CONSTITUTION MINING CORP - FORM 10-K

Attached files

file	filename
EX-32.1 - EX321 - CONSTITUTION MINING CORP	ex321.htm
EX-21.1 - EX211 - CONSTITUTION MINING CORP	ex211.htm
EX-32.2 - EX322 - CONSTITUTION MINING CORP	ex322.htm
EX-24.1 - EX241 - CONSTITUTION MINING CORP	ex241.htm
EX-31.1 - EX311 - CONSTITUTION MINING CORP	ex311.htm
EX-31.2 - EX312 - CONSTITUTION MINING CORP	ex312.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

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

For the fiscal year ended December 31, 2009.

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

For the transition period from to _______.

Commission file number: 000-49725

Constitution Mining Corp.

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

Large accelerated filer ¨ Accelerated filer ¨

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

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

As of June 30, 2009, the aggregate market value of the Company’s common equity held by non-affiliates computed by reference to the closing price ($0.60) was: $36,131,674

The number of shares of our common stock outstanding as of March 1, 2010 was: 78,055,985

Documents Incorporated by Reference: Parts of our definitive proxy statement to be prepared and filed with the Securities and Exchange Commission not later than 120 days after December 31, 2009 are incorporated by reference into Part III of this Form 10-K.

Table of Contents

FORM 10-K

CONSTITUTION MINING CORP.

DECEMBER 31, 2009

Table of Contents

	Page
PART I

Item 1. Business.	5
Item 1A. Risk Factors.	10
Item 1B. Unresolved Staff Comments.	17
Item 2. Properties.	17
Item 3. Legal Proceedings.	30
Item 4. (Removed and Reserved).	30

PART II

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

PART III

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

PART IV

Item 15. Exhibits, Financial Statement Schedules.	43

Glossary
Signature Page
Exhibit Index

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Cautionary Note Regarding Forward Looking Statements

This annual report contains forward-looking statements as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," "intends," and other variations of these words or comparable words. In addition, any statements that refer to expectations, projections or other characterizations of events, circumstances or trends and that do not relate to historical matters are forward-looking statements. These forward-looking statements are based largely on our expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond our control. Therefore, actual results could differ materially from the forward-looking statements contained in this document, and readers are cautioned not to place undue reliance on such forward-looking statements. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

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

risk that we fail to meet the requirements of the agreement under which we acquired our options, including any payments or any exploration obligations that we have regarding these properties, which could result in the loss of our right to exercise the options to acquire the mineral and mining rights underlying these properties;

·	risk that we will not be able to complete the possible acquisition of additional mineral deposits pursuant to terms and conditions outlined in a letter of intent;

·	risk that we cannot attract, retain and motivate qualified personnel, particularly employees, consultants and contractors for our operations in Peru;

·	risks and uncertainties relating to the interpretation of drill results, the geology, grade and continuity of mineral deposits;

·	results of initial feasibility, pre-feasibility and feasibility studies, and the possibility that future exploration, development or mining results will not be consistent with our expectations;

·	mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;

·	the potential for delays in exploration or development activities or the completion of feasibility studies;

·	risks related to the inherent uncertainty of production and cost estimates and the potential for unexpected costs and expenses;

·	risks related to commodity price fluctuations;

·	the uncertainty of profitability based upon our history of losses;

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

·	risks related to environmental regulation and liability;

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

·	risks related to tax assessments;

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

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

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

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

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

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PART I

ITEM 1. Business.

Corporate History

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

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

In November 2007, we reorganized our operations and changed our name to “Constitution Mining Corp.” to better reflect our current focus which is the acquisition, exploration, and potential development of mining properties. Since November 2007, we entered into agreements to secure options to acquire the mineral and mining rights underlying properties located in the Salta and Mendoza provinces of Argentina (the "Argentinean Properties") and in northeastern Peru. In 2009, we determined that it was in our best interest to no longer pursue the exploration and development of the Argentinean Properties and terminated our option agreements to acquire the mineral and mining rights underlying these properties. We are now exclusively pursuing the exploration and development of our property interests in Peru.

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

Our common stock is quoted on the OTC Bulletin Board under the symbol “CMIN.” We conduct our business from Pasaje Martir Olaya 129, Oficina 1203, Centro Empresarial Jose Pardo Torre A, Miraflores, Lima, Peru. Our telephone number is +54-1-446-6807.

Exploration Stage Company

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

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Surplus Strategy

Our current business plan calls for investing any surplus operating capital resulting from retained earnings into bullion accounts and does not include holding retained earnings, if any, in cash or cash equivalents. In the event that commercially exploitable reserves of minerals exist on any of our property interests and we are able to make a profit, our business plan is to sell enough mineral reserves to satisfy all of our expenses and invest all retained mineral reserves in bullion accounts established in Zurich, Switzerland. The price of precious and base metals such as gold and silver has fluctuated widely in recent years, and is affected by numerous factors beyond our control, including international, economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates, global or regional consumptive patterns, speculative activities and increased production due to new extraction developments and improved extraction and production methods. The effect of these factors on the price of base and precious metals, and, therefore, the change in the value of our retained earnings, if any, held in bullion accounts cannot accurately be predicted and is subject to significant fluctuation. There can be no assurance that the value of any bullion accounts established by us in the future to hold retained mineral reserves, if any, will not be adversely impacted by fluctuations in the price of base and precious metals resulting in significant losses.

Summary of our Mineral Property Interests

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

Effect of Governmental Regulation on Our Business

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

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

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

Peruvian Mining Law

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

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

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

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

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

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

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

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

Environmental Laws

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

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

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

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

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

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

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

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

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

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Mining Royalties

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

Competition

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

Intellectual Property

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

Employees

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

Research and Development Expenditures

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

Subsidiaries

Constitution Mining SA is a subsidiary entity which was registered with the General Inspection of Corporations in Argentina on March 4, 2008 and formed for the purpose of acquiring and exploring natural resource properties in Argentina.

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

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ITEM 1A. Risk Factors.

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

Risk Factors

Risks Associated With Our Business

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

As noted in our financial statements, we have incurred a net loss of $16,662,828 for the period from inception on March 6, 2000 to December 31, 2009 and have no present source of revenue. At December 31, 2009, we had a working capital deficiency of $14,807,730. As of December 31, 2009, we had cash and cash equivalents in the amount of US $205,125. We will have to raise additional funds to meet our currently budgeted operating requirements for the next twelve months.

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

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

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

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

We have not yet located any mineral reserve, nor are there any proven reserves on any of the properties for which we hold options, and we have never had any revenues from our operations. In addition, we have a very limited operating history upon which an evaluation of our future success or failure can be made. We have only recently taken steps in a plan to engage in the acquisition of interests in exploration and development properties, and it is too early to determine whether such steps will prove successful. Our business plan is in its early stages and faces numerous regulatory, practical, legal and other obstacles. At this early stage of our operation, we also expect

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to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start-up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties, and our failure to do so could have a materially adverse effect on our financial condition.

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

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

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

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

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

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

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

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

Our proposed acquisition of certain mining claims and leasehold interests for exploration properties located in Nevada is subject to numerous conditions and contingencies.

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terms of the definitive agreement being negotiated between the parties contemplates that closing of the transaction is anticipated to occur on or about May 15, 2010. Closing of the transaction is subject to a number of conditions and contingences, including the following:

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

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

We can give no assurance that these and other conditions will ever be satisfied to allow us to complete the proposed acquisition in accordance with the proposed terms or at all.

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

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

Our success is dependent upon a limited number of people.

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

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

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

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

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

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Our officers and directors may have conflicts of interest and do not devote full time to the our operations.

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

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

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

Risks Associated With Mining

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

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

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

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

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

Both mineral exploration and extraction require permits from various foreign, federal, state, provincial and local governmental authorities and are governed by laws and regulations, including those with respect to prospecting, mine development, mineral production, transport, export, taxation, labor standards, occupational health,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mineral prices are subject to dramatic and unpredictable fluctuations.

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

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

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

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

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Risks Associated With Our Common Stock

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

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

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

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

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

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

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

Indemnification of officers and directors.

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

ITEM 1B. Unresolved Staff Comments.

None.

ITEM 2. Properties.

Description of our Mineral Property Interests

The Peru Property

Our property interests located in Peru are in the exploration stage. These properties are without known reserves and the proposed plan of exploration detailed below is exploratory in nature. These properties are described below.

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

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A description of the Mineral Rights is set forth below:

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

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

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

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

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Under the terms of the Option Agreement, we may exercise the third twenty-five percent option, resulting in our acquisition of a seventy-five percent interest in the Mineral Rights, after we have fulfilled the following conditions:

·	Exercise of the second twenty-five percent option, resulting in our acquisition of a fifty percent interest in the Mineral Rights, within 13 months from the Effective Date (October 29, 2009) or as soon as practicable thereafter, (which event occurred November 2, 2009);

·	Issuance of an additional 2,000,000 shares of our common stock to Temasek, or to an assignee as indicated by Temasek, within 13 months as from the Effective Date (October 29, 2009) or as soon as practicable thereafter (which shares were issued in November 2009); and

·	Payment of an additional $3,000,000 to Temasek on or before March 31, 2010.

We will require additional financing in order to be able to exercise the third twenty-five percent option. There can be no assurance that we will be successful in securing the necessary funding to exercise the third twenty-five percent option. Provided we are successful in securing additional financing, we intend to exercise the third twenty-five percent option on or before March 31, 2010. In the event that we are unable to secure additional financing in order to be able to exercise the third twenty-five percent option in the time frame set forth above or secure an extension for payment, our ownership interest in the Mineral Rights may be limited to our current fifty percent interest.

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

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

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

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

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

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

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

Expansion of Peru Property

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

A description of the Mineral Rights is set forth below:

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

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

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

·	Payment of $250,000 to Temasek within twelve months of the Effective Date; and

·	Issuance of 1,000,000 shares of our common stock to Temasek or its designee within twelve months of the Effective Date.

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

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

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

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

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

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

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

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

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

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

Exploration Program

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

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

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

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

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

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

·	Set-up an operational base in the project area in the town of Saramiriza;

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

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

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

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

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

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

·	Prepare scoping, prefeasibility, and full feasibility studies.

An exploration base and a field laboratory have been set up in the town of Saramiriza and we are currently reviewing the on-going exploration program given the experience gained in the last year of operating in this difficult terrain.

In the first quarter of 2009, a Churn drill and ancillary equipment were purchased in the United States and shipped to Peru. The equipment cost approximately $85,000 and we acquired such funds through the issuance of securities in private equity offerings. After the process of importation and transport to site, the initial phase of the drilling program on the project commenced in late July 2009. Drilling capabilities were increased by the purchase of a second-hand Bangka drilling rig at a cost of $15,000. Two addditional Bangka drill are being manufactured for delivery in April 2010.

Gold bearing gravels were intersected in virtually all of the twenty seven (27) holes drilled to date with the better mineralized horizons returning values in the 60 to 200 mg/m3 range (generally, grades in excess of 60 mg/m3 are considered economically viable) with reconnaissance holes up to 15 km apart indicating the widespread distribution of gold throughout the Marañón basin.

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

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

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

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

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We have developed and outline above the initial stages of an extensive plan of exploration with the principal objective of determining whether minerals that exists on the property are of sufficient quantity to support commercial production. We have commenced our planned exploration program, but must secure additional financing in the near future in order to be able to sustain any drilling activity or we will be forced to cease our exploration and development program.

In addition to the foregoing, we intend to carry out the geophysical evaluation of the property and plan to continue drilling and test pitting for a period of at least 18 months. If we are unable to secure additional financing in the near future, we will be unable to sustain any drilling activity and be forced to cease our exploration and development program. Our plans currently anticipate that an additional two hundred (200) holes will be drilled to a depth of 50m at 100m centers in the area of known mineralization, with a view toward developing a reserve. The objective of this drilling is to define resources of sufficient size to sustain a fleet of high capacity dredges and floating plants in the future. Bulk samples collected by excavating small pits and shafts will be required for metallurgical testing as well as to confirm drill results. At the same time, mine development planning, process design, and other engineering studies will be conducted with a view to completing a feasibility study within a twenty-four month period. Permitting is anticipated to be initiated as early in the exploration and development cycle as possible, so that trial or pilot dredging can be started as soon as feasibility has been established.

Our current cash on hand is insufficient to complete any of the activities set forth in our planned exploration program. If we are unable to secure additional financing in the near future, we will be forced to cease our exploration and development program. Provided that we are able to secure additional financing, we anticipate that we will incur the following costs for the next twelve months:

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

Location and Access

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

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The following map shows the general location of the Mineral Rights we initially acquired:

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

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Previous Exploration History

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

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

Geology and Mineralization

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

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

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

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

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

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

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

Termination of Assignment Agreements for Argentinean Properties

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

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

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

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

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

Letter of Intent

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

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

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

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

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

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

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

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

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

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

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

ITEM 3. Legal Proceedings.

None.

ITEM 4. (Removed and Reserved).

Executive Officers of the Registrant

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

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

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PART II

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

Market Prices

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

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

Fiscal Year Ended December 31, 2009
	High Bid	Low Bid
Fiscal Quarter Ended:
March 31, 2009	$1.20	$0.25
June 30, 2009	$0.89	$0.31
September 30, 2009	$1.91	$0.55
December 31, 2009	$1.76	$0.85

Fiscal Year Ended December 31, 2008
	High Bid	Low Bid
Fiscal Quarter Ended:
March 31, 2008	$1.33	$0.71
June 30, 2008	$1.3499	$0.91
September 30, 2008	$1.64	$0.96
December 31, 2008	$1.25	$0.67

Holders of Common Stock

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

Dividend Policy

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

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

Securities Authorized for Issuance under Equity Compensation Plans

Our board of directors adopted the 2007 Stock Incentive Plan (the “Stock Incentive Plan”) on August 3, 2007. The Board approved an amendment of the Stock Incentive Plan and shareholder approval of the amended Stock Incentive Plan that increased the number of shares of common stock issuable under the Stock Incentive Plan from 10,000,000 to 20,000,000 was received at the 2009 annual shareholder meeting. Grants of 6,075,000 options have been made under the Stock Incentive Plan and remain outstanding as of December 31, 2009. As of December 31, 2009, 13,925,000 shares remain available under the Stock Incentive Plan for future equity grants.

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

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

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

Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by stockholders	6,075,000		$0.85	13,925,000
Equity compensation plans not approved by stockholders 1	-		-	-
Total	6,075,000		$0.85	13,925,000

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

Recent Issuances of Unregistered Securities

On or about December 1, 2009, we sold a total of 33,462 units at $0.65 per Unit (the "Units") to two investors. Each unit consisted of one (1) share of common stock, par value $0.001, and one (1) common stock purchase warrant (the “Warrant”) to purchase one (1) share of our common stock, exercisable commencing six months from the date of issuance and terminating one year from the date of issuance. As a result, we issued a total of 33,462 shares of common stock and warrants to purchase 33,462 shares of common stock in connection with these sales of securities. The exercise price for the Warrant is priced at $1.00 per share. We received gross proceeds of $21,750 from the sale of these securities. No registration rights were granted to either investor.

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These securities were offered and sold in reliance on the following exemptions from registration under the Securities Act of 1933, as amended (the "Securities Act"): (a) Section 4(2) of the Securities Act or Regulation D promulgated thereunder, and (b) Regulation S promulgated under the Securities Act. In connection with these sales of securities, we relied on each of the investors' written representations that they were not a "U.S. person" as that term is defined in Rule 902(k) of Regulation S under the Securities Act and were acquiring the securities for investment only and not with a view toward resale or distribution. We requested our stock transfer agent to affix appropriate restricted legends to the stock certificate issued to each investor. Each investor was given adequate access to sufficient information about us to make an informed investment decision. Neither we nor anyone acting on our behalf offered or sold these Units by any form of general solicitation or general advertising.

ITEM 6. Selected Financial Data.

Not applicable.

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

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

Recent Developments for the Company

Overview

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

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

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

For the Years Ended December 31, 2009 and 2008

Revenues

We have not generated any revenues from operations since our inception.

Operating Expenses

We incurred operating expenses in the amount of $14,743,959 for the year ended December 31, 2009, as compared to operating expenses of $5,479,705 for the year ended December 31, 2008. The substantial increase in our operating expenses for the year ended December 31, 2009, as compared to the year ended December 31, 2008, is primarily attributable to increased exploration costs and stock based compensation together with a write down of mineral property acquisition costs during the reporting period. The write down of mineral property acquisition costs during the reporting period in the amount of $4,339,330 primarily related to the termination of our options to acquire the mineral and mineral rights to the Argentinean Properties. During fiscal 2009, we have exercised the second twenty-five percent option, resulting in our acquisition of an aggregate of a fifty percent interest the mineral and mining rights underlying certain properties located in Northeastern Peru. We have incurred significant expenditures during the year ended December 31, 2009 in connection with the exploration and associated administrative costs required to support our operations. In 2009, we disposed of the Argentinean Properties, and are pursuing exploration and development exclusively on our properties in Peru. In addition, we have entered into a letter of intent in relation to acquiring mineral and mining rights underlying certain properties located in Nevada.

We incurred exploration costs of $2,810,496 for the year ended December 31, 2009, and exploration costs of $924,961 during the year ended December 31, 2008. Exploration costs incurred during the year ended December 31, 2009 related to the initial phases of the exploration programs on the Peru Property, whereas exploration costs incurred during the year ended December 31, 2008 related to the initial phases of our exploration programs on the Atena Project and Cerro Amarillo Property. We incurred professional fees of $986,356 for the year ended December 31, 2009, compared to professional fees of $909,483 for the year ended December 31, 2008. Professional fees, which primarily include legal and accounting expenses, increased because our legal and accounting needs increased as a result of increase exploration and financing activities. We reported stock-based compensation of $4,461,838 for the year ended December 31, 2009, compared to $2,033,607 for the year ended December 31, 2008. This increase is attributable to an increase in the number of stock options issued to employees and non-employees during the year ended December 21, 2009. We reported management fees of $291,367 for the year ended December 31, 2009, compared to $346,583 for the year ended December 31, 2008. The decrease in management fee and stock-based compensation is attributable to a change in management in the year ended December 31, 2009. We incurred investor relations expenses of $1,326,379 for the year ended December 31, 2009, compared to $668,992 for the year ended December 31, 2008. This increase in investor relations costs during the year ended December 31, 2009, as compared to the prior year, is attributable to expenditures associated with increasing awareness of our current and future operations.

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Other Items

We received other income of $162,945 during the year ended December 31, 2009, as compared to other income of $174,872 for the year ended December 31, 2008. The decrease in other income is attributable to a gain of $307,115 attributable to our assignment of all of our right, title and interest in and to a leasehold interest in an oil and gas property located in St. Francis County, Arkansas to an assignee who agreed to assume all of our outstanding payment obligations as consideration for the assignment in 2008.

During the year ended December 31, 2009, our provision for potential legal claims was $135,000, as compared to December 31, 2008, where potential legal claims of $(200,000) related to a legal proceeding disclosed in our prior annual report on Form 10-K. The change in provision for legal claims for the year ended December 31, 2009, as compared to December 31, 2008, is attributable to us entering into a settlement agreement of potential legal claims during 2009 in an amount which was $135,000 less than the provision amount for potential legal claims of $200,000 which we recorded in 2008.

Net Loss

As a result of the above, for the year ended December 31, 2009 we reported a net loss of $9,749,164, as compared to a net loss of $5,304,833 for the year ended December 31, 2008. The increase in our net loss was primarily attributable to increased operating expenses incurred in connection with the acquisition of our mineral property rights in Northeastern Peru, related exploration expenditures incurred during the reporting period, the associated administrative costs required to support our operations and the write down of mineral property acquisition costs relating to our termination of option agreements to acquire the Argentinean Properties.

Basic and Diluted Loss per Share

As a result of the above, the basic and diluted loss per common share was $0.152 and $0.100 for the years ended December 31, 2009 and 2008, respectively.

Liquidity and Capital Resources

At December 31, 2009, we had cash and cash equivalents of $205,125 (December 31, 2008 - $66,580) and working capital deficit of $1,480,730 (December 31, 2008 - $162,440).

During the twelve month period following the date of this report, we anticipate that we will not generate any revenue. Our proposed plan of exploration anticipates that we will incur exploration related expenditures of $3,500,000 over the next twelve months. We anticipate spending approximately $200,000 in ongoing general and administrative expenses per month for the next twelve months, for a total anticipated expenditure of $2,400,000 over the next twelve months. The general and administrative expenses for the year will consist primarily of professional fees for the audit and legal work relating to our regulatory filings throughout the year, as well as transfer agent fees and general office expenses. Our current cash on hand is insufficient to be able to make our planned exploration expenditures and to pay for our general administrative expenses over the next twelve months. Accordingly, we must obtain additional financing in order to continue our plan of operations during and beyond the next twelve months. We believe that debt financing will not be an alternative for funding additional phases of exploration as we do not have limited tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We are currently seeking additional funding in the form of equity financing from the sale of our common stock, but cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our complete exploration program. In the absence of such financing, we will not be able to pursue our exploration program and maintain our mineral property interests in good standing. If we do not fulfill the terms of any of these option agreements according to our business plan, then our ability to commence or continue operations could be materially limited. We also may be forced to abandon our mineral property interests. If we are unable to raise additional capital in the near future, we will experience liquidity problems and management expects that we will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. We may consider entering into a

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

Cash Used in Operating Activities

Operating activities for the year ended December 31, 2009 and 2008 used cash of $5,361,659 and $3,279,958 respectively, which reflect our recurring operating losses. Our net losses of $9,749,164 and $5,304,833 for years ended December 31, 2009 and 2008, respectively, were the primary reasons for our negative operating cash flow in both years.

Cash Used in Investing Activities

For the year ended December 31, 2009, we used $1,199,790 in investing activities, as compared to $1,139,983 used in investing activities during the year ended December 31, 2008. For the year ended December 31, 2009, we purchased $89,560 in equipment and expended $1,110,230 in connection with the acquisition of mineral property interests, as compared to the year ended December 31, 2008, in which we purchased $125,030 in equipment, expended $64,693 for website development costs and expended $950,260 in connection with the acquisition of mineral property interests.

Cash from Financing Activities

As we have had no revenues since inception, we have financed our operations primarily by using existing capital reserves and through private placements of our common stock. Net cash flows provided by financing activities for the year ended December 31, 2009 was $6,699,994, as compared to $4,431,879 for the year ended December 31, 2008. An increase in the cash flow provided by financing activities was primarily due to $6,615,069 we received as net proceeds from the issuance of common stock and warrants and $70,000 in share subscriptions received in advance during the reporting period.

Off Balance Sheet Arrangements

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

Going Concern

We have incurred net losses for the period from inception on March 6, 2000 to December 31, 2009 of $16,434,682 and have no source of revenue. The continuity of our future operations is dependent on our ability to obtain financing and upon future acquisition, exploration and development of profitable operations from our mineral properties. These conditions raise substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies

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

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Mineral property costs

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

Mineral property exploration costs are expensed as incurred.

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

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

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

Equipment

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

Website development costs

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

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

Segments of an enterprise and related information

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

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Start-up expenses

We have adopted ASC 720-15, “Start-Up Costs”, which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with our formation have been included in our expenses for the period from the date of inception on 6 March 2000 to 31 December 2009.

Stock-Based Compensation

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

Foreign Currency Translation

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

Use of estimates

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

Comparative figures

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

Recent Accounting Pronouncements

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

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

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

International Financial Reporting Standards

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

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

Not applicable

ITEM 8. Financial Statements and Supplementary Data.

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

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

None.

ITEM 9A. Controls and Procedures.

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

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

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Management's Report on Internal Control Over Financial Reporting

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

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

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

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

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

In connection with the filing of our annual report on Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2009. In making this assessment, our management used the criteria set forth by Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on our assessment using those criteria, management believes that, as of December 31, 2009, our internal control over financial reporting is effective based on those criteria.

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

Changes in Internal Control Over Financial Reporting

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

ITEM 9B. Other Information.

None.

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PART III

ITEM 10. Directors, Executive Officers and Corporate Governance.

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

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

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

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

ITEM 11. Executive Compensation.

The information required by Item 11 concerning executive compensation is incorporated herein by reference to the information set forth in our Proxy Statement under the heading “Executive Compensation.”

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

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

The information required by Item 12 concerning security ownership of certain beneficial owners and management is incorporated herein by reference to the information set forth in our Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management and related Stockholder Matters.”

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

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

ITEM 14. Principal Accounting Fees and Services.

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

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PART IV

ITEM 15. Exhibits, Financial Statement Schedules.

(a)(1)

Index to Financial Statements		Page (s)
Report of Independent Registered Public Accounting Firm		F-1

Financial Statements:
	Consolidated Balance Sheets - December 31, 2009 and 2008	F-2

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

	Consolidated Statements of Changes in Stockholders’ Equity from Inception on March 6, 2000 to December 31, 2009	F-4

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

Notes to Consolidated Financial Statements		F-6

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James Stafford

Chartered Accountants

Suite 350 – 1111 Melville Street

Vancouver, British Columbia

Canada V6E 3V6

Telephone +1 604 669 0711

Facsimile +1 604 669 0754

* Incorporated professional, James Stafford, Inc.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Constitution Mining Corp.

(An Exploration Stage Company)

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

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

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

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

/s/ James Stafford

James Stafford

Chartered Accountants

Vancouver, Canada

26 February 2010, except as to Note 18 which is as of 26 March 2010.

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Constitution Mining Corp.

(An Exploration Stage Company)

Consolidated Balance Sheets

(Expressed in U.S. Dollars)

As at 31 December

	2009			2008
		$			$
Assets

Current
Cash and cash equivalents		205,125			66,580
Amounts receivable (Note 5)		125,352			60,000
Prepaid expense		22,724			271,250

		353,201			397,830

Property and equipment (Note 6)		150,758			102,049

Website development cost (Note 7)		25,731			47,295

Mineral property costs (Note 8)		19,900,368			5,120,260

		20,430,058			5,667,434

Liabilities

Current
Accounts payable and accrued liabilities (Note 9)		867,027			547,891
Due to related parties (Note 10)		966,904			12,379

		1,833,931			560,270

Future income tax liabilities (Note 14)		752,220			-

		2,586,151			560,270

Stockholders’ equity

Capital stock (Note 12)
Authorized
300,000,000 common shares, par value $0.001 and
50,000,000 preferred shares, par value $0.001
Issued and outstanding
31 December 2009 – 78,055,985 common shares, par value $0.001
31 December 2008 – 58,469,456 common shares, par value $0.001		78,056			58,469
Share subscriptions received in advance (Note 12)		70,000			-
Additional paid in capital		25,336,424			7,945,496
Warrants (Note 12)		3,572,255			3,976,863
Deficit, accumulated during the exploration stage		(16,622,828	)		(6,873,664	)

		12,433,907			5,107,164

Non-controlling interest		5,410,000			-

		17,843,907			5,107,164

		20,430,058			5,667,434

Nature, Basis of Presentation and Continuance of Operations (Note 1), Commitments (Note 16) and Subsequent Events (Note 18)

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

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Constitution Mining Corp.

(An Exploration Stage Company)

Consolidated Statements of Loss and Comprehensive Loss

(Expressed in U.S. Dollars)

	For the period from the date of inception on 6 March 2000 to 31 December 2009 (Unaudited)			For the year ended 31 December 2009			For the year ended 31 December 2008			For the year ended 31 December 2007
		$			$			$			$

Expenses
Amortization expense (Notes 6 and 7)		275,049			74,168			40,379			32,100
Default on oil and gas deposit		25,000			-			-			-
Exploration costs (Note 8)		3,735,457			2,810,496			924,961			-
Interest		165,327			38,802			-			74,770
Investor relations		2,095,097			1,326,379			668,992			99,726
Management fees (Note 11)		782,450			291,367			346,583			132,500
Office and miscellaneous		434,383			196,225			212,290			8,608
Professional fees		2,191,925			986,356			909,483			182,793
Rent (Note 11)		165,330			60,525			89,722			12,683
Stock-based compensation (Note 13)		7,120,480			4,461,838			2,033,607			625,035
Travel		439,436			131,862			253,688			53,886
Write-down of mineral property acquisition costs (Note 8)		4,339,330			4,339,330			-			-
Write-down of property and equipment (Note 6)		26,611			26,611			-			-

Net operating loss before other items		(21,795,875	)		(14,743,959	)		(5,479,705	)		(1,222,101	)

Other items
Foreign exchange income (loss)		26,287			27,941			393			(2,047	)
Gain on sale of oil and gas property (Notes 4 and 15)		307,115			-			307,115			-
Interest income		12,795			4			7,364			5,427
Provision for potential legal claims (Note 9)		(65,000	)		135,000			(200,000	)		-
Project management fees		60,000			-			60,000			-
		341,197			162,945			174,872			3,380
Net operating loss before income taxes		(21,454,678	)		(14,581,014	)		(5,304,833	)		(1,218,721	)

Future income tax recovery (Note 14)		4,831,850			4,831,850			-			-

Net loss and comprehensive loss for the period		(16,622,828	)		(9,749,164	)		(5,304,833	)		(1,218,721	)

Basic and diluted loss per common share					(0.152	)		(0.100	)		(0.025	)

Weighted average number of common shares used in per share calculations					64,212,477			52,812,105			47,875,502

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

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Consolidated Statements of Changes in Stockholders’ Equity

(Expressed in U.S. Dollars)

For the years ended 31 December 2009, 2008 and 2007 (Audited), and

For the period from the date of inception on 6 March 2000 to 31 December 2009 (Unaudited)

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

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

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

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

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

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

Balance at 31 December 2005		42,000,000		42,000		8,000	-		-			(60,767)		-		(10,767)
Common shares issued – cash		4,000,000		4,000		76,000	-		-			-		-		80,000
Contributions to capital by related party – expenses (Notes 11 and 15)		-		-		14,400	-		-			-		-		14,400
Net loss for the year		-		-		-		-		-		(289,343)		-		(289,343)
Balance at 31 December 2006		46,000,000		46,000		98,400	-		-			(350,110)		-		(205,710)
Contributions to capital by related party – expenses (Notes 11 and 15)		-		-		600	-		-			-		-		600
Common shares issued – debt		1,145,300		1,145		21,761	-		-			-		-		22,906
Common shares issued – cash		1,437,000		1,437		501,513	-		-			-		-		502,950
Stock-based compensation (Note 13)		-		-		625,035	-		-			-		-		625,035
Net loss for the year		-		-		-		-		-		(1,218,721)		-		(1,218,721)

Balance at 31 December 2007		48,582,300		48,582		1,247,309	-		-			(1,568,831)		-		(272,940)
Common shares issued – mineral properties (Notes 8, 12 and 15)		3,800,000		3,800		4,166,200	-		-			-		-		4,170,000
Common shares issued – cash (Note 11)		6,016,511		6,016		4,706,272	-		-			-		-		4,712,288
Common shares issued – services (Notes 12 and 15)		70,645		71		49,380	-		-			-		-		49,451
Value assigned to warrants (Note 12)		-		-		(3,739,570)	-		3,739,570			-		-		-
Share issuance costs		-		-		(517,702)	-		237,293			-		-		(280,409)
Stock-based compensation (Note 13)		-		-		2,033,607	-		-			-		-		2,033,607
Net loss for the year		-		-		-		-		-		(5,304,833)		-		(5,304,833)

Balance at 31 December 2008		58,469,456		58,469		7,945,496	-		3,976,863			(6,873,664)		-		5,107,164
Common shares issued – mineral properties (Notes 8, 12 and 15)		2,300,000		2,300		1,676,700	-		-			-		-		1,679,000
Common shares issued – cash (Note 12)		12,786,529		12,787		6,812,536	-		-			-		-		6,825,323
Value assigned to warrants (Note 12)		-		-		(3,309,467)	-		3,309,467					-		-
Warrants expired (Note 12)		-		-		3,739,570	-		(3,739,570)			-		-		-
Agent compensation warrants expired (Note 12)		-		-		237,293	-		(237,293)			-		-		-
Share issuance costs		-		-		(473,042)	-		262,788			-		-		(210,254)
Share subscription received in advance (Note 12)		-		-		-	70,000		-			-		-		70,000
Business acquisition (Notes 8, 12, 15 and 17)		4,500,000		4,500		4,245,500	-		-			-		5,410,000		9,660,000
Stock-based compensation (Note 13)		-		-		4,461,838	-		-			-		-		4,461,838
Net loss for the year		-		-		-		-		-		(9,749,164)		-		(9,749,164)

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

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

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Expressed in U.S. Dollars)

	For the period from the date of inception on 6 March 2000 to 31 December 2009 (Unaudited)			For the year ended 31 December 2009			For the year ended 31 December 2008			For the year ended 31 December 2007
		$			$			$			$

Cash flows used in operating activities
Net loss for the period		(16,622,828	)		(9,749,164	)		(5,304,833	)		(1,218,721	)
Adjustments to reconcile loss to net cash used by operating activities
Accrued interest		126,525			-			-			74,770
Amortization (Notes 6 and 7)		275,049			74,168			40,379			32,100
Contributions to capital by related party expenses		15,000			-			-			600
Future income tax recovery		(4,831,850	)		(4,831,850	)		-			-
Shares issued for services (Notes 12 and 15)		24,199			-			24,199			-
Warrants issued for services (Notes 12 and 15)		25,252			-			25,252			-
Gain on sale of oil & gas property (Notes 4 and 15)		(307,115	)		-			(307,115	)		-
Stock-based compensation (Note 13)		7,120,480			4,461,838			2,033,607			625,035
Write-down of mineral property acquisition costs (Note 8)		4,339,330			4,339,330			-			-
Write-down of property and equipment (Note 6)		26,611			26,611			-			-
Changes in operating assets and liabilities
(Increase) decrease in prepaid expenses		(22,724	)		248,526			(221,542	)		(49,708	)
Increase in amounts receivable		(91,075	)		(31,075	)		(56,000	)		(4,000	)
Increase in accounts payable and accrued liabilities		383,981			(163,910	)		485,104			55,054
Increase in due to related parties		263,867			263,867			-			-

		(9,275,298	)		(5,361,659	)		(3,279,958	)		(475,780	)

Cash flows used in investing activities
Acquisition of mineral property interest (Note 8)		(560,582	)		(360,322	)		(200,260	)		-
Business acquisition, net of cash received (Note 17)		(1,499,908	)		(749,908	)		(750,000	)		-
Purchase of equipment (Note 6)		(214,590	)		(89,560	)		(125,030	)		-
Website development costs (Note 7)		(64,693	)		-			(64,693	)		-
Purchase of oil and gas property (Note 4)		(642,006	)		-			-			-

		(2,981,779	)		(1,199,790	)		(1,139,983	)		-

Cash flows from financing activities
Issuance of common shares, net of share issue costs (Note 12)		4,650,861			3,305,602			692,309			502,950
Increase in due to related parties		27,304			14,925			991			9,090
Issuance of warrants (Note 12)		7,049,037			3,309,467			3,739,570			-
Convertible debentures		665,000			-			-			-
Share subscriptions received in advance (Note 12)		70,000			70,000			-			-

		12,462,202			6,699,994			4,431,879			502,950

Increase in cash and cash equivalents		205,125			138,545			11,938			27,170

Cash and cash equivalents, beginning of period		-			66,580			54,642			27,472

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

Supplemental Disclosures with Respect of Cash Flows (Note 15)

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

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

1.	Nature, Basis of Presentation and Continuance of Operations

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

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

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

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

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

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

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

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

Although management is currently implementing its business plan, and seeking additional sources of equity or debt financing and or a partner, there is no assurance these activities will be successful. This raises substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2.	Changes in Accounting Policies

The Accounting Standards Codification

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principle – a replacement of FASB Statement No. 162”. The Codification reorganized existing U.S. accounting and reporting standards issued by the FASB and other related private sector standard setter into a single source of authoritative accounting principles arranged by topic. The Codification supersedes all existing U.S. accounting standards; all other accounting literature not included in the Codification (other than Securities and Exchange Commission guidance for publicly-traded companies) is considered non-authoritative. The Codification was effective on a prospective basis for interim and annual reporting periods ending after 15 September 2009. The adoption of the Codification changed the Company’s references GAAP accounting standards but did not impact the Company’s results of operations, financial position or liquidity.

Subsequent Events

In May 2009, the FASB issued new guidance for accounting for subsequent events. The new guidance, which is now part of ASC 855, “Subsequent Events” is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. The new guidance was effective on a prospective basis for interim or annual reporting periods ending after 15 June 2009. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Convertible Debt

In May 2008, the FASB issued new guidance for accounting for convertible debt instruments that may be settled in cash. The new guidance, which is now part of ASC 470-20, “Debt with Conversion and Other Options” requires the liability and equity components to be separately accounted for in a manner that will reflect the entity’s nonconvertible debt borrowing rate. The Company will allocate a portion of the proceeds received from the issuance of convertible notes between a liability and equity component by determining the fair value of the liability component using the Company’s nonconvertible debt borrowing rate. The difference between the proceeds of the notes and the fair value of the liability component will be recorded as a discount on the debt with a corresponding offset to paid-in capital. The resulting discount will be accreted by recording additional non-cash interest expense over the expected life of the convertible notes using the effective interest rate method. The new guidance was to be applied retrospectively to all periods presented upon those fiscal years. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Useful Life of an Intangible Assets

In April 2008, the FASB issued new guidance for determining the useful life of an intangible assets. The new guidance, which is now part of ASC 350, “Intangibles – Goodwill and Other”. In determining the useful life of intangible assets, ASC 350 removes the requirement to consider whether an intangible asset can be renewed without substantial cost of material modifications to the existing terms and conditions and, instead, requires an entity to consider its own historical experience in renewing similar arrangements. ASC 350 also requires expanded disclosure related to the determination of intangible asset useful lives. The new guidance was effective for financial statements issued for fiscal years beginning after 15 December 2008. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Derivative Instruments and Hedging Activities

In March 2008, the FASB issued new guidance on the disclosure of derivative instruments and hedging activities. The new guidance, which is now part of ASC 815, “Derivatives and Hedging Activities” requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of, and gains and losses on, derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The new guidance was effective prospectively for financial statements issued for fiscal years beginning after 15 November 2008, with early application encouraged. The adoption of this guidance did not have a significant impact on the Company’s consolidated financial statements.

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Business Combinations

In December 2007, the FASB issued revised guidance for accounting for business combinations. The revised guidance, which is now part of ASC 805, “Business Combination” requires the fair value measurement of assts acquired, liabilities assumed and any noncontrolling interest in the acquiree, at the acquisition date with limited exceptions. Previously, a cost allocation approach was used to allocate the cost of the acquisition based on the estimated fair value of the individual assets acquired and liabilities assumed. The cost allocation approach treated acquisition-related costs and restructuring costs that the acquirer expected to incur as a liability on the acquisition date, as part of the cost of the acquisition. Under the revised guidance, those costs are recognized in the consolidated statement of income separately from the business combination. The revised guidance applies to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 15 December 2008. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Noncontrolling Interests in Consolidated Financial Statements.

In December 2007, the FASB issued new guidance for accounting for noncontrolling interests. The new guidance, which is now part of ASC 810, “Consolidation” establishes accounting and reporting standards for ownership interests in subsidiaries held by parties other than the parent, the amount of consolidated net income attributable and to the noncontrolling interest, changes in a parent’s ownership interest, and the valuation of retained noncontrolling equity investments when a subsidiary is deconsolidated. The new guidance also establishes disclosure requirements that clearly identify and distinguishes between the interests of the parent and the interests of the noncontrolling owners. The new guidance was effective for fiscal years beginning after 15 December 2008. The adoption of this guidance did not have a material effect on the Company’s results of operations, financial position or cash flows.

3.	Significant Accounting Policies

The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.

Principles of consolidation

All inter-company balances and transactions have been eliminated in these consolidated financial statements.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Financial instruments

The carrying value of cash and cash equivalents, amounts receivable, accounts payable and accrued liabilities and amounts due to related parties approximates their fair value because of the short maturity of these instruments. The Company’s operations are in the U.S., Argentina and Peru and virtually all of its assets and liabilities are giving rise to significant exposure to market risks from changes in foreign currency rates. The Company’s financial risk is the risk that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

Derivative financial instruments

The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Income taxes

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.

Basic and diluted net loss per share

The Company computes net income (loss) per share in accordance with ASC 260 “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.

Comprehensive loss

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at 31 December 2009, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Mineral property costs

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

Mineral property exploration costs are expensed as incurred.

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

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

Equipment

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

Website development costs

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Segments of an enterprise and related information

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

Start-up expenses

The Company has adopted ASC 720-15, “Start-Up Costs”, which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Company’s formation have been included in the Company’s expenses for the period from the date of inception on 6 March 2000 to 31 December 2009.

Foreign currency translation

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

Use of estimates

Comparative figures

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

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Stock-based compensation

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

Recent accounting pronouncements

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

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

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

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

International Financial Reporting Standards

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

4.	Unproven Oil and Gas Exploration Property

Tombaugh Farms Property – St. Francis County, Arkansas

On 27 June 2006, the Company acquired a 100% interest in a mineral, oil and gas property lease located in St. Francis County, Arkansas (the “Tombaugh Lease”) for an up front cash payment of $642,006. The lease is for a period of five years and is subject to a 19% royalty on oil and other liquid hydrocarbons produced, saved and sold, and can be extended at the option of the Company for an additional five years on the same terms. By agreements effective 18 January 2008, the Company assigned all of its rights, title and interest in the Tombaugh Lease with a book value of $481,504 to a purchaser in consideration for the purchaser assuming the Company’s outstanding payment obligations of $788,619 related to its convertible debentures. The Company recorded a gain of $307,115 upon completion of this transaction (Note 15).

	Balance at 31 December 2009		Balance at 31 December 2008
		$		$
Unproven oil and gas properties consist of the following:
Undeveloped properties		-		-

The following sets forth costs incurred for oil and gas property acquisition and development activities, whether capitalized or expensed.

	During the year ended 31 December 2009		During the year ended 31 December 2008
		$		$

Acquisition – unproved		-		481,504
Disposal through assignment of rights		-		(481,504	)
Amortization		-		-

		-		-

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

5.	Amounts Receivable

Amounts receivable are non-interest bearing, unsecured and have settlement dates within one year.

6.	Property and Equipment

					Net Book Value
	Cost		Accumulated amortization		31 December 2009		31 December 2008
		$		$		$		$

Equipment		213,898		63,141		150,757		102,049

During the year ended 31 December 2009, total additions to property and equipment were $127,923 (31 December 2008 - $125,030) being $89,560 related to direct purchase and $38,363 related to acquisition of Minera Maranon S.A.C.

During the year ended 31 December 2009, total write-down of property and equipment were $26,611 (31 December 2008 - $Nil) (Note 15).

7.	Website Development Cost

					Net Book Value
	Cost		Accumulated amortization		31 December 2009		31 December 2008
		$		$		$		$

Website development		64,693		38,962		25,731		47,295

During the year ended 31 December 2009, total additions to website development were $Nil (31 December 2008 - $64,693).

8.	Mineral Property Costs

Seabridge Gold Claims

Effective 2 December 2009, the Company entered into a written Letter of Intent with Seabridge Gold Inc. (“Seabridge”) for the exclusive option to acquire a 100% interest in certain mining claims and leasehold interests in Nevada (the “Seabridge Claims”). The Company has until 15 January 2010 (extended to 15 March 2010) to conduct its due diligence (completed) and then, to proceed to enter into a more formal option agreement with Seabridge. Until then, the Letter of Intent remains binding between the parties (Notes 16 and 18).

Under the terms of the Letter of Intent, in order to exercise the Seabridge Claims, the Company upon signing of the Letter of Intent, must pay Seabridge $200,000 (paid) which will be credited against the $1,000,000 payable as defined below.

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Upon competition the transfer of title to the Seabridge Claims scheduled for 31 March 2010 (the “Closing Date”) or as soon as possible thereafter, the Company must:

a.	Pay $1,000,000, against which the $200,000 (paid) delivered upon signing the Letter of Intent will be credited, and the remaining $800,000 will be paid;

b.	Issue 1,000,000 restricted common shares of the Company;

c.	Issue a secured promissory note in the principal amount of $1,000,000 bearing interest at 8% per annum, payable in full on or before the first anniversary of the Closing Date and secured the Seabridge Claims; and

Issue a transferable convertible secured debenture in the principal amount of $1,000,000 maturing on the second anniversary of the Closing Date and bearing interest at a rate of 8% per year, payable quarterly, with principal and accrued interest convertible by Seabridge within 30 days of maturity into share of common stock at $1.00 per share, redeemable in full, not in part, by the Company at any time upon payment of 125% of the principal and accrued interest outstanding at the time of security redemption.

On or before 30 April 2010, the Company must:

a.	Pay $1,000,000; and

b.	Issue 2,000,000 restricted common shares, which will be held in escrow and released 36 months following issuance.

If the payment of $1,000,000 and the issuance of 2,000,000 restricted common shares of the Company, required on or before 30 April 2010, is not completed by 1 May 2010, the Company will then have to transfer all the Seabridge Claims back to Seabridge (Note 18).

The Company has not conducted exploration activities during the year on this property.

Peruvian Gold Sands

On 29 September 2008, the Company entered into a Mineral Right option agreement with Temasek Investments Inc. (“Temasek”) to acquire mining properties totalling 382 km2 in Northeastern Peru (the “Peruvian Agreement”). Pursuant to this Peruvian Agreement, the company acquired four separate options from Temasek, each providing for the acquisition of a 25% interest in certain mining properties (the “Peruvian Gold Sands”). The Peruvian Gold Sands are owned by Minera Maranon S.A.C (“Maranon”). Bacon Hill, a wholly-owned subsidiary of Temasek, owns 999 shares of 1,000 shares of Maranon that are issued and outstanding. Temasek owns the single remaining share of Maranon. The acquisition of each 25% interest in the Peruvian Gold Sands will occur through the transfer to the Company of 25% of the outstanding shares of Bacon Hill.

The Company may exercise the initial 25% option by fulfilling the following conditions:

a.	Pay a non-refundable $375,000 on the date the Peruvian Agreement is executed (paid);

b.	Issue 2,000,000 common shares within 5 business days (issued and valued at $1.01 per common share) (Notes 12 and 15); and

c.	Pay an additional $375,000 prior to 28 December 2008 (paid).

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

The Company entered into an amending agreement dated 12 May 2009 (the “Peruvian Amendment”) and a second amending agreement dated 29 October 2009 (the “Second Peruvian Amendment”) with Temasek. Under the Second Peruvian Amendment, the Company may now exercise the second 25% option resulting in the acquisition of a 50% interest in the Mineral Rights by fulfilling the following conditions as set out in the Second Peruvian Amendment:

a.	Exercise and complete the initial 25% option by 29 March 2009 (completed);

b.	Issue an additional 2,000,000 common shares by 29 March 2009 (issued and valued at $0.65 per common share) (Notes 12 and 15);

c.	Pay an additional $750,000 by 29 October 2009 or as soon as practicable thereafter (paid); and

d.	Issue an additional 500,000 common shares by 29 October 2009 or as soon as practicable thereafter (issued and valued at $1.18 per common share) (Notes 12 and 15).

The Company may exercise the third 25% option by fulfilling the following conditions:

a.	Exercise and complete the initial and second 25% options by 29 October 2009 (completed);

b.	Issue an additional 2,000,000 common shares by 29 October 2009 or as soon as practicable thereafter (issued and valued at $1.18 per common share) (Notes 12 and 15); and

c.	Pay an additional $3,000,000 by 31 March 2010.

The Company may exercise the final 25% option by fulfilling the following conditions by 29 March 2010:

a.	Exercise and complete the initial, second and third 25% options;

b.	Pay an additional $5,000,000; and

c.	Issue an additional 4,000,000 common shares.

The property is subject to a 2.5% net returns royalty that the Company can reduce to 1.0% upon payment of a further $2,000,000 within 90 days of the exercise and completion of the final 25% option (Note 16).

Expenditures related to the Peruvian Gold Sands for the year ended 31 December 2009 consist of business development and project generation of $4,138 (31 December 2008 - $35), camp costs and field supplies of $55,933 (31 December 2008 - $214), drilling of $182,182 (31 December 2008 - $Nil), mapping of $349 (31 December 2008 - $Nil), rental of $50,689 (31 December 2008 - $Nil), sampling of $14,411 (31 December 2008 – $Nil), taxes and permitting of $17,999 (31 December 2008 - $23,562), transportation and fuel of $525,222 (31 December 2008 - $61,634), and wages, consulting and management fees of $1,865,972 (31 December 2008 – $156,440).

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Atena Gold Project

On 12 December 2007, the Company entered into an assignment agreement (the “Atena Agreement”) to acquire the right to explore and option to purchase the 3,676 hectare Atena Gold Project located in the Salta Province of Argentina. Pursuant to the Atena Agreement, the Company was required to issue 500,000 common shares (issued and valued at $0.70 per common share) and pay $60,000 (paid). The Company could have acquired 100% of the option if it incurred a minimum of $3,740,000 in work commitment expenditures on the property and issue 7,000,000 common shares according to the following schedule (Notes 12 and 15):

a.	$240,000 in expenditures (incurred) plus a further issuance of 1,000,000 common shares (issued and valued at $1.59 per common share) on or before 15 March 2008;

b.	a further $500,000 in expenditures plus a further issuance of 2,000,000 common shares on or before 15 March 2009 (issued and valued at $0.73 per common share);

c.	a further $1,000,000 in expenditures plus a further issuance of 4,000,000 common shares on or before 15 March 2010; and

d.	a further $2,000,000 in expenditures on or before 15 March 2011.

The Company entered into an amending agreement dated 5 May 2009 (the “Atena Amendment”) with Proyectos Mineros S.A. (“PMSA”). Under the Atena Amendment, the $500,000 in expenditures originally required to be made by the Company on the Atena Gold Project property by 15 March 2009 was waived upon the issuance of the 2,000,000 common shares (issued) of the Company as required under the Atena Agreement.

The option is subject to a 1% net smelter returns royalty.

Expenditures related to the Atena Gold Project for the year ended 31 December 2009 consist of business development and project generation of $108 (31 December 2008 - $Nil), camp costs and field supplies of $8,800 (31 December 2008 - $48,211), geochemical of $1,460 (31 December 2008 - $51,161), geology and engineering of $Nil (31 December 2008 - $8,123), geophysics of $6,388 (31 December 2008 - $1,903), mapping $29,260 (31 December 2008 - $Nil), taxes and permitting of $8,385 (31 December 2008 - $14,909), transportation and fuel of $18,156 (31 December 2008 - $94,528), trenching of $9,414 (31 December 2008 - $12,725), and wages, consulting and management fees of $9,265 (31 December 2008 - $114,609).

During the year ended 31 December 2009, the Company announced that it was terminating its exploration program on the Atena Gold Project and would allocate its resources exclusively to pursue the exploration and development of their property interests in Northeastern Peru, the Peruvian Agreement.

During the year ended 31 December 2009, the Company recorded a provision for write-down of mineral property costs of $3,530,260 related to the Atena property (Note 15).

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Cerro Amarillo Property

On 8 January 2008, the Company entered into an assignment agreement (the “Cerro Amarillo Agreement”) to explore and option the 14,221 hectare Cerro Amarillo Property located in the Province of Mendoza, Argentina with a company related to the Company by way of a director and shareholder in common. Pursuant to the terms of the Cerro Amarillo Agreement, the Company issued 300,000 common shares (issued and valued at $0.70 per common share) and pay $10,000 (paid). The Company could have acquired a 100% of the option if it incurred a minimum of $450,000 in work commitment expenditures on the property and issues 2,100,000 common shares according to the following schedule (Notes 12 and 15):

a.	$200,000 in expenditures plus a further issuance of 300,000 common shares on or before 8 January 2009 (issued and valued at $0.73 per common share);

b.	a further $250,000 in expenditures plus a further issuance of 600,000 common shares on or before 8 January 2010;

c.	a further issuance of 600,000 common shares on or before 8 January 2011; and

d.	a further issuance of 600,000 common shares on or before 8 January 2012.

The Company entered into an amending agreement dated 5 May 2009 (the “Cerro Amarillo Amendment”) with PMSA. Under the Cerro Amarillo Amendment, the $200,000 in expenditures originally required to be made by the Company on the Cerro Amarillo property by 8 January 2009 was waived upon the issuance of the 300,000 common shares (issued and valued at $0.73 per common share) of the Company as required under the Cerro Amarillo Agreement.

To exercise the option the company is required to issue a further 3,000,000 common shares. The option is subject to a 1% net smelter returns royalty.

The Company has not conducted exploration activities during the year on this property.

The Company was also responsible for certain payments under the agreement between the underlying titleholder of the mineral property rights and PMSA (the “Cerro Amarillo Agreement”). In order for the Company to keep its interest in good standing and to exercise the option to acquire a 100% interest in the Cerro Amarillo property, the Company had to make the following payments to the underlying titleholder and incur a minimum of $250,000 in work commitment expenditures on the property, as set forth in the Cerro Amarillo Agreement:

a.	Pay $20,000 by 28 February 2008 (paid);

b.	Pay additional $40,000 by 1 June 2008 (paid);

c.	Pay additional $50,000 by 1 December 2008 (paid $25,000; $25,000 accrued as at 31 December 2009);

d.	Pay additional $60,000 by 1 June 2009 (accrued as at 31 December 2009);

e.	Pay additional $100,000 by 1 December 2009;

f.	Pay additional $150,000 by 1 December 2010;

g.	Pay additional $200,000 by 1 December 2011; and

h.	Pay additional $250,000 by 1 June 2012.

i.	Incur $50,000 in exploration expenditures on or before 1 December 2008 (incurred);

j.	Incur additional $200,000 in exploration expenditures on or before 1 December 2009 (incurred; $125,070 included in accounts payable);

During the year ended 31 December 2009, the Company announced that it was terminating their exploration program on the Cerro Amarillo Property and would allocate its resources exclusively to pursue the exploration and development of its property interests in northeastern Peru, the Peruvian Agreement.

Expenditures related to the Cerro Amarillo Property for the year ended 31 December 2009 consist of camp costs and field supplies of $Nil (31 December 2008 - $7,589), geochemical of $Nil (31 December 2008 - $1,903), geology and engineering of $Nil (31 December 2008 - $345), taxes and permitting of $Nil (31 December 2008 - $12,973), transportation and fuel of $Nil (31 December 2008 - $35,544), and wages, consulting and management fees of $Nil (31 December 2008 - $66,576).

During the year ended 31 December 2009, the Company recorded a provision for write-down of mineral property costs of $734,070 related to the Cerro Amarillo property (Note 15).

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Amira, Amira Norte and Esparta II

On 17 March 2008, the Company entered into an assignment agreement with PMSA (the “Amira Agreement”), a company related to the Company by way of a director and shareholder in common. Under the Agreement, PMSA assigned to the Company PMSA’s right to explore and option to purchase a 90% interest in three mining properties referred to as “Amira”, “Amira Norte” and “Esparta II” (collectively, the “Properties”), which are located in the Province of Salta, Argentina. In order for the Company to keep its interest in good standing and to exercise the option to acquire a 90% interest in the Properties, the Company must make the following payments to the Titleholder, as set forth in the Amira Agreement (Note 18):

a. US$75,000 by 19 January 2009;

b. a further US$150,000 by 19 January 2010;

c. a further US$200,000 by 19 January 2011; and

d. further US$1,000,000 by 19 January 2012, by means of which final payment the Option to acquire a 90%

interest in the Properties will have been automatically exercised.

The Company entered into an amending assignment agreement dated 5 May 2009 (the “Amira Amendment”) with Silvia Rodriguez, owner of the Properties, whereby the payment originally due on 19 January 2009 under the Amira Agreement was due as follows:

a. US$25,000 on or by the end on 30 June 2009 (not paid but accrued as at 31 December 2009); and

b. US$50,000 on or before by the end of 30 September 2009 (not paid but accrrued as at 31 December 2009).

Expenditures related to the Amira, Amira Norte and Esparta II Properties for the year ended 31 December 2009 consist of business development and project generation of $38 (31 December 2008 - $18,125), camp costs and field supplies of $Nil (31 December 2008 - $13,065), geochemical of $2,073 (31 December 2008 - $Nil) property assessment of $Nil (31 December 2008 - $6,428), transportation and fuel of $203 (31 December 2008 - $74,374), and wages, consulting and management fees of $51 (31 December 2008 - $99,985).

During the year ended 31 December 2009, the Company announced that it was terminating its exploration program on the Properties and would allocate its resources exclusively to pursue the exploration and development of its property interests in Northeastern Peru, the Peruvian Agreement.

During the year ended 31 December 2009, the Company recorded a provision for write-down of mineral property costs of $75,000 related to the Amira Agreement.

9.	Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

Included in accounts payable and accrued liabilities at 31 December 2009 is $45,000 and $20,000 (31 December 2008 - $200,000) related to settlement of potential legal claims on incidents arising from the mineral property interests and the related legal fees, respectively.

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

10.	Due to Related Parties

As at 31 December 2009, the amount due to related parties consists of $27,304 (31 December 2008 - $12,379) payable to directors and former directors of the Company and $939,600 (31 December 2008 - $Nil) payable to companies controlled by shareholders and directors of Maranon. This balance is non-interest bearing, unsecured, and has no fixed terms of repayment.

11.	Related Party Transactions

During the year ended 31 December 2009, the Company paid or accrued management and consulting fees of $291,366 (31 December 2008 - $346,583) to directors and officers of the Company and companies controlled by directors and officer.

During the year ended 31 December 2009, director and shareholder of the Company made contributions to capital for management fees and rent of $Nil (31 December 2008 - $Nil, cumulative - $12,000) and $Nil (31 December 2008 - $Nil, cumulative - $3,000) respectively. This amount has been recorded as an increase in expenditures and an increase in additional paid-in capital (Note 15).

12.	Capital Stock

Authorized

The total authorized capital consists of:

·	300,000,000 of common shares with par value of $0.001

·	50,000,000 of preferred shares with par value of $0.001

Issued and outstanding

As at 31 December 2009, the total issued and outstanding capital stock is 78,055,985 common shares with a par value of $0.001 per common share.

On 1 December 2009, the Company issued 7,533,462 units at a price of $0.65 per unit for total proceeds of $4,686,496, net of issue costs of $210,254. Each unit consist of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase an additional common share at the price of $1.00 up to 1 December 2010, commencing 1 June 2010.

On 1 December 2009, the Company issued 315,775 agent compensation warrants for services rendered by a private placement agent. Each share purchase warrant entitles the holder to purchase one common share at a price of $1.00 up to 1 December 2010, commencing 1 June 2010 (Note 15).

On 2 November 2009, the Company issued 2,500,000 common shares valued at $1.18 per common share pursuant to the Peruvian Gold Sands assignment agreement (Notes 8 and 15).

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

On 2 September 2009, the Company issued 923,428 units at a price of $0.35 per unit for total proceeds of $323,200. Each unit consist of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase an additional common share at the price of $0.70 up to 2 September 2011, commencing 2 March 2010.

On 14 August 2009, a total of 5,007,300 previously outstanding share purchase warrants expired.

On 14 August 2009, a total of 350,511 previously outstanding agent compensation warrants expired.

On 9 July 2009, the Company issued 4,129,639 units at a price of $0.35 per unit for total proceeds of $1,445,373. Each unit consist of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase an additional common share at the price of $0.70 up to 9 July 2011, commencing 9 January 2010.

On 29 June 2009, the Company issued 2,000,000 common shares valued at $0.65 per common share pursuant to the Peruvian Gold Sands assignment agreement (Notes 8 and 15).

On 2 June 2009, the Company issued 2,000,000 common shares valued at $0.73 per common share pursuant to the Atena Agreement (Notes 8 and 15).

On 2 June 2009, the Company issued 300,000 common shares valued at $0.73 per common share pursuant to the Cerro Amarillo Agreement (Notes 8 and 15).

On 17 April 2009, the Company issued 200,000 units at a price of $0.80 per unit for proceeds of $160,000. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase an additional common share at a price of $0.70 up to 17 April 2010, commencing 17 October 2009.

On 7 April 2009, a total of 1,009,211 previously outstanding share purchase warrants were cancelled.

On 7 April 2009, a total of 70,645 previously outstanding agent compensation warrants were cancelled.

During the year ended 31 December 2008, the company issued 2,000,000 common shares valued at $1.01 per common share in pursuant to the Peruvian Gold Sands assignment agreement (Notes 8 and 15).

During the year ended 31 December 2008, the Company issued 350,511 agent compensation warrants for services rendered by a private placement agent. Each share purchase warrant entitles the holder to purchase one common share at a price of $1.40 up to 19 August 2009, commencing 19 February 2009 (Note 15).

During the year ended 31 December 2008, the Company issued 5,007,300 units at a price of $0.80 per unit for proceeds of $3,725,431, net of issue costs of $280,409. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase an additional common share at a price of $1.40 up to 19 August 2009, commencing 19 February 2009.

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

During the year ended 31 December 2008, the Company issued 1,000,000 common shares valued at $1.59 per common share pursuant to the Atena Gold Project assignment agreement (Notes 8 and 15).

During the year ended 31 December 2008, the Company issued an additional 70,645 units at a price of $0.70 per unit for services rendered by a private placement agent. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase an additional common share at a price of $1.40 up to 7 April 2009, commencing 7 October 2008 (Note 15).

During the year ended 31 December 2008, the Company issued 1,009,211 units at a price of $0.70 per unit. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant entitles the holder to purchase an additional common share at a price of $1.40 up to 7 April 2009, commencing 7 October 2008.

During the year ended 31 December 2008, the Company issued 300,000 common shares valued at $0.70 per common share pursuant to the Cerro Amarillo assignment agreement (Notes 8 and 15).

During the year ended 31 December 2008, the Company issued 500,000 common shares valued at $0.70 per common share pursuant to the Atena Gold Project assignment agreement (Notes 8 and 15).

Share Subscriptions Received in Advance

Share subscriptions received in advance consists of $70,000 cash received by the Company for 200,000 common shares valued at $0.35 that were not yet issued at 31 December 2009 (Note 18).

Share Purchase Warrants

The following share purchase warrants were outstanding at 31 December 2009:

	Exercise price		Number of warrants		Remaining contractual life (years)
						$

Warrants		0.70		200,000		0.29
Agent compensation warrants		1.00		315,775		0.92
Warrants		1.00		7,533,462		0.92
Warrants		0.70		4,129,639		1.52
Warrants		0.70		923,428		1.67

				13,102,304

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

The following is a summary of warrant activities during the years ended 31 December 2009 and 2008:

	Number of warrants		Weighted average exercise price
				$

Outstanding at 1 January 2008		-		-

Granted		6,437,667		1.40
Exercised		-		-
Cancelled		-		-
Expired		-		-

Outstanding at 31 December 2008		6,437,667		1.40

Weighted average fair value of warrants granted during the year				0.62

Outstanding at 1 January 2009	6,437,667		1.40

Granted	13,102,304		0.88
Exercised	-		-
Cancelled	(1,079,856	)	1.40
Expired	(5,357,811	)	1.40

Outstanding at 31 December 2009	13,102,304		0.88

Weighted average fair value of warrants granted during the year			0.55

The weighted average grant date fair value of warrants issued during the year ended 31 December 2009, amounted to $0.55 per warrant (31 December 2008 - $0.62). The fair value of each warrant granted was determined using the Black-Scholes warrant pricing model and the following weighted average assumptions:

	2009			2008

Risk free interest rate		0.52	%		2.02	%
Expected life	1.40 years			1 year
Annualized volatility		107.96	%		120.80	%
Expected dividends		-			-

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Table of Contents

Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

Stock Options

The following incentive stock options were outstanding at 31 December 2009:

	Exercise price		Number of options		Remaining contractual life (years)
	$

Options		1.00		1,410,000		8.10
Options		1.05		1,425,000		8.86
Options		0.70		3,240,000		9.39

				6,075,000

The following is a summary of stock option activities during the years ended 31 December 2009 and 2008:

	Number of options			Weighted average exercise price
					$

Outstanding and exercisable at 1 January 2008		3,200,000			0.30

Granted		8,430,000			1.01
Exercised		-
Cancelled		(6,795,000	)		0.67

Outstanding and exercisable at 31 December 2008		4,835,000			1.02

Weighted average fair value of options granted during the year					0.90


Outstanding at 1 January 2009		4,835,000			1.02

Granted		5,440,000			0.70
Exercised		-
Cancelled		(4,200,000	)		0.84

Outstanding at 31 December 2009		6,075,000			0.85

Weighted average fair value of options vested during the year					0.73

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Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

13.	Stock-Based Compensation

During the year ended 31 December 2009, the Company granted 5,440,000 stock options to employees, directors and consultants of the Company entitling the holders to purchase common shares of the Company for proceeds of $0.70 per common share expiring 20 May 2019 of which 3,240,000 were granted to employees and 2,200,000 were granted to non-employees of the Company. The fair value of the portion of the options which vested in the year, estimated using Black-Scholes model, was $1,543,706. This amount has been expensed as stock-based compensation.

During the year ended 31 December 2008, the Company granted 8,430,000 stock options to employees and directors of the Company entitling the holders to purchase up to 6,880,000 common shares of the Company for proceeds of $1.00 per common share expiring 4 February 2018 and 1,550,000 common shares of the Company for proceeds of $1.05 per common share expiring 10 November 2018. A total of 3,595,000 of these stock options were cancelled during the year ended 31 December 2008. The fair value of the portion of the options which vested in the year, estimated using Black-Scholes model, was $2,918,132 (31 December 2008 - $2,033,607). This amount has been expensed as stock-based compensation.

A total of 3,900,000 of the previously granted outstanding stock options, 3,700,000 granted to employees and 200,000 granted to non-employees, of the Company were cancelled during the year ended 31 December 2009 (31 December 2008 – 6,795,000) (Note 12).

The fair value of each option was estimated on the date of grant using Black-Scholes option pricing model. The assumptions about stock-price volatility have been based exclusively on the implied volatilities of publicly traded options to buy the Company’s stock with contractual terms closest to the expected life of options granted to employees, directors or consultants.

The following assumptions were used for the Black-Scholes valuation of stock options granted/vested:

	2009			2008

Risk free interest rate		3.21	%		3.71	%
Expected life	9.9 years			10.0 years
Annualized volatility		120	%		101	%
Expected dividends		-			-

14.	Income Taxes

The Company has losses carried forward for income tax purposes to 31 December 2009. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for consolidated financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.

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Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

The provision for refundable federal income tax consists of the following:

	For the year ended 31 December 2009			For the year ended 31 December 2008
		$			$
Deferred tax asset attributable to:
Current operations		5,032,402			1,808,240
Amortization		(25,696	)		(13,765	)
Stock based compensation		(1,517,025	)		(691,426	)
Other		45,900			(68,000	)
Change in valuation allowance		1,296,269			(1,035,049	)

Future income tax recovery		4,831,850			-

The composition of the Company’s deferred tax assets as at 31 December 2009 and 31 December 2008 is as follows:

	As at 31 December 2009			As at 31 December 2008
		$			$

Net income tax operating loss carryforward		14,189,400			3,799,141

Statutory federal income tax rate		34.05	%		34.15	%
Effective income tax rate		0.00	%		0.00	%

Future income tax assets (liabilities)
Tax loss carryforward		4,831,850			1,296,269
Mineral property costs		(5,584,070	)		-
Less: Valuation allowance		-			(1,296,269	)

Future income tax assets (liabilities)		(752,220	)		-

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As at 31 December 2009, the Company has an unused net operating loss carryforward balance of approximately $14,189,400 that is available to offset future taxable income. This unused net operating loss carryforward balance for income tax purposes expires between the years 2020 to 2029.

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Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

15.	Supplemental Disclosures with Respect to Cash Flows

	For the period from the date of inception on 6 March 2000 to 31 December 2009 (Unaudited)		For the year ended 31 December 2009		For the year ended 31 December 2008		For the year ended 31 December 2007
		$		$		$		$

Cash paid during the year for interest		38,802		38,802		-		-
Cash paid during the year for income taxes		-		-		-		-

During the year ended 31 December 2009, the Company recorded a total write-down of mineral property expenditures in the amount of $4,339,330 related to the Atena, Cerro Amarillo and Amira properties (Note 8).

During the year ended 31 December 2009, the Company recorded a total write-down of property and equipment in the amount of $26,611 (Note 6).

During the year ended 31 December 2009, the Company issued 315,775 agent compensation warrants valued at $262,788 for agent services rendered (Note 12).

During the year ended 31 December 2009, the Company issued 2,500,000 common shares valued at $1.18 per common share pursuant to the Peruvian Gold Sands assignment agreement (Notes 8 and 12).

During the year ended 31 December 2009, the Company issued 2,000,000 common shares valued at $0.65 per common share pursuant to the Peruvian Gold Sands assignment agreement (Notes 8 and 12).

During the year ended 31 December 2009, the Company issued 2,000,000 common shares valued at $0.73 per common share pursuant to the Atena Agreement (Notes 8 and 12).

During the year ended 31 December 2009, the Company issued 300,000 common shares valued at $0.73 per common share pursuant to the Cerro Amarillo Agreement (Notes 8 and 12).

During the year ended 31 December 2008, the Company issued 500,000 common shares valued at $0.70 per common share in pursuant to the Atena Gold Project assignment agreement (Notes 8 and 12).

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Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

During the year ended 31 December 2008, the Company issued 2,000,000 common shares valued at $1.01 per common share in pursuant to the Peruvian Gold Sands assignment agreement (Notes 8 and 12).

During the year ended 31 December 2008, the Company issued 300,000 common shares valued at $0.70 per common share pursuant to the Cerro Amarillo assignment agreement (Notes 8 and 12).

During the year ended 31 December 2008, the Company issued 70,645 common shares valued at $49,252 and 70,645 warrants valued at $25,252 for agent services rendered (Note 12).

During the year ended 31 December 2008, the Company issued 1,000,000 common shares valued at $1.59 per common share pursuant to the Atena Gold Project assignment agreement (Notes 8 and 12).

During the year ended 31 December 2008, the Company issued 350,511 agent compensation warrants valued at $237,293 for agent services rendered (Note 12).

By agreements effective 18 January 2008, the Company assigned all of its rights, title and interest in the Tombaugh Lease with a book value of $481,504 to a purchaser in consideration for the purchaser assuming the Company’s outstanding payment obligations of $788,619 related to its convertible debentures. The Company recorded a gain of $307,115 upon completion of the transaction (Note 4).

During the year ended 31 December 2008, the Company issued $Nil common shares (31 December 2007 – 1,145,300) for convertible debentures of $Nil (31 December 2007 - $22,906) (Note 11).

During the year ended 31 December 2008 the Company accrued interest of $Nil (31 December 2007 - $74,770, cumulative – $126,525) on convertible debentures.

16.	Commitments

The Company is subject to certain outstanding and future commitments related to its mineral property interest (Note 8).

17.	Interest in Variable Interest Entity

In October 2009, the Company acquired 50% interest in Bacon Hill, the registered owner of 999 shares of the 1,000 shares of Maranon that are issued and outstanding. Maranon is the beneficial owner of 100% interest in the Peruvian Gold Sands (Note 8). The aggregate purchase price was $5,410,000 paid by $1,500,000 in cash and 4,500,000 common shares of the Company valued at $3,910,000 (Notes 8, 12 and 15). The acquisition of Bacon Hill expands the Company’s business of acquiring and exploring mineral properties. The Company also has the exclusive right to purchase the remaining 50% share interest in Bacon Hill, upon certain terms and conditions (Note 8).

The Company follows ASC 810-10 and fully consolidates the assets, liabilities, revenues and expenses of Bacon Hill. A valuation of certain assets was completed and the Company internally determined the fair value of others assets and liabilities. In determining the fair value of acquired assets, standard valuation techniques were used including market and income approach.

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Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

The purchase price allocation has been determined as follows:

Assets purchased:
Cash and cash equivalents	$	92
Amounts receivable		34,277
Mineral property interests		17,205,047
Property and equipment		38,363

Total assets acquired	$	17,277,779

Liabilities assumed:
Accounts payable	$	197,976
Due to related parties		675,733
Future income tax liabilities		5,584,070

Total liabilities assumed	$	6,457,779

Non-controlling interest:	$	5,410,000

Purchase price	$	5,410,000

Pro forma information

The following unaudited consolidated pro forma financial information presents the combined results of operations of the Company and Bacon Hill for the years ended 31 December 2009 and 2008 as if the acquisition had occurred at 1 January 2008:

	Unaudited Consolidated Pro Forma
	For the year ended
	31 December 2009			31 December 2008
		$			$

Revenue		-			-
Net loss		9,587,411			5,305,545
Basic and diluted loss per common share		(0.149	)		(0.100	)

The amounts of revenue and net loss of Bacon Hill since the acquisition date included in the consolidated income statement for the year ended 31 December 2009 are $Nil and $4,367, respectively.

The unaudited consolidated pro forma financial information does not include adjustments to remove certain private company expenses, which may not be incurred in future periods. Similarly, the unaudited consolidated pro forma financial information does not include adjustments for additional expenses, such as rent, insurance, and other expenses that would have been incurred subsequent to the acquisition date. The unaudited consolidated pro forma financial information does not necessarily reflect the results of operations that would have been occurred had the Company and Maranon been a single entity during these periods.

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Constitution Mining Corp.

(An Exploration Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

31 December 2009

18.	Subsequent Events

Subsequent to the year ended 31 December 2009 to the date the consolidated financial statements were available to be issued on 26 March 2010, the following events occurred:

On 25 January 2010 (the “Effective Date”), the Company entered into an assignment agreement with Temasek (the “Minera Saramiriza Agreement”), to acquire a 100% interest in the mineral rights that are the property and title on Minera Saramiriza S.A.C. In order for the Company to keep its interest in good standing and to exercise the option to acquire a 100% interest in the property, the Company must issue, within 30 business days from the Effective Date, 500,000 common shares of the Company to the order and direction of Temasek.

The Company may exercise the initial 33% option by fulfilling the following conditions within 12 months of the Effective Date:

a. Issued the initial 500,000 common shares (issued and valued at $0.81);

b. Pay $250,000; and

c. Issue an additional 1,000,000 common shares.

The Company may exercise the second 33% option by fulfilling the following conditions within 24 months of the Effective Date:

a. Exercise and complete the initial 33 % option;

b. Pay an additional $1,000,000; and

c. Issue an additional 1,000,000 common shares.

The Company may exercise the final 34% option by fulfilling the following conditions within 36 months of the Effective Date:

a. Exercise and complete the initial and second 33 % options;

b. Pay an additional $2,000,000; and

c. Issue an additional 2,000,000 common shares.

The property is subject to a 2.5% net returns royalty that the Company can reduce to 1.0% upon payment of a further $2,000,000 within 90 days of the exercise and completion of the final 34% option.

2.	On 22 January 2010, the Company granted 3,240,000 stock options of which 330,000 were granted to employees and 2,910,000 were granted to non-employees of the Company.

3.	On 1 March 2010, the Company extended the Seabridge Letter of Intent due diligence period to 15 March 2010 (completed) with closing of the transaction to occur on or about 31 March 2010.

4.	On 19 March 2010, the Company issued 500,000 common shares valued at $0.81 per common share related to the Minera Saramiriza Agreement.

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(a)(2) Not Applicable.

(a)(3) Exhibits.

See (b) below.

(b) Exhibits.

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

Not Applicable.

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Glossary of Certain Mining Terms

Alluvial -	Material deposited by the action of running water.
Anticline -	An arch or fold in layers of rock shaped like the crest of a wave.
Base Metal -	Any non-precious metal (e.g., copper, lead, zinc, nickel, etc.).
Bulk Sample -	A large sample of mineralized rock, frequently hundreds of tonnes, selected in such a manner as to be representative of the potential orebody being sampled. Used to determine metallurgical characteristics.
Bullion -	Metal formed into bars or ingots.
Concentrate -	A fine, powdery product of the milling process containing a high percentage of valuable metal.
Concentrator -	A milling plant that produces a concentrate of the valuable minerals or metals. Further treatment is required to recover the pure metal.
Development -	Underground work carried out for the purpose of opening up a mineral deposit. Includes shaft sinking, crosscutting, drifting and raising.
Erosion -	The breaking down and subsequent removal of either rock or surface material by wind, rain, wave action, freezing and thawing and other processes.
Exploration -	Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.
Fault -	A break in the Earth’s crust caused by tectonic forces which have moved the rock on one side with respect to the other.
Fine gold -	Fineness is the proportion of pure gold or silver in jewelry or bullion expressed in parts per thousand. Thus, 925 fine gold indicates 925 parts out of 1,000, or 92.5% is pure gold.
Fold -	Any bending or wrinkling of rock strata.
Geology -	The science concerned with the study of the rocks which compose the Earth.
Level -	The horizontal openings on a working horizon in a mine; it is customary to work mines from a shaft, establishing levels at regular intervals, generally about 50 meters or more apart.
Mineral -	A naturally occurring homogeneous substance having definite physical properties and chemical composition and, if formed under favorable conditions, a definite crystal form.
Mineralization -	Occurrences of minerals, which may have an economic value.
Mineralization -	A natural concentration in rocks or soil of one or more metalliferous minerals.
Ore -	A mixture of ore minerals and gangue from which at least one of the metals can be extracted at a profit.

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Plant -	A building or group of buildings in which a process or function is carried out; at a mine site it will include warehouses, hoisting equipment, compressors, maintenance shops, offices and the mill or concentrator.
Prospect -	A mining property, the value of which has not been determined by exploration.
Reclamation -	The restoration of a site after mining or exploration activity is completed.
Reconnaissance -	A preliminary survey of ground.
Resource -	The calculated amount of material in a mineral deposit, based on limited drill information.
Rock -	Any natural combination of minerals; part of the earth’s crust.
Sample -	A small portion of soil, silt, rock or a mineral deposit taken so that the metal content can be determined by assaying.
Sampling -	Selecting a fractional but representative part of a mineral deposit for analysis.
Sediments -	Solid fragmental material that originates from weathering of rocks and is transported or deposited by air, water, or ice, or that accumulates by other natural agents, such as chemical precipitation from solution or secretion by organisms, and that forms in layers on the Earth's surface at ordinary temperatures in a loose, unconsolidated form; e.g., sand, gravel, silt, mud, alluvium.
Tertiary -	The first period of the Cenozoic era considered to have covered the span of time between 2 and 65 million years ago.
Trench -	A long, narrow excavation dug through overburden, or blasted out of rock, to expose a vein or ore structure.
Tunnel -	A horizontal underground opening, open to the atmosphere at both ends.
Waste -	Un-mineralized, or sometimes mineralized, rock that is not minable at a profit.
Zone -	An area of distinct mineralization.

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 31st day of March, 2010.

CONSTITUTION MINING CORP.,

a Delaware corporation

By: /s/ Michael Stocker

Michael Stocker

President and Chief Executive Officer

Each person whose signature appears below authorizes Michael Stocker to execute in the name of each such person who is then an officer or director of the registrant, and to file, any amendments to this annual report on Form 10-K necessary or advisable to enable the registrant to comply with the Securities Exchange Act of 1934 and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof, which amendments may make such changes in such Report as such attorney-in-fact may deem appropriate.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature and Title		Date

/s/ Michael Stocker		March 31, 2010
Michael Stocker, Director, President and Chief Executive Officer (Principal Executive Officer)

/s/ Alois Wiget		March 31, 2010
Alois Wiget, Director and Chairman of the Board

/s/ Peter Wiget		March 31, 2010
Peter Wiget, Director

/s/ Robert Van Tassell		March 31, 2010
Robert Van Tassell, Director

/s/ Gary Artmont		March 31, 2010
Gary Artmont, Director

/s/ Hernan Zaballa		March 31, 2010
Hernan Zaballa, Director

/s/ Kenneth Phillippe		March 31, 2010
Kenneth Phillippe, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer), Secretary, and Treasurer

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CONSTITUTION MINING CORP.

EXHIBIT INDEX

2009 ANNUAL REPORT ON FORM 10-K

Exhibit Number	Description	Incorporated by Reference to:	Filed Herewith
2.1	Agreement and Plan of Merger, dated October 21, 2009, by and between the Constitution Mining Corp, a Delaware corporation, and Constitution Mining Corp., a Nevada corporation.	Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on October 21, 2009.
3.1	Certificate of Incorporation of Constitution Mining Corp, a Delaware Corp.	Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 21, 2009.
3.2	Bylaws of Constitution Mining Corp., a Delaware Corp.	Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 21, 2009.
10.1	2007 Stock Incentive Plan, as Amended.	Exhibit 10.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008
10.2	Services Contract, dated October 15, 2008, between St. Lawrence Alluvial Services and Logistics Corp., its wholly-owned subsidiary Logistica y Servicios Aluviales San Lorenzo SAC, and Constitution Mining Corp.	Exhibit 10.2 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008
10.3	Assignment Agreement, dated effective December 12, 2007, between Proyectos Mineros S.A. and Constitution Mining Corp. regarding Atena Gold Property.	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 18, 2007.
10.4	Assignment Agreement, dated effective January 8, 2008, between Proyectos Mineros S.A. and Constitution Mining Corp. regarding Cerro Amarillo Property.	Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed January 10, 2008.
10.5	Assignment and Assumption of Lease and Debt Agreement, dated effective January 18, 2008.	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 24, 2008.
10.6	Assignment Agreement, dated effective March 17, 2008, between Proyectos Mineros S.A. and Constitution Mining Corp., regarding the Amira, Amira Norte and Esparta II Properties.	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed March 21, 2008.
10.7	Mineral Right Option Agreement, dated September 29, 2008, between Temasek Investments Inc. and Constitution Mining Corp.	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed September 29, 2008
10.8	Amendment No. 1 to Mineral Right Option Agreement, dated September 29, 2008, between Temasek Investments Inc. and Constitution Mining Corp.	Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2009
10.9	Second Amendment to Mineral Right Option Agreement, dated September 29, 2008, between Temasek Investments Inc. and Constitution Mining Corp.	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed November 2, 2009.

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Exhibit Number	Description	Incorporated by Reference to:	Filed Herewith
10.10	Mineral Right Option Agreement with Temasek Investments, Inc., January 2010.	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 27, 2010.
10.11	Consulting and Services Contact with Stocker International, Inc., dated October 2009.	Exhibit 10.1 to the Company’s Current Report on Form 8-K filed January 15, 2010.
14.1	Code of Ethics and Code of Conduct.	Exhibit 14.1 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008
21.1	Subsidiaries of Constitution Mining Corp.		X
24.1	Power of Attorney.		X
31.1	Certificate of Michael Stocker, Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		X
31.2	Certificate of Kenneth Phillippe, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.		X
32.1	Certificate of Michael Stocker, Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		X
32.2	Certificate of Kenneth Phillippe, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.		X
99.1	Letter of Intent for the Acquisition of Certain Mining Claims in Nevada, dated December 2, 2009, by and between the Company and Seabridge Gold, Inc.	Exhibit 99.1 to the Company’s Current Report on Form 8-K filed December 4, 2009.
99.2	Extension to Letter of Intent for the Acquisition of Certain Mining Claims in Nevada, dated February 24, 2010.	Exhibit 99.2 to the Company’s Current Report on Form 8-K filed March 1, 2010.

___________

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Attached files

CONSTITUTION MINING CORP Reports

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