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Drn - Delrand Resources Limited - Interim Condensed Consolidated Financial

Release Date: 18/11/2011 10:37:04      Code(s): DRN
DRN - Delrand Resources Limited - Interim Condensed Consolidated Financial      
statements as at and for the three and nine month periods ended                 
September 30, 2011                                                              
DELRAND RESOURCES LIMITED                                                       
(formerly BRC DiamondCore Ltd.)                                                 
(Incorporated in Canada)                                                        
(Corporation number 627115-4)                                                   
Share code: DRN & ISIN Number: CA2472671072                                     
("Delrand" or "the Company")                                                    
Interim Condensed Consolidated Financial Statements                             
As at and for the three and nine month periods ended                            
September 30, 2011                                                              
(Expressed in Canadian dollars)                                                 
(Unaudited)                                                                     
NOTICE TO READER                                                                
These interim condensed consolidated financial statements of Delrand Resources  
Limited (the "Company") as at and for the three and nine month periods ended    
September 30, 2011 have been prepared by and are the responsibility of the      
Company`s management. These interim condensed consolidated financial            
statements have not been audited or reviewed by the Company`s auditors.         
CONTENTS                                                                        
Condensed Consolidated Statements of Financial Position......................4  
Condensed Consolidated Statements of Comprehensive loss......................5  
Condensed Consolidated Statements of Changes in Equity.......................6  
Condensed Consolidated Statements of Cash Flows..............................7  
1. Corporate Information....................................................10  
2. Basis of Preparation.....................................................10  
3. Summary of Significant Accounting Policies...............................11  
4. Property, Plant and Equipment............................................26  
5. Exploration and Evaluation Assets........................................28  
6. Segmented Reporting......................................................29  
7. Notes Payable............................................................29  
8. Share Capital............................................................30  
9. Share-Based Payments.....................................................31  
10. Related Party Transactions..............................................35  
11. Financial risk management objectives and policies.......................36  
12. Supplemental cash flow information......................................41  
13. Commitments and Contingencies...........................................41  
14. First Time Adoption of International Financial Reporting Standards......42  
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION                         
(EXPRESSED IN CANADIAN DOLLARS - UNAUDITED)                                     
                                                                September 30,   
                                                      Notes              2011   
$   
Assets                                                                          
Current Assets                                                                  
Cash and cash equivalents                                              221,574  
Prepaid expenses and other assets                                       34,333  
Total Current Assets                                                   255,907  
Non-Current Assets                                                              
Property, plant and equipment                              4               129  
Exploration and evaluation                                 5         4,653,829  
Total Non-Current Assets                                             4,653,958  
Total Assets                                                         4,909,865  
Liabilities and Shareholders` Equity                                            
Current Liabilities                                                             
Accounts payable and accrued liabilities                               525,145  
Notes payable                                              7                 -  
Taxes payable                                                                -  
Due to related parties                                                  94,994  
Total Current Liabilities                                              620,139  
Non-current                                                                     
Future tax liability                                                    15,789  
Total Liabilities                                                      635,928  
Shareholders` Equity                                                            
Share capital                                              8       116,283,812  
Contributed surplus                                                  7,812,242  
Deficit                                                          (119,822,117)  
Total Shareholders` Equity                                           4,273,937  
Total Liabilities and Shareholders` Equity                           4,909,865  
Common shares                                                                   
Authorized                                                           Unlimited  
Issued and outstanding                                              49,704,341  
                                               December 31,        January 1,   
                                                       2010              2010   
$                 $   
Assets                                                                          
Current Assets                                                                  
Cash and cash equivalents                            126,931           664,495  
Prepaid expenses and other assets                     21,713           163,175  
Total Current Assets                                 148,644           827,670  
Non-Current Assets                                                              
Property, plant and equipment                          4,100           141,794  
Exploration and evaluation                         5,074,302         5,826,083  
Total Non-Current Assets                           5,078,402         5,967,877  
Total Assets                                       5,227,046         6,795,547  
Liabilities and Shareholders` Equity                                            
Current Liabilities                                                             
Accounts payable and accrued liabilities             834,176         1,027,172  
Notes payable                                        400,493           377,884  
Taxes payable                                          6,127                 -  
Due to related parties                               106,029                 -  
Total Current Liabilities                          1,346,825         1,405,056  
Non-current                                                                     
Future tax liability                                  15,789            57,030  
Total Liabilities                                  1,362,614         1,462,086  
Shareholders` Equity                                                            
Share capital                                    115,457,876       115,457,876  
Contributed surplus                                7,812,242         7,774,233  
Deficit                                        (119,405,686)     (117,898,648)  
Total Shareholders` Equity                         3,864,432         5,333,461  
Total Liabilities and Shareholders` Equity         5,227,046         6,795,547  
Common shares                                                                   
Authorized                                         Unlimited         Unlimited  
Issued and outstanding                            89,408,640        89,408,640  
The accompanying notes are an integral part of these interim condensed          
consolidated financial statements.                                              
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS                         
(EXPRESSED IN CANADIAN DOLLARS - UNAUDITED)                                     
                                         Notes                                  
                                                     For the                    
three                    
                                                       month          For the   
                                                      period      three month   
                                                       ended     period ended   
September        September   
                                                    30, 2011         30, 2010   
                                                           $                $   
Expenses                                                                        
Consulting and professional fees                       31,467          191,361  
General and administrative                             48,223           67,762  
Share-based payment expense                   9             -                -  
Foreign exchange (gain) loss                         (10,478)            1,010  
Loss from operations                                 (69,212)        (260,133)  
Headline Loss                                        (69,212)        (260,133)  
Loss for the period                                  (69,212)        (260,133)  
Comprehensive loss for the period                    (69,212)        (260,133)  
Loss per share, basic and diluted                      (0.00)           (0.00)  
                                                     For the                    
                                                  nine month     For the nine   
                                                      period     month period   
ended            ended   
                                                   September        September   
                                                    30, 2011         30, 2010   
                                                           $                $   
Expenses                                                                        
Consulting and professional fees                      233,785          335,954  
General and administrative                            193,637          174,318  
Share-based payment expense                                 -           73,116  
Foreign exchange (gain) loss                         (10,991)            3,370  
Loss from operations                                (416,431)        (586,758)  
Headline Loss                                       (416,431)        (586,758)  
Loss for the period                                 (416,431)        (586,758)  
Comprehensive loss for the period                   (416,431)        (586,758)  
Loss per share, basic and diluted                      (0.01)           (0.01)  
The accompanying notes are an integral part of these interim condensed          
consolidated financial statements.                                              
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY                          
(EXPRESSED IN CANADIAN DOLLARS - UNAUDITED)                                     
                                                                Common shares   
                                                  Number of                     
Notes           shares            Amount   
                                                                            $   
Balance at January 1, 2010                        89,408,640       115,457,876  
Net loss for the period                                                         
Share based compensation                  9                                     
Balance at September 30, 2010                     89,408,640       115,457,876  
Net loss for the period                                                         
Share based compensation                                                        
Balance at December 31, 2010                      89,408,640       115,457,876  
Balance at January 1, 2011                        89,408,640       115,457,876  
Net loss for the period                                                         
Share based compensation                  9                                     
Share issue                                       10,000,000           825,936  
Two to one share consolidation           8a     (49,704,299)                    
Balance at September 30, 2011             *       49,704,341       116,283,812  
                                                                        Total   
Contributed                       Shareholder`s   
                                  Surplus           Deficit            equity   
                                        $                 $                 $   
Balance at January 1, 2010       7,774,233     (117,898,648)         5,333,461  
Net loss for the period                            (586,758)         (586,758)  
Share based compensation            95,255                              95,255  
Balance at September 30, 2010    7,869,488     (118,485,406)         4,841,958  
Net loss for the period                            (920,280)         (920,280)  
Share based compensation          (57,246)                            (57,246)  
Balance at December 31, 2010     7,812,242     (119,405,686)         3,864,432  
Balance at January 1, 2011       7,812,242     (119,405,686)         3,864,432  
Net loss for the period                            (416,431)         (416,431)  
Share based compensation                                                        
Share issue                                                            825,936  
Two to one share consolidation                                                  
Balance at September 30, 2011    7,812,242     (119,822,117)         4,273,937  
* 2 to 1 consolidation of shares was implemented June 2011 after the share      
issue                                                                           
The accompanying notes are an integral part of these interim condensed          
consolidated financial statements.                                              
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                 
(EXPRESSED IN CANADIAN DOLLARS - UNAUDITED)                                     
                                                                        Three   
                                                   Three months        months   
ended         ended   
                                                      September     September   
                                         Notes         30, 2011      30, 2010   
                                                              $             $   
Cash flows from operating activities                                            
Net loss for the period                                 (69,212)     (260,133)  
Adjustments to reconcile loss to net cash                                       
used in operating activities                                                    
Share based payments                          9                -             -  
Accrued interest in notes payable                              -             -  
Changes in non-cash working capital                                             
Prepaid expenses and other current assets                     77       (3,802)  
Taxes payable                                                  -             -  
Accounts payable and accrued liabilities                (69,501)        25,648  
Net cash flows from operating activities               (138,636)     (238,287)  
Cash flows from investing activities                                            
Expenditures on exploration and evaluation              (61,897)       225,425  
Funds received from Rio Tinto                             36,775             -  
Net cash used in investing activities                   (25,122)       225,425  
Cash flows from financing activities                                            
Issue of shares                                                -             -  
Repayment of notes payable                    7                -             -  
Due to related parties                                    45,380        95,695  
Net cash from financing activities                        45,380        95,695  
Net increase in cash during the period                 (118,378)        82,833  
Cash and cash equivalents, beginning of                                         
the period                                               339,952         7,197  
Cash and cash equivalents, end of the period             221,574        90,030  
Nine          Nine   
                                                         months        months   
                                                          ended         ended   
                                                      September     September   
30, 2011      30, 2011   
                                                              $             $   
Cash flows from operating activities                                            
Net loss for the period                                (416,431)     (586,758)  
Adjustments to reconcile loss to net cash used in                               
operating activities                                                            
Share based payments                                           -        73,116  
Accrued interest in notes payable                          8,000             -  
Changes in non-cash working capital                                             
Prepaid expenses and other current assets               (12,620)        32,804  
Taxes payable                                            (6,127)             -  
Accounts payable and accrued liabilities               (309,032)     (120,425)  
Net cash flows from operating activities               (736,210)     (601,263)  
Cash flows from investing activities                                            
Expenditures on exploration and evaluation                83,336       190,476  
Funds received from Rio Tinto                            341,109             -  
Net cash used in investing activities                    424,445       190,476  
Cash flows from financing activities                                            
Issue of shares                                          825,936             -  
Repayment of notes payable                             (408,493)             -  
Due to related parties                                  (11,035)     (163,678)  
Net cash from financing activities                       406,408     (163,678)  
Net increase in cash during the period                    94,643     (574,465)  
Cash and cash equivalents, beginning of the period       126,931       664,495  
Cash and cash equivalents, end of the period             221,574        90,030  
Supplemental cash flow information (Note 12)                                    
The accompanying notes are an integral part of these interim condensed          
consolidated financial statements.                                              
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                
As at and for the three and nine months ended September 30, 2011                
(Expressed in Canadian dollars - unaudited)                                     
1. CORPORATE INFORMATION                                                        
The principal business of Delrand Resources Limited (the "Company") is the      
acquisition and exploration of mineral properties in the Democratic Republic    
of the Congo ("DRC"). In June 2011, the Company effected a change in the name   
of the Company from BRC DiamondCore Ltd. to Delrand Resources Limited and a     
consolidation of the outstanding common shares of the Company on a two to one   
basis.                                                                          
These interim condensed consolidated financial statements as at and for the     
three and nine month periods ended September 30, 2011 include the accounts of   
the Company and of its wholly-owned subsidiaries incorporated in the DRC, BRC   
DiamondCore Congo SPRL, and in South Africa, BRC Diamond South Africa           
(Proprietary) Limited.                                                          
The Company is a publicly traded company whose outstanding common shares are    
listed for trading on the Toronto Stock Exchange and the JSE Limited in         
Johannesburg, South Africa. The head office of the Company is located at 1      
First Canadian Place, 100 King St. West, Suite 707O, Toronto, Ontario, M5X      
1E3, Canada.                                                                    
2. BASIS OF PREPARATION                                                         
These interim condensed consolidated financial statements are prepared on a     
going concern basis, which assumes that the Company will continue in operation  
for a reasonable period of time and will be able to realize its assets and      
discharge its liabilities in the normal course of operations. The Company has   
not generated revenues from operations. The Company incurred a net loss of      
$69,212 and $416,431 during the respective three and nine months ended          
September 30, 2011 and, as of that date, the Company`s deficit was              
$119,822,117. These conditions along with other matters indicate the existence  
of material uncertainties that may cast significant doubt about the Company`s   
ability to continue as a going concern. As such, the Company`s ability to       
continue as a going concern depends on its ability to successfully raise        
additional financing for development of the mineral properties. Although the    
Company has been successful in the past in obtaining financing and              
subsequently raised financing, there is no assurance that it will be able to    
obtain adequate financing in the future or that such financing will be          
available on acceptable terms.                                                  
a) Statement of compliance                                                      
These interim condensed consolidated financial statements have been prepared    
in accordance with International Accounting Standard ("IAS") 34 Interim         
Financial Reporting using accounting policies consistent with International     
Financial Reporting Standards ("IFRS") issued by the International Accounting   
Standards Board ("IASB").                                                       
The Company`s annual consolidated financial statements previously were          
prepared in accordance with Canadian generally accepted accounting principles   
("GAAP"). Canadian GAAP differs from IFRS in some areas. In preparing the IFRS  
statements, management amended certain accounting, valuation, and               
consolidation methods previously applied under Canadian GAAP.                   
The Company`s date of transition was January 1, 2010 (the "transition date").   
An explanation of how the transition of previously prepared financial           
statements in accordance with Canadian GAAP to IFRS has affected the reported   
financial position, financial performance and cash flows of the Company is      
provided in Note 14. This note includes reconciliations of equity and           
profit/loss for comparative periods and of equity at the date of transition     
reported under Canadian GAAP to those reported for those periods and at the     
date of transition under IFRS. The 2010 comparative figures have been restated  
to reflect the adjustments, except as described in the accounting policies.     
These interim condensed consolidated financial statements and comparative       
figures presented are in accordance with IFRS and have not been audited.        
The policies applied in these interim condensed consolidated financial          
statements are presented in Note 3 and are based on IFRS expected to be         
effective as of December 31, 2011. The date the Company`s Audit Committee       
approved these financial statements was November 11, 2011.                      
b) Basis of measurement                                                         
These interim condensed consolidated financial statements have been prepared    
under the historical cost convention, except for certain financials assets      
which are presented at fair value, as explained in the accounting policies set  
out in Note 3.                                                                  
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                                   
The accounting policies set out below have been applied consistently to all     
periods presented in these interim condensed consolidated financial statements  
and in preparing the opening IFRS consolidated statements of financial          
position at January 1, 2010 for the purposes of the transition to IFRS, unless  
otherwise indicated. The exemptions taken in applying IFRS for the first time   
are set out in Note 14. The accounting policies have been applied consistently  
by all entities.                                                                
a) Basis of Consolidation                                                       
i. Subsidiaries                                                                 
Subsidiaries are entities controlled by the Company. Control exists when the    
Company has the power, directly or indirectly, to govern the financial and      
operating policies of an entity so as to obtain benefits from its activities.   
This control is evidenced through owning more than 50% of the voting rights or  
currently exercisable potential voting rights of a company`s share capital.     
The financial statements of subsidiaries are included in the consolidated       
financial statements of the Company from the date that control commences until  
the date that control ceases. Consolidation accounting is applied for all of    
the Company`s subsidiaries.                                                     
ii. Transactions eliminated on consolidation                                    
Inter-company balances, transactions, and any unrealized income and expenses,   
are eliminated in preparing the consolidated financial statements.              
Unrealized losses are eliminated in the same way as unrealized gains, but only  
to the extent that there is no evidence of impairment.                          
b) Use of Estimates and Judgments                                               
The preparation of these interim condensed consolidated financial statements    
in conformity with IFRS requires management to make judgments, estimates and    
assumptions that affect the application of accounting policies and the          
reported amounts of assets, liabilities, income and expenses. Actual results    
may differ from these estimates.                                                
In preparing these interim condensed consolidated financial statements, the     
significant judgments made by management applying the Company`s accounting      
policies and the key sources of estimation uncertainty are expected to be the   
same as those to be applied in the first annual IFRS financial statements.      
Estimates and underlying assumptions are reviewed on an ongoing basis.          
Revisions to accounting estimates are recognized in the period in which the     
estimates are revised and in any future periods affected. Information about     
critical judgments in applying accounting policies that have the most           
significant effect on the amounts recognized in the interim condensed           
consolidated financial statements is included in the following notes:           
i) Provisions and contingencies                                                 
The amount recognized as provision, including legal, contractual, constructive  
and other exposures or obligations, is the best estimate of the consideration   
required to settle the related liability, including any related interest        
charges, taking into account the risks and uncertainties surrounding the        
obligation. In addition, contingencies will only be resolved when one or more   
future events occur or fail to occur. Therefore assessment of contingencies     
inherently involves the exercise of significant judgment and estimates of the   
outcome of future events. The Company assesses its liabilities and              
contingencies based upon the best information available, relevant tax laws and  
other appropriate requirements.                                                 
ii) Exploration and evaluation expenditure                                      
The application of the Company`s accounting policy for exploration and          
evaluation expenditure requires judgment in determining whether it is likely    
that future economic benefits will flow to the Company, which may be based on   
assumptions about future events or circumstances. Estimates and assumptions     
made may change if new information becomes available. If, after the             
expenditure is capitalized, information becomes available suggesting that the   
recovery of the expenditure is unlikely, the amount capitalized is written off  
in the statement of comprehensive loss during the period the new information    
becomes available.                                                              
iii) Impairment                                                                 
Assets, including property, plant and equipment and exploration and             
evaluation, are reviewed for impairment whenever events or changes in           
circumstances indicate that their carrying amounts exceed their recoverable     
amounts. The assessment of the fair value often requires estimates and          
assumptions such as discount rates, exchange rates, commodity prices,           
rehabilitation and restoration costs, future capital requirements and future    
operating performance. Changes in such estimates could impact recoverable       
values of these assets. Estimates are reviewed regularly by management.         
iv) Income taxes                                                                
The Company is subject to income taxes in various jurisdictions and subject to  
various rates and rules of taxation. Significant judgment is required in        
determining the provision for income taxes. There are many transactions and     
calculations undertaken during the ordinary course of business for which the    
ultimate tax determination is uncertain. The Company recognizes liabilities     
for anticipated tax audit issues based on the Company`s current understanding   
of the tax law. Where the final tax outcome of these matters is different from  
the amounts that were initially recorded, such differences will impact the      
current and deferred tax provisions in the period in which such determination   
is made. In addition, the Company has recognized deferred tax assets relating   
to tax losses carried forward to the extent there are sufficient taxable        
income relating to the same taxation authority and the same subsidiary against  
which the unused tax losses can be utilized. However, future realization of     
the tax losses also depends on the ability of the entity to satisfy certain     
tests at the time the losses are recouped, including current and future         
economic conditions, production rates and production costs.                     
v) Share-based payment transactions                                             
The Company measures the cost of equity-settled transactions with employees by  
reference to the fair value of the equity instruments at the date at which      
they are granted. Estimating fair value for share-based payment transactions    
requires determining the most appropriate valuation model, which is dependent   
on the terms and conditions of the grant. This estimate also requires           
determining the most appropriate inputs to the valuation model including the    
expected life of the stock option, volatility and dividend yield and making     
assumptions about them. The assumptions and models used for estimating fair     
value for share-based payment transactions are disclosed in Note 9.             
vi) Decommissioning and environmental provisions                                
The Company`s operations are subject to environmental regulations in the DRC.   
Upon establishment of commercial viability of a site, the Company estimates     
the cost to restore the site following the completion of commercial activities  
and depletion of reserves. These future obligations are estimated by taking     
into consideration closure plans, known environmental impacts, and internal     
and external studies which estimate the activities and costs that will be       
carried out to meet the decommissioning and environmental obligations. Amounts  
recorded for decommissioning and environmental provisions are based on          
estimates of decommissioning and environmental costs which may not be incurred  
for several years or decades. The decommissioning and environmental cost        
estimates could change due to amendments in laws and regulations in the DRC.    
Additionally, actual estimated decommissioning and reclamation costs may        
differ from those projected as a result of an increase over time of actual      
remediation costs, a change in the timing for utilization of reserves and the   
potential for increasingly stringent environmental regulatory requirements.     
c) Foreign Currency Translation                                                 
Functional and presentation currency                                            
These interim condensed consolidated financial statements are presented in      
Canadian dollars ("$"), which is the Company`s functional and presentation      
currency.                                                                       
Foreign currency transactions                                                   
The functional currency for each of the Company`s subsidiaries is the currency  
of the primary economic environment in which the entity operates. Transactions  
entered into by the Company`s subsidiaries in a currency other than the         
currency of the primary economic environment in which they operate (their       
"functional currency") are recorded at the rates ruling when the transactions   
occur except depreciation and amortization which are translated at the rates    
of exchange applicable to the related assets, with any gains or losses          
recognized in the consolidated statements of comprehensive loss.                
Foreign currency monetary assets and liabilities are translated at current      
rates of exchange with the resulting gain or losses recognized in the           
consolidated statements of comprehensive loss. Exchange differences arising on  
the retranslation of unsettled monetary assets and liabilities are recognized   
immediately in profit or loss. Non-monetary assets and liabilities are          
translated using the historical exchange rates. Non-monetary assets and         
liabilities measured at fair value in a foreign currency are translated using   
the exchange rates at the date when the fair value is determined.               
d) Cash                                                                         
Cash and cash equivalents includes cash on hand, deposits held with financial   
institutions and other short-term, highly liquid investments with original      
maturities of three months or less that are readily convertible to known        
amounts.                                                                        
e) Financial Assets                                                             
Financial assets are classified as either financial assets at fair value        
through profit or loss ("FVTPL"), loans and receivables, held to maturity       
investments ("HTM"), or available for sale financial assets ("AFS"), as         
appropriate at initial recognition and, except in very limited circumstances,   
the classification is not changed subsequent to initial recognition. The        
classification is determined at initial recognition and depends on the nature   
and purpose of the financial asset. A financial asset is derecognized when      
contractual rights to the asset`s cash flows expire or if substantially all     
the risks and rewards of the asset are transferred.                             
i. Financial assets at FVTPL                                                    
Financial assets are classified as FVTPL when the financial asset is held for   
trading or it is designated upon initial recognition as at FVTPL. A financial   
asset is classified as held for trading if (1) it has been acquired             
principally for the purpose of selling or repurchasing in the near term; (2)    
it is part of an identified portfolio of financial instruments that the         
Company manages and has an actual pattern of short term profit taking; or (3)   
it is a derivative that is not designated and effective as a hedging            
instrument. Financial assets at FVTPL are carried in the consolidated           
statement of financial position at fair value with changes in fair value        
recognized in profit or loss. Transaction costs are expensed as incurred.       
The Company has classified cash and cash equivalents as FVTPL.                  
ii. Loans and receivables                                                       
Trade receivables, loans and other receivables that have fixed or determinable  
payments that are not quoted in an active market are classified as loans and    
receivable.                                                                     
Loans and receivables are initially recognized at fair value plus transaction   
costs that are directly attributable to their acquisition or issue, and are     
subsequently carried at amortized cost less losses for impairment. The          
impairment loss of receivables is based on a review of all outstanding amounts  
at period end. Bad debts are written off during the period in which they are    
identified. Amortized cost is calculated taking into account any discount or    
premium on acquisition and includes fees that are an integral part of the       
effective interest rate and transaction costs. Gains and losses are recognized  
in the statements of comprehensive loss when the loans and receivables are      
derecognized or impaired, as well as through the amortization process.          
HTM investments                                                                 
HTM financial instruments are initially measured at fair value. Subsequently,   
HTM financial assets are measured at amortized cost using the effective         
interest rate method, less any impairment losses. The Company did not classify  
any assets as HTM.                                                              
iii. AFS financial assets                                                       
Non-derivative financial assets not included in the above categories are        
classified as AFS financial assets. They are carried at fair value with         
changes in fair value generally recognized in other comprehensive loss and      
accumulated in the AFS reserve. Impairment losses are recognized in profit or   
loss. Purchases and sales of AFS financial assets are recognized on settlement  
date with any change in fair value between trade date and settlement date       
being recognized in the AFS reserve. On sale, the cumulative gain or loss       
recognized in other comprehensive loss is reclassified from the AFS reserve to  
profit or loss. The Company has not designated any of its financial assets as   
AFS.                                                                            
iv. Impairment of financial assets                                              
The Company assesses at each reporting date whether a financial asset or a      
group of financial assets is impaired. A financial asset or group of financial  
assets is deemed to be impaired, if, and only if, there is objective evidence   
of impairment as a result of one or more events that has occurred after the     
initial recognition of the asset and that event has an impact on the estimated  
future cash flows of the financial asset or the group of financial assets that  
can be reliably estimated.                                                      
For financial assets carried at amortized cost, the amount of the impairment    
is the difference between the asset`s carrying amount and the present value of  
estimated future cash flows, discounted at the asset`s original effective       
rate.                                                                           
The carrying amount of all financial assets, excluding advances receivables     
and balances due from related parties, is directly reduced by the impairment    
loss. The carrying amount of trade receivables is reduced through the use of    
an allowance account. Associated allowances are written off when there is no    
realistic prospect of future recovery and all collateral has been realized or   
has been transferred to the Company. Subsequent recoveries of amounts           
previously written off are credited against the allowance account. Changes in   
the carrying amount of the allowance account are recognized in profit or loss.  
A provision for impairment is made in relation to advances receivable, and an   
impairment loss is recognized in profit and loss when there is objective        
evidence that the Company will not be able to collect all of the amounts due    
under the original terms. The carrying amount of the receivable is reduced      
through use of an allowance account. With the exception of AFS equity           
instruments, if in a subsequent period the amount of impairment loss decreases  
and the decrease relates to an event occurring after the impairment was         
recognized, the previously recognized impairment loss is reversed through       
profit or loss. On the date of impairment reversal, the carrying amount of the  
financial asset cannot exceed its amortized cost had the impairment not been    
recognized. Reversal for AFS equity instruments are not recognized in profit    
or loss.                                                                        
v. Effective interest method                                                    
The effective interest method calculates the amortized cost of a financial      
instrument asset or liability and allocates interest income over the            
corresponding period. The effective interest rate is the rate that discounts    
estimated future cash receipts over the expected life of the financial asset    
or liability, or where appropriate, a shorter period. Income is recognized on   
an effective interest basis for debt instruments other than those financial     
assets classified as FVTPL.                                                     
f) Financial Liabilities                                                        
Financial liabilities are classified as FVTPL, or other financial liabilities,  
as appropriate upon initial recognition. A financial liability is derecognized  
when the obligation under the liability is discharged, cancelled or expired.    
i. Financial liabilities classified as other financial liabilities are          
initially recognized at fair value less directly attributable transaction       
costs. Subsequent to the initial recognition, other financial liabilities are   
measured at amortized cost using the effective interest method.                 
The Company`s other financial liabilities include accounts payables and         
accrued liabilities and notes payable.                                          
ii. Financial liabilities classified as FVTPL include financial liabilities     
held for trading and financial liabilities designated upon initial recognition  
as FVTPL. Financial liabilities are classified as held-for-trading if they are  
acquired for the purpose of selling in the near term. This category includes    
derivative financial instruments (including separated embedded derivatives)     
held for trading unless they are designated as effective hedging instruments.   
Gains or losses on liabilities held for trading are recognized in the           
consolidated statement of comprehensive loss. The Company does not have any     
financial liabilities classified as FVTPL.                                      
g) Loss Per Share                                                               
Basic loss per share is computed by dividing the net loss applicable by the     
weighted average number of common shares outstanding during the reporting       
period. Diluted loss per share is computed by dividing the net loss by the sum  
of the weighted average number of common shares issued and outstanding during   
the reporting period and all additional common shares for the assumed exercise  
of stock options and warrants outstanding for the reporting period, if          
dilutive. The treasury method stock method is used for the assumed proceeds     
upon the exercise of stock options and warrants that are used to purchase       
common shares at the average market price during the reporting period. As the   
Company is incurring losses, basic and diluted loss per share are the same      
since including the exercise of outstanding stock options and share purchase    
warrants in the diluted loss per share calculation would be anti- dilutive.     
h) Property, Plant and Equipment ("PPE")                                        
i. Recognition and measurement                                                  
Items of PPE are measured at cost less accumulated depreciation and             
accumulated impairment losses.                                                  
Cost includes expenditures that are directly attributable to the acquisition    
of the asset. The cost of self-constructed assets includes the cost of          
materials, directed labor and any other cost directly attributable to bring     
the asset to the location and condition necessary to be capable of operating    
in the manner intended by the Company. Assets in the course of construction     
are capitalized in the capital construction in progress category and            
transferred to the appropriate category of PPE upon completion. When            
components of an asset have different useful lives, depreciation is calculated  
on each separate component.                                                     
ii. Subsequent costs                                                            
The cost of replacing part of an item of PPE is recognized in the carrying      
amount of the item if it is probable that the future economic benefits          
embodied within the part will flow to the Company and its cost can be measured  
reliably. The carrying amount of the replaced part is derecognized and          
included in net loss. If the carrying amount of the replaced component is not   
known, it is estimated based on the cost of the new component less estimated    
depreciation. The costs of the day to day servicing of property, plant and      
equipment are recognized in profit or loss as incurred.                         
iii. Depreciation                                                               
Depreciation is based on the cost of an asset less its residual value.          
Significant components of individual assets are assessed to determine whether   
a component has an estimated useful life that is different from that of the     
remainder of that asset, in which case that component is depreciated            
separately. Depreciation is recognized in profit or loss on a straight line     
basis over the estimated useful lives of each item or component of an item of   
PPE as follows:                                                                 
- Furniture and office equipment two to seven years                             
- Vehicles four years                                                           
- Computer equipment three years                                                
- Exploration and mining assets two to four years                               
Depreciation methods, useful lives and residual values are reviewed annually    
and adjusted, if appropriate. Depreciation commences when an asset is           
available for use. Changes in estimates are accounted for prospectively.        
iv. Gains and losses                                                            
Gains and losses on disposal of an item of PPE are determined by comparing the  
proceeds from disposal with the carrying amount of the PPE, and are recognized  
net within other income/expenses in profit or loss.                             
v. Repairs and maintenance                                                      
Repairs and maintenance costs are charged to expense as incurred, except major  
inspections or overhauls that are performed at regular intervals over the       
useful life of an asset is capitalized as part of PPE.                          
vi. De-recognition                                                              
An item of PPE is derecognized upon disposal or when no future economic         
benefits are expected to arise from the continued use of the asset. Any gain    
or loss arising on de-recognition of the assets (calculated as the difference   
between the net disposal proceeds and the carrying amount of the item) is       
included in net earnings (loss) in the period the item is derecognized.         
i) Exploration and Evaluation Assets                                            
All direct costs related to exploration and evaluation of mineral properties,   
net of incidental revenues, are capitalized under exploration and evaluation    
assets. Exploration and evaluation expenditures include such costs as           
acquisition of rights to explore; sampling, trenching and surveying costs;      
costs related to topography, geology, geochemistry and geophysical studies;     
drilling costs and costs in relation to technical feasibility and commercial    
viability of extracting a mineral resource.                                     
A regular review of each property is undertaken to determine the                
appropriateness of continuing to carry forward costs in relation to             
exploration and evaluation of mineral properties. Should the carrying value of  
the expenditure not yet amortized exceed its estimated recoverable amount in    
any year, the excess is written off to the consolidated statements of           
comprehensive loss.                                                             
j) Impairment of Non-financial Assets                                           
The Company`s PPE is assessed for indication of impairment at each              
consolidated statements of financial position date. Exploration and evaluation  
assets are assessed for impairment when facts and circumstances suggest that    
the carrying amount of an exploration and evaluation asset may exceed its       
recoverable amount. Internal factors, such as budgets and forecasts, as well    
as external factors, such as expected future prices, costs and other market     
factors are also monitored to determine if indications of impairment exist. If  
any indication of impairment exists, an estimate of the asset`s recoverable     
amount is calculated. The recoverable amount is determined as the higher of     
the fair value less costs to sell for the asset and the asset`s value in use.   
This is determined for an individual asset, unless the asset does not generate  
cash inflows that are largely independent of those from other assets or the     
Company`s assets. If this is the case, the individual assets are grouped        
together into cash generating units ("CGU") for impairment purposes. Such CGUs  
represent the lowest level for which there are separately identifiable cash     
inflows that are largely independent of the cash flows from other assets.       
If the carrying amount of the asset exceeds its recoverable amount, the asset   
is impaired and an impairment loss is charged to the consolidated statements    
of comprehensive loss so as to reduce the carrying amount to its recoverable    
amount (i.e., the higher of fair value less cost to sell and value in use).     
Fair value less cost to sell is the amount obtainable from the sale of an       
asset or CGU in an arm`s length transaction between knowledgeable, willing      
parties, less the costs of disposal. Value in use is determined as the present  
value of the future cash flows expected to be derived from an asset or CGU.     
Estimated future cash flows are calculated using estimated future prices,       
mineral reserves and resources and operating and capital costs. All             
assumptions used are those that an independent market participant would         
consider appropriate. The estimated future cash flows are discounted to their   
present value using a pre-tax discount rate that reflects current market        
assessments of the time value of money and the risks specific to the asset for  
which estimates of future cash flows have not been adjusted.                    
The Company has not recognized impairment of tangible assets during the three   
and nine month periods ended September 30, 2011 and September 30, 2010 (year    
ended December 31, 2010 - $740,975).                                            
k) Income Taxes                                                                 
Income tax expense consists of current and deferred tax expense. Income tax     
expense is recognized in profit and loss, except to the extent that it relates  
to items recognized in other comprehensive income or directly in equity. In     
this case, the tax is also recognized in other comprehensive income or          
directly in equity.                                                             
Current income tax assets and liabilities for the current and prior periods     
are measured at the amount expected to be recovered from or paid to the         
taxation authorities. The tax rates and tax laws used to compute current        
income tax assets and liabilities are measured at future anticipated tax        
rates, which have been enacted or substantively enacted at the reporting date.  
Current tax assets and current tax liabilities are only offset if a legally     
enforceable right exists to set off the amounts, and the Company intends to     
settle on a net basis, or to realize the asset and settle the liability         
simultaneously.                                                                 
Deferred taxation is provided on all qualifying temporary differences at the    
reporting date between the tax basis of assets and liabilities and their        
carrying amounts for financial reporting purposes.                              
Deferred tax assets are only recognized to the extent that it is probable that  
the deductible temporary differences will reverse in the foreseeable future     
and future taxable profit will be available against which the temporary         
difference can be utilized.                                                     
Deferred tax liabilities and assets are not recognized for temporary            
differences between the carrying amount and tax bases of investments in         
controlled entities where the parent entity is able to control the timing of    
the reversal of the temporary differences and it is probable that the           
differences will not reverse in the foreseeable future. Deferred tax assets     
and liabilities are offset when there is a legally enforceable right to offset  
current tax assets and liabilities and when the deferred tax balances relate    
to the same taxation authority.                                                 
l) Share-Based Payments                                                         
Equity-settled share-based payments for directors, officers and employees are   
measured at fair value at the date of grant and recorded as compensation        
expense in the financial statements. The fair value determined at the grant     
date of the equity-settled share-based payments is expensed on a straight-line  
basis over the vesting period based on the Company`s estimate of shares that    
will eventually vest.                                                           
The number of forfeitures likely to occur is estimated on grant date. Any       
consideration paid by the optionee on exercise of equity-settled share-based    
payments is credited to share capital. Shares are issued from treasury upon     
the exercise of equity-settled share-based instruments.                         
Compensation expense on stock options granted to non-employees is measured at   
the earlier of the completion of performance and the date the options are       
vested using the fair value method and is recorded as an expense in the same    
period as if the Company had paid cash for the goods or services received.      
When the value of goods or services received in exchange for the share-based    
payment cannot be reliably estimated, the fair value is measured by use of a    
Black-Scholes valuation model. The expected life used in the model is           
adjusted, based on management`s best estimate, for the effects of non-          
transferability, exercise restrictions, and behavioural considerations.         
m) Provisions and Contingencies                                                 
Provisions are recognized when a legal or constructive obligation exists, as a  
result of past events, and it is probable that an outflow of resources that     
can be reliably estimated will be required to settle the obligation. Where the  
effect is material, the provision is discounted using an appropriate current    
market-based pre-tax discount rate. The increase in the provision due to        
passage of time is recognized as interest expense.                              
When a contingency substantiated by confirming events, can be reliably          
measured and is likely to result in an economic outflow, a liability is         
recognized as the best estimate required to settle the obligation. A            
contingent liability is disclosed where the existence of an obligation will     
only be confirmed by future events, or where the amount of a present            
obligation cannot be measured reliably or will likely not result in an          
economic outflow. Contingent assets are only disclosed when the inflow of       
economic benefits is probable. When the economic benefit becomes virtually      
certain, the asset is no longer contingent and is recognized in the             
consolidated financial statements.                                              
n) Related Party Transactions                                                   
Parties are considered to be related if one party has the ability, directly or  
indirectly, to control the other party or exercise significant influence over   
the other party in making financial and operating decisions. Parties are also   
considered to be related if they are subject to common control or common        
significant influence, related parties may be individuals or corporate          
entities. A transaction is considered to be a related party transaction when    
there is a transfer of resources or obligations between related parties.        
Related party transactions that are in the normal course of business and have   
commercial substance are measured at the exchange amount.                       
o) New Pronouncements Adopted                                                   
March 31, 2011 was the Company`s first reporting period under IFRS. Accounting  
standards effective for periods beginning on January 1, 2011 have been adopted  
as part of the transition to IFRS.                                              
p) Recent Pronouncements Issued                                                 
The Company has reviewed new and revised accounting pronouncements that have    
been issued but are not yet effective and determined that the following may     
have an impact on the Company:                                                  
IFRS 9 Financial instruments ("IFRS 9") was issued by the IASB on November 12,  
2009 and will replace IAS 39 Financial Instruments: Recognition and             
Measurement ("IAS 39"). IFRS 9 replaces the multiple rules in IAS 39 with a     
single approach to determine whether a financial asset is measured at           
amortized cost or fair value and a new mixed measurement model for debt         
instruments having only two categories: amortized cost and fair value. The      
approach in IFRS 9 is based on how an entity manages its financial instruments  
in the context of its business model and the contractual cash flow              
characteristics of the financial assets. The new standard also requires a       
single impairment method to be used, replacing the multiple impairment methods  
in IAS 39. IFRS 9 is effective for annual periods beginning on or after         
January 1, 2013. The Company is currently evaluating the impact of IFRS 9 on    
its consolidated financial statements.                                          
A revised version of IAS 24 Related party disclosures ("IAS 24") was issued by  
the IASB on November 4, 2009. IAS 24 requires entities to disclose in their     
consolidated financial statements information about transactions with related   
parties. Generally, two parties are related to each other if one party          
controls, or significantly influences, the other party. IAS 24 has simplified   
the definition of a related party and removed certain of the disclosures        
required by the predecessor standard. The revised standard is effective for     
annual periods beginning on or after January 1, 2011. The adoption of this      
issuance did not have a significant impact on the Company`s consolidated        
financial statements.                                                           
IFRS 10 Consolidated Financial Statements ("IFRS 10") establishes principles    
for the presentation and preparation of consolidated financial statements when  
an entity controls one or more other entities. IFRS 10 supersedes IAS 27        
"Consolidated and Separate Financial Statements" and SIC-12 "Consolidated -     
Special Purpose Entities" and is effective for annual periods beginning on or   
after January 1, 2013. Earlier application is permitted. The Company is         
currently evaluating the impact of this standard on its consolidated financial  
statements.                                                                     
IFRS 11 Joint Arrangements ("IFRS 11") establishes principles for financial     
reporting by parties to a joint arrangement. IFRS 11 supersedes the current     
IAS 31 "Interests in Joint Ventures" and SIC-13 "Jointly Controlled Entities -  
Non-Monetary Contributions by Venturers" and is effective for annual periods    
beginning on or after January 1, 2013. Earlier application is permitted. The    
Company is currently evaluating the impact of this standard on its              
consolidated financial statements.                                              
IFRS 12 Disclosure of Interests in Other Entities ("IFRS 12") applies to        
entities that have an interest in a subsidiary, a joint arrangement, an         
associate or an unconsolidated structured entity. IFRS 12 is effective for      
annual periods beginning on or after January 1, 2013. Earlier application is    
permitted. The Company is currently evaluating the impact of this standard on   
its consolidated financial statements.                                          
IFRS 13 Fair Value Measurements ("IFRS 13") defines fair value, sets out in a   
single IFRS framework for measuring fair value and requires disclosures about   
fair value measurements. IFRS 13 applies to IFRSs that require or permit fair   
value measurements or disclosures about fair value measurements (and            
measurements, such as fair value less costs to sell, based on fair value or     
disclosures about those measurements), except in specified circumstances. IFRS  
13 is to be applied for annual periods beginning on or after January 1, 2013.   
Earlier application is permitted. The Company is currently evaluating the       
impact of this standard on its consolidated financial statements.               
IFRS 7 Financial instruments: disclosures ("IFRS 7") The Accounting Standards   
Board ("AcSB") approved the incorporation of the IASB`s amendments to IFRS 7    
Financial Instruments: Disclosures and the related amendment to IFRS 1 First-   
time Adoption of International Financial Reporting Standards into Part I of     
the Handbook. These amendments were made to Part I in January 2011 and are      
effective for annual periods beginning on or after July 1, 2011. Earlier        
application is permitted. The amendments relate to required disclosures for     
transfers of financial assets to help users of the financial statements         
evaluate the risk exposures relating to such transfers and the effect of those  
risks on an entity`s financial position. The Company is currently evaluating    
the impact of IFRS 7 on its consolidated financial statements.                  
An amendment to IAS 1, Presentation of financial statements was issued by the   
IASB in June 2011. The amendment requires separate presentation for items of    
other comprehensive income that would be reclassified to profit or loss in the  
future, such as foreign currency differences on disposal of a foreign           
operation, if certain conditions are met from those that would never be         
reclassified to profit or loss. The effective date is July 1, 2012 and earlier  
adoption is permitted. The Company is currently evaluating the impact of this   
amendment on its consolidated financial statements.                             
IAS 27, Separate financial statements ("IAS 27") was re-issued by the IASB in   
May 2011 to only prescribe the accounting and disclosure requirements for       
investments in subsidiaries, joint ventures and associates when an entity       
prepares separate financial statements. The consolidation guidance will now be  
included in IFRS 10. The amendments to IAS 27 are effective for annual periods  
beginning on or after January 1, 2013. The Company is currently evaluating the  
impact of the amendments on its consolidated financial statements.              
IAS 28, Investments in associates and joint ventures ("IAS 28") was re-issued   
by the IASB in May 2011.                                                        
IAS 28 continues to prescribe the accounting for investments in associates,     
but is now the only source of guidance describing the application of the        
equity method. The amended IAS 28 will be applied by all entities that have an  
ownership interest with joint control of, or significant influence over, an     
investee. The amendments to IAS 28 are effective for annual periods beginning   
on or after January 1, 2013. The Company is currently evaluating the impact of  
the amendments on its consolidated financial statements.                        
4.   PROPERTY, PLANT AND EQUIPMENT                                              
The Company`s property, plant and equipment are summarized as follows:          
                                          Notes                                 
Exploration      Computer   
                                                         assets     equipment   
                                                              $             $   
Cost                                                                            
Balance at January 1, 2010                               316,476        28,659  
Additions                                                      -             -  
Disposals                                              (207,371)             -  
Balance at December 31, 2010                             109,105        28,659  
Additions                                                      -             -  
Disposals                                                      -             -  
Balance at September 30, 2011                            109,105        28,659  
Accumulated Depreciation                                                        
Balance at January 1, 2010                               216,384        19,478  
Depreciation for the year                                 34,398         6,985  
Disposals                                              (142,578)             -  
Balance at December 31, 2010                             108,204        26,463  
Depreciation for the period                                  901         2,067  
Disposals                                                      -             -  
Balance at September 30, 2011                            109,105        28,530  
Carrying amounts                                                                
Balance at January 1, 2010                               100,092         9,181  
Balance at December 31, 2010                                 901         2,196  
Balance at September 30, 2011                                  -           129  
                                                      Furniture                 
and                 
                                                         office                 
                                         Vehicles     equipment         Total   
                                                $             $             $   
Cost                                                                            
Balance at January 1, 2010                 254,436        18,106       617,677  
Additions                                        -             -             -  
Disposals                                 (94,323)       (1,255)     (302,949)  
Balance at December 31, 2010               160,113        16,851       314,728  
Additions                                        -             -             -  
Disposals                                        -             -             -  
Balance at September 30, 2011              160,113        16,851       314,728  
Accumulated Depreciation                                                        
Balance at January 1, 2010                 225,820        14,200       475,882  
Depreciation for the year                   28,616         2,686        72,685  
Disposals                                 (94,323)       (1,040)     (237,941)  
Balance at December 31, 2010               160,113        15,846       310,626  
Depreciation for the period                      -         1,005         3,973  
Disposals                                        -             -             -  
Balance at September 30, 2011              160,113        16,851       314,599  
Carrying amounts                                                                
Balance at January 1, 2010                  28,616         3,906       141,794  
Balance at December 31, 2010                     -         1,005         4,100  
Balance at September 30, 2011                    -             -           129  
5. EXPLORATION AND EVALUATION ASSETS                                            
The following table summarizes the Company`s tangible exploration and           
evaluation expenditures with respect to its properties in the DRC:              
                                          Notes        Tshikapa                 
Project         Lubao   
Cost                                                                            
Balance per IFRS as at January 1, 2010               $ 2,901,003     $ 325,416  
Additions                                                120,938             -  
Impairment                                                     -     (325,416)  
Balance as at December 31, 2010                        3,021,941             -  
Additions                                                124,586             -  
Balance as at September 30, 2011                       3,146,527             -  
Tshikapa     Northern DRC                   
                                   (Candore)          Project           Total   
Cost                                                                            
Balance per IFRS as at                                                          
January 1, 2010                     $ 415,559      $ 2,184,105     $ 5,826,083  
Additions                                   -        (131,744)        (10,806)  
Impairment                          (415,559)                -       (740,975)  
Balance as at December 31, 2010             -        2,052,361       5,074,302  
Additions                                   -        (545,059)       (420,473)  
Balance as at September 30, 2011            -        1,507,302       4,653,829  
There are $2,219 of intangible exploration and evaluation expenditures          
as at January 1, 2010 (December 31, 2010: $2,219).                              
There have not been any additions or disposals since January 1, 2010.           
a. Tshikapa Project                                                             
The Tshikapa project is located in the south-western part of the Kasai          
Occidental province of the DRC near the town of Tshikapa. The Tshikapa project  
is located within the so-called Tshikapa triangle, bordering the Kasai River    
in the east, the Loange River in the west and the Angolan border in the south.  
The properties also lie within the broader kimberlite emplacement corridor      
which extends from known kimberlite pipes located in Angola. The Tshikapa       
diamond field has been extensively mined by alluvial diamond companies and      
small-scale miners, and it is estimated that it has produced over 100 million   
carats of diamonds since 1912. The Company has focused its attention on the     
Tshikapa triangle through nine exploration permits covering an area of 1,429    
kmSquared. One of these permits is held by the Company`s wholly-owned DRC       
subsidiary and the other eight permits are controlled through option            
agreements with the permit holders.                                             
b. Northern DRC Project                                                         
The Company`s northern DRC diamond project is located in Orientale Province of  
the DRC and consists of 46 exploration permits, two of which are held by the    
Company directly through its DRC subsidiary and the balance of which are held   
through an option agreement with the holder of the permits. Rio Tinto Mining    
and Exploration Limited ("Rio Tinto") is also party to this agreement. Under    
this agreement, funding for the exploration of the areas covered by the         
permits is provided by Rio Tinto. Funds received from Rio Tinto under this      
agreement are deducted from exploration and evaluation expenditures in the      
Company`s statement of financial position. Assuming ongoing satisfactory        
exploration results, the Company will acquire a 30% interest in the said        
permits subject to certain conditions. The 44 exploration permits under option  
cover an area of 7,313 km2.                                                     
The two additional exploration permits held by the Company`s DRC subsidiary     
cover an area of 749 km2 directly north of the optioned ground.                 
During the year ended December 31, 2010, the Company decided to discontinue     
its Lubao and Candore projects which resulted in an impairment loss of          
$740,975.                                                                       
c. In April 2011, the Company sold the containerized bulk sampling plant that   
had been constructed for the alluvial deposits on the Kwango River in southern  
DRC. The Kwango project had previously been abandoned by the Company and the    
related licences relinquished when it was concluded that the project would not  
be economically viable. The gross proceeds from the sale of the plant were      
US$575,000.                                                                     
6. SEGMENTED REPORTING                                                          
The Company has one operating segment: the acquisition, exploration and         
development of mineral properties located in the DRC. The operations of the     
Company are located in two geographic locations, Canada and the DRC. All of     
the items of property, plant and equipment and exploration and evaluation       
assets in the Company`s statements of financial position as at September 30,    
2011, December 31, 2010 and January 1, 2010 are located in the DRC.             
7. NOTES PAYABLE                                                                
In December 2010, the Company entered into two promissory notes payable (the    
"Notes") in amounts of $100,000 and $300,000. The Notes bore simple interest    
at a rate of 5% per annum and were unsecured and due on demand. The fair value  
approximated the carrying value as at December 31, 2010. The notes were repaid  
in May 2011 including accrued interest of $8,493.                               
8. SHARE CAPITAL                                                                
a) Authorized                                                                   
The Company`s authorized share capital consists of an unlimited number of       
common shares with no par value.                                                
The holders of the common shares are entitled to receive notice of and to       
attend all meetings of the shareholders of the Company and shall have one vote  
for each common share held at all meetings of the shareholders of the Company.  
The holders of the common shares are entitled to (a) receive any dividends as   
and when declared by the board of directors, out of the assets of the Company   
properly applicable to the payment of dividends, in such amount and in such     
form as the board of directors may from time to time determine, and (b)         
receive the remaining property of the Company in the event of any liquidation,  
dissolution or winding-up of the Company.                                       
On May 11, 2011 the Company closed a non-brokered private placement of          
7,500,000 units of the Company at a price of $0.08 per unit for proceeds of     
$600,000, and on May 27, 2011 the Company closed a non- brokered private        
placement of 2,500,000 units of the Company at a price of $0.10 per unit for    
proceeds of $250,000. Each of the said units was comprised of one common share  
of the Company and one warrant of the Company entitling the holder to purchase  
one common share of the Company at a price of $0.11 for a period of three       
years from the date of issuance of the warrant. The purchasers of the units     
under the May 27, 2011 private placement were directors and officers of the     
Company.                                                                        
In June 2011 the Company consolidated its outstanding common shares on a two    
to one basis. Immediately prior to the consolidation, the Company had           
99,408,640 common shares outstanding (December 31, 2010: 89,408,640, January    
1, 2010: 89,408,640). Upon effecting the consolidation, and as of September     
30, 2011, the Company had 49,704,341 common shares outstanding.                 
b) Share purchase warrants                                                      
The Company`s outstanding warrants have been adjusted to reflect the two to     
one share consolidation that occurred in June 2011 (see Note 8a). As at         
September 30, 2011, the Company had outstanding warrants to purchase            
15,000,000 (December 31, 2010: 20,000,000) common shares of the Company. Of     
the 15,000,000 warrants outstanding, 10,000,000 are exercisable at a price of   
$0.132 per share until November 2013 and the remaining 5,000,000 are            
exercisable at a price of $0.22 per share until May 2014.                       
c) Loss per share                                                               
Loss per share was calculated on the basis of the weighted average number of    
common shares outstanding for the three and nine month periods ended September  
30, 2011, amounting to 47,245,529 (three and nine months ended September 30,    
2010: 89,408,640) common shares. Diluted loss per share was calculated using    
the treasury stock method. Total stock options for the three and nine months    
ended September 30, 2011 of 1,040,000 (three and nine months ended September    
3, 2010: 2,280,000) and warrants of 15,000,000 (three and nine months ended     
September 30, 2010: 20,000,000) were excluded from the calculation of diluted   
loss per share as their effect would have been anti-dilutive.                   
9. SHARE-BASED PAYMENTS                                                         
In August 2011, the Company`s board of directors established a new stock        
option plan for the Company (the "New Plan"). In establishing the New Plan,     
the Board of Directors also provided that no additional stock options may be    
granted under the Company`s other stock option plan (the "Old Plan") and        
terminated the Old Plan effective upon the exercise, expiry, termination or     
cancellation of all of the currently outstanding stock options that were        
granted under the Old Plan.                                                     
Under the New Plan, non-transferable options to purchase common shares of the   
Company may be granted by the Company`s Board of Directors to any director,     
officer, employee or consultant of the Company or any subsidiary of the         
Company. The New Plan contains provisions providing that the term of an option  
may not be longer than ten years and the exercise price of an option shall not  
be lower than the last closing price of the Company`s shares on the Toronto     
Stock Exchange prior to the date the stock option is granted. Unless the Board  
of Directors makes a specific determination otherwise, stock options granted    
under the New Plan and all rights to purchase Company shares pursuant thereto   
shall expire and terminate immediately upon the optionee who holds such stock   
options ceasing to be at least one of a director, officer or employee of or     
consultant to the Company or a subsidiary of the Company, as the case may be.   
Stock options granted pursuant to the New Plan vest as follows: 75% of the      
stock options vest on the 12 month anniversary of their grant date and the      
remaining 25% of such stock options vest on the 18 month anniversary of their   
grant date. The total number of common shares of the Company issuable upon the  
exercise of all outstanding stock options granted under the New Plan shall not  
at any time exceed 12% of the total number of outstanding common shares of the  
Company, from time to time.                                                     
The Company`s outstanding stock options have been adjusted to reflect the two   
to one share consolidation that was implemented by the Company in June 2011.    
As at September 30, 2011, the Company had outstanding under the Old Plan stock  
options to acquire 1,040,000 (December 31, 2010 - 2,280,000) common shares of   
the Company at a weighted-average exercise price of $4.59 (December 31, 2010 -  
$2.42) per share. There are currently no stock options outstanding under the    
New Plan.                                                                       
The following tables summarize information about stock options:                 
For the nine months ended September 30, 2011:                                   
                                               During the Period                
                       Opening                                                  
Balance   Granted   Exercised      Expired   Forfeited   
Exercise Price                                                                  
Range (Cdn$)                                                                    
2.10 - 5.00             800,000         -           -            -           -  
5.20 - 7.50             100,000         -           -    (100,000)           -  
7.52 - 16.00            240,000         -           -            -           -  
                     1,140,000         -           -    (100,000)           -   
Weighted Average                                                                
Exercise Price (Cdn$)**  $ 2.42       $ -         $ -       $ 7.50         $ -  
                                        Weighted                                
                                         average                                
                                       remaining                                
Closing     contractual                                
                         Balance            life        Vested &                
                                         (years)     Exercisable     Unvested   
2.10 - 5.00               800,000            1.91         800,000            -  
5.20 - 7.50                     -               -               -            -  
7.52 - 16.00              240,000            0.64         240,000            -  
                       1,040,000                       1,040,000            -   
Weighted Average                                                                
Exercise Price (Cdn$)**    $ 4.59                          $ 4.59          $ -  
For the year ended December 31, 2010:                                           
                                               During the Period                
                  Opening                                                       
Balance     Granted     Exercised     Expired     Forfeited   
Exercise Price                                                                  
Range (Cdn$)                                                                    
1.05 -2.50       2,261,400           -             -     466,400       195,000  
2.60 - 3.75        200,000           -             -           -             -  
3.76 - 8.00        480,000           -             -           -             -  
                2,941,400           -             -     466,400       195,000   
Weighted Average                                                                
Exercise Price                                                                  
(Cdn$)              $ 2.34           -             -      $ 1.76        $ 1.05  
                                        Weighted                                
                                         average                                
Closing       remaining        Vested &                
                         Balance     contractual     Exercisable     Unvested   
                                            life                                
                                         (years)                                
Exercise Price Range                                                            
(Cdn$)                                                                          
1.05 -2.50              1,600,000            2.66       1,600,000            -  
2.60 - 3.75               200,000            0.49         200,000            -  
3.76 - 8.00               480,000            1.39         480,000            -  
                       2,280,000                       2,280,000            -   
Weighted Average                                                                
Exercise Price (Cdn$)      $ 2.42               -          $ 2.42            -  
For the nine months ended September 30, 2010:                                   
                                                  During the Period             
                                Opening                                         
                                Balance     Granted     Exercised     Expired   
Exercise Price Range (Cdn$)                                                     
1.05 - 2.50                    2,261,400           -             -     466,400  
2.60 - 3.75                      200,000           -             -           -  
3.76 - 8.00                      480,000           -             -           -  
2,941,400           -             -     466,400   
Weighted Average Exercise Price                                                 
(Cdn$)                            $ 2.34           -             -      $ 2.47  
                                        Weighted                                
average                                
                         Closing       remaining        Vested &                
                         Balance     contractual     Exercisable     Unvested   
                                            life                                
(years)                                
Exercise Price Range                                                            
(Cdn$)                                                                          
1.05 - 2.50             1,795,000            2.11       1,795,000            -  
2.60 - 3.75               200,000            0.75         200,000            -  
3.76 - 8.00               480,000            0.40         480,000            -  
                       2,475,000            3.25       2,475,000            -   
Weighted Average                                                                
Exercise Price                                                                  
(Cdn$)                     $ 2.31                          $ 2.31            -  
The fair value at grant date is determined using a Black-Scholes option         
pricing model that takes into account the exercise price, the term of the       
option, the impact of dilution, the share price at grant date and expected      
price volatility of the underlying share, the expected dividend yield and the   
risk free interest rate for the term of the option.                             
The expected price volatility is based on the historic volatility (based on     
the remaining life of the options), adjusted for any expected changes to        
future volatility due to publicly available information. During the three and   
nine month periods ended September 30, 2011, the Company recognized in the      
statement of comprehensive loss as an expense $nil (three and nine months       
ended September 30, 2010 $nil and $132,000 respectively) representing the fair  
value at the date of grant of stock options previously granted to employees,    
directors and officers under the Company`s Stock Option Plan. The weighted      
average fair value of stock options issued was estimated at $1.87 per share     
option at the grant date using the Black-Scholes option-pricing model. In       
addition, an amount of $nil for the nine month period ended September 30, 2011  
(year ended December 31, 2010: $8,893) related to stock options issued to       
employees of the Company`s subsidiary in the DRC was capitalized to             
exploration and evaluation assets.                                              
These amounts were credited accordingly to contributed surplus in the           
consolidated statements of financial position.                                  
Replacement options                                                             
In connection with the acquisition by the Company of all of the outstanding     
shares of Diamond Core Resources Limited ("Diamond Core") on February 11,       
2008, 617,710 (the "Replacement Options") stock options were issued by the      
Company to employees of Diamond Core to substitute for their stock options in   
Diamond Core. Diamond Core was subsequently disposed of by the Company. As at   
September 30, 2011, there were 70,752 Replacement Options outstanding           
(December 31, 2010: 141,503).                                                   
10. RELATED PARTY TRANSACTIONS                                                  
a) Key Management Remuneration                                                  
The Company`s related parties include key management. Key management includes   
executive directors and non-executive directors. The remuneration of the key    
management of the Company as defined above, during the three and nine months    
ended September 30, 2011 and 2010 was as follows:                               
                      Three months ended              Nine months ended         
            September 30,     September 30,     September 30,   September 30,   
                     2011              2010              2011            2010   
Salaries         $ 153,675         $ 114,240         $ 200,305       $ 205,933  
                $ 153,675         $ 114,240         $ 200,305       $ 205,933   
b) Other Related Parties                                                        
During the three and nine month periods ended September 30, 2011, legal         
expenses of $8,610 and $29,739 (three and nine month periods ended September    
30, 2010: $14,808 and $95,176), incurred in connection with general corporate   
matters, were paid to a law firm of which a director and officer of the         
Company was a partner until February 2011. As at September 30, 2011, $54,380    
(December 31, 2010 - $90,778) owing to this legal firm was included in          
accounts payable.                                                               
As at September 30, 2011, an amount of $83,334 was owed to two directors of     
the Company representing consulting fees (December 31, 2010: $102,311). During  
the three and nine month periods ended September 30, 2011, consulting fees of   
$50,000 and $150,000, respectively were incurred to the two directors (three    
and nine month periods ended September 30, 2010: $50,000 and $150,000           
respectively to the two directors).                                             
As at September 30, 2011, an amount of $11,660 (December 31, 2010: $3,719) was  
owed to Banro Corporation ("Banro"). During the three and nine months ended     
September 30, 2011, common expenses in the Congo were incurred in the amounts   
of $nil and $7,941. Banro owns 17,716,994 common shares of the Company,         
representing a 35.65% interest in the Company. During the year ended December   
31, 2010, a drill rig was sold to Banro by the Company for gross proceeds of    
$154,964.                                                                       
On May 27, 2011 the Company closed a non-brokered private placement of          
2,500,000 units of the Company at a price of $0.10 per unit for proceeds of     
$250,000. The purchasers of the units under this private placement were         
directors and officers of the Company (see Note 8a).                            
All amounts due to related parties are unsecured, non-interest bearing and due  
on demand. All transactions are in the normal course of operations and are      
measured at the exchange value.                                                 
11. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES                           
a) Fair value of financial assets and liabilities                               
The consolidated statements of financial position carrying amounts for cash     
and cash equivalents, prepaid expenses and other assets, accounts payable and   
accrued liabilities and notes payable approximate fair value due to their       
short-term nature. Due to the use of subjective judgments and uncertainties in  
the determination of fair values these values should not be interpreted as      
being realizable in an immediate settlement of the financial instruments.       
The following presents the fair value and carrying value of the Company`s       
financial instruments:                                                          
Classification     Measurement     30-Sep-11   
Financial assets                                                                
Cash and cash equivalents              Held-for-                                
                                        Trading      Fair value      $221,574   
Loans and       Amortized                 
Prepaid expenses and other           receivables            cost                
assets                                                                  34,334  
Financial liabilities                                                           
Accounts payable and accrued                           Amortized                
liabilities                    Other liabilities            cost      $525,145  
Notes payable                  Other liabilities       Amortized                
                                                           cost             -   
Amortized                 
Taxes payable                  Other liabilities            cost             -  
Due to related parties                                 Amortized                
                              Other liabilities            cost        94,994   
Classification     Measurement     31-Dec-10   
Financial assets                                                                
Cash and cash equivalents              Held-for-                                
                                        Trading      Fair value      $126,931   
Loans and       Amortized                 
Prepaid expenses and other           receivables            cost                
assets                                                                  21,713  
Financial liabilities                                                           
Accounts payable and accrued                           Amortized                
liabilities                    Other liabilities            cost      $834,176  
Notes payable                  Other liabilities       Amortized                
                                                           cost       400,493   
Amortized                 
Taxes payable                  Other liabilities            cost         6,127  
Due to related parties                                 Amortized                
                              Other liabilities            cost       106,029   
Fair value hierarchy                                                            
The following provides a description of financial instruments that are          
measured subsequent to initial recognition at fair value, grouped into Levels   
1 to 3 based on the degree to which the fair value is observable:               
- Level 1 fair value measurements are those derived from quoted prices          
(unadjusted) in active markets for identical assets or liabilities;             
- Level 2 fair value measurements are those derived from inputs other than      
quoted prices included within Level 1 that are observable for the asset or      
liability, either directly (i.e. as prices) or indirectly (i.e. derived from    
prices); and                                                                    
- Level 3 fair value measurements are those derived from valuation techniques   
that include inputs for the asset or liability that are not based on            
observable market data (unobservable inputs).                                   
There were no transfers between Level 1 and 2 during the reporting period. The  
fair values of financial assets and liabilities carried at amortized cost are   
approximated by their carrying values.                                          
Cash is ranked Level 1 as the market value is readily observable. The carrying  
value of cash approximates fair value as maturities are less than three         
months. Notes payable is ranked level 2 as it is based on similar loans in the  
market.                                                                         
Risk Management Policies                                                        
The Company is sensitive to changes in commodity prices and foreign-exchange.   
The Company`s Board of Directors has overall responsibility for the             
establishment and oversight of the Company`s risk management framework.         
Although the Company has the ability to address its price-related exposures     
through the use of options, futures and forward contacts, it does not           
generally enter into such arrangements.                                         
b) Foreign Currency Risk                                                        
Foreign currency risk is the risk that a variation in exchange rates between    
the Canadian dollar and United States dollar or other foreign currencies will   
affect the Company`s operations and financial results. A portion of the         
Company`s transactions are denominated in United States dollars, Congolese      
francs and South African rand. The Company is also exposed to the impact of     
currency fluctuations on its monetary assets and liabilities. The Company`s     
functional currency is the Canadian dollar. The majority of major expenditures  
are transacted in US dollars. The Company maintains the majority of its cash    
in Canadian dollars but it does hold balances in US dollars. Significant        
foreign exchange gains or losses are reflected as a separate component of the   
consolidated statement of comprehensive loss. The Company does not use          
derivative instruments to reduce its exposure to foreign currency risk.         
c) Credit Risk                                                                  
Financial instruments which are potentially subject to credit risk for the      
Company consist primarily of cash. Cash is maintained with several financial    
institutions of reputable credit in Canada, the DRC and South Africa and may    
be redeemed upon demand. It is therefore the Company`s opinion that such        
credit risk is subject to normal industry risks and is considered minimal.      
d) Liquidity Risk                                                               
Liquidity risk is the risk that the Company will not be able to meet its        
financial obligations as they become due. The Company attempts to ensure that   
there is sufficient cash to meet its liabilities when they are due and manages  
this risk by regularly evaluating its liquid financial resources to fund        
current and long-term obligations and to meet its capital commitments in a      
cost-effective manner. The key to success in managing liquidity is the degree   
of certainty in the cash flow projections. If future cash flows are fairly      
uncertain, the liquidity risk increases. The Company`s liquidity requirements   
are met through a variety of sources, including cash, existing credit           
facilities and equity capital markets. In light of market conditions, the       
Company initiated a series of measures to bring its spending in line with the   
projected cash flows from its operations and available project specific         
facilities in order to preserve its financial position and maintain its         
liquidity position.                                                             
e) Mineral Property Risk                                                        
The Company`s operations in the DRC are exposed to various levels of political  
risk and uncertainties, including political and economic instability,           
government regulations relating to exploration and mining, military repression  
and civil disorder, all or any of which may have a material adverse impact on   
the Company`s activities or may result in impairment in or loss of part or all  
of the Company`s assets.                                                        
f) Market Risk                                                                  
Market risk is the potential for financial loss from adverse changes in         
underlying market factors, including foreign-exchange rates, commodity prices,  
interest rates and stock based compensation costs.                              
The Company manages the market risk associated with commodity prices by         
establishing and monitoring parameters that limit the types and degree of       
market risk that may be undertaken.                                             
g) Interest rate risk                                                           
Interest rate risk is the potential impact on any Company earnings due to       
changes in bank lending rates and short term deposit rates. The Company is not  
exposed to significant interest rate risk other than cash flow interest rate    
risk on its cash. The Company does not use derivative instruments to reduce     
its exposure to interest rate risk. A fluctuation of interest rates of 1%       
would not affect significantly the fair value of cash.                          
h) Title risk                                                                   
Title to mineral properties involves certain inherent risks due to the          
difficulties of determining the validity of certain claims as well as the       
potential for problems arising from the frequently ambiguous conveyancing       
history characteristic of many mining properties. Although the Company has      
investigated title to all of its mineral properties for which it holds          
concessions or other mineral licenses, the Company cannot give any assurance    
that title to such properties will not be challenged or impugned and cannot be  
certain that it will have valid title to its mineral properties. The Company    
relies on title opinions by legal counsel who base such opinions on the laws    
of countries in which the Company operates.                                     
i) Country risk                                                                 
The DRC is a developing country and as such, the Company`s exploration          
projects in the DRC could be adversely affected by uncertain political or       
economic environments, war, civil or other disturbances, and a changing fiscal  
regime and by DRC`s underdeveloped industrial and economic infrastructure. The  
Company`s operations in the DRC may be effected by economic pressures on the    
DRC. Any changes to regulations or shifts in political attitudes are beyond     
the control of the Company and may adversely affect its business. Operations    
may be affected in varying degrees by factors such as DRC government            
regulations with respect to foreign currency conversion, production, price      
controls, export controls, income taxes or reinvestment credits, expropriation  
of property, environmental legislation, land use, water use and mine safety.    
There can be no assurance that policies towards foreign investment and profit   
repatriation will continue or that a change in economic conditions will not     
result in a change in the policies of the DRC government or the imposition of   
more stringent foreign investment restrictions. Such changes cannot be          
accurately predicted.                                                           
j) Capital Management                                                           
The Company manages its cash, common shares, warrants and stock options as      
capital. The Company`s main objectives when managing its capital are:           
- to maintain a flexible capital structure which optimizes the cost of capital  
at acceptable risk while providing an appropriate return to its shareholders;   
- to maintain a strong capital base so as to maintain investor, creditor and    
market confidence and to sustain future development of the business;            
- to safeguard the Company`s ability to obtain financing; and                   
- to maintain financial flexibility in order to have access to capital in the   
event of future acquisitions.                                                   
The Company manages its capital structure and makes adjustments to it in        
accordance with the objectives stated above, as well as responds to changes in  
economic conditions and the risk characteristics of the underlying assets.      
There were no significant changes to the Company`s approach to capital          
management during the nine month period ended September 30, 2011.               
Neither the Company nor any of its subsidiaries are subject to externally       
imposed capital requirements.                                                   
                                     September 30, 2011     December 31, 2010   
Cash and cash equivalents                      $ 221,574             $ 126,931  
Share capital                              $ 116,283,812         $ 115,457,876  
Deficit                                  $ (119,822,117)       $ (119,405,686)  
12. SUPPLEMENTAL CASH FLOW INFORMATION                                          
During the periods indicated the Company undertook the following significant    
non-cash transactions:                                                          
                                                     Three months ended         
                                     Note     September 30,     September 30,   
2011              2010   
Depreciation included in                                                        
exploration and evaluation assets        5             $ 511          $ 11,115  
Stock-based compensation                                                        
included in exploration and                                                     
evaluation assets                        9               $ -          $ 40,126  
Interest paid                                            $ -               $ -  
Taxes paid                                               $ -           $ 6,459  
Nine months ended         
                                              September 30,     September 30,   
                                                       2011              2010   
Depreciation included in                                                        
exploration and evaluation assets                    $ 3,973          $ 66,562  
Stock-based compensation included in                                            
exploration and evaluation assets                        $ -          $ 40,126  
Interest paid                                            $ -               $ -  
Taxes paid                                           $ 6,127           $ 6,459  
13. COMMITMENTS AND CONTINGENCIES                                               
The Company is committed to the payment of surface fees and taxes. For the      
year ended December 31, 2011, these fees and taxes are estimated to be          
$127,981 (US$ 132,000) compared to $109,409 (US$ 110,000) incurred in the year  
ended December 31, 2010. The surface fees and taxes are required to be paid     
annually under the DRC Mining Code in order to keep exploration permits in      
good standing.                                                                  
Six of the exploration permits comprising part of the Company`s Tshikapa        
project in the DRC are held through an option agreement with Acacia SPRL.       
Acacia SPRL has advised the Company of its wish to modify the option            
agreement. The Company continues its discussions with Acacia SPRL and is        
optimistic of reaching an agreement that is satisfactory for both parties.      
In addition to the above matters, the Company and its subsidiaries are also     
subject to routine legal proceedings and tax audits. The Company does not       
believe that the outcome of any of these matters, individually or in            
aggregate, would have a material adverse effect on its consolidated losses,     
cash flow or financial position.                                                
Labour disputes                                                                 
The Company is in dispute with two of its previous directors and officers. One  
of the individuals had applied in 2008 for a summary judgment against the       
Company in the Witwatersrand Local Division of the High Court of South Africa   
in respect of a dispute relating to a settlement agreement pertaining to his    
departure. The application for summary judgment was dismissed and the Company   
was granted leave to defend the claim. This individual has not taken further    
steps to progress that matter. However, in October 2010, almost two years       
after the original claim, the same former director and officer instituted       
fresh proceedings against the Company. He has repeated the claim made           
previously, but this time in a summons lodged before the North Gauteng High     
Court in South Africa. This former director and officer is claiming he is owed  
payment of 1.2 million South African rand plus interest. The other individual   
has referred two disputes to the Commission for Conciliation Mediation and      
Arbitration in Johannesburg, South Africa and an action to the High Court in    
that same jurisdiction. He elected to withdraw an application for summary       
judgment. The Company is defending all these actions.                           
14. FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS          
IFRS 1, First Time Adoption of International Financial Reporting Standards,     
requires that comparative financial information be provided. As a result, the   
first date at which the Company has applied IFRS was January 1, 2010. IFRS 1    
requires first-time adopters to retrospectively apply all effective IFRS        
standards as of the reporting date, which for the Company will be December 31,  
2011. However, it also provides for certain optional exemptions and certain     
mandatory exceptions for first-time IFRS adoption. Prior to transition to       
IFRS, the Company prepared its financial statement in accordance with Canadian  
GAAP.                                                                           
In preparing the Company`s opening IFRS consolidated statements of financial    
position, the Company has adjusted amounts reported previously in the           
financial statements prepared in accordance with previous Canadian GAAP. The    
IFRS 1 applicable exemptions and exceptions applied in the conversion from      
Canadian GAAP to IFRS are as follows:                                           
a) Share-based payment transactions                                             
The Company has elected not to retrospectively apply IFRS 2 to equity           
instruments that were granted and that vest before the transition date. As a    
result of applying this exemption, the Company has applied the provision of     
IFRS 2 to all outstanding equity instruments that were unvested prior to the    
date of transition to IFRS.                                                     
b) Deemed Cost of Exploration and Evaluation Assets                             
The Company has elected not to retrospectively apply IFRS 36 to the previous    
impairments that have been recorded by the Company. Per IFRS 1, the Company     
has taken an election to deem all exploration and evaluation assets at cost.    
c) Estimates                                                                    
The estimates previously made by the Company under Canadian GAAP were not       
revised for the application of IFRS except where necessary to reflect any       
difference in accounting policy or where there was objective evidence that      
those estimates were in error. As a result, the Company has not used hindsight  
to create or revise estimates.                                                  
IFRS employs a conceptual framework that is similar to Canadian GAAP. However   
significant differences exist in certain matters of recognition, measurement    
and disclosure. While the adoption has not changed the Company`s actual cash    
flows, it has resulted in changes to the Company`s consolidated statement of    
financial position and statement comprehensive loss. The statements of          
comprehensive loss have been changed to comply with IAS 1 Presentation of       
Financial Statements. The Canadian GAAP consolidated balance sheets as at       
January 1, 2010 and December 31, 2010, the consolidated statements of           
operations and other comprehensive loss for the three and nine month periods    
ended September 30, 2010 as well as the consolidated statement of cash flows    
for the three and nine month periods September 30, 2010 have been reconciled    
to IFRS, with a summary of the most significant changes in share-based          
payments as follows:                                                            
a) Share Based Payments                                                         
Under IFRS 2 Share Based Payments, each tranche of an award with different      
graded vesting is accounted for as a separate award and the resulting fair      
value is amortized over the vesting period of the respective tranches. Under    
Canadian GAAP, the Company was accounting for these as a single award. In       
addition, under IFRS 2, the Company is required to estimate the number of       
forfeitures likely to occur on grant date and reflect this in the share-based   
payment expense revising for actual experiences in subsequent periods. Under    
Canadian GAAP, forfeitures were recognized as they occurred.                    
The impact of adjustments relates to share based payments on the Company`s      
consolidated statement of financial position is as follows:                     
                     December 31, 2010   September 30, 2010   January 1, 2010   
                                     $                    $                 $   
Exploration and evaluation        (739)                (739)            17,248  
                                 (739)                (739)            17,248   
Contributed surplus             (3,156)              (3,156)            73,715  
Deficit                           2,417                2,417          (56,467)  
(739)                (739)            17,248   
The Canadian GAAP consolidated balance sheet as at January 1, 2010 has been     
reconciled to IFRS as follows:                                                  
                                               January 1, 2010                  
Effect of                     
                     Notes     Canadian GAAP     Transition              IFRS   
                                                    to IFRS                     
Assets                                                                          
Current Assets                                                                  
Cash and cash equivalents           $ 664,495             $-         $ 664,495  
Prepaid expenses and                                                            
other assets                          163,175              -           163,175  
Total Current Assets                  827,670              -           827,670  
Non-Current Assets                                                              
Capital assets                        141,794              -           141,794  
Mineral properties and                                                          
deferred exploration                                                            
expenditures                        5,808,835         17,248         5,826,083  
Total Non-Current                                                               
Assets                              5,950,629         17,248         5,967,877  
Total Assets                        6,778,299         17,248         6,795,547  
Liabilities and                                                                 
Shareholders` Equity                                                            
Current Liabilities                                                             
Accounts payable and                                                            
accrued liabilities                 1,027,172              -         1,027,172  
Accrued liabilities                   377,884              -           377,884  
Total Current                                                                   
Liabilities                         1,405,056              -         1,405,056  
Non-current                                                                     
Future tax liability                   57,030              -            57,030  
Shareholders` Equity                                                            
Share capital                     115,457,876              -       115,457,876  
Contributed surplus                 7,700,518         73,715         7,774,233  
Deficit                         (117,842,181)       (56,467)     (117,898,648)  
Total Shareholders`                                                             
Equity                              5,316,213         17,248         5,333,461  
Total Liabilities and                                                           
Shareholders` Equity                6,778,299         17,248         6,795,547  
The Canadian GAAP consolidated balance sheet as at September 30, 2010 has been  
reconciled to IFRS as follows:                                                  
                                            September 30, 2010                  
                  Notes                           Effect of                     
                                              Transition to                     
Canadian GAAP              IFRS              IFRS   
Assets                                                                          
Current Assets                                                                  
Cash                              $ 90,030               $ -          $ 90,030  
Prepaid expenses                                                                
and other assets                   130,371                 -           130,371  
Total Current                                                                   
Assets                             220,401                 -           220,401  
Non-Current Assets                                                              
Property, plant and equipment       10,438                 -            10,438  
Mineral properties and deferred                                                 
exploration expenditures         5,789,841             (739)         5,789,102  
Total Non-Current                                                               
Assets                           5,800,279             (739)         5,799,540  
Total Assets                     6,020,680             (739)         6,019,941  
Liabilities and                                                                 
Shareholders` Equity                                                            
Current Liabilities                                                             
Bank indebtedness                        -                 -                 -  
Accounts payable and accrued                                                    
liabilities                        906,747                 -           906,747  
Due to related parties             214,206                 -           214,206  
Total Current                                                                   
Liabilities                      1,120,953                 -         1,120,953  
Non-current                                                                     
Future tax liability                57,030                 -            57,030  
Total Liabilities                1,177,983                 -         1,177,983  
Shareholders` Equity                                                            
Capital stock                  115,457,876                 -       115,457,876  
Contributed surplus              7,872,644           (3,156)         7,869,488  
Deficit                      (118,487,823)             2,417     (118,485,406)  
Total Shareholders` Equity       4,842,697             (739)         4,841,958  
Total Liabilities and                                                           
Shareholders` Equity             6,020,680             (739)         6,019,941  
The Canadian GAAP consolidated balance sheet as at December 31, 2010 has been   
reconciled to IFRS as follows:                                                  
December 31, 2010                  
                                                  Effect of                     
                  Notes     Canadian GAAP     Transition to              IFRS   
                                                       IFRS                     
Assets                                                                          
Current Assets                                                                  
Cash                             $ 126,931               $ -         $ 126,931  
Prepaid expenses                                                                
and other current assets            21,713                 -            21,713  
Total Current                                                                   
Assets                             148,644                 -           148,644  
Non-Current Assets                                                              
Capital assets                       4,100                 -             4,100  
Mineral properties and                                                          
deferred exploration                                                            
expenditures                     5,075,041             (739)         5,074,302  
Total Non-Current                                                               
Assets                           5,079,141             (739)         5,078,402  
Total Assets                     5,227,785             (739)         5,227,046  
Liabilities and                                                                 
Shareholders` Equity                                                            
Current Liabilities                                                             
Accounts payable and                                                            
accrued liabilities                834,176                 -           834,176  
Note payable                       400,493                 -           400,493  
Taxes payable                        6,127                 -             6,127  
Due to related parties             106,029                 -           106,029  
Total Current                                                                   
Liabilities                      1,346,825                 -         1,346,825  
Non-current                                                                     
Future income tax liabilities       15,789                 -            15,789  
Shareholders` Equity                                                            
Capital stock                  115,457,876                 -       115,457,876  
Contributed surplus              7,815,398           (3,156)         7,812,242  
Deficit                      (119,408,103)             2,417     (119,405,686)  
Total Shareholders` Equity       3,865,171             (739)         3,864,432  
Total Liabilities and                                                           
Shareholders` Equity             5,227,785             (739)         5,227,046  
The Canadian GAAP consolidated statements of operations and other               
comprehensive loss for the three and nine month periods ended September 30,     
2010 have been reconciled to IFRS as follows:                                   
                                      Three Months Ended September 30, 2010     
                       Notes                                                    
                                                    Effect of                   
Transition                   
                                 Canadian GAAP        to IFRS            IFRS   
Expenses                                                                        
Professional fees and                                                           
consulting fees                       $ 191,361            $ -       $ 191,361  
General and administrative               67,762              -          67,762  
Share based payments                          -              -               -  
Foreign exchange (gain) loss              1,010              -           1,010  
Loss from operations                  (260,133)              -       (260,133)  
Loss for the period                   (260,133)              -       (260,133)  
Comprehensive loss for the period   $ (260,133)            $ -     $ (260,133)  
Loss per share, basic and diluted          0.00              -            0.00  
Nine Months Ended September 30, 2010    
                       Notes                                                    
                                                    Effect of                   
                                                   Transition                   
Canadian GAAP        to IFRS            IFRS   
Expenses                                                                        
Professional fees and                                                           
consulting fees                       $ 335,954            $ -       $ 335,954  
General and administrative              174,318              -         174,318  
Share based payments                    132,000       (58,884)          73,116  
Foreign exchange (gain) loss              3,370              -           3,370  
Loss from operations                  (645,642)       (58,884)       (586,758)  
Loss for the period                   (645,642)              -       (586,758)  
Comprehensive loss for the period   $ (645,642)            $ -     $ (586,758)  
Loss per share, basic and diluted        - 0.01              -          - 0.01  
The Canadian GAAP consolidated statements of operations and other               
comprehensive loss for the year ended December 31, 2010 have been reconciled    
to IFRS as follows:                                                             
                                   Year Ended December 31, 2010                 
           Notes                                                                
Effect of Transition                     
                     Canadian GAAP                  to IFRS              IFRS   
Expenses                                                                        
Consulting, management                                                          
and  professional fees    $ 447,319                       $-         $ 447,319  
General and                                                                     
administrative              209,778                        -           209,778  
Share based payments         88,000                 (58,884)            29,116  
Foreign exchange (loss)                                                         
gain unrealized               3,356                        -             3,356  
Impairment of mineral                                                           
properties and deferred                                                         
exploration expenditures    740,975                        -           740,975  
Bad debt expense            105,009                        -           105,009  
Loss from operations    (1,594,437)                 (58,884)       (1,535,553)  
Income tax recovery          28,515                        -            28,515  
Loss for the period     (1,565,922)                        -       (1,507,038)  
Comprehensive loss for                                                          
the period            $ (1,565,922)                       $-     $ (1,507,038)  
Loss per share, basic                                                           
and diluted                  (0.02)                        -            (0.02)  
The Canadian GAAP reconciliation to IFRS of the consolidated statements of      
cash flows for the three and nine month periods September 30, 2010 is as        
follows:                                                                        
Three months ended September 30, 2010         
                                                    Effect of                   
                                                Transition to                   
                    Notes     Canadian GAAP              IFRS            IFRS   
Cash flows from                                                                 
operating activities                                                            
Net loss for the period           $ (260,133)                       $           
(260,133)                                                                       
Adjustments to reconcile                                                        
loss to net cash used in                                                        
operating activities                                                            
Share based payments                       -                                 -  
Changes in non-cash working capital                                             
Prepaid expenses and other assets    (3,802)                 -         (3,802)  
Accounts payable and                                                            
accrued liabilities                   25,648                 -          25,648  
Net cash flows from                                                             
operating activities               (238,287)                 -       (238,287)  
Cash flows from                                                                 
investing activities                                                            
Deferred Exploration expenditures    225,425                 -         225,425  
Net cash used in investing                                                      
activities                           225,425                 -         225,425  
Cash flows from financing                                                       
activities                                                                      
Due to related parties                95,695                 -          95,695  
Net cash (used in) /                                                            
from financing activities             95,695                 -          95,695  
Net increase (decrease) in cash                                                 
during the period                     82,833                 -          82,833  
Cash, beginning of the period          7,197                 -           7,197  
Cash, end of the period             $ 90,030               $ -        $ 90,030  
Nine months ended September 30, 2010         
                                                    Effect of                   
                                                Transition to                   
                    Notes     Canadian GAAP              IFRS            IFRS   
Cash flows from                                                                 
operating activities                                                            
Net loss for the period          $ (645,642)          $ 58,884     $ (586,758)  
Adjustments to reconcile                                                        
loss to net cash used in                                                        
operating activities                                                            
Share based payments                 132,000          (58,884)          73,116  
                                  (513,642)                 -       (513,642)   
Changes in non-cash                                                             
working capital                                                              -  
Prepaid expenses and                                                            
other assets                          32,804                 -          32,804  
Accounts payable and                                                            
accrued liabilities                (120,425)                 -       (120,425)  
Net cash flows from                                                             
operating activities               (601,263)                 -       (601,263)  
Cash flows from investing                                                       
activities                                                                      
Deferred Exploration expenditures    190,476                 -         190,476  
Net cash used in                                                                
investing activities                 190,476                 -         190,476  
Cash flows from financing                                                       
activities                                                                      
Due to related parties             (163,678)                 -       (163,678)  
Net cash (used in) /                                                            
from financing activities          (163,678)                 -       (163,678)  
Net increase (decrease) in cash                                                 
during the period                  (574,465)                 -       (574,465)  
Cash, beginning of the period        664,495                 -         664,495  
Cash, end of the period             $ 90,030               $ -        $ 90,030  
The Canadian GAAP reconciliation to IFRS of the consolidated statement of cash  
flows for the year ended December 31, 2010 is as follows:                       
Year ended December 31, 2010           
                                                  Effect of                     
                                              Transition to                     
                  Notes     Canadian GAAP              IFRS              IFRS   
Cash flows from                                                                 
operating activities                                                            
Net loss for the period      $ (1,565,922)          $ 58,884     $ (1,507,038)  
Adjustments to reconcile                                                        
loss to net cash used                                                           
in operating activities                                                         
Impairment of properties           740,975                 -           740,975  
Share based payments                88,000          (58,884)            29,116  
Accrued interest expense               493                 -               493  
Bad debt expense                   105,009                 -           105,009  
Provision for taxes               (28,515)                 -          (28,515)  
Changes in non-cash                                                             
working capital-                                                                
Prepaid expenses                                                                
and other current assets            36,453                 -            36,453  
Accounts payables and                                                           
accrued liabilities              (192,996)                 -         (192,996)  
Taxes payable                      (6,598)                 -           (6,598)  
Net cash flows from                                                             
operating activities             (823,101)                 -         (823,101)  
Cash flows from                                                                 
investing activities                                                            
Proceeds from disposal                                                          
of capital asset                    64,794                 -            64,794  
Expenditures on exploration                                                     
and evaluation                   (338,757)                 -         (338,757)  
Funds received from Rio Tinto      431,355                 -           431,355  
Net cash used in investing                                                      
activities                         157,392                 -           157,392  
Cash flows from financing                                                       
activities                                                                      
Due to related parties           (271,855)                 -         (271,855)  
Notes payable                      400,000                 -           400,000  
Net cash (used in)                                                              
/ from financing activities        128,145                 -           128,145  
Effect of foreign exchange                                                      
on cash held in foreign currency                           -                 -  
Net increase (decrease) in cash                                                 
during the period                (537,564)                 -         (537,564)  
Cash, beginning of the period      664,495                 -           664,495  
Cash, end of the period          $ 126,931               $ -         $ 126,931  
The Canadian GAAP reconciliation to IFRS of the consolidated statement of       
changes in equity as at January 1, 2010 is as follows:                          
                                               January 1, 2010                  
Notes                           Effect of                     
                                              Transition to                     
                            Canadian GAAP              IFRS              IFRS   
Common Shares                                                                   
Amount                       $ 115,457,876               $ -     $ 115,457,876  
Contributed Surplus              7,700,518            73,715         7,774,233  
Deficit                      (117,842,181)          (56,467)     (117,898,648)  
Total Shareholder`s Equity     $ 5,316,213          $ 17,248       $ 5,333,461  
The Canadian GAAP reconciliation to IFRS of the consolidated statement of       
changes in equity for the nine months ended September 30, 2010 is as follows:   
                                  Nine months ended September 30, 2010          
               Notes                              Effect of                     
Transition to                     
                            Canadian GAAP              IFRS              IFRS   
Common Shares                                                                   
Amount                    $ 115,457,876.00               $ -      $115,457,876  
Contributed Surplus              7,872,644           (3,156)         7,869,488  
Deficit                      (118,487,823)             2,417     (118,485,406)  
Total Shareholder`s Equity     $ 4,842,697           $ (739)       $ 4,841,958  
The Canadian GAAP reconciliation to IFRS of the consolidated statement of       
changes in equity for the year ended December 31, 2010 is as follows:           
                                             December 31, 2010                  
                  Notes                           Effect of                     
                                                 Transition                     
Canadian GAAP        to IFRS              IFRS   
Common Shares                                                                   
Amount                       $ 115,457,876.00              $     $ 115,457,876  
Contributed Surplus                 7,815,398        (3,156)         7,812,242  
Deficit                         (119,408,103)          2,417     (119,405,686)  
Total                                                                           
Shareholder`s Equity              $ 3,865,171        $ (739)       $ 3,864,432  
Date: 18/11/2011 10:37:01 Supplied by www.sharenet.co.za                     
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