IFAM Infrastructure Materials Corp (CE)

ASSETS

Current

   Cash and cash equivalents

   Short term investments

   Marketable securities (Note 9)

   Prepaid expenses and other receivables

Total Current Assets

Restricted Cash (Note 5)

Reclamation Deposit (Note 6)

Plant and Equipment, net (Note 7)

Mineral Property Interests (Note 8)

Total Assets

LIABILITIES

Current

   Accounts payable

   Accrued liabilities

Total Current Liabilities

Deferred Revenue (Note 9)

Asset Retirement Obligation (Note 10)

Total Liabilities

Going Concern (Note 3)

Commitments and Contingencies (Note 13)

Related Party Transactions (Note 14)

Subsequent Events (Note 15)

STOCKHOLDERS' EQUITY

Capital Stock (Note 11)

   Preferred stock, $0.0001 par value, 50,000,000 shares authorized, none issued and outstanding

   Common stock, $0.0001 par value, 500,000,000 shares authorized, 98,935,486 issued and outstanding (June 30, 2012 – 98,935,486)

Additional Paid - in Capital

Accumulated Other Comprehensive Loss (Note 9)

Deficit Accumulated During the Exploration Stage

Total Stockholders' Equity

Total Liabilities and Stockholders' Equity

Operating Expenses

       General and administration

       Project expenses

       Depreciation

Total Operating Expenses

Loss from Operations

       Other income-interest

       Other income-gain on termination of option agreement

       Other income-gain on bargain purchase (Note 8)

       Interest Expense

Loss before Income Taxes

       Provision for income taxes

Net Loss

       Unrealized loss on marketable securities (Note 9)

Comprehensive Loss

Loss per Weighted Average Number of Shares Outstanding

-Basic and Fully Diluted

Weighted Average Number of Shares Outstanding During the Periods

-Basic and Fully Diluted

For the period from inception (June 3, 1999) through July 1, 2004

 Net (loss)

Balance June 30, 2005 (audited)

 Contribution to additional paid-in capital

 Cancelled shares

 Common shares issued for nil consideration

 Common shares issued for cash

 Subscription for stock

 Stock issuance cost

 Net loss for the year

Balance June 30, 2006 (audited)

 Common shares issued for cash

 Common shares issued to agents in lieu of commission for placement of common shares and convertible debentures

 Common shares issued for acquisition of interests in mineral claims

 Common shares issued for acquisition of interests in mineral claims

 Common shares issued for acquisition interests in a refinery

 Common shares issued for purchase of a mill with capital equipment

 Stock issuance cost

 Stock based compensation

 Net loss for the year

Balance June 30, 2007 (audited)

 Common stock issued to consultants

 Stock based compensation

 Warrant modification expense

 Conversion of convertible debentures with accrued interest

 Common shares issued for acquisition of interests in mineral claims

 Common stock issued to a consultant

 Amortization of deferred stock compensation

 Net loss for the year

Balance June 30, 2008 (audited)

 Common shares issued for cash (net)

 Common stock issued to a consultant

 Common stock issued on acquisition of a subsidiary

 Common shares issued on warrant exercises

 Stock based compensation

 Warrant modification expense

 Amortization of deferred stock compensation

 Net loss for the year

Balance June 30, 2009 (audited)

 Common shares issued for cash

 Common stock issued on acquisition of a subsidiary

 Stock based compensation

 Amortization of deferred stock compensation

 Net loss for the year

Balance June 30, 2010 (audited)

 Common shares issued for cash

 Stock based compensation

 Common stock options exercised

 Net loss for the year

Balance June 30, 2011 (audited)

 Common shares issued for cash (net)

 Preferred shares converted to common shares

 Stock based compensation

 Unrealized loss on marketable securities

 Net loss for the period

Balance June 30, 2012 (audited)

 Stock based compensation

 Unrealized loss on marketable securities

 Net loss for the period

Balance September 30, 2012 (unaudited)

Cash Flows from Operating Activities

   Net loss

   Adjustment for:

       Depreciation

       Amortization of debt issuance cost

       Loss on disposal of plant and equipment

       Gain on Bargain Purchase (Note 8)

       Termination of Option Agreement

       Stock based compensation

       Warrant modification expense

       Shares issued for mineral claims, as part of project expenses

       Shares issued for consultant services expensed

       Shares issued on acquisition of subsidiary

       Interest accrued on promissory note

       Accretion of Asset Retirement Obligation (Note 10)

       Interest on convertible debentures

   Changes in non-cash working capital

       Prepaid expenses and other receivables

       Accounts payable

       Accrued liabilities

   Net cash used in operating activities

Cash Flows from Investing Activities

       Decrease (Increase) in Short-term investments

       Increase in Reclamation Deposit

       Increase in Restricted Cash

       Cash received for option on claims and included in Deferred revenue (Note 9)*

       Cash received for termination of Option Agreement

       Acquisition of plant and equipment for cash

       Proceeds from sale of plant and equipment

   Net cash provided (used) in investing activities

Cash Flows from Financing Activities

       Issuance of common shares for cash (net)

       Issuance, for cash, of preferred shares later converted to common shares

       Issuance of common shares for warrant exercises

       Issuance of common shares for option exercise

       Issuance of promissory note

       Repayment of promissory note

       Issuance of convertible debentures subsequently converted to cash

       Stock and debenture placement commissions paid in cash

   Net cash provided by financing activities

Net Change in Cash

Cash - beginning of period

Cash - end of period

Supplemental Cash Flow Information

   Interest Paid

   Income taxes paid

Basis of Presentation

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

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

Recently Adopted Accounting Standards

In June 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, Presentation of Comprehensive Income (ASU 2011-05) , which eliminates the option to present components of other comprehensive income (OCI) as part of the statement of changes in stockholders’ equity. The amendments in this standard require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Subsequently, in December 2011, the FASB issued ASU 2011-12, Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income (ASU 2011-12), which indefinitely defers the requirement in ASU 2011-05 to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the components of net income and the components of OCI are presented. The Company adopted this standard during the first quarter ended September 30, 2012. The adoption of this standard did not have a significant impact on these consolidated financial statements.

Basis of Presentation – Cont’d

In May 2011, the FASB issued ASU 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs (ASU 2011-04). ASU 2011-04 amended Accounting Standards Codification 820, Fair Value Measurements and Disclosures, to converge the fair value measurement guidance in U.S. GAAP and International Financial Reporting Standards (IFRSs). ASU 2011-04 changes the wording used to describe many requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. Disclosure requirements have been expanded to include additional information about transfers between level 1 and level 2 of the fair value hierarchy and level 3 measurements regarding the sensitivity of fair value to changes in unobservable inputs and any interrelationships between those inputs. Additionally, ASU 2011-04 clarifies the FASB’s intent about the application of existing fair value measurements including: (a) the application of the highest and best use valuation premise concepts; (b) measuring the fair value of an instrument classified in a reporting entity's stockholders' equity; and (c) quantitative information required for fair value measurements categorized within level 3. The Company adopted this standard during the first quarter ended September 30, 2012. The adoption of this standard did not have a significant impact on these consolidated financial statements.

Nature of Business and Operations

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

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

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

The Company’s limestone assets are held by its wholly owned subsidiary, IMC US, a Nevada corporation that was acquired as of November 2008. As of the date of the financial statements, IMC US controls 5 limestone Projects in Nevada, made up of 543 mineral claims covering approximately 11,218 acres on land owned or controlled by the United States Department of Interior Bureau of Land Management (“BLM”). IMC US has also acquired 100% of the Mineral Rights on an additional 1,120 acres, 50% of the Mineral Rights on 7,400 acres, and 25% of the Mineral Rights on 160 acres. IMC US also holds 6 mineral exploration permits covering approximately 3,507 acres at one project in the State of Arizona.

Nature of Business and Operations – Cont’d

On December 18, 2008, the Company incorporated a second wholly owned subsidiary in the State of Delaware under its former name, “Silver Reserve Corp.” (referred to herein as “SRC”). The Company assigned all fourteen of its silver/base metal projects in Nevada to SRC. As of June 1, 2010, SRC terminated its interests in one of the projects. As of the date of the financial statements, the remaining thirteen claim groups contain 579 mineral claims covering approximately 11,921 acres on BLM land and 14 patented claims and 8 leased patented claims covering approximately 403 acres. SRC also has a milling facility located in Mina, Nevada on six mill site claims covering 30 acres.

In December 2009, the Company further expanded its limestone exploration activities by acquiring CIC, a Canadian corporation, as its wholly owned subsidiary, which controlled 95 limestone quarry leases issued by the province of Manitoba, Canada, covering 6,090 hectares (15,049 acres). The Company acquired CIC pursuant to a Share Exchange Agreement (the “CIC Agreement”) between the Company, CIC and Todd D. Montgomery dated as of December 15, 2009. Mr. Montgomery was the sole shareholder of CIC. Because Mr. Montgomery was also the Company’s Chief Executive Officer and a member of its Board of Directors, the CIC Agreement was approved by the disinterested members of the Company’s Board of Directors on November 27, 2009, after obtaining an independent appraisal and market study for the properties. Under the terms of the CIC Agreement, the Company acquired all of the issued and outstanding stock of CIC in exchange for 1,021,777 shares of common stock of the Company (a “Common Share” or “Common Shares”). The CIC Agreement closed on February 9, 2010. In January 2011 and May 2011, the Company decided to forfeit a total of 60 quarry leases covering approximately 3,709 hectares (9,166 acres). As of the date of the financial statements, CIC controls 35 quarry leases, covering approximately 2,381 hectares (5,883 acres). Also see Note 8, Mineral Property Interests.

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

Going Concern

The Company is in the exploration stage and has not yet realized revenues from its planned operations. The Company has incurred a cumulative loss of $21,489,355 from inception to September 30, 2012. The Company's financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company has no source of operating revenue and expects to incur significant expenses before establishing operating revenue. Due to continuing operating losses and cash outflows from continuing operations, the Company’s continuation as a going concern is dependent upon its ability to obtain adequate financing and to reach profitable levels of operation. In the event that the Company is unable to raise additional capital, as to which there is no assurance, the Company will not be able to continue doing business. The Company’s future success is dependent upon its continued ability to raise sufficient capital, not only to finance its operating expenses, but to continue its exploration activities and its assessments of the commercial viability of its claims. There is no assurance that such capital will be available on acceptable terms, if at all, or that the Company will attain profitable levels of operation.

The Company has funded operations primarily through the issuance of capital stock, convertible debentures and redeemable preferred stock. Prior to December 2011 the Company received net proceeds of $12,718,365 pursuant to the issuance of such securities. In December 2011 the Company completed a public offering in Canada of its common stock for net proceeds of $2,215,399. Management's plan is to continue raising additional funds through future equity or debt financing until it achieves profitable operations from production of minerals or metals on its properties, if feasible.

These financial statements have been prepared in accordance with United States generally accepted accounting principles applicable to a going concern. Accordingly, they do not give effect to adjustments that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and satisfy its liabilities and commitments in other than the normal course of business and at amounts different from those in the accompanying financial statements.

Fair Value of Financial Instruments

The fair values of financial assets measured at the balance sheet date of September 30, 2012 were as follows:

Restricted Cash

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

Reclamation Deposit

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

Plant and Equipment, Net

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

During the three months ended September 30, 2012, the Company recorded depreciation expense of $26,779. During the twelve months ended June 30, 2012, the Company recorded depreciation expense of $125,401.

Mineral Property Interests

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

Mineral Property Interests – Cont’d

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

Amounts recognized as assets as of the acquisition date:

Mineral Property Interests, being quarry leases in the province of Manitoba, Canada at fair value (CDN $ 550,000)

Fair value as of the acquisition date of 1,021,777 common shares of the Company issued in exchange for all issued and outstanding shares of CIC

Gain on bargain purchase, being the excess of the fair value of net assets acquired over the purchase price, and recognized as Other Income in the Statements of Operations and Comprehensive Loss

Deferred Revenue, Marketable Securities and Accumulated Other Comprehensive Loss

On February 25, 2011, SRC entered into an option and joint venture agreement (the “Option Agreement”) with International Millennium Mining Inc. (“IMMI”), a wholly owned subsidiary of International Millennium Mining Corp. (“IMMC”), to sell an 85% interest in SRC’s NL Extension Project Claim Group (the “NL Project”) for total consideration of $350,000 cash and 1,925,000 shares of IMMC’s common stock (the “Consideration”). The NL Project consists of 18 mineral claims located in Esmeralda County, Nevada, approximately 6 miles southwest of Silver Peak, Nevada on Highway 47. Under the terms of the Option Agreement, the Consideration is payable over a five-year period that ends on September 15, 2015, with IMMI’s interest in the NL Project vesting at the end of such period. As of June 30, 2012, the Company had received Consideration of $193,593, consisting of 575,000 shares of IMMC with a fair market value of $133,593 that is recorded as Marketable Securities in the Company’s Consolidated Balance Sheets and $60,000 in cash. On September 6, 2012, the Company received Consideration of $71,367 consisting of 300,000 shares of IMMC’s common stock with a fair market value of $21,367 and $50,000 in cash. Because IMMI’s interest in the NL Project vests at the end of the five-year period, this Consideration is accounted for in the Consolidated Balance Sheets as Deferred Revenue, a non-current liability. The unrealized loss of $92,663 arising from the reduction in the market value of the Company’s shares of IMMC’s common stock as of September 30, 2012, is accounted for in the Stockholders’ Equity section of the Consolidated Balance Sheets as Accumulated Other Comprehensive Loss.

Balance as of June 30, 2012

Consideration received during the period ending September 30, 2012

Change in market value of securities for the period ending September 30, 2012

Balance as of September 30, 2012

Asset Retirement Obligation

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

Asset Retirement Obligation – Cont’d

At the end of each reporting period, ARO’s are equal to the present value of all estimated future costs required to remediate any ground disturbances that exist as of the end of the period, using discount rates applicable at the time of initial recognition of each component of the liability. A liability for an asset retirement obligation may be incurred over more than one reporting period if the events that create the obligation occur over more than one reporting period. Any incremental liability incurred in a subsequent reporting period shall be considered to be an additional layer of the original liability. Each layer shall be initially measured at fair value. Included in this liability are the costs of reclamation and monitoring and maintenance costs. A discount rate of 10% was determined to be applicable. The Company recorded accretion expense of $2,244 for the year ended June 30, 2012, and $618 for the three-month period ended September 30, 2012. The Company’s entire ARO as of June 30, 2011, June 30, 2012 and September 30, 2012 relates to the Company’s Blue Nose project.

Issuance of Common Shares and Warrants

Three-month period ended September 30, 2012

There were no securities issued during this period.

Year ended June 30, 2012

The Company held an annual meeting of shareholders on July 29, 2011. At the meeting, among other actions, the shareholders of the Company approved and adopted an amendment increasing the number of authorized Common Shares from 100,000,000 to 500,000,000. On August 1, 2011 the Company filed with the Secretary of State of the State of Delaware a certificate of amendment to the Company’s certificate of incorporation reflecting the increase in the number of authorized Common Shares approved by shareholders on July 29, 2011.

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

On December 16, 2011, the Company completed the sale of 26,000,000 Common Shares to the public in Canada at a price of $0.096 (CDN$0.10) per share to raise gross proceeds of $2,507,180 (CDN$2,600,000). The shares were sold pursuant to a long form prospectus filed in the Canadian provinces of Alberta, Saskatchewan, British Columbia and Ontario. PI Financial Corp. (“PI Financial”) acted as lead agent and received a corporate finance fee of $14,464 (CDN$15,000), was reimbursed $127,529 (CDN$132,250) for its expenses, was paid cash commissions of $20,236 (CDN$20,985) and received non-transferable Agent's Warrants valued at $14,644 entitling PI Financial to acquire 209,850 Common Shares at a price of $0.096 (CDN$0.10) per share exercisable for 24 months. The fair value of the Agent’s Warrants was determined using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 1.63%, expected dividend yield of 0%, annualized volatility of 142.45% and expected life of two years. These Agent’s Warrants were not granted pursuant to the Company’s 2006 Stock Option Plan or the Company’s 2011 Stock Option Plan. In connection with the offering, in addition to payments made to PI Financial, the Company incurred legal and other direct expenses, which resulted in net proceeds from the offering of $2,215,399.

The foregoing sale of securities was made entirely outside the United States pursuant to an exemption afforded by Regulation S promulgated under the Securities Act of 1933, as amended. Following the sale of our securities in Canada, the Company's Common Shares were listed for trading on the TSX Venture Exchange under the symbols “IFM” and “IFM.S.” The Company's Common Shares continue to be traded in the United States on the OTC Bulletin Board under the symbol “IFAM.”

Stock Based Compensation

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

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

Stock Based Compensation – Cont’d

Three-month period ended September 30, 2012

No options were granted pursuant to the 2011 Stock Option Plan during the three-month period ended September 30, 2012.

On August 16, 2012, 350,000 options issued in accordance with the Company’s 2006 Stock Option Plan expired.

For the three-month period ended September 30, 2012, the Company recognized in the financial statements, stock-based compensation costs as per the following details. The fair value of each option used for the purpose of estimating the stock compensation is based on the grant date using the Black-Scholes option pricing model with the following weighted average assumptions:

The expected term calculation is based upon the expected term the option is to be held, which is the full term of the option. The risk-free interest rate is based upon the U.S. Treasury yield in effect at the time of grant for an instrument with a maturity that is commensurate with the expected term of the stock options. The dividend yield of zero is based on the fact that the Company has never paid cash dividends on our common stock and has no present intention to pay cash dividends. The expected forfeiture rate of 0% is based on the vesting of stock options in a short period of time.

Commitments and Contingencies

On August 1, 2006, the Company acquired the Pansy Lee Claims Group from Anglo Gold Mining Inc. in exchange for 1,850,000 Common Shares pursuant to an Asset Purchase Agreement dated August 1, 2006 (the “Pansy Lee Purchase Agreement”). Pursuant to the Pansy Lee Purchase Agreement, a 2% net smelter royalty pertains to 8 of the 30 claims in this group. In the event that any one or more of the 8 claims becomes a producing claim, our revenue is subject to a 2% net smelter return royalty where net smelter returns are based upon gross revenue less deductions as provided in the Pansy Lee Purchase Agreement.

The Company obtained 25 mineral claims (the “Option Claims”), located in Elko County, Nevada pursuant to an option agreement (the “Option Agreement”) dated as of May 1, 2008 (the “Date of Closing”) with Nevada Eagle Resources, LLC and Steve Sutherland (together, the “Optionees”). The provisions of the Option Agreement included, among others, payments of specified annual amounts ranging from $10,000 to $80,000 by the Company to the Optionees over a period of ten years. Effective June 1, 2010, the Company and the Optionees agreed to terminate the Company’s interests in the Option Claims pursuant to (1) payment by the Company of $8,750 to each of the Optionees, (2) performance by the Company of such reclamation and remediation as required to discharge the surface management bond posted by the Company pursuant to a Notice of Intent filed with the BLM prior to undertaking exploration activity on the Option Claims, and (3) conveyance by the Company to Nevada Eagle Resources, LLC of the 124 mineral claims staked by the Company after the Date of Closing that are within the Area of Interest described in the Option Agreement. As of September 30, 2012, the undertakings described in (1) and (3) above have been completed and the reclamation and remediation described in (2) above are in progress. The 25 Option Claims together with 124 mineral claims staked by the Company have been referred to by the Company as the “Medicine Claim Group.”

Effective as of June 23, 2008, the Company appointed Mason Douglas as the President of the Company. Mr. Douglas is also a director of the Company. In connection with the appointment, the Company entered into a consulting services agreement with a Canadian corporation that is controlled by Mr. Douglas (the “Consulting Agreement”). The Consulting Agreement has a term of one year and is then automatically renewable. Either party may terminate the Consulting Agreement upon 90 days notice to the other party. According to the terms of the Consulting Agreement as amended effective March 1, 2012, the Company will pay a fee of $10,417 per month and reimburse related business expenses. The Consulting Agreement permits Mr. Douglas to fulfill his duties for the Company from his office in Canada. Mr. Douglas does not receive a salary from the Company. Also see Note 15, Subsequent Events.

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

Commitments and Contingencies – Cont’d

Commitments and Contingencies – Cont’d

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

Effective July 1, 2010, the Company entered into an employment agreement with an individual to provide business and administrative services. The employment agreement has a term of one year and is automatically renewable thereafter. Either party may terminate the employment agreement upon 60 days notice. According to the terms of the employment agreement as amended effective March 1, 2012, the Company will pay the individual no less than $8,333 per month and reimburse related business expenses.

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

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

On September 1, 2011, SRC engaged Tetra Tech, Inc. to complete the exploration permitting activities for its Silver Queen property near Silver Peak, Nevada. The Company is to authorize each phase of work before the work proceeds. The estimated total consideration to be paid under the agreement is $68,900. As of September 30, 2012, the Company had recorded total expenses of $15,823 for this contract.

Commitments and Contingencies – Cont’d

Effective February 29, 2012, SRC entered into a mineral lease agreement (the “Gumaskas Agreement”) with Joseph W Gumaskas (“Gumaskas”) to lease a patented claim covering approximately 10 acres (the “Claim”) in Mineral County, Nevada. Unless terminated earlier by SRC, the term of the Gumaskas Agreement is ten years and will automatically renew on the same terms and conditions for additional five-year periods. The Gumaskas Agreement requires SRC to pay Gumaskas advance minimum royalty payments of $500 annually. In the event that the Claim becomes a producing claim, SRC will pay Gumaskas a 3% royalty based upon gross revenue less deductions as provided in the Gumaskas Agreement. SRC may terminate the Gumaskas Agreement at any time by giving 60 days advance written notice to Gumaskas.

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

Effective April 1, 2012, SRC entered into a mineral lease agreement (the “Saunders Agreement”) with Charles and Barbara Saunders (the “Lessors”) to lease patented claims covering approximately 37 acres (the “Claims”) in Esmeralda County, Nevada. Unless terminated earlier by SRC, the term of the Saunders Agreement is ten years and will automatically renew on the same terms and conditions for additional five-year periods. The Saunders Agreement requires SRC to pay the Lessors advance minimum royalty payments of $2,000 annually. In the event that the Claims become producing claims, SRC will pay the Lessors a 3% royalty based upon gross revenue less deductions as provided in the Saunders Agreement. SRC may terminate the Saunders Agreement at any time by giving 60 days advance written notice to the Lessors.

Commitments and Contingencies – Cont’d

On May 15, 2012, SRC entered into an Exploration License with Option to Purchase (the “Buhrman Agreement”) with Ralph L. Buhrman and Jacqueline Buhrman (together, the “Owner”) for three patented claims, covering approximately 59 acres (the “Property”) situated in Mineral County, Nevada. Under the terms of the Buhrman Agreement, SRC was granted the exclusive right and option to enter and examine the Property (the “Exploration License”) in consideration of a $30,000 payment to the Owner (the License Payment”). During the term of the Exploration License, SRC has the exclusive right to undertake geological, geophysical, and geochemical examinations of the Property; to sample the Property by means of pits, trenches, and drilling; and to take bulk samples from the Property for the purpose of conducting metallurgical and leaching tests. However, SRC may not commence development or mining activities on the Property unless it exercises the Purchase Option as defined below. SRC will be responsible for reclamation of its pits, trenches, drill sites, and other such disturbances arising out of its activities on the Property. The Exploration License has an initial one-year term beginning on May 1, 2012 (the “Effective Date”) and ending on April 30, 2013. SRC has the right to extend the Exploration License for one additional period of one year provided SRC makes an additional License Payment of $30,000 in advance for such extension. SRC was also granted exclusive right and option to purchase the Owner’s ownership interest in the Property (the “Purchase Option”) for the sum of $90,000 less all License Payments previously made. If SRC exercises the Purchase Option, SRC will also pay the Owner a two percent (2%) royalty based upon gross revenues less deductions as defined by the Buhrman Agreement, and SRC will also have the exclusive right and option to purchase such royalty at any time for the sum of $1,000,000 less any payments previously made by SRC to the Owner pursuant to such royalty. SRC may terminate the Buhrman Agreement at any time by giving 30 days’ notice in writing to the Owner.

On July 26, 2012, the Company engaged Harris Exploration Drilling and Associates Inc. to conduct professional drilling services and related activities at SRC’s Kope Scheelite project at an estimated cost of $175,000. As of September 30, 2012, the Company had paid $79,429.69 for this contract that includes a deposit of $15,000.00 to be credited to the Company at the end of the project.

The Company has entered into operating leases for its office space and certain office furniture and equipment. Rent payments associated with those leases for the three-month periods ended September 30, 2012, and September 30, 2011, were $5,899 and $7,995, respectively. As of September 30, 2012, the Company’s estimated future minimum cash payments under non-cancelable operating leases for the years ending June 30, 2013, June 30, 2014, and June 30, 2015, are $19,491, $11,691, and $0, respectively.

Maintaining Claims in Good Standing

The Company is required to pay to the BLM on or before September 1 ^st of each year, a fee in the amount of $140 per mineral claim held by the Company. The total amount paid in August 2012, was $155,400 for 1,110 claims held by the Company at that date. The BLM fee for the 18 NL Project claims held by the Company were paid by IMMI pursuant to the IMMI Option Agreement described above.

Commitments and Contingencies – Cont’d

The Company is also required to pay on or before November 1 ^st of each year, annual fees to counties in Nevada in which the claims are held. In October 2012, the Company paid $11,686 to seven counties in Nevada for annual claims-related fees.

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

The Company holds certain mineral exploration permits issued by the State of Arizona in 2010, which have a term of one year from the date of issuance. The permits may be renewed for up to four additional one-year terms for a total of five years and give the holder thereof an exclusive right to explore for minerals within the land covered by such permit and to apply for mineral leases to such land. The holder of a permit may remove from the land only the amount of material required for sampling and testing and is responsible for any damage or destruction caused by the holder’s exploration activities. The holder of a permit is entitled to ingress and egress to the covered site along routes approved by the Arizona State Land Department. IMC US has posted a bond required by the state of Arizona to back any reclamation required as a result of exploration activities performed. The permit is renewable if the holder has expended not less than $10.00 per acre during each of the first two year-long terms and $20.00 per acre during each of the next three year-long terms. Each permit fee is $500 per year plus $2.00 per acre for the first two years and $1.00 per acre per year for the following three years. Upon termination of a mineral exploration permit, the state of Arizona is entitled to the information collected by the permit holder. In the event that a permit holder discovers a valuable mineral deposit, the permit holder may apply to the Arizona State Land Department for a mineral lease having an initial term of 20 years and then renewable for an additional 20-year term. A permit holder shall be the preferred recipient of the mineral lease, provided that all applicable requirements are met. A mineral lease entitles the lessee to develop and establish a mine on the leased premises, provided that all necessary approvals of a mine plan are obtained.

Each of the Company’s quarry leases located in Manitoba, Canada is renewable annually upon payment of rent to the province of Manitoba in the amount of CDN$24 per hectare or fraction thereof. During the fiscal year ended June 30, 2012, the Company paid CDN$57,504 in rent for these leases.

Related Party Transactions

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

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

Three-months ended September 30, 2012

A corporation owned and operated by the Company’s President who is also a member of the Company’s Board of Directors, received $31,251 for the President’s services.

Related Party Transactions – Cont’d

A law firm, a partner of which is also a member of the Company’s Board of Directors, received $3,925 for legal services rendered and expenses incurred on behalf of the Company.

The Company’s Corporate Secretary received $14,000 for administrative services provided to the Company.

Three-months ended September 30, 2011

A corporation owned and operated by the Company’s President who is also a member of the Company’s Board of Directors, received $25,500 for the President’s services.

The Company recorded expenses of $20,000 for legal services rendered and expenses incurred on behalf of the Company by a law firm, a partner of which is also a member of the Company’s Board of Directors.

The Company’s Chief Financial Officer received $4,722 for consulting services provided to the Company.

The Company’s Corporate Secretary received $13,500 for administrative services provided to the Company.

The Company recorded interest expense of $416 pursuant to a promissory note issued to a corporation that is owned and controlled by the Company’s Chief Executive Officer who is also a member of its Board of Directors.

Subsequent Events

Effective October 1, 2012 the Company appointed Mason Douglas as its Chief Executive Officer. Mr. Douglas is also the President and a Director of the Company. In connection with the appointment, the consulting services agreement between the Company and a Canadian corporation that is controlled by Mr. Douglas was amended to provide annual compensation by the Company of $155,000.00, payable in 12 equal monthly installments. Also effective October 1, 2012 the Company accepted the resignation of Todd D. Montgomery as its Chief Executive Officer. Mr. Montgomery will continue to serve as a Director of the Company.

On October 8, 2012 the Company granted options to an employee to purchase up to 125,000 Common Shares at an exercise price of CDN$0.10 per share. These options were granted in accordance with the terms of the Company’s 2011 Stock Option Plan and vest at a rate of one twelfth (1/12) each month until fully vested. The options granted have a term of 10 years.

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

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

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

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

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

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

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

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

WE WILL NEED TO RAISE ADDITIONAL FINANCING TO COMPLETE FURTHER EXPLORATION.

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

WE HAVE RECEIVED A “GOING CONCERN” COMMENT FROM OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, WHICH MAY NEGATIVELY IMPACT OUR BUSINESS.

Due to the fact that we are an exploration stage company and have no established source of revenues, the report from Schwartz Levitsky Feldman llp, our independent registered public accounting firm, regarding our consolidated financial statements for the fiscal year ended June 30, 2012 includes an explanatory paragraph stating that the financial statements were prepared assuming we will continue as a going concern. The existence of the “going concern” comment in our auditor’s report may make it more difficult for us to obtain additional financing. In the event that we are unable to raise additional capital, as to which there can be no assurance, we may not be able to continue our operations.

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

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

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

We have a history of operating losses, expect to continue to incur losses, and may never be profitable. Further, we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred losses totaling $21,489,355 from inception to September 30, 2012, and incurred losses of $668,538 during the three-month period ended September 30, 2012. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: (i) the costs to acquire additional mineral exploration claims are more than we currently anticipate; or (ii) exploration and or future potential mining costs for additional claims increase beyond our expectations.

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

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

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

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

OUR BUSINESS IS AFFECTED BY CHANGES IN COMMODITY PRICES.

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

THE COMPANY COULD ENCOUNTER REGULATORY AND PERMITTING DELAYS.

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

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

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

CURRENT LEVELS OF MARKET VOLATILITY COULD HAVE ADVERSE IMPACTS.

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

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

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

In addition, the following are incorporated by reference:

Current Report on Form 8-K “Item 5.02: Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers: Compensatory Arrangements of Certain Officers”, dated October 1, 2012