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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

 [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012

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

Commission File Number: 000-52641

INFRASTRUCTURE MATERIALS CORP.
(Exact name of registrant as specified in its charter)

Delaware 98-0492752
(State of incorporation) (I.R.S. Employer Identification No.)

1135 Terminal Way, Suite 207B
Reno, NV 89502 USA
(Address of Principal Executive Offices) (Zip Code)

775-322-4448
(Registrant’s telephone number, including area code)

With a copy to:
Jonathan H. Gardner
Kavinoky Cook LLP
726 Exchange St., Suite 800
Buffalo, NY 14210

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 preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]     No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files)

Yes [X]     No [   ]

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. (Check one):

Large accelerated filer [   ]     Accelerated filer [   ] Non-accelerated filer [   ] Smaller reporting company [X]
    (Do not check if a smaller reporting company)  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]     No [X]

The number of shares of registrant’s common stock outstanding as of April 30, 2012 was 98,935,486.


INFRASTRUCTURE MATERIALS CORP.

FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED March 31, 2012
TABLE OF CONTENTS

  PAGE
     
 PART 1 – FINANCIAL INFORMATION
     
Item 1. Financial Statements (Unaudited) 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 27
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 38
     
Item 4. Controls and Procedures 39
     
PART II – OTHER INFORMATION
     
Item 1. Legal Proceedings 40
     
Item 1A. Risk Factors 40
     
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds 43
     
Item 3. Defaults Upon Senior Securities 43
     
Item 4. Mine Safety Disclosures 43
     
Item 5. Other Information 43
     
Item 6. Exhibits and Reports on Form 8-K 43
     
 SIGNATURES 44

- 2 -


PART 1 – FINANCIAL INFORMATION

ITEM 1.              Financial Statements

INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2012

(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

 

CONTENTS

Interim Consolidated Balance Sheets as of March 31, 2012 (unaudited) and June 30, 2011 (audited) 4
   
Interim Consolidated Statements of Operations and Comprehensive Loss for the nine-months and three-months ended March 31, 2012 and March 31, 2011, and for the period from inception to March 31, 2012 5
   
Interim Consolidated Statements of Changes in Stockholders’ Equity for the nine-months ended March 31, 2012 and for the period from inception to March 31, 2012 6
   
Interim Consolidated Statements of Cash Flows for the nine-months ended March 31, 2012 and March 31, 2011, and for the period from inception to March 31, 2012 7
   
Condensed Notes to Interim Consolidated Financial Statements 8 - 26

- 3 -


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Interim Consolidated Balance Sheets as at
March 31, 2012 and June 30, 2011
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

    March 31,     June 30,  
    2012     2011  
    $     $  
    (unaudited)     (audited)  
ASSETS            
Current            
   Cash and cash equivalents   1,951,935     317,912  
   Short term investments   33,693     83,604  
   Marketable securities (Note 10)   63,408     68,429  
   Prepaid expenses and other receivables   32,800     103,807  
             
Total Current Assets   2,081,836     573,752  
             
Restricted Cash (Note 5)   82,500     82,500  
Reclamation Deposit (Note 6)   240,805     240,805  
             
Plant and Equipment, net (Note 7)   745,414     828,905  
Mineral Property Interests (Note 8)   514,525     514,525  
             
Total Assets   3,665,080     2,240,487  
             
LIABILITIES            
Current            
   Accounts payable   53,027     52,197  
   Accrued liabilities   29,418     103,903  
             
Total Current Liabilities   82,445     156,100  
             
Deferred Revenue (Note 10)   368,643     93,429  
Asset Retirement Obligation (Note 11)   24,138     22,455  
             
Total Liabilities   475,226     271,984  
             
Exploration Stage Activities (Note 2)            
Commitments and Contingencies (Note 15)            
Related Party Transactions (Note 16)            
Subsequent Events (Note 17)            
             
Redeemable Preferred Stock (Note 12)   -     300,000  
             
STOCKHOLDERS’ EQUITY            
Capital Stock (Note 13)            
    Preferred stock, $0.0001 par value, 50,000,000 shares authorized, none
         issued and outstanding (June 30, 2011 – 2,608,696) (Note 12)
  -     -  
    Common stock, $0.0001 par value, 500,000,000 shares authorized, 98,935,486 issued 
         and outstanding (June 30, 2011 – 70,326,790)
  9,894     7,033  
Additional Paid-in Capital   23,632,785     21,120,247  
Accumulated Other Comprehensive Loss   (70,185 )   -  
Deficit Accumulated During the Exploration Stage   (20,382,640 )   (19,458,777 )
             
Total Stockholders’ Equity   3,189,854     1,668,503  
             
Total Liabilities and Stockholders’ Equity   3,665,080     2,240,487  

See Condensed Notes to the Interim Consolidated Financial Statements

-4-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Interim Consolidated Statements of Operations and Comprehensive Loss
For the nine-months and three-months ended March 31, 2012 and March 31, 2011
and the Period from Inception (June 3, 1999) to March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

          For the     For the     For the     For the  
          nine months     nine months     three months     three months  
    Cumulative     ended     ended     ended     ended  
    since     March 31,     March 31,     March 31,     March 31,  
    inception     2012     2011     2012     2011  
    $     $     $     $     $  
Operating Expenses                              
                               
       General and administration   9,606,223     528,085     619,848     197,953     218,576  
       Project expenses   10,180,748     301,263     1,529,555     131,165     289,809  
       Depreciation   1,129,419     93,557     110,361     31,378     36,787  
                               
Total Operating Expenses   20,916,390     922,905     2,259,764     360,496     545,172  
                               
Loss from Operations   (20,916,390 )   (922,905 )   (2,259,764 )   (360,496 )   (545,172 )
       Other income-interest   386,939     423     2,049     135     441  
       Other income-gain on bargain purchase (Note 8)   238,645     -     -     -     -  
       Interest Expense   (91,834 )   (1,381 )   -     -     -  
                               
Loss before Income Taxes   (20,382,640 )   (923,863 )   (2,257,715 )   (360,361 )   (544,731 )
                               
       Provision for income taxes   -     -     -     -     -  
                               
Net Loss   (20,382,640 )   (923,863 )   (2,257,715 )   (360,361 )   (544,731 )
                               
       Unrealized loss on marketable securities (Note 10)         (70,185 )         (15,748 )   -  
                               
Comprehensive Loss         (994,048 )   (2,257,715 )   (376,109 )   (544,731 )
                               
Loss per Weighted Average Number of Shares Outstanding -Basic and Fully Diluted       (0.01 )   (0.03 )   -     (0.01 )
                               
Weighted Average Number of Shares Outstanding During the Periods -Basic and Fully Diluted       82,198,095     68,622,228     98,395,486     69,447,161  

See Condensed Notes to the Interim Consolidated Financial Statements

-5-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Interim Consolidated Financial Statements of Changes in Stockholders’ Equity
From Inception (June 3, 1999) to March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

                            Deficit              
                            Accumulated     Accumulated        
    Common Stock     Additional     Deferred     during the     Other     Total  
    Number           Paid-in     Stock     Exploration     Comprehensive     Stockholders’  
    of Shares     Amount       Capital     Compensation     Stage     Loss     Equity  
           $     $     $     $     $     $  
For the period from inception (June 3, 1999)
   through July 1, 2004
  1     -     5,895         (5,895 )       -  
 Net (loss)   -     -     910           (910 )         -  
Balance June 30, 2005 (audited)   1     -     6,805     -     (6,805 )         -  
 Contribution to additional paid-in capital   -     -     3,024                       3,024  
 Cancelled shares   (1 )   -     (1 )                     (1 )
 Common shares issued for nil consideration   14,360,000     1,436     (1,436 )         -           -  
 Common shares issued for cash   2,050,000     205     414,795           -           415,000  
 Subscription for stock               300,000           -           300,000  
 Stock issuance cost   -     -     (24,500 )         -           (24,500 )
 Net loss for the year   -     -     -           (87,574 )         (87,574 )
Balance June 30, 2006 (audited)   16,410,000     1,641     698,687     -     (94,379 )         605,949  
                                           
 Common shares issued for cash   3,395,739     340     548,595           -           548,935  
 Common shares issued to agents in lieu 
     of commission for placement of common 
     shares and convertible debentures
  1,064,000     106     265,894         -         266,000  
 Common shares issued for acquisition of 
     interests in mineral claims
  3,540,600     354     884,796         -         885,150  
 Common shares issued for acquisition 
     of interests in mineral claims
  1,850,000     185     462,315         -         462,500  
 Common shares issued for acquisition 
     interests in a refinery
  88,500     9     22,116         -         22,125  
 Common shares issued for purchase of 
     a mill with capital equipments
  6,975,000     697     1,743,053         -         1,743,750  
 Stock issuance cost               (59,426 )                     (59,426 )
 Stock based compensation               30,026                       30,026  
 Net loss for the year         -     -     -     (2,845,424 )         (2,845,424 )
Balance June 30, 2007 (audited)   33,323,839     3,332     4,596,056     -     (2,939,803 )         1,659,585  
                                           
 Common stock issued to consultants   3,000,000     300     2,249,700     (1,875,000 )   -           375,000  
 Stock based compensation         -     139,272           -           139,272  
 Warrant modification expense               844,423                       844,423  
 Conversion of convertible debentures with 
     accrued interest
  7,186,730     719     3,590,801     -     -         3,591,520  
 Common shares issued for acquisition 
     of interests in mineral claims
  175,000     18     104,982                 105,000  
 Common stock issued to a consultant   100,000     10     57,990                       58,000  
 Amortization of deferred stock 
     compensation
              562,500             562,500  
 Net loss for the year                           (4,635,465 )         (4,635,465 )
Balance June 30, 2008 (audited)   43,785,569     4,379     11,583,224     (1,312,500 )   (7,575,268 )         2,699,835  
                                           
 Common shares issued for cash (net)   7,040,000     704     3,372,296     -     -           3,373,000  
 Common stock issued to a consultant   75,000     7     43,493     -     -           43,500  
 Common stock issued on acquisition of a 
     subsidiary
  397,024     40     31,722     -     -         31,762  
 Common shares issued on warrant 
     exercises
  8,900,907     890     2,224,337     -     -         2,225,227  
 Stock based compensation               814,050                       814,050  
 Warrant modification expense               346,673                       346,673  
 Amortization of deferred stock 
     compensation
              1,125,000             1,125,000  
 Net loss for the year                           (6,045,477 )         (6,045,477 )
Balance June 30, 2009 (audited)   60,198,500     6,020     18,415,795     (187,500 )   (13,620,745 )         4,613,570  
                                           
 Common shares issued for cash   6,973,180     697     1,603,134                       1,603,831  
 Common stock issued on acquisition of a                                          
     subsidiary   1,021,777     102     275,778                       275,880  
 Stock based compensation               216,751                       216,751  
 Amortization of deferred stock                                          
     compensation                     187,500                 187,500  
 Net loss for the year                           (3,314,953 )         (3,314,953 )
Balance June 30, 2010 (audited)   68,193,457     6,819     20,511,458     -     (16,935,698 )         3,582,579  
                                           
 Common shares issued for cash   2,083,333     209     499,791                       500,000  
 Stock based compensation               101,503                       101,503  
 Common stock options exercised   50,000     5     7,495                       7,500  
 Net loss for the year                           (2,523,079 )         (2,523,079 )
Balance June 30, 2011 (audited)   70,326,790     7,033     21,120,247     -     (19,458,777 )         1,668,503  
                                           
 Common shares issued for cash (net)   26,000,000     2,600     2,212,799     -     -           2,215,399  
 Preferred shares converted to common shares   2,608,696     261     299,739                       300,000  
 Unrealized loss on marketable securities                                 (70,185 )   (70,185 )
 Net loss for the period                           (923,863 )         (923,863 )
Balance March 31, 2012 (unaudited)   98,935,486     9,894     23,632,785     -     (20,382,640 )   (70,185 )   3,189,854  

See Condensed Notes to the Interim Consolidated Financial Statements

- 6 -


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Interim Consolidated Statements of Cash Flows
For the nine-months ended March 31, 2012 and March 31, 2011
and for the period from Inception (June 3, 1999) to March 31, 2012.
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

    Cumulative     For the nine     For the nine  
    Since     months ended     months ended  
    Inception     March 31, 2012     March 31, 2011  
    $     $     $  
Cash Flows from Operating Activities                  
   Net loss   (20,382,640 )   (923,863 )   (2,257,715 )
   Adjustment for:                  
       Depreciation   1,129,419     93,557     110,361  
       Amortization of debt issuance cost   247,490     -     -  
       Loss on disposal of plant and equipment   10,524     -     -  
       Gain on Bargain Purchase (Note 8)   (238,645 )   -     -  
       Stock based compensation   1,301,602     -     89,879  
       Warrant modification expense   1,191,096     -     -  
       Shares issued for mineral claims, as part of project expenses   1,452,650     -     -  
       Shares issued for consultant services expensed   2,351,500     -     -  
       Shares issued on acquisition of subsidiary   31,762     -     -  
       Accretion of Asset Retirement Obligation (Note 11)   24,138     1,683     -  
       Interest on convertible debentures   90,453     -     -  
   Changes in non-cash working capital                  
       Prepaid expenses and other receivables   (32,800 )   71,007     (19,154 )
       Accounts payable   53,027     830     (6,868 )
       Accrued liabilities   29,859     (74,485 )   (50,076 )
                   
   Net cash used in operating activities   (12,740,565 )   (831,271 )   (2,133,573 )
                   
Cash Flows from Investing Activities                  
       Decrease (Increase) in Short-term investments   (33,693 )   49,911     323,422  
       Increase in Reclamation Deposit   (240,805 )   -     -  
       Increase in Restricted Cash   (82,500 )   -     -  
       Cash received for option on claims and included in Deferred revenue (Note 10)*   235,050     210,050     25,000  
       Acquisition of plant and equipment for cash   (121,816 )   (10,066 )   -  
       Proceeds from sale of plant and equipment   2,500     -     -  
                   
   Net cash provided (used) in investing activities   (241,264 )   249,895     348,422  
                   
Cash Flows from Financing Activities                  
       Issuance of common shares for cash (net)   9,109,970     2,215,399     500,000  
       Issuance of preferred shares for cash   300,000     -     -  
       Issuance of common shares for option exercise   7,500     -     7,500  
       Issuance of common shares for warrant exercises   2,225,227     -     -  
       Issuance of promissory note   100,000     100,000     -  
       Repayment of promissory note   (100,000 )   (100,000 )   -  
       Issuance of convertible debentures subsequently converted to cash   3,501,067     -     -  
       Stock and debenture placement commissions paid in cash   (210,000 )   -     -  
                   
   Net cash provided by financing activities   14,933,764     2,215,399     507,500  
                   
Net Change in Cash   1,951,935     1,634,023     (1,277,651 )
                   
Cash - beginning of period   -     317,912     1,598,248  
                   
Cash - end of period   1,951,935     1,951,935     320,597  
                   
Supplemental Cash Flow Information                  
                   
   Interest Paid   1,381     1,381     -  
                   
   Income taxes paid   -     -     -  

* Excludes receipt of marketable securities for $133,593, being a non-cash item included in Deferred Revenue

See Condensed Notes to the Interim Consolidated Financial Statements

-7-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

1.

Basis of Presentation

   

The accompanying unaudited condensed consolidated financial statements of Infrastructure Materials Corp. (the “Company”), have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP); however, such information reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto together with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at March 31, 2012 and June 30, 2011, the results of its operations for the three and nine- month periods ended March 31, 2012 and March 31, 2011, and its cash flows for the nine-month periods ended March 31, 2012 and March 31, 2011. In addition, some of the Company’s statements in this Quarterly Report on Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. The results of operations for the nine- month period ended March 31, 2012 are not necessarily indicative of results to be expected for the full year.

   

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, Infrastructure Materials Corp US (“IMC US”), Silver Reserve Corp. (“SRC” or “Silver Reserve”) and Canadian Infrastructure Corp. (“CIC”). All material inter-company accounts and transactions have been eliminated.

   
2.

Exploration Stage Activities

   

The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

   

The Company is in the exploration stage and has not yet realized revenues from its planned operations. The Company has incurred a cumulative loss of $20,382,640 from inception to March 31, 2012. The Company has no source of operating revenue and expects to incur significant expenses before establishing operating revenue. Due to continuing operating losses and cash outflows from continuing operations, the Company’s continuation as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operation. In the event that the Company is unable to raise additional capital, as to which there is no assurance, the Company will not be able to continue doing business. The Company’s future success is dependent upon its continued ability to raise sufficient capital, not only to finance its operating expenses, but to continue its exploration activities and its assessments of the commercial viability of its claims. There is no assurance that such capital will be available on acceptable terms, if at all, or that the Company will attain profitable levels of operation.

-8-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

2.

Exploration Stage Activities – Cont’d

   

The Company has funded operations primarily through the issuance of capital stock, convertible debentures and redeemable preferred stock. In May and June of 2006, the Company closed a private placement of shares of its common stock (“Common Shares” or a “Common Share”) for gross proceeds of $415,000. During the year ended June 30, 2007 the Company raised $848,935 (including $300,000 received in the prior year as stock subscriptions) through private placement of Common Shares for cash. The Company also issued Convertible Debentures in the amount of $1,020,862 during the year ended June 30, 2006 and issued Convertible Debentures in the amount of $2,480,205 during the year ended June 30, 2007. During the fiscal year ended June 30, 2009, the Company completed private placements of Common Shares for proceeds of $3,373,000 net of cash expenses and issued Common Shares as a result of warrant exercises for proceeds of $2,225,227. In June 2010 and February 2011 the Company completed private placements of Common Shares for gross proceeds of $1,603,831 and $500,000, respectively. In June 2011 the Company completed a private placement of redeemable preferred stock for gross proceeds of $300,000. In December 2011 the Company completed a public offering in Canada of its common stock for gross proceeds of $2,507,180 (CDN$2,600,000). Management’s plan is to continue raising additional funds through future equity or debt financing until it achieves profitable operations from production of minerals or metals on its properties, if feasible.

   
3.

Nature of Operations

   

The Company’s focus is on the exploration and development, if feasible, of limestone, silver and other metals from its claims in the states of Nevada and Arizona and the Canadian province of Manitoba.

   

The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged in the acquisition and exploration of mineral properties. Mineral property acquisition costs are initially capitalized in accordance with ASC 805-20-55-37, previously referenced as the FASB Emerging Issues Task Force ("EITF") Issue 04-2. The Company assesses the carrying costs for impairment under ASC 360 and evaluates its carrying value under ASC 930 at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property will be capitalized. The Company has capitalized $514,525 as Mineral Property Interests (See Note 8, Mineral Property Interests), and written off all other property payments to project expenses as impaired costs. Once capitalized, such costs will be amortized using the units-of- production method over the estimated life of the probable reserve.

   

To date, mineral property exploration costs have been expensed as incurred. To date the Company has not established any proven or probable reserves on its mineral properties.

   

The Company’s limestone subsidiary, IMC US, controls 12 limestone projects in Nevada, made up of 658 mineral claims covering approximately 13,594 acres on land owned or controlled by the United States Department of Interior Bureau of Land Management (“BLM”). IMC US has acquired 100% of the Mineral Rights on an additional 1,120 acres, 50% of the Mineral Rights on 7,400 acres, and 25% of the Mineral Rights on 160 acres. IMC US also holds 14 mineral exploration permits covering approximately 7,939 acres at two projects in the state of Arizona.

-9-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

3.

Nature of Operations – Cont’d

   

On December 18, 2008, the Company incorporated a second wholly owned subsidiary in the state of Delaware under its former name, “Silver Reserve Corp.” The Company assigned all fourteen of its silver/base metal projects in Nevada to SRC. As of June 1, 2010, SRC terminated its interest in one of the projects. SRC’s remaining thirteen claim groups contain 463 mineral claims covering approximately 9,524 acres and 10 patented claims and 3 leased patented claims covering approximately 248 acres. SRC also has a milling facility located in Mina, Nevada on six mill site claims covering approximately 30 acres.

   

In December 2009, the Company further expanded its limestone exploration activities by acquiring CIC, a Canadian corporation, as its wholly-owned subsidiary. At the time of its acquisition by the Company, CIC controlled 95 limestone quarry leases issued by the province of Manitoba, Canada, covering 6090 hectares (15,049 acres). The Company acquired CIC pursuant to a Share Exchange Agreement (the “CIC Agreement”) between the Company, CIC and Todd D. Montgomery dated as of December 15, 2009. Mr. Montgomery was the sole shareholder of CIC. Because Mr. Montgomery is also the Company’s Chief Executive Officer and a member of its Board of Directors, the CIC Agreement was approved by the disinterested members of the Company’s Board of Directors on November 27, 2009, after obtaining an independent appraisal and market study for the properties. Under the terms of the CIC Agreement, the Company acquired all of the issued and outstanding stock of CIC in exchange for 1,021,777 shares of the Company’s common stock. The CIC Agreement closed on February 9, 2010. Also see Note 8, Mineral Property Interests. In January 2011 and May 2011, the Company decided to forfeit a total of 60 quarry leases covering approximately 3,709 hectares (9,166 acres). As of March 31, 2012, CIC controls 35 quarry leases covering 2,381 hectares (5,883 acres).

   

The Company has not yet determined that any of its claims, mineral rights, mineral exploration permits or quarry leases can be economically developed and has expensed related costs to project expense. The Company’s assessment of the claims, mineral exploration permits, mineral rights and quarry leases may change after further exploration.

   
4.

Fair Value of Financial Instruments

   

The fair values of financial assets measured at the balance sheet date of March 31, 2012 are as follows:


            Quoted prices              
            in active     Significant        
            markets for     observable     Unobservable  
      Carrying     identical assets     inputs     inputs  
  Balance sheet   Amount     (Level 1)     (Level 2)     (Level 3)  
  classification and nature   $     $     $     $  
                           
  Assets                        
  Cash and cash equivalents   1,951,935     1,951,935              
  Short term investments   33,693     33,693              
  Marketable securities   63,408     63,408              
  Restricted Cash   82,500     82,500              

-10-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

4.

Fair Value of Financial Instruments – Cont’d

   

The fair values of financial assets measured at the balance sheet date of June 30, 2011 are as follows:


      Quoted prices
      in active Significant
      markets for observable Unobservable
      Carrying identical assets inputs inputs
  Balance sheet   Amount (Level 1)   (Level 2)   (Level 3)  
  classification and nature   $ $ $ $
                           
  Assets                        
  Cash and cash equivalents   317,912     317,912              
  Short term investments   83,604     83,604              
  Marketable securities   68,429     68,429              
  Restricted Cash   82,500     82,500              

5.

Restricted Cash

   

Amounts reflected as Restricted Cash represent either cash held as collateral or certificates of deposits pledged toward reclamation liabilities assessed by the BLM. Periodically, the BLM may require the Company to pledge additional cash as collateral or the Company may be allowed to remove restrictions on this cash by completing its reclamation obligations, as the case may be.

   
6.

Reclamation Deposit

   

The Company posted a reclamation bond of $240,805 pursuant to the Plan of Operations for its Blue Nose limestone project, as required by the BLM to secure remediation costs if the project is abandoned or closed. The Company must complete certain reclamation work for these funds to be released, but may leave the bond in place for future exploration programs, even if such reclamation work is completed.

-11-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

7.

Plant and Equipment, Net

   

Plant and equipment are recorded at cost less accumulated depreciation. Depreciation is provided commencing in the month following acquisition using the following annual rate and method:


Computer equipment 30% declining balance method
Office furniture and fixtures 20% declining balance method
Plant and Machinery 15% declining balance method
Tools 25% declining balance method
Vehicles 20% declining balance method
Consumables 50% declining balance method
Molds 30% declining balance method
Mobile Equipment 20% declining balance method
Factory Buildings   5% declining balance method

      March 31, 2012     June 30, 2011  
            Accumulated           Accumulated  
      Cost     Depreciation     Cost     Depreciation  
      $     $     $     $  
                           
  Computer equipment   24,513     7,891     14,448     5,615  
  Office, furniture and fixtures   3,623     2,279     3,623     2,041  
  Plant and Machinery   1,514,511     900,441     1,514,511     822,601  
  Tools   11,498     6,055     11,498     4,799  
  Vehicles   76,928     48,404     76,928     43,371  
  Consumables   64,197     62,734     64,197     61,857  
  Molds   900     774     900     738  
  Mobile Equipment   73,927     52,339     73,927     48,530  
  Factory Buildings   74,849     18,615     74,849     16,424  
      1,844,946     1,099,532     1,834,881     1,005,976  
                           
  Net carrying amount         745,414           828,905  
  Depreciation charges         93,557           147,148  

8.

Mineral Property Interests

   

The Company entered into an agreement to acquire CIC as a wholly-owned subsidiary, pursuant to the CIC Agreement between the Company, CIC and Todd D. Montgomery dated as of December 15, 2009. Under the terms of the CIC Agreement, the Company acquired all of the issued and outstanding stock of CIC in exchange for 1,021,777 Common Shares. The CIC Agreement closed on February 9, 2010.

-12-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

8.

Mineral Property Interests – Cont’d

   

The Company accounted for the acquisition of CIC as a business combination under the acquisition method as discussed in FASB ASC Topic 805. ASC 805 requires acquisition-date fair value measurement of identifiable assets, liabilities assumed and non-controlling interests in the acquiree. The only assets acquired were CIC’S quarry leases having a fair value of $514,525 (CDN$550,000) that were recorded as an asset, “Mineral Property Interests,” on the date of acquisition. The Company obtained an independent appraisal and market study to determine the fair value of the quarry leases acquired. The stock of the Company traded at $0.27 per share on February 9, 2010, and the Company recorded a $275,880 increase in shareholders’ equity reflecting the issuance of 1,021,777 Common Shares in exchange for all of the issued and outstanding shares of CIC. There were no liabilities assumed by the Company and no non-controlling interests in CIC, yielding a bargain purchase price of $238,645 that was recorded as Other Income in the Company’s Consolidated Statements of Operations and Comprehensive Loss. Costs incurred in connection with the acquisition were expensed.

   

Amounts recognized as assets as of the acquisition date:


  Mineral Property Interests, being quarry leases in the province of Manitoba, Canada at fair value (CDN$550,000) $ 514,525  
         
  Total consideration transferred included the following:      
         
  Fair value as of the acquisition date of 1,021,777 Common Shares of the Company issued in exchange for all issued and outstanding shares of CIC $ 275,880  
         
  Gain on bargain purchase, being the excess of the fair value of net assets acquired over the purchase price, and recognized as Other Income in the Statements of Operations and Comprehensive Loss $ 238,645  

9.

Note Payable

   

As of August 24, 2011, the Company borrowed $100,000 from Mont Strategies Inc., a corporation that is owned and controlled by Todd D. Montgomery, the Company’s Chief Executive Officer and a member of its Board of Directors. The loan was made pursuant to a demand promissory note that bore interest at a rate of four percent (4%) per annum and had a maturity date of August 24, 2013, the second anniversary of such promissory note. On December 27, 2011, the Company retired the promissory note by paying Mont Strategies Inc. the principal amount of the note along with accrued interest. For the nine-month period ended March 31, 2012, the Company recorded interest expense of $1,381 for the promissory note.

-13-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

10.

Deferred Revenue and Marketable Securities

   

On February 25, 2011, SRC entered into an option and joint venture agreement (the “IMMI Option Agreement”) with International Millennium Mining Inc. (“IMMI”), a wholly-owned subsidiary of International Millennium Mining Corp. (“IMMC”), to sell an 85% interest in SRC’s NL Extension Project Claim Group (the “NL Project”) for total consideration of $350,000 and 1,925,000 shares of IMMC’s common stock (the “Consideration”). The NL Project consists of 18 mineral claims located in Esmeralda County, Nevada, approximately 6 miles southwest of Silver Peak, Nevada on Highway 47. Under the terms of the IMMI Option Agreement, the Consideration is payable over a five-year period that ends on September 15, 2015, with IMMI’s interest in the NL Project vesting at the end of such period. As of June 30, 2011, the Company had received Consideration of $93,429, consisting of 275,000 shares of IMMC’s common stock with a fair market value of $68,429 that was recorded as Marketable Securities in the Company’s Consolidated Balance Sheets and $25,000 in cash. On September 2, 2011, the Company received Consideration of $100,164 consisting of 300,000 shares of IMMC’s common stock with a fair market value of $65,164 and $35,000 in cash. Because IMMI’s interest in the NL Project vests at the end of the five-year period, this Consideration is accounted for in the Consolidated Balance Sheets as Deferred Revenue, a non-current liability. The unrealized loss of $70,185 arising from the reduction in the market value of the Company’s shares of IMMC’s common stock as of March 31, 2012, is accounted for in the Stockholders’ Equity section of the Consolidated Balance Sheets as Accumulated Other Comprehensive Loss.

   

On August 24, 2011, SRC entered into an option agreement dated as of August 19, 2011 (the “MGold Option Agreement”) with MGold Resources Inc. (“MGold”), pursuant to which MGold had an option (the “Option) to earn a 50% interest in each of SRC’s Silver Queen Claim Group (the “Silver Queen Property”) and Klondyke Claim Group (the “Klondyke Property”) after expenditure of certain Option Costs and the full payment of the Cash Consideration, as defined below. The Silver Queen Property consists of 178 mineral claims and the Klondyke Property consists of 134 mineral claims and 2 leased patented claims, with both Properties located in Esmeralda County, Nevada. The MGold Option Agreement was preceded by a Letter of Intent between SRC and MGold dated as of June 8, 2011. Under the terms of the MGold Option Agreement, MGold was required to incur exploration expenditures totaling CDN$4,000,000 with regards to the Silver Queen Property and CDN$1,350,000 with regards to the Klondyke Property (together, the “Option Costs”). MGold also was to make total cash payments to SRC of CDN$2,000,000 for the Silver Queen Property and CDN$265,000 for the Klondyke Property (together, the “Cash Consideration”). The Option Costs were to be made over a period of 30 months, and the Cash Consideration was to be paid over a period of 33 months. Upon full expenditure of the Option Costs and payment of the total Cash Consideration, the Option could be exercised and MGold would hold a 50% equity interest in each of the Silver Queen Property and Klondyke Property. On September 26, 2011, the Company received $145,875 (CDN$150,000) and $29,175 (CDN$30,000) from MGold representing the first Cash Consideration payments for the Silver Queen Property and the Klondyke Property, respectively. Because MGold’s interests in the Silver Queen and Klondyke Properties were to vest at the end of the 33-month period, this Cash Consideration has been accounted for in the Consolidated Balance Sheets as Deferred Revenue, a non-current liability. On March 15, 2012, MGold issued notice to SRC that MGold was terminating the MGold Option Agreement effective April 14, 2012. Because the termination of the MGold Option Agreement is effective after the date of this report, the effect of the termination will be reflected in the Company’s consolidated financial statements for the period ending June 30, 2012.

-14-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

10.

Deferred Revenue and Marketable Securities – Cont’d

   

The components of Deferred Revenue are summarized as follows:


    March 31,     June 30,  
    2012     2011  
    $     $  
             
IMMI   193,593     93,429  
MGold   175,050     -  
             
Total   368,643     93,429  

11.

Asset Retirement Obligation

   

The Company is required to recognize a liability for its legal obligation to perform reclamation and disturbance monitoring activities once any of its projects are abandoned or closed. Although these activities are conditional upon future events, the Company is required to make a reasonable estimate of the fair value of the liability. Based on the existing level of ground disturbance and monitoring requirements, the discounted asset retirement obligation ("ARO") was estimated to be $22,455 as of June 30, 2011, assuming payments made over a three year period. Determination of the undiscounted ARO and the timing of these obligations were based on internal estimates using information currently available and existing regulations.

   

At the end of each reporting period, ARO’s are equal to the present value of all estimated future costs required to remediate any ground disturbances that exist as of the end of the period, using discount rates applicable at the time of initial recognition of each component of the liability. A liability for an asset retirement obligation may be incurred over more than one reporting period if the events that create the obligation occur over more than one reporting period. Any incremental liability incurred in a subsequent reporting period will be considered to be an additional layer of the original liability. Each layer will be initially measured at fair value. Included in this liability are the costs of reclamation and monitoring and maintenance costs. A discount rate of 10% was determined to be applicable. The Company recorded accretion expense of $1,683 for the nine-month period ended March 31, 2012. The Company’s entire ARO as of March 31, 2012 and June 30, 2011 relates to the Company’s Blue Nose limestone project.


Balance as of June 30, 2011 $  22,455  
Increase in Asset Retirement Obligation   -  
Accretion for the period ending March 31, 2012   1,683  
       
Balance as of March 31, 2012 $  24,138  

-15-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

12.

Redeemable Preferred Stock

   

Redeemable preferred stock represents preferred stock that is either redeemable for cash on a specific date or contingently redeemable for cash for events that are not within the control of management. Preferred stock where redemption for cash is certain to occur is classified in liabilities. The Company currently has no preferred stock classified in liabilities. The Company’s Series A Convertible Preferred Stock was redeemable preferred stock and was required to be classified outside of stockholders’ equity (in the mezzanine section). Redeemable preferred stock as of June 30, 2011 equaled $300,000.

   

Terms, Features and Conditions of the Company’s Series A Redeemable Preferred Stock:


  Date of Number of Par Stated  
  Designation Shares Value Value Conversion
A   6/1/2011  2,608,696 $0.0001 $0.115  $ 0.115

The Company’s Series A Convertible Preferred Stock had voting rights equal to the if-converted number of Common Shares.

Series A Convertible Preferred Stock

On June 1, 2011, the Company entered into a subscription agreement pursuant to which 2,608,696 shares of the Company’s newly designated Series A Convertible Preferred Stock (“Series A Preferred Stock”), par value $0.0001, were purchased at a price of $0.115 per share (the “Purchase Price”) for an aggregate purchase price of $300,000. The Series A Preferred Stock provided for dividends only if and when declared by the Board. Each holder of Series A Preferred Stock had the right to vote equal to the number of conversion shares issuable upon conversion of the Preferred Stock in all matters as to which shareholders were required or permitted to vote.

The Purchase Price was based on the weighted average trading price of the Company’s Common Shares on the OTC Bulletin Board for the fifteen trading days prior to June 1, 2011, the date of the Subscription Agreement. The sole purchaser (the “Purchaser”) participating in the subscription agreement was a non-U.S. corporation that is controlled by Todd D. Montgomery, the Company’s Chief Executive Officer and a member of its Board of Directors. The issuance of the Series A Preferred Stock was exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) pursuant to an exemption afforded by Regulation S promulgated thereunder (“Regulation S”). The Purchaser and Mr. Montgomery are not “U.S. Person(s)” as that term is defined in Regulation S.

The Company evaluated the Series A Preferred Stock for classification. The Series A Preferred Stock was redeemable at any time on or after the first anniversary of the closing absent the Company’s ability to net share settle. This term and feature does not rise to the level of “unconditionally” redeemable for purposes of liability classification. The Company then evaluated the conversion feature embedded in the Series A Preferred Stock, and certain other features (i.e. the contingent redemption elements) for classification and measurement. Generally, embedded terms and features that both (i) meet the definition of derivatives and (ii) are clearly and closely related to the host contract in terms of risks, do not require bifurcation and separate measurement. In order to develop these conclusions, the Company first evaluated the hybrid contract to determine if the hybrid contract, with all features included, was more akin to an equity instrument or a debt instrument. Significant indicators of equity were that the instrument did not have a term or a maturity date; it was a perpetual financial instrument, the non-existence of a cumulative dividend feature and the existence of voting rights based upon the if-converted number of Common Shares. The sole indicator of debt was the Holder’s ability to redeem the preferred stock upon the occurrence of a specific event. The weight of these indicators led the Company to the conclusion that the hybrid contract was more akin to an equity instrument. Accordingly, the conversion option does not require bifurcation because its risks and the risks of the hybrid are clearly and closely related.

-16-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

12.

Redeemable Preferred Stock – Cont’d

   

Further consideration of the classification of the Series A Preferred Stock as either equity or mezzanine was required. Generally, redeemable instruments, where redemption is either stated or outside the control of management, require classification outside of stockholders’ equity. Because the instrument was redeemable at any time on or after the first anniversary of the closing absent the Company’s ability to net share settle, the instrument was required to be classified outside of stockholders’ equity in the mezzanine.

   

On September 29, 2011, all of the outstanding shares of the Company’s Series A Preferred Stock were converted to Common Shares. Also see Note 13, Issuance of Common Shares.

   
13.

Issuance of Common Shares

   

The Company held an annual meeting of shareholders on July 29, 2011. At the meeting, among other actions, the shareholders of the Company approved and adopted an amendment increasing the number of authorized Common Shares to 500,000,000. On August 1, 2011 the Company filed with the Secretary of State of the State of Delaware a certificate of amendment (the “Amendment”) to the Company’s certificate of incorporation containing the change in the number of authorized Common Shares approved by shareholders on July 29, 2011. The Amendment increased the number of authorized Common Shares, par value $0.0001, from 100,000,000 to 500,000,000.

   

Nine-month period ended March 31, 2012

   

On September 29, 2011, 2,608,696 outstanding shares of the Company’s Series A Preferred Stock were converted to 2,608,696 Common Shares, which results in an increase of $261 and $299,739 to common stock and additional paid-in capital, respectively. Also see Note 12, Redeemable Preferred Stock.

   

On December 16, 2011, the Company completed the sale of 26,000,000 Common Shares to the public in Canada at a price of $0.096 (CDN$0.10) per share to raise gross proceeds of $2,507,180 (CDN$2,600,000). The shares were sold pursuant to a long form prospectus filed in the Canadian provinces of Alberta, Saskatchewan, British Columbia and Ontario. PI Financial Corp. (“PI Financial”) acted as lead agent and received a corporate finance fee of $14,464 (CDN$15,000), was reimbursed $127,529 (CDN$132,250) for its expenses, was paid cash commissions $20,236 (CDN$20,985) and received non-transferable Agent’s Warrants valued at $14,644 entitling PI Financial to acquire 209,850 Common Shares at a price of $0.096 (CDN$0.10) per share exercisable for 24 months. The fair value of the Agent’s Warrants was determined using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 1.63%, expected dividend yield of 0%, annualized volatility of 142.45% and expected life of two years. In connection with the offering, in addition to payments made to PI Financial, the Company incurred legal and other direct expenses, which resulted in net proceeds from the offering of $2,215,399.

-17-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

13.

Issuance of Common Shares – Cont’d

   

The foregoing sale of securities was made entirely outside the United States pursuant to an exemption afforded by Regulation S promulgated under the Securities Act. Following the sale of our securities in Canada, the Company’s Common Shares were listed for trading on the TSX-V exchange under the symbols “IFM” and “IFM.S.” The Company’s Common Shares continue to be traded in the United States on the OTC Bulletin Board under the symbol “IFAM.”

   

Year ended June 30, 2011

   

On September 30, 2010, the Company issued 50,000 Common Shares pursuant to the exercise of options granted in accordance with its employee stock option plan (the “2006 Stock Option Plan”). Also see Note 14, Stock Based Compensation.

   

On February 8, 2011, the Company completed a private placement (the “Private Placement”) of 2,083,333 Common Shares at a price of $0.24 per share for total consideration of $500,000. The Private Placement was exempt from registration under the Securities Act pursuant to an exemption afforded by Regulation S. The sole investor (the “Investor”) participating in the private placement was a non-U.S. corporation that is owned and controlled by Todd D. Montgomery, the Company’s Chief Executive Officer and a member of its Board of Directors. The Investor and Mr. Montgomery are not “U.S. Person(s)” as that term is defined in Regulation S.

   
14.

Stock Based Compensation

   

In April of 2006, the Board of Directors approved the Company’s 2006 Stock Option Plan, the purpose of which was to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees and consultants and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership.

   

The Company held an annual meeting of shareholders on July 29, 2011. At the meeting, among other actions, the shareholders of the Company approved the amendment and restatement of the 2006 Stock Option Plan resulting in the Company’s Amended Stock Option Plan (the “Amended Plan”). The Amended Plan replaces the Company’s 2006 Stock Option Plan and no further options will be issued under the 2006 Stock Option Plan. The terms of the Amended Plan include, among others, that (a) officers, directors, employees and consultants who provide services to the Company may be granted options to acquire the Company’s Common Shares at the fair market value of the stock on the date of grant, (b) options may have a term of up to 10 years, (c) the Company may issue options in a number up to a maximum of 10% of the outstanding Common Shares, and (d) outstanding stock options previously granted pursuant to the 2006 Stock Option Plan will remain in effect and be exercisable in accordance with, and be deemed to be issued under, the terms of the Amended Plan.

-18-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

14.

Stock Based Compensation – Cont’d

   

Nine-month period ended March 31, 2012

   

No options were granted pursuant to the 2006 Stock Option Plan or the Amended Plan during the nine-month period ended March 31, 2012.

   

On August 31, 2011, 250,000 options that were not granted pursuant to the Company’s 2006 Stock Option Plan or the Amended Plan expired.

   

The following table summarizes the options outstanding at March 31, 2012:


Outstanding at June 30, 2011 (audited)   950,000  
Granted   -  
Expired   (250,000 )
Exercised   -  
Forfeited   -  
Outstanding at March 31, 2012   700,000  
Exercisable at March 31, 2012   700,000  

As of March 31, 2012, there was no unrecognized expenses related to non-vested stock-based compensation arrangements granted. There was no stock-based compensation expense for the nine-month period ended March 31, 2012. Also see Note 17, Subsequent Events.

On December 16, 2011, in connection with the sale in Canada of 26,000,000 Common Shares (See Note 13, Issuance of Common Shares), the Company issued 209,850 non-transferable Agent’s Warrants valued at $14,644 to PI Financial, the lead agent in the Canadian offering. Each Agent’s Warrant entitles PI Financial to acquire one Common Share at a price of $0.096 (CDN$0.10) per share and is exercisable for a period of 24 months. The fair value of the agent’s warrants was determined using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 1.63%, expected dividend yield of 0%, annualized volatility of 142.45% and expected life of two years. These Agent’s Warrants were not granted pursuant to the Company’s 2006 Stock Option Plan or the Amended Plan.

-19-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

15.

Commitments and Contingencies

   

On August 1, 2006, the Company acquired the Pansy Lee Claims Group from Anglo Gold Mining Inc. in exchange for 1,850,000 Common Shares pursuant to an Asset Purchase Agreement dated August 1, 2006 (the “Pansy Lee Purchase Agreement”). Pursuant to the Pansy Lee Purchase Agreement, a 2% net smelter royalty pertains to 8 of the 30 claims in this group. In the event that any one or more of the 8 claims becomes a producing claim, our revenue is subject to a 2% net smelter return royalty where net smelter returns are based upon gross revenue. Gross revenue would be calculated after commercial production commences and includes the aggregate of the following amounts: revenue received by the Company from arm’s length purchasers of all mineral products produced from the property, the fair market value of all products sold by the Company to persons not dealing with the Company at arm’s length and the Company’s share of the proceeds of insurance on products. From such revenue, the Company would be permitted to deduct: sales charges levied by any sales agent on the sale of products; transportation costs for products; all costs, expenses and charges of any nature whatsoever that are either paid or incurred by the Company in connection with the refinement and beneficiation of products after leaving the property and all insurance costs and taxes.

   

The Company obtained 25 mineral claims (the “Option Claims”), located in Elko County, Nevada pursuant to an option agreement (the “Option Agreement”) dated as of May 1, 2008 (the “Date of Closing”) with Nevada Eagle Resources, LLC and Steve Sutherland (together, the “Optionees”). The provisions of the Option Agreement included, among others, payments of specified annual amounts ranging from $10,000 to $80,000 by the Company to the Optionees over a period of ten years. Effective June 1, 2010, the Company and the Optionees agreed to terminate the Company’s interests in the Option Claims pursuant to (1) payment by the Company of $8,750 to each of the Optionees, (2) performance by the Company of such reclamation and remediation as required to discharge the surface management bond posted by the Company pursuant to a Notice of Intent filed with the BLM prior to undertaking exploration activity on the Option Claims, and (3) conveyance by the Company to Nevada Eagle Resources, LLC of the 124 mineral claims staked by the Company after the Date of Closing that are within the Area of Interest described in the Option Agreement. As of March 31, 2012, the undertakings described in (1) and (3) above have been completed and (2) above is in progress. The 25 Option Claims together with 124 mineral claims staked by the Company have been referred to by the Company as the “Medicine Claim Group.”

   

Effective as of June 23, 2008, the Company appointed Mason Douglas as the President of the Company. Mr. Douglas is also a director of the Company. In connection with the appointment, the Company entered into a consulting services agreement with a corporation that is controlled by Mr. Douglas (the “Consulting Agreement”). The Consulting Agreement has a term of one year and is then automatically renewable. Either party may terminate the Consulting Agreement upon 90 days notice to the other party. According to the terms of the Consulting Agreement as amended, the Company will pay a fee of $10,417 per month and reimburse related business expenses. Mr. Douglas does not receive a salary from the Company.

-20-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

15.

Commitments and Contingencies – Cont’d

   

On December 8, 2008 IMC US entered into a Mineral Rights Lease Agreement (the “Edgar Lease Agreement”) with the Earl Edgar Mineral Trust (“Edgar”) to lease certain mineral rights in Elko County, Nevada described below (the “Edgar Property”). The term of the Edgar Lease Agreement is ten years and will automatically renew on the same terms and conditions for additional ten-year periods, provided IMC US is conducting exploration, development or mining either on the surface or underground at the property. The rent is to be paid each year on January 1st. $1.00 per net acre was paid upon execution of the Edgar Lease Agreement. On January 1 of each year commencing in 2010 and extending for so long as the Edgar Lease Agreement is in effect, IMC US is obligated to make the following payments:


  2010 $1.00 per net acre
  2011 $2.00 per net acre
  2012 $2.00 per net acre
  2013 $3.00 per net acre
  2014 $3.00 per net acre
  2015 $4.00 per net acre
  2016 $4.00 per net acre
  2017 $5.00 per net acre in each year for the duration of the Edgar Lease Agreement.

The Edgar Lease Agreement covers 100% of the mineral rights on 1,120 acres of the Edgar Property (“Property A”) and 50% of the mineral rights on 6,720 acres of the Edgar Property (“Property B”). Edgar is entitled to receive a royalty of $0.50 per ton for material mined and removed from Property A and $0.25 per ton for material mined and removed from Property B during the term of the Edgar Lease Agreement and any renewal thereof.

On April 9, 2009, the Company and Edgar entered into an Amendment to the Edgar Lease Agreement (the “Amendment”), effective as of December 8, 2008. The Amendment provides for Standard Steam LLC to carry out exploration for geothermal energy sources on the Edgar Property after obtaining the written consent of the Company. The Amendment also provides for other cooperation with Standard Steam LLC regarding mineral rights on Property B of the Edgar Property.

On November 30, 2009, IMC US entered into a Mineral Rights Agreement with Perdriau Investment Corp. (“Perdriau”) to purchase 50% of the mineral rights, including all easements, rights of way and appurtenant rights of any type that run with the mineral rights in certain sections of Elko County, Nevada (the “Perdriau Property”). The purchase price was $10 per net acre. IMC US purchased 340 net acres for a total purchase price of $3,400. Perdriau will be entitled to receive a royalty of $0.25 per ton for material mined and removed from the Perdriau Property. Material mined and stored on the Perdriau Property or adjacent property for reclamation purposes will not be subject to any royalty. Material removed from the Perdriau Property for the purposes of testing or bulk sampling, provided it does not exceed 50,000 tons, will also not be subject to any royalty. The royalty will be calculated and paid within 45 days after the end of each calendar quarter.

As of January 15, 2010, the Company entered into a Property Lease Agreement with Eugene M. Hammond (the “Hammond Lease”) for surface rights on 80 acres in Elko County, Nevada (the “Hammond Surface Rights”). The term of the Hammond Lease is five years and the annual rent is $500. The Company is responsible for the payment of all real estate taxes on the Hammond Surface Rights. During the term of the Hammond Lease, the Company has the exclusive right to conduct exploration and development work on the Hammond Surface Rights. The results of all drilling and exploration are the property of the Company. The Company is responsible for any environmental damage caused by the Company and any reclamation costs required as a result of drilling and testing.

-21-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

15.

Commitments and Contingencies – Cont’d

   

The Company has an option to purchase the property covered by the Hammond Lease for $15,000, less the amount paid in rent during the term of the Hammond Lease.

   

Also as of January 15, 2010, IMC US entered into a Mineral Rights Agreement with Eugene M. Hammond (the “Hammond Mineral Rights Agreement”) pursuant to which the Company purchased a 25% interest in any and all minerals extracted from 160 acres (the “Hammond Mineral Rights Property”) covered by the Hammond Mineral Rights Agreement. The purchase price was $400. In addition, the seller is entitled to receive a royalty of $0.125 per ton on material mined and removed from the Hammond Mineral Rights Property. The Hammond Mineral Rights Agreement does not cover petroleum.

   

Effective July 1, 2010, the Company entered into an employment agreement with an individual to provide business and administrative services. The employment agreement has a term of one year and is automatically renewable thereafter. Either party may terminate the employment agreement upon 60 days notice. According to the terms of the employment agreement as amended, the Company will pay the individual no less than $8,333 per month and reimburse related business expenses.

   

Effective July 1, 2010, the Company entered into an employment agreement with an individual to provide receptionist and administrative services at its Reno, Nevada corporate headquarters. The employment agreement has a term of one year and is automatically renewable thereafter. Either party may terminate the employment agreement upon 30 days notice. Pursuant to this employment agreement, the Company will pay no less than $51,000 per year for such services.

   

On February 25, 2011, SRC entered into an option and joint venture agreement (the “IMMI Option Agreement”) with International Millennium Mining Inc. (“IMMI”), a wholly-owned subsidiary of International Millennium Mining Corp. (“IMMC”), to sell an 85% interest in SRC’s NL Extension Project Claim Group (the “NL Project”) for total consideration of $350,000 and 1,925,000 shares of IMMC’s common stock (the “Consideration”). The NL Project consists of 18 mineral claims located in Esmeralda County, Nevada, approximately 6 miles southwest of Silver Peak, Nevada on Highway 47. Under the terms of the IMMI Option Agreement, the Consideration is payable over a five-year period that ends on September 15, 2015, with IMMI’s interest in the NL Project vesting at the end of such period. In the event of early termination, IMMI is not entitled to the return of Consideration previously paid to SRC. If the NL Project is determined to be economically feasible, based upon criteria contained in the IMMI Option Agreement, SRC will be required to fund its portion of an operating budget proposed by IMMI in order to retain its 15% interest in the NL Project and to acquire a 15% interest in IMMI’s Nivloc Mine Project (the NL Project and the Nivloc Mine Project, collectively, the “IMMI Project”). In the event that SRC decides not to fund its portion of the budget, its 15% interest would be forfeited, but SRC would be entitled to a 2% net smelter return royalty if and when the IMMI Project enters the production phase. Upon funding of the operating budget and SRC’s acquisition of a 15% interest in the IMMI Project, SRC and IMMI would enter into a joint venture agreement.

-22-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

15.

Commitments and Contingencies – Cont’d

   

On August 24, 2011, SRC entered into an option agreement dated as of August 19, 2011 (the “MGold Option Agreement”) with MGold Resources Inc. (“MGold”), pursuant to which MGold had an option (the “Option) to earn a 50% interest in each of SRC’s Silver Queen Claim Group (the “Silver Queen Property”) and Klondyke Claim Group (the “Klondyke Property”) after expenditure of certain Option Costs and the full payment of the Cash Consideration, as defined below. The Silver Queen Property consists of 178 mineral claims and the Klondyke Property consists of 134 mineral claims and 2 leased patented claims, with both Properties located in Esmeralda County, Nevada. The MGold Option Agreement was preceded by a Letter of Intent between SRC and MGold dated as of June 8, 2011. Under the terms of the MGold Option Agreement, MGold was required to incur exploration expenditures totaling CDN$4,000,000 with regards to the Silver Queen Property and CDN$1,350,000 with regards to the Klondyke Property (together, the “Option Costs”). MGold also was to make total cash payments to SRC of CDN$2,000,000 for the Silver Queen Property and CDN$265,000 for the Klondyke Property (together, the “Cash Consideration”). The Option Costs were to be made over a period of 30 months, and the Cash Consideration was to be paid over a period of 33 months. Upon full expenditure of the Option Costs and payment of the total Cash Consideration, the Option could be exercised and MGold would hold a 50% equity interest in each of the Silver Queen Property and Klondyke Property. On March 15, 2012, MGold issued notice to SRC that MGold was terminating the MGold Option Agreement effective April 14, 2012. Also see Note 17, Subsequent Events.

   

On September 1, 2011, SRC engaged Tetra Tech, Inc. to complete the exploration permitting activities for its Silver Queen property near Silver Peak, Nevada. The Company is to authorize each phase of work before the work proceeds. The estimated total consideration to be paid under the agreement is $68,900. As of March 31, 2012, the Company had recorded total expenses of $15,584 for this contract.

   

As of November 4, 2011, the Company engaged Railroad Industries Incorporated to perform a detailed market study for specific types of cement that could potentially be produced at the Company’s Blue Nose limestone project. The cost of the study was estimated to be $45,510, and was subsequently increased to $49,510. As of March 31, 2012, the Company had recorded total expenses of $46,663 for this contract.

   

Effective February 29, 2012, SRC entered into a mineral lease agreement with Joseph W Gumaskas (the “Gumaskas Agreement”) to lease approximately 10 acres (the “Claim”) in Mineral County, Nevada. Unless terminated earlier by SRC, the term of the Gumaskas Agreement is ten years and will automatically renew on the same terms and conditions for additional five-year periods. The Gumaskas Agreement requires SRC to pay Gumaskas advance minimum royalty payments of $500 annually. In the event that the Claim becomes a producing claim, SRC will pay Gumaskas a 3% royalty based upon gross revenue less deductions permitted by the Gumaskas Agreement. Gross revenue includes the aggregate of revenue received by SRC from arm’s length purchasers of all mineral products produced from the Claim, the fair market value of all products sold by SRC to persons not dealing with SRC at arm’s length and SRC’s share of the proceeds of insurance on products. From such revenue, SRC would be permitted to deduct sales charges levied by any sales agent on the sale of products, all insurance costs in respect of mineral products, and all costs, expenses and charges of any nature whatsoever that are either paid or incurred by SRC in connection with the refinement and beneficiation of products after leaving the Claim.

   

The Company has entered into operating leases for its office space and certain office furniture and equipment. Rent payments associated with those leases for the nine-month periods ended March 31, 2012, and March 31, 2011, were $21,479 and $23,553, respectively. As of March 31, 2012, the Company’s estimated future minimum cash payments under non-cancelable operating leases for the years ending June 30, 2012, June 30, 2013, and June 30, 2014, are $6,921, $23,138, and $9,500, respectively.

-23-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

15.

Commitments and Contingencies – Cont’d

   

Maintaining Claims in Good Standing

   

The Company is required to pay to the BLM on or before September 1st of each year, a fee in the amount of $140 per mineral claim held by the Company. The total amount paid on August 30, 2011, was $148,680 for 1,062 claims held by the Company at that date. The BLM fee for the 18 NL Project claims held by the Company were paid by IMMI pursuant to the IMMI Option Agreement described above.

   

The Company is also required to pay on or before November 1st of each year, annual fees to counties in Nevada in which the claims are held. In September 2011, the Company paid $11,190 to nine counties in Nevada for annual claims-related fees.

   

The Company also holds certain patented claims and leases other patented claims in Nevada. A patented claim is fee simple title to the property. Patented claims are subject to taxes assessed by the local community based on assessment rates set annually.

   

As of March 31, 2012, the Company holds certain exploration permits in the state of Arizona, which have a duration of one year from the date of issuance. The permits may be renewed for up to four additional one-year terms for a total of five years and provide the holder of the permit with an exclusive right to explore for minerals within the state land covered by the permit and to apply for mineral leases to such land. The holder of a permit may remove from the land only the amount of material required for sampling and testing and is responsible for any damage or destruction caused by the holder’s exploration activities. The holder of a permit is entitled to ingress and egress to the covered site along routes approved by the Arizona State Land Department. IMC US has posted a bond required by the state of Arizona to back any reclamation required as a result of work performed. The permit is renewable if the holder has expended not less than $10.00 per acre during each of the first two year-long periods and $20.00 per acre during each of the next three year-long periods. Each permit fee is $500 per year plus $2.00 per acre for the first two years and $1.00 per acre per year for the following three years. Upon termination of a mineral exploration permit, the state of Arizona is entitled to information collected by the permit holder. In the event that a permit holder discovers a valuable mineral deposit, the permit holder may apply to the Arizona State Land Department for a mineral lease having a term of 20 years and renewable for an additional 20 years. A permit holder shall be the preferred recipient of the mineral lease, provided that all applicable requirements are met. A mineral lease entitles the lessee to develop and establish a mine on the leased premises, provided that a mine plan and all necessary approvals are obtained.

   

Each of the Company’s quarry leases located in Manitoba, Canada is renewable annually upon payment of rent to the province of Manitoba in the amount of CDN$24 per hectare or fraction thereof. During the fiscal year ended June 30, 2011, the Company paid CDN$57,504 in rent for these leases.

-24-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

16.

Related Party Transactions

There are no amounts owed to or from related parties as of March 31, 2012, or June 30, 2011.

The following transactions were undertaken in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the Company and the related parties.

Nine-months ended March 31, 2012

A corporation owned and operated by the Company’s President who is also a member of the Company’s Board of Directors, received $78,417 for the President’s services.

The Company recorded expenses of $25,681 for legal services rendered and expenses incurred on behalf of the Company by a law firm, a partner of which is also a member of the Company’s Board of Directors. In addition the same law firm was paid $70,853 for legal services rendered and expenses incurred on behalf of the Company that were capitalized as costs for raising capital.

The Company’s Chief Financial Officer received $13,594 for consulting services provided to the Company.

The Company’s Corporate Secretary received $42,167 for administrative services provided to the Company.

The Company recorded interest expense of $1,381 pursuant to a promissory note issued to a corporation that is owned and controlled by the Company’s Chief Executive Officer who is also a member of its Board of Directors. Also see Note 9, Note Payable.

Nine-months ended March 31, 2011

A corporation owned and operated by the Company’s President who is also a member of the Company’s Board of Directors, received $76,500 for the President’s services.

The Company’s Chief Financial Officer received $13,045 for consulting services provided to the Company.

The Company’s Corporate Secretary received $41,075 for administrative services provided to the Company.

17.

Subsequent Events

   

On March 15, 2012, MGold issued notice to SRC that MGold was terminating the MGold Option Agreement effective April 14, 2012. Because the termination of the MGold Option Agreement is effective after the date of this report, the effect of the termination will be reflected in the Company’s consolidated financial statements for the period ending June 30, 2012.

-25-


INFRASTRUCTURE MATERIALS CORP.
(AN EXPLORATION STAGE MINING COMPANY)
Condensed Notes to Interim Consolidated Financial Statements
March 31, 2012
(Amounts expressed in US Dollars)
(Unaudited-Prepared by Management)

17.

Subsequent Events – Cont’d

   

Effective April 1, 2012, the Company entered into a consulting agreement (the “Teatyn Agreement”) with Teatyn Enterprises, Inc. (“Teatyn”) for Teatyn to provide the Company with certain investor relation services to the Company for a period of one year. Under the terms of the Teatyn Agreement, Teatyn will receive a monthly fee of CDN$5,000 and options (the “Options”) to purchase up to 350,000 Common Shares at an exercise price of CDN$0.10 per Common Share. The Options will vest at a rate of one twelfth (1/12) per month during the term of the Teatyn Agreement, such vesting subject to the terms of the Company’s Stock Option Plan and the policies of the TSX Venture Exchange. Unexercised Options, if any, will terminate thirty (30) days following the expiry or termination of the Teatyn Agreement.

   

Effective April 1, 2012, SRC entered into a mineral lease agreement (the “Saunders Agreement”) with Charles and Barbara Saunders (the “Lessors”) to lease approximately 37 acres (the “Claims”) in Esmeralda County, Nevada. Unless terminated earlier by SRC, the term of the Saunders Agreement is ten years and will automatically renew on the same terms and conditions for additional five-year periods. The Saunders Agreement requires SRC to pay the Lessors advance minimum royalty payments of $2,000 annually. In the event that the Claims become producing claims, SRC will pay the Lessors a 3% royalty based upon gross revenue less deductions permitted by the Saunders Agreement. Gross revenue includes the aggregate of revenue received by SRC from arm’s length purchasers of all mineral products produced from the Claims, the fair market value of all products sold by SRC to persons not dealing with SRC at arm’s length and SRC’s share of the proceeds of insurance on products. From such revenue, SRC would be permitted to deduct sales charges levied by any sales agent on the sale of products, all insurance costs in respect of mineral products, and all costs, expenses and charges of any nature whatsoever that are either paid or incurred by SRC in connection with the refinement and beneficiation of products after leaving the Claims.

   

On April 1, 2012, IMC US decided to forfeit 8 mineral exploration permits covering approximately 4,431 acres at its Tres Alamos limestone project in Arizona.

   

On April 2, 2012, the Company engaged Koop Geotechnical Services Inc. to conduct geophysical surveys of several of its precious metal properties at an estimated cost of CDN$38,430.

   

On April 24, 2012, SRC added 33 claims covering approximately 682 acres to its Kope Scheelite project and 45 claims covering approximately 930 acres to its Quailey project, both projects in Mineral County, Nevada.

   

On April 9, 2012, 50,000 options that were granted pursuant to the Company’s 2006 Stock Option Plan expired.

   

On April 16, 2012, 50,000 options that were granted pursuant to the Company’s 2006 Stock Option Plan expired.

   

On April 25, 2012, the Company granted options to certain of its officers, directors, employees and consultants to purchase up to an aggregate of 8,375,000 Common Shares at an exercise price of CDN$0.10 per share. The options were granted in accordance with the Company’s Amended Stock Option Plan and vest at the rate of one twelfth (1/12) each month until fully vested. The options granted have a term of ten years.

-26-



Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

Our name is Infrastructure Materials Corp. and we sometimes refer to ourselves in this report as “Infrastructure Materials” or “Infrastructure”, or “the Company” or as “we,” “our,” or “us.”

Forward-Looking Statements

Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, exploration strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the “RISK FACTORS” section herein. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.

FOR THE NINE-MONTH AND THREE-MONTH PERIODS ENDED MARCH 31, 2012

PLAN OF OPERATIONS

We will require additional capital to implement the further exploration and possible development of our claim groups. We expect to raise this capital through the sale of additional securities, through debt financing or some combination of the foregoing. We have limited assets and no mineral “reserves” in accordance with the definitions adopted by the Securities and Exchange Commission, and there is no assurance that any exploration programs that we undertake will establish reserves.

Discussion of Operations and Financial Condition

Nine-Month and Three-Month Periods ended March 31, 2012

The Company is in the exploration stage and has not yet realized revenues from its planned operations. The Company has incurred a cumulative loss of $20,382,640 from inception to March 31, 2012. We expect our operating losses to continue for so long as we remain in an exploration stage and perhaps thereafter. Our ability to emerge from the exploration stage and conduct mining operations is dependent, in large part, upon our raising additional capital. We are continuing our efforts to raise additional capital and are moving forward with exploration of our projects.

Public Offering of Securities Outside the U.S.

On December 16, 2011, the Company completed the sale of 26,000,000 shares of its common stock (“Common Shares” or a “Common Share”) to the public in Canada at a price of $0.096 (CDN$0.10) per share to raise gross proceeds of $2,507,180 (CDN$2,600,000). The shares were sold pursuant to a long form prospectus filed in the Canadian provinces of Alberta, Saskatchewan, British Columbia and Ontario. PI Financial Corp. (“PI Financial”) acted as lead agent and received a corporate finance fee of $14,464 (CDN$15,000), was reimbursed $127,529 (CDN$132,250) for its expenses, was paid cash commissions $20,236 (CDN$20,985) and received non-transferable Agent’s Warrants entitling PI Financial to acquire 209,850 Common Shares at a price of $0.096 (CDN$0.10) per share exercisable for 24 months. In connection with the offering, in addition to payments made to PI Financial, the Company incurred legal and other direct expenses, which resulted in net proceeds from the offering of $2,215,399. The Company intends to use a portion of these proceeds to continue with the development of its Blue Nose cement grade limestone property.

-27-


The foregoing sale of securities was made entirely outside the United States pursuant to an exemption afforded by Regulation S promulgated under the Securities Act. Following the sale of our securities in Canada, the Company’s Common Shares were listed for trading on the TSX-V exchange under the symbols “IFM” and “IFM.S.” The Company’s Common Shares continue to be traded in the United States on the OTC Bulletin Board under the symbol “IFAM.”

Corporate Structure

The following diagram illustrates the Company’s present structure and ownership of its mineral properties and Milling Facility:

The Company continues to look for opportunities to develop other mineral deposits of commodities in high demand or anticipated high demand. We believe that the federal governments in the United States and Canada will embark on major infrastructure expenditures in the next 10 years creating a demand for cement that exceeds the current sources of supply in certain areas of the United States and Canada. Cement is made from limestone and we believe our acquisitions in this area have significant potential.

We have continued to raise capital and are moving forward with exploration on our Projects. The Company intends to continue to acquire, explore for and, if warranted, develop cement grade limestone properties in strategic locations with a view to filling an anticipated increased demand for cement in the United States and Canada, with a focus on the States of Nevada, California, Utah, Idaho and Arizona as well as the Provinces of Saskatchewan and Manitoba. Based on our evaluation of our 17 Limestone Projects completed to date, we have determined that the Blue Nose and Morgan Hill Projects currently provide the best opportunity for development of resources that could go to production. Further efforts will concentrate on the development of the Blue Nose Property which shows the highest potential for development of a substantial cement grade limestone resource.

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The Company is also continuing its evaluation of the silver/base metal projects and milling facility held by SRC. The Company has determined that the Silver Queen, Klondyke and Kope Scheelite Projects currently provide the best opportunity for development of resources that could go to production. Permitting of the Red Rock mill site at Mina, Nevada is close to completion. While exploratory drilling programs are being developed, the Company is also considering joint ventures with third parties to further explore and develop, if warranted, those properties. For more information regarding the Silver Queen and Klondyke properties, see “Contractual Obligations and Commercial Commitments” herein.

Stock Based Compensation

In April of 2006, the Board of Directors approved the Company’s 2006 Stock Option Plan, the purpose of which was to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees and consultants and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership.

The Company held an annual meeting of shareholders on July 29, 2011. At the meeting, among other actions, the shareholders of the Company approved the amendment and restatement of the 2006 Stock Option Plan resulting in the Company’s Amended Stock Option Plan (the “Amended Plan”). The Amended Plan replaces the Company’s 2006 Stock Option Plan and no further options will be issued under the 2006 Stock Option Plan. The terms of the Amended Plan include, among others, that (a) officers, directors, employees and consultants who provide services to the Company may be granted options to acquire shares of the Company’s Common Shares at the fair market value of the stock on the date of grant, (b) options may have a term of up to 10 years, (c) the Company may issue options in a number up to a maximum of 10% of the outstanding Common Shares, and (d) outstanding stock options previously granted pursuant to the 2006 Stock Option Plan will remain in effect and be exercisable in accordance with, and be deemed to be issued under, the terms of the Amended Plan. It is expected that options issued pursuant to the Amended Plan will not be “qualified” options under the provisions of section 422 of the Internal Revenue Code of 1986 as amended from time to time

No options were granted pursuant to the 2006 Stock Option Plan or the Amended Plan during the nine-month period ended March 31, 2012.

On August 31, 2011, 250,000 options that were not granted pursuant to the Company’s 2006 Stock Option Plan or the Amended Plan expired.

On December 16, 2011, in connection with the sale in Canada of 26,000,000 Common Shares, the Company issued 209,850 non-transferable Agent’s Warrants to PI Financial, the lead agent in the Canadian offering. Each Agent’s Warrant entitles PI Financial to acquire one Common Share at a price of $0.096 (CDN$0.10) per share and is exercisable for a period of 24 months. These Agent’s Warrants were not granted pursuant to the Company’s 2006 Stock Option Plan or the Amended Plan.

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SELECTED FINANCIAL INFORMATION

    Three months     Three months  
    ended     ended  
    March 31, 2012     March 31, 2011  
             
Revenues   Nil     Nil  
Net (Loss)   ($360,361 )   ($544,731 )
(Loss) per share-basic and diluted   -     (0.01 )

    Nine months     Nine months  
    ended     ended  
    March 31, 2012     March 31, 2011  
             
Revenues   Nil     Nil  
Net (Loss)   ($923,863 )   ($2,257,715 )
(Loss) per share-basic and diluted   (0.01 )   (0.03 )

    As of     As of  
    March 31, 2012     June 30, 2011  
             
Total Assets $ 3,665,080   $ 2,240,487  
Total Liabilities $ 475,226   $ 271,984  
Cash dividends declared per share   Nil     Nil  

Total assets as of March 31, 2012 include cash and cash equivalents of $1,951,935, short-term investments of $33,693, marketable securities of $63,408, prepaid expenses and other receivables of $32,800, restricted cash of $82,500, reclamation deposits of $240,805, plant and equipment of $745,414, net of depreciation, and mineral property interests of $514,525. As of June 30, 2011, total assets include cash and cash equivalents of $317,912, short-term investments of $83,604, marketable securities of $68,429, prepaid expenses and other receivables of $103,807, restricted cash of $82,500, reclamation deposits of $240,805, plant and equipment of $828,905, net of depreciation, and mineral property interests of $514,525.

The revenues and net loss (unaudited) of the Corporation for the quarter ended March 31, 2012 as well as the seven quarterly periods completed immediately prior thereto are set out below:

  For the For the For the For the For the For the For the For the
  three months three months three months three months three months three months three months three months
  ended ended ended ended ended ended ended ended
  March 31 December 31 September 30 June 30 March 31, December 31 September 30 June 30
  2012 2011 2011 2011 2011 2010 2010 2010
  $ $ $ $ $ $ $ $
                 
Revenues Nil Nil Nil Nil Nil Nil Nil Nil
                 
Net Loss (360,361) (177,003) (386,499) (265,364) (544,731) (385,062) (1,327,922) (601,518)
                 
Loss per Weighted Average                
Number of Shares Outstanding
-Basic and Fully Diluted 0.00 0.00 (0.01) 0.00 (0.01) (0.01) (0.02) (0.01)

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Revenues

No revenue was generated by the Company’s operations during the three-month and nine-month periods ended March 31, 2012 and March 31, 2011. The Company is an exploration stage mining company and has not yet realized any revenue from its operations.

Net Loss

The Company’s expenses are reflected in the Statements of Operation under the category of Operating Expenses. To meet the criteria of United States generally accepted accounting principles (“GAAP”), all mineral property acquisition and exploration costs are expensed as incurred. Mineral property acquisition costs are initially capitalized in accordance with ASC 805-20-55-37, previously referenced as the FASB Emerging Issues Task Force ("EITF") Issue 04-2. The Company assesses the carrying costs for impairment under ASC 360 and evaluates its carrying value under ASC 930 at each fiscal quarter end. The Company has capitalized $514,525 as Mineral Property Interests pursuant to the acquisition of CIC, and written off all other property payments to project expenses as impaired costs When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. For the purpose of preparing financial information, all costs associated with a property that has the potential to add to the Company’s proven and probable reserves are expensed until a final feasibility study demonstrating the existence of proven and probable reserve is completed. Except for the Mineral Property Interests discussed above, no costs have been capitalized in the periods covered by these financial statements. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserve.

The significant components of expense that have contributed to the total operating expense are discussed as follows:

(a) General and Administration Expense

Included in operating expenses for the three-month period ended March 31, 2012 is general and administration expense of $197,953 as compared with $218,576 for the three-month period ended March 31, 2011. During the nine-month period ended March 31, 2012, general and administration expense was $528,085 as compared to $619,848 for the nine-month period ended March 31, 2011. General and administration expense consists of professional, consulting, office and general and other miscellaneous costs. General and administration expense represents approximately 57% of the total operating expense for the nine-month period ended March 31, 2012 and approximately 27% of the total operating expense for the nine-month period ended March 31, 2011. General and administration expense decreased by $91,763 in the current nine-month period, as compared to the similar nine-month period for the prior year. The decrease in this expense is mainly due to decreases in expenses for investor relations and stock based compensation being offset only in part by the cost of a market study for specific types of cement relating to the Company’s Blue Nose limestone property and by increased expenses relating to the Company’s Common Shares being traded on exchanges in both the United States and Canada.

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(b) Project Expense

During the three-month period ended March 31, 2012, project expense was $131,165 as compared to $289,809 for the three-month period ended March 31, 2011. During the nine-month period ended March 31, 2012, project expense was $301,263 as compared to $1,529,555 for the nine-month period ended March 31, 2011. Project expense represents approximately 33% of the total operating expenses for the nine-month period ended March 31, 2012 and approximately 68% of the total operating expenses for the nine-month period ended March 31, 2011. Project expense decreased significantly during the three and nine-month periods ended March 31, 2012, as the Company pursued additional sources of capital to fund the exploration of its mineral claims.

Liquidity and Capital Resources

The following table summarizes the Company’s cash flow and cash in hand for the nine-month periods:

      March 31, 2012     March 31, 2011  
               
  Cash and cash equivalents $  1,951,935   $  320,597  
  Working capital $  1,999,391   $  632,299  
  Cash (used) in operating activities $  (831,271 ) $  (2,133,573 )
  Cash provided in investing activities $  249,895   $  348,422  
  Cash provided by financing activities $  2,215,399   $  507,500  

As of March 31, 2012 the Company had working capital of $1,999,391 as compared to $632,299 as of March 31, 2011.

Off-Balance Sheet Arrangements

The Company had no off-balance sheet arrangements as of March 31, 2012 and March 31, 2011.

Contractual Obligations and Commercial Commitments

On August 1, 2006, the Company acquired the Pansy Lee Claims Group from Anglo Gold Mining Inc. in exchange for 1,850,000 Common Shares pursuant to an Asset Purchase Agreement dated August 1, 2006 (the “Pansy Lee Purchase Agreement”). Pursuant to the Pansy Lee Purchase Agreement, a 2% net smelter royalty pertains to 8 of the 30 claims in this group. In the event that any one or more of the 8 claims becomes a producing claim, our revenue is subject to a 2% net smelter return royalty where net smelter returns are based upon gross revenue. Gross revenue would be calculated after commercial production commences and includes the aggregate of the following amounts: revenue received by the Company from arm’s length purchasers of all mineral products produced from the property, the fair market value of all products sold by the Company to persons not dealing with the Company at arm’s length and the Company’s share of the proceeds of insurance on products. From such revenue, the Company would be permitted to deduct: sales charges levied by any sales agent on the sale of products; transportation costs for products; all costs, expenses and charges of any nature whatsoever that are either paid or incurred by the Company in connection with the refinement and beneficiation of products after leaving the property and all insurance costs and taxes.

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The Company obtained 25 mineral claims (the “Option Claims”), located in Elko County, Nevada pursuant to an option agreement (the “Option Agreement”) dated as of May 1, 2008 (the “Date of Closing”) with Nevada Eagle Resources, LLC and Steve Sutherland (together, the “Optionees”). The provisions of the Option Agreement included, among others, payments of specified annual amounts ranging from $10,000 to $80,000 by the Company to the Optionees over a period of ten years. Effective June 1, 2010, the Company and the Optionees agreed to terminate the Company’s interests in the Option Claims pursuant to (1) payment by the Company of $8,750 to each of the Optionees, (2) performance by the Company of such reclamation and remediation as required to discharge the surface management bond posted by the Company pursuant to a Notice of Intent filed with the BLM prior to undertaking exploration activity on the Option Claims, and (3) conveyance by the Company to Nevada Eagle Resources, LLC of the 124 mineral claims staked by the Company after the Date of Closing that are within the Area of Interest described in the Option Agreement. As of March 31, 2012, the undertakings described in (1) and (3) above have been completed and (2) above is in progress. The 25 Option Claims together with 124 mineral claims staked by the Company have been referred to by the Company as the “Medicine Claim Group.”

Effective as of June 23, 2008, the Company appointed Mason Douglas as the President of the Company. Mr. Douglas is also a director of the Company. In connection with the appointment, the Company entered into a consulting services agreement with a corporation that is controlled by Mr. Douglas (the “Consulting Agreement”). The Consulting Agreement has a term of one year and is then automatically renewable. Either party may terminate the Consulting Agreement upon 90 days notice to the other party. According to the terms of the Consulting Agreement as amended, the Company will pay a fee of $10,417 per month and reimburse related business expenses. Mr. Douglas does not receive a salary from the Company.

On December 8, 2008 IMC US entered into a Mineral Rights Lease Agreement (the “Edgar Lease Agreement”) with the Earl Edgar Mineral Trust (“Edgar”) to lease certain mineral rights in Elko County, Nevada described below (the “Edgar Property”). The term of the Edgar Lease Agreement is ten years and will automatically renew on the same terms and conditions for additional ten-year periods, provided IMC US is conducting exploration, development or mining either on the surface or underground at the property. The rent is to be paid each year on January 1st. $1.00 per net acre was paid upon execution of the Edgar Lease Agreement. On January 1 of each year commencing in 2010 and extending for so long as the Edgar Lease Agreement is in effect, IMC US is obligated to make the following payments:

  2010 $1.00 per net acre
  2011 $2.00 per net acre
  2012 $2.00 per net acre
  2013 $3.00 per net acre
  2014 $3.00 per net acre
  2015 $4.00 per net acre
  2016 $4.00 per net acre
  2017 $5.00 per net acre in each year for the duration of the Edgar Lease Agreement.

The Edgar Lease Agreement covers 100% of the mineral rights on 1,120 acres of the Edgar Property (“Property A”) and 50% of the mineral rights on 6,720 acres of the Edgar Property (“Property B”). Edgar is entitled to receive a royalty of $0.50 per ton for material mined and removed from Property A and $0.25 per ton for material mined and removed from Property B during the term of the Edgar Lease Agreement and any renewal thereof.

On April 9, 2009, the Company and Edgar entered into an Amendment to the Edgar Lease Agreement (the “Amendment”), effective as of December 8, 2008. The Amendment provides for Standard Steam LLC to carry out exploration for geothermal energy sources on the Edgar Property after obtaining the written consent of the Company. The Amendment also provides for other cooperation with Standard Steam LLC regarding mineral rights on Property B of the Edgar Property.

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On November 30, 2009, IMC US entered into a Mineral Rights Agreement with Perdriau Investment Corp. (“Perdriau”) to purchase 50% of the mineral rights, including all easements, rights of way and appurtenant rights of any type that run with the mineral rights in certain sections of Elko County, Nevada (the “Perdriau Property”). The purchase price was $10 per net acre. IMC US purchased 340 net acres for a total purchase price of $3,400. Perdriau will be entitled to receive a royalty of $0.25 per ton for material mined and removed from the Perdriau Property. Material mined and stored on the Perdriau Property or adjacent property for reclamation purposes will not be subject to any royalty. Material removed from the Perdriau Property for the purposes of testing or bulk sampling, provided it does not exceed 50,000 tons, will also not be subject to any royalty. The royalty will be calculated and paid within 45 days after the end of each calendar quarter.

As of January 15, 2010, the Company entered into a Property Lease Agreement with Eugene M. Hammond (the “Hammond Lease”) for surface rights on 80 acres in Elko County, Nevada (the “Hammond Surface Rights”). The term of the Hammond Lease is five years and the annual rent is $500. The Company is responsible for the payment of all real estate taxes on the Hammond Surface Rights. During the term of the Hammond Lease, the Company has the exclusive right to conduct exploration and development work on the Hammond Surface Rights. The results of all drilling and exploration are the property of the Company. The Company is responsible for any environmental damage caused by the Company and any reclamation costs required as a result of drilling and testing. The Company has an option to purchase the property covered by the Hammond Lease for $15,000, less the amount paid in rent during the term of the Hammond Lease.

Also as of January 15, 2010, IMC US entered into a Mineral Rights Agreement with Eugene M. Hammond (the “Hammond Mineral Rights Agreement”) pursuant to which the Company purchased a 25% interest in any and all minerals extracted from 160 acres (the “Hammond Mineral Rights Property”) covered by the Hammond Mineral Rights Agreement. The purchase price was $400. In addition, the seller is entitled to receive a royalty of $0.125 per ton on material mined and removed from the Hammond Mineral Rights Property. The Hammond Mineral Rights Agreement does not cover petroleum.

Effective July 1, 2010, the Company entered into an employment agreement with an individual to provide business and administrative services. The employment agreement has a term of one year and is automatically renewable thereafter. Either party may terminate the employment agreement upon 60 days notice. According to the terms of the employment agreement as amended, the Company will pay the individual no less than $8,333 per month and reimburse related business expenses.

Effective July 1, 2010, the Company entered into an employment agreement with an individual to provide receptionist and administrative services at its Reno, Nevada corporate headquarters. The employment agreement has a term of one year and is automatically renewable thereafter. Either party may terminate the employment agreement upon 30 days notice. Pursuant to this employment agreement, the Company will pay no less than $51,000 per year for such services.

On February 25, 2011, SRC entered into an option and joint venture agreement (the “IMMI Option Agreement”) with International Millennium Mining Inc. (“IMMI”), a wholly-owned subsidiary of International Millennium Mining Corp. (“IMMC”), to sell an 85% interest in SRC’s NL Extension Project Claim Group (the “NL Project”) for total consideration of $350,000 and 1,925,000 shares of IMMC’s common stock (the “Consideration”). The NL Project consists of 18 mineral claims located in Esmeralda County, Nevada, approximately 6 miles southwest of Silver Peak, Nevada on Highway 47. Under the terms of the IMMI Option Agreement, the Consideration is payable over a five-year period that ends on September 15, 2015, with IMMI’s interest in the NL Project vesting at the end of such period. In the event of early termination, IMMI is not entitled to the return of Consideration previously paid to SRC. If the NL Project is determined to be economically feasible, based upon criteria contained in the IMMI Option Agreement, SRC will be required to fund its portion of an operating budget proposed by IMMI in order to retain its 15% interest in the NL Project and to acquire a 15% interest in IMMI’s Nivloc Mine Project (the NL Project and the Nivloc Mine Project, collectively, the “IMMI Project”). In the event that SRC decides not to fund its portion of the budget, its 15% interest would be forfeited, but SRC would be entitled to a 2% net smelter return royalty if and when the IMMI Project enters the production phase. Upon funding of the operating budget and SRC’s acquisition of a 15% interest in the IMMI Project, SRC and IMMI would enter into a joint venture agreement.

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On August 24, 2011, SRC entered into an option agreement dated as of August 19, 2011 (the “MGold Option Agreement”) with MGold Resources Inc. (“MGold”), pursuant to which MGold had an option (the “Option) to earn a 50% interest in each of SRC’s Silver Queen Claim Group (the “Silver Queen Property”) and Klondyke Claim Group (the “Klondyke Property”) after expenditure of certain Option Costs and the full payment of the Cash Consideration, as defined below. The Silver Queen Property consists of 178 mineral claims and the Klondyke Property consists of 134 mineral claims and 2 leased patented claims, with both Properties located in Esmeralda County, Nevada. The MGold Option Agreement was preceded by a Letter of Intent between SRC and MGold dated as of June 8, 2011. Under the terms of the MGold Option Agreement, MGold was required to incur exploration expenditures totaling CDN$4,000,000 with regards to the Silver Queen Property and CDN$1,350,000 with regards to the Klondyke Property (together, the “Option Costs”). MGold also was to make total cash payments to SRC of CDN$2,000,000 for the Silver Queen Property and CDN$265,000 for the Klondyke Property (together, the “Cash Consideration”). The Option Costs were to be made over a period of 30 months, and the Cash Consideration was to be paid over a period of 33 months. Upon full expenditure of the Option Costs and payment of the total Cash Consideration, the Option could be exercised and MGold would hold a 50% equity interest in each of the Silver Queen Property and Klondyke Property. On March 15, 2012, MGold issued notice to SRC that MGold was terminating the MGold Option Agreement effective April 14, 2012. Also see Subsequent Events.

On September 1, 2011, SRC engaged Tetra Tech, Inc. to complete the exploration permitting activities for its Silver Queen property near Silver Peak, Nevada. The Company is to authorize each phase of work before the work proceeds. The estimated total consideration to be paid under the agreement is $68,900. As of March 31, 2012, the Company had recorded total expenses of $15,584 for this contract.

As of November 4, 2011, the Company engaged Railroad Industries Incorporated to perform a detailed market study for specific types of cement that could potentially be produced at the Company’s Blue Nose limestone project. The cost of the study was estimated to be $45,510, and was subsequently increased to $49,510. As of March 31, 2012, the Company had recorded total expenses of $46,663 for this contract.

Effective February 29, 2012, SRC entered into a mineral lease agreement with Joseph W Gumaskas (the “Gumaskas Agreement”) to lease approximately 10 acres (the “Claim”) in Mineral County, Nevada. Unless terminated earlier by SRC, the term of the Gumaskas Agreement is ten years and will automatically renew on the same terms and conditions for additional five-year periods. The Gumaskas Agreement requires SRC to pay Gumaskas advance minimum royalty payments of $500 annually. In the event that the Claim becomes a producing claim, SRC will pay Gumaskas a 3% royalty based upon gross revenue less deductions permitted by the Gumaskas Agreement. Gross revenue includes the aggregate of revenue received by SRC from arm’s length purchasers of all mineral products produced from the Claim, the fair market value of all products sold by SRC to persons not dealing with SRC at arm’s length and SRC’s share of the proceeds of insurance on products. From such revenue, SRC would be permitted to deduct sales charges levied by any sales agent on the sale of products, all insurance costs in respect of mineral products, and all costs, expenses and charges of any nature whatsoever that are either paid or incurred by SRC in connection with the refinement and beneficiation of products after leaving the Claim.

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The Company has entered into operating leases for its office space and certain office furniture and equipment. Rent payments associated with those leases for the nine-month periods ended March 31, 2012, and March 31, 2011, were $21,479 and $23,553, respectively. As of March 31, 2012, the Company’s estimated future minimum cash payments under non-cancelable operating leases for the years ending June 30, 2012, June 30, 2013, and June 30, 2014, are $6,921, $23,138, and $9,500, respectively.

Maintaining Claims in Good Standing

The Company is required to pay to the BLM on or before September 1st of each year, a fee in the amount of $140 per mineral claim held by the Company. The total amount paid on August 30, 2011, was $148,680 for 1,062 claims held by the Company at that date. The BLM fee for the 18 NL Project claims held by the Company were paid by IMMI pursuant to the IMMI Option Agreement described above.

The Company is also required to pay on or before November 1st of each year, annual fees to counties in Nevada in which the claims are held. In September 2011, the Company paid $11,190 to nine counties in Nevada for annual claims-related fees.

The Company also holds certain patented claims and leases other patented claims in Nevada. A patented claim is fee simple title to the property. Patented claims are subject to taxes assessed by the local community based on assessment rates set annually.

As of March 31, 2012, the Company holds certain exploration permits in the state of Arizona, which have a duration of one year from the date of issuance. The permits may be renewed for up to four additional one-year terms for a total of five years and provide the holder of the permit with an exclusive right to explore for minerals within the state land covered by the permit and to apply for mineral leases to such land. The holder of a permit may remove from the land only the amount of material required for sampling and testing and is responsible for any damage or destruction caused by the holder’s exploration activities. The holder of a permit is entitled to ingress and egress to the covered site along routes approved by the Arizona State Land Department. IMC US has posted a bond required by the state of Arizona to back any reclamation required as a result of work performed. The permit is renewable if the holder has expended not less than $10.00 per acre during each of the first two year-long periods and $20.00 per acre during each of the next three year-long periods. Each permit fee is $500 per year plus $2.00 per acre for the first two years and $1.00 per acre per year for the following three years. Upon termination of a mineral exploration permit, the state of Arizona is entitled to information collected by the permit holder. In the event that a permit holder discovers a valuable mineral deposit, the permit holder may apply to the Arizona State Land Department for a mineral lease having a term of 20 years and renewable for an additional 20 years. A permit holder shall be the preferred recipient of the mineral lease, provided that all applicable requirements are met. A mineral lease entitles the lessee to develop and establish a mine on the leased premises, provided that a mine plan and all necessary approvals are obtained.

Each of the Company’s quarry leases located in Manitoba, Canada is renewable annually upon payment of rent to the province of Manitoba in the amount of CDN$24 per hectare or fraction thereof. During the fiscal year ended June 30, 2011, the Company paid CDN$57,504 in rent for these leases.

-36-


Cash Requirements

At March 31, 2012, the Company had cash and cash equivalents of $1,951,935, short-term investments of $33,693, marketable securities of $63,408, and prepaid expenses and other receivables of $32,800 for total current assets of $2,081,836.

During the twelve month period ending June 30, 2012, the Company expects to incur approximately $75,000 in expenses in connection with its Blue Nose limestone project and plans to incur additional expenses related to other limestone projects. Our ability to incur Project expenses is subject to permitting programs with the Bureau of Land Management and results of drilling as it progresses. As of the date of this report, the Company expects to be able to incur all of the Project and General and administration expenses planned in the current fiscal year without raising additional capital.

Subsequent Events

On March 15, 2012, MGold issued notice to SRC that MGold was terminating the MGold Option Agreement effective April 14, 2012. Because the termination of the MGold Option Agreement is effective after the date of this report, the effect of the termination will be reflected in the Company’s consolidated financial statements for the period ending June 30, 2012.

Effective April 1, 2012, the Company entered into a consulting agreement (the “Teatyn Agreement”) with Teatyn Enterprises, Inc. (“Teatyn”) for Teatyn to provide the Company with certain investor relation services to the Company for a period of one year. Under the terms of the Teatyn Agreement, Teatyn will receive a monthly fee of CDN$5,000 and options (the “Options”) to purchase up to 350,000 Common Shares at an exercise price of CDN$0.10 per Common Share. The Options will vest at a rate of one twelfth (1/12) per month during the term of the Teatyn Agreement, such vesting subject to the terms of the Company’s Stock Option Plan and the policies of the TSX Venture Exchange. Unexercised Options, if any, will terminate thirty (30) days following the expiry or termination of the Teatyn Agreement.

Effective April 1, 2012, SRC entered into a mineral lease agreement (the “Saunders Agreement”) with Charles and Barbara Saunders (the “Lessors”) to lease approximately 37 acres (the “Claims”) in Esmeralda County, Nevada. Unless terminated earlier by SRC, the term of the Saunders Agreement is ten years and will automatically renew on the same terms and conditions for additional five-year periods. The Saunders Agreement requires SRC to pay the Lessors advance minimum royalty payments of $2,000 annually. In the event that the Claims become producing claims, SRC will pay the Lessors a 3% royalty based upon gross revenue less deductions permitted by the Saunders Agreement. Gross revenue includes the aggregate of revenue received by SRC from arm’s length purchasers of all mineral products produced from the Claims, the fair market value of all products sold by SRC to persons not dealing with SRC at arm’s length and SRC’s share of the proceeds of insurance on products. From such revenue, SRC would be permitted to deduct sales charges levied by any sales agent on the sale of products, all insurance costs in respect of mineral products, and all costs, expenses and charges of any nature whatsoever that are either paid or incurred by SRC in connection with the refinement and beneficiation of products after leaving the Claims.

On April 1, 2012, IMC US decided to forfeit 8 mineral exploration permits covering approximately 4,431 acres at its Tres Alamos limestone project in Arizona.

On April 2, 2012, the Company engaged Koop Geotechnical Services Inc. to conduct geophysical surveys of several of its precious metal properties at an estimated cost of CDN$38,430.

-37-


On April 24, 2012, SRC added 33 claims covering approximately 682 acres to its Kope Scheelite project and 45 claims covering approximately 930 acres to its Quailey project, both projects in Mineral County, Nevada.

On April 9, 2012, 50,000 options that were granted pursuant to the Company’s 2006 Stock Option Plan expired.

On April 16, 2012, 50,000 options that were granted pursuant to the Company’s 2006 Stock Option Plan expired.

On April 25, 2012, the Company granted options to certain of its officers, directors, employees and consultants to purchase up to an aggregate of 8,375,000 Common Shares at an exercise price of CDN$0.10 per share. The options were granted in accordance with the Company’s Amended Stock Option Plan and vest at the rate of one twelfth (1/12) each month until fully vested. The options granted have a term of ten years.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not Applicable.

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Item 4. Controls and Procedures

CONTROLS AND PROCEDURES

Based on an evaluation, conducted by our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(e), they concluded that our disclosure controls and procedures were effective as of March 31, 2012, to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are:

  1.

recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and

     
  2.

accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Management believes that potential weaknesses in the Company’s internal controls may arise as a result of a lack of segregation of duties and the existence of related party transactions. Management has added compensating controls to address the lack of segregation of duties and plans to add further controls in the future. In connection with related party transactions, management and the Board have required independent valuations prior to engaging in related party transactions that are not in the ordinary course of business. Management has no evidence of any breakdown in its internal controls and continues to explore methods of reducing and minimizing the risk of a material misstatement in the Company’s financial statements.

Changes in Internal Controls

During the quarter ended March 31, 2012, there have been no changes to the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1.              Legal Proceedings

The Company is not a party to any pending legal proceeding or litigation and none of the Company’s property is the subject of a pending legal proceeding.

Item 1A.            Risk Factors

The following are certain risk factors that could affect our business, financial condition, operating results and cash flows. These risk factors should be considered in connection with evaluating the forward-looking statements because they could cause actual results to differ materially from those expressed in any forward-looking statement. The risk factors highlighted below are not the only ones we face. If any of these events actually occur, our business, financial condition, operating results or cash flows could be negatively affected.

1.

THE COMPANY HAS NO SOURCE OF OPERATING REVENUE AND EXPECTS TO INCUR SIGNIFICANT EXPENSES BEFORE ESTABLISHING AN OPERATING COMPANY, IF IT IS ABLE TO ESTABLISH AN OPERATING COMPANY AT ALL.

   

Currently, the Company has no source of revenue, limited working capital and no commitments to obtain additional financing. The Company will require additional working capital to carry out its exploration programs. The Company has no operating history upon which an evaluation of its future success or failure can be made. The ability to achieve and maintain profitability and positive cash flow is dependent upon:


 

further exploration of our properties and the results of that exploration.

   

 

raising the capital necessary to conduct this exploration and preserve the Company’s Properties.

   

 

raising capital to develop our properties, establish a mining operation, and operate this mine in a profitable manner if any of these activities are warranted by the results of our exploration programs and a feasibility study.

Because the Company has no operating revenue, it expects to incur operating losses in future periods as it continues to spend funds to explore its properties. Failure to raise the necessary capital to continue exploration could cause the Company to go out of business.

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2.

WE WILL NEED TO RAISE ADDITIONAL FINANCING TO COMPLETE FURTHER EXPLORATION

   

We will require significant additional financing in order to continue our exploration activities and our assessment of the commercial viability of our properties. There can be no assurance that we will be successful in our efforts to raise these require funds, or on terms satisfactory to us. The continued exploration of current and future mineral properties and the development of our business will depend upon our ability to establish the commercial viability of our properties and to ultimately develop cash flow from operations and reach profitable operations. We currently are in an exploration stage and we have no revenue from operations and we are experiencing significant cash outflow from operating activities. If we are unable to obtain additional financing, we will not be able to continue our exploration activities and our assessment of the commercial viability of our precious metal and mineral properties.

   
3.

WE HAVE NO RESERVES AND WE MAY FIND THAT OUR PROPERTIES ARE NOT COMMERCIALLY VIABLE

   

Our properties do not contain reserves in accordance with the definitions adopted by the Securities and Exchange Commission, and there is no assurance that any exploration programs that we undertake will establish reserves. All of our mineral properties are in the exploration stage as opposed to the development stage and have no known body of economic mineralization. The known mineralization at these projects has not yet been determined, and may never be determined to be economic. We plan to conduct further exploration activities on our properties, which future exploration may include the completion of feasibility studies necessary to evaluate whether a commercial mineable mineral exists on any of our properties. There is a substantial risk that these exploration activities will not result in discoveries of commercially recoverable quantities of minerals. Any determination that our properties contain commercially recoverable quantities of minerals may not be reached until such time that final comprehensive feasibility studies have been concluded that establish that a potential mine is likely to be economic. There is a substantial risk that any preliminary or final feasibility studies carried out by us will not result in a positive determination that our mineral properties can be commercially developed.

   
4.

WE HAVE A HISTORY OF OPERATING LOSSES AND THERE CAN BE NO ASSURANCES WE WILL BE PROFITABLE IN THE FUTURE.

   

We have a history of operating losses, expect to continue to incur losses, and may never be profitable. Further, we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred losses totaling $20,382,640 from inception to March 31, 2012, and incurred losses of $923,863 during the nine-month period ended March 31, 2012. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: (i) the costs to acquire additional mineral exploration claims are more than we currently anticipate; or (ii) exploration and or future potential mining costs for additional claims increase beyond our expectations.

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5.

THE RISKS ASSOCIATED WITH EXPLORATION COULD CAUSE PERSONAL INJURY OR DEATH, ENVIRONMENTAL DAMAGE AND POSSIBLE LEGAL LIABILITY.

   

We are not currently engaged in mining operations because we are in the exploration phase. However, our exploration operations could expose the Company to liability for personal injury or death, property damage or environmental damage. Although we carry property and liability insurance, cost effective insurance contains exclusions and limitations on coverage and may be unavailable in some circumstances.

   
6.

BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN MINERAL EXPLORATION VENTURES AND CURRENT DETERIORATION IN EQUITY MARKETS, WE FACE A HIGH RISK OF BUSINESS FAILURE.

   

Investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. Our prospects are further complicated by a pronounced deterioration in equity markets and constriction in equity capital available to finance and maintain our exploration activities. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake and the difficult economy and market volatility that we are experiencing. Moreover, most exploration projects do not result in the discovery of commercial mineable deposits.

   
7.

OUR BUSINESS IS AFFECTED BY CHANGES IN COMMODITY PRICES.

   

Our ability to raise capital and explore our properties and the future profitability of those operations is directly related to the market price of certain minerals such as silver and limestone as well as the price and availability of cement. The Company is negatively affected by the current decline in commodity prices

   
8.

THE COMPANY COULD ENCOUNTER REGULATORY AND PERMITTING DELAYS.

   

The Company could face delays in obtaining permits to operate on the property covered by the claims. Such delays could jeopardize financing, if any is available, which could result in having to delay or abandon work on some or all of the properties.

   
9.

THERE ARE PENNY STOCK SECURITIES LAW CONSIDERATIONS THAT COULD LIMIT YOUR ABILITY TO SELL YOUR SHARES.

   

Our common stock is considered a "penny stock" and the sale of our stock by you will be subject to the "penny stock rules" of the Securities and Exchange Commission. The penny stock rules require broker-dealers to take steps before making any penny stock trades in customer accounts. As a result, the market for our shares could be illiquid and there could be delays in the trading of our stock which would negatively affect your ability to sell your shares and could negatively affect the trading price of your shares.

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10.

CURRENT LEVELS OF MARKET VOLATILITY COULD HAVE ADVERSE IMPACTS

   

The capital and credit markets have been experiencing volatility and disruption. If the current levels of market disruption and volatility continue or worsen, there can be no assurance that the Company will not experience adverse effects, which may be material. These effects may include, but are not limited to, difficulties in raising additional capital or debt and a smaller pool of investors and funding sources. There is thus no assurance the Company will have access to the equity capital markets to obtain financing when necessary or desirable.

   
11.

WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.

   

We have never declared or paid a dividend on our common stock. We intend to retain earnings, if any, for use in the operation and expansion of our business and, therefore, do not anticipate paying any dividends in the foreseeable future.

   
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds
   
  None.
   
Item 3.  Defaults Upon Senior Securities
   
  None.
   
Item 4. Mine Safety Disclosures
   
  Not applicable.
   
Item 5.   Other Information
   
  None.
   
Item 6.    Exhibits and Reports on Form 8-K
   
(a)

10.1

Consulting Agreement with Teatyn Enterprises, Inc. dated April 1, 2012
     
(b)

31.1

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
     
31.2

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

     
32.1

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     
(c)   In addition, the following are incorporated by reference:
     
    Current Report on Form 8-K “Item 1.02 Termination of a Material Definitive Agreement”, dated March 23, 2012
     
    Current Report on Form 8-K “Item 8.01 Other Events”, dated April 19, 2012

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SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

INFRASTRUCTURE MATERIALS CORP.

Dated: May 9, 2012 By: /s/Anne Macko
    Anne Macko, Secretary

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