it would not have the resources to fulfill the second payment by February 28, 2011 and the Board determined it was in the best interests of the Company to negotiate revised purchase terms from ETPI for the Mineral Claims.

To provide consideration to ETPI, the Company agreed to waive its rights under the Nantawa Agreement to the Tawa Claims, which had lapsed while in trust with ETPI.

In sum, the Nantawa Modification Agreement has resolved the Tawa Claims matter between the parties and has provided the Company an immediate vesting of a 49% interest in the Mineral Claims without the requirement to make further payments to ETPI.

A copy of the Nantawa Modification Agreement was filed as an Exhibit to a Form 8-K on October 12, 2010 and is incorporated herein by reference.

Ansell Agreement

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The Ansell Agreement specifies the following primary three tiers for the exercise of the option by Ansell:

First Option (Article 4)

On, or before, June 1, 2014, Ansell may acquire a 49% earned interest, free and clear of all encumbrances (except existing royalties to be paid to ETPI specified in the Nantawa Agreement) (the “First Option), by:

	(a)	incurring not less than $2,048,761(1) of exploration expenditures on, or before, June 1, 2012;

	(b)	incurring not less than an additional $3,073,141(1) in exploration expenditures on, or before, June 1, 2014.

	(c)	paying the Additional Parties: (i) $512,190(1) on June 1, 2011; (ii) 12,000,000 units of Ansell securities on June 1, 2011; and (iii) $512,190(1) on, or before, July 31, 2012.

Second Option (Article 5)

Upon notice to the CSG Group (the “Third Option Commencement Date”), over a period of five years, Ansell may acquire an additional 26% earned interest, for an aggregate 75% earned interest, free and clear of all encumbrances except (except existing royalties to be paid to ETPI specified in the Nantawa Agreement) (the “Second Option”), by:

	(a)	having exercised the First Option;

	(b)	solely funding all exploration expenditures and all joint venture expenditures defined inthe joint venture agreement included in the Ansell Agreement (the “JVA”);

	(c)	delivering a suitable feasibility study, as defined in the Ansell Agreement, to each member of the CSG Group, or, incurring the following exploration expenditures: (i) not less than $1,024,380 in Expenditures on, or before, the first anniversary of the Second Option Commencement Date; (ii) not less than $1,024,380 in exploration expenditures on or before the second anniversary of the Second Option Commencement Date; (iii) not less than $1,024,380 in Expenditures on or before the third anniversary of the Second Option Commencement Date; and (iv) not less than $1,024,380 in Expenditures on or before the fourth anniversary of the Second Option Commencement Date; and then delivering a suitable feasibility study, as defined in the Ansell Agreement, to each member of the CSG Group.

(1) (based on a foreign exchange rate of Cdn$1.00 to US$0.97620 on February 28, 2011)

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Third Option (Article 6)

Upon notice to the CSG Group (the “Third Option Commencement Date”), over a period of two years, Ansell may acquire an additional 10% earned interest, for an aggregate 85% earned interest, free and clear of all encumbrances except (except existing royalties to be paid to ETPI specified in the Nantawa Agreement) (the “Third Option”), by:

	(a)	having exercised the Second Option;

	(b)	solely funding all exploration expenditures and all expenditures agreed under the JVA, if any, prior to delivery of notice of exercise of the Third Option; and

	(c)	obtaining a commitment letter which evidences the existence of project financing, as defined in the Ansell Agreement on, or before, the three years from the Third Option Commencement Date.

Subject to Ansell acquiring an 85% interest in and to the Charlotte Project, Guinness will retain a 5% carried working interest in and to the Charlotte Project.

Ansell Capital Corp. (TSX-V: ACP) is a publicly traded Canadian exploration company focused on exploring and developing gold/silver properties with the potential to host world class, economic deposits. Ansell's current projects are the Charlotte Project, Yukon, and the Kuyakuz Mountain Project, located in British Columbia. More information on Ansell can be found at: http://www.ansellcapital.com

Exploration properties description and location

The Charlotte Project is located in the Whitehorse Mining District on NTS map sheet 105I-03 (Figures 1). The complete claim group includes 128 full or fractional quartz mineral claims (Table 1). Total size of the claim group is 2,336.14 square hectares. The central block of the Charlotte Project is some 185 km NNW of Whitehorse. The Charlotte Project claim group measure 8.7 km in the NS direction and 5.1 km in the EW direction. The approximate geographical location of the Charlotte Project claim block is shown in Table 2.

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Figure 1: Road access to the Charlotte Project

(Modified from Eaton and Archer, 1989 and Stroshein, 2007a)

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Table 1: Claim list for Charlotte Project

No.	Claim	Registered Claim Owner	Grant Number	Expiry Date	Area (Ha)	Comments
1	ROSE	Eagle Trail Properties Inc.	04241	09/10/2019	20.42	Lease
2	GOLDEN EAGLE	Eagle Trail Properties Inc.	04278	09/10/2019	20.96	Lease
3	WAR EAGLE	Eagle Trail Properties Inc.	04279	09/10/2019	20.77	Lease
4	SHAMROCK	Eagle Trail Properties Inc.	04354	09/10/2019	20.73	Lease
5	SPOT	Eagle Trail Properties Inc.	04361	09/10/2019	19.92	Lease
6	ARLEP	Eagle Trail Properties Inc.	04368	09/10/2019	14.48	Lease
7	PHYLLIS	Eagle Trail Properties Inc.	04369	09/10/2019	20.26	Lease
8	RUB	Eagle Trail Properties Inc.	55633	09/10/2019	1.84	Lease
9	PUB	Eagle Trail Properties Inc.	55663	09/10/2019	1.93	Lease
10	SUN DOG	Eagle Trail Properties Inc.	55665	09/10/2019	3.20	Lease
11	CUB	Eagle Trail Properties Inc.	55666	09/10/2019	1.29	Lease
12	JAM	Eagle Trail Properties Inc.	55890	09/10/2019	11.64	Lease
13	PAM	Eagle Trail Properties Inc.	55892	09/10/2019	2.64	Lease
14	DOME 1	Eagle Trail Properties Inc.	73537	06/02/2014	15.10	-
15	DOME 2	Eagle Trail Properties Inc.	73538	06/02/2014	15.51	-
16	DOME 3	Eagle Trail Properties Inc.	73539	06/02/2014	17.29	-
17	DOME 4	Eagle Trail Properties Inc.	73540	06/02/2014	17.98	-
18	DOME 6	Eagle Trail Properties Inc.	73542	06/02/2014	17.32	-
19	DOME 7	Eagle Trail Properties Inc.	73543	06/02/2014	25.34	-
20	DOME 8	Eagle Trail Properties Inc.	73694	06/02/2014	12.47	-
21	DOME 14	Eagle Trail Properties Inc.	73700	06/02/2014	21.07	-
22	DOME 16	Eagle Trail Properties Inc.	73702	06/02/2014	20.61	-
23	DOME 17	Eagle Trail Properties Inc.	73703	06/02/2014	18.41	-
24	DOME 18	Eagle Trail Properties Inc.	73704	06/02/2014	18.56	-
25	DOME 19	Eagle Trail Properties Inc.	73705	06/02/2014	16.73	-
26	DOME 20	Eagle Trail Properties Inc.	73706	06/02/2014	13.42	-
27	JOANNE 1	Eagle Trail Properties Inc.	74283	06/02/2014	19.79	-
28	JOANNE 2	Eagle Trail Properties Inc.	74284	06/02/2014	19.51	-
29	JOANNE 3	Eagle Trail Properties Inc.	74285	06/02/2014	20.36	-
30	JOANNE 4	Eagle Trail Properties Inc.	74286	06/02/2014	14.78	-
31	JOANNE 5	Eagle Trail Properties Inc.	74287	06/02/2014	19.83	-
32	JOANNE 6	Eagle Trail Properties Inc.	74288	06/02/2014	19.69	-
33	DOME 25	Eagle Trail Properties Inc.	77746	06/02/2014	15.19	-
34	DOME 26	Eagle Trail Properties Inc.	77747	06/02/2014	22.54	-
35	DOME 27	Eagle Trail Properties Inc.	77748	06/02/2014	20.32	-
36	DOME 28	Eagle Trail Properties Inc.	77749	06/02/2014	21.74	-
37	DOME 33	Eagle Trail Properties Inc.	77754	06/02/2014	25.50	-
38	DOME 34	Eagle Trail Properties Inc.	77755	06/02/2014	23.29	-
39	DOME 35	Eagle Trail Properties Inc.	77756	06/02/2014	22.39	-
40	DOME 36	Eagle Trail Properties Inc.	77757	06/02/2014	23.97	-

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No.	Claim	Registered Claim Owner	Grant Number	Expiry Date	Area (Ha)	Comments
41	DOME 37	Eagle Trail Properties Inc.	77758	06/02/2014	14.23	-
42	DOME 38	Eagle Trail Properties Inc.	77759	06/02/2014	18.48	-
43	DOME 39	Eagle Trail Properties Inc.	77760	06/02/2014	14.95	-
44	DOME 40	Eagle Trail Properties Inc.	77761	06/02/2014	20.51	-
45	DOME 41	Eagle Trail Properties Inc.	77762	06/02/2014	20.76	-
46	DOME 42	Eagle Trail Properties Inc.	77763	06/02/2014	19.93	-
47	DOME 43	Eagle Trail Properties Inc.	77764	06/02/2014	20.47	-
48	DOME 49	Eagle Trail Properties Inc.	77770	06/02/2014	8.18	-
49	DOME 50	Eagle Trail Properties Inc.	77771	06/02/2014	18.83	-
50	DOME 51	Eagle Trail Properties Inc.	77772	06/02/2014	19.05	-
51	DOME 52	Eagle Trail Properties Inc.	77773	06/02/2014	21.85	-
52	DOME 53	Eagle Trail Properties Inc.	77774	06/02/2014	22.80	-
53	DOME 54	Eagle Trail Properties Inc.	77775	06/02/2014	14.69	-
54	DOME 55	Eagle Trail Properties Inc.	77776	06/02/2014	13.09	-
55	DOME 56	Eagle Trail Properties Inc.	77777	06/02/2014	13.35	-
56	DOME 57	Eagle Trail Properties Inc.	77778	06/02/2014	20.47	-
57	DOME 58	Eagle Trail Properties Inc.	77779	06/02/2014	19.41	-
58	DOME 60	Eagle Trail Properties Inc.	77781	06/02/2014	20.06	-
59	DOME 61	Eagle Trail Properties Inc.	77782	06/02/2014	18.91	-
60	DOME 63	Eagle Trail Properties Inc.	77784	06/02/2014	22.51	-
61	DOME 64	Eagle Trail Properties Inc.	77785	06/02/2014	22.88	-
62	DOME 65	Eagle Trail Properties Inc.	77786	06/02/2014	20.66	-
63	DOME 66	Eagle Trail Properties Inc.	77787	06/02/2014	21.18	-
64	DOME 78	Eagle Trail Properties Inc.	81842	06/02/2014	25.41	-
65	DOME 79	Eagle Trail Properties Inc.	81843	06/02/2014	24.10	-
66	DOME 80	Eagle Trail Properties Inc.	81844	06/02/2014	24.20	-
67	DOME 81	Eagle Trail Properties Inc.	81845	06/02/2014	22.52	-
68	DOME 82	Eagle Trail Properties Inc.	81846	06/02/2014	23.26	-
69	DOME 83	Eagle Trail Properties Inc.	81847	06/02/2014	18.72	-
70	DOME 84	Eagle Trail Properties Inc.	81848	06/02/2014	19.37	-
71	DOME 86	Eagle Trail Properties Inc.	81850	06/02/2014	20.76	-
72	HIW 9	Eagle Trail Properties Inc.	YA23835	06/02/2014	19.44	-
73	HIW 10	Eagle Trail Properties Inc.	YA23836	06/02/2014	20.83	Fractions
74	HIW 11	Eagle Trail Properties Inc.	YA23837	06/02/2014	21.55	Fractions
75	HIW 12	Eagle Trail Properties Inc.	YA23838	06/02/2014	19.93	Fractions
76	HIW 13	Eagle Trail Properties Inc.	YA23839	06/02/2014	20.72	-
77	HIW 14	Eagle Trail Properties Inc.	YA23840	06/02/2014	19.55	-
78	HIW 15	Eagle Trail Properties Inc.	YA23841	06/02/2014	20.15	-
79	HIW 16	Eagle Trail Properties Inc.	YA23842	06/02/2014	19.86	-
80	HIW 17	Eagle Trail Properties Inc.	YA23843	06/02/2014	19.92	-

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No.	Claim	Registered Claim Owner	Grant Number	Expiry Date	Area (Ha)	Comments
81	HIW 1	Eagle Trail Properties Inc.	YA24813	06/02/2014	4.74	Fractions
82	HIW 2	Eagle Trail Properties Inc.	YA24814	06/02/2014	5.15	Fractions
83	HIW 7	Eagle Trail Properties Inc.	YA24819	06/02/2014	3.01	Fractions
84	DD 1	Eagle Trail Properties Inc.	YA59596	06/02/2014	20.62	-
85	DD 2	Eagle Trail Properties Inc.	YA59597	06/02/2014	22.35	-
86	DD 15	Eagle Trail Properties Inc.	YA59610	06/02/2014	19.20	-
87	DD 16	Eagle Trail Properties Inc.	YA59611	06/02/2014	19.21	-
88	DD 17	Eagle Trail Properties Inc.	YA59612	06/02/2014	19.37	-
89	DD 18	Eagle Trail Properties Inc.	YA59613	06/02/2014	19.85	-
90	DD 19	Eagle Trail Properties Inc.	YA59614	06/02/2014	20.17	-
91	DD 20	Eagle Trail Properties Inc.	YA59615	06/02/2014	19.90	-
92	DD 21	Eagle Trail Properties Inc.	YA59616	06/02/2014	19.64	-
93	DD 22	Eagle Trail Properties Inc.	YA59617	06/02/2014	19.17	-
94	DD 23	Eagle Trail Properties Inc.	YA59618	06/02/2014	18.69	-
95	DD 24	Eagle Trail Properties Inc.	YA59619	06/02/2014	18.30	-
96	DD 25	Eagle Trail Properties Inc.	YA59620	06/02/2014	18.18	-
97	DD 26	Eagle Trail Properties Inc.	YA59621	06/02/2014	17.65	-
98	DD 27	Eagle Trail Properties Inc.	YA59622	06/02/2014	19.49	-
99	DD 28	Eagle Trail Properties Inc.	YA59623	06/02/2014	18.71	-
100	TBR 1	Eagle Trail Properties Inc.	YA86690	06/02/2014	8.92	-
101	TBR 2	Eagle Trail Properties Inc.	YA86691	06/02/2014	20.16	-
102	TBR 3	Eagle Trail Properties Inc.	YA86692	06/02/2014	20.03	-
103	TBR 4	Eagle Trail Properties Inc.	YA86693	06/02/2014	20.84	-
104	TBR 5	Eagle Trail Properties Inc.	YA86694	06/02/2014	18.34	-
105	TBR 6	Eagle Trail Properties Inc.	YA86695	06/02/2014	20.92	-
106	TBR 7	Eagle Trail Properties Inc.	YA86696	06/02/2014	15.96	-
107	TBR 8	Eagle Trail Properties Inc.	YA86697	06/02/2014	21.79	-
108	ONT 38	Eagle Trail Properties Inc.	YA87204	06/02/2014	20.26	-
109	ONT 40	Eagle Trail Properties Inc.	YA87206	06/02/2014	18.34	-
110	ONT 42	Eagle Trail Properties Inc.	YA87208	06/02/2014	5.73	-
111	EEK 1	Eagle Trail Properties Inc.	YA87210	06/02/2014	21.07	-
112	EEK 2	Eagle Trail Properties Inc.	YA87211	06/02/2014	20.08	-
113	EEK 3	Eagle Trail Properties Inc.	YA87212	06/02/2014	20.70	-
114	EEK 4	Eagle Trail Properties Inc.	YA87213	06/02/2014	20.68	-
115	EEK 5	Eagle Trail Properties Inc.	YA87214	06/02/2014	20.80	-
116	EEK 6	Eagle Trail Properties Inc.	YA87215	06/02/2014	19.58	-
117	EEK 7	Eagle Trail Properties Inc.	YA87216	06/02/2014	19.97	-
118	EEK 8	Eagle Trail Properties Inc.	YA87217	06/02/2014	21.91	-
119	EEK 9	Eagle Trail Properties Inc.	YA87218	06/02/2014	22.64	-
120	EEK 14	Eagle Trail Properties Inc.	YA87223	06/02/2014	21.36	-

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No.	Claim	Registered Claim Owner	Grant Number	Expiry Date	Area (Ha)	Comments
121	EEK 15	Eagle Trail Properties Inc.	YA87224	06/02/2014	21.22	-
122	EEK 16	Eagle Trail Properties Inc.	YA87225	06/02/2014	21.76	-
123	EEK 17	Eagle Trail Properties Inc.	YA87226	06/02/2014	20.01	-
124	EEK 18	Eagle Trail Properties Inc.	YA87227	06/02/2014	20.74	-
125	ONT 44	Eagle Trail Properties Inc.	YA92655	06/02/2014	16.80	-
126	ONT 45	Eagle Trail Properties Inc.	YA92656	06/02/2014	12.91	-
127	ONT 46	Eagle Trail Properties Inc.	YA92657	06/02/2014	18.48	-
128	ONT 47	Eagle Trail Properties Inc.	YA92658	06/02/2014	14.41	-
	Total				2,336.14

Table 2: Coordinates of the corners of the Charlotte Project claim block

Corner	N-S	E-W
NW	62o06.0’ N	137o12.0’ W
NE	62o05.5’ N	137o05.8’ W
SE	62o01.2’ N	137o05.3’ W
SW	62o02.4’ N	137o11.7’ W

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The Charlotte Project is located approximately 180 km northwest of Whitehorse and 60 km west of the Village of Carmacks in the Yukon Territory. This property is accessible from Whitehorse via the Klondike highway to the town of Carmacks and then via an all weather gravel road. Carmacks is 170 km north of Whitehorse. Whitehorse is connected to Vancouver, Edmonton, and Calgary by air service. The Charlotte Project is facilitated with an extensive network of gravel and dirt roads (Figure 1).

The Charlotte Project lies northwest of the maximum advance of the Wisconsin ice sheet, and, consequently, are not affected by the Pleistocene continental glaciations (Figure 2; Eaton and Archer, 1989). This resulted in deep weathering in the properties reaching to depths of over 70 m from the topographic surface (Denholm et al, 2000; Roder, 1996). In mineralized zones, sulphides are commonly altered into limonite and other oxides (Denholm et al, 2000; Melling, 1995; Roder, 1996). The topography in the two properties is hilly with rounded ridges and shallow valleys. Local elevation ranges from 1030 m to 1560 m (Melling, 1995; Rodger, 1996).

Permafrost is widespread in the area and varies according to the amount of vegetation and slope facing direction (Stroshein, 2007b). In the north-facing slopes, permafrost is frozen all year around and in the south-facing slopes permafrost thaw to a depth of 1-2 m in the summer (Eaton and Archer, 1989; Roder, 1996).

The average precipitation in the Charlotte Project is approximately 25 cm, most of which falls as rain in the summer months (Stroshein, 2007b). Snow fall is normally 30-40 cm deep in late winter. The average monthly temperature ranges from -25oC in January to 15oC in July (Stroshein, 2007b).

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The Charlotte Project is situated in the traditional Territory of the Little Salmon/Carmacks First Nation (Stroshein, 2007b). At the mine site, there is no infrastructure other than the mine plant and buildings. The village of Carmacks has been established since 1893 and has provided fuel for river steamboats, a roadhouse on the Whitehorse to Dawson stage run, and an area service center (Campbell, 1994). In the Village of Carmacks, there reside approximately 500 people. The village is also the main and administrative center of the Little Salmon Traditional Lands.

Additional information:

Full text of a Report completed by Robert S. Middleton, P.Eng on November 27, 2009 regarding the Charlotte Project can be found at our website: www.guinnessexploration.com.

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Figure 2: Glaciation, Dawson Range, Yukon Territory

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Results of Operations for the Three and Nine month Periods Ended February 28, 2011 and February 28, 2010 and the Exploration Stage Period from July 15, 2005 to February 28, 2011

Our operating results for the three and nine month periods ended February 28, 2011 and February 28, 2010 and the Exploration Stage Period of July 15, 2005 to February 28, 2011 (the ‘Exploration Stage’) are summarized as follows:

	Nine months ended February 28, 2011			Nine months ended February 28, 2010			Exploration Stage
Revenue	$	-		$	-		$	-
Expenses	$	1,060,310		$	1,113,203		$	2,561,880
Net loss from operations	$	(1,060,310	)		(1,113,203	)		(2,561,880	)
Interest expense	$	-			(3,355	)		(8,037	)
Cancelation of debt	$	471,934			-			471,934
Net Loss	$	(588,376	)	$	(1,116,558	)	$	(2,097,983	)

Revenues

We have not earned any revenues since our inception and we do not anticipate earning revenues in the near future.

Expenses

Exploration Costs

Exploration costs were $1,006 and $801,090 versus $7,725 and $7,725 for the three and nine month periods ended February 28, 2011 and February 28, 2010, respectively. Exploration expenses for the Exploration Stage totaled $978,505. During the current period, exploration expenses related to fees paid to geological contractors for exploration work, fees for geological consulting services, and other operational expenses. We cannot yet predict the possible level of exploration expenses during the next twelve months.

Professional Fees

Profession fees were $33,232 and $116,979 versus $48,463 and $62,214 for the three and nine month periods ended February 28, 2011 and February 28, 2010, respectively. Professional fees for the Exploration Stage totaled $332,149. During the current period, professional fees included fees paid for legal, auditor and accounting fees. In the next twelve months, we project professional fees will increase modestly or remain at current levels.

Administrative Expenses

Administrative expenses were $21,443 and $79,244 versus $8,244 and $11,066 for the three and nine month periods ended February 28, 2011 and February 28, 2010, respectively. During the Exploration Stage Period administrative expenses totaled $120,280. During the current period administrative fees included management fees paid to our CEO and independent director, plus office expenses, bank charges and filing fees related to our SEC filings. We expect administrative fees to see a moderate increase during the coming year as we continue implementation of our strategic plans.

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Investor Relations

Investor Relations expenses comprise costs for press releases, maintenance of the Company’s website and other investor information initiatives. During the three and nine month periods ended February 28, 2011 and February 28, 2010, these expenses totaled $13,785 and $62,997 versus $25,100 and $26,530, respectively. For the Exploration Stage Period, Investor Relations expenses totaled $109,293. We anticipate Investor Relations expenses will remain at current levels during the coming year as we continue our efforts to raise further capital and keep investors informed of Company developments.

Impairment Losses on Mineral Properties

During the three and nine month periods ended February 28, 2011 and February 28, 2010, impairment losses on mineral properties were $nil and $nil versus $1,005,668 and $1,005,668, respectively. Total impairment loss for the Exploration Stage Period of $1,021,653.

Net Loss

We incurred a net losses of $(70,466) and $(588,376) for the three and nine months periods ended February 28, 2011 compared with net losses of $(1,096,370) and $(1,116,558) for the same periods ended February 28, 2010.

Liquidity and Capital Resources

Our financial position as at February 28, 2011 and 2009 are as follows:

Net Working Capital

	As at February 28, 2011		As at May 31, 2009

Current Assets	$	28,436	$	1,164,953
Current Liabilities		8,793		559,261
Net Working Capital		19,643		605,692

Our net working capital decreased by $586,049 between May 31, 2009 to February 28, 2011 due to expenditures on our exploration program.

Cash Flows - nine months

	Nine months ended February 28, 2011			Nine months ended February 28, 2010

Net cash (used) by Operating Activities	$	(951,019	)	$	(128,992	)
Net cash (used) by Investing Activities		-			(471,934	)
Net cash provided in Financing Activities		-			1,413,715
Increase (Decrease) in Cash during the Period		(948,692	)		812,789
Cash, Beginning of Period		973,227			20,638
Cash, End of Period		24,535			833,427

Since the date of our incorporation to February 28, 2011, we have raised $2,053,500 though private placements of our common shares. As of February 28, 2011 we had cash on hand of $24,535 and prepaid expenses of $13,901.

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Material Events and Uncertainties

Our operating results are difficult to forecast. Our prospects should be evaluated in light of the risks, expenses and difficulties commonly encountered by comparable early stage companies in mineral resource markets. There can be no assurance that we will successfully address such risks, expenses and difficulties and cannot assure you that we will become profitable in the future.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

EXCHANGE RATE FLUCTUATION RISK

Our reporting currency is United States Dollars (“USD”). Our transactions are primarily conducted in USD but also include transactions in other currencies most particularly the Canadian dollar. Foreign currency rate fluctuations may have a material impact on the Company’s financial reporting. These fluctuations may have positive or negative impacts on the results of operations of the Company.

We have not entered into derivative contracts either to hedge existing risk or for speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a-15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. The Company's certifying officer has concluded that the Company's disclosure controls and procedures are not effective in reaching that level of assurance.

As the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

Management's Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a-15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company's CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial

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statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that 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 (iii) 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.

As of February 28, 2011, management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the criteria established by COSO management concluded that the Company's internal control over financial reporting was not effective as of February 28, 2011, as a result of the identification of the material weaknesses described below.

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Specifically, management identified the following control deficiencies. (1) The Company has not properly segregated duties as one or two individuals initiate, authorize, and complete all transactions. The Company has not implemented measures that would prevent the individuals from overriding the internal control system. The Company does not believe that this control deficiency has resulted in deficient financial reporting because the Chief Financial Officer is aware of his responsibilities under the SEC's reporting requirements and personally certifies the financial reports. (2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software.

Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps.

Changes in Internal Control over Financial Reporting

During the current quarter of the Company’s fiscal year ended May 31, 2011, no material changes were made to the Company’s internal control over financial reporting

Remediation Plan

Addition of staff

We have identified that additional staff will be required to properly segment the accounting duties of the Company. However, we do not currently have resources to fulfill this part of our plan and will be addressing this matter once sufficient resources are available.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There is no litigation pending or threatened by or against us.

ITEM 1A. RISK FACTORS

The following risk factors should be considered in connection with an evaluation of our business:

THE COMPANY'S LIMITED OPERATING HISTORY MAKES IT DIFFICULT FOR YOU TO JUDGE ITS PROSPECTS.

The Company has a limited operating history upon which an evaluation of the Company, its current business and its prospects can be based. You should consider any purchase of the Company's shares in light of the risks, expenses and problems frequently encountered by all companies in the early stages of its corporate development.

LIQUIDITY AND CAPITAL RESOURCES ARE UNCERTAIN.

For the nine months ended February 28, 2011, the Company had a Net Loss of $(588,376). The Company may need to raise additional capital by way of an offering of equity securities, an offering of debt securities, or by obtaining financing through a bank or other entity. The Company has not established a limit as to the amount of debt it may incur nor has it adopted a ratio of its equity to debt allowance. If the Company needs to obtain additional financing, there is no assurance that financing will be available from any source, that it will be available on terms acceptable to us, or that any future offering of securities will be successful. If additional funds are raised through the issuance of equity securities, there may be a significant dilution in the value of the Company’s outstanding common stock. The Company could suffer adverse consequences if it is unable to obtain additional capital which would cast substantial doubt on its ability to continue its operations and growth.

THE VALUE AND TRANSFERABILITY OF THE COMPANY'S SHARES MAY BE ADVERSELY IMPACTED BY THE LIMITED TRADING MARKET FOR ITS SHARES AND THE PENNY STOCK RULES.

There is only a limited trading market for the Company's shares. The Company's common stock is traded in the over-the-counter market and "bid" and "asked" quotations regularly appear on the OTC Bulletin Board under the symbol "GNXP". There can be no assurance that the Company's common stock will trade at prices at or above its present level and an inactive or illiquid trading market may have an adverse impact on the market price. In addition, holders of the Company's common stock may experience substantial difficulty in selling their securities as a result of the "penny stock rules" which restrict the ability of brokers to sell certain securities of companies whose assets or revenues fall below the thresholds established by those rules.

FUTURE SALES OF SHARES MAY ADVERSELY IMPACT THE VALUE OF THE COMPANY'S STOCK.

If required, the Company may seek to raise additional capital through the sale of common stock. Future sales of shares by the Company or its stockholders could cause the market price of its common stock to decline.

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MINERAL EXPLORATION AND DEVELOPMENT ACTIVITIES ARE SPECULATIVE IN NATURE.

Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but from finding mineral deposits which, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection, the combination of which factors may result in the Company not receiving an adequate return of investment capital.

Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities and grades to justify commercial operations or that funds required for development can be obtained on a timely basis. Estimates of reserves, mineral deposits and production costs can also be affected by such factors as environmental permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. In addition, the grade of ore ultimately mined may differ from that indicated by drilling results. Short term factors relating to reserves, such as the need for orderly development of ore bodies or the processing of new or different grades, may also have an adverse effect on mining operations and on the results of operations. Material changes in ore reserves, grades, stripping ratios or recovery rates may affect the economic viability of any project.

THE COMPANY WILL BE SUBJECT TO OPERATING HAZARDS AND RISKS WHICH MAY ADVERSELY AFFECT THE COMPANY'S FINANCIAL CONDITION.

Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. The Company's operations will be subject to all the hazards and risks normally incidental to exploration, development and production of metals, such as unusual or unexpected formations, cave-ins or pollution, all of which could result in work stoppages, damage to property and possible environmental damage. The Company does not have general liability insurance covering its operations and does not presently intend to obtain liability insurance as to such hazards and liabilities. Payment of any liabilities as a result could have a materially adverse effect upon the Company's financial condition

THE COMPANY'S ACTIVITIES WILL BE SUBJECT TO ENVIRONMENTAL AND OTHER INDUSTRY REGULATIONS WHICH COULD HAVE AN ADVERSE EFFECT ON THE FINANCIAL CONDITION OF THE COMPANY.

The Company's activities are subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation generally provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailing disposal areas, which would result in environmental pollution. A breach of such legislation may result in imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards and enforcement, fines and penalties for non-compliance are more

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stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations could have an adverse effect on the financial condition of the Company.

The operations of the Company include exploration and development activities and commencement of production on its properties, require permits from various federal, state, provincial and local governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters. Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.

COMPETITION MAY HAVE AN IMPACT ON THE COMPANY'S ABILITY TO ACQUIRE ATTRACTIVE PRECIOUS METALS PROPERTIES, WHICH MAY HAVE AN ADVERSE IMPACT ON THE COMPANY'S OPERATIONS.

Significant and increasing competition exists for the limited number of precious metals acquisition opportunities available. As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than the Company, the Company may be unable to acquire attractive precious metals properties on terms it considers acceptable. Accordingly, there can be no assurance that any exploration program intended by the Company on properties it intends to acquire will yield any reserves or result in any commercial mining operation.

DOWNWARD FLUCTUATIONS IN METAL PRICES MAY SEVERELY REDUCE THE VALUE OF THE COMPANY.

The Company has no control over the fluctuations in the prices of the metals for which it is exploring. A significant decline in such prices would severely reduce the value of the Company.

THE COMPANY CURRENTLY RELIES ON CERTAIN KEY INDIVIDUALS AND THE LOSS OF ONE OF THESE CERTAIN KEY INDIVIDUALS COULD HAVE AN ADVERSE EFFECT ON THE COMPANY.

The Company's success depends to a certain degree upon certain key members of the management. These individuals are a significant factor in the Company's growth and success. The loss of the service of members of the management and advisory board could have a material adverse effect on the Company. In particular, the success of the Company is highly dependent upon the efforts of the President & CEO, CFO, PAO, Treasurer & Secretary, Chair & Director of the Company, the loss of whose services would have a material adverse effect on the success and development of the Company.

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THE COMPANY DOES NOT MAINTAIN KEY MAN INSURANCE TO COMPENSATE THE COMPANY FOR THE LOSS OF CERTAIN KEY INDIVIDUALS.

The Company does not anticipate having key man insurance in place in respect of its senior officers or personnel, although the Board has discussed and investigated the prospect of obtaining key man insurance for our CEO.

WE ARE AN EXPLORATION STAGE COMPANY, AND THERE IS NO ASSURANCE THAT A COMMERCIALLY VIABLE DEPOSIT OR "RESERVE" EXISTS ON ANY PROPERTIES FOR WHICH THE COMPANY HAS, OR MIGHT OBTAIN, AN INTEREST.

The Company is an exploration stage company and cannot give assurance that a commercially viable deposit, or “reserve,” exists on any properties for which the Company currently has (through an option) or may have (through potential future joint venture agreements or acquisitions) an interest. Therefore, determination of the existence of a reserve depends on appropriate and sufficient exploration work and the evaluation of legal, economic, and environmental factors. If the Company fails to find a commercially viable deposit on any of its properties, its financial condition and results of operations will be materially adversely affected.

WE REQUIRE SUBSTANTIAL FUNDS MERELY TO DETERMINE WHETHER COMMERCIAL PRECIOUS METAL DEPOSITS EXIST ON OUR PROPERTIES.

Any potential development and production of the Company’s exploration properties depends upon the results of exploration programs and/or feasibility studies and the recommendations of duly qualified engineers and geologists. Such programs require substantial additional funds. Any decision to further expand the Company’s operations on these exploration properties is anticipated to involve consideration and evaluation of several significant factors including, but not limited to:

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Costs of bringing each property into production, including exploration work, preparation of production feasibility studies, and construction of production facilities;

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Availability and costs of financing;

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Ongoing costs of production;

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Market prices for the precious metals to be produced;

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Environmental compliance regulations and restraints; and

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Political climate and/or governmental regulation and control.

GENERAL MINING RISKS

Factors beyond our control may affect the marketability of any substances discovered from any resource properties the Company may acquire. Metal prices, in particular gold and silver prices, have fluctuated widely in recent years. Government regulations relating to price, royalties, and allowable production and importing and exporting of precious metals can adversely affect the Company. There can be no certainty that the Company will be able to obtain all necessary licenses and permits that may be required to carry out exploration, development and operations on any projects it may acquire and environmental concerns about mining in general continue to be a significant challenge for all mining companies.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has no senior securities outstanding.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

(a) During the quarter there was no information which would have been required to be filed via a report on Form 8-K which was not filed as such.

(b) During the quarter there were no material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors.

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ITEM 6. EXHIBITS

EXHIBIT INDEX

Number	Exhibit Description

3.1	Articles of Incorporation(1)
3.2	Certificate of Amendment of Articles of Incorporation(1)
3.3	Bylaws(1)
10.1	Nantawa Modification Agreement(2)
10.2	Ansell Agreement(3)
14.1	Code of Ethics(1)
31.1	Certificate of President (chief executive officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certificate of Chief Financial Officer (principal financial officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certificate of President (chief executive officer) and Treasurer (principal financial officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1) Filed as an exhibit to our registration statement on Form SB-2 filed December 27, 2006 and incorporated herein by this reference

(2) Filed as an exhibit to a Current Report on Form 8-K on October 12, 2010 and incorporated herein by this reference.

(3) Filed as an exhibit to a Current Report on Form 8-K on March 8, 2011 and incorporated herein by this reference.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GUINNESS EXPLORATION, INC.

/s/ Alastair Brown

Alastair Brown

President & CEO, CFO

Dated: April 19, 2011

Guinness Exploration, Inc 10-Q