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A copy of this preliminary prospectus has been filed with the securities regulatory authorities in each of

British Columbia, Alberta and Ontario but has not yet become final for the purpose of the sale of
securities. Information contained in this preliminary prospectus may not be complete and may have to be
amended. The securities may not be sold until a receipt for the prospectus is obtained from the securities
regulatory authorities.
This prospectus constitutes a public offering of these securities only in those jurisdictions where they may
be lawfully offered for sale and therein only by persons permitted to sell such securities. No securities
regulatory authority has expressed an opinion about these securities and it is an offence to claim
otherwise.
The securities offered hereby have not been and will not be registered under the United States Securities
Act of 1933, as amended, (the "U.S. Securities Act") or any state securities laws, and, subject to certain
exceptions, may not be offered, sold or delivered, directly or indirectly in the United States of America, its
territories or possessions and this prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby within the United States. See "Plan of Distribution".
INITIAL PUBLIC OFFERING

April 28, 2011
PRELIMINARY PROSPECTUS

RED EAGLE MINING CORPORATION
(the "Company")
 Shares
 per Share
This prospectus (the "Prospectus") qualifies the distribution (the "Offering") of  common shares (the
"Offered Shares") of Red Eagle Mining Corporation (the "Company") at a price of $ per Offered
Share (the "Offering Price"). The Offered Shares are being offered pursuant to an agency agreement
dated , 2011 (the "Agency Agreement") among the Company, Raymond James Ltd., BMO Nesbitt
Burns Inc., Canaccord Genuity Corp. and Salman Partners Inc. (together the "Agents"). The Offering
Price of the Offered Shares and the terms of the Offering have been determined by negotiation between
the Company and the Agents.
Price to Public

Agents'
Commission(1)

Net Proceeds to the
Company(2)

Per Share

Offering(3)

Notes:

1.

The Company has agreed to pay the Agents a cash commission equal to 6% of the gross proceeds of the Offering (the
"Agents' Commission"). In addition, the Agents will receive warrants (the "Agents' Warrants") entitling them to
acquire that number of Common Shares (as hereinafter defined) as is equal to 3% of the total number of Offered Shares
sold pursuant to the Offering (including any Additional Shares sold pursuant to the Over-Allotment Option) at the
Offering Price for a period of 18 months from the Closing Date. This Prospectus qualifies the distribution of the
Agents' Warrants to the Agents. The Company has also agreed to pay the Agents' expenses in connection with the
Offering, including legal expenses and the Agents' reasonable out-of-pocket expenses. See "Plan of Distribution".

008226000-00082763; 17

ii
2.

Before deducting the balance of the expenses of the Company and the Agents relating to the Offering, estimated not to
exceed $, which will be paid by the Company out of the proceeds of the Offering. See "Use of Proceeds".

3.

The Company has granted the Agents an option (the "Over-Allotment Option"), exercisable in whole or in part for a
period of 30 days from Closing of the Offering to solicit subscriptions for and purchase or arrange for purchase of such
number of Common Shares (the "Additional Shares") as is equal to 15% of the number of Offered Shares sold
pursuant to the Offering and to require the Company to issue and deliver such number of Additional Shares as is
required to cover over-allotments, if any, and for market stabilization purposes. This Prospectus qualifies the grant of
the Over-Allotment Option and the distribution of Additional Shares issued upon the exercise of the Over-Allotment
Option. In the event the Agents exercise the Over-Allotment Option in full, the Price to Public, Agents' Commission
and Net Proceeds to the Company (before deducting expenses of the Offering), will be $, $ and $ respectively. A
purchaser who acquires Additional Shares forming part of the Agents' over-allotment position, acquires the Additional
Shares under this Prospectus, regardless of whether the over-allocation position is ultimately filled through the exercise
of the Over-Allotment Option or secondary market purchases. The Additional Shares and the Offered Shares are herein
collectively referred to as the "Shares".

There is currently no market through which the securities offered hereunder may be sold and
purchasers may not be able to resell securities purchased under this Prospectus. This may affect
the pricing of the securities in the secondary market, the transparency and availability of trading
prices, the liquidity of the securities, and the extent of issuer regulation. Investments in natural
resource issuers involve a significant degree of risk. The degree of risk increases substantially when
an issuer's properties are in the exploration as opposed to the development stage. All of the
properties of the Company are in the exploration or pre-exploration stage and are without a known
body of commercial ore. An investment in these securities should only be made by persons who can
afford the total loss of their investment. See "Risk Factors".
The Company has applied to list the common shares (the "Common Shares") on the TSX Venture
Exchange (the "Exchange"). Listing will be subject to the Company fulfilling all of the listing
requirements of the Exchange.
As at the date of this Prospectus, the Company does not have any of its securities listed or quoted, has not
applied to list or quote any of its securities, and does not intend to apply to list or quote any of its
securities, on the Toronto Stock Exchange, a U.S. marketplace, or a marketplace outside Canada and the
United States of America.
The Agents, as exclusive agents of the Company for the purposes of the Offering, conditionally offer the
Offered Shares on a commercially reasonable efforts basis, subject to prior sale, if, as and when issued by
the Company and accepted by the Agents in accordance with the Agency Agreement referred to under
"Plan of Distribution".
Subscriptions for the Offered Shares offered hereunder will be received subject to rejection or allotment
in whole or in part and the Agents reserve the right to close the subscription books at any time without
notice. Other than the Shares offered or sold in the United States, which will be represented by individual
certificates, registration of interests in and transfers of Shares held through CDS Clearing and Depository
Services Inc. ("CDS") or its nominee will be made electronically through the non-certificated inventory
("NCI") system of CDS. Common Shares registered to CDS or its nominee will be deposited
electronically with CDS on an NCI basis on the closing of the Offering. It is expected that the closing
date of the Offering (the "Closing Date") will be no later than , 2011. The Offered Shares are to be
taken up by the Agents, if at all, on or before a date not later than 90 days after the date of the receipt for
the final prospectus relating to the Offering. Funds received in connection with subscriptions during this
90 day period will be held by the Agents as depository and if the entire Offering is not achieved during
this period, the funds will be returned to the subscribers unless the subscribers have otherwise instructed
the Agents. A purchaser of Offered Shares (other than a purchaser of Offered Shares in the United States)
will receive only a customer confirmation from a registered dealer that is a CDS participant and from or
through which the Shares are purchased. See "Plan of Distribution".

008226000-00082763; 17

iii
Subject to applicable laws, and in connection with the Offering, the Agents may effect transactions
intended to stabilize or maintain the market price of the Common Shares at levels other than those that
might otherwise prevail in the open market. Such transactions, if commenced, may be discontinued at any
time. See "Plan of Distribution".
An investment in the Shares is highly speculative and involves a high degree of risk. Investors
should carefully review the risk factors outlined in this Prospectus. See "Risk Factors".
Potential investors are advised to consult their own legal counsel and other professional advisers in
order to assess income tax, legal and other aspects of this investment.
No person has been authorized to give any information other than that contained in this
Prospectus, or to make any representations in connection with the Offering made hereby, and, if
given or made, such other information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell or a solicitation of
an offer to buy securities in any jurisdiction or to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction.
The Company is not a related or connected issuer (as such terms are defined in National Instrument 33105-Underwriting Conflicts) to the Agents.
The following table set out securities issuable to the Agents:
Exercise price or
average acquisition
price

Agents' Position

Maximum size or
number of securities
available

Exercise period or
acquisition date

Agents' Warrants

Up to  Agents' Warrant
Shares

18 months from the
Closing Date

Over-Allotment Option

Up to  Additional Shares

30 days following the
Closing Date

Total Securities Under Option
Issuable to the Agents

Up to  Common Shares

N/A

N/A

Unless otherwise noted, all currency in this Prospectus are stated in Canadian dollars.
Certain legal matters relating to the securities offered hereby will be passed upon by Anfield Sujir
Kennedy & Durno LLP, Barristers & Solicitors, on behalf of the Company and by Blake, Cassels &
Graydon LLP, Barristers & Solicitors, on behalf of the Agents. No person is authorized to provide any
information or to make any representation in connection with this offering other than as contained in this
Prospectus.

008226000-00082763; 17

.......................... 48  PRINCIPAL SECURITYHOLDERS ............................................ 1  BUSINESS OF THE COMPANY ......... 45  OPTIONS TO PURCHASE SECURITIES ................................................................ 17 .......................................................................................................................................................................................................................................... VIII  CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION .................................................. 54  008226000-00082763....TABLE OF CONTENTS PROSPECTUS SUMMARY ............................................................................................................................................... 1  USE OF PROCEEDS .................................................................................................................................................................. ................... 40  DESCRIPTION OF SECURITIES DISTRIBUTED......................... 50  DIRECTORS AND EXECUTIVE OFFICERS ..................................................................................................................................................................................................................................................................................... VII  CAUTION REGARDING FORWARD-LOOKING STATEMENTS .....IX  CORPORATE STRUCTURE ....................... VIII  ELIGIBILITY FOR INVESTMENT ................. VII  CURRENCY....................................................................................................................................... 45  CONSOLIDATED CAPITALIZATION ........................................................................ 46  PRIOR SALES ........... 47  ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER ................................................ 40  SELECTED FINANCIAL INFORMATION AND MANAGEMENT'S DISCUSSION AND ANALYSIS .................................................. I  SEE "SELECTED FINANCIAL INFORMATION AND MANAGEMENT'S DISCUSSION AND ANALYSIS".............. 50  EXECUTIVE COMPENSATION ....................................................................................................................................................................................... 38  DIVIDENDS OR DISTRIBUTIONS .........................................................................................................................................................................................................................................................................................................................................................................

.................................... 58  PLAN OF DISTRIBUTION.............................................................................................. 57  INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS ................................................... 61  PROMOTERS ........................... 17 .................................................................................................................. 69  RELATIONSHIP BETWEEN THE COMPANY AND AGENTS ........................ 69  MATERIAL CONTRACTS ......................... 71  GLOSSARY ............................. 70  RELATIONSHIP BETWEEN THE COMPANY'S PROFESSIONAL PERSONS AND EXPERTS ....................................................................................................................ii COMPENSATION OF DIRECTORS ..................................................................................................................................................... 72  008226000-00082763...................................................................................................................................... 58  AUDIT COMMITTEE ................................................................................................................ 69  EXPERTS .......................................................... TRANSFER AGENT AND REGISTRAR ....... 58  RISK FACTORS ...................................................................................................................................................... 58  CORPORATE GOVERNANCE ............................................................. 69  INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS ...................................... 70  LIST OF EXEMPTIONS .......................................... 70  PURCHASERS' STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION ............................................................................................................................................................... 69  AUDITORS..........................................................................................................................................................................................................

The Company has agreements to acquire three material properties. The Company intends to commence an aggressive drill program on its three main projects in 2011. The Company Red Eagle Mining Corporation is a gold and copper mineral exploration and development company focused exclusively in Colombia. REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 008226000-00082763. in part. Colombia is now ranked first in geological potential. Up until the 20th century. with improving security. and (c) an option to acquire 100% interest in the Mina Vieja copper and gold project. The Company's interests in its material properties are as follows: (a) an option to acquire 100% interest in the Santa Rosa gold project. and the Santa Rosa and Mina Vieja Projects were optioned in the fourth quarter of 2010. who have extensive experience in the minerals industry. the Company had over $5 million in cash. (b) an earn-in for a 70% joint venture in the Pavo Real gold project.PROSPECTUS SUMMARY The following is a summary of the principal features of the Offering and should be read together with the more detailed information and financial data and statements contained elsewhere in this prospectus. The Company has been active in seeking mineral resource opportunities since its incorporation in January of 2010. 30% of the world's gold came from Colombia. political stability and a modern mining code. The Company believes that Colombia is now the gold exploration country of choice. to its directors and management team. and have assembled a very competent team in Colombia with all senior geologists having over 15 years of exploration experience. The Pavo Real Project was optioned by the Company in the second quarter of 2010. According to The Fraser Institute. all of which are early exploration properties and without any drilling undertaken to date. and until very recently Colombia's gold potential has remained largely untouched in terms of modern exploration. As of April 2011. nineteenth in political potential (third in South America) and seventh last year for gold exploration spending. The Company's success in securing these opportunities is due. 17 .

2 million by November 2013. These structures tie in with data obtained from the aerial magnetic survey conducted by the Company over the project area which indicates a magnetic low intensity intrusive that has been hydrothermally altered to an amphibolite with destruction 008226000-00082763. and more recently was mined with near surface adits. 17 .060ha under application for US$8. The Santa Rosa property was sluice-mined extensively for gold during the Spanish Empire.ii Figure 1 Santa Rosa Project The Santa Rosa Project is located northwest of Medellin in Antioquia Province of Colombia.488ha plus 3. The Company has an option to acquire 100% of the tenements covering 1. trends of NE/SW and EW mineralised structures have become evident. with easy access by paved road (70km) and gravel road (15km). After surveying the sluiced-out areas and adits.

and agriculture is almost non-existent. incurring a minimum of US$4 million in capital contributions on the Pavo Real Project over four years. An exploration program is also planned for the Pavo Real Project for 2011. with the negotiation of a joint venture with Miranda in early 2010.996ha land position once the current tenements and surrounding areas are mapped to determine the extent of mineral potential. The mineralisation is not confined to just one sedimentary rock type. hence demonstrating potential for a strong. and is accessed by paved road and gravel road (5km). issuing 700. Although there has been insufficient exploration to date to define a "mineral resource" within the meaning of NI 43-101 and it is uncertain if further exploration will result in the delineation of mineral resources. A number of small local marble and limestone quarrying operations 008226000-00082763. Infrastructure is limited in the area. and paying US$400. An exploration program is planned for 2011 with total direct exploration expenditures estimated at US$4. The main primary gold areas have been intermittently mined by artisanal miners exploiting narrow high grade gold bearing veins and fault zones in the sedimentary host rock. including 5. Mapping and sampling of the near surface adits. the Company believes that the Santa Rosa Project has the potential to develop into a significant bulk tonnage resource taking into account the stockwork or vein systems. The high grade narrow vein systems contain significant gold occurrences in their own right . An initial aerial magnetic survey and surface rock chip and channel sampling have yielded positive results. and agriculture is quite limited. Water is also abundant from underground sources.0 million. including 10.594ha. Security in the area is good. extensive system of pervasive gold mineralisation with high fracture and vein density and possible dissemination. the Company believes that the Pavo Real project could offer the potential for a large resource. A check sample by the Company of one such vein assayed 96 grams/tonne gold. The initial drill sites have been selected as a result of the mapping and sampling conducted to date. subsequently a further five applications totaling 1. The original joint venture covered five tenements totaling 2. The topography is gently undulating hills which is conducive to valley fill tailings deposition or heap leach sites. 17 .000 metres of diamond drilling. Infrastructure is good in the region with a major town (Santa Rosa de Osos) nearby. Although there has been insufficient exploration to date to define a "mineral resource" within the meaning of NI 43-101 and it is uncertain if further exploration will result in the delineation of mineral resources. Copper Skarn Projects The copper skarn deposits (including the Mina Vieja Project) lie along a skarn trend extending at least 15km NE of the Pavo Real Project. the capital of Tolima Province. Security in the area is sound. and ground geochemistry is currently on-going with results to date showing a correlation with magnetics and old workings.402ha have been added under the area of interest agreement. Pavo Real Project The Pavo Real Project established the Company's presence in Colombia. but regional centres such as Rovira and Ibague (20km south) will provide labour and supplies support. This project is located approximately 20km south of Ibague.5million. the Company has surveyed 245 adits (6km total length) and over 60 colonial sluice workings. These veins appear to extend laterally over considerable distance.250 metres of diamond drilling. The Company intends to further consolidate the existing 3. The Company expects that drilling under the oxidised zone will determine the extent of economic primary mineralisation contained within the vein stockwork system. The continued high quality assays from both rock chip and adit sampling have been very encouraging for the intended drill program.000 Common Shares.000 cash in installments between 2010 and 2015.iii of magnetic iron. Since the beginning of 2011. The Company has an earn-in joint venture to 70% of the Pavo Real Project by completing a feasibility study.in the SE area of the tenements three veins over an area of 100 metres total width are well known. with total direct exploration expenditures estimated at US$2.

to purchase or arrange for the purchase of up to such number of Additional Shares as is equal to 15% of the aggregate number of Offered Shares sold under the Offering at the Offering Price. including 2.5 grams/tonne gold. The fact that a modest mining and processing operation took place in the past is encouraging. it is reported the mine averaged 2. Although there has been insufficient exploration to date to define a "mineral resource" within the meaning of NI 43-101 and it is uncertain if further exploration will result in the delineation of mineral resources. for total available funds of $ which will be used by the Company as follows: Funds to be Used ($) To pay the property payments due under the Option Agreements for the next twelve months as follows: • • • Santa Rosa (US$3. at the Offering Price of $ per Offered Share. The Company intends to fully map the skarn trend.000) Pavo Real (US$50. 2011. and in parallel conduct a drilling program under the old mining operation to confirm the depth extension of the known deposit. Mining took place to an estimated depth of 100 metres.000) Mina Vieja (US$135.000) 008226000-00082763. The Mina Vieja Project had a moderate sized copper mining and processing operation in the early 70's. consolidate a land position according to the results. which is still above the water table and river valley floor below the outcrop. Information at hand indicates an ore body strike length of at least 350 metres and a thickness of 20 to 30 metres. dipping at 57O. for a period of 30 days following the closing of the Offering. See "Plan of Distribution".6 million. The Company expects the mineralization to continue at depth and the Company believes that it is conducive to a decline-accessed underground mining operation. and the size of a possible future copper mining operation. The Offering The Company is offering  Offered Shares for sale in the Selling Provinces.000 as at April 15. These funds will be combined with the Company's working capital of approximately $5. which corresponds to sampling undertaken by the Company. the Company believes that the Mina Vieja Project has the potential to develop into a relatively high grade copper and gold resource. 17 $ $ $ . Over-Allotment Option The Company has granted to the Agents the Over-Allotment Option exercisable in whole or in part. Use of Proceeds The Company will receive aggregate net proceeds (after payment of the Agents' Commission and estimated expenses of the Offering) of $ from the sale of Offered Shares pursuant to this Prospectus (assuming no exercise of the Over-Allotment Option). is planned for 2011.375.iv lie along this trend. An exploration program with direct exploration expenditures of US$0. The skarn is formed by a younger massive intrusive to the East of the limestone deposit. at the discretion of the Agents. subject to exercise of the Over-Allotment Option.500 metres of diamond drilling.5% copper and 1. Future consolidation of the land position could increase the resource potential.000.

licences and permits from various regulatory authorities that are by no means guaranteed. The Company's property interests and proposed exploration activities in Colombia are subject to political.v Completion of proposed Stage 1 and Stage 2 exploration programs on the Company's properties as follows: • • • $ $ $ Santa Rosa (US$4. The Company's business is strongly affected by the world market price of gold.533. The ability of the Company to identify. The Company's interest in its properties is subject to the terms of the applicable Option Agreements. experience and knowledge may not eliminate. The Company's exploration and development activities are subject to regulation under environmental laws. economic and other uncertainties which could have a significant negative effect on the Company. 17 . most of which are beyond the Company's control. The Company does not currently have mineral properties in production and as a result. . Any failure by the Company to obtain. title to the properties under the terms of the Option Agreements. The mining industry is subject to significant risks and hazards. and which could have an adverse effect on the Company's financial performance.000 Mina Vieja (US$598. all of which are beyond the Company's control. The Company does not maintain insurance against title and cannot give any assurance that title to properties it has acquired will not be challenged or impugned and it cannot guarantee that it will have or acquire valid title to the properties. The Company competes with other parties with greater financial. or retain. could have a material adverse effect. including: Exploration and development of mineral deposits involves a high degree of risk which even a combination of careful evaluation. technical and other resources than the Company and there is no assurance that the Company will continue to be able to compete successfully in acquiring exploration and development rights to properties. the Company is and will continue to be subject to all of the risks associated with establishing new mining operations. there is no assurance that the Company will be able to acquire the necessary resources to successfully implement its 008226000-00082763. amendments to which could have a material adverse impact on the Company. The Company has a history of losses and there can be no assurance that it will ever be profitable.000 To provide funding sufficient to meet administrative costs for 12 months $1.700. There may be circumstances.500) Pavo Real (US$2. The Company intends to spend the funds available to it as stated in this Prospectus. liquidity and results of operations. The mining industry in Colombia is subject to extensive controls and regulations.054.000) For future acquisitions in order to consolidate the districts surrounding the Pavo Real and Santa Rosa Projects $4. Risk Factors An investment in the Shares qualified under this Prospectus is subject to certain risk factors that should be considered by prospective investors and their advisors. The operations of the Company and the Option Agreements require approvals. where for sound business reasons a reallocation of funds may be necessary. Few properties which are explored are ultimately developed into producing properties. negotiate and consummate transactions is dependent on the Company's management team and the loss of service of any member could adversely affect the Company. Given the current levels of demand for equipment and personnel within the mining industry. however.200. which is subject to volatile price movements that are affected by numerous factors.000 To provide general working capital to fund ongoing operations $ Total: $ See "Use of Proceeds".

vi business plan. There is no assurance that the Company will be able to obtain additional funding which may be required to complete any proposed or future exploration and development on its properties. sabotage. 2010 Revenues Comprehensive Loss for the Period $1.582.633. Summary of Financial Information The following selected financial information is subject to the detailed information contained in the financial statements of the Company and notes thereto appearing elsewhere in the Prospectus and should be read in conjunction with the financial statements and related notes. Substantially all of the Company's assets are located outside of Canada and it may be difficult or impossible to enforce judgments granted by a court in Canada against the assets of the Company. There can be no assurance that restrictions in repatriation of earnings from Colombia will not be imposed in the future. The Company's operations in Colombia make it subject to foreign currency fluctuations which could adversely affect the Company's financial position and results. Period from January 4. terrorism. Investing in the Shares is speculative and involves a high degree of risk due to the business and present stage of exploration of the Company's mineral properties.679.722 $6. community. The Offering Price significantly exceeds the net tangible book value per share and investors will suffer immediate and substantial dilution of their investment. and which may also cause decreases in asset values. 2010 (date of inception) to December 31. The securities markets in the United States and Canada have experienced a high level of price and volume volatility in recent years and the value of the Common Shares will be affected by any continued volatility. It is unlikely the Company will pay dividends in the immediate or forseeable future. Weather.216 Total Liabilities Shareholder's Equity 008226000-00082763. A failure by a joint venture partner to meet its obligations to the Company or third parties could adversely affect the Company.962 . 17 Nil $125. See "Risk Factors". which could cause the Company to reduce or delay its proposed activities. The Company's directors and officers serve as directors and officers of other companies which participate in the same business as the Company and therefore such directors and officers could have conflicts of interest.506 Total Assets $6. Current global markets and financial conditions have been characterized by volatility which may impact the Company's ability to obtain financing in the future on terms favorable to the Company. government or other interference with the maintenance or provision of infrastructure necessary for the Company's operations could adversely affect the Company. The market price of the Common Shares can be subject to wide fluctuations. Events caused by turmoil in world financial markets may have an adverse effect on the Company's operations and the trading price of its Common Shares.

vii See "Selected Financial Information and Management's Discussion and Analysis". Currency Unless otherwise indicated. 17 . all currency amounts herein are stated in Canadian Dollars. See "Currency Presentation and Exchange Rate Information". 008226000-00082763.

"continue" or other similar expressions concerning matters that are not historical facts and include. ELIGIBILITY FOR INVESTMENT In the opinion of Blake. "targeted". the timing of receipt of permits. a registered education 008226000-00082763.viii CAUTION REGARDING FORWARD-LOOKING STATEMENTS Except for statements of historical fact relating to the Company. "could". mineral resources. While the Company considers these assumptions to be reasonable based on information currently available to it. "intend". if issued on the date hereof. under the current provisions of the Income Tax Act (Canada) (the "Tax Act") and the regulations thereunder. and any and all other timing. including. economic conditions. LLP. counsel to the Agents. operational. future oriented financial information. "expect". "projects". but are not limited in any manner to. existence or realization of mineral resource estimates. other than as required by law. foreign currency exchange rates. can be identified by terminology such as "may". realization of mineral reserves. Investors are cautioned against placing undue reliance on forward-looking statements. "anticipate". or financial outlooks (collectively. as such matters may be applicable. access to capital and debt markets and associated costs of funds. See "Risk Factors". update any forward looking information to reflect. Forward-looking statements are based upon management's beliefs. they may prove to be incorrect. the Offered Shares. "plan". the timing and amount of future production. if any. and include the ultimate determination of mineral reserves. including but not limited to specific risks and uncertainties disclosed in this Prospectus. and • Treatment under applicable governmental regimes for permitting and approvals (see "Risk Factors"). process and sell mineral products on economically favourable terms. a registered retirement income fund. the Company's future outlook and anticipated events or results and. Actual results may vary from such forward-looking information for a variety of reasons. development. availability of a qualified work force. Forward-looking information may relate to this Prospectus. the Company does not intend. economic. "predict". interest rates. certain statements in this Prospectus may constitute forward-looking information. and the ultimate ability to mine. legal. "should". "will". new information or future events. "believe". rights and authorizations. but not limited in any manner to. and general and administrative expenses (see "Use of Proceeds" for further details). access to adequate services and supplies. capital and operating expenditures. 17 . financial. among other things. "possible". • Expectations generally regarding completion of this Offering and the ability to raise further capital for corporate purposes. In particular. those with respect to commodity prices. commodity prices. in some cases. and undertakes no obligation to. would be qualified investments. the availability and final receipt of required approvals. sufficient working capital to develop and operate any proposed mine. "estimate". those disclosed in any other of the Company's public filings. for a trust governed by a registered retirement savings plan. The Company has no policies or procedures for updating forward-looking information. the timing of construction of any proposed mine and process facilities. Such forward-looking statements are based on a number of material factors and assumptions. Cassels & Graydon. "forward-looking information") within the meaning of Canadian and United States securities laws. licenses and permits. a deferred profit sharing plan. regulatory and political factors that may influence future events or conditions. estimates and opinions on the date the statements are made and. this Prospectus contains forward-looking statements pertaining to the following: • Proposed expenditures for exploration work. "potential". mineral reserves.

00060 . at the time of the issuance of the Shares.9946 1.2969 Low 0. and does not have a "significant interest" (as defined in the Tax Act) in either the Company or a corporation.00 = US$. The closing. The closing.00055 High .0660 As at . as reported by OANDA Corporation were as follows: 2010 2009 2008 Closing . a holder of Offered Shares will be subject to a penalty tax if the Offered Shares are held in a TFSA and are a "prohibited investment" for a TFSA under the Tax Act. all references to dollars in this Prospectus are references to Canadian dollars. low and average exchange rates for one US$ (based on the noon buying rates) in terms of Canadian dollars for each of the three years ended December 31.3000 1.0299 1. 2010. However. Holders should consult their own tax advisors in this regard.00051 .00 = $ or $1. 008226000-00082763.00055 . CURRENCY PRESENTATION AND EXCHANGE RATE INFORMATION Unless otherwise specified herein. low and average exchange rates for one Colombian Peso (or COL$) in terms of Canadian dollars for each of the three years ended December 31. Holders should consult their own tax advisors as to whether the Offered Shares will be a prohibited investment in their particular circumstances.00055 As at . a registered disability savings plan and a tax-free savings account (''TFSA'') provided that.2246 High 1.00 = COL$. the noon buying rate as reported by the Bank of Canada was US$1.00051 .9946 1. 2010. partnership or trust that does not deal at arm's length with the Company for purposes of the Tax Act. such Shares are listed on a designated stock exchange (which includes the Exchange). the published rate as reported by OANDA Corporation was COL$1. high.00058 .00 = $ or $1. 2009 and 2008.ix savings plan.0778 1.9719 Average 1.00049 Average . the Offered Shares will not be prohibited investments for a TFSA held by a particular holder provided the holder deals at arm's length with the Company for the purposes of the Tax Act. as reported by the Bank of Canada were as follows: 2010 2009 2008 Closing 0.00054 .00049 . Notwithstanding the foregoing.00062 Low . 17 .0292 0.0466 1.00049 . References to "US$" are to United States dollars. The 2011 Federal Budget proposes to extend the concept of "prohibited investment" to registered retirement savings plans and registered retirement income funds. high.1420 1. 2009 and 2008.

BUSINESS OF THE COMPANY The Company is a growth-oriented. 2010 under the name Red Eagle Mining Corporation. the Company has raised $9. To fund its exploration activities to date and to provide working capital the Company has so far relied on the sale of Common Shares from treasury.25 million privately through the sale of its Common Shares (see "Prior Sales").CORPORATE STRUCTURE NAME AND INCORPORATION The Company was incorporated under the laws of the Province of British Columbia on January 4. Since incorporation. The Company currently has interests in several exploration and development projects. The Company's principal business is the acquisition and exploration of resource properties located in Colombia. British Columbia V6E 2Y3. Red Eagle Mining de Colombia Limited. INTERCORPORATE RELATIONSHIPS The Company currently has two subsidiaries. 17 . (a wholly owned British Columbia subsidiary) and Rovira Mining Limited (MAD III) (a 70%-owned British Columbia subsidiary). The Company intends to raise 008226000-00082763. The Company's head office is located at Suite 920 – 1030 West Georgia Street. focused on exploring and developing gold properties in Colombia. Canadian-based gold company. the Pavo Real Project and the Mina Vieja Project are currently the Company's focus. RED EAGLE MINING CORPORATION (BRITISH COLUMBIA) 100% 70% RED EAGLE MINING de COLOMBIA (British Columbia) Santa Rosa Project(1) ROVIRA MINING LIMITED (British Columbia) ("MAD III") Pavo Real Project(1) Mina Vieja Project(1) Notes: (1) The Company has options to acquire each of these projects. V7Y 1C3. British Columbia. The Company's registered office is located at Suite 1600 – 609 Granville Street. See "Business of the Company". Vancouver. of which the Santa Rosa Project. Vancouver. see the detailed description of each project under "Business of the Company".

the license is required to be converted to a mining concession on compliance with prescribed conditions. the holder of surface or subsurface minerals. During the term of the exploration license. There is now only one title which. The Ministry of Mines and Energy subsequently makes a definitive project classification based on the information filed. exploration licenses. On its expiry. The 1988 Mining Code establishes four types of mining title: permits. which has been subject to various changes and amendments. into an exploitation license. and Colombian governmental regulatory bodies are specifically prohibited from imposing any additional or different requirements than would be required of a Colombian individual or corporation. the license can be converted. There are three types of exploration licenses: small. all mineral rights are the property of the government of Colombia. On expiry of an exploration license for medium and large mining activities and any extensions thereof. There is a maximum size area for each type of exploration license. Under Colombian mining law. on compliance with prescribed conditions. work directed to identifying commercially exploitable mineral deposits and reserves. The type of exploration license is determined by the anticipated volume or tonnage of materials to be extracted from the mine to be developed on the property. and large mining activity licenses. where the applicant did not request to be subject to the new regulation. foreign individuals and corporations have the same rights as Colombian individuals and corporations. On expiry of an exploration license for small mining activity and any extensions thereof. could be extended for an additional 30 years. Concession contracts have a term of 30 years. An exploitation license has a term of ten years. Under Colombian mining law. Obtaining a mining right does not transfer ownership of the mineral estate. However. The separation of concessions into three different levels for small. whether operating on government or private property. in a prescribed area. There are two types of mining contracts: concession contracts issued by the Ministry of Mines and Energy and those contracts issued by entities to which the Ministry of Mines and Energy has assigned its rights. The Ministry of Mines and Energy has the right to reclassify the project every five years during the exploration phase. is subject to the legal requirements established under the 1988 Mining Code and the Colombian Mining Law 685 of 2001 (the “2001 Mining Code”). An exploration license grants the holder the exclusive right to perform. INFORMATION REGARDING COLOMBIA Regulatory Matters In Colombia. A concession contract gives the holder the exclusive right to extract certain minerals and conduct the activities necessary for exploitation. the holder can apply for a ten year extension or conversion of the license into a concession contract. Mineral property rights are governed by the Colombian Mining Code. reports on work performed on the property must be filed with the Ministry of Mines and Energy. It is also applied to those applications made during its pendency but still under administrative proceeding when the 2001 Mining Code came into force. this 30 year period was amended by Mining Law 1382 of 008226000-00082763. transport and shipment of the same. as amended by Mining Law 1382 of 2010. In June 2001. the 2001 Mining Code was enacted that somewhat simplifies and streamlines procedures for concessions. medium. and further first rights for subsequent periods of 30 years. once issued has a duration of 30 years and under the 2001 Mining Code. medium and large mining no longer exists. exploitation licenses and concession contracts. The 1988 Mining Code is currently applied to those licences granted during the period it was in effect and prior to the effective date of the 2001 Mining Code. 17 .2 additional funding under the Offering to carry out additional exploration on its properties as set out in the section entitled "Use of Proceeds". but creates a temporary right to explore and benefit from minerals in exchange for royalty payments so long as the mining title remains in good standing.

This is followed by a construction phase of three years with a further one year extension. Therefore. increased fines and penalties for noncompliance. Areas Excluded from Mining Activities The 2001 Mining Code. which established the possibility to obtain a non-automatic extension for a 20 year period. the Regional Development Companies and certain municipalities and metropolitan districts. mining can start any time within this phase.3 2010. These laws address emissions into the air. an emissions permit and a river course occupation permit. management of waste. more stringent environmental assessments of proposed projects and increasing responsibility for companies and their officers. Companies were permitted to elect to maintain existing claims under the 1988 Mining Code or elect to comply with the 2001 Mining Code. a certificate of vehicular emissions. Environmental legislation in Colombia is evolving and the general trend has been towards stricter standards and enforcement. Environmental Laws and Regulations All of the Company's exploration. 17 . etc). To obtain the requisite permits to explore and mine the necessary environmental plans and report studies need to be presented and approved. the number of drill holes.e. Exploration on a mineral tenure which exceeds prospecting. 008226000-00082763. mapping and sampling. • the proposed measures to prevent negative environmental impact that could be caused to the environment or to the communities by the project. There is no assurance that development of the Company's projects will be permitted. for a maximum exploration phase period of eleven years. management of hazardous substances. requires the submittal and approval of an Environmental Management Plan (“PMA”) which must include: • the work to be done (i. directors and employees. a forest use permit. a permit for springs. antiquities and endangered species and reclamation of lands disturbed by mining operations. Mining companies in Colombia are subject to the authority of the Ministry of the Environment. it may result in additional costs and/or delays which could materially affect the commercial viability and profitability of future operations. with further and successive two year extensions. The 2001 Mining Code requires an environmental mining insurance policy for each concession contract. this provision requires that an environmental impact study (an “EIA”) be presented to the Ministry of the Environment at the end of the exploration phase if the concession is to proceed to the construction phase. Within the first 30 year period. the Mining Code Amendments could be subject to a declaration of unconstitutionality. provide for areas to be excluded from mining activities. protection of natural resources. However. there is an exploration phase of three years. Should modifications to a project be required as a result of the exclusion of the area from mining activities. potential development and production activities are subject to regulation by governmental agencies under various environmental laws.. 2010 (the “Mining Code Amendments”). and this must be approved and an environmental license issued before the exploitation phase can begin. the National Code of Renewable Natural Resources and Environmental Protection forms the basis of environmental policy in Colombia and there is an interest in preserving certain natural resources from development activities. depth. direction. Despite these time limits. as well as its amendments enacted on February 9. This could materially affect development of the infrastructure for the Company's projects as envisioned by any technical and economic study. In addition. discharges into water. including an environmental license. location. The current Mining Code Amendments are under evaluation by the Constitutional Court in order to determine their compliance with the Constitution and other law enactment formalities. Exploitation may require additional permits.

the holder has to obtain an insurance policy and the insured value must be 10% of the estimated production for the first two years as established by the building and works plan. • the proposed points of diversion for water so appropriate water permits can be issued. concession. As noted above. Historically. the insured value under the policy must be 10% of the product of the estimated annual production multiplied by the mine mouth price of the minerals being produced. any such work carried out in areas designated as natural reserves are to be governed by those rules and restrictions. The EIA has to demonstrate the building and works plan’s environmental feasibility. an emission permit and/or a river course alteration permit. group actions. a forest use permit. environmental authorities have taken a relaxed approach in the enforcement of environmental regulations. class actions. • the location and number of settling ponds to prevent turbidity in the streams by drilling fluids. undertakings and industrial activities has resulted in increased enforcement and prosecution. growing concern with respect to the environmental sustainability of projects. 17 . a mining company may be required to request before the Regional Development Companies a permit for springs. There is no bond requirement for exploration PMA’s. and confiscation of products or implements used to commit an infringement. away from streams and creeks. an affected third party or the government may initiate judicial action against a polluting entity. which must contain the measures to prevent and to deal with emergencies arising from the project. up to a maximum of 90 days. civil liability lawsuits. an EIA must be submitted before an environmental licence is issued. Without approval of this study and the issuance of the corresponding Environmental Licence. including actions for protection of civil rights. • the contingency plan. During the exploration phase. work demolition at the cost of the infringer. the insured value under the policy must be 5% of the value of the planned annual exploration expenditures and during the construction phase the insured value under the policy must be 5% of the planned investment for assembly and construction under the building and works plan. Article 280 of the Mining Code provides for the possibility of requiring a guarantee of compliance with mining and environmental obligations under the concession contract with real security.4 • the monitoring plan of the project. executive or police measures and criminal filings. As discussed above. as fixed annually by the Colombian government. Recently. While PMA’s do not require any authorization or environmental permits. and • the location of fuel and oil storage areas. and is typically approved in 15 to 30 days. the policy must be maintained during the entire term of the licence or agreement. temporary or final closure of the establishment. or authorization. During the exploration stage. During the exploitation phase. 008226000-00082763. Further. Where there is a breach of environmental laws. • the schedule for the execution of the PMA. Article 280 of the 2001 Mining Code also requires a concession contract holder to obtain an environmental mining insurance policy. • the costs of the PMA and the costs of the project. in order for the environmental authorities to verify the concessionaire’s compliance with environmental commitments and obligations during the implementation of the PMA. and no site reclamation is required. For licences or agreements to be maintained under 1988 Mining Code. The preparation and filing of the PMA is normally the responsibility of the drill contractor. Sanctions include daily penalties. suspension or revocation of the license. mining and exploration cannot commence. along with a PMA. Environmental laws are a matter of public interest and are not subject to settlement. permit.

should receive not less than 70% of the total payroll of qualified or of skilled personnel in upper management or senior level staff.com.500. the Company entered into a purchase agreement (the "Santa Rosa Agreement") with Miguel Angel Perez Villa.000 Total US$7.5 times the minimum daily wage per hectare per year The fee is payable in advance per year upon the contract’s execution. 2011. as follows: for years 6 and 7. Pursuant to the Santa Rosa Agreement. The value per gram of gold and silver at mine mouth for the estimation of royalties will be 80% of the average international price for the previous month.000 On or before November 30. For underground mines. Upon prior authorization. The fee is payable annually until the commencement of commercial production from the property.500. 2013 US$4.000 tonnes and. 2010 and a payment of US$400. the holder of a concession contract must pay a property fee equivalent to one Colombian minimum daily wage per hectare per year.25 times the minimum daily wage per hectare per year. for open-pit mines. Colombian staff of a mining company. the property fee will be increased for every additional two year period.5 Taxes and Royalties In Colombia. as determined by exploration conducted by the Company and in accordance with resource estimates prepared in accordance with NI 43-101 by an independent geologist appointed by agreement between the Company and the Santa Rosa Vendors.000 The Company will be required to pay to the Santa Rosa Vendors the greater of US$2 million or US$15 per resource ounce of gold in the measured and indicated categories on a pre-determined 20ha area. and no less than 80% of the value of total payroll of the subordinates. A royalty is payable at an effective rate of 4% of the gross value of the minerals calculated at the mine mouth for gold. from the first to the fifth year. 17 .000 on October 18. Reference should be made to the full text of the Santa Rosa Report which is available for review on SEDAR located at www. The Santa Rosa Vendors have executed all the necessary documents to assign the Santa Rosa concessions to the Company.SEDAR. there are various government fees and royalties payable by mining titleholders. During the exploration and construction phases. as published in the London Metal Exchange. afterwards. when annual production exceeds 250. 2011 (the "Santa Rosa Report"). relief may be granted by the Ministry of Labour for a specified time to allow specialized training for Colombian personnel.2 million. The Company can complete its acquisition of up to 100% of the project by making the following additional payments: Cash Payments Required Payment Upon transfer of title US$3. Under the 2001 Mining Code. as a whole. the royalty is payable when annual production exceeds 8. SANTA ROSA PROJECT On April 15. The information below is based on the technical report titled "An Assessment of the Santa Rosa Gold Project" dated March 31. Luis Carlos Perez Villa and Carlos Augusto Escobar (the "Santa Rosa Vendors") pursuant to which the Company was granted an option to acquire a 100% interest in the Santa Rosa Project for aggregate payments of US$8. the Company made an initial payment of US$300. 2011. subject to certain deductions and gross adjustments.000 cubic metres. for year 8. the property fee will be equivalent to 1. 008226000-00082763.000 on February 28.000. the property fee will be equivalent to 1.

in the municipality of the same name. The Santa Rosa Project is easily accessible from the city of Medellin which has an international/national airport. There is also minor commercial forestry (pine). The remaining concession contract (B7560005) and concession application (LDM-08061) are located nearby to the east but surrounded by ground belonging to others (Figure 2 below and Figure 4 of the Santa Rosa Report). 70km north of the department capital Medellín in Colombia. South America.6 Property Location The Santa Rosa Project is located approximately 5km southeast of the town of Santa Rosa De Osos. B7171005. low-growth Andean forest. in the Department of Antioquia. Tropically weathered latosol profiles are ubiquitous and average five to ten metres thick in undisturbed areas. The principal access to the project is Medellín – Barbosa – Don Matías – Santa Rosa for a total 008226000-00082763. H5791005 and H5790005 and one concession application numbered LDM-08061 (Figure 2 below.549. Figure 2 Further concession contracts H6771005 (Santa Marta property located inside concession application LDM-08061) and LKA-08004 are under agreements to purchase and these contracts are presently being finalized. mostly located along drainages. Altitudes range between about 2300 and 2500 metres. H5791005 and B7171005). dissected peneplain with gentle to steep sided valleys and hills. Infrastructure and Physiography Topography in the Santa Rosa de Osos district is an irregular. Accessibility. Agriculture within the project area comprises cattle farming in about 50% of the project area and tamarillo (tree tomato) cultivation in approximately 10% of the area. Climate. Three of the concession contracts are contiguous (H5790005. Local Resources.14ha in four concession contracts numbered B7560005. Property Description The Santa Rosa Project comprises a total area of 4. mostly in the south east. Table 1 of the Santa Rosa Report). 17 . The region is largely occupied by grass pasture and arable land with limited and often isolated areas of lush.

Mining has now moved the adjacent Hilo Azul (Blue Vein) mine. and adjacent Ecuador and western Venezuela. Santa Rosa de Osos was discovered in 1541 by Captain Juan Francisco Vallejo who named the area Valley of the Bears (de Osos) because of the large number of the animals found in the region. autoch-thonous and allochthonous terranes (Figure 3 below). soil and saprolite grid geochemistry and airborne (magnetic and radiometric) geophysics. Police patrol the town of Santa Rosa de Osos and vicinity. Security is provided in the district by a military base (Guadalupe) and troops (Batallón altos de Cuiva). Water is abundant in main rivers but is not potable. 2010.5 hours) on asphalt highway then by a network of gravel roads to the properties (30 minutes). Yearly rainfall averages about 200 centimetres and falls mostly during rainy seasons from March to May and September to December. Spanish colonial rule mostly exploiting alluvial deposits and oxidized veins. Electricity is widely available via a local grid with a possible three phase supply (220 volt). There are no significant climatic restrictions on working. Since that date the Company has undertaken preliminary exploration including surveying and mapping of old mine workings as well as sampling and assaying in areas of known mineralization. The project area is located about 5km east of the town of Santa Rosa de Osos (population 16. Fifty years later the gold potential of the area was recognised and hundreds of miners led by Captain Antonio de Espejo Serrano founded the town of Santa Rosa de Osos (approved in 1636 by King Philip IV of Spain). heap leach pads and mineral processing sites. and continued during. Unskilled labour is available locally. 008226000-00082763. is a complex elongated mosaic of Palaeozoic and younger. Level valley floors are available for tailings storage and waste disposal. History Gold mining in the Department of Antioquia pre-dates. 17 .7 72km (1. Geological Setting Regional Geology The northwest margin of South America comprising Colombia. There has been no known modern mineral exploration activity in the Santa Rosa Project prior to the initial visit by the Company in July. Based upon the existence of the extensive abandoned mine workings past gold production was significant but actual gold production is unknown. Climate is mildly tropical with daytime temperatures around 14°C. Small-scale gold mining continued intermittently and was recently in operation at the Yaruma mine with an estimated average weekly production of about 50 grams gold (unpublished report by Oscar Alejandro Garcia Alvarez. There are no known historical mineral resources or reserves figures for the Santa Rosa Project. Exploration and small scale gold mining by artisanal miners in cooperation with the tenement owners is ongoing within the Santa Rosa Project. Local resources and infrastructure in the Santa Rosa de Osos district are good. Ingeniero de Minas y Metalúrgia).000 in the town and the same in the surrounding municipality). Mines within the Santa RosaProject area reportedly produced gold and silver from bonanza-grade oxide ores during their heyday in the 1940's but production declined as free milling ores were exhausted. Access within the properties is by gravel roads and footpaths.

17 . transcurrent. the Western Cordillera (Occidental). Eocene to late Miocene. Subduction-related magmatic arcs were superimposed on the above described terranes during the Jurassic. Central Cordillera (Central) and eastern Cordillera (Oriental) separated by broad interAndean valleys. some of which are interpreted to be terrane boundary sutures (Figure 3 above). major faults and shear zones. and Late Miocene to Recent and are characterised by plutonic batholiths.(dominantly north-northeast-) striking. Regional-scale structural geology is characterised by a suite of anastamosing. Andean. Cretaceous. The Andean Cordillera in Colombia comprises three distinct mountain chains. Figure 3 above and Figure 6 of the Santa Rosa Report). sub-volcanic intrusions and associated volcanic rocks (Figure 6 of the Santa Rosa Report). The Santa Rosa gold project is located in the Central Cordillera within the Cajamarca- 008226000-00082763.8 Figure 3 These terranes were accreted to the South American continent (Guyana Shield) and subjected to transpressional tectonics and subduction-related magmatism along a 2. sub-parallel.000km-long segment of the Pacific Rim.

especially in the east. Metamorphic rocks including amphibolites (Pav) and metasediments (Pms) occur as isolated outliers (Figure 8 of the Santa Rosa Report). Figure 3 above). These comprise a para-autochthonous accretionary prism that was accreted to the continental margin along the Palestina fault system in the Ordovician-Silurian and subsequently underwent regional metamorphism. aplite and granite pegmatite. Plate 1 of the Santa Rosa Report). Soils are generally up to about 50 centimetres thick and rarely 2 metres.000km2 and is a subduction-related. The basement and Mesozoic lithogies were intruded by the Antioquia batholith during the Cretaceous under a regional tectonic regime of dextral transpression. The batholith is cut in places by centimetre to metre scale dykes of porphyritic diorite. a northstriking. calcalkaline. Local to regional-scale metasomatism is evident as chlorite after biotite and epidote after hornblende. 008226000-00082763. Schistose fault zone mylonite was observed at one locality (Hilo Azul mine dump) associated with gold and sulphide mineralized quartz veins. multi-phase. and oceanic ophiolitic volcanics and intrusives. Local Geology Geology in the vicinity of the Santa Rosa Project comprises hornblende-biotite diorite and quartz diorite typical of the Antioquia batholith. Rock textures are holo-crystalline. Metamorphic rocks. Red-brown coloured saprolite is widespread and often deep. Reactivation of the Palestina fault system and initiation of the Romeral fault system occurred from the Aptian-Albian. Radiometric age dates are scattered from around 90 to 60 Ma but cluster around 70 Ma. Soils are generally about 50 centimetres thick and rarely up to 2 metres. strike west-northwest to northwest (Figure 7 of the Santa Rosa Report) and may be related to dextral reactivation of the Palestina fault system in the east and dextral transpression along the Romeral fault system in the west. Small plugs of bipyramidal quartz. granular hornblende-biotite diorite and quartz diorite (Figure 9.and biotite-phyric hypabyssal granodiorite porphyry have been identified at various localities. I-type plutonic intrusive complex composed mostly of quartz-diorite and granodiorite (Figure 7 of the Santa Rosa Report). 17 .potassium feldspar and up to 20% mafic minerals ranging from biotite to hornblende dominant. dextral transcurrent. Major lineaments. This terrane dominates the geology of the northern portion of the Central Cordillera and is a composite lithotectonic unit comprising a metamorphic basement complex and the Antioquia batholith. grey coloured. The Antioquia batholith was intruded during dextral-oblique accretion and transpression of the Andes during the late Cretaceous–Eocene. During the Mesozoic the Cajamarca-Valdivia terrane metamorphic basement was onlapped by volcanosedimentary lithologies. The Antioquia batholith occupies more than 7. medium to coarse grained and phaneritic and mineralogy is dominated by plagioclase and quartz +\. including amphibolites (Pav) and metasediments (Pms). The Cajamarca–Valdivia terrane is bounded in the west by the Romeral fault. quartz diorite. River valleys contain unconsolidated alluvium. Saprolite is widespread and sometimes relatively deep (up to 50 metres) and Pleistocene-Holocene volcanic ash cover is extensive. Trace minerals include magnetite and titanite. together with a period of uplift and erosion of the Palaeozoic basement and Mesozoic volcano-sedimentary sequences. Property Geology Geology within the Santa Rosa Project is characterised by relatively monotonous. coarse grained. mostly lower greenschist to lower amphibolite grade metasediments.9 Valdivia terrane (Figure 3 above). terrane suture that defines the east limit of allochthonous oceanic terranes accreted the northern Andean margin during the late Mesozoic and Cenozoic. occur as isolated outliers and fine grained basalt or andesite dikes are exposed in places. Local river valleys contain unconsolidated alluvium. The Cajamarca-Valdivia terrane basement comprises early Palaeozoic metamorphic lith-ologies.

and base metals sulphides. quartz-sulphide veins best exposed in adits in old colluvial gold workings known locally as "baticiones". therefore. 245 adits have been identified extending over 5.6km in developed length. rocks and stream sediments. Veins are usually massive or ribbon-textured but vein breccias and drusy.5 grams/tonne silver. Wilson and Redwood. crystalline quartz can also occur.000 metres and occur alone or.g. 2010). The northwest zone has more adits than the southeast zone. Exploration at the Santa Rosa Project is being planned to identify high grade quartz veins. Individual deposits average 30. 008226000-00082763. silver and base metals in soils. Geochemistry is characterised by anomalous gold. brittle-ductile shear zones and locally in shallow-dipping extension fractures. Veins commonly extend along strike and down dip for 100 to 1. Faults and veins are often characterised by linear magnetic low anomalies as a result of magnetite destruction by sulphides. Ores are gold-rich (Au:Ag 5:1 to 10:1) and vertical mineral zoning is usually absent despite the significant vertical extent of the veins (commonly >1km). Mineralization Known mineralization within the Santa Rosa Project comprises narrow. Wall-rock alteration is zoned and comprises carbonate (often ankerite). pyrite. Deposits can be difficult to evaluate because of the gold "nugget effect".000 tonnes. Gold at the Santa Rosa Project was historically extracted from saprolite (and alluvial gravels) and potential may exist for discovery of further such mineralization in the area. in complex vein networks. Gold ore is processed in local water-powered California stamp mills with mercury amalgamation or. with grades of 16 grams/tonne gold and 2. Gold deposits of this type occur in Colombia at Gramalote in the Antioquia batholith 60km east-southeast of the Santa Rosa Project (NI 43-101 compliant 2. Canada (4 Moz gold). sheeted veins. typically. and pyrite. Pataz-Buldibuyo district in Peru (6 Moz gold) and the Bralorne-Pioneer district in British Colombia. Vein minerals are mostly quartz and carbonates with minor native gold.B2Gold Corporation) and at Frontino in the Segovia batholith 95km northeast of the Santa Rosa gold project (about 6 Moz historical gold production. Plutonic intrusive-hosted mesothermal/orogenic vein deposits are usually small scale gold producers but large deposits are known e.10 Deposit Types Gold mineralization at the Santa Rosa Project has characteristics in common with mesothermal or orogenic and intrusion hosted gold veins. usually only amenable to underground mining. Abandoned colluvial gold workings and adits are concentrated in two principal zones named the northwest zone and the southeast zone (Figure 10 of the Santa Rosa Report). Veins are usually less than 2 metres wide and. These zones contain large abandoned colluvial workings and abandoned and some active tunnels made by artisanal miners (Figures 11 and 12 of the Santa Rosa Report). sericite. Mineralization of these types comprises quartz-carbonate veins located in moderately to steeply dipping. Saprolite gold deposits at Santa Rosa have similarities to bulk mineable laterite and saprolite gold deposits in Australia and elsewhere. and anastomosing vein networks that might represent bulk minable and/or high grade selective mining targets. a jaw crusher and mercury amalgamation mills. in the southeast zone. gold-bearing. 17 . and may be as large as 40 million tonnes. Alteration and structural analysis can be used to delineate prospective ground.39 Moz gold resource .

A quartz vein up to 1 metre wide located at shallow depth in Yaruma shaft (SR-004) returned 95. Alteration at the Santa Rosa gold project is mostly silicic and argillic.to coarse-grained pyrite with subordinate galena and sphalerite and trace chalcopyrite and pyrhottite. dip 75°N Yaruma N100°E. dip 85°S Yaruma N 90°E. in places. The Yaruma operation has ceased and operations recently moved to the Azul vein. 008226000-00082763. Sulphides are dominated by fine.8 grams/tonne gold.35 metres wide. goethite and limonite.3 to almost 0. Oxides include hematite. Recent exploration has revealed other closely spaced mineralized veins and shoots. Plate 7 of the Santa Rosa Report). rock sample SR-004. Silicified wall rock with disseminated sulphides returned gold values from 0.g. Analyses of veins throughout the Santa Rosa Project reportedly range from 23 to 55 grams/tonne gold. dip vertical Hilo Azul N 95°E.5 to 1. Gold and silver occur as inclusions in sulphides most intimately associated with galena (70%) and less commonly as inclusions in pyrite and sphalerite. Reported strike and dip measurements are as follows: Yaruma N 95-105°E.8 grams/tonne gold (Figures 13 and 15 of the Santa Rosa Report). Mining here focused on individual quartz sulphide veins. Bernardina adit. medium. Quartz veinlets range from 2 to 5 centimetres wide and occur in places in network zones up to 35 metres wide. The Yaruma mine vein ranges from 0.5 grams/tonne (samples SR-002 and SR-003 respectively). 17 .11 Quartz veins within the Santa Rosa gold project usually range from 0. Two recently and currently producing. small-scale gold mines respectively named Yaruma and Hilo Azúl are located in the southeast zone (Figure 12.26 metres. The Hilo Azul vein ranges from 0. Analyses of near surface ores from old workings reportedly yielded 7 grams/tonne gold. pyrite and sphalerite with traces of chalcopyrite and pyrhottite. Veinlet networks with dominant northwest and northeast strike orientations are well exposed in colluvial workings. average 0.g. Other historic mines and mineralized showings are present within the vein-fault structure along strike. Mineralized quartz veins and veinlets in the southeast zone at the Santa Rosa Project usually strike approximately east-west.0 metres wide and is open along strike and down dip. dip 60°N Hilo Blanco N 95-100°E. Appendix 6 of the Santa Rosa Report).18 to 0. A sample (SR001) of quartz vein from Hilo Azul (Bernardina adit) returned values of up to 6. dip 55°N Vein quartz textures are mostly massive to ribbon-textured and. Sulphides range from 1% to 5% but can reach 10% (e. The association of gold and galena is reported to cause problems for cyanide leaching the ore. Two or three small groups of miners are reportedly working adits (three observed to be active) in veinlet networks in saprolite in old colluvial workings (baticiones). In the Yaruma mine the main ore minerals in decreasing order are galena. dip 85°S Hilo Azul N 95°E. Figure 15 of the Santa Rosa Report).3 to 1 metre wide (artisanal miners report up to two metres). Manganese oxides are common in places and are likely derived from hypogene manganiferous carbonates.to coarse-grained crystalline and drusy. Zones of quartz veinlets and stringers have been measured up to 35 metres wide (e.

9 line-km of data were acquired over the project area (total area 19.3 and 0. 2011). A 50 (NS) X 200 metre (EW) soil grid mobile metal ion (MMI. 0. Samples were analysed by SGS laboratories in a standard package of gold plus 52 elements (see Appendix 6 of the Santa Rosa Report).6 km²).5 grams/tonne gold (Figure 16 of the Santa Rosa Report). 0.03. A program of continuous channel sampling in adits that cut across veins and structures was initiated in January 2011. 17 . channel and panel sampled.62 grams/tonne gold (162 samples). A total of 451. Grant & Watson were retained by the Company to interpret the aeromagnetic survey. Additionally. high resolution. compare Figures 17 and 12 of the Santa Rosa Report). A 10 metre long channel sample taken (in July. Consultants Paterson. Geochemistry Quartz veins and diorite-granodiorite wall rocks exposed in artisanal adits and mines have been extensively grab. These features have been shown to cluster in two principal areas in the northwest and southeast of the project area (Figures 10 to 12 of the Santa Rosa Report). The survey was flown at a nominal mean terrain clearance of 70 metres along north-south oriented flight lines spaced at 50 metres with tie lines spaced at 500 metres. Geophysics A helicopter-borne. Gold values are erratically distributed with only three returning values between 0. 0. A total of 945 samples have been taken.41.22. Results were received in January 2011. 2010 (Figures 18 and 19 of the Santa Rosa Report). The Hilo Yaruma shaft has since collapsed. grams/tonne gold. The strongest MMI gold response corresponds with the locations of the Bernardina adits (Hilo Azul vein.12 Exploration Geology The Company has undertaken an extensive program of mapping and sampling old colluvial gold workings ("baticiones" . The Bernadino adit (an oxidised vein adjacent to Hilo Azul) was also sampled and returned 35 metres at 0.75.53. 39 samples returned values in the range 1 to 11. A 200 X 200 metre grid auger saprolite conventional geochemistry (45 samples) program was completed over part of the southeast zone.62 grams/tonne gold. and 0.62 grams/tonne gold (Figure 15 of the Santa Rosa Report). A total of 35 adits have been sampled to date but only results for two adits have been returned from the laboratory (to February 28. Initial interpretation of the results was received by the end of the same month. Results obtained to date range from below detection limit to 11. Hilo Yaruma was previously sampled underground at a depth of 65 metres and reportedly returned values of 95. 2010) across the footwall structure north of Hilo Azul (Blue vein) returned reported values 2. The stated goals of the aeromagnetic interpretation were: 008226000-00082763. 156 samples) sampling program was completed over the same area as the saprolite grid geochemistry program in the southeast zone of the Santa Rosa Project (Figure 17 of the Santa Rosa Report).2 grams/tonne gold in part of the wall rock. magnetic and radiometric survey was completed over the Santa Rosa gold project area by MPX Geophysics on the 18th and 19th November.Figures 10 to 12 of the Santa Rosa Report) as well as adits and quartz veins within the Santa Rosa gold project area (Figure 13 of the Santa Rosa Report).8 grams/tonne gold in the vein and 0.

17 . From the geophysical interpretation it appears that extensive northwest striking faulting in the middle of the Santa Rosa gold project meets with north-northeast and northwest striking faulting from west. perhaps. Two models were generated both consisting of a series of tabular bodies with varying dip and magnetic susceptibility. and the inflection from subvertical to eastward or westward dip usually is accompanied by an interpreted structure. Nare and Balseadrero faults) and a zone of north-south striking regional scale faults in the west (Espiritu Santo. The most important feature is a northwest-striking magnetic anomaly (Figure 18 of the Santa Rosa Report) interpreted as various subunits of Palaeozoic amphibolite bounded by Palaeozoic quartz sericite schist and minor occurrences of the main Cretaceous diorite-gabbro. The Santa Rosa Project is interpreted to be located between two structural domains. This survey will cover some known gold occurrences in the far northwest of the project area and other prospective areas in the middle of the belt. 008226000-00082763. Both models show the same pattern of westward dip towards the southern edge of the anomaly and an eastward dip towards the north. • Lithological mapping based on the airborne magnetic data. channel and panel samples were taken from tunnel walls by the Company's geologists. The dip of the bodies is very similar on both models. Drilling No historical drilling is known within the Santa Rosa Project and no drilling has been done by the Company. a zone of northwest striking faults in the east (Montel Oro. Further IP lines are recommended to cover the main amphibolite belt if and when the IP and resistivity surveys are proven to be effective over the conductive saprolite layer characteristic of the Santa Rosa gold project area. • Definition of targets and areas of interest for an upcoming ground IP survey. Sampling Method And Approach Composite chip. Magnetic data alone cannot easily discriminate fault displacement but it appears that the eastern blocks have been normal faulted (down) relative to the western blocks and is interpreted to indicate southwest-northeast extension. The abandoned colluvial gold workings and more recent adit excavations appear to correlate well with magnetic low zones (Figure 18 of the Santa Rosa Report) that may indicate amphibolite occurrences or. The proposed IP survey comprises 22 line-km. The main magnetic anomaly was modelled using ENCOM's Quickmag software.13 • Definition and mapping of structures of importance in the area and that might have a role in gold mineralization. Sabana Larga). hydrothermal alteration accompanied by magnetite destruction. A couple of northweststriking faults are evident with apparent vertical displacement. Based on modelling the apparent correlation of known mineralization with magnetic low anomalies and structures a tight induced polarization ("IP") grid was recommended over the known gold occurrences in the southeast. Several lithological units have been interpreted from the magnetic data. • Overall refinement of the known geology of the area. Santa Rita. Mobile metals ions ("MMI") soil sampling was done by digging shallow pits 10-15 centimetres deep into the "B" soil horizon on a 50 metre (NS) X 200 metre (EW) grid.

Sample Preparation. Every Saturday security personnel transport the sample sacks directly to the SGS laboratory in Medellin together with the dispatch documents. Samples are prepared at their laboratories respectively in Medellin and Bogota and 30 gram pulps forwarded to their laboratories in Lima.62 grams/tonne gold. Analyses are undertaken by SGS Laboratory (gold fire assay plus 52 elements (ICP)) and duplicates analysed by ALS Chemex (gold fire assay plus 35 elements (ICP)). Rock samples (average 2 kilograms) are placed in a plastic bag marked with the sample number on both sides and on a piece of flagging tape (placed inside the bag) and sealed immediately. sample preparation and analyses employed by the Company but he is familiar with the processes and laboratories employed based upon work with other companies. More dispersed (up to tens of metres wide) gold mineralized quartz veinlet zones have been satisfactorily tested by channel sampling (two metre sample lengths. Chain of custody is maintained for all samples. Bagged samples are put in larger sacks in the field and when filled these are sealed in the field.62 grams/tonne gold (162 samples) of which 39 samples retured values in the range 1 to 11. Sampling was done and/or supervised by the Company's geologists and conforms to industry-wide good practices.3 to 1 metre wide) reported from below detection limit to 11. Analyses And Security Sampling by the Company's geologists conforms to industry-wide good practice. The sample and sample location are then photographed. 17 . therefore. sample preparation and analytical procedures at the Santa Rosa Project are satisfactory and confirm to industry-wide good practice. Individual higher gold grade quartz veins have been identified and sampled separately (Figure 14 of the Santa Rosa Report). Data Verification The author of the Santa Rosa Report reviewed and verified the results of the reconnaissance exploration program completed to date and is of the opinion that the QA/QC protocols implemented by the Company are appropriate for this type of exploration and allow a high level of confidence in the data. no reason to doubt that security. Peru for analysis.5 metres maximum depth) on a 200 X 200 metre grid and analysed using conventional geochemistry. MMI samples are delivered to SGS Medellin and forwarded directly to Lima for preparation and analysis. The author of the Santa Rosa Report did not conduct detailed investigative analysis of security. Some samples are screened for coarse gold. Channel samples average 0. Samples are representative of mineralization at the Santa Rosa Project restricted only by available surface outcrop and underground exposures.62 grams/tonne gold (uncut) over a 35 metre intersection it the Bernadina adit (Figure 15 of the Santa Rosa Report).14 Saprolite was sampled using an auger (to 5. Saprolite auger samples are delivered to SGS Laboratory in Medellin for preparation then forwarded to laboratories in Lima for analysis. The Company then communicates with the laboratory to confirm receipt of the samples. Sample sacks are then securely transported to the sample store. Gold mineralization at the Santa Rosa Project occurs in relatively narrow (up to 2 metres wide reported) quartz veins in homogeneous diorite country rock. Individual veins (0. Deposits of this type often exhibit erratic gold distribution (the "nugget effect") which can affect accuracy and repeatability of gold assay results in some instances. The author of 008226000-00082763. Figure 15 of the Santa Rosa Report). The author of the Santa Rosa Report has.

Adjacent Properties Properties surrounding the Santa Rosa Project concessions are held by various mining and mineral exploration companies and individuals (Figure 4 of the Santa Rosa Report). Veins commonly strike approximately east west and dip steeply north and south and are associated with sheared and mylonitic country rocks. Mineral Processing And Metallurgical Testing The Company did not conduct any studies on mineral processing nor did they perform any metallurgical testing mineralized samples during the 2010/2011 exploration program. however. 17 .15 the Santa Rosa Report did not take any additional check samples on the property due to the limited nature of the exploration completed to date. in sheeted and/or networked vein zones that could represent potentially bulk minable targets. MMI soil geochemistry samples are analysed by SGS and include a duplicate every 30 samples (no blanks and no standards). Mineral Resource And Mineral Reserve Estimates The Company did not perform any mineral resource or mineral reserve estimates during the 2010/2011 exploration program. a standard and a blank are included with every 30 samples sent for analysis.g. The latter probably represent high angle reverse faults indicating north-south directed compression consistent with the dominant regional-scale tectonic regime of dextral strike-slip transpression.3 to 1 metre wide) reported from below detection limit to 11.62 grams/tonne 008226000-00082763. Interpretation And Conclusions Geology within the Santa Rosa Project is dominated by relatively monotonous diorite and quartz diorite of the Antioquia batholith. Individual quartz-sulphide veins (0. A duplicate. Hypogene gold mineralization at the Santa Rosa Project occurs in relatively narrow (up to 2 metres wide reported) quartz veins in homogeneous diorite country rock. Other Relevant Data And Information The author of the Santa Rosa Report is not aware of any further data and information relevant to the Santa Rosa Project.62 grams/tonne gold (162 samples) of which 39 samples returned values in the range 1 to 11. No information is available regarding the status of exploration in these properties. no activity has been reported or discovered by the Company employees in the area. The clustering of historical alluvial/saprolite gold workings (baticiones) and artisanal adits in the northwest and southeast zones at the Santa Rosa Project suggests that hypogene gold mineralization at these localities may be more extensive e. The Company monitors QA/QC on all analytical work via the use of certified reference materials and blank samples (both purchased in Canada) and field duplicates in addition to monitoring of internal laboratory check-analyses.

500 Drafting and plotting 50.000 Administration 146. More detailed exploration will be required to advance the project and to confirm or condemn its economic potential. 2. (b) further grid soil MMI and conventional saprolite geochemistry extended across the project area. Recommendations The following two stage exploration strategy is recommended for the Santa Rosa Project: Stage 1 Exploration (a) detailed geological mapping. Geophysics (aeromagnetics) show a strong magnetic low striking approximately northwest across the Santa Rosa Project area.000 Sampling and assaying veins in trenches and adits 150. especially structural geology.000 Field labour 125. Deposits of this type can form near surface. Further exploration will require more detailed geological mapping.500 rock chip @$35) 129. and sampling/assaying of quartz veins and quartz veinlet zones in trenches and adits.16 gold. drilling.000 Detailed ground magnetic and electromagnetic geophysics 60. This anomaly corresponds with the locations of known mineralization and may be related to a major structure and associated hydrothermal alteration and sulphide mineralization. Mesothermal/orogenic quartz vein gold deposits occur worldwide and are important past and present gold producers. The objectives of early stage exploration of the Santa Rosa Project undertaken by the Company to date have been met.000 Grid saprolite/soil MMI and conventional geochemistry 125.000 Assays (600 MMI. geochemistry.000 Consulting geologists 50. 17 . potentially bulk minable laterite/saprolite gold deposits under tropical weathering conditions. Exploration undertaken and data obtained have been of sufficient density and reliability to confirm the occurrence of potentially economic gold mineralization. Channel samples average 0. and (c) detailed ground magnetic and closely-spaced electromagnetic geophysics (induced polarization resistivity/chargeability) to identify and generate drill targets in mineralized (vein quartz) and hydrothermally-altered structures (vein and disseminated sulphides). geophysics.000 Capital equipment 224. sampling and assaying.500 008226000-00082763. 600 vein systems.000 Transportation and logistics 55.29 million as follows: ITEM COST US$ Detailed geological mapping structures 175.62 grams/tonne gold (uncut) over a 35 metre wide zone of quartz veinlets in the Bernardina adit. Total costs for Stage 1 exploration is estimated to be US$1.

000 TOTAL 3.000.243.000 Diamond drilling (12.000 Drill site preparation. 2013 $1.000 metres @ $ 150/metre) 1.000 On or before June 25.000 Assays (15.000 Transportation and logistics 123. 2011 (incurred) US $500. 2010.5) 487. 17 .000 @ $32.00.000. MAD I and MAD III also entered into a shareholders' agreement (the "Pavo Real Shareholder Agreement") governing the activities of MAD III.24 million as follows: ITEM COST US$ Drill mobilization 25. A program of diamond drilling up to 12.500 Total exploration costs for exploration Stages I and 2 are estimated at US$4.000 Consulting geologists 100.000 metres and assaying is estimated to cost US$3.17 ITEM TOTAL COST US$ 1. all of which must be expended by MAD III on exploration and concession fees and payments: Exploration Expenditures On or before June 25.800.000 metres of diamond core drilling (3 drill rigs) should be initiated. in order to maintain its 70% interest in MAD III. Pursuant to the Pavo Real Shareholder Agreement. 2010 the Company entered into a share purchase agreement (the "Pavo Real Agreement") and shareholder agreement with Miranda and MAD I. On June 25.000 Stage 2 Exploration Should the results of exploration program stage 1 define the expected drill targets a stage 2 exploration program consisting of a minimum of 12. roads and access 75.000 Administration 246. MAD I sold 70% of the shares of MAD III. the Company. a wholly-owned subsidiary of MAD I.000 Field labour 225. the Company must make an aggregate US$4 million contribution (the "First REM Contribution") to the contributed surplus of MAD III in the following amounts by the following dates.000 On or before June 25. to the Company in consideration for $1.500 Drafting and plotting 125.000 008226000-00082763. pursuant to the which.53 million.000 Total $4. Miranda.000 Capital equipment 37. 2014 $1. 2012 $750.000 On or before June 24.290.750. PAVO REAL PROJECT On June 25.

In addition to the First REM Contribution and the Second REM Contribution. MAD III will issue additional shares from treasury without payment to increase the Company’s ownership percentage to 80%. the Company will have the option. 2020. at MAD I's election. In the event that the Company fails to make any of the required capital contributions set out above. or transfer all of its shares in MAD III to MAD I. for concession fees paid to acquire the Pavo Real Property and to assume and discharge all payments to be made and other obligations required to be discharged by MAD III under the Pavo Real Option Agreement (as defined below). If the Company exercises the Pavo Real Additional 10% Option. all of which shall be expended on exploration operations. but not the obligation. which annual minimum contribution shall be made by the Company until the completion of such feasibility study. to elect to acquire an additional 10% interest in MAD III by committing to sole fund all costs associated with achieving the commencement of commercial production. After making the Second REM Contribution. or fails to cause MAD III to expend such contributions within the time periods set out above. the Company shall contribute a minimum of US$10 million in excess of the First REM Contribution at a rate of not less than US$1 million per year. The shareholder holding the largest ownership interest in MAD III. The Company may exercise this option (the "Pavo Real Additional 10% Option") by providing notice in writing to MAD III and MAD I within 30 days of the date of such board of directors of MAD III approval. the Company is required to issue an equivalent number of commons shares to Miranda. Pursuant to the Pavo Real Shareholder Agreement. the Company has issued 200. if the board of directors of MAD III has approved a feasibility study and a mine construction program.18 If the Company fails to make any of the First REM Contribution within the stated time periods. the Company is required to make further contributions to the contributed surplus of MAD III as follows ("Second REM Contribution"): 1. or if MAD III commences a feasibility program but does not complete a feasibility study. which feasibility study must be completed by June 25. the Company must also reimburse MAD I or Miranda. A contribution of at least US$1 million per year in the event that MAD III elects to undertake a feasibility program to prepare a positive feasibility study in a form acceptable for the purpose of financing mine construction. either forfeit all of its shares in MAD III and return them to treasury for cancellation. which when so paid will be deemed to have been expended as required. and one is a nominee of MAD I. 2018. or to Miranda's direction. Red Eagle will forfeit its shares of MAD III to Miranda. the Board of Directors of MAD III will be comprised of three Directors. or 2. In addition. If a capital contribution made by the Company has not been expended by its due date. development operations and concession fees and payments and must be expended by June 25. the directors representing each shareholder will be entitled to jointly cast one vote for each full 1% ownership interest held by the shareholder represented by such directors. After making the First REM Contribution. 17 . the Pavo Real Shareholders Agreement shall be terminated and the Company shall. will be entitled to appoint the general manager over the operations of MAD III. If MAD III does not undertake a feasibility program. as applicable. two of whom are nominees of the Company. in the event Miranda issues shares to Expogold under the Pavo Real Option Agreement. the Company may pay the amount of the deficiency within 30 days of receiving notice of the deficiency from MAD I. To date. Expenditures made by the Company on an uncompleted feasibility study may be applied to these additional expenditure requirements. On any matter to be decided by the Board of Directors of MAD III. 008226000-00082763.000 Common Shares to Miranda.

which complies with an independent NI 43-101 compliant technical report (the "Pavo Real Defined 008226000-00082763. 2016.000 and deliver 100. (Sucursal Colombia) ("MAD II Colombia").000 On or before June 24. 2013 100. 17 . Miranda Gold Colombia II Ltd.19 If a shareholder elects not to participate in an exploration. and payable on each succeeding anniversary.000 On or before December 24.000 Common shares to be issued On or before June 24.000 On or before June 24. mine construction or mine program.000 On or before June 24. are now obligations of the Company). Pursuant to an option agreement (the "Pavo Real Option Agreement") dated June 24. 2010 (paid) US $20.5% net smelter royalty The Pavo Real Shareholder Agreement also provides that any shareholder who acquires or agrees to acquire any mineral or surface rights within the five km area surrounding the Pavo Real project must notify MAD III of such acquisition and MAD III may. 2010 (issued) 100. Expogold agreed to transfer the Pavo Real Property to MAD III Colombia and MAD III Colombia agreed to pay to Expogold the following amounts (which pursuant to the Pavo Real Shareholders Agreement.000 common shares of Miranda to Expogold until the date on which there is a defined measured and Indicated Mineral Resource within a defined area of interest on the Pavo Real Property of greater than 250. (Sucursal Colombia) ("MAD III Colombia"). development. Cash Payments On or before June 24. 2011 $50. 2014 100. Miranda.000 On or before June 24.000 On or before June 24.000 total ounces of gold or gold equivalent.000 On or before June 24. and issue the following shares of Miranda. 2015 100. the Colombia branch of MAD II and Miranda Gold Colombia III Ltd. acquire such additional property interest. 2010 (paid) $20. 2010 (issued) 100. 2012 $60.000 Total 700. or elects to participate and contribute less than its proportionate cost share. then that ownership interest will automatically convert to a 0.000 On or before December 24. 2014 $80. MAD III Colombia must pay US$100. 2011 100.000 On or before June 24.A.000 On or before June 24.000 On or before June 24. 2015 $100.000 In addition. at the direction of the non-acquiring shareholder. then its ownership interest will be reduced on a proportionate basis. the Colombian branch of MAD III. commencing on June 25. 2013 $70. 2012 100.000 On or before June 24. ("Expogold"). If at any time a shareholder's ownership interest falls below 10%. 2010 among Expogold Colombia S.000 Total $400.

264. 2010.996. in accordance with agreements signed between Miranda and ExpoGold on June 25.594. in Colombia. Since the commencement of the main Pavo Real Project. subsequently to the Company under power of attorney.000 ounces of gold or gold equivalent ounces. (d) US$750. Thereafter. MAD III Colombia shall pay US$100. 2010. 008226000-00082763.000 ounces. These properties were leased to Miranda Gold Corporation and. MAD III Colombia shall pay US$250. and between Miranda and the Company on June 25.000 upon completion of a feasibility study. MAD III Colombia will be required to make one of the following additional payments to Expogold: (a) If the Pavo Real Defined Resource is greater than 250. In addition. or (b) If the Pavo Real Defined Resource is equal to or greater than 500. The information in the section below is based on the technical report titled "An Assessment of the Pavo Real Project" dated March 31.000 upon producing 250. 2011 (the "Pavo Real Report"). Once there is a Pavo Real Defined Resource.000 upon achieving commercial production. totaling 1. MAD III Colombia shall pay to Expogold: (a) US$250.000 ounces. The main Pavo Real Project properties (original joint venture with Miranda) are owned by three Colombian citizens who are legal representatives of ExpoGold which has a joint venture with Miranda. MAD III Colombia shall pay US$1 million for each 1 million ounces of gold or gold equivalent ounces produced. and (e) US$1. (b) US$500.12ha. and lies mostly within the municipality of Valle del San Juan. but less than 500. Each of the above payments may be in cash or common shares of Miranda. South America (Figures 1 and 2 of the Pavo Real Report).000 upon producing 500.000.000 ounces. JLI-10231 and JG1-16101 (awaiting final signature from Ingeominas). Property Description And Location Property Location The Pavo Real Project is located approximately 20km south of the city of Ibague. one under application (LGE-16201) in the name of a Colombian employee of the Company and another under application (LAQ-14021) in the name of a representative of ExpoGold.20 Resource").000.SEDAR. in the Department of Tolima.82ha.000.000 upon producing 1 million ounces of gold or gold equivalent ounces. The area of these tenements totals 2. (c) US$500. Property Description The Pavo Real Project occupies 3.30ha. These agreements covered concession contracts IHT-10541 and IHT-10542X. and concession agreements KG3-14191. four additional titles have been added to the project.com. Reference should be made to the full text of the Pavo Real Report which is available for review on SEDAR located at www. 17 .000 ounces of gold or gold equivalent ounces.

21 and two concession contracts under an option agreement with a local Colombian title holder (907-73 and 656-73) totaling 138.40ha. 17 . REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 008226000-00082763. Some of the above properties are contiguous but most are separated by ground belonging to others (Figure 4 below. Table 1 of the Pavo Real Report).

22 Figure 4 008226000-00082763. 17 .

These terranes were accreted to the South American continent (Guyana Shield) and subjected to transcurrent tectonics and subduction-related magmatism along a 2. ExpoGold (Colombian JV partner with Miranda) conducted some exploration in the project area in 2009 including rock chip. Resources and infrastructure in the Pavo Real district are moderately good. The project area is about 5km from the town of Rovira (population about 22. Andean (dominantly north-northeast) striking. 2010 for five Pavo Real tenements totaling 2. The Pavo Real area is accessible by road from the city of Ibague via the town of Rovira on paved roads (35km) followed by gravel road (5km) to the finca (farm) of Pavo Real. Climate.23 Accessibility. transcurrent. stream sediment and adit sampling. Cattle farming is widespread followed by cultivation of coffee.70ha.402. major faults and shear zones some of which are interpreted to be 008226000-00082763. maize and sorghum and. An alternative route from Ibague is via the municipality of Valle de San Juan (37km) then towards the town of Rovira (24km) on gravel roads. and adjacent Ecuador and western Venezuela. Level valley floors are available in places for tailings storage and waste disposal. Unskilled labour is available locally.000km-long segment of the Pacific Rim (Figures 4 and 5 of the Pavo Real Report). citrus and avocados. Temperatures range between 18 and 24oC. high grade gold bearing veins hosted in sedimentary rocks within the Pavo Real concessions. These additional tenements total 1. An electrical grid is available with connections for 110 and 220 volts. nothing is known regarding past mining history in the area. Otherwise. Infrastructure And Physiography Topography in the Pavo Real Project area is moderately rugged with steep sided valleys and hills. to a lesser extent. Rainfall averages 2010 mm per annum and humidity 60%. 17 . Local Resources.594. Altitudes range between 650 and 1300 meters.000). There are no significant climatic restrictions on working in any part of the Pavo Real Project area. sub-parallel. Police patrol the town and vicinity. Water is widely available from local rivers and streams but must be obtained by negotiation with local land owners. Since that time an additional four tenements have been added to the Company and Miranda's joint venture agreement under a five kilometer area of interest. Geological Setting Regional Geology The northwest margin of South America comprising Colombia. Security is provided by a military base and troops. Much of the area is under pasture and cultivation. History Artisanal miners have been intermittently exploiting narrow. Regionalscale structural geology is characterised by a suite of anastamosing. Climate is moderately warm (dry tropical forest) but varies with altitude. autochthonous and allochthonous terranes (Figure 4 of the Pavo Real Report). Secondary forest is preserved in sheltered areas of the Rio Luisa and major streams.12ha. is a complex elongated mosaic of Palaeozoic and younger. The Company signed a joint venture with Miranda on June 25. heap leach pads and mineral processing sites particularly along broad areas in the Rio Luisa valley.

The Pavo Real Project is located on the east flank of the Central Cordillera within the Mesozoic Ibague block (Cediel et al. Figure 4 of the Pavo Real Report). Plate 1 of the Pavo Real Report) overlain by sandstones and limestone/marble (Payande formation). shale-hosted. Property Geology Geology observed by the author of the Pavo Real Report within the Pavo Real concession (JLI-10231) comprises a stratigraphic sequence of indurated. The Triassic-Jurassic Ibague (and San Lucas) block is dominated by composite metaluminous calc-alkaline diorite to granodiorite batholiths and associated volcanic rocks generated on a modified continental basement composed of the Chicamocha and Cajamarca-Valdivia terranes (Figure 4 of the Pavo Real Report). Deposit Types The Pavo Real Project is prospective for two principal and separate mineral deposit types. agglomerates and lavas occasionally intercalated with red bed lithic arenites and siltstones (Saldana formation). siltstones. Eocene to late Miocene. The Andean Cordillera in Colombia comprises three distinct mountain chains. Some areas are underlain by Lower Triassic Luisa formation red bed siltstones. mesothermal or orogenic vein deposits. fine-grained arenites. gold bearing quartz veins are also known as turbidite-hosted. This sequence is intruded by Jurassic granodiorites (syenogranite to tonalite and quartz monzonites to quartz monzodiorites) of the Ibague batholith (140-150 Ma) and associated minor intrusions (Figure 6 of the Pavo Real Report). Veins commonly extend along strike and down dip for 100 to 1000 meters and occur alone or. Cretaceous. separated by broad interAndean valleys. slate-belt. sub-volcanic intrusions and associated volcanic rocks (Figure 5 of the Pavo Real Report). Subduction-related magmatic arcs were superimposed on the above described terranes during the Jurassic. conglomerates and breccias. Veins are usually hosted in extensive belts of shale and siltstone that were originally deposited in thick sequences along passive continental margin settings. siltstones. or Upper Triassic to Lower Jurassic Saldana formation tuffs. the Western Cordillera (Occidental). Mineralization comprises quartz-carbonate veins with carbonate-sericite-pyrite alteration envelopes located in moderately to steeply dipping. sedimenthosted. and Late Miocene to Recent and are characterised by plutonic batholiths. gold-bearing quartz veins and copper-gold skarn deposits. in complex vein networks and vertically stacked "saddle reefs". This stratigraphic sequence is intruded in places by Jurassic granodiorite (syenogranite to tonalite and quartz monzonites to quartz monzodiorites) of the Ibague batholith (140-150 Ma) and associated minor intrusions (Figure 7 of the Pavo Real Report). 17 . Central Cordillera (Central) and eastern Cordillera (Oriental).24 terrane boundary sutures (Figure 4 of the Pavo Real Report). Pre to postmineral plutonic granite intrusions commonly occur in spatial association with these deposits. typically. calcareous shales and arentites (Payande formation) overlain by Upper Triassic to Lower Jurassic tuffs. Figure 7. Veins are usually less 008226000-00082763. brittle-ductile shear zones and locally in shallow-dipping extension fractures.. calcareous shales and arenites. 2003. agglomerates and lavas with occasional intercalated red bed lithic arenites and siltstones. fine-grained arenites. polymict breccia/conglomerate (Luisa formation ?. Local Geology Geology in the vicinity of the Pavo Real Project comprises a stratigraphic sequence of Lower Triassic red bed siltstones. The Mesozoic Ibague block is part of the central continental subplate realm that dominates the central Cordillera of Colombia (Figure 4 of the Pavo Real Report). conglomerates and breccias (Luisa formation) overlain by Upper Triassic limestones with intercalated claystones. Sediment-hosted. Properties within the Pavo Real Project are mostly underlain by Upper Triassic Payande formation limestones with intercalated claystones.

None of these reported mineral occurrences were observed by the author of the Paval Real Report because of lack of access at the time of the field visit. been under exploitation by artisanal miners. Mineralization The Pavo Real Project is located at the southwest end of a ten kilometer long northeast-southwest oriented trend of mineralized skarn deposits or occurrences with reported base metals. Deposits can be difficult to evaluate because of the gold "nugget effect". Skarn copper deposits average 1 to 2 % copper and range from 1 to 100 million tonnes ("Mt") and. Historical artisanal prospects or workings are reported to cluster around or within the limits of the Pavo Real Project licenses and narrow. applications and leases for inclusion in the Pavo Real Project. Fosterville. vertical pipes. crystalline quartz can also occur. >300 Mt.25 than 2 meters wide and. narrow lenses and irregular ore zones near igneous contacts. quartz veins hosted in sandstones and limestones are. Mineralization observed by the author of the Pavo Real Report comprised narrow veins and structures cutting breccias or conglomerates. In Australia numerous deposits occur in the Victoria gold fields including Bendigo (>20Moz). geological mapping and geochemistry sampling within a relatively small area (principally on concession IHT-10541 and concession application JLI10231). Examples include Muruntau (>80 Moz).5 grams/tonne silver. 17 . silver. the Company completed a property-wide helicopter airborne magnetic and radio-metric survey. Vertical mineral zoning is usually absent despite the significant vertical extent of the veins (commonly >1 kilometer). molybdenum. Veins are usually massive or ribbon-textured but vein breccias and drusy. Exploration within the Pavo Real Project is focussed on discovery of sediment hosted gold deposits and copper-gold skarns. Copper is dominant (generally chalcopyrite) with moderate to high sulphide content but can also contain economic gold. wollastonite. Metallurgy is generally simple with minor native gold and trace to minor amounts of arsenopyrite and stibnite as well as tungsten. etc. Ores are gold-rich (Au:Ag 5:1 to 10:1) with average grades of 16 grams/tonne gold and 2. gold and silver values (Figure 8 of the Pavo Real Report). Base metals sulfides are minor and total sulfide content is usually low. bismuth and tellurium minerals. usually only amenable to underground mining. Since signing a joint venture agreement with Miranda. Exploration ExpoGold is reported to have conducted some exploration in the Pavo Real Project area during 2009 including rock chip. Copper skarns commonly occur where Andean-type plutons intrude continental margin carbonate sequences. Mineralization is associated with skarn gangue (andradite garnet. In addition. tremolite-actinolite. and Stawell. gold-bearing.) and occurs as stratiform and tabular orebodies. tungsten and magnetite. the Company has continued to acquire additional concessions. These deposits occur worldwide but are most prolific in size and number in Asia. Ballarat. 008226000-00082763. or have recently. exceptionally. stream sediment and adit sampling. diopside. Sukhoy Log (>20 Moz) and several others (each >5 Moz). therefore. Major copper skarns are known and mined worldwide. A recent metallogenic study of an area of similar geological terrain located immediately south of the Pavo Real Project suggests prospectivity for a range of mineral deposit types including sediment-hosted gold and copper skarns.

45 km²). Assays vary from below detection levels to a high of 45. The new zone. Rockgeophysics. high resolution. referred to as Quebrada Corosal. Geophysical consultants Paterson. Results are depicted in Figures 9 to 11 of the Pavo Real Report and indicate significant anomalous gold geochemistry in the sectors tested. The area being mined had been offlimits to the Company while procedures were implemented to gain access and have the miners removed (recently this issue was legally resolved and access to the area has been achieved). Initial interpretation of the results was received by the end of the month.7 grams/tonne gold and average 1. This area contains approximately 30 known adits with significant sampled gold grades. A total of 1514. The first area is approximately 600 meters south of an area that up until recently was being mined by illegal miners. Figures 9 to 11 of the Pavo Real Report and Figure 4 above) sampling has identified two new anomalous areas of gold mineralization. The northern sector of these properties contains a known area of artisanal mining activity and old adits but was not accessible because of a dispute with the land owners. Nevada). 17 . geochemical sampling) 008226000-00082763. Miranda and the Company's exploration teams. • Lithological mapping based on the airborne magnetic data. On two of the original Pavo Real concessions (JLI-10231 and IHT-10541. The miners were working an area of anomalous gold in soils that has dimensions of 700 metres long by 100 to 500 metres wide. The main goals were: • Definition and mapping of structures of importance in the area and that might have a role in gold mineralization.2 line-km of data were acquired over the project area (68. Grant & Watson were subsequently retained by Red Eagle Mining Corporation to re-interpret the aeromagnetic survey. stream sediment and soil (conventional and mobile metal ion (MMI)) geochemistry sampling on the southern sector of concession application JLI-10231 and the adjacent northeast sector of concession contract IHT-10451 in September 2010. • Definition of targets and areas of interest for ground follow-up (IP surveys. 2010 the Company's geologists completed preliminary geological mapping of the southern sector of concession application JLI 10231. 2010 (Figures 12 and 13 of the Pavo Real Report). The survey was flown at a nominal mean terrain clearance of 70 metres along east-west oriented flight lines spaced at 50 metres with tie lines spaced at 500 metres. Geochemistry The Company undertook rock chip and channel. Interpretation followed using a geophysicist used by Miranda Gold Corporation (Terry White.29 grams/tonne gold. magnetic and radiometric survey was completed over the Pavo Real Project area by MPX Geophysics during August. Geology During December. Geophysics A helicopter-borne. defined by 155 rock samples. • Overall refinement of the known geology of the area.26 A total of 567 rock chip and channel samples are reported to have been collected by ExpoGold. is 340 metres long and 137 metres wide. The ground between this new anomaly and the area where the illegal miners were working has not yet been sampled.

the results are different from the radiometric data which is constrained to the top 30 centimeters beneath the ground surface. Peru. and therefore similar magnetic signature) and radiometric patterns (high K. soil/geochemical sampling and/or ground geophysics on a later stage. however. there is a good contrast between Jsa which is higher in potassium and Jib which is lower in uranium. either geological mapping. Analyses And Security Rock samples (average 2 kilograms) are placed in a plastic bag marked on both sides and on a piece of flagging tape inside with the sample number and sealed immediately. Since magnetic data is able to map lithological units under sedimentary cover. Sample sacks are then securely transported to the sample store. Considering the main structural patterns. The Company has not undertaken any drilling or extensive sampling where recovery of samples might materially affect the accuracy and reliability of results. The company then communicates with the laboratory who confirm receipt of the samples.27 The main magnetic anomalies are interpreted to be related to the Triassic-Cretaceous intrusives (Jib) and Upper Triassic to Upper Jurassic andesites (Figure 14 of the Pavo Real Report). Sampling to date has been preliminary in nature and part of a reconnaissance exploration program so the information provided is only indicative of mineralization on the Pavo Real Project. Sampling by the Company's geologists conforms to industry-wide good practice. and a northeast-southwest trend on the southeast corner. Mobile metal ion sampling has been done in accordance with the published methodology from the technology originators in Australia. or supervised by. The structural interpretation indicates an extensive northwest-southeast system to the northwest of the area. Chain of custody is maintained for all samples. Every Saturday security personnel transport the sample sacks directly to the SGS Laboratory in Medellin together with the dispatch documents. Based on modelling intrusives/andesites seem all to be within reasonable depth (<250 metres). MMI samples are sent to the SGS laboratory in Medellin and forwarded their MMI accredited laboratory for preparation and analysis in Lima. 008226000-00082763. Samples are prepared at their laboratories respectively in Medellin and Bogota and 30 gram pulps forwarded to their laboratories in Lima. Soil and rock chip geochemical sampling has been undertaken only within a small area of the entire property package on the Pavo Real Project. Jib and Jsa units are very difficult to differentiate using magnetics since both have a very similar signature. Appendix 4 of the Pavo Real Report) and duplicates analysed by SGS Laboratory (gold fire assay plus 52 elements (ICP)). In the radiometric data. Peru for analysis. or low U to define probable alteration zones) five areas were selected for ground follow-up. the Company geologists. These data are insufficient to develop statistics on samples and composites. Sampling Method And Approach Rock chip and channel samples are taken from outcrops and soil samples from shallow pits by. Sample Preparation. 17 . Drilling No record of historical drilling is known for the Pavo Real Project and no drilling has been done by the Company. Bagged samples are put in larger sacks in the field and when these are filled they are sealed in the field. Analyses are undertaken by ALS Chemex (gold fire assay plus 35 elements (ICP. presence of intrusives/andesites (similar in composition. The sample is then photographed. Some outcrop channel sampling has been conducted over 1-2 metre intervals.

Narrow quartz veins and structures were observed by the author of the Report cutting breccia/conglomerate stratigrahically below sandstones and limestones. The author of the Pavo Real Report has. mesothermal/orogenic quartz veins that contain gold. Small scale artisanal miners are reported to have exploited narrow. Interpretation And Conclusions Mineralization in the Pavo Real Project area is reported to comprise sandstone and limestone hosted. Mineral Resource And Mineral Reserve Estimates The Company did not perform any mineral resource or mineral reserve estimates during the 2010/2011 exploration program. No information is available regarding the status of exploration in these properties. a standard and a blank are included with every 30 samples sent for analysis. no reason to dispute the adequacy of security. high-grade auriferous quartz veins but this could not be confirmed by the author of the Report for lack of access. sample preparation and analyses employed by the Company but he is familiar with the processes and laboratories employed based upon work with other companies. Mineral Processing And Metallurgical Testing The Company did not conduct any studies on mineral processing nor did they perform any metallurgical testing mineralized samples during the 2010/2011 exploration program. 17 . Other Relevant Data And Information Restrictions in gaining access to the northern sector of the northern Pavo Real Project tenements (IHT10541 and JLI-10231) where extensive artisanal mining activity and excellent surface sample data exists has affected scope of work until recently.28 The author of the Pavo Real Report did not conduct a detailed investigative analysis of security. MMI samples are analysed by SGS with a duplicate every 30 samples (no blanks or standards). These quartz veins and structures are reported to have returned significant gold assay values. 008226000-00082763. therefore. sampling and analyses undertaken at this early stage in the exploration program at the Pavo Real Property. Adjacent Properties Properties surrounding the Pavo Real Project concessions are held by various companies and individuals. Access has now been obtained after a successful systematic legal due process. The author of the Pavo Real Report reviewed and verified the results of the reconnaissance exploration program completed to date and is of the opinion that the QA/QC protocols implemented by the Company are appropriate for this type of exploration and allow a high level of confidence in the data. A duplicate. Data Verification The Company monitors QA/QC on all analytical work via the use of certified reference materials and blank samples (both purchased in Canada) and field duplicates in addition to monitoring of internal laboratory check-analyses. The author of the Report did not take any additional check samples on the property due to the limited nature of the exploration completed to date.

Exploration at the Pavo Real Project is at a very early stage but it is the Pavo Real Report author's opinion that the project is prospective for gold veins and base and precious metals skarn mineralization and hence warrants further exploration. The amount of drilling has been estimated incorporating the difficult terrain and conditions in the selected areas 008226000-00082763. especially structural geology.000 Drafting and plotting 20. Recommendations The following Stage 1 exploration strategy is recommended for the Pavo Real Project: • Detailed geological mapping. which is outside the Pavo Real Project area. should be extended throughout the Pavo Real Project area together with sampling and assaying of known gold mineralized quartz veins and veinlet zones (artisanal mines) • Property wide stream sediment geochemistry should be undertaken across the Pavo Real Project area and anomalies followed up using grid MMI and/or conventional soil geochemistry • Ground magnetic and closely-spaced electromagnetic geophysics (induced polarization resistivity/chargeability) should be undertaken to test extensions of known mineralization and to follow up potentially mineralized geochemistry anomalies If Stage 1 exploration generates significant potentially mineralized targets then a Stage 2 program of diamond drilling should be designed and initiated to test these targets.250 meters of diamond core drilling will be initiated.49 million.000 TOTAL 490. 500 rockchip and adit samples @$35) 35. 250 vein systems.000 Consulting geologists 25. and includes: ITEM COST US$ Detailed geological mapping structures 40. 17 .29 Skarn deposits and occurrences with base and precious metals values are reported to occur northeast of the Pavo Real Project area where high copper and gold samples were reported but in similar geological environment where high copper and gold samples were reported. Only one such deposit was examined by the author of the Report. but under an option agreement between the Company and local tenement holders. Stage 1 Exploration cost is US$0.000 Field labour 50.000 Grid soil MMI and conventional geochemistry 25.000 Sampling and assaying veins in trenches and adits 40.000 Detailed ground magnetic and electromagnetic geophysics 40.000 Administration 150. a stage 2 exploration program consisting of a minimum of 5.000 Should the results of exploration program stage 1 define the expected drill targets.000 Assays (250 MMI.000 Transportation and logistics 25. Mina Vieja.000 Capital equipment 40.

• a US$200. land use fees and option payments.56 million. the Company has the sole exclusive right to conduct exploration and development of gold on the Mina Vieja Project by incurring a minimum of US$2 million on exploration expenditures and making the cash payments totalling an aggregate of US$535.250metres @ $150/metres) 861. Pursuant to the Mina Vieja Option Agreement.000 Consulting geologists 50.000 as detailed above. The balance after stage 1 and 2 exploration programs is US$116.800 1.000 per month commencing on the MV Effective Date. • 6 monthly cash payments of US$5. and 008226000-00082763. 2010. 17 . Work completed during 2010 and the program for 2011 ensures that the Company fulfills and exceeds its exploration commitments with respect to the Miranda Gold Corporation-Red Eagle Mining Corporation earn-in joint venture.30 Stage 2 Exploration cost is US$ 1.000 Capital equipment TOTAL 9.000 Transportation and logistics 55.000 Administration 180.000 upon successful title due diligence (the "MV Effective Date").050 for 2011.000 The Company has prepared a total budget of US$2.564.200 Supervision 50.170.000 over the initial 30 month option period (the "Mina Vieja Initial Option") as follows: • an initial cash payment of US$5. Exploration costs total US$2.000 Drill site preparation. the effective date for making the option payments under the Mina Vieja Option Agreement.000 cash payment on or before 18 months after the MV Effective Date. roads and access 30.000 Field labour 75. As title due diligence is still in progress.5) 213.000 Assays (6560 @ $32. the Company entered into an option agreement (the "Mina Vieja Option Agreement") with Carmen Laserna and Fernando Uribe (the "Mina Vieja Vendors") to acquire up to 100% of the Mina Vieja Project by acquiring 100% of the outstanding shares of MV Colombia.000 Drafting and plotting 20. has not yet occurred.050 which is required for mining title. and includes: ITEM COST US$ Drill mobilization 20.000 Diamond drilling (5.054. • a US$100.000 cash payment on or before 6 months after the MV Effective Date. MINA VIEJA PROJECT On November 27. a Colombian simplified stocks corporation to be incorporated by the Mina Vieja Vendors for the purposes of the Mina Vieja Option Agreement.

Property Description The Mina Vieja Project comprises a total area of 951. Upon the 80% interest being acquired by the Company.31 • a US$200.89ha in one exploitation licence numbered 3126 (130. approximately 25km southeast of the city of Ibague. As at April 15. in Colombia. in the Department of Tolima. 17 . The purchase price will be payable in cash.SEDAR. the effective date as defined under the Agreement has not yet been established. The purchase price will be calculated by taking 20% of the quantity of measured and indicated gold equivalent ounces calculated under the Second Option and multiplying it by US$15 per gold equivalent ounce. 2011. title due diligence is still in progress.14ha) and one concession contract numbered 1061 (821. If the Mina Vieja Vendors are unable to meet their 20% funding obligation on future project expenditures. the Company has the right to purchase the remaining 20% of MV Colombia (the "Mina Vieja Third Option"). Table 1 of the Mina Vieja Report). South America (Figures 1 and 2 of the Mina Vieja Report).75ha. Upon completing its obligations under the Mina Vieja Initial Option. Property Description And Location Property Location The Mina Vieja Project is located 7km northeast the town of Valle de San Juan in the municipality of San Luis. The properties are almost. 008226000-00082763.com. the Company will have the right for a period of 90 days to purchase 80% of the outstanding shares of MV Colombia (the "Mina Vieja Second Option").000 cash payment on or before 30 months after the MV Effective Date. The Mina Vieja Option Agreement is terminable by the Company on 30 days notice. The purchase price will be calculated by taking 80% of the quantity of measured and indicated gold equivalent ounces (as defined in NI 43-101 and calculated by an independent qualified person) and multiplying it by US$10 per gold equivalent ounce. future project expenditures will be funded on a pro-rata basis: 80% by the Company and 20% by the Mina Vieja Vendors. In the event that the Company does not exercise the Mina Vieja Third Option. 2011 (the "Mina Vieja Report"). The information in the section below is based on the technical report titled "An Assessment of the Mina Vieja Project" dated March 31. the remaining 20% interest held in the Mina Vieja Property by the Mina Vieja Vendors will be transferred to the Company in exchange for a 1% net smelter return" royalty on the Mina Vieja Property. The purchase price will be payable in cash. and is terminable by the Mina Vieja Vendors on notice if the Company is in breach of its obligations under the Mina Vieja Option Agreement. the parties will enter into a shareholders' agreement to govern further activities. Reference should be made to the full text of the Mina Vieja Report which is available for review on SEDAR located at www. Once the Company exercises its right under the Mina Vieja Second Option. but not quite contiguous (Figure 5 below). therefore.

32 Figure 5 008226000-00082763. 17 .

Much of the area is under pasture and cultivated land.5km) to the Mina Vieja mine/ quarry. Mina Vieja is accessible from the city of Ibague via the paved road to Bogota road turning left at the Buenos Aires district (after 23km) then right to the town of Payande (after 10km) then via unpaved roads (5. Subduction-related magmatic arcs were superimposed on the above described terranes during the Jurassic.25oC) but temperatures vary with altitude. Resources and infrastructure in the Mina Vieja district are moderately good. heap leach pads and mineral processing sites. These terranes were accreted to the South American continent (Guyana Shield) and subjected to transcurrent tectonics and subduction-related magmatism along a 2. Water is widely available from local rivers and streams but must be obtained by negotiation with local land owners. Cretaceous. and Late Miocene to Recent and are characterised by plutonic batholiths. part of the central continental subplate realm that dominates the central Cordillera of Colombia (Figure 4 of the Mina Vieja Report). There are no significant climatic restrictions on working.000km-long segment of the Pacific Rim (Figures 4 and 5 of the Mina Vieja Report). auto-chthonous and allochthonous terranes (Figure 4 of the Mina Vieja Report). and adjacent Ecuador and western Venezuela. 008226000-00082763. Central Cordillera (Central) and eastern Cordillera (Oriental). Rainfall averages 1870 mm per annum and humidity 63%. Regionalscale structural geology is characterised by a suite of anastamosing. Andean. Mina Vieja is located on the east flank of the Central Cordillera within the Mesozoic Ibague block.33 Accessibility. separated by broad interAndean valleys. Climate in the region is moderately warm (19 . sub-parallel. sub-volcanic intrusions and associated volcanic rocks (Figure 5 of the Mina Vieja Report Report). is a complex elongated mosaic of Palaeozoic and younger. Secondary forest is preserved around Mina Vieja and also in sheltered areas along major streams. 17 . Altitudes range between 850 and 1200 metres. Eocene to late Miocene. The principal economic activity in the area is limestone and marble quarrying followed by cultivation and cattle farming and some tourism. Level valley floors are available in places for tailings storage and waste disposal. Climate. Geological Setting Regional Geology The northwest margin of South America comprising Colombia. Unskilled labour is available locally. major faults and shear zones some of which are interpreted to be terrane boundary sutures (Figure 4 of the Mina Vieja Report). Local Resources.(dominantly north-northeast-) striking. transcurrent. History Mina Vieja was previously known as "Rio Frio" and was owned and operated by a Chilean company for an unknown period up to the early 1970's. the Western Cordillera (Occidental). The Andean Cordillera in Colombia comprises three distinct mountain chains. The Triassic-Jurassic Ibague (and San Lucas) block is dominated by composite metaluminous calc-alkaline diorite-granodiorite batholiths and associated volcanics in modified continental basement of the Chicamocha and Cajamarca-Valdivia terranes. An electrical grid in the area is can supply connections of 110 and 220 volts. Infrastructure And Physiography Topography in the Mina Vieja area is moderately rugged and comprises steep sided valleys and hills.

008226000-00082763. gold and silver values (Figure 8 of the Mina Vieja Report). A recent metallogenic study immediately south of Pavo Real in similar geological terrain. molybdenum. northeast-south-west oriented trend of mineralized skarn deposits and occurrences with reported base metals.0 to 1. 1992) hired by the mine owners reportedly mapped and interpreted the skarn contact and showed it to dip at 57o to the east and to the south. conglomerates and breccias (Luisa formation) overlain by Upper Triassic limestones with intercalated claystones. massive. 17 . tremolite-actinolite. finegrained arenites. vertical pipes. exceptionally. siltstones.5 Mt of ore (estimate by the Company). Exploration Mina Vieja is focussed on discovery of copper-gold skarn mineralization. medium grained granular grey-white marble (Upper Triassic Payande formation) intruded by a diorite-monzodiorite (Jurassic Payande ?) stock and andesite and trachyte porphyry dikes (Figure 7 of the Mina Vieja Report). Marble close to the intrusive contact is mineralized with coarse to fine-grained sulphides and magnetite intimately associated with garnet-pyroxene skarn alteration. Deposit Types Mina Vieja is a copper (-gold) skarn deposit. Head grade reportedly ran 2. This sequence is intruded by Jurassic granodiorites (syenogranite to tonalite and quartz monzonites to quartz monzodiorites) of the Ibague batholith (140-150 Ma) and associated minor intrusions (Figure 6 of the Mina Vieja Report).5 grams/tonne gold with estimated production of 1. Cross-sections showed a copper skarn orebody of 20 to 30 metres in thickness approximate 350 metre strike length of mineralization. narrow lenses and irregular ore zones near igneous contacts. Mineralization of this type commonly occurs where Andean-type plutons intrude continental margin carbonate sequences (Appendix 2 of the Mina Vieja Report). Property Geology Geology at Mina Vieja comprises relatively monotonous. silver. suggests prospectivity for a range of mineral deposit types including copper skarns (Table 2 of the Mina Vieja Report). >300 Mt. Raby. diopside. Skarn copper deposits average 1 to 2 % copper and range from 1 to 100 Mt and. tungsten and magnetite.34 Local Geology Geology around Mina Vieja comprises a stratigraphic sequence of Lower Triassic red bed siltstones. Mineralization is associated with skarn gangue (andradite garnet.) and occurs as stratiform and tabular orebodies.5% copper and 1. Mineralization Mina Vieja is located at the northeast end of a ten kilometre long. milling and concentrate processing operation under a Chilean company. A Canadian consulting geologist (R. calcareous shales and arentites (Payande formation) overlain by Upper Triassic to Lower Jurassic tuffs. The copper orebody was mined via three adits above the water table and over an estimated vertical distance of approximately 100 metres. etc. Copper is dominant (generally chalcopyrite) with moderate to high sulphide content but can also contain economic gold. wollastonite. Major copper skarns are known and mined worldwide (Appendix 2 of the Mina Vieja Report). Mina Vieja is reported to have operated until the 1970's as a mid-sized mining. agglomerates and lavas occasionally intercalated with red bed lithic arenites and siltstones (Saldana formation).

5 grams/tonne silver 8% copper 0.8 429 446 6 27 d 10 MV3 d d 57 42 4 146 d 1350 MV1 2. Raby had been contracted by the current land and title owner to investigate a scope for marble and limestone exploitation. bismuth and tungsten typical of copper-gold skarn deposits (Appendix 2 of the Mina Vieja Report). Raby.5 8 290 64 1 754 10 MV2 0.1% copper 0. Geologists took four grab samples that returned the following results: Sample Au Ag Cu Zn Pb Mo Bi W MVO d 2.3% copper The limited exploration work done to date at the Mina Vieja Project has been done by experienced professional geologists employed by the Company. d = below detection limit) The above samples display highly anomalous to potentially economic grades for precious and base metals together with high values of molybdenum. dominantly chalcopyrite. A report by a Canadian geologist. associated with garnetpyroxene skarn-altered marble. 12 of which intersected marble skarn. No information regarding this drilling has been seen by the author of the Mina Vieja Report.2 grams/tonne gold 67.16 67. Drilling Mina Vieja has not been drilled by the Company. 008226000-00082763. from 1992 claimed that the previous Chilean owners may have drilled up to 29 holes at Mina Vieja. R.72 grams/tonne gold 920 grams/tonne silver 8% copper 26. Exploration No systematic exploration has been made at Mina Vieja by the Company. All assay work has been undertaken by international accredited assay facilities located in South America. 22 grams/tonne silver 11% copper 0. of which 16 were identified.33 grams/tonne gold 22 grams/tonne silver 4.8 1275 33 18 5 76 50 (all values in ppm.35 Mineralization observed by the author of the Mina Vieja Report comprises coarse-grained irregular to fine-grained disseminated magnetite and sulphides.15 grams/tonne gold.6 grams/tonne gold 4250 grams/tonne silver 2% copper 2. Other reported values for Mina Vieja rockchips are as follows (the Company): 1.22 22.22 grams/tonne gold 23 grams/tonne silver 1. 17 .

Sample Preparation.36 Sampling Method And Approach The Company has not undertaken systematic sampling at the Mina Vieja Project. 17 . Bagged samples are put in larger sacks in the field and when these are filled they are sealed in the field. Analyses are undertaken by ALS Chemex (gold fire assay plus 35 elements (ICP. 008226000-00082763. Mineral Resource And Mineral Reserve Estimates The Company did not perform any mineral resource or mineral reserve estimates during the 2010/2011 exploration program. silver and other metals. The author of the Mina Vieja Report did not take any additional check samples on the Mina Vieja Project due to the limited nature of the exploration completed to date. Adjacent Properties No information is available regarding the status of exploration in properties surrounding Mina Vieja. Sampling by the Company's geologists conforms to industry-wide good practice. The sample and sample location are then photographed. Appendix 3 of the Mina Vieja Report). Samples are prepared at their laboratories respectively in Medellin and Bogota and 30 gram pulps forwarded to their laboratories in Lima. Analyses And Security Rock samples (average 2 kilograms) are placed in a plastic bag marked on both sides and on a piece of flagging tape inside with the sample number and sealed immediately. Other Relevant Data And Information The author of the Mina Vieja Report is not aware of any other relevant data or information regarding the Mina Vieja Project. Mineral Processing And Metallurgical Testing The Company did not conduct any studies on mineral processing nor did they perform any metallurgical testing mineralized samples during the 2010/2011 exploration program. a standard and a blank are included with every 30 samples sent for analysis. Data Verification The Company monitors QA/QC on all analytical work via the use of certified reference materials and blank samples (both purchased in Canada) and field duplicates in addition to monitoring of internal laboratory check-analyses. Preliminary grab samples have been taken but sampling cannot be considered to be adequate at this time. Sample collection was partly undertaken by the Company's geologists and partly by the Company's joint venture partner geologists. Peru for analysis. Interpretation And Conclusions Mineralization at the Mina Vieja Project is skarn copper type with gold. Chain of custody is maintained for all samples. A duplicate. Sample sacks are then securely transported to the sample store.

16 grams/tonne gold. 500 underground samples @$35) 35. below detection to 67.000 Administration 5. below detection to 754 ppm bismuth and 10 to 1350 ppm tungsten. 17 .000 Drafting and plotting 5. • Property wide geochemistry using grid MMI and/or conventional soil geochemistry.5 grams/tonne silver.000 Field labour 10. Stage 1 Exploration Budget ITEM COST US$ Detailed geological mapping surface outcrops and old underground workings 15. geophysics. geochemistry.000 Transportation and logistics 5. it is critical for the property owners to obtain an extension for exploitation of precious and base metals in the mining licences from the Colombian mining authorities. and • Ground magnetic and closely-spaced geophysics (induced polarization resistivity/chargeability) to test known mineralization and locate extensions. drilling.000 008226000-00082763. In addition. The objectives of exploration of the Mina Vieja Project undertaken by the Company to date have been met but exploration undertaken and data obtained to date are of insufficient density and reliability to confirm the occurrence of potentially economic mineralization. sampling and assaying.000 TOTAL 120.000 Capital equipment 10. More detailed exploration will be required to advance the project and to confirm or condemn its economic potential. 1 to 146 ppm molybdenum.000 Assays (250 MMI. 33-446 ppm zinc. Recommendations The following Stage 1 exploration strategy is recommended for the Mina Vieja Project: • Detailed surface and underground geological mapping of skarn mineralization and the intrusivemarble contact together with sampling and assaying for copper. gold and other base and precious metals.000 Sampling and assaying outcrips and old underground workings 15.000 Grid soil MMI and conventional geochemistry 10.37 The deposit was previously drilled and mined on a moderate industrial scale but no previous exploration results or production figures have been seen by the author of the Mina Vieja Report. Four grab samples taken by the Company's geologists returned value of below detection to 2. Further exploration will require detailed geological mapping. 4 to 64 ppm lead.000 Detailed ground magnetic and electromagnetic geophysics 10. It is the author’s opinion that the Mina Vieja Project warrants further exploration. 250 vein systems. 8 to 1275 ppm copper.

In the event that the Agents exercise all or a portion of the Over-Allotment Option.000.000 Drill site preparation.000) 008226000-00082763.000 Capital equipment 5.38 If Stage 1 exploration generates significant potentially mineralized targets then a Stage 2 program of diamond drilling (2.000 Drafting and plotting 5. 17 FUNDS TO BE USED $(1) .000 Administration 5.000 Field labour 15.000 as at April 15. These funds will be combined with the Company's working capital of approximately $5. 2011 for total available funds of $ upon completion of the Offering.000 The total budget for the two stages of exploration at Mina Vieja is US$ 598. USE OF PROCEEDS FUNDS AVAILABLE The Company will receive aggregate net proceeds (after payment of the Agents' Commission and estimated expenses of the Offering) of $ from the sale of Offered Shares pursuant to this Prospectus.375.000 Diamond drilling (2.500 metres) should be designed and initiated to test these targets.000 Transportation and logistics 5.5) 101.000) • Pavo Real (US$50.000. assuming no exercise of the Over-Allotment Option.000 Assays (3125 @ $32. roads and access 10. PRINCIPAL PURPOSES The principal purposes for which the funds available to the Company upon completion of the Offering will be used are as follows: PRINCIPAL PURPOSE To pay the property payments due within the next 12 months under the Company's Option Agreements as follows: • Santa Rosa (US$3.000 TOTAL 478.500metres @ $125/metre) 312. any proceeds received by the Company will be added to its general working capital.000 Supervision 15.000) • Mina Vieja (US$135. Stage 2 Exploration Budget ITEM COST US$ Drill mobilization 5.

000 The Company intends to spend the funds available to it as stated in this Prospectus.000 TOTAL: $1. 17 . a reallocation of funds may be necessary.000 To provide funding sufficient to meet administrative costs for 12 months $1. Administrative expenditures for the following twelve months are comprised of the following: Administrative Costs for 12 months Budget Salaries and consulting fees $650. being the noon exchange rate reported by the Bank of Canada on .500) $(1) Recommended Stage 1 exploration program on the Pavo Real Project (US$490.200. Exchange. auditors and other professional fees $150. the Company's working capital available to fund ongoing operations will be sufficient to meet its administrative costs and exploration expenditures for twelve months.000) $(1)(2) Recommended Stage 1 exploration program on the Mina Vieja Project (US$120.564. 2.000 Legal.000) $(1)(2) For future acquisitions in order to consolidate the districts surrounding the Pavo Real and Santa Rosa Projects $4. The Company will only expend these funds if the results of the Stage 1 exploration program warrant.200. STATED BUSINESS OBJECTIVES AND MILESTONES The Company's business objectives using the available funds are to: 008226000-00082763.000 To provide general working capital to fund ongoing operations $ Total: $ 1. where.000) $(1)(2) Recommended Stage 2 exploration program on the Mina Vieja Project (US$478.290.39 PRINCIPAL PURPOSE FUNDS TO BE USED Recommended Stage 1 exploration program on the Santa Rosa Project (US$1.000) $(1)(2) Recommended Stage 2 exploration program on the Santa Rosa Project (US$3. Upon completion of the Offering. There may be circumstances however.700. for sound business reasons.243.000 Office costs (Vancouver and Colombia) $400.000) $(1) Recommended Stage 2 exploration program on the Pavo Real Project (US$1. Converted from US$ at US$ = CDN$.

capital requirements and operating financial conditions. As such the Company does not anticipate the payment of dividends in the foreseeable future. (c) conduct the recommended work programs in its properties. 17 . and (e) seek out acquisition opportunities in areas surrounding existing projects. the Company's policy is to retain earnings.269 Shareholders' Equity $6. to finance its business operations.216 Current Liabilities $125. the various exploration programs are expected to commence shortly thereafter and are estimated to be completed by December 31. Period from January 4. among other factors.40 (a) obtain a listing of its Common Shares on the Exchange. if any.990. (b) complete the acquisition of the interests in its properties.582. (d) working capital requirements.707 Current Assets $5. While there are no restrictions precluding the Company from paying dividends. 2011. 2010 to December 31.722 Working Capital $5.707 Net Loss $1. subject to the Company fulfilling all of the requirements of the Exchange.679. SELECTED FINANCIAL INFORMATION AND MANAGEMENT'S DISCUSSION AND ANALYSIS SUMMARY OF FINANCIAL INFORMATION The following table sets forth summary financial information for the Company for the period from incorporation on January 4. 2010 to December 31.617. as included elsewhere in this Prospectus. and "Management Discussion and Analysis". At present.622.962 008226000-00082763.865. Upon completion of the Offering.991 Total Assets $6. The listing of the Company on the Exchange is anticipated to occur shortly after completion of the Offering. it has no source of cash flow. and anticipates using all available cash resources toward its stated business objectives. 2010 Total Revenues Nil Expenses $1. the Company's earnings. and should be read in conjunction with the financial statements and related notes attached to and forming part of this Prospectus. DIVIDENDS OR DISTRIBUTIONS The Company has not paid dividends since its incorporation. 2010. The payment of dividends in the future will depend upon.

and (ii) complete the process of obtaining a listing on the Exchange.378. To date. objectives. but rather are based on the current plans. The forwardlooking statements are not historical facts. of which 23.127.712.759 Common Shares. Liquidity and Capital Resources As at December 31. the Company intends to carry out the recommended exploration programs on each Project.093 Management Discussion and Analysis: The following management discussion and analysis ("MD&A") included financial information as at December 31.000. 17 . the Company signed three additional option agreements. It is expected that the Company plans to use its existing working capital and the proceeds from the offering in 2011 as follows: 008226000-00082763. The activities of MAD III are governed by the Pavo Real Shareholders Agreement. and in March of 2011. the Company must make an aggregate US$4 million contribution to MAD III within the next four years. including the Santa Rosa Option Agreement. 2010 Net Loss Per Share Number of Shares Outstanding $0. business and future financial results. NI 43-101 technical reports were prepared on the work completed on the Santa Rosa and Pavo Real Projects. 2010 to December 31.0 million and current liabilities of $200. Overall Performance and Results of Operations The Company was inactive from incorporation on January 4. 2010 until June 25. strategies.41 Period from January 4. appearing elsewhere in this Prospectus. To maintain its 70% shareholding in MAD III. Subsequent to entering into the Pavo Real Option Agreement. the Company's sole business focus has been to (i) raise sufficient funds to carry out initial exploration on the Colombian projects.858. assumptions and projections about the Company's industry. Miranda assigned 70% of the shares of MAD III.13 22. 2010 when the Company entered into the Pavo Real Option Agreement and Pavo Real Shareholder Agreement with Miranda and other parties. 2010 (date of inception) to December 31. the Company has issued an aggregate 24.8 million with current assets of $6. See "Caution Regarding Forward-Looking Statements" and "Risk Factors". including those discussed in other sections of this Prospectus. effectively representing a 70% interest in the Pavo Real Project. estimates. Pursuant to the Pavo Real Option Agreement. goals. 2010.000 were issued for cash consideration ($9. 2010 and should be read in conjunction with the Company's audited financial statements for the period from January 4. Actual results could differ materially from the results contemplated by these forwardlooking statements due to a number of factors. A preliminary exploration program has been carried out on the Company's Pavo Real and Santa Rosa Projects for a total cost of approximately $900. 2010 the Company had working capital of approximately $5.847). Upon completion of the Offering. Since then. as well as the disclosure contained throughout this Prospectus. a wholly-owned subsidiary of Miranda to the Company.000. uncertainties and other factors. Included herein are certain forward-looking statements that involve various risks.

• US$4.2 million in exploration programs. which includes planned expenditures of approximately US$4.1 million in connection with the Pavo Real Project. After listing on the Exchange. Proposed Transactions There are no proposed transactions of a material nature being considered by the Company.000 $100.: Payments Due by Period Contractual Obligations Total Less than 1 year 1 – 3 years 4 – 5 years After 5 years Santa Rosa $7.500. and • $1. and • US$7.000 $210.000 $100.000 $400. on the properties or to develop mineral resources on the properties.500. if commercially mineable quantities of such resources are located thereon.010.000 $4.000 $- $- Pavo Real $360. Notwithstanding success to date in acquiring equity financing on acceptable terms. the Company had the following options payments remaining on the various projects.53 million in connection with the Santa Rosa Project and approximately US$2. the Company continues to evaluate properties and other entities and opportunities that may be acquired or pursued in the future.185.000 $- Mina Vieja $535. there can be no assurance that the Company will be successful in obtaining any additional required funding necessary to conduct additional exploration.395. Contractual Obligations As of the date of this MD&A.000 $- Total Contractual Obligations 008226000-00082763. However.42 • US$3. if warranted.000 $135. 17 .000 $- $- $8.7 million in potential acquisitions in order to consolidate the districts surrounding the Santa Rosa and Pavo Real Projects.000. the Company may require additional funds to support working capital requirements or for other purposes and may seek to raise additional funds through public or private equity funding.000 $5. bank debt financing or from other sources.000 $3.000 $50.000 $3.2 million to meet administrative costs for the next twelve months.2 million payable to the vendors under the various purchase agreements entered into in fiscal 2010. Off Balance Sheet Arrangements The Company has no off balance sheet arrangements other than already disclosed.

Critical Accounting Policies and the Use of Estimates A detailed summary of the Company's significant accounting policies. is included in note 3 of the Company's annual audited financial statements for the period from inception (January 4.000) paid to a company controlled by the directors of the Company. the Company had one class of authorized shares. 24.409   Notes: 1) Salary paid to an officer of the Company.000) paid to a partnership in which one of the directors of the Company is a partner.666 units at a price of $0. 2011. The only financial instruments consist of cash.000 to a strategic investor. 2011. receivables. being Common Shares without par value. the Company issued 1. 2010) to December 31.000 annual payment pursuant to the Santa Rosa Agreement. 17 . Financial Instruments The Company's significant accounting policies regarding its financial instruments are set out in Note 3 to the financial statements included in this Prospectus. the Company made a US$400.25 per share for up to two years subsequent to the Closing Date. which entered into various agreements on the Pavo Real Project (refer to Note 8 of the Company's annual audited financial statements for the period ended December 31.75 per unit for gross proceeds of $1. legal fees ($20. Consulting fees ($31.759 Common Shares are issued and outstanding.209 195. 2010 $153. 2010 was $20. On February 14. rent and related costs ($144.250. currency or credit risks arising from these financial instruments.43 Transactions with Related Parties The aggregate value of transactions and outstanding balances relating to key management personnel and entities over which they have control or significant influence were as follows: Short-term employee benefits(1) All other compensation(2) December 31.666. and as at the date of this Prospectus. office.200) paid to a partnership in which the CFO of the Company is an incorporated partner. The Company's CEO is a director common to both the Company and Miranda. 008226000-00082763. 2010.000 to these related parties. 2010). accounts payable and accrued liabilities. Disclosure of Outstanding Share Data As at December 31. The Company is of the opinion that it is not exposed to significant interest. As at the date of this Prospectus. 2010. Subsequent Events On January 6. Each whole warrant entitles the holder to purchase one Common Share of the Company for $1. Each unit consisted of one common share and one-half common share purchase warrant. 2) The balance in accounts payable and accrued liabilities as at December 31. including the use of estimates.378.200 $348.

The Company will quantify the effect in conjunction with the other phases. The amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset. The standard is effective for annual periods beginning on or after January 1. New Accounting Standards and Interpretations Standards issued but not yet effective up to the date of issuance of the Company's financial statements are listed below. The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability qualify as consideration paid. The Company intends to adopt those standards when they become effective. The revised standard introduces a partial exemption of disclosure requirements for government-related entities. This listing is of standards and interpretations issued. 17 . 2010. This amendment will have no impact on the Company after initial application. 2013. 2011. the Company signed a final purchase agreement for the Santa Rosa Project as described in Note 8 of the Company's annual audited financial statements for the period ended December 31. The adoption of the first phase of IFRS 9 will have an effect on the classification and measurement of the Company’s financial assets. 2010 and amended the definition of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where such rights are given pro rata to all of the existing owners of the same class of an entity’s non-derivative equity instruments. 1 2011 with retrospective application. 008226000-00082763. The Company does not expect the impact of such changes on the financial statements to be material. the IASB will address classification and measurement of financial liabilities. IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments IFRIC 19 is effective for annual periods beginning on or after July 1. IFRIC 14 Prepayments of a minimum funding requirement (Amendment) The amendment to IFRIC 14 is effective for annual periods beginning on or after January. IAS 24 Related Party Disclosures (Amendment) The amended standard is effective for annual periods beginning on or after January 1. 2010. IFRS 9 Financial Instruments: Classification and Measurement IFRS 9 as issued reflects the first phase of the International Accounting Standards Board ("IASB") work on the replacement of IAS 39 and applies to classification and measurement of financial assets as defined in IAS 39. The amendment is deemed to have no impact on the financial statements of the Company.44 On April 15. In subsequent phases. when issued. The Company does not expect any impact on its financial position or performance. The amendment provides guidance on assessing the recoverable amount of a net pension asset. hedge accounting and derecognition. It clarified the definition of a related party to simplify the identification of such relationships and to eliminate inconsistencies in its application. Early adoption is permitted for either the partial exemption for governmentrelated entities or for the entire standard. 2011. to present a comprehensive picture. which the Company reasonably expects to be applicable at a future date. The completion of this project is expected in early 2011. IAS 32 Financial Instruments: Presentation – Classification of Rights Issues (Amendment) The amendment to IAS 32 is effective for annual periods beginning on or after February 1. or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency.

the holders of the Common Shares are entitled to receive. DESCRIPTION OF SECURITIES DISTRIBUTED COMMON SHARES The authorized share capital of the Company consists of an unlimited number of Common Shares without par value and an unlimited number of preferred shares. of the holders of any other class of shares of the Company.378. and as at such date assuming completion of the Offering and after giving effect to the Offering. subject to the prior rights.45 The equity instruments issued are measured at their fair value. 008226000-00082763. (based on the audited financial statements of the Company included in this Prospectus). 2010 Amount Outstanding at Date of the Prospectus Amount Outstanding Assuming Completion of the Offering Common Shares Unlimited 22.712.333 5. of any other class of shares of the Company.378. 2010. AGENTS' WARRANTS The Company has also agreed to grant the Agents' Warrants to the Agents entitling the Agents to purchase that number of Common Shares as is equal to 3% of the number of Shares sold pursuant to the Offering. Any gain or loss is recognised immediately in profit or loss. 24. The holders of the Common Shares are entitled to receive notice of and to attend and vote at all meetings of the shareholders of the Company and each Common Share confers the right to one vote in person or by proxy at all meetings of the shareholders of the Company.759 (1) Preferred Shares Unlimited Nil Nil Nil Common Share Purchase Warrants(2) N/A 4. or existing share purchase warrants. 17 . if any.000 5.333 Long Term Debt N/A Nil Nil Nil Agents' Warrants N/A Nil Nil  Notes: (1) Does not include any Common Shares issuable on exercise of the Over-Allotment Option. are entitled to receive such dividends in any financial year as the board of directors of the Company may by resolution determine. the Agents' Warrants or on exercise of stock options. In the event of the liquidation. subject to the prior rights.500. the instruments are measured at the fair value of the liability extinguished. CONSOLIDATED CAPITALIZATION The following table summarizes the changes in the Company's capitalization as at December 31. The adoption of this interpretation will have no effect on the financial statements of the Company. In case that this cannot be reliably measured.333. See "Plan of Distribution".759 Common Shares are issued and outstanding as fully paid and non-assessable and no Preferred Shares are outstanding. the remaining property and assets of the Company.093 24. As of the date of this Prospectus. if any. The holders of the Common Shares. The table should be read in conjunction with the financial statements appearing elsewhere in this Prospectus: Designation of Security Authorized Amount Amount Outstanding as of December 31. whether voluntary or involuntary.333. dissolution or winding-up of the Company.

Subject to certain exceptions. or to any one employee or consultant engaged in investor relations activities may not exceed 2% of the issued and outstanding Common Shares of the Company. 008226000-00082763. if any. consultant or management company employee under the Stock Option Plan will expire 90 days after such individual or entity ceases to act in that capacity in relation to the Company or such longer period as determined by the board of directors of the Company. OPTIONS TO PURCHASE SECURITIES STOCK OPTION PLAN The Stock Option Plan was adopted by the Company's board of directors on April 27. The purpose of the Stock Option Plan is to advance the interests of the Company and its shareholders and subsidiaries by attracting. The Stock Option Plan provides that. subject to earlier termination in the event of dismissal for cause. Options may be granted under the Stock Option Plan to such directors. options granted under the Stock Option Plan expire six months from the date of the death of the option holder. In the event of death of an option holder. Subject to certain exceptions. options granted under the Stock Option Plan may be subject to vesting. If desired by the board of directors of the Company. employees or consultants of the Company and its affiliates. employees or consultants of the Company of high caliber and potential and to encourage and enable such persons to acquire and retain a proprietary interest in the Company by ownership of its stock. options granted to such director or officer under the Stock Option Plan will expire 90 days after such director or officer ceases to hold office or such longer period as determined by the board of directors of the Company. The term of any options granted under the Stock Option Plan shall be determined by the board of directors at the time of grant but. The number of Common Shares which may be reserved in any 12 month period for issuance to any one consultant. Options granted under the Stock Option Plan are not to be transferable or assignable other than by will or other testamentary instrument or pursuant to the laws of succession. if applicable). Options may also be granted to employees of management companies providing management services to the Company.10. officers. The exercise price of any options granted under the Stock Option Plan shall be determined by the board of directors. options granted to such employee. subject to the requirements of the Exchange. as the board of directors may from time to time designate. The number of Common Shares which may be reserved in any 12 month period for issuance to any one individual upon exercise of all stock options held by that individual may not exceed 5% of the issued and outstanding Common Shares of the Company unless the Company has obtained disinterested shareholder approval. retaining and motivating the performance of selected directors. The Stock Option Plan will be administered by the board of directors of the Company. termination other than for cause or in the event of death. the term of any options granted under the Stock Option Plan may not exceed ten years. officers. in the event that an employee. subject to the board of directors of the Company having the authority to extend the expiry date to a maximum of twelve months from the date of death of the option holder. set aside and made available for issuance under the Stock Option Plan may not exceed 10% of the issued and outstanding shares of the Company at the time of granting of options (including all options granted by the Company to date. The Stock Option Plan provides that options issued to consultants performing investor relations activities will vest in stages over 12 months with no more than ¼ of the options vesting in any three month period. the aggregate number of securities reserved for issuance. which will have full and final authority with respect to the granting of all options thereunder. consultant or management company employee ceases to act in that capacity in relation to the Company.46 (2) Does not include the Agents' Warrants. in the event that a director or officer ceases to hold office. 17 . but may not be less than the market price of the Company's shares on the Exchange on the date of the grant (less any discount permissible under Exchange rules) subject to a minimum price of $0. 2011.

000 options. 2010 $0. Vice-President Exploration.000 options.000 options.000 Private Placement June 14. as to 700. The options are exercisable from the Listing Date to the date which is five (5) years from the Listing Date. Robert Bell as to 700. 4.675. Paul Robertson. 3. and Robert Pease as to 250. Ken Cunningham as to 175. and Tim Petterson.000 options.000 options. Chairman and CEO as to 700.588. as to 150. AGENTS' WARRANTS The Company has also agreed to issue to the Agents Agents' Warrants for the purchase of up to that number of Common Shares as is equal to 3% of the Shares of the Company sold pursuant to the Offering.000 options.475.25 1. and Alejandro Kakarieka.800. 2010 $0. exercisable at the Offering Price per Common Share for a period of eighteen months from the Closing Date. Director and VP Corporate Development. Ian Slater. 2.000 Common Shares 5 years (1) Offering Price N/A Employees of the Company Notes: 1. Optionee Designation and number of Securities Under Option Expiry Date Purchase Price per Common Share Market Value of Common Shares as of the date of this Prospectus(4) Executive Officers of the Company(2) 1.000 Common Shares 5 years(1) Offering Price N/A 435.000 options. As the Company's shares were not listed on any stock exchange on the date of grant of the options.000 Property Option Agreement 008226000-00082763. the CFO.000 options. 2010 $0. and Jay Sujir as to 175.000 Private Placement July 5. and Jeffrey Mason as to 175. PRIOR SALES The following table summarizes the sales of securities of the Company within the twelve months prior to the date of this Prospectus.000 stock options outstanding. Date Price per Security Number of Common Shares Reason for Issuance April 30.25 2. 17 .47 OUTSTANDING OPTIONS The Company currently has 3.710.000 Common Shares 5 years(1) Offering Price N/A Directors (five) of the Company (other than Executive Officers)(3) 1. The following table summarizes the options of the Company that will be outstanding as of the Listing Date pursuant to the Stock Option Plan.000 Private Placement August 16.25 1. 2010 N/A 100.737. as to 250.000 options. the market value of the Common Shares cannot be ascertained.

2010 $0. as listed in this Prospectus. on completion of the Offering. 17 . 2010 $0. (d) Those who own and/or control more than 20% of the Company's voting securities immediately after completion of this Offering.333 Private Placement December 16.759 Finder's Fee December 23. securities held by Principals (as defined below) are required to be held in escrow in accordance with the national escrow regime applicable to initial public distributions. The Escrow Agreement will provide that the Escrowed Securities will be released from escrow in equal blocks of 25% of a Principal's Escrowed Securities at six month intervals over the 24 months following the Listing Date. with 25% of each Principal's holdings being first released on the date which is six months after the Listing Date. 2010 $0.75 1.75 320. 2010 N/A 100.666. 2011 $0.75 7.25 600.853.48 Date Price per Security Number of Common Shares Reason for Issuance October 25.666 Private Placement ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER ESCROWED SECURITIES Under the applicable policies and notices of the Canadian Securities Administrators.000 Property Option Agreement January 25.000 Private Placement December 16.25 338.000 Private Placement November 25. 2010 $0. including Common Shares are subject to the escrow requirements. (b) Promoters of the Company during the two years preceding this Offering. (c) Those who own and/or control more than 10% of the Company's voting securities immediately after completion of this Offering if they also have appointed or have the right to appoint a director or senior officer of the Company or of a material operating subsidiary of the Company. and (e) Associates and affiliates of any of the above. fall into one of the following categories: (a) Directors and senior officers of the Company. Equity securities owned or controlled by Principals. Computershare Investor Services Inc. 008226000-00082763. the Principals agree to deposit in escrow the Shares held by them (the "Escrowed Securities") with the Escrow Agent. (the "Escrow Agent") and various Principals of the Company. Pursuant to the Escrow Agreement to be entered into between the Company. Principals ("Principals") include all persons or companies that.

provided that upon a realization the securities remain subject to escrow.333 2.334 8. British Columbia. 3. BC 2. Suite 1600.64% % Name and Municipality of Residence of Shareholder Notes: (1) Based on 24. 17 .013. Slater Vancouver.334 2.012. with approval of the board of directors of the Company. The following table sets forth details of the issued and outstanding Common Shares of the Company that are subject to the Escrow Agreement as of the date of this Prospectus: Common Shares Number of Common Shares Escrowed Percentage of Common Shares of the Company Prior to Giving Effect to the Offering Percentage of Common Shares of the Company After Giving Effect to the Offering(1) Ian P.013.002 2. the securities held in escrow may not be transferred or otherwise dealt with during the term of the Escrow Agreement unless the transfers or dealings within the escrow are: 1. 609 Granville Street. BC 400. transfers upon bankruptcy to the trustee in bankruptcy. Tenders of Escrowed Securities to a take-over bid are permitted provided that. securities received in exchange for tendered Escrowed Securities are substituted in escrow on the basis of the successor corporation's escrow classification.000 400. Vancouver.000 1. The complete text of the Escrow Agreement will be available for inspection at the offices of the Company's legal counsel. V7Y 1C3. 008226000-00082763. Australia 2. if the tenderer is a Principal of the successor corporation upon completion of the take-over bid.013. (2) Assumes  Common Shares are outstanding on completion of the Offering.26% % Robert Bell Perth. upon their appointment.333 8. pledges to a financial institution as collateral for a bona fide loan.013. BC 2.002 8. transfers to a registered retirement savings plan or similar trustee plan provided that the only beneficiaries are the transferor or the transferor's spouse or children.26% % Jay Sujir Vancouver.013. and 4.25% % Tim Petterson Vancouver.012.26% % Jeffrey Mason Vancouver.759 Common Shares outstanding as at the date of this Prospectus. incoming directors and senior officers of the Company or of a material operating subsidiary.333 2. transfers to continuing or.013. 2.49 Pursuant to the terms of the Escrow Agreement. BC 2.378.333 8.

Australia Director/ Officer Since Principal Occupation for the Past Five Years Director since January 4. and (ii) arrange shareholders who acquired Common Shares at a price of $0. 2010 Secretary since July 6. and to not sell in excess of one-fifth of such Common Shares in any subsequent three month period. 2010 Director since January 4. municipalities of residence. BC VP Corporate Development and Director Jay Sujir(1) Vancouver. BC VP Corporate Development since July 6. the Company has agreed to use its reasonable best efforts to (i) arrange for shareholders who acquired Common Shares of the Company at a price of $0. BC Chairman. directly or indirectly. 2010 Mining Engineer Director Jeffrey Mason(1) Vancouver. as of the date hereof: Name and Municipality of Residence and Position with the Company Ian Slater(1) Vancouver. as of the date of this Prospectus no person beneficially owns or exercises control or direction over Common Shares carrying more than 10% of the votes attached to the Common Shares and no person is anticipated to own more than 10% of the votes attached to the Common Shares outstanding on completion of the Offering. or exercises control over.75 per Common Share to agree not to sell such Common Shares for a period of four months from the Closing Date. 17 Lawyer . to agree not to sell any such Common Shares for a period of four months from the Closing Date. 2010 Corporate Secretary and Director 008226000-00082763. CEO and Director Robert Bell Perth. position. BC Director Tim Petterson Vancouver. principal occupations and the number of voting securities of the Company that each of the directors and executive officers beneficially owns. DIRECTORS AND EXECUTIVE OFFICERS The following table provides the names. 2010 Chief Executive Officer of Slater Mining Corporation and Red Eagle Mining Corporation Chairman and CEO since January 4. PRINCIPAL SECURITYHOLDERS To the knowledge of the directors and officers of the Company. 2010 Chartered Accountant Director since January 4.25 per Common Share. 2010 Director since January 4. 2010 Mining Engineer Director since January 4.50 SECURITIES SUBJECT TO A VOLUNTARY HOLD Pursuant to the Agency Agreement.

Mr. The term of office of the directors expires annually at the time of the Company's annual general meeting. Most recently. Petterson was Managing Director Mining at Kingsdale 008226000-00082763. Bell was one of the founding partners of Minproc Engineers’ Mining Division and was responsible for a large number of bankable feasibility studies. The term of office of the officers expires at the discretion of the Company's directors. Slater is a Canadian Chartered Accountant (1995) and holds a BBA from Simon Fraser University (1994). Bell is a graduate Mining Engineer from the Western Australian School of Mines. Bell has worked internationally in the mining industry for over forty years. the directors and officers of the Company as a group owned beneficially. directly or indirectly or exercised control or discretion over an aggregate of 8. None of the Company's directors or officers have entered into non-competition or non-disclosure agreements with the Company. 2011 Geologist CFO since July 6. From 2003 to 2007 Mr. Denotes a member of the Audit Committee of the Company.. Bell has accumulated a wealth of experience in the construction of numerous mines around the world. has been a Director of the Company since incorporation. Miranda Gold Corp. 2011 Geologist and President. Slater was the President and CEO of Fortress Minerals Corp. focused on gold exploration and development in Russia. BC Chief Financial Officer Notes: 1. Mr. has been a Director and Vice President Corporate Development of the Company since incorporation. 17 . Mr. Nevada Director/ Officer Since Principal Occupation for the Past Five Years Director since March 28. Mr. Director since April 14. Mr.51 Name and Municipality of Residence and Position with the Company Ken Cunningham Reno. he was General Manager of the Chelopech Mine in Bulgaria.202.002 Common Shares (33. Mr. Previously. Petterson worked for fifteen years in both Mining Consultancy and Investment Banking in London. Slater was the Managing Partner of Arthur Andersen’s Central Asian practice. Chairman and CEO of the Company since incorporation. Slater is currently a director of Slater Mining Corporation and Miranda Gold Corp. Previously. Mr. 2010 Chartered Accountant Director Robert Bruce Pease Surrey. BC Director Paul Robertson Vancouver. Slater will devote approximately three-quarters of his time to the affairs of the Company. Mr. Slater was the Managing Partner of Ernst & Young’s Canadian mining practice. Mr. Mr. Earlier in his career he was employed as a Mine Manager and Mine Superintendent on numerous projects. before becoming ABN AMRO’s Head of Pan European Equity Research. age 45. He has held several senior positions including Head of Global Mining Research at HSBC and more latterly ABN AMRO. a Lundin Group company. Ian Slater. Bell will devote approximately one-half of his time to the affairs of the Company. age 39. Mr. has been a Director.64%). As at the date of this Prospectus. age 64. After moving to Canada in 2004 Mr. Robert Bell. Tim Petterson.

Robertson has over fifteen years of accounting. provides services. He has been a partner with Anfield Sujir Kennedy & Durno and its predecessor firms since 1991. Following comptrollership positions at Homestake Mining Group of companies. 2011. Mr. 17 . Jefferey Mason. Mason has also been employed as Chief Financial Officer of Hunter Dickinson Inc. Jeffrey Mason holds a Bachelor of Commerce degree from the University of British Columbia (1980) and obtained his Chartered Accountant designation from the Institute of Chartered Accountants. Uranerz U. Robert Pease. 2010. Jay Sujir. He is a member of the Law Society of British Columbia. age 53.52 Capital Markets. 1996. Mason has spent the last several years as a corporate officer and director to a number of publicly-traded mineral exploration companies. Mr. Mr. Robertson will devote approximately one-third of his time to the affairs of the Company. Mr. Mr. Sujir is a securities and natural resources lawyer who has extensive experience in advising and assisting public companies. has been a Director of the Company since incorporation. Cunningham has 36 years of worldwide mineral exploration experience. Mr. Kakarieka has over 27 years of experience as an Exploration Geologist throughout Latin America. Petterson will devote approximately one-half of his time to the affairs of the Company. will be Vice President Exploration of the Company from June 15. a mineral exploration and development company focused on the 008226000-00082763. 2011. age 52. Mr. including most recently Exploration Manager and Country Manager for Colombia. Mr. and his principal occupation was the financial administration of the public companies to which Hunter Dickinson Inc. He is currently a Director and active strategic advisor for Richfield Ventures. the Aserradero gold skarn and the Porvenir zinc-gold skarn deposits at the Toqui district in Chile. been involved in gold. 2011. Kakarieka was formerly with IAMGOLD Corporation where he held senior exploration roles. Alejandro Kakarieka. Mr.S. a professional services firm dedicated to assisting publicly listed companies with their financial reporting. degree in Geology from Oregon State University and a MSc. copper and uranium discoveries. BC in August 1982 while at the international accounting firm of Deloitte & Touche. Paul Robertson.. age 38. Mr.A. Pease is a consultant to the mineral exploration and development business. Robertson holds a BA from the University of Western Ontario (1993) and obtained his Chartered Accountant designation from the British Colombian Institute of Chartered Accountants (1997). Mr. Petterson is a graduate Mining Engineer. Mr. Sujir obtained his Bachelor of Arts degree from the University of Victoria in 1981 with a double major in Economics and Philosophy and obtained his Bachelor of Law degree from the University of Victoria in 1985. He has contributed directly to the discovery of several gold deposits including the Furioso mine in Patagonia. Cunningham is a Registered Professional Geologist and holds a BSc. He completed a BSc in Geology studies at the Universidad of Chile. Currently. Prior to joining Miranda he held executive positions with Nevada North Resources. the Geological Society of America (GSA) and the Association of Applied Geochemists (AAG). he is the managing partner of Quantum Advisory Partners LLP. and tax experience including working with Ernst & Young from 1999 to 2005. age 62 was appointed a Director of the Company on March 28. Mr. Mr. Robertson was appointed Chief Financial Officer of the Company on July 6. Since December. the Canadian Bar Association. and the British Columbia Advisory Committee of the TSX Venture Exchange. taxation and regulatory requirements. has been a Director of the Company since incorporation and Corporate Secretary since July 2010. and Tenneco Minerals Company. Ken Cunningham. auditing. Inc. is the Chief Financial Officer of the Company. He is a member of the Society of Economic Geologists (SEG). and is currently President and CEO of Miranda Gold Corp. age 54. age 53. was appointed a Director of the Company on April 14. He joined IAMGOLD in mid-2008 after working for eleven years with Breakwater Resources where he served as Exploration Manager Latin America. Mr. in Geology from Texas Christian University.

Mr. while that person was acting in that capacity. Mr. or has been within the 10 years before the date hereof. Corporate Cease Trade Orders To the Company's knowledge. From 2002 to 2006. and overseeing the geological aspects of world-wide advanced stated. Pease holds a B. no director or executive officer of the Company or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company: (a) is. major exploration and developments projects. Pease was the General manager. chief executive officer or chief financial officer. exploration and technical support to the Company from time to time. as at the date of this Prospectus. Sujir and Mason. and that was issued while the director or executive officer was acting in such capacity as director. and initiated construction prior to the acquisition by Thompson Creek. Sujir had no association with these companies whatsoever at the time the financial statements became overdue or when the cease trade orders were made. None of the directors or officers of the Company have entered into non-competition or non-disclosure agreements with the Company. or within a year of that person ceasing to act in that 008226000-00082763. Jay Sujir is currently a director of Escape Gold Inc. and that was issued after the director or executive officer ceased to be a director. a director or executive officer of any company (including the Company) that. and a former director of American Bullion Minerals Limited. or (b) was subject to a cease trade order or similar order or an order that denied the company access to any statutory exemptions. Pease was previously the founder. Mr. other than as specified below. other than as set forth below. Terrane was a mineral exploration and development company focused on the development of the Mt Milligan Gold/Copper project. President. CEO and a Director of Terrane Metals Corp. Slater. is as at the date of this Prospectus or has within the 10 years before the date of this Prospectus been a director or executive officer of any issuer that: (a) was subject to a cease trade order or similar order or an order that denied the company access to any statutory exemptions. that was in effect for a period of more than 30 consecutive days. Canada. Pease has agreed to provide geological. a Professional Geologist (British Columbia) certification and is a Fellow of the Geologic Association of Canada. Bankruptices To the Company's knowledge. he was employed by Placer Dome group for 25 years. Previously. chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director. chief executive officer or chief financial officer. degree in Earth Science from the University of Waterloo. as may be required. Pease guided the company through development studies and permitting. Mr. Richfield is currently subject to a friendly proposed acquisition by New Gold Inc. no director or executive officer of the Company. Canada Exploration and Global Major Projects.53 Blackwater Gold project in central British Columbia. Mr.Sc. and he became a director solely to assist in the resurrection of such companies. The audit committee is comprised of Messrs. where he was responsible for managing all aspects of Placer Dome's Canadian exploration. that was in effect for a period of more than 30 consecutive days. He is also a past Chairman of the Association for Mineral Exploration British Columbia. both of which companies have been subject to cease-trade orders in Alberta and British Columbia for extended periods of time for failure to file financial statements. Mr. The board of directors of the Company has constituted an audit committee. 17 . from its inception in 2006 until its acquisition in 2010 by Thompson Creek Metals Company.

any director or officer in a conflict is required to disclose his interest and any director in a conflict is required to abstain from voting on such matter.54 capacity. made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings. compensation of the NEOs to date has emphasized meaningful stock option awards to attract and retain management. Conflicts of Interest The directors of the Company are required by law to act honestly and in good faith with a view to the best interests of the Company and to disclose any interests. EXECUTIVE COMPENSATION COMPENSATION DISCUSSION AND ANALYSIS The Company's approach to executive compensation has been to provide suitable compensation for executives that is internally equitable. became bankrupt. The Company's compensation arrangements for the NEOs (as hereinafter defined) may. made a proposal under any legislation relating to bankruptcy or insolvency. receiver manager or trustee appointed to hold its assets. Other than disclosed herein. director. arrangement or compromise with creditors or had a receiver. no director or executive officer of the Company or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company. or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision. within the 10 years before the date of this Prospectus. Penalties or Sanctions To the Company's knowledge. officer or other member of management as a result of their outside business interests except that certain of the directors and officers serve as directors and officers of other companies. See ''Risk Factors''. Given the stage of development of the Company. has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority. executive officer or shareholder. there are no known existing or potential conflicts of interest among the Company. become bankrupt. and therefore it is possible that a conflict may arise between their duties to the Company and their duties as a director or officer of such other companies. its promoters. and to a certain extent. or had a receiver. in addition to salary. or (b) has. This policy may be re-evaluated in the future to instead emphasize increased 008226000-00082763. If a conflict of interest arises at a meeting of the board of directors of the Company. externally competitive and reflects individual achievement. to conserve cash. which they may have in any project or opportunity of the Company. or become subject to or instituted any proceedings. include compensation in the form of bonuses and. The Company attempts to maintain compensation arrangements that will attract and retain highly qualified individuals who are able and capable of carrying out the objectives of the Company. 17 . benefits arising from the grant of stock options. over a longer term. arrangement or compromise with creditors. receiver manager or trustee appointed to hold assets of the director. directors and officers or other members of management of the Company or of any proposed promoter.

the Company has not currently set any objective criteria and will instead rely upon any recommendations and discussions at the board level with respect to the above-noted considerations and any other matters which the Board of Directors may consider relevant on a going-forward basis. establishes and reviews the Company's overall compensation philosophy and its general compensation policies with respect to executive officers.000. The following table sets out certain information respecting the compensation paid to the NEOs for the most recently completed fiscal year of the Company ended December 31. (i) the President and Chief Executive Officer of the Company was paid a salary of $150. 2010. The Board of Directors as a whole. 2010: 008226000-00082763. Options have been granted to directors. based on its evaluation. the value of similar incentive awards to officers performing similar functions at comparable companies. the awards given in past years and other factors it considers relevant. The size of the option awards is in proportion to the deemed ability of the individual to make an impact on the Company's success.000. 17 . The Company has not established a Compensation Committee. the Company had two executive officers. including the cash position of the Company. Existing options held by management at the time of subsequent option grants are taken into consideration in determining the quantum or terms of any such subsequent option grants. The current overall objectives of the Company's compensation strategy is to reward management for their efforts. In determining compensation matters. The Board evaluates each officer's performance in light these goals and objectives and. options and other benefits for such officers. (ii) Alejandro Kakarieka will be paid an annual salary of approximately $200. approved the salary. (i) Ian Slater will be paid an annual salary of approximately $250.55 base salaries and cash bonuses with a reduced reliance on option awards. including the Company's performance. bonus. the Board may consider a number of factors. management.000. employees and certain service providers as long-term incentives to align the individual's interests with those of the Company. See "Options to Purchase Securities". In the last financial year of the Company ended December 31.200. Ian Slater. and (ii) the Chief Financial Officer of the Company received $31. 2010. and (iii) Robert Bell and Tim Petterson will each be paid an annual salary of approximately $100.000. while seeking to conserve cash. the CFO (each a "NEO"). the Chairman and CEO of the Company and Paul Robertson. With respect to any bonuses or incentive plan grants which may be awarded to executive officers in the future. The Company currently anticipates that following the Offering. including the corporate goals and objectives and the annual performance objectives relevant to such officers. depending upon the future development of the Company and other factors which may be considered relevant by the Board of Directors from time to time. During the financial year ended December 31.

officers.000 Nil Nil Nil Nil Nil 3. including rent. SB Management Ltd. provided to the Company. Robertson was appointed CFO of the Company on July 6. 2010: Option-based Awards Share-based Awards Number of securities underlying unexercised options (#) Option exercise price ($) Option expiration date Value of unexercised inthe-moneyoptions(1) ($) Number of shares or units of shares that have not vested (#) Market or payout value of share-based awards that have not vested ($) (b) (c) (d) (e) (f) (g) Ian Slater Nil N/A N/A Nil N/A N/A Paul Robertson Nil N/A N/A Nil N/A N/A Name (a) 008226000-00082763. the Company has agreed to reimburse SB Management Ltd.200 (1) Mr. for management and administrative services. senior management personnel and employees of the Company and to enable the Company to attract and retain experienced and qualified individuals in those positions by permitting such individuals to directly participate in an increase in per share value created for the Company's shareholders. Outstanding Share-Based Awards and Option-Based Awards The following table sets forth particulars of all outstanding share-based and option-based awards granted to the Named Executive Officers and which were outstanding at December 31. etc.209(2) Paul Robertson CFO 2010(1) 31. 2010. dated January 1. 2010. 17 . telephone. is controlled by three directors of the Company.56 Summary Compensation Table Name and principal position Year Salary ($) Sharebased awards ($) Optionbased awards ($) Non-equity incentive plan compensation ($) Pension value ($) All other compensation ($) Total Compensation ($) (a) (b) (c) (d) (e) (f) (g) (h) (i) Annual Incentive Plans Long-term incentive plans (f1) (f2) Ian Slater Chairman/CEO 2010 150. (2) Pursuant to a management services agreement with SB Management Ltd. The Company has no equity incentive plans other than the Stock Option Plan. See "Interest of Management and Others in Material Transactions".209 $153. INCENTIVE PLAN AWARDS Common Share Purchase Plan The Company has in effect the Stock Option Plan in order to provide effective incentives to directors.200 Nil Nil Nil Nil Nil Nil $31.

resignation. The purpose of granting such options is to assist the Company in compensating. including. COMPENSATION OF DIRECTORS NARRATIVE DISCUSSION Directors Compensation The only arrangements the Company has pursuant to which directors are compensated by the Company for their services in their capacity as directors. 2010. the Company has agreed to reimburse SB Management Ltd.57 Incentive Plan Awards – Value Vested Or Earned During The Year The following table sets forth particulars of the value vested or earned during the year ended December 31. provided to the Company. or for committee participation. 008226000-00082763. involvement in special assignments or for services as consultant or expert during the most recently completed financial year or subsequently. Three of the directors of the Company are shareholders of SB Management Ltd. retaining. 2010. attracting. 2010. agreements. 2010. Pursuant to a management services agreement with SB Management Ltd.. telephone. a change of control of the Company or a change in an NEO's responsibilities. are by the issuance of incentive stock options pursuant to the Company's Stock Option Plan. dated January 1. in respect of incentive awards to the Named Executive Officers: Name Option-based awards– Value vested during the year ($) Share-based awards– Value vested during the year ($) Non-equity incentive plan compensation–Value earned during the year ($) Ian Slater Nil Nil Nil Paul Robertson Nil Nil Nil TERMINATION AND CHANGE OF CONTROL BENEFITS During the year ended December 31. Director Compensation Table The Company paid no compensation to its directors who were not named executive officers during the year ended December 31. 2010. rent. 17 . plans or arrangements in place with any NEO that provides for payment following or in connection with any termination (whether voluntary. retirement. etc. Outstanding Share-Based Awards and Option-Based Awards There were no share-based and option-based awards granted to the directors during the year ended December 31. and motivating the directors of the Company and to closely align the personal interests of such persons to that of the shareholders. the Company did not have any contracts. involuntary or constructive). for management and administrative services.

 Offered Shares at the Offering Price for aggregate gross proceeds of $. The Offering Price was determined by negotiation between the Company and the Agents. if any. AUDIT COMMITTEE The charter of the Company's audit committee and the other information required to be disclosed by Form 52-110F2 is attached to this Prospectus as Schedule "A". to sell up to such number of Additional Shares as is equal to 15% of the aggregate number of Offered Shares sold under the Offering. The Company has also granted the Agents an Over-Allotment Option. all subject to the terms and conditions contained in the Agency Agreement. including the history of. unless each of the persons who subscribed during that period has consented to the continuation and an amendment to the prospectus has been filed and a receipt obtained from the Securities Commissions in the Selling Provinces. the Company's business and the industry in which it competes and an assessment of the Company's management. regardless of whether the over- 008226000-00082763. A purchaser that acquires Shares forming part of the Agents' overallotment position acquires the Additional Shares under this Prospectus. The Over-Allotment Option is exercisable in whole or in any part. support agreement. 17 . or at any time since the incorporation of the Company was. exercisable not later than 30 days after the Closing Date. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS No individual who is. This prospectus also qualifies the grant of the Over-Allotment Option and the distribution of the  Additional Shares issuable on exercise of the Over-Allotment Option. the Company has appointed the Agents to offer for sale to the public on a "best efforts" basis. at the Agents' sole discretion. In the event that the Agents exercise the Over-Allotment Option in full. the number of Shares issued under the Offering will be .58 Incentive Plan Awards – Value Vested Or Earned During The Year No incentive plan awards vested or were earned during the period ended December 31. PLAN OF DISTRIBUTION Pursuant to the Agency Agreement. made by the Agents in connection with the Offering and for market stabilization purposes. a director. CORPORATE GOVERNANCE The information required to be disclosed by National Instrument 58-101 Disclosure of Corporate Governance Practices is attached to this Prospectus as Schedule "B". the Agents' Commission will be $ and the net proceeds to the Company (excluding estimated expenses of the Offering) will be $. is or has been indebted to the Company or has any indebtedness to another entity which has been the subject of a guarantee. operations and financial results and may bear no relationship to the price that will prevail in the public market. the funds will be returned to the subscribers unless the subscribers have otherwise instructed the Agents. and the Company has agreed to issue and sell. based upon several factors. without underwriter liability. only for the purpose of covering over-allotments. The distribution will not continue for a period of more than 90 days after the date of receipt for the (final) prospectus if subscriptions representing the entire Offering are not obtained within that period. executive officer or employee of the Company or any associate of any of them. and prospects for. Funds received in connection with subscriptions during this 90 day period will be held by the Agents as depository and if the entire Offering is not achieved during this period. 2010 in respect of incentive awards to the directors. payable in cash to the Company against delivery of certificates representing the Offered Shares. letter of credit or similar arrangement by the Company. the price to the public will be $.

The obligations of the Agents under the Agency Agreement may be terminated at their discretion on the basis of their assessment of the state of the financial markets and may also be terminated upon the occurrence of certain stated events. without the prior written consent of Raymond James Ltd. The Shares will be offered through the Agents directly. with compensation to be negotiated between the Agents and such selling group participants. each of the directors. (c) pursuant to the exercise of outstanding options and warrants. In consideration for the services provided by the Agents in connection with the Offering and pursuant to the terms of the Agency Agreement. and (d) in connection with any arm's-length property acquisitions or existing property agreements. Subscriptions will be received subject to rejection or allotment in whole or in part and the Agents reserve the right to close the subscription books at any time without notice. Shares registered to CDS or its nominee will be deposited electronically with CDS on an NCI basis on the closing of the Offering. as a condition to the closing of the Offering. directly or indirectly. Cassels & Graydon LLP. the Agents (and any selling group members) will also be granted the Agents' Warrants to acquire that number of Common Shares as is equal to 3% of the aggregate number of Shares sold pursuant to the Offering at the Offering Price for a period of 18 months from the date of issuance thereof. for a period of six months following the Closing Date. A purchaser of Shares (other than a purchaser of Shares in the United States) will receive only a customer confirmation from a registered dealer that is a CDS participant and from or through which the Shares are purchased. but at no additional cost to the Company. to advance their own funds to purchase any of the Shares. officers and employees of the Company and their respective associates (as such term is defined in the Securities Act (Ontario)) will be required to execute and deliver an undertaking in favour of the Agents in which they will covenant and agree that. The Agents are acting as agents of the Company in connection with the Offering pursuant to the Agency Agreement and subject to certain legal matters to be passed on behalf of the Company. The Agents are not obligated. equal to 6% of the aggregate gross proceeds of the Offering ($ per Share). the Agents may offer the Shares outside of Canada. for an aggregate commission of $ (or $ in the event of the full exercise of the Over-Allotment Option). including any material adverse change in the business or financial condition of the Company. In addition. the Company has agreed not to issue or announce the issue of any Common Shares or any securities convertible into or exchangeable for or exercisable to acquire Common Shares for a period of 180 days following the Closing Date.59 allocation position is ultimately filled through the exercise of the Over-Allotment Option or secondary market purchases. other than: (a) pursuant to the Offering. The Company has agreed to indemnify the Agents and their affiliates and the respective directors.. Subject to applicable law. including liabilities under Canadian securities legislation. registration of interests in and transfers of Shares held through CDS or its nominee will be made electronically through the NCI system of CDS. they will not directly or indirectly. such consent not to be unreasonably withheld or delayed. the Company has agreed to pay the Agents the Agents' Fee. including the exercise of the Over-Allotment Option. 008226000-00082763. agents and employees thereof against certain liabilities pursuant to the Agency Agreement. This prospectus qualifies the distribution of the Agents' Warrants. officers. by Anfield Sujir Kennedy & Durno LLP. which will be represented by individual certificates. The Company will also pay certain expenses of the Agents in connection with the Offering as set forth in the Agency Agreement. (b) pursuant to the grant or exercise of stock options and other similar issuances pursuant to the Plan and other existing share compensation arrangements. The Offering is being made concurrently in each of the Selling Provinces. Under the terms of the Agency Agreement. The Agents may offer selling group participation to other registered dealers. and on behalf of the Agents. Other than the Shares offered or sold in the United States. As additional consideration. by Blake. 17 .

. Securities Act. Securities Act and applicable state securities laws. such consent not to be unreasonably withheld or delayed. The Agency Agreement permits the Agents to offer the Shares for sale directly by the Company to certain ''accredited investors'' (within the meaning of Rule 501(a) of Regulation D under the U. until 40 days after the commencement of the Offering.S.S. it will not offer. distributed or qualified under this prospectus. and similar exemptions under applicable state securities laws. an amount equal to one-half of the Agents' Commission. directly or indirectly by them. or sale of all or a portion of the Company or a subsidiary or a material asset). Each Agent has agreed that. marketplace. Securities Act). In addition. 17 .S.S.S. an offer or sale of the Shares within the United States by any dealer (whether or not participating in the Offering) may violate the registration requirements of the U. any equity securities of the Company owned or controlled. swap.S. Securities Act and applicable state securities laws or certain exemptions therefrom. contract to sell. There is currently no market through which any of the securities of the Company.S. The Shares offered hereby have not been and will not be registered under the U.S. directly or indirectly. has not applied to list or quote any of its securities. the Company does not have any of its securities listed or quoted. Securities Act or any state securities laws and. Listing will be subject to the Company fulfilling all the listing requirements of the Exchange.60 offer. then the Company will pay to Raymond James Ltd.S. a U. within the United States. lend. sold. the Shares at any time within the United States. Securities Act if such offer or sale is made otherwise than in accordance with an exemption from registration under the U. transferred. delivered or otherwise disposed of. including the Shares. provided that such offers and sales are made in accordance with the exemption from the registration requirements of the U. This Prospectus does not constitute an offer to sell or a solicitation of an offer to buy any of the Shares in the United States. 008226000-00082763. The Shares sold in the United States will be "restricted securities" within the meaning of Rule 144 under the U. except as permitted under the Agency Agreement. sold or otherwise transferred pursuant to certain exemptions from the registration requirements of the U. The Agency Agreement also provides that if the Offering is not completed as a result of the Company entering into an alternative business transaction (defined to include an alternative financing. sell. Moreover. and subsequent to such six month period will not sell in excess of 1/4 of such securities in any six month period without the prior written consent of Raymond James Ltd. or enter into any agreement to transfer the economic consequences of or otherwise dispose of or deal with. deliver or otherwise dispose of. Securities Act. the Agency Agreement provides that the Agents will offer and sell the Shares outside the United States only in accordance with Rule 903 of Regulation S under the U. As at the date of this Prospectus. Securities Act or applicable state securities laws and may only be offered. directly or indirectly. sell.S. and does not intend to apply to list or quote any of its securities on The Toronto Stock Exchange. The certificates representing the Shares which are offered or sold in the United States will contain a legend to the effect that the Shares have not been registered under the U. may not be offered. Securities Act. may be sold and purchasers hereunder may not be able to resell or dispose of any of the securities purchased. and any Shares issued or issuable pursuant to the Agency Agreement on the Exchange. or a marketplace outside Canada and the United States of America other than the Alternative Investment Market of the London Stock Exchange of The Plus Markets operated by The Plus Markets Group PLC. subject to registration under the U. LISTING OF COMMON SHARES The Company has applied to list its Common Shares. Securities Act provided by Rule 506 of Regulation D under the U. transfer. or publicly announce any initiation to do so.S. Securities Act.S.

damage to life or property. The Company's right to acquire an interest in 008226000-00082763. in which case it will forfeit its interests in such properties. importing and exporting of minerals and environmental protection. unusual or unexpected geological formations and metallurgy. make such payments. caveins. 17 . Any potential determination as to whether a mineral deposit will be commercially viable can be affected by such factors as: deposit size.61 RISK FACTORS Investing in the Shares is speculative and involves a high degree of risk due to the business and present stage of exploration of the Company's mineral properties. financial condition. unforeseen technical difficulties. land tenure. or the Company might not elect to insure itself against such liabilities due to high premium costs or other reasons. Even though the Company intends to obtain liability insurance in an amount which it considers adequate. Exploration. to develop the extraction and processing facilities and infrastructure at any site chosen for extraction. experience and knowledge may not eliminate. liabilities. grade. land use. Readers should carefully consider the following risks described below. including regulations relating to permitting. Although appropriate precautions to mitigate these risks are taken. the price of the Company's securities could decline and investors may lose all or part of their investment. or destruction of. Mining operations generally involve a high degree of risk. metal prices which are highly cyclical. development and production of gold and copper. Few properties which are explored are ultimately developed into producing properties. royalties. to develop processes to extract the resources and. taxes. business and business prospects. seismic activity. The exact effect of these factors cannot be accurately predicted. In such circumstances. in the case of new properties. are likely to be material and adversely affected. If any of these risks materialize into actual events or circumstances or other possible additional risks and uncertainties of which the Company is currently unaware actually occur. environmental factors. the Company's assets. Although substantial benefits may be derived from the discovery of a major deposit. any of which could result in damage to. proximity to infrastructure. the nature of these risks is such that liabilities might exceed policy limits. the mine and other producing facilities. Substantial expenditures are required to establish reserves through drilling. The Company has identified below certain significant risks to potential investors in the Company. including unusual and unexpected geologic formations. no assurance can be given that any such deposit will be commercially viable or that the funds required for development can be obtained on a timely basis. results of operations (including future results of operations). Risks with Title to Mineral Properties Title to the properties comprising the Santa Rosa Project and the Pavo Real Project is subject to the terms of the applicable Option Agreements which require the Company to make certain payments in order to retain its interest in the properties. flooding and other conditions involved in the drilling and removal of material. or may choose not to. and government regulations. prices. but it has not identified all of the risks associated with an investment in securities of the Company. The Company's operations will be subject to all the hazards and risks normally encountered in the exploration. Development and Operations Exploration and development of mineral deposits involves a high degree of risk which even a combination of careful evaluation. rock bursts. The long term profitability of the Company's operations will be in part directly related to the cost and success of its exploration programs. environmental damage and possible legal liability. The Company may fail to. in which event the Company could incur significant costs that could have a material adverse effect upon its financial condition. the liabilities and hazards might not be insurable. operations are subject to hazards such as equipment failure or failure of structures which may result in environmental pollution and consequent liability. work interruptions. which may be affected by a number of factors.

delays in the early stages of 008226000-00082763. including: • the timing and cost. and the development of which is approved by the Board. The future development of properties found to be economically feasible. The Company cannot give any assurance that title to properties it acquired individually or through historical share acquisitions will not be challenged or impugned and cannot guarantee that the Company will have or acquire valid title to these mining properties. environmental groups or locals. • groups which may delay or prevent development activities. which can be considerable. The Company Has No Mineral Properties in Production or Under Development The Company does not currently have mineral properties under development. will require the construction and operation of mines. the Company will not be able to secure its indirect interest in the Mina Vieja properties and will not be able to proceed with its planned exploration activities. processing plants and related infrastructure. Cost estimates may increase as more detailed engineering work is completed on a project. materials and supplies. of the construction of mining and processing facilities. this should not be construed as a guarantee of title. timing and complexities of developing the Company's projects may be greater than anticipated because the majority of such property interests are not located in developed areas. • the availability and cost of skilled labour and mining equipment. If the current owners fail to satisfy the conditions of their agreement with the Company. • the need to obtain necessary environmental and other governmental approvals and permits and the • timing of the receipt of those approvals and permits. a Colombian simplified stocks corporation. • the availability of funds to finance construction and development activities. including the current owners first transferring their title in the properties to MV Columbia.62 the Mina Vieja project is subject to certain conditions. and • potential increases in construction and operating costs due to changes in the cost of fuel. Any failure by the Company to obtain or retain title to properties which comprise its projects could have material adverse effect on the Company and the value of the Common Shares. The Company has diligently investigated and continues to diligently investigate and validate title to its mineral claims. The Company does not maintain insurance against title. development and mine start-up. power. It is common in new mining operations to experience unexpected costs. and. as a result. The costs. problems and delays during construction. In addition. the Company's property interests may not be served by appropriate road access. 17 . the Company is and will continue to be subject to all of the risks associated with establishing new mining operations. however. • potential opposition from non-governmental organizations. water and power supply and other support infrastructure. Title on mineral properties and mining rights involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyance history of many mining properties. The Company is continuously in the process of establishing the certainty of the title of mineral concessions which it holds either directly or through its equity interest in its subsidiaries or will be seeking to consolidate those titles through a government-sanctioned process. As a result.

the results of consultant analysis and recommendations. Industry factors that may affect the price of gold include: industrial and jewellery demand. These risks and hazards could result in: (i) damage to. and confidence in. Gold prices may also be affected by macroeconomic factors. personal injury or death. the rate at which operating losses are incurred and the execution of any joint venture agreements with any strategic partners. including: expectations of the future rate of inflation. environmental damage. the currency in which the price of gold is generally quoted. unusual or unexpected geological conditions. the Company may also curtail or suspend some or all of its exploration activities. some of which are beyond the Company's control. and other currencies. political or economic uncertainties. central bank lending. insurance coverage could adversely affect the Company's cash flow and overall profitability. the level of demand for gold as an investment. the Company's profitability and cash flow would be negatively affected. (ii) delays in mining. The development of the properties will require the commitment of substantial financial resources. rock bursts. History of Losses and No Immediate Foreseeable Earnings The Company has a history of losses and there can be no assurance that it will ever be profitable. mineral properties or producing facilities. As a result. The Company does not maintain insurance to cover these risks and hazards. the Company may determine that it is not economically feasible to continue some or all of its operations or the development of some or all of the its projects. interest rates. The Company expects to continue to incur losses unless and until such time as it develops its properties and commences mining operations on its properties. the strength of. including environmental hazards. if any. and (iii) monetary losses and possible legal liability. including the progress of ongoing exploration. all of which are beyond the Company's control. sales and purchases of gold. cave-ins. Metal Price Volatility The Company's business is strongly affected by the world market price of gold. labour force disruptions. the U. There can be no assurance that the Company will ever achieve profitability. which can be material and can occur over short periods of time and are affected by numerous factors. flooding. industrial accidents. The lack of. seismic activity. Gold prices can be subject to volatile price movements. unavailability of materials and equipment. pit wall failures. The amount and timing of expenditures will depend on a number of factors. dollar. and global or regional. as applicable. weather conditions. 17 .S. the Company cannot provide assurance that its activities will result in profitable mining operations at its mineral properties. or insufficiency of. most of which are beyond the Company's control. which could have an adverse impact on the Company's financial performance and results of operations. Depending on the market price of gold. studies and development. or destruction of. Accordingly. Mining Risks and Insurance Risks The mining industry is subject to significant risks and hazards. and costs of and levels of global gold production by producers of gold. production may fall below historic or estimated levels and the Company may incur significant costs or experience significant delays that could have a material adverse effect on the Company's financial performance. speculative trading. civil strife. liquidity and results of operation. In such a circumstance.63 mineral production often occur. water conditions and gold bullion losses. If the world market price of gold were to drop and the prices realized by the Company on gold sales were to decrease significantly and remain at such a level for any substantial period. 008226000-00082763.

64
Permitting Approvals
The operations of the Company and the exploration agreements into which it has entered require
approvals, licenses and permits from various regulatory authorities, governmental and otherwise
(including project specific governmental decrees) that are by no means guaranteed. The Company
believes that it holds or will obtain all necessary approvals, licenses and permits under applicable laws
and regulations in respect of its main projects and, to the extent that they have already been granted,
believes it is presently complying in all material respects with the terms of such approvals, licenses and
permits. However, such approvals, licenses and permits are subject to change in various circumstances
and further project-specific governmental decrees and/or legislative enactments may be required. There
can be no guarantee that the Company will be able to obtain or maintain all necessary approvals, licenses
and permits that may be required and/or that all project-specific governmental decrees and/or required
legislative enactments will be forthcoming to explore and develop the properties on which it has
exploration rights, commence construction or operation of mining facilities or to maintain continued
operations that economically justify the costs involved.
Changes in Legislation
The mining industry in Colombia is subject to extensive controls and regulations imposed by various
levels of government. All current legislation is a matter of public record and the Company will be unable
to predict what additional legislation or amendments may be enacted. Amendments to current laws,
regulations and permits governing operations and activities of mining companies, including
environmental laws and regulations which are evolving in Colombia, or more stringent implementation
thereof, could have a material adverse impact on the Company and cause increases in expenditures and
costs, affect the Company's ability to expand or transfer existing operations or require the Company to
abandon or delay the development of new properties.
Economic and Political Factors in Colombia
Although Colombia has a long-standing tradition respecting the rule of law, which has been bolstered in
recent years by the present and former government's policies and programs, no assurances can be given
that the Company's plans and operations will not be adversely affected by future developments in
Colombia. The Company's property interests and proposed exploration activities in Colombia are subject
to political, economic and other uncertainties, including the risk of expropriation, nationalization,
renegotiation or nullification of existing contracts, mining licenses and permits or other agreements,
changes in laws or taxation policies, currency exchange restrictions, and changing political conditions and
international monetary fluctuations. Future government actions concerning the economy, taxation, or the
operation and regulation of nationally important facilities such as mines, could have a significant effect on
the Company. Colombia is home to South America's largest and longest running insurgency. While the
situation has improved dramatically in recent years, there can be no guarantee that the situation will not
again deteriorate. Any increase in kidnapping, gang warfare, homicide and/or terrorist activity in
Colombia generally may disrupt supply chains and discourage qualified individuals from being involved
with the Company's operations.
Additionally, the perception that matters have not improved in Colombia may hinder the Company's
ability to access capital in a timely or cost effective manner. Any changes in regulations or shifts in
political attitudes are beyond the Company's control and may adversely affect the Company's business.
Exploration may be affected in varying degrees by government regulations with respect to restrictions on
future exploitation and production, price controls, export controls, foreign exchange controls, income
and/or mining taxes, expropriation of property, environmental legislation and mine and/or site safety.
Presidential elections for the 2010-2014 term were held in Colombia on May 30, 2010 (first round) and
June 20, 2010 (second round, since no one candidate reached 50% of the vote in the first round). The
008226000-00082763; 17

65
elected president, Mr. Juan Manuel Santos, took office on August 7, 2010 and it is anticipated that the
current government will not materially change polices regarding resource development and investment
policies in a way that could adversely affect the Company's business.
Competition
The mineral exploration and mining business is competitive in all of its phases. The Company competes
with numerous other parties with greater financial, technical and other resources than the Company, in the
search for and acquisition of exploration and development rights on attractive mineral properties. The
Company's ability to acquire exploration and development rights on properties in the future will depend
not only on its ability to develop the properties on which it currently has exploration and development
rights, but also on its ability to select and acquire exploration and development rights on suitable
properties for exploration and development. There is no assurance that the Company will continue to be
able to compete successfully in acquiring exploration and development rights on such properties.
Changes to Environmental Laws
The Company's operations are subject to the extensive environmental risks inherent in the gold mining
industry. The current or future operations of the Company, including development activities,
commencement of production on its properties, potential mining and processing operations and
exploration activities require permits from various 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. Existing and possible future environmental legislation,
regulations and actions could cause significant additional expense, capital expenditures, restrictions and
delays in the activities of the Company. Although the Company believes that it is in substantial
compliance in all material respects with applicable material environmental laws and regulations, there are
certain risks inherent in its activities such as accidental spills, leakages or other unforeseen circumstances,
which could subject the Company to extensive liability. In addition, the Company cannot assure that the
illegal miners operating on its properties are in compliance with applicable environmental laws and
regulations.
Failure to comply with applicable laws, regulations, and permitting requirements may result in
enforcement actions thereunder, 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. Amendments
to current laws, regulations and permits governing operations and activities of mining companies, or more
stringent implementation thereof, could have a material adverse impact on the Company and cause
increases in capital expenditures or production costs or reduction in levels of production at producing
properties or require abandonment or delays in development of new mining properties.
Shortage of Experienced Personnel and Equipment
The ability to identify, negotiate and consummate transactions that will benefit the Company is dependent
upon the efforts of the Company's management team. The loss of the services of any member of
management could have a material adverse effect on the Company. The Company's future drilling
activities may require significant investment in additional personnel and capital equipment. Given the
008226000-00082763; 17

66
current level of demand for equipment and experienced personnel within the mining industry, there can be
no assurance that the Company will be able to acquire the necessary resources to successfully implement
its business plan.
Furthermore, certain of the directors and officers of the Company are directors and officers of other
reporting issuers and, as such, will devote only a portion of their time to the affairs of the Company.
Conflicts of Interest
Certain of the Company's directors and officers serve as directors or officers of other companies or have
significant shareholdings in other resource companies and, to the extent that such other companies
participate in ventures in which the Company may participate, the directors of the Company will have a
conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the
event that such a conflict of interest arises, a director or officer who has such a conflict will disclose that
conflict and will abstain from voting for or against the approval of such participation or such terms. In
determining whether or not the Company will participate in a particular program and the interest therein
to be acquired by it, the directors will consider, among other things, the degree of risk to which the
Company may be exposed and its financial position at that time.
Possible Volatility of Stock Price
The market price of the Common Shares can be subject to wide fluctuations in response to factors such as
actual or anticipated variations in the Company's results of operations, changes in financial estimates by
securities analysts, general market conditions, the issuance of Common Shares in connection with
acquisitions made by the Company or otherwise, and other factors. Market fluctuations, as well as
general economic, political and market conditions such as recessions, interest rate changes or
international currency fluctuations may adversely affect the market price of the Common Shares.
Repatriation of Earnings Risk
There are currently no restrictions on the repatriation from Colombia of earnings to foreign entities.
However, there can be no assurance that restrictions on repatriations of earnings from Colombia will not
be imposed in the future. Exchange control regulations require that any proceeds in foreign currency
originated on exports of goods from Colombia (including minerals) be repatriated to Colombia.
However, purchase of foreign currency is allowed through any Colombian authorized financial entities for
the purpose of payments to foreign suppliers, repayment of foreign debt, payments of dividends to foreign
stockholders and other foreign expenses.
Financing Risks
Additional funding may be required to complete the proposed or future exploration and other programs on
the properties. There is no assurance that any such funds will be available. Failure to obtain additional
financing, if required, on a timely basis, could cause the Company to reduce or delay its proposed
operations.
The majority of sources of funds currently available to the Company for its acquisition and development
projects are in large portion derived from the issuance of equity. While the Company has been successful
in the past in obtaining equity financing to undertake its currently planned exploration and development
programs, there is no assurance that it will be able to obtain adequate financing in the future or that such
financing will be on terms advantageous to the Company.

008226000-00082763; 17

processing. terrorism. which effect capital and operating costs. including on the Mina Vieja Project. power sources and water supply are important determinants. As a result. bridges. Foreign exchange risk is mainly derived from assets and liabilities stated in Colombian pesos. Dilution The offering price of the Shares issuable under this Offering significantly exceeds the net tangible book value per Common Share. Dividends Any payments of dividends on the Common Shares will be dependent upon the financial requirements of the Company to finance future growth. Unusual or infrequent weather phenomena. the Company may be unable to exert influence over strategic decisions made in respect of properties that are the subject of such joint ventures and could suffer dilution of its interest in the properties if it is not able to meet its funding obligations under the terms of the joint venture. financial condition and results of operations. Joint Ventures The Company is party to the Pavo Real Shareholder Agreement and may enter into other joint ventures in the future. dollars. Currency Risk The Company maintains its accounts in U. and accordingly. It is unlikely that the Company will pay dividends in the immediate or foreseeable future. In addition. to one degree or another. Any failure of a joint venture partner to meet its obligations to the Company or third parties. or any disputes with respect to the parties' respective rights and obligations could have a material adverse effect on such joint ventures. dollars. Colombia has a free and unrestricted supply and demand market. 008226000-00082763. The Company is exposed to foreign exchange risk from the exchange rate of Colombian pesos relative to the Canadian and U. government or other interference in the maintenance or provision of such infrastructure could adversely affect the Company's operations.67 Enforcement of Civil Liabilities Substantially all of the Company's assets are located outside of Canada and certain of the directors and officers of the Company are resident outside of Canada.S. dollars and the market for gold is principally denominated in U. if the Company does not exercise the Mina Vieja Third Option. Reliable roads.S.S. Infrastructure Mining. community. The Company limits its foreign exchange risk by the acquisition of short-term financial instruments and. the financial condition of the Company and other factors which the Board may consider appropriate in the circumstance. investors will suffer immediate and substantial dilution of their investment in the amount of or $ per Share. sabotage. on adequate infrastructure. development and exploration activities depend. The Company's operations in Colombia make it subject to foreign currency fluctuations and such fluctuations may materially affect the Company's financial position and results. 17 . minimizes its Colombian peso monetary asset positions. it may be difficult or impossible to enforce judgments granted by a court in Canada against the assets of the Company or any of the Company's directors and officers residing outside of Canada. when possible.

notwithstanding any potential business of the Company. An active public market for the Common Shares might not develop or be sustained after the Offering. on terms favourable to the Company. There is no public market for the Company's Common Shares. Conflicts of Interest Some of the directors and officers are engaged and will continue to be engaged in the search for additional business opportunities on behalf of other corporations. and the market prices of securities of many companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance. The Company is also exposed to liquidity risks in meeting its operating expenditure requirements in instances where cash positions are unable to be maintained or appropriate financing is unavailable. The availability of services such as drilling contractors and geological service companies and/or the terms on which these services are provided may be adversely affected by the economic impact on the service providers. may adversely affect businesses and industries that purchase commodities. The value of the Shares distributed hereunder will be affected by such volatility. affecting commodity prices in more significant and unpredictable ways than the normal risks associated with commodity prices. if obtained. It may be anticipated that any quoted market for the Common Shares will be subject to market trends generally. 008226000-00082763. If an active public market for the Common Shares does not develop. and financial condition. Any of these events. operating results. Stress in the Global Economy Reduction in credit. and situations may arise where these directors and officers will be in direct competition with the Company. the Company’s operations could be adversely impacted and the trading price of the Common Shares could be adversely affected. but not limited to: (i) through financial institutions that hold the Company’s cash. and (iii) through the Company’s insurance providers. or any other events caused by turmoil in world financial markets. may have a material adverse effect on the Company’s business. The initial public offering price of the Common Shares has been determined by negotiations between the Company and representatives of the Agents and this price will not necessarily reflect the prevailing market price of the Common Shares following the Offering. The adverse effects on the capital markets generally make the raising of capital by equity or debt financing much more difficult and the Company is dependent upon the capital markets to raise financing. As such. Current Global Financial Condition Current global financial conditions have been subject to increased volatility. These factors may impact the ability of the Company to obtain loans and other credit facilities in the future and. the liquidity of a shareholder's investment may be limited and the share price may decline below the initial public offering price. underlying asset values or prospects of such companies. If these increased levels of volatility and market turmoil continue. the Company is exposed to various counterparty risks including. will be dealt with in accordance with the relevant provisions of the Business Corporations Act (British Columbia). 17 . if any. Conflicts. There can be no assurance that continual fluctuations in price will not occur. (ii) through companies that have payables to the Company. combined with reduced economic activity and the fluctuations in the United States dollar. Access to financing has been negatively impacted by both sub-prime mortgages in the United States and elsewhere and the liquidity crisis affecting the asset-backed commercial paper market. the securities markets in the United States and Canada have experienced a high level of price and volume volatility.68 Price Volatility of Publicly Traded Securities In recent years.

200 to a partnership in which the CFO of the Company is a partner. 700 West Georgia Street. During the period from incorporation to December 31. (c) An associate or affiliate of any of the persons or companies referred to in paragraphs (a) or (b) has any material interest. TRANSFER AGENT AND REGISTRAR The auditors of the Company are Ernst & Young LLP. which are currently in effect and considered to be currently material: 008226000-00082763.334 Common Shares. Canada V6C 3B9. is the promoter of the Company. the following are the only material contracts entered into by the Company since its incorporation. the Company paid $144. RELATIONSHIP BETWEEN THE COMPANY AND AGENTS The Company is not a "related issuer" or "connected issuer" to the Agents as such terms are utilized in National Instrument 33-105 Underwriting Conflicts of the Canadian Securities Administrators. Vancouver. 510 Burrard Street. Slater owns 2. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS Other than fees paid to directors and officers of the Company (or entities controlled by them) as disclosed below. etc.000. In addition. AUDITORS. Inc.000. Chartered Accountants.000 to SBM. ("SBM"). the Company has agreed to reimburse SBM for management and administrative services including rent. British Columbia. MATERIAL CONTRACTS Except for contracts made in the ordinary course of business. and paid legal fees of $20. in any material transaction since incorporation or in any proposed transaction that has materially affected or will materially affect the Company. British Columbia. more than 10 percent of any class or series of the Company's outstanding voting securities.69 PROMOTERS Mr. Mr. telephone. provided to the Company. The registrar and transfer agent of the Company is Computershare Investor Services. (b) A person or company that beneficially owns. a company controlled by three directors of the Company.000 Common Shares and options to acquire 700. 2010. the Chairman. the Company paid consulting fees of $31. directly or indirectly. no person who is: (a) A director or executive officer of the Company. Ian Slater.013. 17 . Canada V7Y 1C7. 3rd Floor. The current monthly cost is $25. direct or indirect. 2010 with SB Management Ltd.000 common shares – see "Directors and Officers" and "Options to Purchase Securities". or controls or directs. Vancouver. Fees paid to these parties are as follows: Pursuant to a Management Services Agreement dated January 1. CEO and a director of the Company. warrants to acquire 1.000 to a partnership in which one of the directors is a partner.

A copy of any material contract and the Technical Reports with respect to the Santa Rosa. dated January 4. 2010. Mr. Santa Rosa Agreement referred to under "General Development of the Business". British Columbia. direct or indirect. 6. Pavo Real and Mina Vieja Projects may be inspected during distribution of the Shares being offered under this Prospectus and for a period of 30 days thereafter during normal business hours at the Company's offices at Suite 920 – 1030 West Georgia Street. Vancouver. held by a professional person as referred to in section 106(1) of the Rules under the Securities Act (British Columbia). direct or indirect. Alberta and Ontario provides purchasers with the right to withdraw from an agreement to purchase securities. 5. This right may be exercised within two business days after receipt or deemed receipt of a prospectus and any amendment. a director of the Company. The securities legislation further provides a purchaser with remedies for rescission or damages if the prospectus and any amendment contains a misrepresentation or is not delivered to the purchaser. Pavo Real Option Agreement referred to under "General Development of the Business". 17 . Canada. counsel to the Company. Pavo Real Shareholder Agreement referred to under "General Development of the Business". Ernst & Young. PURCHASERS' STATUTORY RIGHTS OF WITHDRAWAL AND RESCISSION Securities legislation in the Provinces of British Columbia . have audited the Company's financial statements and report that they are independent of the Company in accordance with the rules of professional conduct of the Institute of Chartered Accountants of British Columbia as at the date of their audit report. V6B 2Y3. 7. is a lawyer at the firm of Anfield Sujir Kennedy & Durno LLP. Escrow Agreement referred to under "Escrowed Shares". Management Services Agreement between the Company and SB Management Ltd. provided that the remedies 008226000-00082763. Agency Agreement between the Company and the Agents dated . 2. EXPERTS Certain legal matters related to the Offering have been passed upon on behalf of the Company by Anfield Sujir Kennedy & Durno LLP and on behalf of the Agents by Blake Cassels & Graydon LLP. Mina Vieja Option Agreement referred to under "General Development of the Business".70 1. RELATIONSHIP BETWEEN THE COMPANY'S PROFESSIONAL PERSONS AND EXPERTS There is no beneficial interest. 4. No person or company whose profession or business gives authority to a report. 2011 referred to under "Plan of Distribution". valuation. Chartered Accountants. a responsible solicitor or any partner of a responsible solicitor's firm or by any person or company whose profession or business gives authority to a statement made by the person or company and who is named as having prepared or certified a part of this Prospectus or prepared or certified a report or valuation described or included in this Prospectus. 3. Jay Sujir. in any securities in excess of one percent of the Company's issued capital or property of the Company or of an associate or affiliate of the Company. in any securities or property of the Company or any associate of the Company. statement or opinion and whom is named as having prepared or certified a report or valuation described or included in this Prospectus holds or is to hold any beneficial or registered interest.

The Company sought this relief to permit it to prepare its financial statements for inclusion in this Prospectus in accordance with IFRS as issued by the International Accounting Standards Board. Auditing Standards and Reporting Currency that financial statements included in the Prospectus. 17 . The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for the particulars of these rights or consult with a legal adviser.71 for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. In accordance with NP 11-202. 008226000-00082763. other than acquisition statements. LIST OF EXEMPTIONS The Company has made a pre-filing application with the Securities Commissions pursuant to Part 8 of National Policy 11-202 – Process for Prospectus Reviews in Multiple Jurisdictions ("NP 11-202") in the relevant jurisdictions for relief from the requirements in section 3. must be prepared in accordance with Canadian GAAP as applicable to public enterprises.1 of National Policy Instrument 52 107 – Acceptable Accounting Principles. the receipt for the final long form prospectus will constitute evidence of receipt of such aforementioned relief for the purpose of the financial statements contained in the final long form prospectus.

"CEO" means Chief Executive Officer. as constituted on the date hereof. "Agents'" means Raymond James Ltd. 17 . Computershare Investor Services Inc. "Expogold" means Expogold Colombia S. BMO Nesbitt Burns Ltd. 2011 between the Agents and the Company relating to the Offering. Agents' Commission" means the cash fee equal to 6% of the gross proceeds from the sale of Shares under the Offering payable to the Agents by the Company. all pursuant to the Agency Agreement.. 008226000-00082763.. "Escrow Agreement" means the escrow agreement dated  between the Company.. "CFO" means Chief Financial Officer. the original owner of the Pavo Real Project. and various Principals of the Company . "Company" or "Red Eagle" means Red Eagle Mining Corporation. "Common Share" means a common share in the capital of the Company. "Agents' Warrant Shares" means the Common Shares to be issued to the Agents upon exercise of the Agents' Warrants. "CDS" means CDS Clearing and Depository Services Inc... "Exchange" or "TSXV" means the TSX Venture Exchange.A. "Closing" means the closing of the Offering. and Salman Partners Inc.72 GLOSSARY "Additional Shares" means up to  Common Shares issuable pursuant to the Over-Allotment Option. Canaccord Genuity Corp. "Closing Date" means such date or dates that the Company and the Agents mutually determine to close the sale of the Offered Shares offered pursuant to this Prospectus. "Agents' Warrants" means the share purchase warrants to be granted to the Agents as partial consideration in connection with the Offering each entitling the holder to acquire one Common Share at the Offering Price until the date which is 18 months following the Closing Date. "Colombia" means the Republic of Colombia. "Agency Agreement" means the Agency Agreement dated .

"Offering Price" means $ per Share. "Listing Date" means the date on which the Common Shares of the Company are first listed for trading on the Exchange following the Offering. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops. "Mina Vieja Option Agreement" means the agreement dated November 27. "km" means kilometers.. "MAD I" means Miranda Gold Colombia I Ltd.89 ha in the Department of Tolima. "MAD III" means Rovira Mining Limited. Colombia. workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed. "Miranda" means Miranda Gold Corp. "NI 43-101" means National Instrument 43-101 – Standards of Disclosure for Mineral Projects of the Canadian Securities Administration. "Mina Vieja Project" means exploration license 3126 on concession contract 1061. can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic viability of the deposit. 17 . "Offering" means the Offering of Shares of the Company as described in this Prospectus. "IFRS" means International Financial Reporting Standards. densities. formerly known as Miranda Gold Colombia III Ltd. a wholly owned subsidiary of Miranda. the Pavo Real Option Agreement and the 008226000-00082763. shape and physical characteristics. "Option Agreements" means the Santa Rosa Agreement.73 "ha" means hectares. "MAD II" means Miranda Gold Colombia II Ltd. a wholly owned subsidiary of Miranda. "Offering Period" means the 90 day period following the date of issuance of the receipt for the final prospectus.... 2011 among the Company and the Mina Vieja Vendors pursuant to which the Company was granted the option to acquire 100% interest in the Mina Vieja Project. "Offered Shares" means the up to  Common Shares offered for sale under this Prospectus. grade or quality. "Mina Vieja Vendors" means Carmen Laserna and Fernando Uribe. trenches. pits. comprising of a total area of 951. "Indicated Mineral Resource" means that part of a mineral resource for which quantity.

"Pavo Real Shareholder Agreement" means the shareholder agreement dated June 25. 008226000-00082763. "Pavo Real Project" means concession contracts IHT-10541 and IHT-10542X and three concession agreements KG3-14191. "Santa Rosa Project" means concession contract numbers B7560005. and Carlos Augusto Escobarr. covering a total of 2. JLI-10231 and JLI-10601. if any. B7171005.594. 2010 among Expogold. (Sucursal Colombia) and Miranda Gold Colombia III Ltd. (Sucursal Colombia relating to the Pavo Real Project.74 Mina Vieja Option Agreement. Miranda. employees and consultants in accordance with the rules and policies of the Exchange. which are the subject of the Santa Rosa Agreement. H5791005. "Santa Rosa Agreement" means the agreement dated April 15.12 ha in the Department of Tolima. "Pavo Real Agreement" means the share purchase agreement dated June 25. "Over-Allotment Option" means the option granted by the Company to the Agents to purchase or arrange for the purchase of Common Shares equal to 15% of the number of Offered Shares sold pursuant to the Offering at the Offering price within 30 days of the Closing Date for market stabilization purposes and to cover overallotments. Miranda and MAD I in respect of the Pavo Real Project. schedules or attachments hereto. 2010 among the Company. 17 . "Securities Commissions" means the British Columbia Securities Commission. Luis Carlos Perez Villa. 2011 among the Company and the Santa Rosa Vendors pursuant to which the Company was granted an option to acquire up to a 100% interest in the Santa Rosa Project. the Alberta Securities Commission and the Ontario Securities Commission. Colombia. "Stock Option Plan" means the Company's stock option plan adopted on  by the Company's board of directors and providing for the granting of incentive options to the Company's directors. officers. Ontario and any other provinces in which this Prospectus has been filed and in which the Shares will be offered for sale. Miranda Gold Colombia II Ltd. MAD I and MAD III. "Prospectus" means this prospectus and any appendices. Alberta. "Santa Rosa Vendors" means Miguel Angel Perez Villa. and "Subscriber" means a person or other entity that subscribes for Shares under the Offering. "Pavo Real Option Agreement" means the option agreement dated June 24. H5790005 and the application for concession agreement LDM 08061. "Selling Provinces" means British Columbia. 2010 among the Company.

2010 together with the Auditor's Report thereon.FINANCIAL STATEMENTS Attached to and forming part of this Prospectus are the audited financial statements of the Company for the period from incorporation on January 4. 17 . 2010 to December 31. 008226000-00082763.

We have complied with Canadian generally accepted standards for an auditor's involvement with offering documents. Vancouver. 2010 and the consolidated statements of comprehensive loss. We consent to the use in the above-mentioned prospectus of our report to the directors of the Company on the consolidated statement of financial position of the Company as at December 31.AUDITORS’ CONSENT We have read the prospectus of Red Eagle Mining Corporation (“the Company”) dated ● relating to the issue and sale of ● common shares of the Company. 2010. 2011 008226000-00082763. 17 Chartered Accountants . Canada ●. 2010) to December 31. Our report is dated ●. changes in equity and cash flows for the period from inception (January 4.

        RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Consolidated Financial Statements  Period from Inception January 4. 2010 to December 31. 2010        .

 and its financial performance and its cash flows for the period from inception  (January 4. 2010) to December 31. which comprise the  consolidated statement of financial position as at December 31.  Management's responsibility for the consolidated financial statements  Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance  with  International  Financial  Reporting  Standards. An audit also includes evaluating the  appropriateness of accounting policies used and the reasonableness of accounting estimates made by management. but not for  the purpose of expressing an opinion on the effectiveness of the entity's internal control. 2010 in accordance with International Financial Reporting Standards.  An  audit  involves  performing  procedures  to  obtain  audit  evidence  about  the  amounts  and  disclosures  in  the  consolidated  financial  statements.  the  auditors  consider  internal  control  relevant  to  the  entity's  preparation  and  fair  presentation  of  the  consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. and the consolidated statements of comprehensive loss.  whether  due  to  fraud  or  error. 2011  Chartered accountants          . 2010. the financial position of Red Eagle  Mining Corporation as at December 31. 2010. We conducted our  audit in accordance with Canadian generally accepted auditing standards.  changes in equity and cash flows for the  period from inception (January 4. in all material respects.  INDEPENDENT AUDITORS’ REPORT    To the Directors of   Red Eagle Mining Corporation  (an exploration stage enterprise)  We have audited the accompanying consolidated financial statements of Red Eagle Mining Corporation. 2010.   Opinion  In our opinion.  and  for  such  internal  control  as  management  determines  is  necessary  to  enable the preparation of consolidated financial statements that are free from material misstatement.  We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. whether due to fraud or  error.  The  procedures  selected  depend  on  the  auditors’  judgment.  Auditors’ responsibility  Our responsibility is to express an opinion on these consolidated financial statements based on our audit. Canada  . as well as  evaluating the overall presentation of the consolidated financial statements.  In  making  those  risk  assessments. and a summary of  significant accounting policies and other explanatory information. Those standards require that we comply with ethical  requirements  and  plan  and  perform  the  audit  to  obtain  reasonable  assurance  about  whether  the  consolidated  financial  statements are free from material misstatement.  including  the  assessment  of  the  risks  of  material  misstatement  of  the  consolidated  financial  statements.      Vancouver. 2010) to December 31. the consolidated financial statements present fairly.

622.138                                       1. 2010 to  December 31.           Page 3 of 28  .13                                    10.633.617.208                                             48.707 OTHER COMPREHENSIVE LOSS Foreign currency translation differences for     foreign operations TOTAL COMPREHENSIVE LOSS FOR THE YEAR     FOR PERIOD FROM INCEPTION (JANUARY 4.725                                           153.211                                           128. 2010 $                                          10.506 $                                              0. 2010 EXPENSES Depreciation Office and general administration (note 11) Professional fees Project evaluation Resource property expenditures (note 8) Salaries and benefits (note 11) Travel OTHER EXPENSES (INCOME) Foreign exchange gain Interest and miscellaneous income NET LOSS FOR PERIOD FROM INCEPTION (JANUARY 4. for profit for the     year attributable to ordinary equity holders of the     parent (warrants not included as the impact would be    anti‐dilutive) Weighted average number of common     shares outstanding                                             15.038                                           223.707                                              (4.943)                                                    (57) $                                    1. 2010)     TO DECEMBER 31.410.917.759 The accompanying notes are an integral part of these consolidated financial statements.948                                           147.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Consolidated Statement of Comprehensive Loss   (Expressed in Canadian Dollars)    For The Period From Inception  January 4.731                                           941.468 $                                    1.746                                           192. 2010 Attributable to: Equity holders of the parent Non‐controlling interests Basic and diluted loss per share basic.799                                        1.633.506  $                                    1. 2010) TO     DECEMBER 31.

679.343)                                       6.225 Current assets Cash and cash equivalents Other financial assets (note 9) Amounts receivable Prepaid expenses                                       1.990. 2011 They are signed on the Company's behalf by: /s/ Jeffrey Mason  Director           /s/ Ian Slater  Director           Page 4 of 28  .RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Consolidated Statement of Financial Position  (Expressed in Canadian Dollars)    As at ASSETS Non‐current assets Equipment (note 7) Resource properties (note 8) December 31.967.468)                                       6.537.847                                           122.456.612                                             16.216 SHAREHOLDERS' EQUITY Share capital (note 10) Warrants (note 10) Foreign exchange reserve Deficit Non‐controlling interests TOTAL EQUITY $                                    7.695)                                      (1.583                                       4.582.400.722 TOTAL EQUITY AND LIABILITIES $                                    6.000                                             36.216 Nature and continuance of operations (note 1) Segmented information (note 13) Subsequent events (note 15) The accompanying notes are an integral part of these consolidated financial statements.508                                           483.796                                       5.582.722 TOTAL LIABILITIES                                           125.494 LIABILITIES Current Liabilities Accounts payable and accrued liabilities (note 11)                                           125. These consolidated financial statements are authorized for issue by the Board of  Directors on April •.991 TOTAL ASSETS $                                    6.153                                            (12.962                                         (223.397. 2010 $                                       107.717                                           591.

468)      (1.093 $       7.           Page 5 of 28  .569 8           200.468) $       6. 2010 Number of  shares issued  Share capital   Warrants   Foreign  exchange  reserve  Attributable to  equity holders  Non‐controlling  Deficit   of the parent  interests  Total                         1 $                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ $                     ‐ Private placements 10     22.967.000                        ‐       8.695) $      (1.569                        ‐                        ‐                        ‐           240. 2010        22.191.000                        ‐                        ‐                        ‐           100.038)         (223.877.000.633.712.000 10                        ‐         (250.847 $          122.000 Shares issued for finder's fees 10           320.153                        ‐                        ‐       8.962 $         (223.506) Shares issued for resource properties Share issue costs Total comprehensive loss for the period from     inception (January 4.000                        ‐           100.343)      (1.    2010 Balance as at December 31.569                        ‐           240.410.494 The accompanying notes are an integral part of these consolidated financial statements.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Consolidated Statement of Changes in Equity   (Expressed in Canadian Dollars)    Note Share issued upon inception on January 4.847           122.000           100.343) $       6.569)                        ‐                        ‐                        ‐            (12.569)                        ‐         (250.397.679. 2010) to December 31.397.333       7.759           240.456.569)                        ‐                        ‐                        ‐         (250.153 $           (12.695)      (1.000.

595.537.717)                       (4.310)    Net changes in non‐cash working capital items: Amounts receivable Prepaid expenses Accounts payable and accrued liabilities                             (36.  2010 to  December 31.583                                         ‐ $                     1.996) FINANCING ACTIVITIES Issuance of common shares and warrants for cash.397                       (1.000                        7. 2010 Cash flows provided from (used by): OPERATING ACTIVITIES    Net loss for the period    Adjustments for item not affecting cash: Depreciation $                    (1.617.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Consolidated Statement of Cash Flows   (Expressed in Canadian Dollars)    For The Period From  Inception January 4.537.707)                              22.583 Cash paid during the period for interest $                                      ‐ Cash paid during the period for income taxes $                                      ‐ Supplemental cash flow information (Note 12) The accompanying notes are an integral part of these consolidated financial statements. end of period                        1.990.921. beginning of period Cash and cash equivalents.172) Net increase in cash and cash equivalents Cash.522.000)                          (137.722                       (1.249) Effects of exchange rate changes on cash and cash equivalents                               (8.612)                             (16.             Page 6 of 28  .796)                            125.000 INVESTING ACTIVITIES Expenditures on resource properties Purchase of short‐term investments Purchase of equipment                          (383.532)                       (4.400.     net of share issue costs                        7.990.

 British Columbia. 2010  and is engaged in the acquisition and exploration of resource properties located in Colombia. exploration and development of mineral resources in Colombian.  These consolidated financial statements have been prepared on a going concern basis. The consolidated financial statements  are presented in Canadian dollars.    2. 2011. any losses of that  subsidiary are attributed to the non‐controlling interest/s even if that results in a deficit balance. which assumes the realization of  assets and liquidation of liabilities in the normal course of business.  The consolidated financial statements have been prepared on a historical cost basis. and  continue to be consolidated until the date when such control ceases. unrealised gains and losses resulting from intra‐group transactions and dividends are  eliminated in full. 2010  1. and therefore a non‐controlling interest/s exists. Canada. should the Group be unable to continue as a going concern.  Subsidiaries are fully consolidated from the date of acquisition. BASIS OF PRESENTATION    The  consolidated  financial  statements  of  the  Group  have  been  prepared  in  accordance  with  International  Financial  Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).  The financial statements of the subsidiaries are prepared for the same reporting period as the parent company.   Red Eagle Mining Corporation was incorporated under the Business Corporations Act in British Columbia on January 4. asset sales or a combination  thereof.  The  Group  has  entered  into  mineral  property  acquisition  agreements  that  will  require  future  outlays  of  cash  in  order  to  maintain the properties in good standing or in order to fulfill contractual obligations. transactions. using  consistent accounting policies. Vancouver.            Page 7 of 28  .  All intra‐group balances.  The Group is engaged in the identification.  The Group is considered to be in the exploration stage as it has not placed any of its mineral properties into production. CORPORATE INFORMATION AND CONTINUANCE OF OPERATIONS   The consolidated financial statements of Red Eagle Mining Corporation all its subsidiaries (the “Group”) for the year ended  31 December 2010 were authorised for issue in accordance with a resolution of the board of directors on April •.   The  address  and  domicile  of  the  Group’s  registered  office  and  its  principal  place  of  business  is  Suite  920  ‐  1030  West  Georgia Street. acquisition.  Basis of consolidation  The consolidated financial statements comprise the financial statements of the Group as at 31 December 2010. being the date on which the Group obtains control. V6E 2Y3. The Group’s continuing operations as  intended are dependent upon management’s ability to raise required funding through debt.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. These consolidated financial statements do not include  any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might  be necessary.  Where the ownership of a subsidiary is less than 100%.

  cost  includes  directly  attributable  costs  and  the  estimated  present  value  of  any  future  costs  of  dismantling  and  removing  items.     b) Equipment  Items  of  equipment  are  initially  recognized  at  cost. On disposal  of  a  foreign entity. if any.   Income statements and cash flows of foreign entities are translated into the Group's presentation currency at average  exchange  rates  for  the  year  while  their  balance  sheets  are  translated  at  the  year  end  exchange  rates. It is applied using the declining balance method at the following rates:  • Computers – 30% per annum  •  Software – 100% per annum  •  Field Equipment – 30% per annum  •  Office Furniture – 20% per annum  Material residual value estimates and estimates of useful life are updated as required.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. but at least annually. such exchange differences are transferred out of this reserve and are recognised in comprehensive loss  as part of the gain or loss on sale.   a) Foreign currency translation  Functional and presentation currency   Items  included  in  the  financial  statements  of  each  of  the  Group's  entities  are  measured  using  the  currency  of  the  primary  economic  environment  in  which  the  entity  operates  ('the  functional  currency').  The  corresponding  liability  is  recognized  within  provisions. PRINCIPAL ACCOUNTING POLICIES    The principal accounting policies adopted in the preparation of the financial statements are set out below.  Depreciation is provided on all items of equipment to write off the carrying value of items over their expected useful  economic lives. 2010  3.  Exchange  differences  arising  from  the translation  are  taken  to the currency translation  reserve  within  equity.            Page 8 of 28  .  All  items  of  equipment  are  subsequently  carried  at  depreciated  cost  less  impairment losses.   Transactions and balances   Foreign  currency  transactions  are  translated  into  the  functional  currency  using  the  exchange  rates  prevailing  at  the  dates  of  the  transactions. which is the Group's functional and presentation currency.  The  consolidated  financial  statements are presented in Canadian dollars.  As  well  as  the  purchase  price.  Foreign  exchange  gains  and  losses  resulting  from  the  settlement  of  such  transactions  and  from the translation at year‐end exchange rates of monetary assets and liabilities denominated in foreign currencies  are recognised in comprehensive loss.

 net of  bank overdrafts which are repayable on demand. quoted share prices for publicly  traded subsidiaries or other available fair value indicators. For longer periods. These calculations are corroborated by valuation multiples. are recognised in comprehensive loss  in those expense categories consistent with the function of the impaired asset.  in  which  case  the  asset  is  tested  as  part  of  a  larger  CGU.  Where  the carrying  amount  of  an  asset  or  CGU  exceeds  its  recoverable  amount.  recent market transactions are taken into account. if available. including impairment of inventories. If no such transactions can be identified.   Impairment losses of continuing operations. PRINCIPAL ACCOUNTING POLICIES (continued)   c) Resource properties  All direct costs including the option payments related to the acquisition of resource property interests are capitalized  into  intangible  assets  on  a  property  by  property  basis.  the  asset is considered impaired and is written down to its recoverable amount. Cash and cash equivalents normally have a term to maturity of three  months or less from the date of acquisition. deposits held on call with banks.  d) Impairment of non‐financial assets   The  Group  assesses  at  each  reporting  date  whether  there  is  an  indication  that  an  asset  may  be  impaired. On the commencement of commercial production. an appropriate  valuation model is used.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. In assessing value in use. a long‐term growth rate is  calculated and applied to project future cash flows after the fifth year.  An  asset’s  recoverable  amount  is  the  higher  of  an  asset’s  or  cash‐generating  unit’s  (CGU)  fair  value less costs to sell and its value in use and is determined for an individual asset.  If  any  indication  exists.  These  budgets  and forecast calculations are generally covering a period of five years.  or  when  annual  impairment  testing  for  an  asset  is  required.  Exploration  costs. depletion of each mining  property will be provided on a unit‐of production basis using estimated resources as the depletion base. unless the asset does not generate  cash  inflows  that  are  largely  independent  of  those  from  other  assets  or  groups  of  assets. In determining fair value less costs to sell.  are  charged  to  operations  in  the  period  incurred  until  such  time  as  it  has  been  determined  that  a  property  has  economically  recoverable  resources.    e) Cash and cash equivalents  Cash and cash equivalents comprise cash on hand. the estimated  future  cash  flows  are  discounted  to  their  present  value  using  a  pre‐tax  discount  rate  that  reflects  current  market  assessments of the time value of money and the risks specific to the asset.  the  Group  estimates  the  asset’s  recoverable  amount.  in  which case  subsequent  exploration  costs and the costs  incurred  to develop  a property  are  capitalized into “Resources properties”.            Page 9 of 28  .  net  of  incidental  revenues.   The  Group  bases  its  impairment  calculation  on  detailed  budgets  and  forecast  calculations  which  are  prepared  separately  for each  of the  Group’s cash‐generating  units to  which the  individual  assets  are  allocated. highly liquid investments that are  readily convertible into known amount of cash and which are subject to insignificant risk of changes in value. 2010  3.

 The effective interest  rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that  form  an  integral  part  of  the  effective  interest  rate.  Financial assets classified as available for sale are measured at fair value with unrealized gains and losses recognized in  other comprehensive income (loss) except for losses in value that are considered other than temporary or a significant  or prolonged decline in the fair value of that investment below its cost.  transaction  costs  and  other  premiums  or  discounts)  through  the  expected life of the financial asset.  Financial  assets  classified  as  loans  and  receivables  and  held  to  maturity  are  measured  at  amortized  cost  using  the  effective interest method less any allowance for impairment. while transaction costs associated  with all other financial assets are included in the initial carrying amount of the asset. The effective interest method is a method of calculating  the amortized cost of a financial asset and of allocating interest income over the relevant period.  Financial  assets  classified  as  FVTPL  are  measured  at  fair  value  with  unrealized  gains  and  losses  recognized  through  profit and loss. a shorter period. available for sale. PRINCIPAL ACCOUNTING POLICIES (continued)   f) Financial instruments  Financial assets  All  financial  assets  are  initially  recorded  at  fair  value  and  designated  upon  inception  into  one  of  the  following  four  categories: held to maturity. 2010  3. loans and receivables or fair value through profit or loss (“FVTPL”).  Transactions costs associated with FVTPL financial assets are expensed as incurred. where appropriate.            Page 10 of 28  .RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. or.

 PRINCIPAL ACCOUNTING POLICIES (continued)   f) Financial instruments (continued)  Financial liabilities  All  financial  liabilities  are  initially  recorded  at  fair  value  and  designated  upon  inception  as  FVTPL  or  other  financial  liabilities.  Assets carried at amortized cost  If there is objective evidence that an impairment loss on assets carried at amortized cost has been incurred.  If.            Page 11 of 28  .  At the end of each reporting period subsequent to initial recognition. 2010  3. After initial recognition. where appropriate.  Financial  liabilities  classified  as  other  financial  liabilities  are  initially  recognized  at  fair  value  less  directly  attributable  transaction costs. The net  gain or loss recognized in comprehensive loss excludes any interest paid on the financial liabilities.  Any  subsequent  reversal  of  an  impairment  loss  is  recognized  in  comprehensive loss. a provision for impairment is made and an impairment loss is recognized  in  profit  and  loss  when  there  is  objective  evidence  (such  as  the  probability  of  insolvency  or  significant  financial  difficulties of the debtor) that the Group will not be able to collect all of the amounts due under the original terms  of the invoice. Derivatives. Transaction costs on financial liabilities classified  as FVTPL are expensed as incurred. with changes in fair value recognized directly in comprehensive loss in the period in which they arise. other financial liabilities are subsequently measured at amortized cost using  the effective interest method.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. a  shorter period.  Financial  liabilities  classified  as  FVTPL  include  financial  liabilities  held  for  trading  and  financial  liabilities  designated  upon initial recognition as FVTPL.  the  amount  of  the  impairment  loss  decreases  and  the  decrease  can  be  related  objectively to an event occurring after the impairment was recognized. financial liabilities at FVTPL are measured at fair  value. are also classified as held for  trading unless they are designated as effective hedging instruments. The carrying amount  of  the  asset  is  then  reduced  by  the  amount  of  the  impairment.  in  a  subsequent  period. the previously recognized impairment loss  is reversed to the extent that the carrying value of the asset does not exceed what the amortized cost would have  been  had  the  impairment  not  been  recognized.  In relation to trade and other receivables. including separated embedded derivatives. the  amount of the loss is measured as the difference between the asset’s carrying amount and the present value of  estimated future cash flows discounted at the financial asset’s original effective interest rate.  The  amount  of  the  loss  is  recognized  in  comprehensive loss.  Impairment of financial assets  The Group assesses at the end of each reporting period whether a financial asset is impaired. The effective interest rate is the rate that exactly  discounts estimated future cash payments through the expected life of the financial liability. Fair value changes on financial liabilities classified as FVTPL are recognized through  the statement of comprehensive income. or. The effective interest method is a method of calculating the amortized cost of a financial  liability and of allocating interest expense over the relevant period. Impaired  debts are written off against the allowance account when they are assessed as uncollectible. The carrying amount of the receivable is reduced through use of an allowance account.

 or the  terms of an existing liability are substantially modified. and the difference in the respective carrying amounts is  recognised in the statement of comprehensive loss.  A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. such an exchange or modification is treated as a derecognition  of the original liability and the recognition of a new liability. but has transferred control  of the asset. Reversals in respect of equity instruments classified as available‐for‐sale are not recognized in  comprehensive loss. provided they are enacted or substantively enacted by the end of the  reporting period. at tax rates that are expected to apply to their  respective period of realization or settlement.   Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future  taxable income.   When an existing financial liability is replaced by another from the same lender on substantially different terms.   Deferred tax assets and liabilities are offset only when the Group has a legally enforceable right to set off current tax  assets and liabilities and the deferred income taxes related to the same taxable entity and the same taxation authority.  Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in comprehensive  loss.  Derecognition of financial assets and liabilities  A  financial  asset  (or. and  either (a) the Group has transferred substantially all the risks and rewards of the asset. 2010  3. without discounting.  less  any  impairment  loss  previously  recognized  in  comprehensive  loss. PRINCIPAL ACCOUNTING POLICIES (continued)   f) Financial instruments (continued)  Available for sale  If an available for sale asset is impaired.   Deferred tax assets and liabilities are calculated.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.    g) Taxation  Tax  expense  recognized  in  comprehensive  loss  comprises  the  sum  of  deferred  tax  and  current  tax  not  recognized  directly in equity. respectively.        Page 12 of 28  .  where  applicable  a  part  of  a  financial  asset  or  part  of  a  group  of  similar  financial  assets)  is  derecognised when:  • The rights to receive cash flows from the asset have expired  • The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay  the received cash flows in full without material delay to a third party under a ‘pass‐through’ arrangement.  in  which case the related deferred tax is also recognized in other comprehensive income or equity. an amount comprising the difference between its cost and its current fair  value.  except  where  they  relate  to  items  that  are  recognized  in  other  comprehensive  income  or  directly  in  equity.  is  transferred  from  equity  to  comprehensive loss. or (b) the Group has  neither transferred nor retained substantially all the risks and rewards of the asset.  Deferred income tax is provided using the liability method on temporary differences at the reporting date between the  carrying amounts of assets and liabilities and their tax bases.

 a formal estimate of the recoverable amount is made. as far as possible. liabilities.                         Page 13 of 28  . Such estimates include liquidity risk.  exploration  potential  and operating performance.  where  active  market  quotes are not available. income and expenses are discussed below. Management has assessed its cash generating units as being an individual mine site.  Fair  value  for  mineral  assets  is  generally  determined  as  the  present  value  of  estimated  future  cash  flows  arising  from  the  continued  use  of  the  asset. PRINCIPAL ACCOUNTING POLICIES (continued)     h) Management judgements and key sources of estimation uncertainty  The  preparation  of  financial  statements  in  conformity  with  IFRS  requires  management  to  make  estimates  and  assumptions that affect the reported amounts of assets. liabilities and disclosure of contingent assets at the date of the  financial statements and the reported amounts of revenues and expenses during the reporting period.  In applying the valuation techniques management makes maximum use of market inputs wherever possible. These assessments require the use of estimates and  assumptions  such  as  long‐term  commodity  prices. estimates and assumptions that have the  most significant effect on recognition and measurement of assets.  future  capital  requirements. management uses its best estimate about the  assumptions that market participants would make. consistent with observable data that market participants would  use in pricing the instrument. Details of the assumptions used are given in the notes regarding financial assets and liabilities. Fair value is determined as the amount that would be obtained from the sale of the asset  in  an  arm’s  length  transaction  between  knowledgeable  and  willing  parties.  using  assumptions  that  an  independent market participant may take into account.  discount  rates. and uses  estimates and assumptions that are.  which  includes  estimates  such  as  the  cost  of  future  expansion  plans  and  eventual  disposal.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.   Fair value of financial instruments  Management  uses  valuation  techniques  in  measuring  the  fair  value  of  financial  instruments. which is the lowest level for  which cash inflows are largely independent of those of other assets.  Impairment  The  Group  assesses  each  cash  generating  unit  annually  to  determine  whether  any  indication  of  impairment  exists.  Information about significant judgments.  Where an indicator of impairment exists. Where applicable data is not observable. Cash flows are discounted to their present value using a pre‐ tax  discount  rate  that  reflects  current  market  assessments  of  the  time  value  of  money  and  the  risks  specific  to  the  asset. 2010  3. which is considered to  be the higher of the fair value less costs to sell and value in use.  Useful lives of depreciable assets  Management reviews the useful lives of depreciable assets at each reporting date. credit risk and volatility may  vary from the actual prices that would be achieved in an arm's length transaction at the reporting date. Actual results  could differ from those estimates.

 which the Group reasonably expects to be applicable at a future date.  The  amendment  provides  guidance  on  assessing  the  recoverable  amount  of  a  net  pension  asset. This amendment  will have no impact on the Group after initial application. when issued.  Any  gain  or  loss  is  recognised  immediately  in  comprehensive  loss. The Group will quantify the  effect in conjunction with the other phases.  The  Group  does  not  expect  the  impact  of  such  changes on the financial statements to be material. The completion of this project is expected in early 2011.   IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments  IFRIC 19 is effective for annual periods beginning on or after 1 July 2010. to present a comprehensive picture.  hedge  accounting and derecognition.  The  adoption  of  this  interpretation will have no effect on the financial statements of the Group.  The  amendment permits an entity to treat the prepayment of a minimum funding requirement as an asset.   IFRS 9 Financial Instruments: Classification and Measurement  IFRS 9 as issued reflects the first phase of the IASBs work on the replacement of IAS 39 and applies to classification and  measurement of financial assets as defined in IAS 39.  or to acquire a fixed number of the entity’s own equity instruments for a fixed amount in any currency. This  listing is of standards and interpretations issued. The adoption of the first phase of  IFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. The  Group  intends  to  adopt  those  standards  when  they  become  effective.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. In case that this cannot be reliably measured. NEW ACCOUNTING STANDARDS AND INTERPRETATIONS   Standards issued but not yet effective up to the date of issuance of the Group’s financial statements are listed below.  IFRIC 14 Prepayments of a minimum funding requirement (Amendment)  The  amendment  to  IFRIC  14  is  effective  for  annual  periods  beginning  on  or  after  1  January  2011  with  retrospective  application.  The  equity  instruments  issued  are  measured at their fair value.  Early  adoption  is  permitted  for  either  the  partial  exemption for government‐related entities or for the entire standard. It clarified the definition of a  related  party  to  simplify  the  identification  of  such  relationships  and  to  eliminate  inconsistencies  in  its  application.  IAS 32 Financial Instruments: Presentation – Classification of Rights Issues (Amendment)  The amendment to IAS 32 is effective for annual periods beginning on or after 1 February 2010 and amended the definition  of a financial liability in order to classify rights issues (and certain options or warrants) as equity instruments in cases where  such rights are given pro rata to all of the existing owners of the same class of an entity’s non‐derivative equity instruments.  IAS 24 Related Party Disclosures (Amendment)  The amended standard is effective for annual periods beginning on or after 1 January 2011. the instruments are measured at the fair value  of  the  liability  extinguished.  the  IASB  will  address  classification  and  measurement  of  financial  liabilities.  The  revised  standard  introduces  a  partial  exemption  of  disclosure  requirements  for  government‐related  entities. The interpretation clarifies that equity instruments  issued  to  a  creditor  to  extinguish  a  financial  liability  qualify  as  consideration  paid.  The  Group  does  not  expect  any  impact  on  its  financial  position  or  performance. 2010  4. The standard is effective for annual periods beginning on or after 1  January  2013.                Page 14 of 28  .  In  subsequent  phases. The amendment is  deemed to have no impact on the financial statements of the Group.

 2010 is summarized as follows:  December 31.400.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.  and accounts payable as other financial liabilities. FINANCIAL INSTRUMENTS    The  Group  has  designated  its  cash  and  short‐term  investments  as  held‐for‐trading. 2010  5.400.  The fair value of financial instruments at December 31.000 $                 1.537.  The  Group  manages  the  capital  structure  and  makes  adjustments  to  it  in  the  light  of  changes  in  economic  conditions  and  the  risk  characteristics  of  the  underlying  assets.    6.   The  Group  sets  the  amount  of  capital  in  proportion  to  risk.  receivables  as  loans  and  receivables.537.583 $                 4.583 $                 4.  the  Group  may  adjust  the  amount  of  dividends  paid  to  shareholders. issue new shares.722 $                    125.   a) Fair value  The  fair  value  of  these  financial  instruments  equals  their  carrying  value.  In  order  to  maintain  or  adjust  the  capital  structure.722             Page 15 of 28  .000 $                         1. or sell assets to reduce debt.662 $                         1.662 $                    125.  so  that  it  can  continue  to  provide  returns  for  shareholders and benefits for other stakeholders. 2010 Carrying amount Fair value Financial Assets Held‐for‐trading Cash and cash equivalents Other financial assets Loans and receivables Receivables (excluding Harmonized Sales    Tax receivable) Financial Liabilities Accounts payable $                 1.  return capital to shareholders.  due  to  the  short‐term  nature  of  these  instruments. and   • to  provide  an adequate  return  to  shareholders  by pricing  products  and  services  commensurately  with  the  level  of  risk. CAPITAL MANAGEMENT    The Group's objectives when managing capital are:  • to  safeguard  the  entity's  ability  to  continue  as  a  going  concern.

RED EAGLE MINING CORPORATION 
(an exploration stage enterprise) 

Notes to the Consolidated Financial Statements for the period ended December 31, 2010 
6. FINANCIAL INSTRUMENTS (continued) 
 
a) Fair value (continued) 
The  IFRS  establishes  a  fair  value  hierarchy  that  prioritizes  the  inputs  to  valuation  techniques  used  to  measure  fair 
value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or 
liabilities and the lowest priority to unobservable inputs. The three levels of the fair value hierarchy are as follows: 
Level 1: 

Unadjusted quoted prices in active markets for identical assets or liabilities; 

Level 2: 

Inputs  other  than  quoted  prices  that  are  observable  for  the  asset  or  liability  either  directly 
(i.e., as prices) or indirectly (i.e., derived from prices); and 

Level 3:  

Inputs that are not based on observable market data. 

The fair value of all the financial instruments is measured by using the unadjusted quoted price in active markets for 
identical assets and liabilities (Level 1). 
b) Financial risk management 
Credit risk 
The  Group  is  exposed  to  credit  risk  with  respect  to  its  cash  and  short  term  investments.  Cash  and  short  term 
investments have been placed on deposit with a major Canadian financial institution and a major Colombian financial 
institution. 
The risk arises from the non‐performance of counterparties of contractual financial obligations. The Group manages 
credit  risk,  in  respect  of  cash  and  cash  equivalents,  by  purchasing  highly  liquid,  short‐term  investment‐grade 
securities held at a major Canadian financial institution. 
Concentration of credit risk exists with respect to the Group’s cash and short term investments as the majority of the 
amounts are held at a single Canadian financial institution. The Group’s concentration of credit risk and maximum 
exposure thereto is as follows: 
December 31, 2010
Held at major Canadian financial institution:
Cash
Short‐term money market instruments

$                 1,424,502
                   4,400,000
                   5,824,502

Held at major Colombian financial institution:
Cash
Total cash and short‐term investments

                       113,081
$                 5,937,583

 
The credit risk associated with cash is minimized by ensuring the majority of these financial assets are held with a 
major Canadian financial institution with strong investment‐grade ratings by a primary rating agency. 
Interest rate risk 
The Group has cash balances, investment‐grade short‐term deposit certificates issued by its banking institution and 
no  interest‐bearing  debt.    Interest  income  is  not  material  to  the  Group.    The  Group  is  not  exposed  to  significant 
interest rate risk. 
 
 

 

 

 

Page 16 of 28 

RED EAGLE MINING CORPORATION 
(an exploration stage enterprise) 

Notes to the Consolidated Financial Statements for the period ended December 31, 2010 
6. FINANCIAL INSTRUMENTS (continued) 
 
b) Financial risk management (continued) 
Foreign currency risk 
The Group is exposed to currency risk to the extent that monetary assets and liabilities held by the Group are not 
denominated in Canadian dollars. The Group has not entered into any foreign currency contracts to mitigate this risk. 
Certain of the Group’s cash and cash equivalents, and accounts payable and accrued liabilities are held in Colombian 
Peso (“COP”); therefore, COP amounts are subject to fluctuation against the Canadian dollar (CAD). 
The Group had the following balances in foreign currency as at December 31, 2010: 
Cash
Accounts payable and accrued liabilities

in COP
$            220,516,537
$           (139,073,423)
$               81,443,114

Equivalent to CAD

$                       41,764

Rate to convert to $1.00 Canadian

                       0.00051

 
Based on the above net exposure as at December 31, 2010, and assuming that all other variables remain constant, a 
10% appreciation or depreciation of the COP against the CAD would result in a decrease or increase of approximately 
$2,200 in the Group’s net loss. 
The Group also has transactional currency exposures. Such exposures arise from purchases in currencies other than 
the respective functional currencies. The Group manages this risk by matching receipts and payments in the same 
currency and monitoring. 
Other price risk 
Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of 
changes in market prices, other than those arising from interest rate risk or currency risk. The Group is not exposed 
to significant other price risk. 
Liquidity risk 
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.  The Group 
anticipates that there is sufficient capital and liquidity to meet liabilities when due.  
The  Group  maintained  sufficient  cash  and  short‐term  investments  at  December  31,  2010  in  the  amount  of 
$1,537,583 and $4,400,000, respectively, in order to meet short‐term business requirements. At December 31, 2010, 
the Group had accounts payable of $125,722, which will be repaid within three months. 
 
 
 

 

 

 

 

Page 17 of 28 

RED EAGLE MINING CORPORATION 
(an exploration stage enterprise) 

Notes to the Consolidated Financial Statements for the period ended December 31, 2010 
7. EQUIPMENT 
 

 
Computer 
hardware

Field 
equipment

Office 
equipment

Software

Vehicles

Total

Cost
During the year ended December 31, 2010
Additions
Balance as at December 31, 2010

 $            2,096  $          13,618  $          25,070  $            8,131   $          88,617  $       137,532 
$            2,096 $          13,618 $          25,070 $            8,131 $          88,617 $        137,532

Deprecation
During the year ended December 31, 2010
Depreciation charged for the period
Balance as at December 31, 2010

 $              (305) $          (2,043) $          (2,398) $          (4,066)  $        (13,585) $        (22,397)
$              (305) $           (2,043) $           (2,398) $           (4,066) $         (13,585) $         (22,397)

Effect of movements in exchange rates

$                 (56) $                     ‐ $           (2,522) $                 (52) $           (4,997) $           (7,627)

Net book value as at December 31, 2010

$            1,735 $          11,575 $          20,150 $            4,013 $          70,035 $        107,508

 

 
8. RESOURCE PROPERTIES 

 
Following is a continuity of the acquisition costs of the resource properties: 
Pavo Real 

Santa Rosa 

 Total 

Acquisition costs

$             177,331

$             306,386

$             483,717

Balance as at December 31, 2010

$             177,331

$             306,386

$             483,717

 
Following  is  a  summary  of  the  exploration  costs  of  the  resource  properties  which  were  expensed  when  incurred  for  the 
period from inception (January 4, 2010) to December 31, 2010: 
Pavo Real 

Santa Rosa 

Others 

Total 

Resource property expenditures:
Assays and sampling

$               22,789

$                           ‐ $                           ‐ $               22,789

Depreciation

                    9,608

                       681

                    1,362

                  11,651
               135,426

Field and camp expenses

               124,713

                    4,131

                    6,582

Geophysics

               140,461

                  92,171

                             ‐                232,632

Salaries and consulting fees

               317,787

                  99,684

                  18,445

               435,916

                  75,651
$             691,009

                  27,293
$             223,960

                       367
$               26,756

               103,311
$             941,725  

Travel
Balance as at December 31, 2010

 

 

 

 

 

Page 18 of 28 

 The activities of MAD III will be governed by the SA. MAD III will pay the Group a fee of 10% of the costs incurred by MAD III in carrying out approved exploration  programs and implementing a production decision.            Page 19 of 28  . RESOURCE PROPERTIES (continued)    Pavo Real Project (Colombia)  On  June  25.  The  Group  may  exercise  this  option  (the  “Additional  10%  Option”)  by  providing  notice  in  writing  to  MAD  III  and  MAD  I  within 30 days of the date of such board of directors of MAD III approval. 2010. Red Eagle will forfeit its shares of MAD III to Miranda. to elect to acquire an additional 10% interest  in MAD III by committing to sole fund all costs associated with achieving the commencement of commercial production. 2010  8. the Group will have the option.000.  all  of  which  shall  be  expended  on  exploration  operations. If the Group exercises the Additional 10% Option.000.  which  annual  minimum  contribution  shall  be  made  by  the  Group  until  the  completion  of  such  feasibility  study.  After  making  the  Second  Contribution.  concessions  and  land  (excluding  payments  in  the  Group’s  shares  issued  pursuant  to  the  Pavo  Real  Option  Agreement) and must be expended within 10 years from June 30.000                 750. effectively representing a 70% interest in the Pavo Option and the Pavo Real  mining interest. 2011 (paid) On or before June 25.  development  operations.000. (“MAD III”). or  b) If MAD III does not undertake a feasibility program.000. 2012 On or before June 25. 2014  USD      500. 2010.000. a wholly‐owned subsidiary of Miranda. concession  fees  and  payments  made  to  acquire  and  maintain applications. Expenditures made by the Group on an  uncompleted feasibility study may be applied to these additional expenditure requirements.000  in  excess  of  the  First  Contribution  at  a  rate  of  not  less  than  $1.  if  the  board  of  directors  of  MAD  III  has  approved  a  feasibility  study  and  a  mine  construction program.  In addition.  To maintain its 70% shareholding in MAD III.  which  feasibility study must be completed within eight years from June 25. but not the obligation.   After making the First contribution.000             1. If the Group fails to make any of the capital  contributions within the stated time periods. (“Miranda”). 2013 On or before June 25.000    These funds will be used to fund exploration work at the Pavo Real project.000 contribution (“First Contribution”) to MAD III within the  next four years as follows:   Exploration expenditures: On or before June 25.  MAD III will issue additional shares from treasury without payment to increase the Group’s ownership percentage to 80%.000             1.000  per  year. Miranda assigned 70% of the shares of Miranda Gold Colombia III  Ltd.000   USD   4. to the Group.  2010  the  Group  entered  into  a  share  purchase  agreement  (“SPA”)  and  shareholder  agreement  (“SA”)  with  Miranda Gold Corp. the Group must make an aggregate US$4.000 per year in the event that MAD III elects to undertake a feasibility program to  prepare  a  positive  feasibility  study  in  a  form  acceptable  for  the  purpose  of  financing  mine  construction.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. or if MAD III commences a feasibility program but does not  complete  a  feasibility  study.000.  the  Group  shall  contribute  a  minimum  of  $10. Pursuant to the SPA.750. the Group shall make further contributions to the contributed surplus of MAD III as  follows (“Second Contribution”):   a) A contribution of at least $1.

000 ounces. 2015  USD         20. RESOURCE PROPERTIES (continued)    Pavo Real Project (Colombia) (continued)  On June 24. 2012 On or before June 24. 2014 On or before June 24. 2014 On or before June 24. 2013 On or before June 24.000 ounces. commencing on June 25.000. Miranda. 2010 (paid) On or before December 24. 2010  8.000                 100.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.000   USD      400.000                 700.000                 100. 2010 (issued) On or before June 24. 2012 On or before June 24. 2011 On or before June 24.000                   80.000                   60.            Page 20 of 28  . and MAD  III. 2011 On or before June 24.000                 100. 2010 (issued on August 16.000.000  Common shares to be issued: On or before June 24.  and  the  Colombian  branch  of  MAD  III  to  acquire  the  Pavo  Real  mining  interest. Miranda executed an option agreement (the “Pavo Option”) by and among ExpoGold. 2010 (paid) On or before June 24. the Group has to  make the following cash payments and issue the Group’s common shares to Miranda:  Cash payments: On or before June 24.000                 100.000 and  deliver 100. 2016.  which  complies  with  an  independent  NI  43‐101  compliant  technical  report  (the  "Pavo  Real  Defined  Resource").000                   70. MAD III must pay US$100. and payable on each succeeding anniversary. 2015   In addition. MAD III will be required to make one of the following additional  payments to Expogold:  a) If the Pavo Real Defined Resource is greater than 250. MAD III shall pay  US$100.000                   20.  Once there is a Pavo Real Defined Resource.000                 100. or  b) If the Pavo Real Defined Resource is equal to or greater than 500.000 total ounces of gold or  gold  equivalent.000 ounces. Under the terms of the Pavo Option.000 common shares of Miranda to Expogold until the date on which there is a defined measured and indicated  mineral resource within a defined area of interest on the Pavo Real property of greater than 250. 2010) On or before December 24. but less than 500. 2010.    The  commitments  under  the  Pavo  Option will be the responsibility of the Group pursuant to the SA. 2013 On or before June 24.000                   50.000                 100.000    Number of  common shares                100. MAD III shall pay US$250.000                 100.

 MAD III shall pay to Expogold:  a) b) c) d) e) US$250. 2013 USD                   400.               Page 21 of 28  .000 upon completion of a feasibility study. MAD III shall pay US$1 million for  each 1 million ounces of gold or gold equivalent ounces produced. RESOURCE PROPERTIES (continued)    Pavo Real Project (Colombia) (continued)  In addition.000 upon producing 250.000    The  Group  also  has  to  pay  to  the  original  owners  the  greater  of  US$2. The Group made an initial payment of US$300. 2010.000 on October  18.  US$750.  Each of the above payments may be in cash or common shares of Miranda.000   USD                7. which is  comprised of various concession contracts in Colombia.000                         3.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.  US$500.    Santa Rosa Project (Colombia)  On October 6.000 upon producing 1 million ounces of gold or gold equivalent ounces.000.000  or  US$15  per  gold  equivalent  ounce  multiplied by the quantity of Measured and Indicated gold equivalent ounces (as defined in National Instrument Policy  43‐101 and calculated by an independent qualified person) on a predefined 20 hectare area of the project.000.000.000 ounces of gold or gold equivalent ounces.500.000 upon producing 500.000 upon achieving commercial production.  US$500. 2011 (paid ‐ see Note 15) Upon title transfer On or before November 30. and  US$1.900.000                         4. 2010  8. the Group entered into a Letter Agreement to acquire 100% of the Santa Rosa Project. 2010.  Thereafter.000 ounces of gold or gold equivalent ounces. The Group can acquire 100% of the property by making the following payments:  Cash payments: On or before February 28.

  6 monthly cash payments of US$5. the Group will have the right to purchase 80% of the project  for a period of 90 days (the “Second Option”).85% 1. The purchase price will be payable in cash.  The Group can then earn the right to acquire up to 100% of the project by first spending a minimum of US$2. OTHER FINANCIAL ASSETS    Interest rate December 31.000 cash payment on or before 6 months after the effective date of the agreement. the effective date as defined under the Agreement has not yet been established. 2011                     3.400. therefore. 2010 Guaranteed Investment Certificate Guaranteed Investment Certificate Maturity date 0.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.000.000 December 28.  The  purchase  price  will  be  payable in cash.000.  Upon completing its obligations under the Initial Option.000 cash payment on or before 30 months after the effective date of the agreement. the Group entered into an option agreement to acquire up to 100% of the Mina Vieja project. As at December 31. title due diligence is  still in progress.  a US$200.000  on  exploration  expenditures  and  making  the  following  cash  payments  over  the  initial  30  month  option  period  (the  “Initial Option”):  • • • • • an initial cash payment of US$5. the Group has the right to purchase the remaining 20% of  the project (the “Third Option”). The purchase price will be calculated by taking 80% of the quantity of  Measured and Indicated gold equivalent ounces (as defined in National Instrument Policy 43‐101 and calculated by an  independent  qualified  person)  and  multiplying  it  by  US$10  per  gold  equivalent  ounce. 2010.000 $                 4. RESOURCE PROPERTIES (continued)    Mina Vieja Project (Colombia)  On November 27. If the Vendors are unable to meet their 20% funding obligation on  future project expenditures.00% Amount December 28. and.000             Page 22 of 28  .  a  US$100.     9.  future  project  expenditures  will  be  funded  on  a  pro‐rata  basis: 80% by the Group and 20% by the Vendors. The purchase price will be calculated by taking 20% of the quantity of Measured and  Indicated gold equivalent ounces calculated under the Second Option and multiplying it by US$15 per gold equivalent  ounce. the remaining 20% interest held in the project by the owners will be transferred to the  Group in exchange for a 1% “Net Smelter Return” royalty on the project. 2010.400. 2011                     1.  Once the Group exercises its right under the Second Option. In the event that the Group does not exercise their right to purchase  the  remaining  20%  of  the  project  under  the  Third  Option.000 cash payment on or before 18 months after the effective date of the agreement. 2010  8.000 per month commencing on the effective date of the agreement.000 upon successful title due diligence.  a US$200.

890. The value attributed to the warrants was based on their fair value with the residual  balance of $170.000  common  shares  with  a  fair  value  of  $75.734.000 common shares for gross proceeds of $15.569  as  finders’ fees and included in share issue costs.  2010.000 units for gross proceeds of $292.333  common  shares  for  gross  proceeds  of  $5.350.853. the Group issued 4.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.000  of  legal  fees  that  have  been  recorded as share issue costs.759  common  shares  with  a  value  of  $240. the Group issued 1.  the  Group  issued  7.  in  five  different  tranches dated April 30th. expected life of 5 years and expected dividend yield of 0%. the Group issued 100. 2010  10.              Page 23 of 28  .  the  Group  also  issued  320. 2015. Each unit consists of  one  common  share  and  one  common  share  purchase  warrant. 2010.500.  using  the  Black‐Scholes  option pricing model with the following assumption: risk free interest rate of 2.  • On August 16. 2010.  the  Group  issued  100.500. June 14th.    For  accounting  purposes.000.25 per share until February 12. 2010.  • On February 12.153. which totalled $122.  In  connection  with  the  financing. expected annual volatility  of 125%.000 common shares for gross proceeds of $67.500.347 being allocated to common shares.  • On  December  23.000 common shares with a fair value of $25. July 8th.000 for the resource  properties (see Note 8). 2010   Details of common shares issued in 2010 are as follows:  • On January 8.938.500. the Group issued 1. 2010.000  for  the  resource properties (see Note 8).24%.  • On January 25. SHARE CAPITAL      a) Authorized share capital  Unlimited number of common shares without par value.550.000  common  shares  for  aggregate  gross  proceeds  of  $1.  • On  December  16. October 25th and November 25th. and recorded  these values as reserves.  • In  connection  with  the  above  transactions.  Each  whole  warrant  entitles  the  holder  to  purchase one common share at an exercise price of $0.  • The  Group  issued  6.  the  Group  calculated  the  fair  value  of  warrants  issued.  the  Group  also  incurred  $10.500.    b) Issued during the period ended December 31.  2010.

500. 2010 Issued (see Note 10 (b)) Balance.000  $                   0.25     The following summarizes the share purchase warrants outstanding at December 31. 2010 and changes for the period from inception (January 4.  2010) then ended are as follows:   Weighted  Number  Average Exercise  Outstanding Price  Balance at inception January 4.500. 2010:  Warrants  Outstanding  Exercise Price            4.25            4.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31.25 Expiry Date February 12. 2010  10. 2010                        ‐ $                     ‐            4.12                  Page 24 of 28  .500. 2015  Weighted  Average  Remaining  Contractual Life  (in Years)                        4. December 31. SHARE CAPITAL (continued)      c) Warrants  A summary of the status of warrants as of December 31.000 $                   0.000 $                   0.

RED EAGLE MINING CORPORATION 
(an exploration stage enterprise) 

Notes to the Consolidated Financial Statements for the period ended December 31, 2010 
11. RELATED PARTY TRANSACTIONS 
 

Name
Principal subsidiaries
Red Eagle Mining de Colombia Limited
Miranda Gold Colombia III Ltd.

Country of 
incorporation

% of ordinary 
shares held & 
voting rights

 Principal activities

Canada
Canada

Exploration company
Exploration company

100%
70%

 
The  aggregate  value  of  transactions  and  outstanding  balances  relating  to  key  management  personnel  and  entities  over 
which they have control or significant influence were as follows: 
December 31, 2010
Short‐term employee benefits

(1)

$                   153,208

All other compensation 

(2)

                     195,200
$                   348,408

1)
2)

 

Salary paid to an officer of the Group. 
Consulting fees ($31,200) paid to a partnership in which the CFO of the Group is a partner; office, rent and 
related costs ($144,000) paid to a company controlled by the directors of the Group; legal fees ($20,000) 
paid to a partnership in which one of the directors of the Group is a partner.  

The Group’s CEO is a director common to both the Group and Miranda Gold Corp., which entered into a SPA and SA on the 
Pavo Real Project described in Note 8. 
The balance in accounts payable and accrued liabilities as at December 31, 2010 was $20,000 to these related parties. 
 
 
12. SUPPLEMENTAL CASH FLOW INFORMATION
 
Supplemental cash flow information for the period from inception (January 4, 2010) to December 31, 2010 is as follows: 
 
For the years ended
December 31, 2010
Shares issued for resources properties

 $                              100,000 

 
 

 

 

 

 

Page 25 of 28 

RED EAGLE MINING CORPORATION 
(an exploration stage enterprise) 

Notes to the Consolidated Financial Statements for the period ended December 31, 2010 
13. SEGMENTED INFORMATION 
 
The Group has one operating segment, which is the exploration and development of resource properties. The Group’s net 
assets are distributed in two geographic regions: Canada and Colombia, as follows: 

As at December 31, 2010
Cash and cash equivalents
Other financial assets
Receivables
Prepaid expenses
Property and equipment
Resource properties
Accounts payable

Loss for the year

Canada

Colombia

Total

$              1,414,653
                 4,400,000
                      35,715
                         3,713
                                  ‐
                                  ‐
                 5,854,081
                     (44,171)
$              5,809,910

$                  122,930
                                  ‐
                            897
                      13,083
                    107,508
                    483,717
                    728,135
                     (81,551)
$                  646,584

$              1,537,583
                 4,400,000
                      36,612
                      16,796
                    107,508
                    483,717
                 6,582,216
                   (125,722)
$              6,456,494

$              1,097,221

$                  520,486

$              1,617,707

 
 

 

 

 

 

Page 26 of 28 

RED EAGLE MINING CORPORATION 
(an exploration stage enterprise) 

Notes to the Consolidated Financial Statements for the period ended December 31, 2010 
14. TAXES 
 
The Group in Canada are subject to Canadian federal and provincial tax for the estimated assessable profit for the period 
ended December 31, 2010 at a rate of 28.5%. The Group had no assessable profit in Canada for the period ended December 
31, 2010. 
 
The  Group’s  branches  in  Colombia  are  subject  to  tax  for  the  period  ended  December  31,  2010  at  a  rate  of  33%.  No 
Colombian tax was provided for as the Group had no assessable profit arising in or derived from Colombia in the period 
ended December 31, 2010. 
 
The  tax  expense  for  the  Group  can  be  reconciled  to  the  loss  for  the  period  per  the  Consolidated  Statement  of 
Comprehensive Loss as follows: 
Period ended 
December 31, 2010
Net Loss and Comprehensive Loss for the Period

$             1,633,506

Statutory tax rate

28.5%

Recovery of income taxes based on combined
   Canadian federal and provincial statutory rates

$                 465,549

Net impact of changes in income tax rates

                    (48,971)

   Tax effect of tax losses and temporary differences
         not recognized
   Non‐deductible expenses
Tax recovery for the period

                  (388,818)
                    (27,760)
$                          ‐

 

 
The Group’s unrecognized deferred income tax assets are as follows: 
As at
December 31, 2010
Resource properties
Property, plant and equipment
Share issue costs
Tax loss carry‐forwards
Total unrecognized deferred
income tax assets

$                 181,922
                        8,557
                     57,180
                   163,316
$                 410,975

 
 
At December 31, 2010, the Group have unrecognized non‐capital losses for Canadian income tax purposes of approximately 
$573,000 that may be used to offset future taxable income and expire in the 2030 taxation year. 
 
 
 
 
 
 

 

 

 

Page 27 of 28 

25 per share for up to two  years subsequent to the date of the initial public offering.  Each  unit  consists  of  one  common  share  and  one‐half  common share  purchase  warrant. 2011.  The  Group  issued  3.  a  stock  option  plan  was  adopted  by  the  Board  of  Directors.  • On  April  27.000 annual payment on Santa Rosa Project pursuant to the terms  of the Letter Agreement described in Note 8. the Group signed a final purchase agreement for the Santa Rasa Project as described in Note 8.75 per unit for gross proceeds of $1.000  stock  options which will have an exercise price equal to the offering price of the Group’s initial public offering.  • On April 15. SUBSEQUENT EVENTS    • On January 6. Each  whole warrant entitles the holder to purchase one common share of the Group for $1.    • On February 14.710.000 to  a  strategic  investor. the Group issued 1.250. the Group made a US$400.RED EAGLE MINING CORPORATION  (an exploration stage enterprise)  Notes to the Consolidated Financial Statements for the period ended December 31. 2011. 2011.666. 2010  15.  2011.666 units at a price of $0.                Page 28 of 28  .

CERTIFICATE OF RED EAGLE MINING CORPORATION Dated: April 28. Director . "Ian Slater" Ian Slater. Chief Financial Officer ON BEHALF OF THE BOARD OF DIRECTORS "Jeffrey Mason" Jeffrey Mason. Director 008226000-00082763. Chairman and Chief Executive Officer "Paul Robertson" Paul Robertson. Alberta and Ontario. true and plain disclosure of all material facts relating to the securities offered by this Prospectus as required by the securities legislation of British Columbia. 17 "Jay Sujir" Jay Sujir. 2011 This Prospectus constitutes full.

true and plain disclosure of all material facts relating to the securities offered by this Prospectus as required by the securities legislation of British Columbia.CERTIFICATE OF PROMOTER Dated: April 28. PROMOTER: "Ian Slater" Ian Slater 008226000-00082763. 2011 This Prospectus constitutes full. 17 . Alberta and Ontario.

RAYMOND JAMES LTD. "Ali Pejman" Name: Ali Pejman Title: Managing Director "Doug McDonald" Name: Doug McDonald Title: VP Corporate Finance 008226000-00082763. "John Murphy" Name: John Murphy Title: Managing Director BMO NESBITT BURNS INC. SALMAN PARTNERS INC. "Jamie Rogers" Name: Jamie Rogers Title: Managing Director CANACCORD GENUITY CORP. 17 . 2011 To the best of our knowledge. this Prospectus constitutes full.CERTIFICATE OF THE AGENTS Dated: April 28. Alberta and Ontario. information and belief. true and plain disclosure of all material facts relating to the securities offered by this Prospectus as required by the securities legislation of British Columbia.

17 . Slater is currently a director of Slater Mining Corporation and Miranda Gold Corp. All of the members are financially literate. Until early 2008. and his principal occupation was the financial administration of the public companies to which Hunter Dickinson Inc. Mason holds a Bachelor of Commerce degree from the University of British Columbia (1980) and obtained his Chartered Accountant designation from the Institute of Chartered Accountants. Mason has spent the last several years as a corporate officer and director to a number of publicly-traded mineral exploration companies. Sujir and Mason. a Lundin Group company. BC in August 1982 while at the international accounting firm of Deloitte & Touche. Sujir obtained his Bachelor of Arts degree from the University of Victoria in 1981 with a double major in Economics and Philosophy and obtained his Bachelor of Law degree from the University of Victoria in 1985. Mr. Mr. Ian Slater Mr. Slater was the Managing Partner of Arthur Andersen’s Central Asian practice. Mr. Mr. Following comptrollership positions at Homestake Mining Group of companies. 2011 ITEM 1: THE AUDIT COMMITTEE'S CHARTER INSERT AUDIT COMMITTEE CHARTER ITEM 2: COMPOSITION OF THE AUDIT COMMITTEE The current members of the Committee are Messrs. Slater was the Managing Partner of Ernst & Young’s Canadian mining practice. Previously. Slater is a Canadian Chartered Accountant (1995) and holds a BBA from Simon Fraser University (1994). Mason was employed as Chief Financial Officer of Hunter Dickinson Inc. Slater is the Chairman and Chief Executive Officer of the Company. ITEM 3: RELEVANT EDUCATION AND EXPERIENCE The relevant education and/or experience of each member of the Audit Committee is as follows: Mr. Jay Sujir Mr. provides services. Slater. Mr. He has been a partner with Anfield Sujir Kennedy & Durno and its predecessor firms since 1991. Mr. Mr. and the British Columbia Advisory Committee of the TSX Venture Exchange. Sujir is a Director of the Company.SCHEDULE "A" to the Preliminary Prospectus of RED EAGLE MINING CORPORATION dated April 28. 008226000-00082763. Mr. Slater was the President and CEO of Fortress Minerals Corp. Previously. "Independent" and "financially literate" have the meaning used in Multilateral Instrument 52-110 – Audit Committees ("NI 52-110" or the "Instrument") of the Canadian Securities Administrators. From 2003 to 2007 Mr. Mason is a Director of the Company.. focused on gold exploration and development in Russia. Mr. Mr. He is a member of the Law Society of British Columbia. Sujir is a securities and natural resources lawyer who has extensive experience in advising and assisting public companies. Jeffrey Mason Mr. Mr. the Canadian Bar Association.

the Company is relying on the exemption set out in section 6. ITEM 5: RELIANCE ON CERTAIN EXEMPTIONS Since the effective date of NI 52-110. ITEM 7: EXTERNAL AUDITOR SERVICE FEES (BY CATEGORY) The aggregate fees charged to the Company by the external auditor the last fiscal year is as follows: FYE 2010 Audit fees for the year ended All other fees: Total Fees: ITEM 8: $35. on a case by case basis. in whole or in part.4 provides an exemption from the requirement that the audit committee must pre-approve all non-audit services to be provided by the auditor. Subject to the requirements of the Instrument. Section 8 permits a company to apply to a securities regulatory authority for an exemption from the requirements of NI 52-110.4 or 8 of the Instrument. Ernst & Young LLP. and where applicable by the Audit Committee. ITEM 6: PRE-APPROVAL POLICIES AND PROCEDURES Formal policies and procedures for the engagement of non-audit services have yet to formulated and adopted. the engagement of non-audit services is considered by the Company's Board of Directors. 17 .000 Nil $35.-2ITEM 4: AUDIT COMMITTEE OVERSIGHT At no time since the commencement of the Company's most recently completed financial year was a recommendation of the Committee to nominate or compensate an external auditor (currently.1 of the Instrument with respect to compliance with the requirements of Part 3 (Composition of the Audit Committee) and Part 5 (Reporting Obligations) of the Instrument. 008226000-00082763. the Company has not relied on the exemptions contained in sections 2. where the total amount of fees related to the non-audit services are not expected to exceed 5% of the total fees payable to the auditor in the fiscal year in which the non-audit services were provided. Chartered Accountants) not adopted by the Board. Section 2.000 EXEMPTION In respect of the most recently completed financial year.

Tim Petterson. ITEM 1. the Board meets without management present. other than the interests and relationships arising from shareholdings. materially interfere with the director’s ability to act with the best interests of the Company. materially interfere with the director’s ability to act with the best interests of the Company. or could reasonably be perceived to. Ian Slater is a director and is the Chairman and Chief Executive Officer of the Company and is therefore not independent. materially interfere with the director’s ability to act with the best interests of the Company. Mr. As circumstances require.SCHEDULE "B" to the Preliminary Prospectus of RED EAGLE MINING CORPORATION dated April 28. When conflicts arise. as deemed necessary. other than the interests and relationships arising from shareholdings. other than the interests and relationships arising from shareholdings. interested parties are precluded from voting on matters in which they may have an interest. is "independent" in that he is independent and free from any interest and any business or other relationship which could. 008226000-00082763. Mr. a director of the Company. materially interfere with the director’s ability to act with the best interests of the Company. and convenes meetings. or could reasonably be perceived to. Mr. Robert Pease. Robert Bell. is "independent" in that he is independent and free from any interest and any business or other relationship which could. or could reasonably be perceived to. Jeffrey Mason. a director of the Company. of the independent directors. a director of the Company. 2011 Pursuant to National Instrument 58-101 Disclosure of Corporate Governance Practices of the Canadian Securities Administrators the Company is required to and hereby discloses its corporate governance practices as follows. Ken Cunningham. is "independent" in that he is independent and free from any interest and any business or other relationship which could. Mr. Jay Sujir. and is the Vice-President Corporate Development and is therefore not independent. a director of the Company. Mr. materially interfere with the director’s ability to act with the best interests of the Company. at which meetings non-independent directors and members of management are not in attendance. or could reasonably be perceived to. a director of the Company. 17 . other than the interests and relationships arising from shareholdings. The Board reviews its procedures on an ongoing basis to ensure it is functioning independently of management. a director of the Company. other than the interests and relationships arising from shareholdings. is "independent" in that he is independent and free from any interest and any business or other relationship which could. Mr. or could reasonably be perceived to. Mr. is "independent" in that he is independent and free from any interest and any business or other relationship which could. BOARD OF DIRECTORS The Board of Directors of the Company facilitates its exercise of independent supervision over the Company’s management through frequent meetings of the Board.

Name of Reporting Issuer ORIENTATION AND CONTINUING EDUCATION The Board of Directors of the Company brief all new directors with the policies of the Board of Directors. officer. Pilot Gold Inc. the directors approve the contract or transaction and the contract or transaction was reasonable and fair to the Company at the time it was entered into. IBC Advanced Alloys Corp. Norwood Resources Ltd. whether made or proposed. and other relevant corporate and business information. DIRECTORSHIPS The directors of the Company are currently directors of the following other reporting issuers: Name of Director Ian P. is a director or officer (or an individual acting in a similar capacity) of a party to the contract or transaction or has a material interest in a party to the contract or transaction. the contract or transaction must have been reasonable and fair to the Company and the contract or transaction 008226000-00082763. The director must then abstain from voting on the contract or transaction unless the contract or transaction (i) relates primarily to their remuneration as a director.—2— ITEM 2. and disclose to the board the nature and extent of any interest of the director in any material contract or material transaction. the director must have acted honestly and in good faith. Jeffrey Mason Jay Sujir Robert Bell Tim Petterson Ken Cunningham Robert Pease ITEM 3. Slater Mining Corporation AMI Resources Inc. diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Santa Fe Metals Corporation Midasco Capital Corp. (ii) is for indemnity or insurance for the benefit of the director in connection with the Company. Escape Gold Inc. If the director abstains from voting after disclosure of their interest. Uracan Resources Ltd. Richfield Ventures Corp. 17 . Otherwise. the contract or transaction is not invalid and the director is not accountable to the Company for any profit realized from the contract or transaction. Cannon Point Resources Ltd. Amarc Resources Ltd. Slater Mining Corporation Slater Mining Corporation Miranda Gold Corp. Slater Slater Mining Corporation Miranda Gold Corp. ITEM 4. Excelsior Mining Corp. Slater Mining Corporation Sunward Resources Ltd. a director is required to act honestly and in good faith with a view to the best interests of the Company and exercise the care. employee or agent of the Company or an affiliate of the Company. Coastal Contacts Inc. if the director is a party to the contract or transaction. ETHICAL BUSINESS CONDUCT The Board has found that the fiduciary duties placed on individual directors by the Company’s governing corporate legislation and the common law and the restrictions placed by applicable corporate legislation on an individual director’s participation in decisions of the Board in which the director has an interest have been sufficient to ensure that the Board operates independently of management and in the best interests of the Company. Under the corporate legislation. or (iii) is with an affiliate of the Company. Crosshair Exploration & Mining Corp.

and a willingness to serve. 008226000-00082763. shown support for the Company’s mission and strategic objectives. OTHER BOARD COMMITTEES The Board of Directors has no other committees other than the Audit Committee. To make its recommendation on directors’ compensation. the ability to devote the time required. NOMINATION OF DIRECTORS The Board of Directors is responsible for identifying individuals qualified to become new Board members and recommending to the Board new director nominees for the next annual meeting the shareholders. ITEM 8.—3— be approved by the shareholders by a special resolution after receiving full disclosure of its terms in order for the director to avoid such liability or the contract or transaction being invalid. 17 . communication between the board and management and the strategic direction and processes of the board and committees. special expertise in an area of strategic interest to the Company. New nominees must have a track record in general business management. ASSESSMENTS The Board of Directors monitors the adequacy of information given to directors. ITEM 7. ITEM 5. ITEM 6. the Board of Directors takes into account the types of compensation and the amounts paid to directors of comparable publicly traded Canadian companies. COMPENSATION The Board of Directors conducts reviews with regard to directors’ compensation once a year.