Bunker Hill Mining Corp. - Quarter Report: 2014 December (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended December 31, 2014

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

Commission File Number: 333-150028

LIBERTY SILVER CORP.

 (Exact name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  

[ X ] Yes   [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [ X ] Yes   [ ] No

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

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Indicate by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). [ ]Yes [X ] No

As of February 13, 2014 the Issuer had 12,354,010 shares of common stock issued and outstanding.

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PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

The financial statements of Liberty Silver Corp., (“Liberty Silver”, the “Company”, or the “Registrant”) a Nevada corporation, included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.  Because certain information and notes normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America were condensed or omitted pursuant to such rules and regulations, these financial statements should be read in conjunction with the financial statements and notes thereto included in the audited financial statements of the Company in the Company's Form 10-K for the fiscal year ended June 30, 2014, and all amendments thereto.

LIBERTY SILVER CORP.

(AN EXPLORATION STAGE COMPANY)

INTERIM UNAUDITED FINANCIAL STATEMENTS

PERIOD ENDED DECEMBER 31, 2014

INDEX TO FINANCIAL STATEMENTS:	Page
Balance Sheets	4
Statements of Operations	5
Statements of Cash Flows	6-7
Notes to Interim Unaudited Financial Statements	8-13

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Liberty Silver Corp.

(An Exploration Stage Company)

Notes to Interim Unaudited Financial Statements

For the Six Months Ended December 31, 2014

Note 1 – Basis of Presentation and Going Concern

The accompanying interim unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, stockholders’ equity or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation.  The interim unaudited financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the annual audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the year ended June 30, 2014.  The interim results for the period ended December 31, 2014 are not necessarily indicative of the results for the full fiscal year.  The interim unaudited financial statements are presented in USD, which is the functional currency.

These financial statements have been prepared on a going concern basis. The Company has incurred losses since inception resulting in an accumulated deficit of $12,452,053 and further losses are anticipated in the development of its business.  The Company does not have sufficient working capital needed to meet its current fiscal obligations.  In order to continue to meet its fiscal obligations in the current fiscal year and beyond, the Company must seek additional financing.  This raises substantial doubt about the Company’s ability to continue as a going concern.  Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

 

Management is considering various financing alternatives including, but not limited to, merger and acquisition activity, raising capital through the equity markets and debt financing. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

The ability of the Company to emerge from the exploration stage is dependent upon, among other things, obtaining additional financing to continue operations, explore and develop the mineral properties and the discovery, development, and sale of reserves.

These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Note 2 – Nature of Operations

Liberty Silver Corp. was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp.  Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp. The Company’s registered office is located at 1802 N. Carson Street, Suite 212, Carson City Nevada 89701, and its head office is located at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J 2T3, and its telephone number is 888-749-4916. As of the date of this Form 10-Q, the Company has no subsidiaries.

The Company was incorporated for the purpose of engaging in mineral exploration activities.  On March 29, 2010, the Company entered into an Exploration Earn-In Agreement relating to the Trinity Project located in Pershing County, Nevada.  The Company is currently engaged in the exploration of the Trinity Project, and has not yet commenced development stage activities, however, the Company intends to engage in efforts to develop the Trinity Project in the future.  Subject to securing adequate financing, the plan of operation for the fiscal year ending June 30, 2015 is to conduct additional mineral exploration activities at the Trinity Silver property.  Operations at the Trinity Project will consist of (i) an effort to expand the known mineralized material through drilling, (ii) permitting for operation, if deemed economically viable, (iii) metallurgical studies aimed at enhancing the recovery of the silver and by-product lead and zinc, (iv)

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engineering design related to potential construction of a new mine, and (v) complete feasibility studies relating to possible re-opening of the historic mine.  Exploration of the property would be conducted simultaneously with the mine development in order to locate additional mineralized materials.

Note 3 - Mineral Property

    

The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement.  On March 29, 2010, the Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada company beneficially owned by another Nevada company AuEx Ventures, Inc.  AuEx, Inc. held an exclusive interest in the Trinity Project by way of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who owns or leases the various unpatented mining claims and portions of private land comprising the Trinity Project.  As part of a restructuring transaction by AuEx Ventures, Inc., another Nevada company Renaissance Exploration Inc. (“Renaissance”) was spun out, and on July 1, 2010 AuEx, Inc. assigned all of its interest in the Trinity Project and the Earn-In Agreement to Renaissance, who currently holds a 100% leasehold interest in the Trinity Project.  The Minerals Lease and Sublease grants to Newmont, a right of first offer on any transfer of AuEx, Inc.’s interests in the Trinity Project to any non-affiliate of AuEx, Inc., and also gives Newmont a right to either enter into a joint venture agreement covering the Trinity Project and any other real property interests that AuEx, Inc. holds or acquires within the Trinity Project, or receive a royalty on all mineral production from such properties.  Currently the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights from AuEx, Inc.  The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70% undivided interest in rights of Renaissance in the Trinity Project (the “70% Interest”).

Under the Earn-In Agreement, the Company may earn-in the 70% Interest in the Trinity Project during a 6-year period in consideration of (1) a signing payment of $25,000, which has been made, (2) an expenditure of a cumulative total of $5,000,000 in exploration and development expenses on the Trinity Project by March 29, 2016, including a minimum of $500,000 which must be expended within one year from the effective date of the Agreement, and (3) completion of a bankable feasibility study on the Trinity Project on or before the 7^th anniversary date of the Agreement.  Item (1) has been completed by the Company, and the Company has satisfied item (2), and has reported its compliance as of March 29, 2013, which is the end of the third year from the inception of the Earn-in Agreement.

On October 15, 2012, the Company entered into and closed a Purchase Agreement (the “Purchase Agreement”) with Primus Resources, L.C. and James A. Freeman (collectively “Seller”) to acquire unpatented mining claims, Nevada BLM Serial No. 799907, 799908, 799909, 799910, and 799911 covering approximately 100 acres of property located adjacent to the former Trinity Silver mine on the Company’s Trinity Project (the “Hi Ho Properties”).  The Hi Ho Properties were previously the only acreage not controlled by the Company or its joint venture partner Renaissance Exploration Inc. in the Trinity Project.  Under the terms of the Purchase Agreement, the Company provided cash consideration of US$250,000 and issued 2,583,333 restricted shares of common stock of the Company to Seller.  In addition the Seller was granted a 2% net smelter royalty on future production from the Hi Ho Properties pursuant to the terms of a Deed With Reservation of Royalty Hi Ho Silver Claims.

In conjunction with the entry into the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Seller, pursuant to which the Company agreed to file a registration statement on Form S-1 with the United States Securities and Exchange Commission, within thirty (30) days of the closing, which registers the common stock issued to the Seller pursuant to the Purchase Agreement. Pursuant to the Registration Rights Agreement the Company was obliged to pay Seller additional consideration as follows:

·  if the registration statement was declared effective by the United States Securities Exchange Commission by March 1, 2013, Liberty Silver would issue an additional 277,778 Liberty Silver common shares to Primus, thereby increasing the total aggregate number of shares issued to 2,861,111 shares; or

·  if the registration statement was not declared effective by the United States Securities Exchange Commission (“SEC”) by March 1, 2013, Liberty Silver would pay Primus US$200,000.  As well, if the five-day weighted average trading price of Liberty Silver’s common shares on the Toronto Stock Exchange as of March 1, 2013 (the “Market Price”) exceeded US$0.72 per share, Liberty Silver would have issued an additional number of Liberty Silver common shares to Primus equal to (a) 277,778 less (b) US$200,000 divided by the Market Price.

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On March 1, 2013, the SEC declared the Company’s registration statement, filed on Form S-1, effective and as such, the Company issued an additional 277,778 Liberty Silver common shares to Primus, pursuant to the Registration Rights Agreement.  

The Trinity Project consists of a total of approximately 10,020 acres, including 5,676 acres of fee land and 253 unpatented mining claims.

The Company has completed some financing transactions, and continues to pursue additional financing opportunities in order to obtain the capital needed to fulfill its obligations under the terms of the Earn-In Agreement.  There has been no mining of resources to date.

During the interim period ended December 31, 2013, the Company had incurred approximately $277,532 in exploration expenditures, which were reported under various line items on the statement of operations.  

During the interim period ended December 31, 2014, the Company had incurred approximately $227,626 in exploration expenditures, which were reported under various line items on the statement of operations.  

Note 4 – Convertible Loan Payable

On October 17, 2014, the Company amended and restated its agreement in relation to an existing $1,210,000 principal amount secured loan facility (the “Original Loan”) made available by BG Capital Group Ltd. (“BGCG”).  Under the terms of the revised agreement, BGCG has made available to the Company a committed non-revolving term credit facility in the principal amount of $1,250,000 (the “New Loan”), which shall initially bear interest at a rate of 11% per annum and which shall be secured by a charge on all of the assets of the Company.  The Company has also repaid the indebtedness to BGCG under the Original Loan by converting the outstanding, aggregate total sum of the principal amount of the Original Loan, together with all accrued and unpaid interest thereon, being $1,248,653.70 (the “Debt”), into 99,892,296 common shares of the Company (“Common Shares”) at a price of $0.0125 per Common Share, in full satisfaction of the Debt under the Original Loan.

The New Loan consists of up to $1,250,000 of new credit facilities, of which $25,000 had been advanced to the Company pursuant to a promissory note, which was superseded by the New Loan and became part of the first advance under the New Loan in the aggregate amount of $350,000.  The Company intends to use the funds from the New Loan for drilling, metallurgical work, environmental permitting, surveying and other related exploration expenses pertaining to its Trinity Project as well as land taxes and related fees, and for general working capital purposes.

The key terms of the New Loan are as follows:

·

a total amount of up to $1,250,000 is being advanced to Liberty, of which $25,000 was previously advanced by way of promissory notes subsequent to the signing of the letter of intent relating to the New Loan (which promissory note is superseded by the New Loan), $325,000 was advanced upon closing of the New Loan (the “Closing Date”), $150,000 to be advanced on any date that is mutually agreeable between BGCG and the Company, between the Closing Date and November 30, 2014, or failing such agreement, on November 30, 2014, $250,000 on December 31, 2014, $250,000 on March 31, 2015, and $250,000 on June 30, 2015;

·

the outstanding principal amount bears interest at 11% per annum from date of advance and becomes due and payable in its entirety one year following the Closing Date (the “Maturity Date”).  The Company has the option to extend the Maturity Date by six months, with interest payable at 15% per annum accruing on the outstanding principal amount during such extension period;

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the New Loan is secured by a charge on all of the assets of the Company; and

·

BGCG, at any time up to one business day prior to the Maturity Date, at its sole option, shall be entitled to convert all or any portion of the outstanding principal amount of the New Loan advanced to Liberty (including all deferred interest), together with all accrued interest, into Common Shares, on the basis of $0.0125 per Common Share.  The conversion rights are subject to the Company having sufficient authorized capital available to satisfy the exercise of the conversion rights from time to time.  To the extent there is not sufficient authorized capital at any time to

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permit the full exercise of all conversion rights available to BGCG at such time, the Company shall take all reasonable commercial efforts to hold, as expeditiously as possible, a shareholders’ meeting to approve the necessary increase to the authorized capital in order that the conversion rights available to BGCG may be exercised to its fullest extent.

The carrying value of the conversion option equity component of the convertible loan has been determined to be nil and the carrying value of the liability component is $750,000.   The effective interest rate on the liability component of the convertible loan is 11%.

The lender pursuant to the New Loan is BGCG.  Immediately following the Closing Date, BGCG and certain of its related parties owned, directly and indirectly, 129,861,249 Common Shares, which represented approximately 70.1% of the Company’s 185,309,575 issued and outstanding Common Shares on the Closing Date.  Other than pursuant to the New Loan, the Company does not have any contractual or other relationship with BGCG.

Note 5 – Capital Stock and Warrants

As discussed in Note 7, on January 30, 2015, subsequent to the end of the period, the Company completed a share consolidation of its common shares on the basis of one (1) new post-consolidation common share for every 15 pre-consolidated common shares.  The number of authorized shares was not reduced as a result of this share consolidation.  Except as specifically stated herein, all references in this report to the number of shares, options and/or warrants issued and outstanding, and to the exercise prices of outstanding options and warrants, are to pre-consolidation amounts.  

Authorized

The total authorized capital is as follows:

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300,000,000 common shares with a par value of $0.001 per common share; and

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10,000,000 preferred shares with a par value of $0.001 per preferred share

Issued and outstanding

On June 30, 2014, the Company reached an agreement with arm’s-length creditors to settle indebtedness in the aggregate amount of $226,000 by issuing 732,000 common shares, including 382,000 common shares at a price of $0.50 per share and 350,000 common shares at a price of $0.10 per share.

On September 30, 2014, the Company issued 523,333 common shares to employees of the Company, at a price of $0.50 per share, in settlement of arrears compensation obligations of $261,666.

On October 17, 2014, the Company issued 99,892,296 common shares, at a price of $0.0125 per share, in settlement of a secured loan facility, which included any unpaid and accrued interest, totaling $1,248,654.  In conjunction with the issuance of these common shares, the Company incurred $40,400 in share issuance costs.

On December 31, 2014, the Company issued 170,000 common shares to employees of the Company, at a price of $0.50 per share, in settlement of arrears compensation obligations of $85,000.

For the above share issuances, the shares were not registered under the Securities Act of 1933 in reliance upon the exemptions from registration contained in Regulation S of the Securities Act of 1933.  No underwriters were used, nor were any brokerage commissions paid in connection with the above share issuances.

Warrants

On November 13, 2013, 6,500,000 common share purchase warrants were terminated as a condition of the Loan with BGCG.  The warrants were originally issued pursuant to a private placement offering of Subscription Receipts, which Subscription Receipts were converted in to Units, without additional consideration, effective December 19, 2011.  The Units were comprised of one common share and one common share purchase warrant.  The warrants were exercisable at a price of $0.65 per common share.

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On December 31, 2013, 2,607,500 common share purchase warrants expired.  The warrants were originally issued pursuant to a private placement offering of 2,627,500 Units on December 19, 2011.  The Units were comprised of one common share and one common share purchase warrant.  The warrants were exercisable at a price of $0.65 per common share.

On April 1, 2014, 300,000 common share purchase warrants expired.  The warrants were originally issued in connection with notes payable issued to related parties on April 1, 2011.  The warrants were exercisable at $0.55 per common share.

As at December 31, 2014, the aggregate weighted average intrinsic value of the 200,000 warrants that are outstanding was $0, and the weighted average grant date fair value of each warrant outstanding was CAD $0.75.

Stock Options

Effective December 19, 2013, 3,900,000 vested stock options were cancelled, and 150,000 non-vested stock options were forfeited.  Further, the Company granted 200,000 stock options at an exercise price of $0.10 each.  

Effective December 21, 2013, 300,000 vested stock options had expired.

On April 8, 2014, the Company granted a total of 5,000,000 stock options to purchase common shares to directors, officers and an employee of the Company, at an exercise price of $0.10 per share and for a term of 5 years.

On November 14, 2014, the vested and non-vested portion of the 6,000,000 stock options granted to purchase common shares by directors, officers and employees were cancelled or forfeited.

Stock based compensation expense, resulting from the vesting of stock options, for the six months ended December 31, 2014 was $115,747 (2013 - $1,082,980).  Stock based compensation expense for the three months ended December 31, 2014 was $69,672 (2013 - $943,298).  The expense was calculated using the Black-Scholes valuation model.

As at December 31, 2014 there were 700,000 stock options outstanding, exercisable at $0.75 per share, and expiring on April 19, 2016.

Note 6 – Commitments and Contingencies

Effective November 1, 2011, and terminating on April 28, 2016, the Company entered into a sub-lease agreement for the lease of premises in Toronto, Ontario, Canada, for a term of 54 months.  The Company has its head office at these premises, which is approximately 1,400 square feet.  The annual base rent commitment for the Toronto head office space is $41,457 (CAD $48,094).

Effective February 8, 2012, the Company entered into a lease agreement for the lease of premises in Sparks, Nevada, USA, for a term of 12 months, and terminating on January 31, 2013.  The lease agreement was amended such that the term was extended for a further 24 months, and terminating on January 31, 2015, and further amended such that the term was extended for a further 12 months, and terminating on January 31, 2016.  The Company has its field office at these premises, which is approximately 5,500 square feet.  The annual base rent commitment for the Sparks field office space is $30,624 for the period from February 1, 2014 to January 31, 2015, and $30,624 for the period from February 1, 2015 to February 1, 2016.

As at December 31, 2014, the Company had a commitment, for the above noted leases, of $91,004 remaining.

The following table outlines the remaining lease commitment at the end of the next five fiscal years based on the leases that are currently entered into by the Company:

	Total Lease Commitment
June 30, 2015	$54,964
June 30, 2016 and thereafter	$0

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On September 12, 2013, the Company and certain of its current and former officers and directors (the “Liberty Silver Parties”) were named as defendants in a proposed securities class action lawsuit filed against Robert Genovese, certain individuals alleged to have collaborated with Mr. Genovese, and an offshore investment firm allegedly controlled by Mr. Genovese (the “Action,” Case No. 9:13-cv-80923-KLR, Stanaford v. Genovese et al.).  The action contains various claims alleging violations of the United States Securities Exchange Act of 1934 and rules thereunder relating to anomalous trading activity and fluctuations in the Company’s share price from August through October 2012.  The plaintiff purports to bring suit on behalf of all who purchased or otherwise acquired the Company’s common shares from April 1, 2008, through and including October 5, 2012.  An amended complaint was filed on September 27, 2013.

On January 22, 2014, the Court appointed Jerald Todd Stanaford and Philip Hobel lead plaintiffs and approved Federman & Sherwood as Lead Counsel and Menzer & Hill, PA as Liaison Counsel.  On March 24, 2014, Plaintiffs filed a Second Amended Consolidated Class Action Complaint.  On May 8, 2014, the Liberty Silver Parties moved to dismiss the Complaint.  

On December 8, 2014, the Company had reached a settlement in principle regarding the consolidated securities class action filed in September 2013 in U.S. federal court in the Southern District of Florida pertaining to anomalous trading activity and fluctuations in the Company’s share price from August through October 2012.  The settlement, which is subject to final documentation as well as review by the court, provides for a payment of $1 million cash, to be paid by the Company's D&O insurance coverage.  This settlement, without in any way acknowledging any fault or liability, would lead to a full and final dismissal with prejudice of all claims against Liberty Silver, Geoffrey Browne, and William Tafuri in the litigation.  Although defendants continue to deny plaintiffs' allegations, the Company believes it is in the best interests of its stockholders to focus its attention on its business and put the matter behind it.  The settlement is subject to approval by the Court.

Additionally, in the normal course of operations, certain other contingencies may arise relating to legal actions undertaken against the Company. In the opinion of management, whether the impact of such potential legal actions would have a material adverse effect on the Company's results of operations, liquidity, or its financial position, cannot be determined in advance.

Note 7 – Subsequent Event

On January 30, 2015, the Company completed a share consolidation of its common shares on the basis of one (1) new post-consolidation common share for every 15 pre-consolidated common shares.  The 185,309,574 common shares of the Company outstanding immediately prior to consolidation were reduced to 12,354,010 common shares, as approved by shareholders at the Company’s annual general and special meeting held on December 5, 2014.  No fractional shares are being issued.  Any fractions of a share are to be rounded up to the next whole common share.  A new CUSIP number of 53121P206 replaces the old CUSIP number of 53121P107, to distinguish between the pre- and post-consolidated shares.  In conjunction with this share consolidation, corresponding adjustments were made in the number of options and warrants issued and outstanding, and in the exercise prices of such options and warrants.   

For financial accounting purposes, this change to the Company’s capital structure, which took place subsequent to the end of the period, has been given retroactive effect on the balance sheets and the statements of operations.  Except for the foregoing, and except as otherwise specifically stated herein, all references in this report to the number of shares, options and/or warrants issued and outstanding, and to the exercise prices of outstanding options and warrants, are to pre-consolidation amounts.

The Company has evaluated subsequent events for the interim period ended December 31, 2014 through the date the financial statements were issued, and concluded, aside from the foregoing, that there were no other events or transactions occurring during this period that required recognition or disclosure in its interim financial statements.

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ITEM 2.

 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SPECIAL NOTE OF CAUTION REGARDING FORWARD-LOOKING STATEMENTS

CERTAIN STATEMENTS IN THIS REPORT, INCLUDING STATEMENTS IN THE FOLLOWING DISCUSSION, ARE WHAT ARE KNOWN AS "FORWARD LOOKING STATEMENTS", WHICH ARE BASICALLY STATEMENTS ABOUT THE FUTURE. FOR THAT REASON, THESE STATEMENTS INVOLVE RISK AND UNCERTAINTY SINCE NO ONE CAN ACCURATELY PREDICT THE FUTURE. WORDS SUCH AS "PLANS," "INTENDS," "WILL," "HOPES," "SEEKS," "ANTICIPATES," "EXPECTS "AND THE LIKE OFTEN IDENTIFY SUCH FORWARD LOOKING STATEMENTS, BUT ARE NOT THE ONLY INDICATION THAT A STATEMENT IS A FORWARD LOOKING STATEMENT. SUCH FORWARD LOOKING STATEMENTS INCLUDE STATEMENTS CONCERNING OUR PLANS AND OBJECTIVES WITH RESPECT TO THE PRESENT AND FUTURE OPERATIONS OF THE COMPANY, AND STATEMENTS WHICH EXPRESS OR IMPLY THAT SUCH PRESENT AND FUTURE OPERATIONS WILL OR MAY PRODUCE REVENUES, INCOME OR PROFITS. NUMEROUS FACTORS AND FUTURE EVENTS COULD CAUSE THE COMPANY TO CHANGE SUCH PLANS AND OBJECTIVES OR FAIL TO SUCCESSFULLY IMPLEMENT SUCH PLANS OR ACHIEVE SUCH OBJECTIVES, OR CAUSE SUCH PRESENT AND FUTURE OPERATIONS TO FAIL TO PRODUCE REVENUES, INCOME OR PROFITS. THEREFORE, THE READER IS ADVISED THAT THE FOLLOWING DISCUSSION SHOULD BE CONSIDERED IN LIGHT OF THE DISCUSSION OF RISKS AND OTHER FACTORS CONTAINED IN THIS REPORT ON FORM 10-Q AND IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. NO STATEMENTS CONTAINED IN THE FOLLOWING DISCUSSION SHOULD BE CONSTRUED AS A GUARANTEE OR ASSURANCE OF FUTURE PERFORMANCE OR FUTURE RESULTS.

DESCRIPTION OF BUSINESS

The Corporation

Liberty Silver Corp. was incorporated under the laws of the state of Nevada, U.S.A on February 20, 2007 under the name Lincoln Mining Corp.  Pursuant to a Certificate of Amendment dated February 11, 2010, the Company changed its name to Liberty Silver Corp.  The Company’s registered office is located at 1802 N. Carson Street, Suite 212, Carson City Nevada 89701, and its head office is located at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J 2T3, and our telephone number is 888-749-4916.

Current Operations

Overview

We were incorporated for the purpose of engaging in mineral exploration activities, and on May 24, 2007, purchased the Zone Lode mining claim located in Elko County, Nevada, for a purchase price of $10,000.  Our objective was to conduct mineral exploration activities on the Zone Lode claim to assess whether it contained economic reserves of copper, gold, silver, molybdenum or zinc.  We were not able to determine whether this property contained reserves that were economically recoverable and as a result, ceased to explore this property.  The Company’s current business operations are focused on exploring and developing the Trinity Silver property located in Pershing County, Nevada (the “Trinity Project”).

The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement (the “Earn-In Agreement”), discussed below in Item 2 - Properties.  On March 29, 2010, the Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada company providing the Company with a right to earn a 70% undivided interest in rights of AuEx, Inc. in the Trinity Project (the “70% Interest”); as discussed below, the 70% Interest is subject to the rights and obligations of AuEx, Inc. and its successors and assigns under a Minerals Lease and

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Sublease between AuEx, Inc. and Newmont Mining USA Limited.  AuEx, Inc. is beneficially owned by another Nevada company AuEx Ventures, Inc. AuEx, Inc. held an exclusive interest in the Trinity Project by way of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who owns or leases the various unpatented mining claims and portions of private land comprising the Trinity Project; the Minerals Lease and Sublease is discussed below. As part of a restructuring transaction by AuEx Ventures, Inc., another Nevada company Renaissance Gold Inc. (“Renaissance”) was spun out, and on July 1, 2010 AuEx, Inc. assigned all of its interest in the Trinity Project and the Earn-In Agreement to Renaissance, who currently holds a 100% leasehold interest in the Trinity Project pursuant to the Minerals Lease and Sublease.  The Company’s rights in the Trinity Project are derived from and based upon the rights of Renaissance through the Minerals Lease and Sublease.  The Minerals Lease and Sublease grants to Newmont, a right of first offer on any transfer of AuEx, Inc.’s interests in the Trinity Project to any non-affiliate of AuEx, Inc., and also gives Newmont a right to either enter into a joint venture agreement covering the Trinity Project and any other real property interests that AuEx, Inc. holds or acquires within the Trinity Project, or receive a royalty on all mineral production from such properties.  Currently the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights from AuEx, Inc. The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70% undivided interest in rights of Renaissance in the Trinity Project.

The Trinity Project consists of a total of approximately 10,020 acres, including 5,676 acres of fee land and 253 unpatented mining claims.  Under the Earn-In Agreement, the Company may earn-in the 70% Interest in the Trinity Project during a 6-year period in consideration of (1) a signing payment of $25,000, which has been made, (2) an expenditure of a cumulative total of $5,000,000 in exploration and development expenses on the Trinity Project by March 29, 2016, including a minimum of $500,000 which must be expended within one year from the effective date of the Agreement, and (3) completion of a bankable feasibility study on the Trinity Project on or before the 7^th anniversary date of the Agreement.   Item (1) has been completed by the Company, and the Company has satisfied item (2), and has reported its compliance as of March 29, 2013, which is the end of the third year from the inception of the Earn-in Agreement.

The Company’s business operations are currently focused on efforts to explore the Trinity Project. The Company has not yet commenced development stage activities, however, subject to the availability of adequate funding, the Company intends to engage in efforts to develop the Trinity Project in the future.  The Company foresees future operations at the Trinity Project consisting of (i) an effort to expand the known mineralized material through drilling, (ii) permitting for operation, if deemed economically viable, (iii) metallurgical studies aimed at enhancing the recovery of the silver and by-product lead and zinc, and (iv) engineering design related to potential construction of a new mine. Exploration of the property would be conducted simultaneously with the mine development in order to locate additional mineralized materials.

Products

The Company’s anticipated product will be precious and base metal-bearing concentrates and/or precious metal bullion produced from ores from mineral deposits which it hopes to discover and exploit through exploration and acquisition. The Company anticipates such products will be silver, lead and zinc.

Trinity Project Location

The Trinity Project is located along the west flank of the Trinity Range in Pershing County, Nevada, about 25 miles by road northwest of Lovelock, NV, the county seat. The Trinity Project consists of approximately 10,020 acres, which includes 253 unpatented lode mining claims and portions of nine sections of private land. The specific location of the Trinity Project is discussed in more detail the section entitled “Properties” herein.

Infrastructure

The Trinity Project is situated in western Nevada, a locale which is host to many metal mines, mining equipment companies, drilling companies, mining and metallurgical consulting expertise, and experienced mining personnel. Its location is accessible by all-weather road through an area of very sparse population. There is no infrastructure on the property. All buildings have been removed, all wells have been properly abandoned, and there is no equipment on site. The mine site has been totally reclaimed to the satisfaction of the State of Nevada. The need for power and water would be defined by a feasibility study and mine plan both of which are premature at this point in time.

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Government Regulation and Approval

The following permits will be necessary to put the Trinity Project into production.

	Permit/notification	Agency
	- Mine registry	Nevada Division of Minerals
	- Mine Opening notification	State Inspector of Mines
	- Solid Waste Landfill	Nevada Bureau of Waste Management
	- Hazardous Waste Management Permit	Nevada Bureau of Waste Management
	- General Storm Water Permit	Nevada Bureau of Pollution Control
	- Hazardous material Permit	State Fire Marshal
	- Fire and Life Safety	State Fire Marshal
	- Explosives Permit	Bureau of Alcohol, Tobacco, Firearms
	- Notification of Commencement of Operations	Mine Safety and Health Administration
	- Radio License	Federal Communications Commission

All of the Company's drilling operations to date have been on private land and, as a result, have not been subject to U.S. Bureau of Land Management jurisdiction. On private land in Nevada, the Company's activities are regulated by The Nevada Division of Environmental Protection and the Nevada Bureau of Mining Regulation and Reclamation (“NBMRR”) and no permit is needed as long as the disturbance created is less than five acres. Our total disturbance to date has been less than four acres, much of which has already been reclaimed, and as a result, we have not yet applied for a NBMRR permit. However, as a matter of courtesy, we have provided written correspondence to NBMRR to advise them of our activities.

Environmental Regulations

Our current exploration activities and any future mining operations (of which we currently have none planned), are subject to extensive laws and regulations governing the protection of the environment, waste disposal, worker safety, mine construction, and protection of endangered and protected species. We have made, and expect to make in the future, significant expenditures to comply with such laws and regulations. Future changes in applicable laws, regulations and permits or changes in their enforcement or regulatory interpretation could have an adverse impact on our financial condition or results of operations. In the event that we make a mineral discovery and decide to proceed to production, the costs and delays associated with compliance with these laws and regulations could stop us from proceeding with a project or the operation or further improvement of a mine or increase the costs of improvement or production.

We anticipate that the following environmental permits will be necessary for our anticipated operations:

§Permit for Reclamation

§Water Pollution Control Permit

§Air Quality Operating Permit

§Industrial Artificial Pond Permit

§Water Rights

The Company anticipates that, subject to the availability of funds or financing, it will begin soliciting bids for the programs necessary to obtain these permits during the fiscal year ending June 30, 2015. The cost, timing, and work schedules are not yet available.

Competition

We compete with other mining and exploration companies in connection with the acquisition of mining claims and leases on silver and other precious metals prospects and in connection with the recruitment and retention of qualified employees. Many of these companies are much larger than we are, have greater financial resources and have been in the mining business much longer than we have. As such, these competitors may be in a better position through size, finances and experience to acquire suitable exploration properties. We may not be able to compete against these companies in acquiring

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new properties and/or qualified people to work on our current Trinity Project, or any other properties we may acquire in the future.

Given the size of the world market for precious metals such as silver and gold relative to the number of individual producers and consumers, we believe that no single company has sufficient market influence to significantly affect the price or supply of precious metals such as silver and gold in the world market.

Employees

The Company currently has five employees: Manish Z. Kshatriya, the President and Chief Executive Officer, Chief Financial Officer, Secretary and Director of the Board; and, four independent directors serving on the Company’s board of directors.

PROPERTIES

Office Space

The Company has a lease agreement for office space at 181 Bay Street, Suite 2330, Toronto, Ontario, Canada, M5J 2T3. The telephone number is: 647-749-4916. The monthly base rent is approximately $3,354 (CDN $4,007). The term of the lease is for fifty-four months and terminates on April 28, 2016.

The Company has a lease agreement for a field office at 808 Packer Way, Sparks, NV 89431.  The phone number there is: 775-352-9375.  The monthly base rent is $2,552 plus Common Area Reimbursement of $400 and Property Tax of $215. The current term of the lease, which has been amended to extend the term, is for twelve months and terminates on January 31, 2016.

Trinity Project

Trinity Project Location

The Trinity Project is situated approximately 25 road miles north-northwest of Lovelock, Nevada, in Pershing County, Nevada, on the northwest flank of the Trinity Range, in the Trinity mining district. The latitude-longitude coordinates of the mine site are 40^o 23’ 47” N, 118^o 36’ 38” W. The JV area is situated in sections 2, 3, 4, 5, 8, 9, 10, 11, 15, 16, and 17, Township 29 North, Range 30 East, MDB&M and sections 26-28, 33, 34, and 35, Township 30 North, Range 30 East, MDB&M.

The Trinity Project includes located public and leased/subleased fee land consisting of the following 253 unpatented mining claims and tracts of fee land:

(1)

248 unpatented lode mining claims consisting of: The Seka 1-6, 8-16, 61-64, 73-76, 95-112 claims, the TS 1-18 claims, and the XXX claims located in secs. 4, 10, 16 and 21 in T29N, R30E. The Elm 1-183 in secs. 2, 4, 10, 16 T29N, R30E and secs. 26 28, 34, and 35 in T30N, R30E. The claims are located on public land open to mineral entry, currently valid, and subject to Bureau of land management regulations. The total area covered is approximately 5,120 acres.

(2)

Hi Ho Silver 3, 5, 9, 10, and 11 unpatented lode mining claims located in sec. 10, T29N, R30E MDB&M covering approx. 100 acres.

(3)

 Approximately 4,480 acres of fee land leased by Newmont Mining Corp. from Southern Pacific Land Co., and its successors, and from Santa Fe Pacific Minerals Corporation, and its successors located in sections 3, 5, 11, and 17, Township 29 North, Range 30 East, and sections 27, 33, and 35, Township 30 North, Range 30 East MDB&M.

(4)

 Approximately 1,280 acres of fee land owned by Newmont Mining Corp. located in sections 9 and 15, Township 29 North, Range 30 East, MDB&M.

The Company’s joint venture area of interest is currently sections 2-5, 8-11, 15-17, and 21 Township 29 North, Range 30 East, MDB&M, and sections, 26-28, 33-35, Township 30 North, Range 30 East, MDB&M. The Company’s rights, which apply to all of the above properties include exploration, development, and production of valuable minerals except geothermal, hydrocarbons, and sand/gravel, and also include the authority to apply for all necessary permits, licenses and

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other approvals from the United States of America, the State of Nevada or any other governmental or other entity having regulatory authority over any part of the Trinity Project.

Each claim filed with the BLM has an associated maintenance fee of $140 per year for each assessment year (which runs from September 1 through August 31). This fee must be paid by midnight on August 31 of each year to maintain the claim's validity for the succeeding assessment year. The fees for the claims comprising the Trinity Project are paid by Renaissance in accordance with the Lease they hold with Newmont. The Company reimburses Renaissance for this expenditure. All of the fees have been paid to the BLM for the 2012-2013 assessment year and all filings are current. We have 253 claims which, based upon current maintenance fees, costs $35,420 per assessment year to maintain.

To protect and verify our claims and interests in the Trinity Project, we have completed examinations of legal title to the property making up the Trinity Project, which we have deemed to be satisfactory. In addition, a Memorandum of Exploration Earn-In Agreement, effective March 29, 2010, has been recorded in the Office of the Recorder of Pershing County, Nevada.

Location and Access

The following maps identify the location and access of the Trinity Project located in Pershing County Nevada:

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Trinity Project Agreements

The Company acquired its interest in the Trinity Project through an Exploration Earn-In Agreement, discussed below.  On March 29, 2010, the Company entered into the Earn-In Agreement relating to the Trinity Project with AuEx, Inc., a Nevada company beneficially owned by another Nevada company AuEx Ventures, Inc. AuEx, Inc. held an exclusive interest in the Trinity Project by way of a Minerals Lease and Sublease with Newmont Mining USA Limited, a Delaware corporation who owns or leases the various unpatented mining claims and portions of private land comprising the Trinity Project; the Minerals Lease and Sublease is discussed below. As part of a restructuring transaction by AuEx Ventures, Inc., another Nevada company Renaissance Exploration Inc. (“Renaissance”) was spun out, and on July 1, 2010, pursuant to a letter agreement by and between AuEx, Inc., Renaissance Exploration, Inc., and Liberty Silver Corp., AuEx, Inc. assigned all of its rights in the Exploration Earn-In Agreement to Renaissance, which currently holds a 100% leasehold interest in the Trinity Project pursuant to the Minerals Lease and Sublease.  Pursuant to the letter agreement, all parties consented to the assignment, and as a result, the Company’s rights in the Trinity Project under the Earn-In Agreement are enforceable against Renaissance Exploration, Inc., and are derived from and based upon the rights of Renaissance under the Minerals Lease and Sublease; a copy of the Letter Agreement effective July 1, 2010 was filed as Exhibit 10.18 to the Company’s S-1 filed on January 24, 2013.  Additionally, a Memorandum of Exploration Earn-In effective March 29, 2010, has been recorded in the Office of the Recorder of Pershing County, Nevada.

Lease and Sublease Agreement

Renaissance’s rights in the Trinity Project are derived through a Minerals Lease and Sublease dated July 29, 2005 (the “Lease”) by and between Newmont Mining USA Limited, a Delaware corporation (“Newmont”) and AuEx, Inc., a Nevada corporation.

Consideration

The Lease was granted to Renaissance for the following consideration:

a)

Renaissance agreed to pay Newmont a claim fee reimbursement of $10,955 concurrently with the execution of the Lease (this amount was paid);

b)

Renaissance is required to expend a total of $2,000,000 in ascertaining the existence, location, quantity, quality or commercial value of a deposit of minerals within the Trinity Project on or before the seventh anniversary of the Lease;

c)

Prior to the commencement of any commercial production, Renaissance shall supply Newmont with a feasibility study with respect to the Trinity Project.

In the event the Company does not meet its minimum expenditure obligation in any year, it is obligated under the terms of the Earn-In Agreement to pay the amount of any deficiency to Renaissance Exploration, Inc.  During each of the first three years, the Company has exceeded its minimum expenditure obligation and has not been obligated to pay any amounts to Renaissance.  The Company had an excess of approximately $133,000 in expenditures over the minimum requirement in the first year, an excess of approximately $162,000 in expenditures over the minimum requirement in the second year, and an excess of approximately $2,856,430 in the third year.  The Company has satisfied its entire $5,000,000 expenditure commitment by the end of the third year, when it had incurred a total of approximately $5,652,397.  As a result, the Company will not be obligated to pay any deficiency amounts to Renaissance for any future years.   

Joint Venture / Royalty

The Lease gives Newmont a right to either enter into a joint venture with Renaissance covering the Trinity Project and any other real property interests that Renaissance holds or acquires within the Trinity Project, or receive a royalty on all mineral production from such properties.

Joint Venture: The Lease contemplates the following schedule with respect to Newmont’s rights to enter into a joint venture with Renaissance:

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a)

Before Renaissance spends $5 million and provides a feasibility study, Newmont can elect at any time to enter into a joint venture in which event Newmont would be required to pay all future joint venture expenses up to 250% of the expenditures made by Renaissance as of the date of Newmont’s election to enter into the joint venture.

b)

Upon Renaissance spending $5 million, but before the feasibility study, Renaissance shall deliver written notice to Newmont containing a summary of the expenditures made by Renaissance on the Trinity Project. Newmont may thereafter elect to enter into a joint venture by notifying Renaissance in writing of such election within 60 days of Newmont’s receipt of Renaissance’s initial notice. Under the joint venture, Newmont would be required to pay all future joint venture expenses up to 250% of the expenditures made by Renaissance as of the date of Newmont’s election to enter into the joint venture.

c)

After Renaissance spending $5 million, but before the feasibility study, at any time after the expiration of the 60 day period identified in section b above, Newmont can elect to enter into a joint venture in which event Newmont would be required to pay Renaissance 50% of the expenditures made in the Trinity Project up to the date of Newmont’s election to participate in a joint venture, and all future joint venture expenses up to 200% of such expenditures.

d)

At any time within 60 days after Renaissance’s delivery of feasibility study, Newmont can elect to enter into a joint venture at which time Newmont would be required to pay Renaissance 200% of expenditures made by Renaissance as of the date of Newmont’s election to enter into the joint venture. Additionally, Renaissance can elect to have Newmont finance Renaissance’s share of the joint venture expenses until the Trinity Project is put into commercial production. Following the commencement of commercial production, Newmont shall be entitled to recover such paid expenses with interest at the London Interbank Offering Rate. If Newmont fails to elect to participate in the Joint Venture within 60 days following the delivery of the feasibility study, Newmont’s right to participate in a joint venture shall terminate.

Should Newmont elect to participate in a joint venture with Renaissance, pursuant to the Lease, and its payment terms, Newmont will serve as the manager of the joint venture and own 51% of the joint venture with an option to acquire an additional 14% for additional payments to Renaissance (for a total participating interest of 65%). Pursuant to the Earn-In Agreement, we are entitled to 70% interest in the Trinity Project, subject only to the Newmont interest. Accordingly, if Newmont exercised all of its joint venture options under the Lease, we would own a 35% interest in the Trinity Project.

Royalty: In the event Newmont does not elect to participate in a joint venture, then Newmont shall have the right to receive a royalty on all mineral production from the Trinity Project. Pursuant to the Lease, if Newmont elects to not participate in the joint venture, then Renaissance shall pay to Newmont $1 million and the Lease shall terminate and Newmont shall transfer title to all property comprising the Trinity Project to Renaissance, and thereafter receive a royalty payment of up to 5% of the net smelter returns generated from the properties comprising the Trinity Project.

Buyout Option

The Lease provides Renaissance with a buyout option pursuant to which Renaissance holds the right to purchase Newmont’s rights in the Trinity Project through the payment of $1 million to Newmont. In the event Renaissance elects the buyout option, Newmont would transfer title to the Trinity Project to Renaissance through quit claim deed while retaining certain rights in the Trinity Project; such rights may include some form of joint venture or a royalty interest.

Ownership Interest – Earn-In Agreement

As noted above, the rights to the Trinity Project are held 100% by Renaissance, pursuant to an assignment of such rights from AuEx, Inc. The Company entered into the Earn-In Agreement providing the Company with a right to earn a 70% undivided interest in rights of Renaissance in the Trinity Project (the “70% Interest”), as set out below. The following is intended to be a summary of the material terms of the Earn-In Agreement, and is subject to, and qualified in its entirety, by the full text of the Earn-In Agreement.

Consideration

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The exclusive right to acquire the 70% Interest in the Trinity Project was granted to the Company for the following consideration:

a)

The Company agreed to pay $25,000 upon execution of the Earn-In Agreement (this amount was paid);

b)

In order to obtain the 70% Interest in the Trinity Project, the Company is required to (i) produce a bankable feasibility study by March 29, 2017 and (ii) to expend a minimum of $5,000,000 in exploration on the Trinity Project as follows: $500,000 in the first year; $1,000,000 in the second year; $1,000,000 in the third year; $1,000,000 in the fourth year; $1,000,000 in the fifth year; and $500,000 in the sixth year.

Any excess expenditure in any year shall be carried forward and applied to the subsequent year’s expenditure requirement, and the Company may accelerate the expenditures at its discretion. If the Company elects not to meet the minimum expenditure obligation during any year but wishes to maintain the Earn-In Agreement in full force and effect, or if it is subsequently determined that the minimum amount was not expended in any given year, the Company shall pay the amount of any deficiency to Renaissance.

In the event the Company does not meet its minimum expenditure obligation in any year, it is obligated under the terms of the Earn-In Agreement to pay the amount of any deficiency to Renaissance Exploration, Inc. During each of the first two years, the Company has exceeded its minimum expenditure obligation and not been obligated to pay any amounts to Renaissance. The Company had an excess of approximately $133,000 in expenditures over the minimum requirement in the first year, and an excess of approximately $162,000 in expenditures over the minimum requirement in the second year and an excess of approximately $2,856,430 in the third year. The Company satisfied its entire $5,000,000 expenditure commitment by March 29, 2013, which was the end of the third year, and as a result, will not be obligated to pay any deficiency amounts to Renaissance for the third year or any future years.

Work Program

The Company shall be the operator and shall have full control over the content of work programs and annual expenditure amounts during the earn-in period, including having the authority to apply for all necessary permits, licenses and other approvals from the U.S., the State of Nevada or any other governmental or other entity having regulatory authority over any part of the Trinity Project.

Joint Venture

Upon the Company having acquired the 70% Interest in the Trinity Project by satisfying the minimum expenditure amounts and producing a bankable feasibility study, the Company and Renaissance shall enter into a formal joint venture agreement, and the Company will be the operator of the joint venture.

At such time as the Company earns the 70% Interest in the Trinity Project, the parties will thereafter participate in expenditures on the Trinity Project in accordance with their respective interests therein, or have their interest diluted in accordance with a straight-line dilution formula, as set forth in the joint venture agreement.

If through dilution the interest of a party is reduced to less than 10%, then that party’s participating interest shall automatically be converted to a 3% net smelter returns royalty interest. Should third party claims be acquired with royalties within the area of interest, the 3% royalty described above would be reduced by the amount of such royalty but not below 1%. This reduction does not apply to the royalty described under the heading “Royalty upon Termination of Interest” below.

Royalty upon Termination of Interest

If the Company elects to terminate its right to earn an interest in the Trinity Project prior to completing a bankable feasibility study by March 29, 2017, but has expended at least $3,000,000, the Company shall be entitled to a 4% net smelter returns royalty capped at twice its expenditure on the Trinity Project.

Termination

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The Company may in its sole discretion terminate the Earn-In Agreement at any time by giving not less than 30 days prior written notice to that effect to Renaissance. Upon expiry of the 30-day notice period, the Earn-In Agreement will be of no further force and effect. Upon such termination, the Company shall have no further obligation to incur expenses on or for the benefit of the Trinity Project and shall have no further obligations or liabilities to Renaissance under the Earn-In Agreement or with respect to the Trinity Project (including without limitation liability for lost profits or consequential damages as a result of an election by the Company to terminate the agreement), other than (a) as set forth below, and (b) to reclaim (in accordance with applicable law) any disturbances of the Trinity Project made by the Company.

At any time the Company may, at its option, terminate its interest in some but less than all of the claims comprising the Trinity Project by written notice to Renaissance, provided that if such notice (or notice of termination of the Earn-In Agreement in its entirety) is received by Renaissance after June 30^th of any year, the Company shall remain obligated to pay the claim maintenance fees (and make all filings and recordings required in connection therewith) for those claims to which such termination applies for the upcoming assessment year. To the extent the Company terminates its interest in some but less than all of the claims, the Earn-In Agreement shall remain in full force and effect with respect to the remaining claims.

In the event the Company is in default in the observance or performance of any of the Company’s covenants, agreements or obligations under the Earn-In Agreement, Renaissance may give written notice of such alleged default specifying the details of same. The Company shall have 30 days following receipt of said notice within which to remedy any such default described therein, or to diligently commence action in good faith to remedy such default. If the Company does not cure or diligently commence to cure such default by the end of the applicable 30-day period, then Renaissance shall have the right to terminate the Earn-In Agreement by providing 30 days advance written notice to the Company.

Confidentiality

All data and information coming into possession of Renaissance or the Company by virtue of the Earn-In Agreement with respect to the business or operations of the other party, or the Trinity Project generally, shall be kept confidential and shall not be disclosed to any person not a party thereto without the prior written consent of the other party, except: (a) as required by law, rule, regulation or policy of any stock exchange or securities commission having jurisdiction over a party; (b) as may be required by a party in the prosecution or defense of a lawsuit or other legal or administrative proceedings; (c) as required by a financial institution in connection with a request for financing relating to development or mining activities; or (d) as may be required in connection with a proposed conveyance to a third party of an interest in the Trinity Project or the Earn-In Agreement, provided such third party agrees in writing in a manner enforceable by the other party to abide by all of the applicable confidentiality provisions of the Earn-In Agreement with respect to such data and information.

To the extent either party intends to disclose data or information via press release or other similar format as may be required, the disclosing party shall provide the other party with not less than five business days notice of the text of the proposed disclosure, and the other party shall have the right to comment on the same.

Deed With Reservation of Royalty Hi Ho Silver Claims.

On October 15, 2012, the Company entered into and closed a Purchase Agreement (the “Purchase Agreement”) with Primus Resources, L.C. and James A. Freeman (collectively “Seller”) to acquire unpatented mining claims, Nevada BLM Serial No. 799907, 799908, 799909, 799910, and 799911 covering approximately 100 acres of property located adjacent to the former Trinity Silver mine on the Company’s Trinity Project (the “Hi Ho Properties”). The Hi Ho Properties were previously the only acreage not controlled by the Company or its joint venture partner Renaissance Exploration Inc. in the Trinity Project. Under the terms of the Purchase Agreement, the Company provided cash consideration of US$250,000 and issued 2,583,333 restricted shares of common stock of the Company to Seller. In addition the Seller was granted a 2% net smelter royalty on future production from the Hi Ho Properties pursuant to the terms of a Deed With Reservation of Royalty Hi Ho Silver Claims.

In conjunction with the entry into the Purchase Agreement, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with Seller, pursuant to which the Company agreed to file a registration statement on Form S-1 with the United States Securities and Exchange Commission, within thirty (30) days of the closing, which registers the common stock issued to the Seller pursuant to the Purchase Agreement. Pursuant to the Registration Rights Agreement the Company was obliged to pay Seller additional consideration as follows:

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·

if the registration statement was declared effective by the United States Securities Exchange Commission by March 1, 2013, Liberty Silver would issue an additional 277,778 Liberty Silver common shares to Primus, thereby increasing the total aggregate number of shares issued to 2,861,111 shares; or

·

if the registration statement is not declared effective by the United States Securities Exchange Commission by March 1, 2013, Liberty Silver will pay Primus US$200,000. As well, if the five-day weighted average trading price of Liberty Silver’s common shares on the Toronto Stock Exchange as of March 1, 2013 (the “Market Price”) exceeds US$0.72 per share, Liberty Silver will issue an additional number of Liberty Silver common shares to Primus equal to (a) 277,778 less (b) US$200,000 divided by the Market Price.

The registration statement was declared effective by the United States Securities Exchange Commission on March 1, 2013 and as a result, the Company issued an additional 277,778 Liberty Silver common shares to Primus, thereby increasing the total aggregate number of shares issued to 2,861,111 shares.

Trinity Project Technical Report

In the process of compiling and synthesizing information on the Trinity Project, on February 15, 2011, the Company completed an independently verified mineralized materials estimate on the Trinity Project (the “Trinity Project Technical Report”); the report was publicly released by the Company on March 2, 2011.  The Technical Report for the Trinity mine project was prepared in accordance with the Canadian Securities Administrators’ National Instrument 43-101 (“NI 43-101”) by Mine Development Associates of Reno, Nevada, and has been reviewed by the Toronto Stock Exchange.  The Trinity Project Technical Report may be viewed on the Company’s website at www.libertysilvercorp.com, and also on www.SEDAR.com, where it has been filed.  Mineralized materials defined in the Trinity Project Technical Report are not recognized by the United States Securities and Exchange Commission.

Mining history

The following disclosure regarding the mining history of the Trinity Project has been derived from information contained in the Trinity Project Technical Report.

The Trinity Project lies in the Trinity mining district, which had limited production of silver, lead, zinc, and gold from 1864 through 1942, primarily from the east side of the Trinity Range. In the vicinity of the Trinity project, which is located on the west side of the range, there was historic prospecting with unrecorded but presumed minor silver production.

Minor exploration activity took place in the vicinity of the Trinity project in the 1950s, and in the 1960s Phelps Dodge Corporation completed trenching, IP surveying, and limited drilling in the area.

U. S. Borax and Chemical Corp. (“Borax”) became interested in what is now the Trinity project in 1982 on the basis of reconnaissance geochemical sampling that indicated the presence of anomalous lead and silver in the Willow Canyon area. By 1984, Borax had acquired a property position and had entered into a joint venture with Southern Pacific Land Company (later Santa Fe Pacific Mining, Inc. (“SFPM”) and still later Newmont Mining Corp. (“Newmont”), in which Borax was the operator. From 1982 to 1986, Borax and its joint-venture partner explored the property and developed the Trinity mine. Borax operated the open pit heap-leaching mine, through a mining contractor, on behalf of the joint venture from September 3, 1987 to August 29, 1988, with leaching continuing into 1989. During this period, the mine produced about five and a half million ounces of silver from about 1.1 million tons of oxidized ore grading approx. six and a half ounces of silver per ton. Borax drilled and conducted extensive metallurgical testing on the sulfide mineralization, but metal prices at the time were too low to support mining of this material.

In 1984-1985, 1987-1989, and 1990, SFPM conducted exploration and drilling on their property in the vicinity of the joint-venture lands. In 1991, SFPM acquired sole interest in the joint-venture lands, including Borax’s claims, and conducted further exploration through 1992. SFPM’s 1990-1992 exploration work concentrated on down-dip and lateral extensions of mineralization underlying the oxide pit and the sulfide mineralization, as well as extensions of mineralization outside the immediate mine area.

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There was no exploration on the Trinity property from 1993 to 2005. In August 2005, Renaissance leased the property from Newmont, who had acquired SFPM’s Nevada holdings. Under an earn-in agreement with Piedmont Mining Company, Renaissance explored the property from September 2005 through July 2009, including limited drilling in 2006 and 2007 that encountered high-grade silver values below and adjacent to the open pit.

Liberty Silver entered into an earn-in agreement with Renaissance in March, 2010. To date, Liberty Silver has conducted extensive data compilation and has completed geophysical surveys consisting of a magnetotelluric survey, a gravity survey, and an induced polarization survey over portions the project. The company has also drilled approximately 20,000 ft of reverse circulation rotary drilling consisting of 20 holes 18 of which were drilled in the vicinity of the Trinity mine. The database of technical data for the property, developed since 1982, includes the results of soil and rock surveys, geophysical surveys, geologic mapping, lithology logging and multi-element analyses for about 400 drill holes, and metallurgical work, as well as data derived from the previous production of heap-leach silver. The Magnetotelluric Survey was initiated in June of 2010 and completed in August of 2010. The Gravity survey was initiated in February of 2012 completed in March of 2012. The Induced Polarization Survey was initiated in April of 2012 completed in May of 2012. The drill program was started in January of 2012 and completed in April of 2012.

Work Completed by Company & Plan of Operation

As of the date of this Form 10-Q, the Company has completed the following items: (a) a magnetotelluric geophysical survey has been completed; (b) the drill hole database has been digitized; (c) a mineralized material estimate for the original deposit identified in the Earn-In Agreement; in addition, environmental and permitting work has begun, and all of the past geologic data has been compiled.  

Past exploration activities consisted of a magnetotelluric survey that was completed in August of 2010, a gravity survey that was completed in March of 2012, an induced polarization survey that was completed in May of 2012 and a drill program that was started in January of 2012 and completed in April of 2012, consisting of 20 reverse circulation holes comprising 22,565 ft of drill hole. The Magnetotelluric Survey was initiated in June of 2010 and completed in August of 2010. The Gravity survey was initiated in February of 2012 completed in March of 2012. The Induced Polarization Survey was initiated in April of 2012 completed in May of 2012. The drill program was started in January of 2012 and completed in April of 2012.

It is estimated that during the fiscal year ending June 30, 2011, the Company incurred approximately $554,145 in exploration expenses, and that during the fiscal year ending June 30, 2012, the Company incurred approximately $1,667,497 in exploration expenses, and that during the fiscal year ending June 30, 2013, the Company incurred approximately $3,299,000 in exploration expenses, and that during the fiscal year ending June 30, 2014, the Company incurred approximately $460,432 in exploration expenses, and during the interim period ended December 30, 2014, the Company incurred approximately $227,626.   These amounts include both direct exploration costs as well as various indirect costs related to exploration and the costs of acquiring mineral properties, which under the terms of the Earn-In Agreement, are included in the calculations for purposes of determining whether the Company has met its minimum annual expenditure commitment.   

It is anticipated, subject to the availability of financing, that additional exploration work will be needed during 2015, although specific plans for this additional work have not yet been finalized.  It is currently anticipated that the additional exploration work to be completed will include additional drilling to upgrade the level of confidence in the mineralization and to expand the mineralized area, as well as drilling to collect metallurgical samples. The estimated budgeted cost for this additional drilling is approximately $1,500,000, which the Company currently does not have.  Metallurgical testing, which is budgeted to cost approximately $300,000, is expected to be undertaken for the purpose of defining the estimated silver recovery of the mineralized rock.  The Company expects to be able to complete metallurgical testing with the funds currently available to it.  Once adequate funding is secured, engineering design work, budgeted at approximately $500,000, is expected to be undertaken for the purpose of studying the feasibility of developing a mine, and as soon as design work is completed, permitting will need to start.  The budget for permitting work is expected to be approximately $100,000.  No further geophysical work is currently planned.

Geology and Mineralization of Trinity Project

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The following disclosure regarding the Geology and Mineralization of the Trinity Project has been derived from information contained in the Trinity Project Technical Report.  

The Trinity Project lies on the western flank of the Trinity Range, one of the generally north-trending ranges formed during Tertiary extension of the Basin and Range Province.

Within the Trinity Range, the basement rocks are comprised of the Middle Triassic to Early Jurassic near-shore deltaic deposits of the Auld Lang Syne Group, which are represented by phyllite, argillite, quartzite, and dirty limestone at the Trinity Project. The best-represented pre-Cenozoic deformation in this portion of the Trinity Range is the Jurassic and Cretaceous Nevadan Orogeny, which resulted in low-grade regional metamorphism, variably directed folding, and thrust faulting. A Cretaceous intrusive episode culminated the Nevadan Orogeny and is exemplified by a Cretaceous granodiorite stock just northeast of the Trinity project.

Tertiary volcanic and sedimentary rocks and Quaternary sediments are abundant in the Trinity project area. There is a thin Tertiary rhyolite sequence along the central north-south axis of the property that includes the mineralized material area. These volcanic rocks overlie the Mesozoic phyllite and argillite, exposed to the east, but are separated by an argillite breccia that is closely associated with faulting. The rhyolite includes interbedded rhyolitic flows, welded tuffs, air-fall tuffs, epiclastic tuffs, and lacustrine deposits. Several rhyolite domes, dikes, and sills have also been identified on the property, some of which may be related to mineralization. Early Tertiary north- to northwest-trending faults are present in the Trinity project area, as are younger north- to northeast-trending normal faults. Late Tertiary and/or Quaternary bench and channel gravel deposits and Quaternary alluvium and outwash unconformably overly the rhyolites and cover the western part of the property.

Rhyolite porphyry, aphanitic rhyolite, and volcaniclastic rocks are the principal host rocks for mineralization in the Trinity mine area. Silicification and quartz-adularia-sericite alteration are associated with the mineralization. Tertiary rhyolitic tuffs and flows were extensively altered and form a halo extending 1.6 miles beyond the main mineralized area. This alteration affected the Auld Lang Syne Group only locally along faults and breccia zones.

Mineralization at the Trinity Project is controlled by a northeast-trending zone of normal faults. Silver, lead, and zinc mineralization occurs in fractures and bedding planes in Tertiary rhyolite in the hanging-wall block of the fault zone. Although mineralization continues downward into the underlying Triassic rocks, it is more tightly constrained to fractures that host higher-grade vein mineralization. The original Trinity silver deposit can generally be divided into two parts: a sulfide zone below the current pit and to the northeast, and an overlying oxide zone. Borax’s mining in the late 1980s focused on a portion of the oxide zone.

Mineralization occurs as oxidized and unoxidized sulfides in veinlets, as fracture-controlled mineralization, and as disseminations within the host rocks, including breccia matrix. Sulfide mineralization consists mainly of pyrite, sphalerite, galena, marcasite, and minor arsenopyrite with various silver minerals, including tetrahedrite-freibergite, pyrargyrite, minor argentite, and rare native silver, with traces of gold, pyrrhotite, stannite, and chalcopyrite. Low-grade lead and zinc have the potential to add value as byproducts.

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Index of Geologic Terms

TERM	DEFINITION
Adularia	A variety of transparent or translucent orthoclase.
Air-fall tuffs	Ash exploded out of a volcano, which falls through the air and settles in beds, called tuffs when consolidated.

Alluvium	Loose, unconsolidated (not cemented together into a solid rock) soil or sediments
Aphanitic	Igneous rock in which the grain or crystalline structure is too fine to be seen by the unaided eye
Argillite	A fine-grained sedimentary rock composed predominantly of indurated muds and oozes.
Argillization	The replacement or alteration of feldspars to form clay minerals.
Arsenopyrite	The most prevalent mineral containing the element arsenic.
Breccia	A rock composed of broken fragments of minerals or rock cemented together by a fine-grained matrix, which can be either similar to or different from the composition of the fragments.
Cenozoic	The current and most recent geological era and covers the period from 65.5 million years ago to the present
Chalcopyrite	A major ore mineral containing copper, iron, and sulfur.
Cretaceous	A geologic period from 145 to 65 million years ago.
Deltaic	Pertaining to, or like a delta.
Dikes	A type of sheet intrusion referring to any geologic body that cuts discordantly across rock structures.
Domes	A roughly circular mound-shaped protrusion resulting from the slow extrusion of viscous lava from a volcano.
Epiclastic	Formed at the surface of the earth by consolidation of fragments of preexisting rocks.
Freibergite	A complex sulfosalt mineral of silver, copper, iron, antimony, arsenic, and sulfur.
Galena	The natural mineral form of lead sulfide.
Grandiorite	A visibly crystalline plutonic rock composed chiefly of sodic plagioclase, alkali feldspar, quartz, and subordinate dark-colored minerals.
Hydrothermal	Relating to or produced by hot water, especially water heated underground by the Earth's internal heat.
Jurassic	The geologic period that extends from about 200  to 145 million years ago.
Lacustrine	Of or relating to lakes.
Metal Sulfides	A group of minerals containing both metals and sulfur.
Mesozoic	A geologic era that extends from 251 to  65 million years ago
Mineral	A mineral is a naturally occurring solid chemical substance having characteristic chemical composition, highly ordered atomic structure, and specific
Mineralization	The act or process of mineralizing.
Miocene	A geological epoch that extends from about 23.8 to 5.3 million years ago.
Nevadan Orogeny	A major mountain building event that took place along the western edge of ancient North America between the mid to late Jurassic.
Ore	Mineralized material that can be mined and processed at a positive cash flow.
Orthoclase	A variety of feldspar, essentially potassium aluminum silicate, which forms igneous rock.
Oxidized	A process whereby the sulfur in a mineral has been removed and replaced by oxygen.
Phyllite,	A type of foliated metamorphic rock primarily composed of quartz, muscovite mica, and chlorite
Pliocene	The geologic epoch that extends from about 5.3 million to 1.8 million years ago.

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Porphyry	A variety of igneous rock consisting of large-grained crystals suspended in a fine grained matrix
Pyrargyrite	A sulfosalt mineral consisting of silver, arsenic, and sulfur.
Pyrite	A very common sulfide mineral consisting of iron and sulfur found in a wide variety of geological occurrences.  Commonly known as “Fools Gold”
Pyrrhotite	An unusual iron sulfide mineral with a variable iron content.
Quartzite	A hard metamorphic rock which was originally sandstone
Rhyolite	A fine-grained volcanic rock, similar to granite in composition
Sercitization	A hydrothermal or metamorphic process involving the introduction of, alteration to, or replacement by white, fine-grained potassium mica.
Silicification	A hydrothermal or metamorphic process involving the introduction of, alteration to, or replacement by silica.
Sills	A tabular sheet intrusion that has intruded between older layers of sedimentary rock, beds of volcanic lava or tuff.
Sphalerite	A mineral containing zinc and sulfur.
Stannite	A mineral containing copper, iron, tin, and sulfur.
Sulfides	Sulfide minerals are a class of minerals containing sulfur with sulfide (S2−) as the major anion.
Tetrahedrite	A sulfosalt mineral containing copper, antimony, and sulfur.
Triassic	A geologic period that extends from about 251 to 200 million years ago.
Volcanic	A rock formed from magma erupted from a volcano.
Volcaniclastic	Volcanic material which been transported and reworked through mechanical action, such as by wind or water.
Welded tuffs	Rock composed of compacted volcanic ejected materials.

Subsequent Event

On January 30, 2015, the Company completed a share consolidation of its common shares on the basis of one (1) new post-consolidation common share for every 15 pre-consolidated common shares.  The 185,309,574 common shares of the Company outstanding immediately prior to consolidation were reduced to 12,354,010 common shares, as approved by shareholders at the Company’s annual general and special meeting held on December 5, 2014.  No fractional shares are being issued.  Any fractions of a share are to be rounded up to the next whole common share.  A new CUSIP number of 53121P206 replaces the old CUSIP number of 53121P107, to distinguish between the pre- and post-consolidated shares.

For financial accounting purposes, this change to the Company’s capital structure, which took place subsequent to the end of the period, has been given retroactive effect on the balance sheets and the statements of operations.  Except for the foregoing, and except as otherwise specifically stated herein, all references in this report to the number of shares, options and/or warrants issued and outstanding, and to the exercise prices of outstanding options and warrants, are to pre-consolidation amounts.

The Company has evaluated subsequent events for the interim period ended December 31, 2014 through the date that the financial statements were issued, and concluded, aside from the forgoing, that there were no other events or transactions occurring during this period that required recognition or disclosure in its interim financial statements.

RESULTS OF OPERATIONS

The following discussion and analysis provides information that we believe is relevant to an assessment and understanding of our results of operation and financial condition for the three and six months ended December 31, 2014 as compared to the three and six months ended December 31, 2013. Unless otherwise stated, all figures herein are expressed in U.S. dollars, which is the functional currency of the Company.

Results of Operations for the three months ended December 31, 2014 compared to the three months ended December 31, 2013.

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Revenue

During the three-month periods ended December 31, 2014 and 2013, the Company generated no revenue.

Operating expenses

During the three month period ended December 31, 2014, the Company reported total operating expenses of $253,237 compared to $1,353,107 during the three month period ended December 31, 2013, a decrease of $1,099,870, or approximately 81%.  The net decrease in total operating expenses is comprised of: a decrease of $1,048,249 in operation and administration expenses; and, a decrease in legal and accounting of $145,516.  The decrease in these expenses was partially offset by an increase of $93,895 in exploration expense.

Operation and administration expense decreased by $1,048,249 to $149,000 during the period ended December 31, 2014, compared to an expense of $1,197,249 reported during the period ended December 31, 2013.  The net decrease was primarily the result of a decrease in stock based compensation expense, which decreased by $873,626 during the current three month period, compared to the three month period from the prior year.  During both the current and comparative three month periods, certain officers and directors of the Company cancelled or forfeited their previously issued stock options, and as a result, any unamortized value attributed to those previously issued and vested stock options, were expensed upon cancellation.  Stock options that had not vested were forfeited, which did not impact the results in either of the periods, however, if any portion of the non-vested options had been amortized, the amortization was reversed.  During the current three month period ended December 31, 2014, the Company recorded $69,672 of stock based compensation expense as compared to $943,298 during the comparative period.  The significant difference is a result of there being far fewer vested options that were being cancelled during the current period, as opposed to almost all the options that were cancelled during the comparative period being vested.  Investor relations expense decreased by $108,409 when comparing the two periods.  During the current period, the Company was able to negotiate settlements on outstanding investor relation expense obligations and as a result, an expense recovery of $72,332 was recorded, as compared to an expense of $36,077 during the comparative period.  There were other expenses that contributed to the overall decrease in operation and administration expense, which included salaries and public company expenses.  These various examples of expenses comprising the total net decrease in the operation and administration expense amount were partially offset by some expenses that increased during the current period, such as directors and officers insurance expense, which increased by $18,688, however for the most part, the various expenses comprising the total operation and administration expense had decreased.

Exploration expense increased by $93,895 to $108,446 during the period ended December 31, 2014, as compared to an expense of $14,551 reported during the period ended December 31, 2013.  During the period ended December 31, 2014, the Company commenced the planning work for the anticipated fieldwork program to be conducted during 2015.  During the current period, the Company incurred certain property related expenses, as prescribed in the agreements between the Company and its joint venture partner that were not incurred during the prior period.

For financial accounting purposes, the Company reports all direct exploration expenses under the exploration expense line item of the statement of operations.  Certain indirect expenses, which are related to the exploration activities, may be reported as operation and administration expense or consulting expense on the statement of operations, as the case may be, or in certain cases, these expenses may also be capitalized to the balance sheet if they relate to costs incurred to acquire mineral properties.  During the interim period ended December 31, 2014, the Company incurred a total of $162,395 of direct and indirect expenses, which related to its exploration activities, as compared to approximately $130,025 during the interim period ended December 31, 2013.

Legal and accounting expense decreased by $145,516 to a reported expense recovery of $4,209 during the current period, compared to a legal and accounting expense of $141,307 reported during the comparative period.  Over the last several reporting periods, the Company has incurred and reported legal fees in connection with a class action lawsuit that has now been reported as settled.  The Company’s insurance underwriters have commenced to reimburse the Company for these legal fees, pursuant to the Company’s directors’ and officers’ insurance policy.  The Company has also recorded expense recoveries in connection with negotiated settlements with law firms for amounts that were outstanding.  During the period, the Company recorded $177,272 in expense recoveries resulting from the reimbursements from the insurance underwriters and $16,590 in expense recoveries relating to the negotiated settlements of past due legal fees.  Without considering the

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total expense recoveries of $193,862, the Company incurred $189,653 in legal and accounting expense as compared to $141,307 during the comparative period.

Net loss and comprehensive loss  

The Company had a net loss and comprehensive loss of $253,865 for the three months ended December 31, 2014, compared to a net loss and comprehensive loss of $1,330,854, for the three months ended December 31, 2013, a change of $1,076,989 or approximately 81%.  The decrease in net loss and comprehensive loss was due to a net decrease in total operating expenses as described above, and partially offset by: a decrease in the gain on foreign exchange reported during the current period and an increase in interest expense during the current period.

Results of Operations for the six months ended December 31, 2014 compared to the six months ended December 31, 2013.

Revenue

During the six-month periods ended December 31, 2014 and 2013, the Company generated no revenue.

Operating expenses

During the six month period ended December 31, 2014, the Company reported total operating expenses of $625,313 compared to $1,777,780 during the six month period ended December 31, 2013, a decrease of $1,152,467, or approximately 65%.  The net decrease in total operating expenses is comprised of: a decrease of $1,159,485 in operation and administration expense; a decrease in legal and accounting of $40,829; and a decrease of $30,000 in consulting expense.  The decrease in these expenses was partially offset by an increase of $77,847 in exploration expense.

Operation and administration expense decreased by $1,159,485 to $342,586 during the period ended December 31, 2014, compared to an expense of $1,502,071 reported during the period ended December 31, 2013.  The net decrease was primary the result of a decrease in stock based compensation expense, which decreased by $967,233 during the current six month period, compared to the six month period from the prior year.  During both the current and comparative six month periods, certain officers and directors of the Company cancelled or forfeited their previously issued stock options, and as a result, any unamortized value attributed to those previously issued and vested stock options, were expensed upon cancellation.  Stock options that had not vested were forfeited, which did not impact the results in either of the periods, however, if any portion of the non-vested options had been amortized, the amortization was reversed.  During the current six month period ended December 31, 2014, the Company recorded $115,747 of stock based compensation expense as compared to $1,082,980 during the comparative period.  The significant difference is a result of there being far fewer vested options that were being cancelled during the current period, as opposed to almost all the options that were cancelled during the comparative period being vested.  Investor relations expense decreased by $128,594 when comparing the two periods.  During the current period, the Company was able to negotiate settlements on outstanding investor relation expense obligations and as a result, an expense recovery of $72,332 was recorded, as compared to an expense of $56,262 during the comparative period.  There were other expenses that contributed to the overall decrease in operation and administration expense, which included salaries and public company expenses.  These various examples of expenses comprising the total net decrease in the operation and administration expense amount were partially offset by some expenses that increased during the current period, such as directors and officers insurance expense, which increased by $40,875, however for the most part, the various expenses comprising the total operation and administration expense had decreased.  

Exploration expense increased by $77,847 to $117,908 during the period ended December 31, 2014, as compared to an expense of $40,061 reported during the period ended December 31, 2013.  During the period ended December 31, 2014, the Company commenced the planning work for the anticipated fieldwork program to be conducted during 2015.  During the current period, the Company incurred certain property related expenses, as prescribed in the agreements between the Company and its joint venture partner that were not incurred during the prior period

For financial accounting purposes, the Company reports all direct exploration expenses under the exploration expense line item of the statement of operations.  Certain indirect expenses, which are related to the exploration activities, may be

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reported as operation and administration expense or consulting expense on the statement of operations, as the case may be, or in certain cases, these expenses may also be capitalized to the balance sheet if they relate to costs incurred to acquire mineral properties.  During the interim period ended December 31, 2014, the Company incurred a total of $227,626 of direct and indirect expenses, which related to its exploration activities, as compared to approximately $277,532 during the interim period ended December 31, 2013.

Legal and accounting expense decreased by $40,829 to $164,819 during the period ended December 31, 2014, compared to a legal and accounting expense of $205,648 reported during the period ended December 31, 2013.  Over the last several reporting periods, the Company has incurred and reported legal fees in connection with a class action lawsuit that has now been reported as settled.  The Company’s insurance underwriters have commenced to reimburse the Company for these legal fees, pursuant to the Company’s directors’ and officers’ insurance policy.  The Company has also recorded expense recoveries in connection with negotiated settlements with law firms for amounts that were past due.  During the period, the Company recorded $177,272 in expense recoveries resulting from the reimbursements from the insurance underwriters and $26,149 in expense recoveries relating to the negotiated settlements of past due legal fees.  Without considering the total expense recoveries $203,421, the Company incurred $368,240 in legal and accounting expense as compared to $205,648 during the comparative period.

The Company reported $0 of consulting expense during the current period, compared to $30,000 during the comparative period.

Net loss and comprehensive loss  

The Company had a net loss and comprehensive loss of $652,213 for the six months ended December 31, 2014, compared to a net loss and comprehensive loss of $1,768,664, for the six months ended December 31, 2013, a change of $1,116,451 or approximately 63%.  The decrease in net loss and comprehensive loss was due to a net decrease in total operating expenses as described above and an increase in the reported gain on foreign exchange period over period.  These changes, which resulted in an overall decrease in net loss and comprehensive loss, were partially offset by the increase in interest expense.

ANALYSIS OF FINANCIAL CONDITION

Liquidity and Capital Resources

The Company does not have sufficient working capital needed to meet its current fiscal obligations.  In order to continue to meet its fiscal obligations in the current fiscal year and beyond the next twelve months, management is considering various financing alternatives including, but not limited to, merger and acquisition activity, raising capital through the equity markets and debt financing.

In order to acquire a 70% interest in the Trinity Project, the Company is required to incur $5,000,000 in exploration expenditures over a six-year period from March 29, 2010, the date of the Earn-In Agreement, to March 29, 2016.  In addition, by the end of March 29, 2017, the Company is required to produce a bankable feasibility study.  As of March 29, 2013, the end of the third year following the date of the Earn-In Agreement, the Company had incurred approximately $5,652,397 in expenditures related to the Trinity Project, and therefore has satisfied the $5,000,000 exploration expenditure commitment.  The Company is currently considering various financing alternatives, as described above, with the objective to raise approximately $5,000,000 to fund additional work to complete the bankable feasibility study and to fund ongoing working capital.  The additional work will consist of engineering and metallurgical testing, confirmation drilling, and an update of the National Instrument 43-101 compliant resource estimate.

The primary source for capital for the Company is the equity markets.  Management plans to continue its canvassing efforts of investors and financial institutions to invest capital in the Company through private placement offerings of common shares or units consisting of common shares and warrants.  The terms and pricing of any such financing would be determined in the context of the markets.  The Company has not entered into an agency agreement or arrangement with any financial institution or investor group to raise capital at this time.

In such an event where the Company is not successful at raising capital through the issuance of capital stock, the Company may consider raising capital by the issuance of debt.  However, unless the appropriate features, such as convertible options,

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are attached to the debt instruments, this form of financing is less desirable until such time as the Company may be in a position to reasonably foresee the generation of cash flow to service and repay debt.  

Further, on an ongoing basis, management will review potential merger or acquisition targets to determine if certain synergies exist for the Company and if the potential target would strengthen the Company’s financial position. Management does not currently have any merger or acquisition target identified, and any such discussions are at the very preliminary stages.

In the event that the Company raises some funds, but, due to difficult capital market conditions or other factors, is not successful at raising all funds needed to complete the bankable feasibility study and fund ongoing working capital, management plans to reduce overhead and maintain the Trinity Project under a care and maintenance program, until such time as the capital markets improve for junior exploration companies.  Management believes that this option is available to it, without jeopardizing its interest in the Trinity Project, due to the accelerated pace at which it has incurred exploration expenditures in relation to the timeline for the minimum expenditure commitment prescribed in the Earn-In Agreement.

On November 14, 2013, the Company closed a $1,210,000 loan facility with BGCG.  The loan bears interest at the rate of 11% per annum for the first twelve months.  The Company may extend the one-year term of the loan for an additional six months at the rate of 15% per annum during the extended term.  The loan is secured by a charge on all of the Company’s assets.  Subject to regulatory approval, the Company may cause the lender to convert the outstanding debt to common shares of the Company, should the Company complete an arm’s length equity financing of $500,000 or more, at a price of not less than $0.50 per common share. The Company intends to use the funds from the Loan for general working capital purposes, thereby affording the Company more time to secure longer term financing for the Trinity Silver Project.

Effective December 19, 2013, 3,900,000 vested stock options were cancelled, and 150,000 non-vested stock options were forfeited.  Further, the Company granted 200,000 stock options at an exercise price of $0.10 each.  

Effective December 21, 2013, 300,000 vested stock options had expired.

On April 8, 2014, the Company granted 5,000,000 stock options at an exercise price of $0.10 each.

On June 30, 2014, the Company reached an agreement with arm’s-length creditors to settle indebtedness in the aggregate amount of $226,000 by issuing 732,000 common shares, including 382,000 common shares at a deemed price of $0.50 per share and 350,000 common shares at a deemed price of $0.10 per share.

On September 30, 2014, the Company issued 523,333 common shares to employees of the Company, at a deemed price of $0.50 per share, in settlement of arrears compensation obligations of $261,666.

On October 17, 2014, the Company entered into an amended and restated agreement (“Amended Loan Agreement”) in relation to an existing $1,210,000 principal amount secured loan facility (the “Original Loan”) made available by BG Capital Group Ltd. (“BGCG”) on November 14, 2013, as described above. Under the terms of the revised agreement, BGCG has made available to the Company a committed non-revolving term credit facility in the principal amount of $1,250,000 (the “New Loan”), which initially bears interest at a rate of 11% per annum and which is secured by a charge on all of the assets of the Company.  Under the terms of the Amended Loan Agreement, the Company also repaid the indebtedness to BGCG under the Original Loan by converting the outstanding, aggregate total sum of the principal amount of the Original Loan, together with all accrued and unpaid interest thereon, being $1,248,654 (the “Debt”), into 99,892,296 common shares of the Company (“Common Shares”) at a price of $0.0125 per Common Share, in full satisfaction of the Debt under the Original Loan.

The New Loan consists of up to $1,250,000 of new credit facilities, of which $25,000 had been previously advanced to the Company pursuant to a promissory note, which was superseded by the New Loan and became part of the first advance under the New Loan in the aggregate amount of $350,000.  The Company intends to use the funds from the New Loan for drilling, metallurgical work, environmental permitting, surveying and other related exploration expenses pertaining to its Trinity Project as well as land taxes and related fees, and for general working capital purposes.

The key terms of the New Loan are more fully described in the notes to the financial statements.

On December 31, 2014 the Company issued 170,000 common shares to employees of the Company, at a deemed price of

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$0.50 per share, in settlement of arrears compensation obligations of $85,000.

As at the filing date of this Form 10-Q, there were 46,667 post-consolidation stock options outstanding, which are exercisable at $11.25 per common share, for gross proceeds of $525,000, however the exercise prices of these stock options exceed the market price of the Company’s shares.

As at the filing date of this Form 10-Q, there were 13,334 post-consolidation warrants outstanding, which may be exercised at $11.25 per common share, for gross proceeds of $150,000, however the exercise prices of these warrants exceed the market price of the Company’s shares.

Current Assets and Total Assets

As of December 31, 2014, the unaudited balance sheet reflects that the Company had: i) total current assets of $537,898, compared to total current assets of $459,506 at June 30, 2014, an increase of $78,392, or approximately 17%; and ii) total assets of $3,101,790, as compared to total assets of $3,026,872 at June 30, 2014, an increase of $74,918, or approximately 2%.  The increase in current and total assets was primarily due to the receipt of proceeds from the new loan facility, partially offset by net cash used in operating activities.

Total Current Liabilities and Total Liabilities

As of December 31, 2014, the unaudited balance sheet reflects that the Company had total current liabilities and total liabilities of $1,811,373, compared to total current liabilities and total liabilities of $2,754,909 at June 30, 2014, a decrease of $943,536 or approximately 34.2%.  The decrease in current and total liabilities was due to: a total decrease of $492,464 in accounts payable and accrued liabilities and a net decrease of $460,000 in loan payable, which was the result of converting an existing loan facility into common shares and replacing it with a new loan facility that had not been drawn to the same extent as the previous loan facility, by the end of the reporting period.  Loan interest increased by $8,928 during the period, which partially offset the overall decrease in liabilities.

Cash Flow – for the interim periods ended December 31, 2014 and 2013

During the six months ended December 31, 2014 cash was primarily used to fund operations.  The Company reported a net increase in cash of $51,797 during the six months ended December 31, 2014 compared to a net increase in cash of $295,585 for the six months ended December 31, 2013.  The following provides additional discussion and analysis of cash flow.

	For the six months ended December 31,
	2014 $		2013 $
Net cash used in operating activities	(657,804)		(296,223)
Net cash used in investing activities	-		(13,192)
Net cash provided by financing activities	709,600		605,000
Net Change in Cash	51,796		295,585

During the six months ended December 31, 2014, net cash used in operating activities was $657,804, compared to net cash used in operating activities of $296,223 during the six months ended December 31, 2013.  The increase in net cash used in operating activities of $361,581 is due to the effects of the net changes in working capital items, which resulted in an increase to cash outflow by $510,132 during the six months ended December 31, 2014, compared to net changes in working capital items, which resulted in a decrease to cash outflow of $385,987 during the comparative period.  Further, during the six months ended December 31, 2014, there was $504,541 in non-cash items being reported, compared to non-cash items of $1,086,454 being reported during the comparative period.  The increase in net cash used in operating activities was partially

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offset by a net loss and comprehensive loss of $652,213 reported during the six months ended December31, 2014, compared to a net loss and comprehensive loss of $1,768,664 reported in the comparative period.

During the six months ended December 31, 2014, cash used for investing activities was $0, compared to six months ended December 31, 2013 when cash used for investing activities was $13,192 in connection with certain direct costs associated with the October 2012 acquisition of mining interests.

During the six months ended December 31, 2014, net cash provided by financing activities was $709,600, compared to net cash provided by financing activities of $605,000 during the six months ended December 31, 2013.  During the current period, the Company had advanced a total of $750,000 of the $1,250,000 available to it pursuant to the terms of the New Loan.  The gross proceeds were offset by $40,400 in issue costs, resulting in net proceeds of $709,600.  During the comparative period, the Company had advanced a total of $605,000 of the $1,210,000 available to it pursuant to the terms of the previous loan facility.

Going Concern

These interim unaudited financial statement filings have been prepared on the going concern basis, which assumes that adequate sources of financing will be obtained as required and that the Company’s assets will be realized and liabilities settled in due course of business.  Accordingly, the interim unaudited financial statements do not include any adjustments related to the recoverability of assets and classification of assets and liabilities that might be necessary should the Company not be able to continue as a going concern.  The going concern assumption is discussed in Note 1 – Basis of Presentation and Going Concern.

OFF BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements.

ITEM 3.

        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK.

Not Applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures

The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a Company's controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC's rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on this evaluation, the chief executive officer and chief financial officer concluded that the disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in the Company’s periodic SEC reports

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and of ensuring that such information is recorded, processed, summarized and reported within the time periods specified.  The Company’s chief executive officer and chief financial officer also concluded that the disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.  

Changes in Internal Control over Financial Reporting

There was no change in the Company's internal control over financial reporting during the period ended December 31, 2014, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

On September 12, 2013, the Company and certain of its current and former officers and directors (the “Liberty Silver Parties”) were named as defendants in a proposed securities class action lawsuit filed against Robert Genovese, certain individuals alleged to have collaborated with Mr. Genovese, and an offshore investment firm allegedly controlled by Mr. Genovese (the “Action,” Case No. 9:13-cv-80923-KLR, Stanaford v. Genovese et al.).  The action contains various claims alleging violations of the United States Securities Exchange Act of 1934 and rules thereunder relating to anomalous trading activity and fluctuations in the Company’s share price from August through October 2012. The plaintiff purports to bring suit on behalf of all who purchased or otherwise acquired the Company’s common shares from April 1, 2008, through and including October 5, 2012.  An amended complaint was filed on September 27, 2013.

On January 22, 2014, the Court appointed Jerald Todd Stanaford and Philip Hobel lead plaintiffs and approved Federman & Sherwood as Lead Counsel and Menzer & Hill, PA as Liaison Counsel.  On March 24, 2014, Plaintiffs filed a Second Amended Consolidated Class Action Complaint.  On May 8, 2014, the Liberty Silver Parties moved to dismiss the Complaint.  

On December 8, 2014, The Company had reached a settlement in principle regarding the consolidated securities class action filed in September 2013 in U.S. federal court in the Southern District of Florida pertaining to anomalous trading activity and fluctuations in the Company’s share price from August through October 2012.  The settlement, which is subject to final documentation as well as review by the court, provides for a payment of $1 million cash, to be paid by the Company's D&O insurance coverage.  This settlement, without in any way acknowledging any fault or liability, would lead to a full and final dismissal with prejudice of all claims against Liberty Silver, Geoffrey Browne, and William Tafuri in the litigation.  Although defendants continue to deny plaintiffs' allegations, the Company believes it is in the best interests of its stockholders to focus its attention on its business and put the matter behind it.  The settlement is subject to approval by the Court.

Neither the Company nor its property is the subject of any other pending legal proceedings, and no other such proceeding is known to be contemplated by any governmental authority. The Company is not aware of any other legal proceedings in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of our voting securities, or any associate of any such director, officer, affiliate or security holder of the Company, is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

ITEM 1A.

 RISK FACTORS.

Not Applicable.

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ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On December 31, 2014, the Company issued a total of 170,000 restricted shares to an employee of the Company.  The shares were issued at an agreed upon value of $0.50 per share in settlement of past due compensation obligations.  The shares were issued in reliance upon an exemption from registration provided by Section 4(2) of the Securities Act of 1933 for transactions not involving a public offering.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

The recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (“the Act”) requires the operators of mines to include in each periodic report filed with the Securities and Exchange Commission certain specified disclosures regarding the Company’s history of mine safety. The Company is currently in the exploration phase and does not operate mines at any of its properties, and as such is not subject to disclosure requirements regarding mine safety that were imposed by the Act.

ITEM 5.    

OTHER INFORMATION.

None.

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ITEM 6.

EXHIBITS.

(a)

The following exhibits are filed herewith:

31.1

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certifications pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2

Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.

SCH XBRL Schema Document.

101

INS XBRL Instance Document.

101.

CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.

LAB XBRL Taxonomy Extension Label Linkbase Document.

101.

PRE XBRL Taxonomy Extension Presentation Linkbase Document.

101.

DEF XBRL Taxonomy Extension Definition Linkbase Document.

SIGNATURES

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

By: /s/    Manish Z. Kshatriya

 Manish Z. Kshatriya, President and Chief Executive Officer

Date:  February 13, 2015

By: /s/    Manish Z. Kshatriya

 Manish Z. Kshatriya, Chief Financial Officer and Secretary

Date:  February 13, 2015

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