McEwen Mining Inc. - Annual Report: 2009 (Form 10-K)

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

FORM 10-K

Commission file number 001-33190

US GOLD CORPORATION
(Name of registrant as specified in its charter)

(866) 441-0690
(Registrant's telephone number, including area code)

         Securities registered pursuant to Section 12(b) of the Act:

         Securities registered pursuant to Section 12(g) of the Act: None

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

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

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

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

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

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

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

         As of June 30, 2009 (the last business day of the registrant's second fiscal quarter), the aggregate market value of the registrant's voting and non-voting common equity held by non-affiliates of the registrant was $254,186,661 based on the closing price of $2.64 per share as reported on the NYSE Amex. There were 115,662,588 shares of common stock outstanding (and 6,235,265 exchangeable shares exchangeable into US Gold Corporation common stock on a one-for-one basis) on March 10, 2010.

         DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the 2010 Annual Meeting of Shareholders are incorporated into Part III, Items 10 through 14 of this report.

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ADDITIONAL INFORMATION

        Descriptions of agreements or other documents in this report are intended as summaries and are not necessarily complete. Please refer to the agreements or other documents filed or incorporated herein by reference as exhibits. Please see the Exhibit Index at the end of this report for a complete list of those exhibits.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Please see the note under "ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS," for a description of special factors potentially affecting forward-looking statements included in this report.

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PART I

ITEM 1.    BUSINESS

History and Organization

        US Gold Corporation ("US Gold," "we," "us," or the "Company") is engaged in the exploration for gold, silver, and other valuable minerals. Our core assets are our interests in several large exploration properties in the State of Nevada and our properties in Sinaloa State, Mexico. We were organized under the laws of the State of Colorado on July 24, 1979 under the name Silver State Mining Corporation. On June 21, 1988, we changed our name to U.S. Gold Corporation and on March 16, 2007, we changed our name to US Gold Corporation. We are currently in the exploration stage and have not generated revenue from operations since 1990.

        In June 2007, we completed three simultaneous acquisitions ("Acquisitions"), significantly increasing our land position in Nevada and adding our Mexican properties as well as a property in the State of Utah. The three companies acquired were: Nevada Pacific Gold Ltd. ("Nevada Pacific"), Tone Resources Ltd. ("Tone") and White Knight Resources Ltd. ("White Knight"), which we refer to as the Acquired Companies. Presently, we hold interests in approximately 260 square miles in the United States, which we refer to as the U.S. and approximately 1,395 square miles in Mexico. We own our properties and operate through various consolidated subsidiaries, each of which is owned entirely, directly or indirectly, by us. References in this report to our company may include one or more of our subsidiaries as the context requires.

Segment Information

        Our operating segments include Nevada and Mexico. See Note 14 to the Consolidated Financial Statements for information relating to our operating segments.

Overview of Business and Properties

        Our objective is to increase the value of our shares through the exploration, discovery, development, and extraction of gold, silver and other valuable minerals. We generally conduct our business as sole operator, but we may enter into arrangements with other companies through joint venture or similar agreements in an effort to achieve our strategic objectives.

        A majority of our Nevada properties, including our Tonkin and Gold Bar properties, are located along the Cortez Trend, in north central Nevada. We also own property, including our Limo property, on the Carlin Trend, which is located east of the Cortez Trend. Our Tonkin property produced gold for a limited period of time from shallow deposits from 1988 to 1990. From early 1991 to early 2005, we had a series of joint venture partners that conducted exploration activities at the Tonkin property. In 2005, the last of these joint venture relationships was terminated, returning to us 100% of the Tonkin property. In 2006, we commenced comprehensive exploration of our Tonkin property in an effort to identify additional mineralized material. In 2007, after the completion of the Acquisitions, we began a comprehensive evaluation of the major land areas acquired in Nevada and identified numerous drilling targets at our Tonkin, Gold Bar, and Limo properties. In 2008 and 2009, we continued to drill various targets on these properties, as well as expand the quantity of known mineralized material at the Gold Bar property in updated technical reports. In 2009, we also developed targets for future drilling on our Battle Mountain Complex properties which are located at the north end of the Cortez trend.

        Our primary properties in Mexico include the El Gallo Project, the Magistral Mine Property, and the Palmarito Project, in addition to large amounts of unexplored land. The El Gallo Project, located approximately 4 miles to the northwest of the Magistral Mine, has become the primary focus of our exploration efforts in Mexico. We made the El Gallo silver discovery in the second half of 2008 as a result of a regional exploration program that we were conducting on targets surrounding the Magistral

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Mine. In 2009, we significantly expanded the known area of mineralized material at El Gallo through drilling and began the permitting process to significantly expand our exploration efforts in 2010. The Magistral Mine Property, located in Sinaloa State, consists of approximately 38 square miles of mineral concessions, plant and equipment. The mine operated and produced approximately 70,000 ounces of gold from 2002 to 2005, before it was placed on care and maintenance status in 2006 due to higher than anticipated operating costs and a lack of operating capital when gold prices were approximately $400 per ounce. Inclusive of the foregoing, we control mineral concessions of approximately 1,395 square miles located in the Mexican states of Sinaloa and Nayarit.

        Our principal executive office is located at 99 George Street, 3^rd Floor, Toronto, Ontario, Canada M5A 2N4 and our telephone number is (866) 441-0690. We also maintain offices in Elko and Reno, Nevada and Guamuchil, Mexico. Our website is www.usgold.com. We make available our periodic reports and press releases on our web site. Our common stock is listed on the NYSE Amex and on the Toronto Stock Exchange (TSX), each under the symbol "UXG." Our warrants are listed on the TSX under the symbol "UXG.WT".

        In this report, opt represents ounces per ton, gpt represents grams per tonne, ft. represents feet, m represents meters, km represents kilometer, and sq. represents square. All of our financial information is reported in U.S. dollars, unless otherwise noted.

Developments During 2009

        During 2009, we continued our multi-year exploration and evaluation program at our Nevada properties and significantly increased our focus on our Mexican properties subsequent to the El Gallo discovery in 2008. Total exploration costs for the year were $8.2 million with $4.8 million spent in Nevada and $3.4 million spent in Mexico, compared to $10.8 million in 2008 with $5 million and $5.8 million for Nevada and Mexico respectively.

        Exploration targets drilled in Nevada during the year included a number of targets on the Tonkin and Gold Bar properties, each on the Cortez Trend, and targets at the Limo property on the Carlin Trend. Also, we completed an update of the estimate of mineralized material for the Gold Bar properties prepared in compliance with the Canadian Institute of Mining, Metallurgy and Petroleum referred to in Canadian National Instrument 43-101, commonly known as NI 43-101 and an initial NI 43-101 compliant mineralized material estimate at the Limo properties.

        Mexico exploration efforts during the first half of 2009 focused on expanding the size of the El Gallo project. Primary exploration activities consisted of core and conventional rotary drilling and geochemical surface sampling. Our focus at El Gallo during the second half of the year was on completion of environmental studies and the permitting process to drill on a significantly expanded area around the initial discovery. Applications for two key permits were submitted to local authorities in July 2009. The permit for a Land Use Change was subsequently approved on November 27, 2009 and the second permit relating to an Environmental Impact Study was approved on December 15, 2009. While the environmental and permitting work was being completed, we continued to carry out prospecting activities in the El Gallo/Magistral region and also initiated planning for an extensive drill program at El Gallo in anticipation of the permits being received. Renewed drilling began in January 2010. During 2009, we also completed the first phase of metallurgical testing at El Gallo and initiated the second phase of such testing, including tests to help determine the viability of using a heap leach recovery process. Results are expected to be released during the second quarter of 2010.

        As the Company is now focusing on the most prospective properties from the Acquisitions, in 2009 we began the process of rationalizing the lowest priority exploration areas by allowing those claims to lapse as they come due. Accordingly, we recorded a write-off of long lived assets for 2009 of $16.6 million of which $15.8 million related to our Nevada mineral property interests. The remainder of the write-off was due to an impairment charge recorded for mobile mining equipment in Mexico.

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        In order to fund our continued exploration programs, we successfully completed a public offering pursuant to a registration statement filed with U.S. securities regulators and a prospectus filed with Canadian securities regulators. In May 2009, we issued 25.15 million shares of common stock at a price of $2.00 per share (before the underwriters' commissions and expenses). This provided the Company with net cash of $46.3 million and we ended 2009 with working capital of $42.5 million.

Competitive Business Conditions

        We compete with many companies in the mining industry, including large, established mining companies with substantial capabilities, personnel, and financial resources. There is a limited supply of desirable mineral lands available for claim-staking, lease, or acquisition in the U.S., Mexico, and other areas where we may conduct exploration activities. We may be at a competitive disadvantage in acquiring mineral properties, since we compete with these individuals and companies, many of which have greater financial resources and larger technical staffs than we do. From time to time, specific properties or areas which would otherwise be attractive to us for exploration or acquisition may be unavailable due to their previous acquisition by other companies or our lack of financial resources.

        Competition in the industry is not limited to the acquisition of mineral properties, but also extends to the technical expertise to find, advance, and operate such properties; the labor to operate the properties; and the capital for the purpose of funding such exploration and development. Many competitors not only explore for and mine precious metals, but conduct refining and marketing operations on a world-wide basis. Such competition may result in our company being unable not only to acquire desired properties, but to recruit or retain qualified employees or to acquire the capital necessary to fund our operation and advance our properties. Our inability to compete with other companies for these resources would have a material adverse effect on our results of operation, financial condition and cash flows.

General Government Regulations

United States

        Mining in the State of Nevada is subject to federal, state and local law. Three types of laws are of particular importance to our U.S. mineral properties: those affecting land ownership and mining rights; those regulating mining operations; and those dealing with the environment.

        Land Ownership and Mining Rights.    The Tonkin Springs property is situated on lands owned by the United States (Federal Lands). On Federal Lands, mining rights are governed by the General Mining Law of 1872 (General Mining Law) as amended, 30 U.S.C. §§ 21-161 (various sections), which allows the location of mining claims on certain Federal Lands upon the discovery of a valuable mineral deposit and proper compliance with claim location requirements. A valid mining claim provides the holder with the right to conduct mining operations for the removal of locatable minerals, subject to compliance with the General Mining Law and Nevada state law governing the staking and registration of mining claims, as well as compliance with various federal, state and local operating and environmental laws, regulations and ordinances. As the owner or lessee of the unpatented mining claims, we have the right to conduct mining operations on the lands subject to the prior procurement of required operating permits and approvals, compliance with the terms and conditions of any applicable mining lease, and compliance with applicable federal, state, and local laws, regulations and ordinances.

        Mining Operations.    The exploration of mining properties and development and operation of mines is governed by both federal and state laws. The Tonkin Springs property is administered by the United States Department of the Interior, Bureau of Land Management, which we refer to as the BLM. In general, the federal laws that govern mining claim location and maintenance and mining operations on Federal Lands, including the Tonkin Springs property, are administered by the BLM. Additional federal

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laws, such as those governing the purchase, transport or storage of explosives, and those governing mine safety and health, also apply.

        The State of Nevada likewise requires various permits and approvals before mining operations can begin, although the state and federal regulatory agencies usually cooperate to minimize duplication of permitting efforts. Among other things, a detailed reclamation plan must be prepared and approved, with bonding in the amount of projected reclamation costs. The bond is used to ensure that proper reclamation takes place, and the bond will not be released until that time. The Nevada Department of Environmental Protection, which we refer to as the NDEP, is the state agency that administers the reclamation permits, mine permits and related closure plans on our Nevada property. Local jurisdictions (such as Eureka County) may also impose permitting requirements (such as conditional use permits or zoning approvals).

        Environmental Law:    The development, operation, closure, and reclamation of mining projects in the United States requires numerous notifications, permits, authorizations, and public agency decisions. Compliance with environmental and related laws and regulations requires us to obtain permits issued by regulatory agencies, and to file various reports and keep records of our operations. Certain of these permits require periodic renewal or review of their conditions and may be subject to a public review process during which opposition to our proposed operations may be encountered. We are currently operating under various permits for activities connected to mineral exploration, reclamation, and environmental considerations. Unless and until a mineral resource is proved, it is unlikely our operations will move beyond the exploration stage. If in the future we decide to proceed beyond exploration, there will be numerous notifications, permit applications, and other decisions to be addressed at that time.

Mexico

Mining Regulations

        Exploration and exploitation of minerals in Mexico may be carried out through Mexican companies incorporated under Mexican law by means of obtaining mining concessions. Mining concessions are granted by the Mexican government for a period of fifty years from the date of their recording in the Public Registry of Mining and are renewable for a further period of fifty years upon application within five years of the expiration of such concession in accordance with the Mining Law and its Regulations. Failure to do so prior to expiration of the term of the exploration concession will result in termination of the concession.

        Mining concessions are subject to annual work requirements and payment of annual surface taxes which are assessed and levied on a semi-annual basis. Such concessions may be transferred or assigned by their holders, but such transfers or assignments must be registered with the Public Registry of Mining in order to be valid against third parties.

        The holder of a concession must pay semi-annual duties in January and July of each year on a per hectare basis and in accordance with the amounts provided by the Federal Fees Law.

        During the month of May of each year, the concessionaire must file with the General Bureau of Mines, the work assessment reports made on each concession or group of concessions for the preceding calendar year. The Regulations of the Mining Law provides tables containing the minimum investment amounts that must be made on a concession. This amount is updated annually in accordance with the variation of the Consumer Price Index.

        Mexican mining law does not require payment of finder's fees or royalties to the government, except for a discovery premium in connection with national mineral reserves, concessions and claims or allotments contracted directly from the Mexican Geological Survey. None of the claims held by any subsidiaries of US Gold are under such a discovery premium regime. However, the PRI, which is the

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main opposition party in Mexico, with the support of other opposition parties, has introduced in the Chamber of Deputies a 4% mining royalty on production. The opposition parties collectively have a majority in both the Chamber of Deputies and the Senate, with the governing PAN a minority. The opposition numbers are sufficient (over ²/3) to override a Presidential veto in the Chamber but not in the Senate. To date, the Government has been silent on the royalty proposal.

        There are no limitations on the total amount of surface covered by mining concessions.

Environmental Law

        The Environmental Law in Mexico called the General Law of Ecological Balance and Protection to the Environment ("General Law"), provides for general environmental policies, with specific requirements for certain activities such as exploration set forth in regulations called "Mexican official norms". Responsibility for enforcement of the General Law, the regulations and the Mexican official norms is with the Ministry of Environment and Natural Resources, which regulate all environmental matters with the assistance of Procuraduría Federal de Proteccion al Ambiente (PROFEPA).

        The primary laws and regulations used by the State of Sinaloa in order to govern environmental protection for mining and exploration are: the General Law, Forestry Law, Residues Law, as well as their specific regulations on air, water and residues, and the Mexican official norms ("NOM-120"). In order to comply with the environmental regulations, a concessionaire must obtain a series of permits during the exploitation and exploration stage. The time required to obtain the required permits is dependent on a number of factors including the type of vegetation and trees impacted by proposed activities.

Employees

        As of March 10, 2010, we had 110 employees including 10 employees based in the U.S., 10 in Canada and 90 in Mexico. All of our employees based in Canada work in an executive or administrative position, while our employees in the U.S. and Mexico include geologists, environmentalists, information technologists, and office administrators. None of our employees are covered by union labor contracts and the Company believes we have good relations with our employees. We also engage independent contractors in connection with the exploration of our properties, such as drillers, geophysicists, geologists, and other technical disciplines.

ITEM 1A.    RISK FACTORS

        This report, including Management's Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements that may be affected by several risk factors. The following information summarizes all material risks known to us as of the date of filing this report:

        We have incurred substantial losses since our inception in 1979 and may never be profitable.    Since our inception in 1979, we have never been profitable and we have not generated revenue from operations since 1990. As of December 31, 2009, our accumulated deficit was approximately $298 million (including a non-cash expense of approximately $52 million related to derivative instrument accounting in the year ended December 31, 2006, a non-cash expense of approximately $107 million related to impairment of the Company's goodwill, all of which was related to the Acquired Companies, in the year ended December 31, 2008, and a non-cash expense of approximately $17 million related to the write-off of long-lived assets in the year ended December 31, 2009). To become profitable, we must identify additional mineralization and establish economic reserves on our properties, and then either develop our properties or locate and enter into agreements with third party operators. It could be years before we receive any revenues from production, if ever. We may suffer significant additional losses in the future and may never be profitable. We do not expect to receive revenue from operations in the foreseeable future, if at all. Even if we do achieve profitability, we may not be able to sustain or

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increase profitability on a quarterly or annual basis. We expect to incur losses unless and until such time as one or more of our properties enter into commercial production and generate sufficient revenue to fund our continuing operations.

        The feasibility of mining any of our properties has not been established, meaning that we have not completed sufficient exploration or other work necessary to determine if it is commercially feasible to develop any of our properties.    We are currently an exploration stage company. We have no proven or probable reserves on our properties as defined by U.S. law. A "reserve," as defined by regulation of the Securities and Exchange Commission ("SEC"), is that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. A reserve requires a feasibility study demonstrating with reasonable certainty that the deposit can be economically extracted and produced. We have not carried out any feasibility study with regard to any of our properties. As a result, we currently have no reserves and there are no assurances that we will be able to prove that there are reserves on our properties.

        The mineralized material identified on our properties does not and may never have demonstrated economic viability. Substantial expenditures are required to establish reserves through drilling and additional study and there is no assurance that reserves will be established. The feasibility of mining on our Tonkin or Magistral properties or any other property has not been, and may never be, established. Whether a mineral deposit can be commercially viable depends upon a number of factors, including the particular attributes of the deposit, including size, grade and proximity to infrastructure; metal prices, which can be highly variable; and government regulations, including environmental and reclamation obligations. If we are unable to establish some or all of our mineralized material as proven or probable reserves in sufficient quantities to justify commercial operations, we may not be able to raise sufficient capital to develop a mine, even if one is warranted. If we are unable to establish such reserves, the market value of our securities may suffer, and you may lose some or all of your investment.

        There are significant differences in U.S. and Canadian practices for reporting reserves and resources.    Our estimates of mineralized material have been prepared in accordance with standards of the Canadian Institute of Mining, Metallurgy and Petroleum referred to in Canadian National Instrument 43-101, commonly known as NI 43-101. These standards are different from the standards generally permitted to report reserve and other estimates in reports and other materials filed with the SEC. Under NI 43-101, we report measured, indicated and inferred resources, measurements which are generally not permitted in filings made with the SEC. Under SEC rules, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. U.S. investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves. Further, "inferred resources" have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Canadian regulations permit disclosure of "contained ounces", however, the SEC only permits issuers to report "mineralized material" in tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization contained in our public filings may not be comparable to information made public by other U.S. companies subject only to the U.S. reporting and disclosure requirements of the SEC.

        Historical production of gold at our Tonkin or Magistral properties may not be indicative of the potential for future development or revenue.    Historical production of gold from our Tonkin property came from relatively shallow deposits, in very limited quantities and for a very limited period of time. We commenced exploration of deeper zones of our Tonkin property in 2006 in an effort to identify additional mineralized material, and recently have identified priority exploration drilling targets on our Tonkin, Gold Bar and Limo properties in Nevada. In Mexico, the Magistral Mine produced gold from 2002 through 2005, but it was shut down in 2006 and is currently held by us on a care and maintenance

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basis. In recent years, we increased our expenditures for exploration for our Mexico properties in and around the Magistral Mine. However, due to uncertainties associated with exploration, including variations in geology and structure, there is no assurance that our efforts will be successful or that prior drilling results are reflective of additional or economically developable deposits. Investors in our securities should not rely on our historical operations as an indication that we will ever place any of our mining properties into commercial production again.

        We will require significant additional capital to continue our exploration activities, and, if warranted, to develop mining operations.    Substantial expenditures will be required to determine if proven and probable mineral reserves exist at any of our properties, to develop metallurgical processes to extract metal or to develop the mining and processing facilities and infrastructure at any of our properties or mine sites. We have spent and will be required to continue to expend significant amounts of capital for drilling, geological and geochemical analysis, assaying, and, if warranted, feasibility studies with regard to the results of our exploration. We may not benefit from these investments if we are unable to identify commercially exploitable mineralized material. If we do locate commercially mineable material or decide to put one or more of our properties into production, we may be required to upgrade our processing facility at the Magistral Mine or the Tonkin property or construct new facilities. Our ability to obtain necessary funding for these purposes, in turn, depends upon a number of factors, including the status of the national and worldwide economy and the price of gold and other precious metals. Capital markets worldwide have been adversely affected by substantial losses by financial institutions, in turn caused by investments in asset-backed securities. We may not be successful in obtaining the required financing, or if we can obtain such financing, such financing may not be on terms that are favorable to us. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration or development and the possible, partial or total loss of our potential interest in certain properties.

        The figures for our estimated mineralized material are based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.    Unless otherwise indicated, mineralization figures presented in our filings with securities regulatory authorities including the SEC, press releases and other public statements that may be made from time to time are based upon estimates made by independent geologists and our internal geologists. When making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations as to the mineralized material and grades of mineralization on our properties. Until ore is actually mined and processed, mineralized material and grades of mineralization must be considered as estimates only.

        These estimates are imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. We cannot assure you that:

•

these estimates will be accurate;



•

mineralization estimates will be accurate; or



•

this mineralization can be mined or processed profitably.

        Any material changes in mineral estimates and grades of mineralization will affect the economic viability of placing a property into production and such property's return on capital. There can be no assurance that minerals recovered in small scale tests will be recovered in large-scale tests under on-site conditions or in production scale.

        The estimates contained in our public filings have been determined and valued based on assumed future prices, cut-off grades and operating costs that may prove to be inaccurate. Extended declines in market prices for gold and/or silver may render portions of our mineralization estimates uneconomic and result in reduced reported mineralization or adversely affect the commercial viability of one or

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more of our properties. Any material reductions in estimates of mineralization, or of our ability to extract this mineralization, could have a material adverse effect on our results of operations or financial condition.

        The integration of any other acquisitions that we may pursue will present significant challenges.    The investigation of any other acquisitions, integration of our operations with any other acquisitions we may pursue and the consolidation of those operations will require the dedication of management resources, which will temporarily divert attention from the day-to-day business of the Company. The process of combining the organizations may cause an interruption of, or a loss of momentum in, the activities of any or all of the Company's businesses, which could have an adverse effect on the operating results of the combined company for an indeterminate period of time. The failure to successfully integrate any such acquisitions, to retain key personnel and to successfully manage the challenges presented by the integration process may prevent us from achieving the anticipated potential benefits of any such acquisitions. If we fail to realize the anticipated benefits of any such acquisitions, our results of operations, financial condition and cash flows may be adversely affected.

        Fluctuating gold and silver prices could negatively impact our business.    The potential for profitability of our gold and silver mining operations and the value of our mining properties are directly related to the market price of gold and silver. The price of gold and silver may also have a significant influence on the market price of our common stock. The market price of gold and silver historically has fluctuated significantly and is affected by numerous factors beyond the control of any mining company. These factors include supply and demand fundamentals, expectations with respect to the rate of inflation, the relative strength of the U.S. dollar and other currencies, interest rates, gold and silver sales and loans by central banks, forward sales by metal producers, accumulation and divestiture by exchange traded Funds, global or regional political, economic or banking crises, and a number of other factors. The market price of silver is also affected by industrial demand. The selection of a property for exploration or development, the determination to construct a mine and place it into production, and the dedication of funds necessary to achieve such purposes are decisions that must be made long before the first revenues, if any, from production will be received. Price fluctuations between the time that such decisions are made and the commencement of production can have a material adverse effect on the economics of a mine.

        The volatility in gold and silver prices is illustrated by the following table, which sets forth, for the periods indicated (calendar year), the average annual market prices in U.S. dollars per ounce of gold and silver, based on the daily London P.M. fix.

Average Annual Market Price of Gold and Silver (per oz.)

        The volatility of mineral prices represents a substantial risk which no amount of planning or technical expertise can fully eliminate. In the event gold and silver prices decline and remain low for prolonged periods of time, we might be unable to develop our properties, which may adversely affect our results of operations, financial performance and cash flows.

        Our continuing reclamation obligations at the Tonkin property and other properties could require significant additional expenditures.    We are responsible for the reclamation obligations related to disturbances located on all of our properties, including the Tonkin property. We have posted a bond in the amount of the estimated reclamation obligation at the Tonkin project. We are required to submit a mine closure plan to the BLM for the Tonkin property during the fourth quarter of 2010. There is a significant risk that our bonding requirements will increase subsequent to the submission of the closure

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plan. We have not posted a bond in Mexico, as none is required. There is a risk that any cash bond, even if increased based on the analysis and work performed to update the reclamation obligations, could be inadequate to cover the actual costs of reclamation when carried out. The satisfaction of bonding requirements and continuing reclamation obligations will require a significant amount of capital. There is a risk that we will be unable to fund these additional bonding requirements, and further, that the regulatory authorities may increase reclamation and bonding requirements to such a degree that it would not be commercially reasonable to continue exploration activities, which may adversely affect our results of operations, financial performance and cash flows.

        Our ongoing operations and past mining activities are subject to environmental risks, which could expose us to significant liability and delay, suspension or termination of our operations.    All phases of our operations are subject to federal, state and local environmental regulation. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for us and our officers, directors and employees. Future changes in environmental regulation, if any, may adversely affect our operations, make our operations prohibitively expensive, or prohibit them altogether. Environmental hazards may exist on our properties that are unknown to us at the present and that have been caused by us, one of the Acquired Companies, or previous owners or operators, or that may have occurred naturally. Mining properties that the Acquired Companies may have transferred may cause us to be liable for remediating any damage that those companies may have caused. The liability could include response costs for removing or remediating the release and damage to natural resources, including ground water, as well as the payment of fines and penalties.

        We have transferred our interest in several mining properties over past years, some of which are now being operated by third parties. Under applicable U.S. federal and state environmental laws, as prior owner of these properties, we may be liable for remediating any damage that we may have caused. The liability could include response costs for removing or remediating the release and damage to natural resources, including ground water, as well as the payment of fines and penalties.

        Failure to comply with applicable environmental laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities, causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.

        Production, if any, at our property will involve the use of hazardous materials. Should these materials leak or otherwise be discharged from their containment systems, we may become subject to liability. We have not purchased insurance for environmental risks including potential liability for pollution or other hazards as a result of the disposal of waste products occurring from exploration and production, as it is not generally available at a reasonable price.

        Our operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations on our mining property.     Our operations, including ongoing exploration drilling programs, require permits from the state and federal governments. We may be unable to obtain these permits in a timely manner, on reasonable terms, or at all. Even if we are able to obtain such permits, the time required by the permitting process can be significant. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for exploration of our properties will be adversely affected, which may in turn adversely affect our results of operations, financial condition and cash flows.

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        Our operations in Mexico are subject to potential changes in political conditions and regulations and crime in that country.    Our Magistral Mine and certain other concessions are located in Mexico, and are subject to Mexican federal and state laws and regulations. As a result, our mining investments are subject to the risks normally associated with the conduct of business in foreign countries. In the past, Mexico has been subject to political instability, changes and uncertainties which may cause changes to existing government regulations affecting mineral exploration and mining activities. Civil or political unrest could disrupt our operations at any time. Our Magistral Mine is in a region that is subject to violence in connection with the illegal drug trade. An increase in criminal activity and violent crime, especially in connection with such drug trade, could impact our ability to operate safely in the region or to bring in needed consultants and contractors. Our exploration and mining activities may be adversely affected in varying degrees by changing government regulations relating to the mining industry or shifts in political conditions that could increase the costs related to our activities or maintaining our properties.

        Title to mineral properties can be uncertain, and we are at risk of loss of ownership of one or more of our properties.    Our ability to explore and operate our properties depends on the validity of title to that property. Our U.S. mineral properties consist of leases of unpatented mining claims, and unpatented mining and millsite claims. Unpatented mining claims provide only possessory title and their validity is often subject to contest by third parties or the federal government, which makes the validity of unpatented mining claims uncertain and generally more risky. These uncertainties relate to such things as the sufficiency of mineral discovery, proper posting and marking of boundaries, assessment work and possible conflicts with other claims not determinable from public record. Since a substantial portion of all mineral exploration, development and mining in the U.S. now occurs on unpatented mining claims, this uncertainty is inherent in the mining industry. We have not obtained a title opinion on our entire property, with the attendant risk that title to some claims, particularly title to undeveloped property, may be defective. There may be valid challenges to the title to our property which, if successful, could impair development and/or operations.

        We remain at risk that the mining claims may be forfeited either to the U.S., or to rival private claimants due to failure to comply with statutory requirements as to location and maintenance of the claims or challenges to whether a discovery of a valuable mineral exists on every claim.

        Legislation has been proposed that would significantly affect the mining industry.    Periodically, members of the U.S. Congress have introduced bills which would supplant or alter the provisions of the General Mining Law of 1872, which governs the unpatented claims that we control with respect to our U.S. properties. One such amendment has become law and has imposed a moratorium on patenting of mining claims, which reduced the security of title provided by unpatented claims such as those on our U.S. properties. If additional legislation is enacted, it could substantially increase the cost of holding unpatented mining claims by requiring payment of royalties, and could significantly impair our ability to develop mineral estimates on unpatented mining claims. Such bills have proposed, among other things, to make permanent the patent moratorium, to impose a federal royalty on production from unpatented mining claims and to declare certain lands as unsuitable for mining. Although it is impossible to predict at this time what royalties may be imposed in the future, the imposition of such royalties could adversely affect the potential for development of such mining claims, and the economics of existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our business.

        On March 1, 2010, Nevada's State Assembly and Senate passed Assembly Bill No. 6 ("AB6") which sought to balance the state budget by reducing expenditures and increasing certain fees. Among those fee increases was a one-time fee payable in conjunction with the annual filing of an affidavit of the work performed on or improvements made to a mining claim, or an affidavit of the intent to hold a mining claim with a tiered fee structure applied for holders of 11 or more claims. The fee ranges from $70 per claim for holders of 11 to 199 claims up to $195 per mining claim for holders of 1,300 or more

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claims as of the date of filing. The Company is still reviewing the potential impact of this bill, however, as one of the state's largest claim holders, US Gold and its subsidiaries in the state would have to pay approximately $1.6 million due to this fee on or before June 1, 2011, based on the number of claims held at December 31, 2009. As of March 10, 2010, AB6 has not been signed by the Governor.

        In Mexico, the PRI, which is the main opposition political party, with the support of other opposition parties, has introduced in the Chamber of Deputies a 4% mining royalty on production. The opposition parties collectively have a majority in both the Chamber of Deputies and the Senate, with the governing PAN party a minority. The opposition numbers are sufficient (over ²/3) to override a Presidential veto in the Chamber but not in the Senate. To date, the Government has been silent on the royalty proposal.

        A significant portion of the lode claims comprising our Tonkin property are subject to a lease in favor of a third party which may expire in 2011 and which provides for a 5% royalty on production.    A total of 372 of our mining and millsite claims at the Tonkin property are subject to this lease. The lease requires annual payments of $187,500 or 568.75 ounces of gold, whichever is greater, and payment of a royalty of 5% of the gross sales price of gold or silver from the property before deduction of any expenses from the gross sales price. The term of this lease expires January 1, 2011 and can be extended from year to year, up to a maximum of 99 years, by production from or other activities on the leased claims. This lease covers a portion of the claims in the mine corridor where most of our mineralized material relating to the Tonkin project has been identified. In the event the lease is not extended and/or we are unable to purchase the claims from the owner, we may be forced to forfeit the underlying claims, which in turn may adversely affect our ability to explore and develop the property. If we are successful in identifying sufficient mineralization to warrant placing the property into production, we will be obligated to pay the leaseholder a royalty of 5% of the production. The payment of this royalty, together with other royalties payable to third parties in respect of certain claims, will reduce our potential revenue.

        Gain recognized by non-U.S. holders and non-U.S. persons holding any interest in the Company other than solely as a creditor (including, for example, convertible debt) on the sale or other disposition of our securities may be subject to U.S. federal income tax.    We believe that we currently are a "United States real property holding corporation" under section 897(c) of the Internal Revenue Code, or USRPHC, and that there is a substantial likelihood that we will continue to be a USRPHC. Generally, securities (other than securities that provide no interest in a corporation other than solely as a creditor) issued by a corporation that has been a USRPHC at any time during the preceding five years (or the non-U.S. holder's holding period for such securities, if shorter) are treated as United States real property interests, or USRPIs, and gain recognized by a non-U.S. holder on the sale or other disposition of securities is subject to regular U.S. federal income tax, as if such gain were effectively connected with the conduct by such holder of a U.S. trade or business. There are, however, certain exceptions pursuant to which our securities may not be treated as USRPIs provided that our common stock is "regularly traded" on an "established securities market." Under one such exception, shares of our common stock will not be treated as USRPIs in the hands of a non-U.S. holder provided that such non-U.S. holder has not owned or been deemed to own (directly or under certain constructive ownership rules) more than 5% of the common stock at any time during the 5-year period ending on the date of the sale or other taxable disposition. Under any exception, classes of our securities other than common stock will not generally be treated as USRPIs in the hands of a non-U.S. holder provided that, on the date such security was acquired by the non-U.S. holder, it had a fair market value not greater than the fair market value on that date of 5% of our common stock (or, under certain circumstances, the value, if lower, of 5% of any other regularly traded class of our stock, which may possibly include the exchangeable shares of our subsidiary, US Gold Canadian Acquisition Corporation ("Canadian Exchange Co.")). If gain recognized by a non-U.S. holder from the sale or other disposition of our common stock or other securities is subject to regular income tax under these rules, the transferee of

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such common stock or other securities may be required to deduct and withhold a tax equal to 10 percent of the amount realized on the sale or other disposition, unless certain exceptions apply. Any tax withheld may be credited against the U.S. federal income tax owed by the non-U.S. holder for the year in which the sale or other disposition occurs.

        We cannot assure you that we will have an adequate supply of water to complete desired exploration or development of our mining properties.    In accordance with the laws of the State of Nevada, we have obtained permits to drill the water wells that we currently use to service the Tonkin property and we plan to obtain all required permits for drilling water wells to serve other properties we may develop or acquire in the future. However, the amount of water that we are entitled to use from those wells must be determined by the appropriate regulatory authorities. A final determination of these rights is dependent in part on our ability to demonstrate a beneficial use for the amount of water that we intend to use. Unless we are successful in developing the property to a point where we can commence commercial production of gold or other precious metals, we may not be able to demonstrate such beneficial use. Accordingly, there is no assurance that we will have access to the amount of water needed to operate a mine at the property, which may prevent us from generating revenue, and which would adversely affect our financial condition and cash flows.

        The nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses that could materially and adversely affect our operations.    Exploration for minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Few properties that are explored are ultimately advanced to production. Our current exploration efforts are, and any future development or mining operations we may elect to conduct will be, subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as, but not limited to:

•

economically insufficient mineralized material;



•

fluctuations in production costs that may make mining uneconomical;



•

labor disputes;



•

unanticipated variations in grade and other geologic problems;



•

environmental hazards;



•

water conditions;



•

difficult surface or underground conditions;



•

industrial accidents;



•

metallurgical and other processing problems;



•

mechanical and equipment performance problems;



•

failure of pit walls or dams;



•

unusual or unexpected rock formations;



•

personal injury, fire, flooding, cave-ins and landslides; and



•

decrease in reserves due to a lower gold price.

        Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures, potential revenues and production dates. We currently have no insurance to guard against any of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would

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incur a writedown of our investment in these interests. All of these factors may result in losses in relation to amounts spent which are not recoverable.

        We do not insure against all risks to which we may be subject in our planned operations.    While we currently maintain insurance to insure against general commercial liability claims, we do not maintain insurance to cover all of the potential risks associated with our operations. Certain of our exploration properties such as Gold Bar and Limo have no existing infrastructure for which we insure, and we do not insure our limited physical assets at the Magistral Mine or Tonkin property. For example, we do not have insurance on the mill at our Tonkin property nor the mine assets associated with the Magistral property and we do not have business interruption insurance. We may also be unable to obtain insurance to cover other risks at economically feasible premiums or at all. Insurance coverage may not continue to be available, or may not be adequate to cover liabilities. We might also become subject to liability for environmental, pollution or other hazards associated with mineral exploration and production which may not be insured against, which may exceed the limits of our insurance coverage or which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could materially adversely affect our financial condition and our ability to fund activities on our property. A significant loss could force us to reduce or terminate our operations.

        We depend on a limited number of personnel and the loss of any of these individuals could adversely affect our business.    Our company is primarily dependent on two persons, namely our Chairman and Chief Executive Officer, and our Vice President and Chief Financial Officer. Robert R. McEwen, our Chairman and Chief Executive Officer, is responsible for strategic direction and the oversight of our business. Perry Y. Ing, our Vice President and Chief Financial Officer, is responsible for our public reporting and administrative functions. We rely heavily on these individuals for the conduct of our business. The loss of either of these officers would significantly and adversely affect our business. In that event, we would be forced to identify and retain an individual to replace the departed officer. We may not be able to replace one or more of these individuals on terms acceptable to us. We have no life insurance on the life of any officer.

        We are required to annually evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have a material adverse effect on the price of our common stock.    Under Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on internal control over financial reporting. Such a report must contain, among other matters, an assessment of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by our management. If we are unable to maintain and to assert that our internal control over financial reporting is effective, or if we disclose material weaknesses in our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports, which could have a material adverse effect on our stock price.

        The acquisition of the Acquired Companies has and may further result in the issuance of a significant amount of additional US Gold common stock which may in turn depress the trading price of our stock or other securities.    The acquisition of the Acquired Companies resulted in the issuance of approximately 42,968,830 exchangeable shares of Canadian Exchange Co., each of which is convertible into shares of our common stock on a one-for-one basis. As of December 31, 2009, 15,355,122 exchangeable shares remain outstanding. If all of those exchangeable shares were converted into common stock, it would represent an increase in the outstanding shares of US Gold common stock as of December 31, 2009 of approximately 14%. The conversion of the remaining outstanding exchangeable shares could depress the trading price of our common stock.

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        The exercise of outstanding options and warrants and the future issuances of our common stock will dilute current shareholders and may reduce the market price of our common stock.    As of March 10, 2010, we had outstanding options and warrants to purchase a total of 12,203,500 shares of our common stock, which if completely exercised, would dilute existing shareholders' ownership by approximately 10%, assuming all exchangeable shares not held by US Gold or our subsidiaries are exchanged for an equivalent amount of our common stock. Under certain circumstances, our Board of Directors has the authority to authorize the offer and sale of additional securities without the vote of or notice to existing shareholders. Based on the need for additional capital to fund expected growth, it is likely that we will issue additional securities to provide such capital and that such additional issuances may involve a significant number of shares. Issuance of additional securities in the future will dilute the percentage interest of existing shareholders and may reduce the market price of our common stock.

        Our stock price may be volatile and as a result you could lose all or part of your investment.    In addition to volatility associated with publicly traded securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock:

•

changes in the worldwide price for gold and/or silver;



•

disappointing results from our exploration or development efforts;



•

failure to meet our operating budget;



•

decline in demand for our common stock;



•

downward revisions in securities analysts' estimates or changes in general market conditions;



•

technological innovations by competitors or in competing technologies;



•

investor perception of our industry or our prospects; and




•

general economic trends.

        In addition, stock markets generally have experienced extreme price and volume fluctuations and the market prices of securities generally have been highly volatile. These fluctuations are often unrelated to operating performance of a company and may adversely affect the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.

        A small number of existing shareholders own a significant portion of our common stock, which could limit your ability to influence the outcome of any shareholder vote.    Our chairman and chief executive officer, Robert McEwen, beneficially owns approximately 21% of our common stock as of March 10, 2010 (assuming all exchangeable shares not held by US Gold or our subsidiaries are exchanged for an equivalent amount of our common stock). Under our Articles of Incorporation and the laws of the State of Colorado, the vote of a majority of the shares voting at a meeting at which a quorum is present is generally required to approve most shareholder action. As a result, this individual will be able to significantly influence the outcome of shareholder votes for the foreseeable future, including votes concerning the election of directors, amendments to our Articles of Incorporation or proposed mergers, acquisitions or other significant corporate transactions.

        We have never paid a dividend on our common stock and we do not anticipate paying one in the foreseeable future.    We have not paid a dividend on our common stock to date, and we may not be in a position to pay dividends in the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop one or more properties and generate revenue from operations. Further, our initial earnings, if any, will likely be retained to finance our growth. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors, and will be at the discretion of our Board of Directors.

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ITEM 1B.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 2.    PROPERTIES

Introduction

        Throughout 2009, we continued to hold a 100% interest in the historic Tonkin property and have begun the process of rationalizing the Nevada Pacific, White Knight and Tone properties acquired in 2007. Our total Nevada land position consists of approximately 260 square miles (673 sq. km), of which approximately 199 square miles (515 sq. km) are located on the Cortez Trend. We also continued to hold approximately 1,395 square miles (3,613 sq. km) of mineral rights in Mexico, including the Magistral Gold Mine located in the state of Sinaloa, Mexico.

        The following table summarizes the U.S. land position of our company as of December 31, 2009:

        The following Nevada trend map and property location map is presented to generally indicate the location of the trends and our properties:

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        For purposes of organizing and describing our exploration efforts in the United States, we have grouped our properties into four complexes, the Tonkin Complex, the Gold Bar Complex, the Limo Complex and the Battle Mountain Complex. Mineral properties outside these areas and where limited exploration work has been performed by us to date are grouped as "Other United States Properties". Certain properties are subject to certain royalty and earn-in rights. Please see the "Other United States Properties" section below for further information.

        In addition to the above-mentioned U.S. properties, we acquired mineral concessions in Mexico from our acquisition of Nevada Pacific in 2007, including the Magistral Mine. The Magistral Mine is located in northwestern Mexico, within Sinaloa state, Mocorito Municipality, Mexico. In addition to the Magistral Mine complex of approximately 38 sq. miles (98 sq. km), we acquired exploration concessions consisting of approximately 1,513 sq. miles (3,919 sq. km) located in the Mexican states of Sinaloa, Nayarit and Durango. In 2009, we began a closer examination of our Mexico properties and as a result we released our concessions in the state of Durango. In aggregate, we currently own an interest in approximately 1,395 sq. miles (3,613 sq. km) of mineral concessions in Mexico.

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        The following map illustrates the general location of the Magistral Mine and our mineral concessions in Mexico:

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Tonkin Complex

        Overview.    The Tonkin Complex includes our historic Tonkin property, together with additional properties and interests acquired in 2007. The Tonkin Complex is divided functionally into five areas: the Mine Corridor, Tonkin North, Patty, Keystone, and Tweed. The Tonkin Complex represents our largest holding in the State of Nevada at approximately 93 sq. miles (241 sq. km).

        Location.    The Tonkin Complex is located on the Cortez Trend, approximately 48 miles (77 km) by road northwest from Eureka, Nevada, 85 miles (137 km) by road southwest from Elko and 245 miles (394 km) by road east from Reno. The nearest commercial airport is located in Elko.

        Infrastructure.    The Tonkin Complex includes a mine site from operations in the 1980's with several small open pits, stockpile areas, plant and established infrastructure. In 1988 and 1989, an integrated carbon-in-leach bacterial oxidation plant was built. The plant and associated infrastructure was decommissioned and put on care and maintenance in June 1990, but apart from the SAG mill, which has been removed, it is complete and we believe it is in relatively good condition. The existing infrastructure also includes a water supply, water storage and distribution, sewage disposal, trailer park, fuel storage and distribution, grid and emergency power supply and distribution. Electrical power is supplied via existing 64kV power lines and a substation on the property. The power lines and substation are owned and maintained by Sierra Pacific Power Company. Existing facilities include an administration building, truck shop, assay laboratory, mill building, warehouse, and plant maintenance shop.

        History.    We obtained the first claims which now comprise the Tonkin Complex in 1985. Between 1985 and 1988, we produced approximately 26,000 ounces of gold from the heap leach operation from about 871,000 tons of ore.

        In 1988 and 1989, we constructed a mill with the proceeds of a debt financing. In 1989, we processed ore from the "Rooster" deposit, producing 1,753 ounces of gold. In 1990, using bio-oxidation and the carbon-in-leach circuits of the mill, we produced 2,735 additional ounces of gold from approximately 70,000 tons of sulfide ore mined from the property. To date, a total of approximately 30,517 ounces of gold has been produced at the Tonkin property.

        Since 1990, we have had a series of joint venture partners at the Tonkin property. These partners include Homestake Mining Company, Sudbury Contact Mines Limited, a subsidiary of Agnico-Eagle Mines Limited, and BacTech Mining Corporation. As a group, these companies conducted various types of exploration, including data compilation, geologic mapping, rock, soil and chemical sampling, and drilling, all focused primarily on the development of near-surface oxide and later, sulfide mineralization. For a variety of reasons, some of which are unknown to us, these relationships were terminated, returning 100% ownership of the property to us in 2005. We commenced a comprehensive drilling program in 2006, following an equity financing.

        Recent Exploration.    The following table summarizes drilling at our Tonkin Complex during 2008 and 2009:

        As noted in the previous table, drilling on the Tonkin Complex for 2009 totaled 4,890 ft. (1,490 m) in three reverse circulation drill holes. Additional exploration efforts at the Complex included geologic mapping and sampling. The objective of the 2009 program at the Tonkin Complex was to explore for feeders to the known mineralization in the North Mine Corridor area, testing new targets adjacent to the known mineralization identified through our three-dimensional modeling completed in 2008.

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        The following graphic depicts the Tonkin Complex:

        During 2008, a technical report completed on the Tonkin property concluded that mineralized material totals 35.6 million tons with an average grade of 0.041 oz gold/ton. Mineralized material cutoff grades were 0.018 oz gold/ton for sulfide and 0.012 oz gold/ton for oxide. This report provides a technical summary of the existing exploration and development activities and results, and the mineral potential of the Tonkin property. It was prepared in accordance with the standards on mineral resources of the Canadian Institute of Mining, Metallurgy and Petroleum. As a company listed on the Toronto Stock Exchange, we are required to comply with NI 43-101, which requires the preparation of a technical report and includes estimates of potential mineral resources for further targeted exploration disclosed pursuant to the applicable provisions of NI 43-101. However, U.S. reporting requirements for disclosure of mineral properties are governed by the SEC and included in the SEC's Securities Act Industry Guide 7 entitled "Description of Property by Issuers Engaged or to be Engaged in Significant Mining Operations" ("Guide 7"). NI 43-101 and Guide 7 standards are substantially different. For example, the SEC only permits the disclosure of proven or probable reserves, which in turn, requires the preparation of a feasibility study demonstrating the economic and legal feasibility of mining and processing the mineralization. We have not received a feasibility study with regard to our Tonkin property and therefore the Tonkin property has no "reserves" as defined by Guide 7. We cannot be certain that any part of the mineralized material at the Tonkin property will ever be confirmed or converted into Guide 7 compliant "reserves". U.S. investors are cautioned not to assume that all or any part of the mineralized material will ever be confirmed or converted into reserves or that any of the mineralized material can be economically or legally extracted.

        The 2009 exploration program at Tonkin was directed by in-house three-dimensional modeling that utilized surface geology, surface geochemistry, drill hole geochemistry, drill hole geology, drill hole and surface structure, and geophysical surveys. The program consisted of three reverse circulation drill holes totaling 4,890 feet (1,490 m) that tested three separate targets in the north area. Although none of these holes intersected ore grade mineralization, two contained weakly anomalous gold mineralization

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(30-245 ppb) with anomalous pathfinder elements. The significance of this mineralization is currently being evaluated.

        Geology.    The geology of the Tonkin Complex area is complicated. The primary host for mineralization is the Cambro-Ordovician Hales Formation, which consists of sandy limestones, siltstones, shales, and greenstones in the Mine Corridor area. These rocks are in apparent structural contact with Ordovician rocks of the Vinini Formation, Devonian Slaven Chert, Devonian McColley Canyon Formation and the Devonian Devils Gate Limestone. This assemblage has been intruded locally by Tertiary porphyritic dacite and andesite dikes. All rocks east and west of the Mine Corridor are overlain by Tertiary volcanic rocks. Gold mineralization is found in all of the rock types of the Hales Formation, Slaven Chert, and McColley Canyon Formation, as well as at the contact between internal units. Spotty gold occurs in other units in the Mine Corridor, but it has not been recorded in economic amounts to date.

        Patty Project.    The Tonkin Complex also includes the Patty Project, in which the Company holds a non-operating minority interest (30%) and where Barrick Gold U.S. Inc. ("Barrick") is manager and holds a 60% interest and the remaining 10% is owned by Chapleau Resources Ltd. The Patty Project is a large property (approximately 18.1 sq. miles) located in the northeast portion of the Tonkin Complex and consists of 544 unpatented mining claims. The 2009 exploration program expenditures totaled approximately $225,777, of which our portion was $67,733. In November 2009, Barrick informed us that it intended to cease management of the exploration program. An amendment to the joint venture agreement would need to be executed should that occur.

        In addition to exploration conducted during 2009, we completed the reclamation of certain access roads, and other existing disturbed areas at the Tonkin Complex.

        The mineral interests included in the Tonkin Complex are set forth in the following table:

        We generally hold mineral interests in the Tonkin Complex through unpatented mining and mill site claims, leases of unpatented mining claims, and joint venture and other agreements. Unpatented mining claims are held subject to paramount title in the United States. In order to retain these claims, we must pay annual maintenance fees to the BLM, and to the counties within which the claims are located. Rates for these jurisdictions vary and may change over time. Other obligations which must be met include obtaining and maintaining necessary regulatory permits, and lease and option payments to claim owners.

        Tonkin North.    The 372 claims covering the area of the property known as Tonkin North are owned by unaffiliated parties and held by us under a lease agreement. The term of this lease expires January 1, 2011 and may be extended from year to year, up to a maximum of 99 years, by production from or other activities on the leased claims. We believe that current and past exploration are sufficient to hold the lease and the Company has a significant carry-forward work commitment balance.

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        The lease requires payment of an annual advance royalty in the amount of $187,500 or the value of 568.75 ounces of gold, whichever is greater, due in January of each year. The lease also requires payment of production royalties of 5% of the gross sales price of gold or silver but provides for recapture of annual advance royalties previously paid. The existing balance of the advance royalties paid by us, after taking into account the January 2010 payment, is approximately $5.03 million, meaning that we would not be required to pay any production royalties until we produced approximately $101 million of gross revenue from the leased claims. Our interests in other claims included in the Tonkin Complex are subject to royalties ranging from 1% to 2% of any production from those claims.

        Cornerstone Property Lease.    The Company holds an interest in the Cornerstone property (106 claims) pursuant to a mining lease made effective as of May 25, 2004 (the "Lease") which extends for a period of 10 years and is renewable in 5-year increments to a maximum term not exceeding 99 years, subject to certain conditions. The lessor has a sliding-scale gross production royalty of 3-4% of gross production in respect to gold and silver, as well as other royalties on other valuable materials. The Lease requires annual minimum advance royalty payments of the greater of $50,000 or the dollar equivalent of 130 ounces of gold. In addition, the Lease requires annual work expenditures of $50,000. We believe that current and past exploration are sufficient to hold the lease and the Company has a carry-forward work commitment balance.

Gold Bar Complex

        The Gold Bar Complex is located south of the Tonkin Complex on the continuation of the Cortez Trend. The Gold Bar Complex is in the Roberts Creek Mountains, in Eureka County, Nevada, approximately 30 miles (48 km) northwest of the town of Eureka. The Complex may be accessed by traveling approximately 26 miles (42 km) west of Eureka on U.S. Highway 50, 17 miles (27 km) north on county-maintained and graded Three Bar Road. Several unimproved dirt roads lead from there up into the project area.

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        The following graphic depicts the Gold Bar Complex:

        An updated technical report completed to NI 43-101 standards was completed for the Gold Pick-Gold Ridge Project by Telesto Nevada Inc. in April 2009. This report concludes that the Gold Pick-Gold Ridge property contains mineralized material of 21,482,600 tons at an average grade of 0.032 oz gold/ton. During 1991 to 1994, a total of 2,079,000 tons of ore averaging 0.074 oz gold/ton were recovered by a former owner of the property, producing 133,865 ounces of gold.

        The Telesto report is based on 1,369 drill holes from historic Atlas drilling programs, 19 holes drilled in 2005-2006 by White Knight Resources Ltd., and 20 holes drilled by the Company in 2008. Seven of the 1,369 historic Atlas holes were drilled using diamond drill core and the rest were drilled using reverse circulation. A set of east-west cross sections was created at 30-meter intervals incorporating updated lithology and alteration features along with 3D modeling techniques. Geologic parameters and gold grades were plotted on the sections. Geologic and structural data from surface mapping was transferred to the sections. Geologic boundaries were rectified between sections and then gold envelopes were drawn to constrain interpolation of grades in the block model. Blocks within the mineral envelopes were assigned to either oxide or reduced categories. The 2009 exploration drilling discussed below was conducted subsequent to preparation of the technical report, so the 2009 drill results were not incorporated in the technical report.

        The updated technical report also included an estimate for the Cabin Creek Project located just east of the Gold Pick-Gold Ridge Project. The report concludes the Cabin Creek Property contains mineralized material of 3,174,000 tons at an average grade of 0.024 oz gold/ton. No mining has been done on the Cabin Creek Project. Modeling the Cabin Creek estimate employed essentially the same procedures described above for the Gold Pick-Gold Ridge estimate. The Cabin Creek estimate is based on 165 reverse circulation drill holes.

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        The following table summarizes drilling at our Gold Bar Complex during 2008 and 2009:

        Exploration drilling at the Gold Bar Complex in 2009 totaled approximately 71,510 ft. (21,796 m) in 109 reverse circulation drill holes that were focused on extensions to the Gold Pick-Gold Ridge and Cabin Creek mineralization. Geologic mapping and geochemical sampling were also conducted on the property. Exploration drilling was guided by the detailed cross-sections that were constructed to define mineralization during preparation of the mineralized material analysis.

        The 2009 drilling focused on these trends and continued to expand the gold mineralization. The best intercepts from this drilling are shown below:

        The Gold Pick-Gold Ridge area occurs on the Battle Mountain-Eureka mineral belt in a large window of lower-plate carbonate rocks surrounded by upper-plate rocks. The lower-plate carbonates at Gold Pick-Gold Ridge consist of an east-dipping section of Silurian Lone Mountain Dolomite, Devonian McColley Canyon Formation, Devonian Denay Formation, and Devonian Devils Gate Limestone (from oldest to youngest). Northwest-trending and northeast-trending structures cut the area; the Gold Pick mineralization is localized in an apparent northwest-trending horst of McColley Canyon Formation which is cut by a series of northeast-trending structures.

        Gold mineralization is hosted primarily in the Bartine Member of the McColley Canyon Formation, which consists of carbonate wackestones and packstones approximately 250 to 380 feet thick. Minor amounts of mineralization are found in the underlying dolomitic limestone Kobeh Member of the McColley Canyon Formation when it is adjacent to apparent feeder structures. Gold Pick-Gold Ridge is "Carlin-Type" sediment-hosted gold mineralization with typical associated alteration (decalcification, silicification) and trace elements (antimony, arsenic, mercury, and barium).

        Three-dimensional modeling by our geologists has led to the identification of an unconformity (erosional surface) between the basement and gold host rocks at the Gold Bar Project. Channels in this unconformity were filled with porous limestone, which then acted as preferred pathways for gold mineralization. Most of the gold mineralization in the Gold Pick-Gold Ridge area occurs in the porous limestones above these channels. Additional channels in this area are also targets for exploration in 2010.

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        Exploration in 2009 was conducted under various BLM Notices of Intent. All disturbances were reclaimed as per BLM regulation.

        Mineral interests included in the Gold Bar Complex are set forth in the following table:

Limo Property

        The Limo Property is located in east-central Nevada, along the eastern portion of Butte Valley and along the western edge of the Cherry Creek Range. It is located about 40 miles northwest of Ely, the county seat of White Pine County, at the southern end of the Carlin Trend.

        The project area lies between the historic Cherry Creek Mining District to the northeast and the deeply buried Butte Valley copper-molybdenum porphyry deposit to the southwest. The northeast-trending Black Metals fault system stretches between the two areas, and controls mineralization along its 15 mile (24 km) length. Access is gained from US Highway 93 via the town of Cherry Creek, and from US 50 via the Thirty Mile gravel road. Except for periods of heavy snowfall or excessive mud, the property is accessible most of the year.

        When the Limo Property was acquired in 2007, it was a large, 30 sq. mile (78 sq. km) property with historic production of approximately 93,000 ounces of gold. With additional claim staking in 2007 and 2008, the property position now totals approximately 44 sq. miles (114 sq km). We consider this property to be highly prospective. Gold mineralization has been identified in numerous places along the 15 mile (24 km) length of the property.

        Gold mineralization at the Limo Complex is localized along northeast- and northwest- trending fault zones, where favorable calcareous beds have been replaced within the Devonian-Mississippian Pilot and the Mississippian Chainman formations. The mineralization is "Carlin-style", with its associated alteration (decalcification, silicification, and argillization) and trace elements (antimony, arsenic, mercury and barium) suites.

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        The following graphic depicts the Limo Complex:

        A technical report compliant with NI 43-101 standards was completed on the Limo Project by Telesto Nevada Inc. in July 2009. This report concludes that the Resurrection Ridge/Golden Butte area of the Limo property contains mineralized material of 8,969,000 tons at an average grade of 0.023 oz gold/ton.

        The Telesto report is based on 680 drill holes from historic drilling programs by Amselco, Alta Bay, Kennecott and others and 32 holes drilled by us in 2007. Sets of east-west and north-south cross sections were created at 30-meter intervals. Geologic parameters and gold grades were plotted on the sections. Geologic and structural data from surface mapping were transferred to the sections. Geological boundaries were rectified between sections and then gold envelopes were drawn to constrain interpolation of grades in the block model.

        Exploration drilling at the Limo Property in 2009 totaled approximately 14,220 ft. (4,334 m) in 20 reverse circulation drill holes. The drilling was focused on two new targets outside the existing mineralization.

        Recoveries from historic mining and preliminary metallurgical tests conducted on 2007 drill core indicate that mineralization at the Limo Complex is primarily oxide in nature and amenable to current heap-leach technology.

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        The mineral interests controlled by us in the Limo property consist of 1,392 contiguous claims that cover approximately 44 square miles (114 sq km). The land package extends for about 15 miles (24 km), and covers much of the western side of the southern Cherry Creek Range.

        The Limo Property was previously subject to a joint venture between Nevada Pacific and Newmont Gold Company ("Newmont"), and in March 2003, Nevada Pacific acquired Newmont's interest in return for a sliding scale (1.5% to 2.5%) net smelter return royalty on all production from the property and from any claim acquired by Nevada Pacific within one mile of the property, with an advance payment to Newmont of $1 million to be made at the commencement of commercial production and credited against future royalty payments. Newmont has subsequently assigned this royalty interest to Franco-Nevada Corporation.

        In 2008, we submitted to the BLM a Plan of Operation that proposed a drill program within the project area. The Plan requested an additional 72 acres of disturbance that was yet to be determined on a site-specific basis. The Plan of Operation was approved and a reclamation bond was submitted to, and accepted by, state and federal regulatory authorities.

        In 2009, an amendment to the Plan of Operation proposing approximately two acres of site-specific disturbance in the project area was approved by regulatory authorities. The approved site-specific acreage reduces the surplus bonded acreage to approximately 70 acres.

Battle Mountain Complex

        In conjunction with the acquisitions in 2007, we acquired various property interests which have been grouped under the designation "Battle Mountain Complex." The Battle Mountain Complex is generally located within Humboldt and Lander Counties in the valleys and on the flanks of the mountains surrounding Battle Mountain on the Cortez Trend north of our Tonkin complex. Battle Mountain, Nevada, located off Interstate 80, is the closest town.

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        The following graphic depicts the Battle Mountain Complex:

        Exploration drilling will be initiated in early 2010 on the Valmy and Hits projects in the Battle Mountain Complex.

        The general exploration model for the Battle Mountain Complex is Carlin-style mineralization contained in structurally-controlled, intrusive-related, quartz-adularia-sericite, low-sulfidation deposits, and/or skarn mineralization.

        The mineral interests included in the Battle Mountain Complex are set forth in the following table:

Other United States Properties

        Through the acquisitions completed during 2007, we acquired a number of mineral properties in Nevada, some of which are subject to option agreements as discussed further below.

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        Mineral interests included in Other Properties are set forth in the following table:

        Royalty and Earn In Rights.    The mineral properties included in the acquisition of Tone (Roberts Creek, Kobeh, Gold Bar North, South Keystone, Big Antelope Springs, Red Ridge, Fish Creek and Kent Springs) are generally subject to a 1% net smelter return royalty interest in favor of KM Exploration Ltd, a Nevada limited liability company. Certain properties (Roberts Creek, Kobeh, Gold Bar North, South Keystone and Big Antelope Springs) are also subject to earn-in rights in favor of Teck Cominco American Incorporated ("Teck"), pursuant to a 2004 Financing and Acquisition Agreement ("Acquisition Agreement"). Pursuant to the Acquisition Agreement, Teck has the right to acquire a joint venture interest in certain of our properties subject to the Acquisition Agreement. In order to acquire a joint venture interest in any property, certain contingencies and benchmarks outlined in the Acquisition Agreement which are intended to benefit a specific property must be satisfied. Such benchmarks include for example: (i) Teck funding certain minimum holding, exploration, and development activities for the property; (ii) Teck arranging financing for the development of the property; and (iii) Teck having feasibility reports prepared for the property. The Acquisition Agreement assigns various equity earn-in percentages in the joint venture to Teck's various levels of expenditures on the property. Depending on the benchmarks and related contractual contingencies satisfied, Teck has an opportunity to acquire a joint venture interest of between 51%-75% of our interest in a maximum of two properties. Teck also has certain first rights of refusal if the Company determines to sell the Red Ridge property. Through December 31, 2009, the required contractual contingencies and benchmarks had not been satisfied to enable Teck to earn a joint venture interest in any of the properties subject to the Acquisition Agreement.

        New Pass and Squaw Creek.    In 2004, White Knight entered into an option agreement on the New Pass and Squaw Creek properties with Consolidated Odyssey Exploration Inc. ("Odyssey") whereby Odyssey may earn an initial 50% interest in each property. To earn this, Odyssey needs to provide cash payments to White Knight of $500,000, 500,000 of its common shares per property (which have been paid) and spend $2,000,000 in exploration expenditures per property over a four-year period. Odyssey may earn an additional 10% interest in each property by financing the completion of a feasibility study. Subsequently, Odyssey assigned all its rights under the option agreement to Bonaventure Enterprises Inc., a Canadian corporation ("Bonaventure") on September 30, 2005. Bonaventure alleges that its exploration expenditures reached the $2,000,000 earn-in mark during 2008 and the parties are currently investigating the formation of the joint venture. According to the original option agreement, Bonaventure will be the operator of the newly formed joint venture. Bonaventure did not complete the requirements to earn an additional 10% interest in the property.

Mexican Properties

        The Company has property in Mexico which includes the Magistral Mine Property, the Palmarito Project and the El Gallo Project. The Magistral Mine Property, located in Sinaloa State, produced approximately 70,000 ounces of gold from 2002-2005 before it was shut down due to higher than

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anticipated operating costs and a lack of working capital when gold was approximately $400 per ounce. In late 2006, the Magistral mine was placed on a care and maintenance basis.

        Including the projects discussed above, we currently control mineral concessions of approximately 1,395 sq. miles (3,613 sq. km) located in the Mexican states of Sinaloa and Nayarit. We hold our interests through ownership of Pangea Resources Inc. which in turn holds 100 percent ownership of Compania Minera Pangea S.A. de C.V. ("Minera Pangea"). The titles are granted under Mexican mining law and are issued by Secretaria de Economía, Coordinación General de Mineria, Dirección General de Minas (Dirección de Minas).

        The following map depicts the location of the Magistral Mine Property and the Palmarito and El Gallo projects.

Magistral Mine Property

        The Magistral Mine Property consists of 38 sq. miles (98 sq. km) of mineral concessions located in the Sinaloa state, of northwestern Mexico in Mocorito Municipality. The project is located approximately 62 miles (100 km) by air northwest of the Sinaloa state capital city of Culiacán in the western foothills of the Sierra Madre Occidental mountain range. The project area is located approximately 14 miles (22 km) northeast from the village of Mocorito, approximately 25 miles (40 km)

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northeast from the town of Guamuchil, and approximately 93 miles (150 km) southeast from the city of Los Mochis. It is a former producing open pit mining operation, with heap leach processing facilities, that until July 2005, was operating at a production rate of 900,000 ore tonnes per year. Past production came from the San Rafael and Samaniego Hill deposits.

        The mineralization at the Magistral Mine Property is classified as low-sulfidation epithermal gold-silver mineral system. The presence of biotite and K-feldspar, the lack of clay minerals, and the overprint of biotite by chlorite indicate that these veins were formed deep in the epithermal system. The main alteration and assemblages consist of quartz-chlorite/biotite-hematite, and minor sulphides.

        Mineralization within the various deposits of the Magistral Mine Property mine area is generally very similar, with the individual structural zones consisting of stockwork, breccia, and locally quartz vein mineralization occurring within sheared, broken, and propylitically altered volcanic rocks.

        Modern exploration activities at the Magistral Mine Property started in early 1995, initially for Mogul Mining NL and subsequently for Santa Cruz Gold Inc. From mid-1995 to early 1997, extensive drilling was conducted by Minera Pangea/Santa Cruz Gold on the San Rafael and Samaniego Hill deposit areas, as well as locally extensive drilling on the Sagrado Corazón-Central-Lupita deposit area. In 1998, Santa Cruz conducted a limited amount of additional drilling for metallurgical samples, reverse circulation grade verification, in-fill purposes, and condemnation of potential surface facility locations. In 1999, after a merger with Santa Cruz Gold, Queenstake conducted a limited drilling program to step-out/in-fill drill in the Samaniego Hill deposit and to obtain pit-slope geotechnical samples from both the San Rafael and Samaniego Hill deposits. Queenstake conducted a drilling campaign from late 2001 to early 2002 in the La Prieta Zone of the Samaniego Hill deposit to delineate extensions of the high grade La Prieta zone along strike and down dip.

        The Magistral Mine Property includes infrastructure associated with heap leach operations at the mine site and is currently used as our base for exploration. Infrastructure at Magistral includes offices and process buildings, as well as a heavy equipment maintenance shop and warehouse. An in-house laboratory has the capacity for fire assays along with atomic absorption, and includes a standard metallurgical testing facility. Telecommunications are provided by a microwave system that supplies modern telephone and internet service. The process plant includes a carbon circuit with a capacity of 12 tons of activated carbon. The gold recovery system includes a zinc precipitation circuit. The plant is powered by four 175 kW diesel generators. In 2009, we sold the four CAT 777B haul trucks and five Euclid R-50 trucks due to the age of the equipment for net proceeds of $654,637. The remaining heavy fleet of used equipment includes various loaders, excavators, bulldozers and conventional rotary drills. During 2009, with the assistance of a third party valuator, it was determined that our carrying value of this equipment were greater than the net realizable value. As a result, for the year ended December 31, 2009, we recorded a write-off of long-lived assets of $760,355.

        Care and Maintenance.    In October 2006, the mine was placed on care and maintenance. The pumping of solutions and operation of other plant equipment will continue on an "as needed" basis to maintain safe pond levels and to ensure that the plant equipment can be returned to service when and if a decision to restart the mine is made. Staffing levels have been maintained to the minimum required for these efforts and also to support exploration in the mine area.

        Royalties.    The Repadre Capital Corporation (owned by IAMGOLD Corporation) holds a net smelter return ("NSR") royalty based upon the quantity of gold produced by the project. For production up to 30,000 ounces, a 1.5 percent royalty is due. For production between 30,000 and 350,000 ounces, a royalty of 3.5 percent is required. Above 350,000 ounces the royalty drops to 1 percent. Since the mine has already produced more the 30,000 ounces the 1.5 percent royalty is no longer in effect and all future production up to the 350,000 ounce level will be subject to the 3.5 percent royalty rate.

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        The following map depicts the key mineralized areas at the Magistral Mine Property and surface facilities

Palmarito Project

        The Palmarito Project is located 7.5 miles (12 km) southwest of US Gold's Magistral Mine in Sinaloa state. Palmarito is one of Sinaloa's major historic producers of silver. Total production is estimated to be 15,300,000 ounces of silver and 49,250 ounces of gold from open pit and underground workings before mining ceased in 1950.

        During 2008, US Gold signed an option agreement to buy 100 percent of a third party concession containing 0.5 sq. miles (1 sq. km) in the Palmarito area. The exercise of the option brought the immediate project area to a total of approximately 3 sq. miles (8 sq. km). The option agreement provides US Gold with the right to purchase the 2 percent NSR royalty for $1 million during the term of option agreement and up to 12 months thereafter.

        Core drilling totaled approximately 1,465 ft. (447 m) in 2009 with the objective of identifying and confirming new mineralized zones. An NI 43-101 compliant technical report was completed at the Palmarito Project by Pincock, Allen & Holt (PAH) in December 2008. The report estimates that mineralized material for the Palmarito Silver Project consists of 3.8 million tonnes of material with an

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average grade of 70.1 grams silver per tonne and 0.14 grams gold per tonne, using a cut-off grade of 40 grams silver per tonne.

        The estimated mineralization for Palmarito was divided into three categories in the report prepared by PAH: (a) In Situ, material undisturbed by past mining activity; (b) Dump, material that was mined in the past but not processed; and (c) Tailings, material from the previous processing operations. PAH defined finite volumes to restrict the boundaries of the estimated mineralization for each of the different categories. A three-dimensional block model was created for each material category and composited assay data for the drill holes and pits were used to populate them with silver and gold grades.

        In situ material as well as dump and tailings material was included in the estimate, with approximately 95% of the estimated mineralization coming from the in situ deposit and the remaining approximately 5% coming from the historic dump and tailings. The PAH estimate was based on 369 historic and recent drill holes drilled by three different companies, Lluvia de Oro (1994-1995), Nevada Pacific Gold (2006-2007) and US Gold (2008). Of the 369 holes used in the estimate, 105 were done by reverse circulation (74 of which were drilled by Lluvia de Oro and 31 by US Gold); and 27 were core holes (19 drilled by Nevada Pacific Gold and 8 by US Gold). The remaining 237 holes were drilled by US Gold by conventional rotary methods and were exclusively used to model and define the estimate of the historic mine tailings.

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        The following map depicts the concessions that are 100% owned by US Gold and those where the Company has an option to earn a 100% interest:

        Palmarito is a low-sulfidation, epithermal silver deposit. These deposit types occur commonly throughout the Sierra Madres in Mexico. Known mineralization at Palmarito occurs along or near the northeastern intrusive contact where the structures forming the intrusive contact strike roughly E-W and N-S. Near surface, these structures are mineralized, forming a horseshoe-shaped zone which wraps around the margin of the intrusive. Commonly, strongly silicified and stockwork-veined andesite occurs

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above and below the breccia at the contact. The breccias consist of clast-supported, coarse angular fragments of rhyolite and fine- to medium-grained andesite. Clasts are cemented by fine-grained, white silica. Generally, Palmarito mineralization is characterized by strong silicification.

El Gallo Project

        The El Gallo Project is located 4.7 miles (7.5 km) northwest of the Magistral Mine Property and has become a high-priority for US Gold after high grade silver mineralization was discovered during the fall of 2008. The project is situated in the middle of US Gold's large Magistral District land package. Although there has been some minor prospecting in the area, there is no historic mining of any significance. The mineralization at El Gallo is mainly silver , with minor gold-lead-zinc probably contributed by a separate mineralizing event.

        The El Gallo Project lies within two US Gold-controlled concessions called Rocío Fracción A and Pangea (see map below). These concessions have an area of 86,487 acres and 3,942 acres respectively

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and are located within the Magistral District property. US Gold controls all the immediate properties surrounding El Gallo.

        The El Gallo Project occurs within the Pie de la Sierra physiographic province of the Sierra Madre Occidental Range, which is part of a late Jurassic to middle Cretaceous volcanic-arc. Tertiary volcanic and volcaniclastic rocks overlay Paleozoic and Mesozoic metamorphic rocks which may be locally cut by Cretaceous intrusive rocks.

        The oldest rocks in the region are andesite porphyries that occur widely throughout the area. These are cut by intrusions of late Cretaceous-early Tertiary age, ranging from tonalite to granodiorite in composition. These rocks are discordantly overlain by early Tertiary andesites, andesite tuffs, and

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andesite porphyries which are the principal host rocks to the mineralized structures that occur throughout the Magistral District. The oldest rocks seen in outcrop in the study area are Cretaceous in age. This includes locally fossiliferous limestones, sandy limestones, and limy sandstones that crop out to the south and northwest of El Gallo, where they are altered to garnet-epidote skarn with very local tremolite-actinolite skarn.

        The Cretaceous calcareous rocks are overlain discordantly by a thick package of andesitic rocks of Middle Cretaceous age. The sequence is composed of coarse-grained andesite flows (turkey track), fine-grained andesite porphyry flows, aphanitic andesite flows and andesite lithic tuffs. Coarse-grained granite-granodiorites of the Laramide Sinaloa Batholith intrude both Cretaceous sequences. The Cretaceous sedimentary and volcanic rocks, as well as the lower Tertiary volcanics, are also locally cut by younger dikes of quartz-eye rhyolitic porphyry and fine-to-medium grained diorite stocks that are of a later stage than the main batholith, possibly of lower Tertiary age. These dikes and stocks are interpreted to be the source of the mineralized hydrothermal fluids responsible for the El Gallo and Magistral deposits.

        The northern part of the El Gallo Project is characterized by the presence of a thick sequence of volcanic rocks, mainly andesitic flows, that discordantly overlie the Cretaceous andesitic rocks and are hydrothermally altered, forming part of the host rock for the mineralized structures.

        The Cretaceous and lower Tertiary units are covered by rhyolitic to rhyodacitic flows of probable mid-Tertiary age which are then capped by upper Tertiary basaltic andesitic flows.

        Environmental studies were commissioned by US Gold in order to obtain various exploration permits for the El Gallo Project. Sistemas de Gestion Integral and Heuristica Ambiental, environmental consultants from Culiacan, Sinaloa and Hermosillo, Sonora, were contracted to carry out the studies and permitting. Applications for the two permits were submitted to the Secretariat of Environmental and Natural Resources ("SEMARNAT"), the Mexican Government environmental authority. The first permit was submitted on July 17, 2009 for a Land Use Change and was subsequently approved on November 27, 2009. The second permit was submitted on July 27, 2009 for an Environmental Impact Study and was approved on December 15, 2009. These permits allow for a specific amount of disturbance for exploration activities.

        Exploration work completed in 2009 at El Gallo consisted mainly of core and conventional rotary drilling and geochemical surface sampling. A total of 11,665 soil samples and 3,845 rock samples were

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taken at the El Gallo Project during 2009. Drilling at El Gallo totaled 58,583 ft. (17,856 m). The most significant core intercepts are highlighted below:

        US Gold has planned an aggressive 330,000 ft. (100,000 m) drilling program at El Gallo in 2010 in order to delineate and expand the known mineralization and for mineralized material calculation purposes.

Other Exploration Areas

        Geochemical surface sampling has been carried out in other prospective areas within the Magistral District. Further work is needed in order to evaluate the potential of those areas. Drilling is budgeted for various prospects in 2010.

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ITEM 3.    LEGAL PROCEEDINGS

        We are not currently subject to any legal proceedings, and to the best of our knowledge, no such proceeding is threatened, the results of which would have a material impact on our properties, results of operation, or financial condition. Nor, to the best of our knowledge, are any of our officers or directors involved in any legal proceedings in which we are an adverse party.

ITEM 4.    RESERVED

PART II

ITEM 5.    MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

        Our common stock is traded on the NYSE Amex and on the TSX, both under the symbol "UXG." US Gold Canadian Acquisition Corporation exchangeable shares are traded on the TSX, under the symbol "UXE". Warrants to purchase our stock are traded on the TSX under the symbol "UXG.WT."

        The table below sets forth the high and low sales prices for our common stock on a quarterly basis as reported by NYSE Amex and TSX from January 1, 2008 to December 31, 2009.

        As of March 10, 2010, there were outstanding 115,662,588 shares of our common stock, which were held by approximately 6,679 stockholders of record.

        As of March 10, 2010, there were outstanding 6,235,265 exchangeable shares, which were held by 76 holders of record. The exchangeable shares are exchangeable at the option of the holders into our common stock on a one-for-one basis.

Transfer Agent

        Computershare Investor Services is the transfer agent for our common stock. The principal office of Computershare is 350 Indiana Street, Suite 800, Golden, Colorado 80401 and its telephone number is (303) 262-0600.

Dividend Policy

        We have never declared or paid dividends on our common stock. Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including the terms of any credit arrangements, our financial condition, operating results, current and anticipated cash needs and plans for growth. Our initial earnings, if any, will likely be retained to

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finance our growth. At the present time, we are not party to any agreement that would limit our ability to pay dividends.

Securities Authorized for Issuance Under Equity Compensation Plans

        Set out below is information as of December 31, 2009 with respect to compensation plans (including individual compensation arrangements) under which our equity securities are authorized for issuance. This information relates to our Equity Incentive Plan.

Equity Compensation Plan Information

Performance Graph

        The following graph compares our cumulative total shareholder return for the five years ended December 31, 2009 with (i) the AMEX Gold Bugs Index, which is an index of companies involved in the gold industry and (ii) the AMEX Composite Index, which is a performance indicator of the overall stock market. The graph assumes a $100 investment, assuming reinvestment of dividends, if any, on December 31, 2004 in our common stock and the two other stock market indices.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
(Assumes $100 initial investment on 12/31/2004)

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ITEM 6.    SELECTED FINANCIAL DATA

        The following table summarizes certain selected historical financial data about our company for the last 5 years. The data has been derived from our audited consolidated financial statements for the years indicated. Our historical results include the results of the Acquisitions that we completed effective June 28, 2007. You should read this data in conjunction with the MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and our audited consolidated financial statements contained herein. All amounts are stated in U.S. dollars unless otherwise indicated.

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ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Introduction

        The following discussion updates our plan of operations for the foreseeable future. It also analyzes our financial condition at December 31, 2009 and compares it to our financial condition at December 31, 2008. The discussion also summarizes the results of our operations for the years ended December 31, 2009, 2008 and 2007, and compares each year's results to the results of the prior year.

Plan of Operation

        Our plan of operation for 2010 is to advance our two primary projects, the Gold Bar Project in Nevada and the El Gallo Project in Mexico. With the assistance of a third party engineering firm, we expect to have a completed Preliminary Economic Assessment ("PEA") on the Gold Bar Project by the end of the first quarter of 2010. Based on the results of that study, we would then make a decision during the second quarter of 2010 on whether to have a bankable feasibility study completed on the Gold Bar Project which, if undertaken, would likely have a target completion date in early 2011. On December 21, 2009, we announced that we obtained all of the necessary drilling permits at our El Gallo Project in Mexico and announced our plans to execute 330,000 feet of core drilling in 2010. We expect to have an initial NI 43-101 compliant mineralized material estimate for El Gallo completed during the second quarter of 2010 and a PEA completed by the end of 2010.

        The company-wide exploration budget for 2010 is currently projected at approximately $23 million and may be re-evaluated at any time during 2010. The bulk of the exploration spending will be used to complete the 330,000 feet drilling program at the El Gallo Project and surrounding projects in Mexico with $18 million budgeted for Mexico for exploration spending and $5 million budgeted for Nevada exploration spending. Corporate general and administrative overhead for 2010 is expected to be consistent at approximately $4 million with property holding costs projected between $4 and $6 million. Our estimate of property holding costs includes the effect of an anticipated one-time fee to be introduced by the State of Nevada on holders of mining claims. We also expect to spend up to $1 million performing reclamation related work at our Tonkin and Magistral Mine properties. We are required to submit a closure plan to the BLM for the Tonkin property in the fourth quarter of 2010.

        Our only sources of capital at present include cash and short-term investments on hand, our gold bullion, and the possible exercise of options and warrants. While our cash and short-term investments on hand is sufficient to fund ongoing operations at the spending level currently projected for 2010, we would likely need to raise funds in 2011. Therefore, we may seek additional capital funding within the next 18 months based upon market conditions and other circumstances. As well, should we make a production decision at any of our projects, we would require substantial amounts of capital in order to construct new operating facilities. We may also consider strategic alternatives which could include, but are not limited to, acquisition or disposition of assets, debt financing, joint ventures, or other corporate transactions.

Liquidity and Capital Resources

        As of December 31, 2009, we had working capital of $42.5 million comprised of current assets of $44.3 million and current liabilities of $1.8 million. This represents an increase of $32.2 million from the working capital of $10.3 million at year end December 31, 2008.

        On May 19, 2009, we issued 22 million shares of common stock at a price of $2.00 per share (before the underwriters' commissions and expenses) in a public offering pursuant to a registration statement filed with U.S. securities regulators and a prospectus filed with Canadian securities regulators. In connection with the offering, we granted the underwriters a 30-day option to purchase up

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to 3.3 million additional shares of common stock to cover over-allotments. On May 26, 2009, the underwriters exercised their over-allotment option to purchase 3.15 million of the 3.3 million shares of common stock at a price of $2.00 per share (before the underwriters' commissions and expenses).

        Gross proceeds from the 25.15 million shares sold in the offering totaled $50.3 million with net recorded proceeds to us being $46.3 million, which is net of the underwriters' commissions and expenses, legal fees, securities listing costs, printing and other costs. During 2009, we invested $2.8 million of our cash in gold bullion by purchasing 2,824 ounces of gold at an average price of $975 per ounce.

        Net cash used in operations for the year ended December 31, 2009 increased to $28.4 million from $18.7 million for 2008 and from $29.4 million in 2007. Cash paid to suppliers and employees decreased to $15.6 million for the 2009 period from $19.4 million and $31.0 million during the 2008 and 2007 periods respectively, primarily due to decreased exploration spending. During 2009, we also invested $12.9 million of our cash in short-term US and Canadian Treasury Bills with maturities between three and six months. Cash used in investing activities for the year ended December 31, 2009 was $2.2 million, primarily due to investment in gold bullion, capital expenditures and partially offset by proceeds from disposal of property and equipment from our Mexico operations. This compares to cash used in 2008 of $0.2 million, primarily due to capital expenditures. Cash used in investing activities for 2007 of $2.0 million, primarily reflecting $5.7 million of cash acquired with the acquisitions offset by acquisition costs of $5.3 million and an increase in our restrictive investments of $2.1 million.

        Cash provided by financing activities for 2009 increased to $46.4 million, resulting from the public offering of 25.15 million shares and exercise of stock options, compared to $0.3 million generated in 2008 from the exercise of stock options and warrants. Cash provided by financing activities in 2007 was $10.3 million, primarily due to the exercise of broker options, stock options and warrants.

        On March 10, 2009, we entered into a $5 million standby credit facility agreement with Robert R. McEwen, our Chairman and Chief Executive Officer and principal shareholder. Amounts borrowed would have been charged interest at a rate equal to 5% above the US Prime Rate and a 1% annual standby fee would have been charged on the unused portion of the credit facility. Subsequent to the completion of our public offering, the credit facility was cancelled. No amounts were drawn under this facility prior to termination. Standby fees of $9,861 were paid during 2009.

Tabular Disclosure of Contractual Obligations (in thousands)

        Schedule of Contractual Obligations.    The following table summarizes our obligations and commitments as of December 31, 2009 to make future payments under certain contracts, aggregated by category of contractual obligation, for specified time periods:

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Results of Operations

Year Ended December 31, 2009 compared to 2008

        General.    For the year ended December 31, 2009, we recorded a net loss of $27.7 million or $(0.25) per share, compared to a net loss for 2008 of $131.1 million or $(1.36) per share. The substantial decrease in net loss in 2009 from 2008 was primarily due to the write off of the entire goodwill balance at the end of the third quarter of 2008 in the amount of $107.0 million. During 2009, we rationalized our mineral property interests in Nevada and Utah in order to focus our exploration program on our priority exploration areas. As a result, we allowed certain claims from three of our Nevada properties to lapse and allowed the lease on our Utah property to lapse. We also wrote down mining equipment from our Mexico operations to estimated net realizable value. This resulted in a net write-off of $10.2 million (net of $6.4 million of future income taxes recovery) during the year and is included in the net loss for the year ended December 31, 2009.

        Costs and Expenses.    General and administrative expense for the year ended December 31, 2009 decreased to $4.8 million compared to $5.5 million in 2008, primarily due to decreases in staff and salaries, legal fees, professional fees related to tax compliance, management service fees, Sarbanes Oxley compliance and audit expenses, travel, and shareholder communications, partially offset by an increase in stock option expense as a result of new stock option grants and a reduction in forfeitures during 2009. The decrease in staff and salaries and travel expenses is attributable to the closure of our Denver office and relocation of administrative functions to Toronto, Canada at the end of 2008. The decrease in legal and shareholder communications fees is attributable to a reduction in corporate development activities in 2009. The decrease in Sarbanes Oxley compliance, tax and audit related fees are attributable to greater efficiencies in our internal processes.

        Property holding costs increased to $4.2 million in 2009 from $3.3 million in 2008, primarily due to an increase in our annual royalty payment to our lessors from our Nevada properties as a result of the increase in gold prices during the year. Exploration costs decreased to $8.2 million in 2009 from $10.8 million in 2008, reflecting a reduction in exploration activities in Mexico as a result of permitting delays we experienced during 2009 and a weaker Mexican peso. Total stock option expense increased to $1.3 million in 2009 from $0.4 million in 2008, reflecting a lower number of forfeitures in 2009 and increased expenses associated with stock option grants at the beginning of 2009. Stock option expense is split between the general and administrative and exploration costs lines within the Consolidated Statements of Operations and Comprehensive Loss.

        Accretion of the asset retirement obligation in Nevada and Mexico increased to $0.8 million in 2009 from $0.6 million in 2008. Depreciation costs remained flat at $0.6 million in 2009 and 2008.

        Total loss on sale of assets increased to $0.5 million in 2009 from $0 in 2008. During the year we sold certain heavy mining equipment from our Mexico operation with a net book value of $1.2 million for net proceeds of $0.7 million, resulting in a loss on disposal of $0.5 million.

        Other Income (Expenses).    Interest income decreased to $0.1 million in 2009 from $0.6 million in 2008, reflecting lower interest rates during 2009. During 2009, we recorded a foreign currency exchange gain of $1.6 million, reflecting a weakening U.S. dollar against the Canadian dollar and its effect on our net monetary assets or cash that are denominated in Canadian dollars. In 2008, we recorded a foreign currency loss of $2.2 million due to the stronger U.S. dollar against the Canadian dollar.

Year Ended December 31, 2008 compared to 2007

        General.    For the year ended December 31, 2008, we recorded a net loss of $131.1 million or $(1.36) per share, compared to a net loss for 2007 of $28.5 million or $(0.35) per share. The substantial increase in net loss in 2008 over 2007 was primarily due to the write off of the entire goodwill balance at the end of the third quarter of 2008 in the amount of $107.0 million.

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        In accordance with our accounting policies, we conduct an annual goodwill impairment test during the fourth quarter of each year, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Based on a combination of factors, including the then-existing economic environment and a sustained decline in our market capitalization during 2008, we concluded that there were sufficient indicators to require us to perform the annual goodwill impairment analysis as of September 30, 2008. As a result of that analysis, we concluded that an impairment loss has occurred and accordingly, we recorded $107.0 million non-cash goodwill impairment charge during the third quarter of fiscal 2008 related to all the goodwill recorded in 2007 from the acquisition of the Acquired Properties.

        We also evaluated whether events or changes in circumstances indicated that the carrying value of mineral property interests may not be recoverable. During 2008, we discontinued some leases from one of the properties that we acquired in 2007. The leases that were discontinued were deemed unproductive. As a result, we recorded a write down of $2.5 million to mineral property interests.

        Costs and Expenses.    General and administrative expense for the year ended December 31, 2008 decreased to $5.5 million compared to $7.9 million in 2007, primarily due to decreases in legal fees of $1.0 million, shareholder communications of $0.5 million and stock option expense of $1.3 million, partially offset by increases in accounting, tax and audit fees of $0.5 million. The decrease in legal and shareholder communication expenses is attributable to a reduction in mergers and acquisitions activity in 2008 as compared to the acquisition that occurred in 2007. The decrease in stock option expense reflects forfeitures during 2008.

        There were no acquisition costs in 2008 as compared to $0.4 million in 2007. Property holding costs for the 2008 period related to the combined Tonkin project and acquired properties from 2007 increased to $3.3 million compared to $3.1 million in 2007, primarily due to the properties acquired in 2007. In 2007, property holding costs incurred for the acquired properties were for only 9 months since the acquisition were 80% complete in March and 100% complete in June, as compared to the full year of spending in 2008.

        Exploration costs in the 2008 period were $10.8 million, reflecting an active drilling program at certain Nevada properties and Magistral mine properties, while during 2007 the exploration costs of $20.0 million was only for certain Nevada properties. Accretion of asset retirement obligation for 2008, primarily reflecting the Tonkin and Magistral mine properties, increased to $0.6 million, compared to $0.4 million for 2007. Depreciation costs in the 2008 period were $0.6 million compared to $0.5 million during 2007.

        Total stock option expense in the 2008 period decreased to $0.4 million compared to $2.2 million for 2007, reflecting an increase in forfeitures in 2008 and decrease in fair values of options granted during 2008 due to a decrease in the price of our common stock during that year. Stock option expense is split between the general and administrative and exploration costs lines within the income statement, depending on the option recipients.

        Other Income (Expenses).    Interest income for 2008 decreased to $0.6 million compared to $1.6 million in 2007, reflecting lower average levels of interest-bearing deposits and lower cash balances during 2008. In 2007, we reached a settlement with a vendor as to outstanding fees, recognizing a gain of $0.7 million. During 2008, we recorded a foreign currency loss of $2.2 million, reflecting a stronger U.S. dollar against the Canadian dollar and its effect on our net monetary assets that are denominated in Canadian dollars. Foreign currency gain for 2007 was $1.2 million.

Critical Accounting Policies

        Listed below are the accounting policies that we believe are critical to our consolidated financial statements due to the degree of uncertainty regarding the estimates or assumptions involved.

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        Mineral Property Interests, Exploration and Development Costs:    Mineral property interests include acquired mineral, development and exploration stage properties. The amount capitalized related to a mineral property interests represents its fair value at the time it was acquired, either as an individual asset purchase or as a part of a business combination. The value of such assets is primarily driven by the nature and amount of mineralized material believed to be contained in such properties. Exploration costs are expensed as incurred. Development costs are capitalized when proven and probable reserves exist and the property is a commercially minable property. Mine development costs incurred either to develop new ore deposits, expand the capacity of operating mines, or to develop mine areas substantially in advance of current production are capitalized. Costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations. Costs of abandoned projects are charged to operations upon abandonment. The Company evaluates, at least quarterly, the carrying value of capitalized mineral interests costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded. The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected future cash flows and/or estimated salvage value.

        Impairment of Long-Lived Assets:    We review and evaluate our long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Recoverability is measured by comparing the net book value to the fair value. When the net book value exceeds the fair value, an impairment loss is measured and recorded.

        The underlying fair value of inactive mining equipment located at our Magistral Mine in Mexico is based on the estimated net realizable value calculated by a third party valuator. During 2009, with the assistance of the valuator, it was determined that our carrying value of the inactive mining equipment in our Mexico operations were greater than the net realizable value. As a result, for the year ended December 31, 2009, we recorded a write-off of long-lived assets of $0.8 million.

        The underlying fair value of the inactive milling equipment located at our Tonkin Mine in Nevada is based on the estimated net realizable value of the equipment as determined by a third party valuator. As at December 31, 2009, the estimated net realizable value of the equipment was greater than our carrying value of $0.8 million and as a result, no impairment was recorded.

        Mineral properties are monitored for impairment based on factors such as our continued right to explore the area, exploration reports, assays, technical reports, drill results and our continued plans to fund exploration programs on the property. We use the market approach to estimate the fair value of the properties by using a combination of the observed market value per square mile in the region and an observed market value per ounce of mineralized material. We are unable to determine the estimate undiscounted future net cash flows from our operations due the nature of our mineralized materials. As such, the appropriate evidence to perform estimates of future cash flows is not available and would not be accurate in supporting our long-lived assets. For purposes of recognition and measurement of an impairment loss, we group our properties by geological mineral complex as this represents the lowest level at which we allocate our exploration spending independent of other assets and liabilities. For our Battle Mountain Complex, as described in the Properties section (Item 2), we have separated our properties into three regions, due to their physical separation, for the purposes of impairment testing. The three regions are North (BMX and Valmy), East (Slaven Canyon) and West (Timber Creek and Fish Creek). During the fourth quarter of 2009, we performed our annual impairment test on these mineral properties using the market approach to estimate the fair value of the properties by using the observed market value per square mile in the region with the assistance of a third party expert. Based on this approach, our carrying values of these mineral properties did not exceed the fair value and as a result no impairment was recorded for the year ended December 31, 2009.

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        Asset Retirement Obligations:    We record the fair value of a liability for an asset retirement obligation ("ARO") in the period that it is incurred if a reasonable estimate of fair value can be made. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. Ongoing environmental and reclamation expenditures are credited to the ARO as incurred to the extent they relate to the ARO and to expense to the extent they do not so apply. The fair value of AROs is measured by discounting the expected cash flows using a discount factor that reflects the credit-adjusted risk free rate of interest, while taking into account an inflation rate. We prepare estimates of the timing and amounts of expected cash flows when an ARO is incurred, which are updated to reflect changes in facts and circumstances. Changes in regulations or laws, any instances in non-compliance with laws or regulations that result in fines, or any unforeseen environmental contamination could result in a material impact to the amounts charged to earnings for reclamation and remediation. Significant judgments and estimates are made when estimating the fair value of AROs. Expected cash flows relating to AROs could occur over long periods of time and the assessment of the extent of environmental remediation work is highly subjective. Considering all of these factors that go into the determination of an ARO, the fair value of the AROs can materially change over time. A change in the credit adjusted risk free rate and inflation rate used will not have a material impact on the ARO liability balance as the ARO amount is not significant in relation to our overall balance sheet.

        Stock-Based Compensation:    Effective January 1, 2006, we implemented Accounting Standards Codification ("ASC") Section 718-10-25 (formerly Statement of Financial Accounting Standards ("SFAS") 123R, Accounting for Stock-Based Compensation) requiring us to provide compensation costs for our stock options determined in accordance with the fair value based method prescribed in ASC Section 718-20-25. We estimate the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.

        Income Taxes:    We account for income taxes under ASC Section 740-10-25 (formerly SFAS 109, Accounting for Income Taxes) using the liability method, recognizing certain temporary differences between the financial reporting basis of our liabilities and assets and the related income tax basis for such liabilities and assets. This method generates either a net deferred income tax liability or asset for the Company, as measured by the statutory tax rates in effect. We derive the deferred income tax charge or benefit by recording the change in either the net deferred income tax liability or asset balance for the year. We record a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

Recently Adopted Accounting Pronouncements

        Noncontrolling Interests:    In December 2007, the ASC 810 guidance for noncontrolling interests was updated to establish accounting and reporting standards pertaining to: (i) ownership interests in subsidiaries held by parties other than the parent ("noncontrolling interests"), (ii) the amount of net income attributable to the parent and to the noncontrolling interests, (iii) changes in a parent's ownership interest, and (iv) the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. For presentation and disclosure purposes, the guidance requires noncontrolling interests to be classified as a separate component of equity. The Company adopted the updated guidance on January 1, 2009. Except for presentation changes, the adoption had no impact on the Company's consolidated financial position, results of operations or cash flows.

Forward-Looking Statements

        This report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 concerning our ability to develop and produce gold or other precious metals from any of our properties, future business plans and strategies, future revenue and the

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receipt of working capital, and other statements that are not historical in nature. In this report, forward-looking statements are often identified by the words "anticipate," "plan," "believe," "expect," "estimate," and the like. These forward-looking statements reflect our current beliefs, expectations and opinions with respect to future events, and involve future risks and uncertainties which could cause actual results to differ materially from those expressed or implied.

        In addition to the specific factors identified under Risk factors above, other uncertainties that could affect the accuracy of forward-looking statements, include:

•

decisions of foreign countries and banks within those countries;



•

unexpected changes in business and economic conditions;



•

changes in interest rates and currency exchange rates;



•

timing and amount of production, if any;



•

technological changes in the mining industry;



•

our costs;



•

changes in exploration and overhead costs;



•

access and availability of materials, equipment, supplies, labor and supervision, power and water;



•

results of current and future exploration activities;



•

our ability to secure permits needed to explore our mineral properties;



•

results of pending and future feasibility studies;



•

changes in our business strategy;



•

interpretation of drill hole results and the geology, grade and continuity of mineralization;



•

the uncertainty of reserve estimates and timing of development expenditures;



•

commodity price fluctuations



•

local and community impacts and issues; and



•

accidents and labor disputes

        This list, together with the factors identified under Risk factors, is not exhaustive of the factors that may affect any of the company's forward-looking statements. You should read this report completely and with the understanding that our actual future results may be materially different from what we expect. These forward-looking statements represent our beliefs, expectations and opinions only as of the date of this report. We do not intend to update these forward-looking statements except as required by law. We qualify all of our forward-looking statements by these cautionary statements.

        Prospective investors are urged not to put undue reliance on forward-looking statements.

ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        Our exposure to market risks includes, but is not limited to, the following risks: changes in foreign currency exchange rates, changes in interest rates, equity price risks, commodity price fluctuations, and country risk. We do not use derivative financial instruments as part of an overall strategy to manage market risk.

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Foreign Currency Risk

        While we transact most of our business in US dollars, some expenses, labor, operating supplies and capital assets are denominated in Canadian dollars or Mexican pesos. As a result, currency exchange fluctuations may impact our operating costs. The appreciation of non-US dollar currencies against the US dollar increases costs and the cost of purchasing capital assets in US dollar terms in Canada and Mexico, which can adversely impact our operating results and cash flows. Conversely, a depreciation of non-US dollar currencies usually decreases operating costs and capital asset purchases in US dollar terms.

        The value of cash and cash equivalents denominated in foreign currencies also fluctuates with changes in currency exchange rates. Appreciation of non-US dollar currencies results in a foreign currency gain on such investments and a decrease in non-US dollar currencies results in a loss. We have not utilized market risk sensitive instruments to manage our exposure to foreign currency exchange rates but may in the future actively manage our exposure to foreign currency exchange rate risk. We also hold portions of our cash reserves in non-US dollar currencies. Based on our Canadian cash balance of $15.8 million at December 31, 2009, a 1% change in the Canadian dollar would have an impact (gain or loss) of approximately $0.2 million in the statement of operations.

Interest Rate Risk

        We have no debt outstanding nor do we have any investment in debt instruments other than highly liquid short-term investments. Accordingly, we consider our interest rate risk exposure to be insignificant at this time.

Equity Price Risk

        We have in the past sought and will likely in the future seek to acquire additional funding by sale of common stock and other equity instruments. Movements in the price of our common stock have been volatile in the past and may also be volatile in the future. As a result, there is a risk that we may not be able to sell common stock or other equity at an acceptable price to meet future funding requirements.

Commodity Price Risk

        We currently do not have any production and expect to be engaged in exploration activities for the foreseeable future. However, if we commence production and sales, changes in the price of gold could significantly affect our results of operations and cash flows in the future. We also hold a portion of our cash in gold bullion which is recorded at cost. Gold prices may fluctuate widely from time to time. Based on our gold holdings of $2.8 million at December 31, 2009, a 10% reduction in the price of gold would decrease our working capital by approximately $0.3 million. At December 31, 2009, this gold bullion had a fair value of $3.1 million.

Foreign Country Risk

        Our Magistral Mine and certain other concessions are located in Mexico, and are subject to Mexican federal and state laws and regulations. As a result, our mining investments are subject to the risks normally associated with the conduct of business in foreign countries. In the past, Mexico has been subject to political instability, changes and uncertainties which may cause changes to existing government regulations affecting mineral exploration and mining activities. Civil or political unrest or violence could disrupt our operations at any time. Our exploration and mining activities may be adversely affected in varying degrees by changing government regulations relating to the mining industry or shifts in political conditions that could increase the costs related to our activities or maintaining our properties.

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

        Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Securities Exchange Act of 1934 defines internal control over financial reporting in Rule 13a-15(f) and 15d-15(f) as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company's board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

•

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



•

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



•

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

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        The Company's management assessed the effectiveness of the Company's internal control over financial reporting as of December 31, 2009. In making this assessment, the Company's management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework.

        Based upon its assessment, management concluded that, as of December 31, 2009, the Company's internal control over financial reporting was effective based upon those criteria. KPMG LLP, an independent registered public accounting firm, has audited the effectiveness of the Company's internal control over financial reporting as at December 31, 2009.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
US Gold Corporation:

        We have audited the accompanying consolidated balance sheets of US Gold Corporation and subsidiaries (the "Company") as of December 31, 2009 and 2008, and the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2009 and 2008 and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"), and our report dated March 11, 2010 expressed an unqualified opinion on the effectiveness of the Company's internal control over financial reporting.

/s/ KPMG LLP

Chartered Accountants, Licensed Public Accountants
Toronto, Ontario, Canada
March 11, 2010

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
US Gold Corporation:

        We have audited US Gold Corporation's (the "Company") internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, US Gold Corporation maintained, in all material respects, effective internal control over financial reporting as of December 31, 2009 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of US Gold Corporation as of December 31, 2009 and 2008, and the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity and cash flows for the years then ended, and our report dated March 11, 2010 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Chartered Accountants, Licensed Public Accountants
Toronto, Ontario, Canada
March 11, 2010

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders
US Gold Corporation:

        We have audited the accompanying consolidated balance sheet of US Gold Corporation and subsidiaries (the Company) as of December 31, 2007, and the related consolidated statements of operations and comprehensive loss, changes in shareholders' equity, and cash flows for the year ended December 31, 2007. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

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

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of US Gold Corporation and subsidiaries operations and its cash flows for the year ended December 31, 2007, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Denver, Colorado
March 17, 2008

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US GOLD CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

For the years ended December 31,