XTRA-GOLD RESOURCES CORP - Annual Report: 2011 (Form 10-K)

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

Form 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2011

or

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________to __________________

Commission file number: 33-139037

Xtra-Gold Resources Corp.
(Name of registrant as specified in its charter)

Securities registered under Section 12(b) of the Act:

Securities registered under Section 12(g) of the Act:

None
(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

[  ] Yes [X] No

 Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

[X] Yes [ ] No

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.

[X] Yes [  ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

[X] Yes [  ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the 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.

[  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

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

[  ] Yes [X] No

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold or the average bid and asked prices of such common equity, as of June 30, 2011, was approximately $73,027,487 based on the closing price of the shares as of that date of $1.79 per share.

As of March 29, 2012, we had 44,569,217 issued and outstanding shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents of the Registrant are incorporated by reference in this Report: None

TABLE OF CONTENTS

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USE OF NAMES

In this annual report filed on Form 10-K (the “Report”) the terms, “Xtra-Gold”, “company”, “we”, and “our” refers to Xtra-Gold Resources Corp., a Nevada corporation, and our wholly-owned subsidiaries, Xtra-Gold Exploration Limited, Xtra Energy Corp., Xtra Oil & Gas Ltd., Xtra Oil & Gas (Ghana) Limited and our 90% owned subsidiary, Xtra-Gold Mining Limited.

CURRENCY

Unless otherwise specified, all dollar amounts in this Report are expressed in United States dollars.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Report, including all exhibits hereto, contains forward-looking statements and forward-looking information. Forward-looking statements are with reference to our financial condition, results of operations, business prospects, plans, objectives, goals, strategies, future events, capital expenditure, and exploration and development efforts. Words such as “anticipates”, “expects”, “intends”, “plans”, “forecasts”, “projects”, “budgets”, “believes”, “seeks”, “estimates”, “could”, “might”, “should”, and similar expressions identify forward-looking statements. Although we believe that our plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot be certain that these plans, intentions or expectations will be achieved. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements. These statements include comments regarding the establishment and estimates of mineral reserves and mineral resources, production, production commencement dates, productions costs, cash operating costs per ounce, total cash costs per ounce, grade, processing capacity, potential mine life, feasibility studies, development costs, capital and operating expenditures, exploration, the closing of certain transactions including acquisitions and offerings. All statements, other than statements of historical facts, included in this Report, our other filings with the SEC and Canadian securities commissions and in news releases and public statements made by our officers, directors or representatives of our company, that address activities, events or developments that we expect or anticipate will or may occur in the future are forward-looking statements and forward-looking information.

The following, in addition to the factors described elsewhere in this Report under “Risk Factors”, are among the factors that could cause actual results to differ materially from the forward-looking statements:

• unexpected changes in business and economic conditions;

• significant increases or decreases in gold prices;

• changes in interest rates and currency exchange rates;

• unanticipated grade changes;

• changes in metallurgy;

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

• determination of mineral resources and mineral reserves;

• availability of drill rigs; changes in project parameters;

• costs and timing of development of new mineral reserves; results of current and future exploration activities;

• results of pending and future feasibility studies; joint venture relationships;

• political or economic instability, either globally or in the countries in which we operate;

• local and community impacts and issues;

• timing of receipt of government approvals; accidents and labor disputes; environmental costs and risks; and

• competitive factors, including competition for property acquisitions; and availability of capital at reasonable rates or at all.

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With respect to any forward-looking statement that includes a statement of its underlying assumptions or bases, we believe such assumptions or bases to be reasonable and have formed them in good faith, assumed facts or bases almost always vary from actual results, and the differences between assumed facts or bases and actual results can be material depending on the circumstances. When, in any forward-looking statement, we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can be no assurance that the stated expectation or belief will result or be achieved or accomplished. All subsequent written and oral forward-looking statements attributable to us, or anyone acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except for our ongoing obligations to disclose material information under the Federal securities laws, we do not undertake any obligations to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this Report or to reflect unanticipated events that may occur. These forward-looking statements speak only as of the date of this Report and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

PART I

Description of Business

We are engaged in the exploration of gold properties exclusively in the Republic of Ghana (“Ghana”), West Africa. Exploration means we are engaged in the search for mineral deposits, mineral resources and/or mineral reserves which could be economically and legally extracted or produced and typically includes the review of existing data, grid establishment, geological mapping, geophysical surveying, trenching and pitting to test the areas of anomalous soil samples and reverse circulation (“RC”) and/or diamond drilling to test targets followed by infill drilling, if successful, to define a mineral resource and, perhaps ultimately, a mineral reserve.

Our interests in our projects (collectively, the “Projects” and individually, the “Project”), are currently held by our Ghanaian subsidiary, Xtra-Gold Mining Limited, through mining leases granted by the Government of the Republic of Ghana (the “Government of Ghana”) for leased areas respectively located within and upon concessions in Ghana. A concession is a grant of a tract of land made by a government or other controlling authority in exchange for an agreement that the land will be used for a specific purpose. We have the following five Projects all of which are in the exploration stage.

• Kibi Project. Our Kibi Project is located on the Apapam Concession, in the Kibi Greenstone Belt (the “Kibi Gold Belt”) located in Ghana. The Kibi Gold Belt means a greenstone belt, as defined in all the geological publications in Ghana, and is one of the four main greenstone belts located in Ghana. Our interest in the Apapam Concession is secured by a mining lease (the “Apapam Mining Lease”). Our Kibi Project is the only material project of our company and is in the exploration stage. This Project consists of an over 5.5 kilometer (“km”) long mineralized trend delineated from gold-in-soil anomalies, geophysical interpretations, trenching and drilling along the northwest margin of the Apapam Concession. Our company’s exploration efforts from January 1 to December 31, 2011, being the fiscal year for which this Report is being filed (the “Fiscal Year”), have been focused on our Kibi Project. As at the date of this Report, we have drilled more than 44,000 metres (“m”) at our Kibi Project. During the Fiscal Year, we: (i) completed a diamond drill program (the “2011 Drill Program”) including infill drilling on Zone 2 to define a potential mineral resource (see “Kibi Project – Phase III Drill Program” for the results of this program); (ii) engaged SGS South Africa (Pty) Ltd. (“SGS”) to conduct a modified gold deportment study aimed at characterizing the gold, in two samples, located at this Project; (iii) Geotech Airborne Limited (“Geotech”) completed an integrated helicopter-borne geophysical survey (the “VTEM Survey”) initiated in December 2010, covering the Apapam Concession and our four other concessions located in the Kibi Gold Belt (see “Description of Properties – VTEM Survey”); (iv) engaged Geotech to prepare an interpretation of the VTEM Survey completed by Geotech in February 2011; (v) engaged SRK Consulting (Canada) Inc. (“SRK”) to conduct structural geological investigations of Zone 2 of our Kibi Project; (vi) engaged SRK to conduct regional structural geology interpretation of the aeromagnetic data from the VTEM Survey; and (vii) negotiated with independent Ghanaian contract miners and operators in connection with recovery of placer gold operations on fixed payment terms to our company (see “Description of Properties – Recovery of Placer Gold”). As at the date of this Report, we: (i) plan to commence a further 30,000 m diamond drill program (the “2012 Drill Program”); (ii) have commissioned SEMS Exploration Services Ltd. (“SEMS”) to prepare an initial National Instrument 43-101 (“NI 43-101”) compliant mineral resource estimate on the Big Bend and East Dyke gold zones located within Zone 2 of this Project which will constitute the first ever mineral resource estimate generated on a gold project within the underexplored Kibi Gold Belt.

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• Kwabeng Project. Our Kwabeng Project is located on the Kwabeng Concession, in the Kibi Gold Belt. Our interest in the Kwabeng Concession is secured by a mining lease (the “Kwabeng Mining Lease”). During the Fiscal Year, we did not conduct any exploration activities on this Project. During the Fiscal Year, we negotiated with independent Ghanaian contract miners and operators in connection with their recovery of placer gold at the Kwabeng Concession on fixed payment terms to our company (see “Description of Properties – Recovery of Placer Gold”). As of the date of this Report, we have not planned for any exploration activities during the next 12 months, however, we may consider doing so at a later date. See “Kwabeng Project – 2009 to 2010 Exploration Programs” for exploration activities conducted by our company during the two (2) years preceding the Fiscal Year.

• Pameng Project. Our Pameng Project is located on the Pameng Concession, in the Kibi Gold Belt. Our interest in the Pameng Concession is secured by a mining lease (the “Pameng Mining Lease”). This Project is in the exploration stage. During the Fiscal Year, we did not conduct any exploration activities on this Project. During the Fiscal Year, we negotiated with independent Ghanaian contract miners and operators in connection with their recovery of placer gold at the Pameng Concession on fixed payment terms to our company (see “Description of Properties – Recovery of Placer Gold”). There are no exploration activities currently being conducted on our Pameng Project, however, a first pass work program including soil geochemistry and scout trenching is currently under consideration for 2012. See “Pameng Project – 2009 to 2010 Exploration Programs” for exploration activities conducted by our company during the two (2) years preceding the Fiscal Year.

• Banso Project. Our Banso Project is located on the Banso Concession, in the Kibi Gold Belt. Our interest in the Banso Concession is secured by a mining lease (the “Banso Mining Lease”). This Project is in the exploration stage. During the Fiscal Year, we entered into a letter of intent in January 2011 (the “2011 LOI”) with Buccaneer Gold Corp. (“Buccaneer”) (formerly Verbina Resources Inc.), a mineral resource company listed on the TSX Venture Exchange (the “TSXV”), whereby Buccaneer has an option to earn up to a 55% interest (the “55% Interest”) in our 90% interest of the mineral rights in the Banso Mining Lease. As at the date of this Report, we have not planned for any additional exploration activities during the next 12 months and we may consider doing so at a later date, however, with a view to meeting the expenditures to earn the 55% Interest, Buccaneer commenced exploration activities on this Project during the Fiscal Year. As at the date of this Report, Buccaneer commenced an aggregate 5,000 m core drilling program (the “Buccaneer Drill Program”) on this Project together with our Muoso Project designed to test several drill targets identified on these Concessions. See “Banso Project – 2012 Exploration Plans” for further details. See “Banso Project – 2009 to 2011 Exploration Programs” for exploration activities conducted by our company during the two (2) years preceding the Fiscal Year.

• Muoso Project. Our Muoso Project is located on the Muoso Concession, in the Kibi Gold Belt. Our interest in the Muoso Concession is secured by a mining lease (the “Muoso Mining Lease”). This Project is in the exploration stage. During the Fiscal Year, we entered into the 2011 LOI with Buccaneer whereby Buccaneer has an option to earn up to a 55% interest in our 90% interest of the mineral rights in the Muoso Mining Lease. During the Fiscal Year, we did not conduct any exploration activities on this Project. We have not planned for any additional exploration activities during the next 12 months and may consider doing so at a later date, however, with a view to meeting the expenditures to earn the 55% Interest, Buccaneer commenced exploration activities on this Project in 2010. As at the date of this Report, Buccaneer commenced the Buccaneer Drill Program on this Project tpgether with our Banso Project designed to test several drill targets identified on these Concessions. See “Muoso Project – 2012 Exploration Plans” for further details. See “Muoso Project – 2009 to 2011 Exploration Programs” for exploration activities conducted by our company during the two (2) years preceding the Fiscal Year.
  
  The mining lease areas for our above-noted Projects total approximately 226 square kilometers (“sq km”) and are located at the northern extremity of the Kibi Gold Belt.

• Edum Banso Project. Our Edum Banso Project is located on the Edum Banso Concession, in the Western Region of Ghana. During the Fiscal Year, we commenced the assignment of our interest in this Project to Norman Cay Development, Inc. (“NCD”), a mineral exploration company whose common stock is quoted on the Over-the-Counter Bulletin Board (“OTCBB”). See “Edum Banso Project – Assignment of Interest” for further details.

As of the date of this Report, we:

• have received gross cash proceeds of CAD$10,925,001 (US$10,753,149) from an initial public offering (“IPO”) completed in Canada in November 2010;

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• have received net cash proceeds of $6,843,965 derived from the recovery of gold of the mineralized material at our Kwabeng Project (2007 to 2009);

• have achieved losses since inception;

• have minimal operations, and

• currently rely upon the sale of our securities to fund our operations.
  During the Fiscal Year, we:

• have received net cash proceeds of $1,316,330 derived from payments made to us by independent Ghanaian contract miners in connection with their recovery of placer gold from the mineralized material at our Pameng and Apapam Concessions; and

• have received net cash proceeds of $1,992,475 derived from the exercise of warrants to acquire common shares.

Our company’s strategic plan is, with respect to our gold projects: (i) to focus our efforts and dedicate our financial resources toward the potential to drill out a mineral resource and, perhaps ultimately, a mineral reserve of the Kibi Gold Discovery located on our Kibi Project; (ii) to either option out to other operators or perform our own exploration, with a view towards defining a mineral resource and perhaps ultimately, a mineral reserve on our other Projects; and (iii) to acquire further interests in gold mineralized projects that fall within the criteria of providing a geological basis for development of drilling initiatives that can enhance shareholder value by demonstrating the potential to define reserves.

As part of our current business strategy, our company plans to continue engaging technical personnel under contract where possible as our management believes that this strategy, at its current level of development, provides the best services available in the circumstances, leads to lower overall costs, and provides the best flexibility for our company’s business operations.

Our company anticipates that our ongoing efforts will continue to be focused on the exploration and development of our Kibi Project and completing acquisitions in strategic areas.

In October 2008, we temporarily suspended our placer mining operations at our Kwabeng Project while our management evaluated a more economic and efficient manner in which to extract and process the gold from the mineralized material. Our operations resumed in 2010 which focused primarily on reclamation. As at the date of this Report, operations at our Kwabeng Project have not resumed. During the next 12 months, we plan to (i) enter into negotiations to contract out the recovery of placer gold operations at this Project; (ii) advance the development of our Kibi Project by carrying out our 2012 Drill Program; and (iii) acquire further interests in mineral projects by way of acquisition or joint venture participation.

We anticipate that, over the next 12 months, we will spend an aggregate of approximately $6,000,000 comprised of $5,000,000 for exploration expenses in connection with our 2012 Drill Program of our Kibi Project located on the Kibi Gold Belt to identify a potential mineral resource and approximately $1,000,000 for general and administrative expenses (which excludes approximately $500,000 in non-cash expenses).

Our company has historically relied on equity and debt financings to finance its ongoing operations. Existing working capital, possible debt instruments, anticipated warrant exercises, further private placements and anticipated cash flow are expected to be adequate to fund our company’s operations over the next year. During the future years, subsequent to 2012, we require additional capital to implement our plan of operations. We anticipate that these funds primarily will be raised through equity and debt financing or from other available sources of financing. If we raise additional funds through the issuance of equity or convertible debt securities, this may result in the dilution in the equity ownership of stockholders in our common stock. There can be no assurance that additional financing will be available upon acceptable terms, if at all. If adequate funds are not available or are not available on acceptable terms, we may be unable to take advantage of prospective new opportunities or acquisitions, which could significantly and materially restrict our operations, or we may be forced to discontinue our current projects.

At December 31, 2011, we had working capital of approximately $$6,629,046, comprised of current assets of $7,374,906 less current liabilities of $745,860. Our current assets were comprised of $4,498,753 in cash and cash equivalents, $2,531,644 in trading securities and $344,509 in receivables and other assets.

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Corporate History

Xtra-Gold Resources Corp. (“we” or “our company”) was incorporated under the laws of the State of Nevada on September 1, 1998 under the name Silverwing Systems Corporation (“Silverwing”) with an authorized capital consisting of 25,000,000 shares of common stock at a par value of $.001 per share. From the incorporation of Silverwing until March 14, 1999, we were inactive. Thereafter until June 1999, we were involved in the negotiation and closing of the acquisition of a business opportunity described below.

On June 23, 1999, we acquired all of the issued and outstanding shares of Advertain On-Line Canada, Inc. (“Advertain”) from the sole shareholder of Advertain in exchange for 1,550,000 shares of common stock (24% of our then issued and outstanding shares of common stock). At the time of the acquisition, Advertain was in the business of creating and developing computer software for an Internet web site called “Advertain.com” and maintaining and operating the said web site. The primary purpose of the web site was to collect and distribute entertaining advertising on the Internet. This transaction resulted in the formation of our being a holding company for Advertain, our then only wholly-owned subsidiary. Since our only business activities was the business activities of Advertain, the president of Advertain joined our then current management as president of our company. On August 19, 1999, we changed our name to Advertain On-Line Inc. to better describe our intended business.

From the date of the acquisition of Advertain on June 23, 1999 to December 31, 2000, our principal business activities were the continuation of the business activities of Advertain. We continued to fund the activities of Advertain through December 31, 2000.

After December 31, 2000 we continued to use our best efforts to fund Advertain. Since we were unable to complete further funding, it was decided, on May 21, 2001, to abandon our interest in Advertain and enter into a plan to dispose of Advertain and reorganize our company for a future acquisition. On May 21, 2001, our then president, who was also president of Advertain, resigned since we determined to dispose of Advertain, and our former president, who was a director at the time, was appointed president. On June 15, 2001, we sold the shares we owned in Advertain back to the former sole shareholder and president of Advertain. On June 18, 2001, we consolidated our outstanding common shares on a basis of 20 for 1, adopted a new business plan to develop and operate laser eye correction (lasik surgery) clinics, and changed our name to RetinaPharma International, Inc. (“RetinaPharma”) to better describe our new intended business plan, which was ultimately never developed for lack of capital. No change of management occurred between May 21, 2001, when our former president rejoined our company as described above, and October 31, 2003 when we acquired our subsidiary, XGRI, as described below.

From June 18, 2001 to October 31, 2003, we were inactive except for searching for a business opportunity to acquire. During this period our principal shareholders made capital contributions as needed to pay certain debts and fund our minimal activities, which consisted of locating a business opportunity. In addition, on July 22, 2002, we consolidated our outstanding common shares on a basis of 5 for 1. In the fall of 2002, through the referral to our former president by our current president, we commenced discussions for the acquisition of XGRI, as described below.

On October 31, 2003, we acquired all of the issued and outstanding shares of Xtra-Gold Resources, Inc., a Florida corporation (“XGRI”) from the shareholders of XGRI, all of which were unaffiliated third parties, in exchange for 10,070,000 shares of common stock (approximately 80% of our then issued and outstanding shares of our common stock). This transaction resulted in a change of control of our company and the formation of our being a holding company for XGRI, our then only wholly-owned subsidiary. As a result of this change in control, the president and directors of XGRI were appointed as our new management, and management immediately prior to this acquisition resigned. Subsequently, on November 22, 2003, we executed a 5 for 1 forward stock split. On December 16, 2003, we changed our name to Xtra-Gold Resources Corp. and increased the number of shares of common stock we are authorized to issue to 250,000,000 shares effective December 19, 2003. We undertook this name change to better describe our intended business. As a condition for the acquisition of XG Mining in December 2004, two former officers and directors of our company agreed to return 47,000,000 of the original shares of common stock issued in connection with the acquisition of XGRI for cancellation and these shares were subsequently cancelled in May 2005.

XGRI was incorporated on October 24, 2003 and its only operations prior to the share exchange was the issuance of 10,070,000 shares to its two founders in exchange for an option to develop a mining property located in Switzerland and the sale of 50,000 shares of its common stock to pay certain expenses.

On October 20, 2005, we amended the name of XGRI to Xtra Energy Corp. (“Xtra Energy”). On October 20, 2005, we incorporated our wholly-owned subsidiary, Xtra Oil & Gas Ltd. (“XOG”), an Alberta, Canada corporation, and on March 2, 2006, we incorporated our wholly-owned subsidiary, Xtra Oil & Gas (Ghana) Limited (“XOG Ghana”), an Accra, Ghana corporation for the business purpose set forth hereunder. On April 7, 1998, our wholly-owned subsidiary Xtra-Gold Exploration Limited (“XGEL”), a Ghana corporation, was formed. On June 7, 1989, our 90% owned subsidiary, Xtra-Gold Mining Limited (“XG Mining”), a Ghana corporation, was formed.

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On October 20, 2005, we amended the name of XGRI to Xtra Energy Corp. (“Xtra Energy”). On October 20, 2005, we incorporated our wholly-owned subsidiary, Xtra Oil & Gas Ltd. (“XOG”), an Alberta, Canada corporation, and on March 2, 2006, we incorporated our wholly-owned subsidiary, Xtra Oil & Gas (Ghana) Limited (“XOG Ghana”), an Accra, Ghana corporation for the business purpose set forth hereunder. On April 7, 1998, our wholly-owned subsidiary Xtra-Gold Exploration Limited (“XGEL”), a Ghana corporation, was formed. On June 7, 1989, our 90% owned subsidiary, Xtra-Gold Mining Limited (“XG Mining”), a Ghana corporation, was formed.

Location

As at the date of this Report, our corporate office is located at 360 Bay Street, Suite 301, Toronto, Ontario, Canada, M5H 2V6, and our telephone number there is (416) 366-4227. We use this office as our mailing address, to maintain our corporate records and to perform limited administrative functions. We maintain a technical and administrative office at our field camp (the “Field Camp”) located at 2 Masalakye Street, in the town of Kwabeng, Ghana.

Employees

As at the date of this Report, our company has no salaried employees. Our President and Chief Executive Officer (“CEO”) provides our company with his consulting services and devotes approximately 60% of his time to our company. Our Chief Financial Officer (“CFO”) provides our company with his consulting services and devotes approximately 20% of his time to our company. Our Vice-President, Exploration provides our company with his consulting services and devotes approximately 90% of his time in consulting services to our company. We further engage the consulting services of our Vice-President, Ghana Operations for our Ghanaian subsidiaries, who devotes a variable percentage of his time to our company on an “as needed” basis. We also engage the consulting services of our Secretary and Treasurer with respect to corporate and administrative services, who devotes a variable percentage of his time to our company on an “as needed” basis.

Other Pertinent Information

Our fiscal year end is December 31.

OUR COMPANY IS CURRENTLY IN THE EXPLORATION STAGE WITH RESPECT TO ALL OUR PROJECTS. THE CHANCE OF EVER REACHING THE PRODUCTION STAGE AT OUR PROJECTS IS UNCERTAIN. OUR COMPANY CANNOT PREDICT WHETHER WE WILL SUCCESSFULLY EFFECTUATE OUR COMPANY’S CURRENT BUSINESS PLAN. YOU ARE ENCOURAGED TO CAREFULLY ANALYZE THE RISKS AND MERITS OF AN INVESTMENT IN OUR COMMON STOCK AND SHOULD TAKE INTO CONSIDERATION WHEN MAKING SUCH ANALYSIS, AMONG OTHERS, THE RISK FACTORS DISCUSSED BELOW IN ADDITION TO THE OTHER INFORMATION CONTAINED IN OR INCLUDED BY REFERENCE IN THIS ANNUAL REPORT ON FORM 10-K.

IF OUR COMPANY DOES NOT OBTAIN NEW FINANCINGS, IN FUTURE YEARS, COMMENCING FROM 2012, THE AMOUNT OF FUNDS AVAILABLE TO OUR COMPANY TO PURSUE ANY FURTHER EXPLORATION ACTIVITIES AT OUR PROJECTS WILL BE REDUCED AND OUR COMPANY’S PLAN OF OPERATIONS MAY BE ADVERSELY AFFECTED.

Our company has relied on recent private placement financings and an initial public offering (“IPO”) completed in Canada in November 2010 in order to fund our exploration programs, including our drilling programs at the Kibi Project. In future years, commencing from 2012, our company will continue to require additional financing to complete our plan of operations to carry out any further exploration activities on our Projects. Any impairment in our company’s ability to raise additional funds through financings would reduce the available funds for such exploration activities, with the result that our company’s plan of operations may be adversely affected.

SUBSTANTIAL ADDITIONAL CAPITAL MAY BE REQUIRED IN FUTURE YEARS COMMENCING FROM 2012 TO CONTINUE EXPLORATION ACTIVITIES AT ALL OF OUR PROJECTS. IF OUR COMPANY CANNOT RAISE ADDITIONAL CAPITAL AS NEEDED, OUR ABILITY TO EXECUTE OUR BUSINESS PLAN AND FUND OUR ONGOING OPERATIONS WILL BE IN JEOPARDY.

Commencing from 2012, our company may need to explore various financing alternatives to meet our projected costs and expenses. Our company cannot assure our stockholders that we will be able to obtain the necessary financing for our Projects on favorable terms or at all. Additionally, if the actual costs to execute our company’s business plan are significantly higher than expected, our company may not have sufficient funds to cover these costs and we may not be able to obtain other sources of financing. The failure to obtain all necessary financing would prevent our company from executing our business plan and would impede our company’s ability to sustain operations or become profitable, and our company could be forced to cease our operations.

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IN CONNECTION WITH FUTURE STOCK OFFERINGS, THE VALUE OF OUR COMPANY’S COMMON STOCK MAY BECOME DILUTED AS MORE COMMON STOCK IS ISSUED AND OUTSTANDING.

Our company may undertake in the future additional offerings of common stock or of securities convertible into common stock. The increase in the number of common stock issued and outstanding and the possibility of sales of such common stock may depress the price of our common stock. In addition, as a result of such additional common stock, the voting power of our company’s existing stockholders will be diluted.

OUR COMPANY WILL CONTINUE TO INCUR OPERATING LOSSES AND THERE IS NO GUARANTEE THAT WE WILL ACHIEVE OPERATING PROFITS.

Our company has incurred operating losses on an annual basis for a number of years, primarily arising out of the costs related to continued exploration and development of mineral resource properties, including costs written off on properties no longer being pursued by our company. As of December 31, 2011, our company had an accumulated deficit during the exploration stage of $17,646,122. It is anticipated that our company will continue to experience operating losses for fiscal 2012 and until our company discovers economically mineable mineralized material and successfully develops a mine. There can be no assurance that our company will ever achieve significant revenues or profitable operations.

THE PRICE OF OUR COMMON STOCK IS LIKELY TO BE HIGHLY VOLATILE AND POSSIBLY ILLIQUID, WHICH COULD CAUSE THE VALUE OF INVESTMENTS TO DECLINE.

The market price of our common stock may be highly volatile and possibly illiquid. Our stockholders may not be able to resell their common stock following periods of volatility because of the market’s adverse reaction to volatility. Factors that could cause such volatility may include, among other things:

• actual or anticipated fluctuations in our quarterly operating results;

• large purchases or sales of our common stock;

• additions or departures of key personnel;

• investor perception of our Company’s business prospects;

• conditions or trends in other industry related companies;

• changes in the market valuations of publicly traded companies in general and other industry-related companies; and

• world-wide political, economic and financial conditions.

OUR COMPANY’S PROJECTS ARE IN THE EXPLORATION STAGE AND MAY NOT RESULT IN THE DISCOVERY OF COMMERCIAL BODIES OF MINERALIZATION WHICH WOULD RESULT IN OUR COMPANY DISCONTINUING THAT PROJECT. SUBSTANTIAL EXPENDITURES ARE REQUIRED TO DETERMINE IF A PROJECT HAS ECONOMICALLY MINEABLE MINERALIZED MATERIAL.

Our company’s Projects are all in the exploration stage. Mineral exploration involves a high degree of risk and few properties which are explored are developed into producing mines. The exploration efforts of our company on our Projects may not result in the discovery of commercial bodies of mineralization which would require our company to discontinue that Project. Substantial expenditures are required to determine if a Project has economically mineable mineralized material. It could take several years to establish proven and probable mineral resources or reserves. Due to these uncertainties, there can be no assurance that current and future exploration programs will result in the discovery of mineral resources or reserves.

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OUR COMPANY CURRENTLY DEPENDS SIGNIFICANTLY ON A LIMITED NUMBER OF PROJECTS.

Our company’s activities are currently focused on our Kibi Project. Our company will as a consequence be exposed to some heightened degree of risk due to the lack of property diversification. Adverse changes or developments affecting our Kibi Project would have a material and adverse effect on our company’s business, financial condition, results of operations and prospects.

OUR COMPANY MAY FAIL TO ACHIEVE AND MAINTAIN THE ADEQUACY OF DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING AS PER THE REQUIREMENTS OF THE SARBANES-OXLEY ACT WHICH COULD MATERIALLY ADVERSELY AFFECT OUR FINANCIAL CONDITION.

Our company has documented our internal control procedures and tested key controls during the Fiscal Year, in order to determine our company’s compliance with the requirements of Section 404 of the Sarbanes-Oxley Act (“Sarbanes-Oxley”). Sarbanes-Oxley requires an annual assessment by management of the effectiveness of our company’s internal control over financial reporting. Our management concluded that our company’s internal control over financial reporting was operating effectively at December 31, 2011.

During 2010, our company addressed our lack of experience in the application of U.S. GAAP through hiring a Chief Financial Officer with experience in U.S. GAAP and through quarterly reviews of the financial statements by our company’s auditor. Since these changes occurred during the Fiscal Year, we cannot conclude that the system of internal control was effective for the period in 2010 before the changes were made.

Our company believes that the system of internal controls was operating effectively at December 31, 2011. However, as a small reporting company, our auditor was not retained to audit the system of internal controls and express an opinion as to their effectiveness. Without independent verification of the adequacy of internal controls, our company is not in a position to conclude that the system of internal controls in place at December 31, 2011 met the requirements of Sarbanes-Oxley.

Our company may fail to achieve and maintain the adequacy of our internal control over financial reporting, as such, standards are modified, supplemented, or amended from time to time, our company may not be able to ensure that it can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Sarbanes-Oxley. Our company’s failure to satisfy the requirements of Sarbanes-Oxley on an ongoing, timely basis could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our company’s business and negatively impact the trading price of our common stock. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our company’s operating results or cause us to fail to meet our reporting obligations.

OUR COMPANY IS SUBJECT TO FACTORS BEYOND OUR CONTROL WHICH MAY IMPACT OUR COMPANY’S TITLE IN OUR PROJECTS.

Although our company has obtained title opinions with respect to all of our Projects and has taken other reasonable measures to ensure proper title to these Projects, there is no guarantee that title to any of our Projects will not be challenged or impugned. Third parties may have valid claims underlying portions of our company’s interests. Our Projects may be subject to prior unregistered liens, agreements, transfers or claims and title may be affected by, among other things, undetected defects. In addition, our company may be unable to operate our Projects as permitted or to enforce its rights with respect to our Projects.

OUR COMPANY’S ACTIVITIES ARE AND WILL BE SUBJECT TO COMPLEX LAWS, SIGNIFICANT GOVERNMENT REGULATIONS AND ACCOUNTING STANDARDS THAT MAY DELAY OR PREVENT OPERATIONS AT OUR PROJECTS AND CAN ADVERSELY AFFECT OUR CMPANY’S OPERATING COSTS, THE TIMING OF THE OUR COMPANY’S OPERATIONS, ABILITY TO OPERATE AND FINANCIAL RESULTS.

Business, exploration activities and any future development activities and mining operations are and will be subject to extensive Ghanaian, United States, Canadian and other foreign, federal, state, territorial and local laws and regulations and also exploration, development, production, exports, taxes, labor standards, waste disposal, protection of the environment, reclamation, historic and cultural resource preservation, mine safety and occupational health, reporting and other matters, as well as accounting standards. Compliance with these laws, regulations and standards or the imposition of new such requirements could adversely affect the Company’s operating and future development costs, the timing of our company’s operations, ability to operate and financial results. These laws and regulations governing various matters include:

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• environmental protection;

• management of natural resources;

• exploration, development of mines, production and post-closure reclamation;

• export and import controls and restrictions;

• price controls;

• taxation;

• labor standards and occupational health and safety, including mine safety;

• historic and cultural preservation; and

• generally accepted accounting principles.

The costs associated with compliance with these laws and regulations may be substantial and possible future laws and regulations, or more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspensions of our company’s operations and delays in the development of our Projects. These laws and regulations may allow governmental authorities and private parties to bring lawsuits based upon damages to property and injury to persons resulting from the environmental, health and safety impacts of our company’s past and current operations, and could lead to the imposition of substantial fines, penalties or other civil or criminal sanctions. In addition, our company’s failure to comply strictly with applicable laws, regulations and local practices relating to permitting applications or reporting requirements could result in loss, reduction or expropriation of entitlements, or the imposition of additional local or foreign parties as joint venture partners. Any such loss, reduction, expropriation or imposition of partners could have a materially adverse effect on our company’s operations or business.

OUR COMPANY MAY NOT BE ABLE TO OBTAIN, RENEW OR CONTINUE TO COMPLY WITH ALL OF THE PERMITS NECESSARY TO DEVELOP EACH OF OUR PROJECTS WHICH WOULD FORCE OUR COMPANY TO DISCONTINUE DEVELOPMENT, IF ANY, ON THAT PROJECT.

Pursuant to Ghanaian law, in the event that our company discovers economically mineable mineralized material, we must obtain various approvals, licenses or permits pertaining to environmental protection and use of water resources in connection with the development, if any, of our Projects. In addition to requiring permits for the development of our mineral concessions where our Projects are located, our company may need to obtain other permits and approvals during the life of our Projects. Obtaining, renewing and continuing to comply with the necessary governmental permits and approvals can be a complex and time-consuming process. The failure to obtain or renew the necessary permits or licenses or continue to meet their requirements could delay future development and could increase the costs related to such activities.

THE DEVELOPMENT OF ALL OF OUR COMPANY’S PROJECTS MAY BE DELAYED DUE TO DELAYS IN RECEIVING REGULATORY PERMITS AND APPROVALS, WHICH COULD IMPEDE OUR COMPANY’S ABILITY TO DEVELOP OUR PROJECTS WHICH, ABSENT RAISING ADDITIONAL CAPITAL, COULD CAUSE IT TO CURTAIL OR DISCONTINUE DEVELOPMENT, IF ANY.

In the event that our company discovers economically mineable mineralized material, our company may experience delays in developing our Projects. The timing of development at our Projects depends on many factors, some of which are beyond our control, including:

• taxation;

• the timely issuance of permits; and

• the acquisition of surface land and easement rights required to develop and operate our Projects, (in particular, our company is required to acquire surface land through expropriation in connection with our mineral concessions).

These delays could increase development costs of our Projects, affect our company’s economic viability, or prevent our company from completing the development of our Projects.

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OUR COMPANY’S ACTIVITIES ARE SUBJECT TO ENVIRONMENTAL LAWS AND REGULATIONS THAT MAY INCREASE OUR COMPANY’S COSTS OF DOING BUSINESS AND MAY RESTRICT OUR OPERATIONS.

All of our company’s exploration activities in Ghana are subject to regulation by governmental agencies under various environmental laws. To the extent our company conducts exploration activities or undertakes new exploration or future mining activities in other foreign countries, our company will also be subject to environmental laws and regulations in those jurisdictions. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. Environmental legislation in many countries is evolving and the trend has been towards stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and increasing responsibility for companies and their officers, directors and employees. Compliance with environmental laws and regulations may require significant capital outlays and may cause material changes or delays in our company’s intended activities. Our company cannot assure our stockholders that future changes in environmental regulations will not adversely affect our company’s business, and it is possible that future changes in these laws or regulations could have a significant adverse impact on some portion of our company’s business, causing our company to re-evaluate those activities at that time.

In addition, our company may be exposed to potential environmental impacts during any full scale mining operation. At such time of commencement of full scale mining, if ever, our company plans to negotiate posting of a reclamation bond to quantify the reclamation costs. Our company anticipates that the dollar amount of reserves established for exposure to environmental liabilities will be $220,000, as to $150,000 for our Kwabeng Project and $70,000 for our Pameng Project, as estimated by the Environmental Protection Agency of Ghana (the “EPA”), however, our company is currently unable to predict the ultimate cost of compliance or the extent of liability risks.

OUR COMPANY IS NOT ABLE TO PREDICT THE REMEDIATION COSTS FOR POTENTIAL ENVIRONMENTAL LIABILITIES.

The costs of remediation may exceed the provision that our company has made for such remediation by a material amount. Whenever a previously unrecognized remediation liability becomes known, or a previously estimated cost is increased, the amount of that liability or additional cost could adversely affect the Company’s exploration activities and its financial condition.

THERE MAY BE INSTANCES WHERE CERTAIN EVENTS OCCUR THAT OUR COMPANY IS NOT INSURED AGAINST.

Our company maintains insurance policies to protect itself against certain risks related to its operations. This insurance is maintained in amounts that the Company believes to be reasonable depending upon the circumstances surrounding each identified risk. However, the Company may elect not to have insurance for certain risks because of the high premiums associated with insuring those risks or for various other reasons; in other cases, insurance may not be available for certain risks. Some concern always exists with respect to investments in parts of the world where civil unrest, war, nationalist movements, political violence or economic crisis are possible. These countries may also pose heightened risks of expropriation of assets, business interruption, increased taxation and a unilateral modification of concessions and contracts. Our company does not maintain insurance policies against political risk. Occurrence of events for which our company is not insured could adversely affect our company’s exploration activities and its financial condition.

OUR COMPANY IS SUBJECT TO THE POTENTIAL OF LEGAL CLAIMS AND THE ASSOCIATED COSTS OF DEFENSE AND SETTLEMENT.

Our company is subject to litigation risks. All industries, including the mining industry, are subject to legal claims, with and without merit. Defense and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding to which our company is or may become subject could have a material effect on its financial position, results of operations or our company’s project development operations.

OUR COMPANY IS SUBJECT TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES, WHICH COULD MATERIALLY ADVERSELY AFFECT OUR FINANCIAL POSITION.

Our company’s primary currency for operations is the United States dollar and, to a lesser extent, the “Cedi”, the Ghanaian currency. Our company maintains most of its working capital in United States dollars. Our company converts its United States funds to foreign currencies as certain payment obligations become due. Accordingly, our company is subject to fluctuations in the rates of currency exchange between the United States dollar and these foreign currencies and these fluctuations, which are beyond our control, could materially affect our company’s financial position and results of operations. A significant portion of the operating costs of our Projects are in Cedi. Our company obtains services and materials and supplies from providers in West Africa. The costs of goods and services could increase or decrease due to changes in the value of the United States dollar or the Cedi or other currencies. Consequently, exploration and development of our Projects could be more costly than anticipated.

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OUR COMPANY’S BUSINESS IS IMPACTED BY ANY INSTABILITY AND FLUCTUATIONS IN GLOBAL FINANCIAL SYSTEMS.

The recent credit crisis and related instability in the global financial system, although somewhat abated, has had, and may continue to have, an impact on our company’s business and our company’s financial condition. Our company may face significant challenges if conditions in the financial markets do not continue to improve. Our company’s ability to access the capital markets may be severely restricted at a time when our company wishes or needs to access such markets, which could have a materially adverse impact on our company’s flexibility to react to changing economic and business conditions or carry on our operations.

OUR COMPANY IS SUBJECT TO THE EFFECTS THAT HISTORICALLY HIGH INFLATION RATE MAY HAVE ON ITS RESULTS.

Our company’s mineral properties are located in Ghana, which has historically experienced relatively high rates of inflation. High inflation rates in Ghana could cause the prices of materials obtained within Ghana to be slightly higher. As our company maintains our funds in US and/or Canadian currency, the effect due to Ghanaian currency fluctuations is minimal.

THE GOVERNMENT OF GHANA HAS THE RIGHT TO INCREASE ITS CURRENT OWNERSHIP INTEREST OF 10% IN OUR COMPANY’S SUBSIDIARY, XG MINING, THROUGH WHICH OUR COMPANY HOLDS, AMONG OTHER THINGS, ITS INTEREST IN OUR KIBI PROJECT AND OUR OTHER PROJECTS, FOR A CONSIDERATION AGREED UPON BY THE PARTIES OR BY ARBITRATION AND HAS A RIGHT OF PRE-EMPTION TO PURCHASE ALL MINERALS PRODUCED BY XG MINING. IF THE GOVERNMENT OF GHANA WERE TO EXERCISE ANY OF ITS RIGHTS, OUR COMPANY’S RESULTS OF OPERATIONS IN FUTURE PERIODS COULD BE ADVERSELY IMPACTED.

The Government of Ghana currently has a 10% free carried interest in XG Mining, one of our Ghanaian subsidiaries that holds all of the mining leases securing our interest in all of the concessions where our Projects are located. The Government of Ghana also has: (a) the right to acquire an additional interest in XG Mining for a price to be determined by agreement or arbitration; (b) the right to acquire a special share (as defined in the Minerals and Mining Act, 2006 (Act 703), as amended by the Minerals and Mining Act, 2010 (Act 794) (the “Mining Act (Ghana)”) in XG Mining at any time for such consideration as the Government of Ghana and XG Mining might agree; and (c) a right of pre-emption to purchase all minerals raised, won or obtained in Ghana. While our company is not aware of the Government of Ghana having ever exercised such right of pre-emption, our company cannot assure our stockholders that the Government of Ghana would not seek to exercise one or more of these rights which, if exercised, could have an adverse affect on our company’s results of operations in future periods. If the Government of Ghana should exercise its right to either acquire the additional interest in XG Mining or its right to acquire the special share, any profit that might otherwise be reported from XG Mining’s operations would be proportionally reduced in the same percentage as the minority interest attributable to the Government of Ghana in that subsidiary would be increased. If the Government of Ghana should exercise its right to purchase all gold and other minerals produced by XG Mining, the price it would pay may be lower than the price our company could sell the gold or other minerals for in transactions with third parties and it could result in a reduction in any revenues our company might otherwise report from XG Mining’s operations.

OUR COMPANY CURRENTLY RELIES ON THE CONTINUED SERVICES OF KEY EXECUTIVES, INCLUDING THE DIRECTORS OF OUR COMPANY AND A SMALL NUMBER OF HIGHLY SKILLED AND EXPERIENCED EXECUTIVES AND PERSONNEL. THE LOSS OF THEIR SERVICES MAY DELAY OUR COMPANY’S EXPLORATION ACTIVITIES OR ADVERSELY AFFECT OUR BUSINESS AND FUTURE OPERATIONS.

Due to the relatively small size of our company, the loss of these persons or our company’s inability to attract and retain additional highly skilled employees may lead to our company having to delay our exploration activities or adversely affect our business and future operations.

OUR COMPANY MAY EXPERIENCE DIFFICULTY IN ENGAGING THE SERVICES OF QUALIFIED PERSONNEL IN CONNECTION WITH OUR TECHNICAL OPERATIONS AT OUR PROJECTS.

In the event of the loss of any of our company’s key technical personnel at any of our Projects, our company may have difficulty finding qualified replacements. Our company’s inability to hire and retain the services of qualified persons for these positions in a timely manner could impede our company’s exploration activities at any of our Projects which would have a material adverse effect on our company’s ability to conduct business.

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In the event of the loss of any of our company’s key technical personnel at any of our Projects, our company may have difficulty finding qualified replacements. Our company’s inability to hire and retain the services of qualified persons for these positions in a timely manner could impede our company’s exploration activities at any of our Projects which would have a material adverse effect on our company’s ability to conduct business.

OUR COMPANY IS SUBJECT TO CHANGES IN POLITICAL STABILITY IN WEST AFRICA.

 Our company conducts exploration and development activities in Ghana, West Africa. Our company’s Projects in Ghana may be subject to the effects of political changes, war and civil conflict, changes in government policy, lack of law enforcement and labor unrest and the creation of new laws. These changes (which may include new or modified taxes or other government levies as well as other legislation) may impact the profitability and viability of our properties. The effect of unrest and instability on political, social or economic conditions in Ghana could result in the impairment of exploration, development and mining operations. Any such changes are beyond the control of our company and may adversely affect our business.

In addition, local tribal authorities in West Africa exercise significant influence with respect to local land use, land labor and local security. From time to time, the Government of Ghana has intervened in the export of mineral concentrates in response to concerns about the validity of export rights and payment of duties. No assurances can be given that the co-operation of such authorities, if sought by our company, will be obtained, and if obtained, maintained.

The Government of Ghana also recently announced that it will be engaging companies to address the issue of dividend payment, exemptions and the mining sector fiscal regime, generally. As a result of these discussions, the Government of Ghana could amend the Mining Act (Ghana) or other regulations resulting in a material adverse impact on our company including increases in operating costs, capital expenditures or abandonment or delays in development of mining properties.

THE MINING INDUSTRY IS A COMPETITIVE INDUSTRY AND OUR COMPANY MAY COMPETE WITH LARGER, MORE ESTABLISHED COMPETITORS FOR GOLD ACQUISITION OPPORTUNITIES.

Significant and increasing competition exists for the limited number of gold acquisition opportunities available. As a result of this competition, some of which is with large established mining companies with substantial capabilities and greater financial and technical resources than our company, our company may be unable to acquire additional attractive mining properties on terms we consider acceptable.

THE MARKETABILITY OF OUR COMPANY’S MINERALS MAY BE INFLUENCED BY VARIOUS INDUSTRY CONDITIONS.

The marketability of minerals, if any, which may be acquired or discovered by our company, will be affected by numerous factors beyond the control of our company. These factors include market fluctuations, the proximity and capacity of mineral markets and processing equipment and government regulations, including regulations relating to prices, taxes, royalties, land tenure and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our company not receiving an adequate return on invested capital. The probability of our company not receiving an adequate return on invested capital will be, to a significant extent, dependent upon the market price for gold. Gold prices fluctuate dramatically and are affected by numerous industry factors, such as interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand for precious metals, forward selling by producers, central bank sales and purchases of gold, production and cost levels in major gold producing regions and the political and economic conditions of major gold, copper or other mineral-producing countries throughout the world. Moreover, gold prices are also affected by macro-economic factors such as expectations for inflation, interest rates, currency exchange rates and global or regional political and economic situations. The current demand for, and supply of, gold affects gold prices, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. The potential supply of gold consists of new gold mine production plus existing stocks of bullion and fabricated gold held by governments, financial institutions, industrial organizations and individuals. Since mine production in any single year constitutes a very small portion of the total potential supply of gold, normal variations in current production do not necessarily have a significant effect on the supply of gold or its price.

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IT MAY BE DIFFICULT FOR STOCKHOLDERS TO ENFORCE ANY JUDGMENT OBTAINED IN THE UNITED STATES AGAINST US OR OUR OFFICERS OR DIRECTORS, WHICH MAY LIMIT THE REMEDIES OTHERWISE AVAILABLE TO OUR STOCKHOLDERS.

The majority of our directors and officers are residents of countries other than the United States and all or a substantial portion of such persons’ assets are located outside the United States. As a result, it may be difficult or impossible for our stockholders to:

• effect service of process on our directors or officers, or

• enforce any United States judgment they receive against us or our officers or directors in a foreign court, or

including judgments predicated upon the securities laws of the United States or any state thereof. In addition, there is uncertainty as to whether foreign courts would be competent to hear original actions brought in such foreign court against us or such persons predicated upon the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal securities laws against us or our officers and directors. The foregoing risks also apply to those experts identified in this Report that are not residents of the United States.

OUR COMMON STOCK IS CURRENTLY QUOTED ON THE OTC BULLETIN BOARD (“OTCBB”) AND TRADING IN THE SHARES IS LIMITED. BECAUSE OUR STOCK CURRENTLY TRADES BELOW $5.00 PER SHARE, AND IS QUOTED ON THE OTCBB, OUR STOCK IS CONSIDERED A “PENNY STOCK” WHICH CAN LIMIT OR MAKE TRADING AND LIQUIDITY IN OUR STOCK MORE DIFFICULT TO EFFECTUATE.

The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exemptions. Such exemptions include an equity security listed on a national securities exchange or quoted on NASDAQ and an equity security issued by an issuer that has net tangible assets of at least $2,000,000, if such issuer has been in continuous operation for more than three (3) years. Unless such an exemption is available, the regulations require the delivery of a disclosure document to the investor explaining the penny stock market and the risks associated therewith prior to any transaction involving a penny stock. In addition, as long as the common stock is not listed on a national securities exchange or at any time that the company has less that $2,000,000 in net tangible assets, trading in the common stock is covered by Rule 15g-9 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), for non-exchange listed securities. Under that rule, broker-dealers who recommend such securities to persons other than established customers and accredited investors must make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to a transaction prior to sale. Securities are exempt from this rule if the market price is at least $5.00 per share. To the extent that we do not meet the exemptions under the Penny Stock Rule, there will be reduced liquidity in the market.

None.

Real Property

Except for the land upon which our Field Camp is located, we do not own any real property. We also own the mineral rights on our Projects located in the Kibi Gold Belt. All of our exploration activities are currently conducted at project sites located in Ghana. Mining leases to which we are a party, granting us the right to operate at our Kibi, Kwabeng, Pameng, Banso and Muoso Projects, are described elsewhere in this Report.

We currently conduct limited administrative activities from our corporate office located at Suite 301, 360 Bay Street, Toronto, Ontario, Canada, M5H 2V6, where we have leased 1,163 square feet for a 66 month term commencing on May 1, 2007 and expiring on October 31, 2012, at approximately CAD$4,392 (USD$4,306) per month.

As of the date of this Report, our technical and administrative activities are conducted at our Field Camp located in Kwabeng, Ghana. We do not pay any rent as we own our Field Camp.

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Map of Properties and Operations

The map below shows the locations of our Kibi, Kwabeng, Pameng, Banso and Muoso Projects all of which are described in further detail in this Report.

Xtra-Gold Mining Concessions Located in the Kibi Gold Belt

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Xtra-Gold Mining Leases Located in the Kibi Gold Belt

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Description of Properties

Each of our mineral exploration projects; namely our Kibi Project, our Kwabeng, Project, our Pameng Project, our Banso Project and our Muoso Project are currently at an early stage of evaluation. As at the date of this Report, no mineralized material or mineral resource or mineral reserve estimates have been made at any of our Projects. As of the date of this Report, except for the 2012 Drill Program at our Kibi Project located on the Kibi Gold Belt, and the Buccaneeer Drill Program being carried out by Buccaneer, there are no exploration activities currently being conducted on our other Projects or have any such activities been planned for the next 12 months, however, we may consider doing so at a later date. Prior to the commencement of the Fiscal Year covered by this Report, we had completed preliminary lode gold exploration programs at our Kibi, Banso and Muoso Projects and their respective results are noted hereunder.

Three concessions totaling 118.92 sq km; namely our Kibi Project, which is located to the south of our Kwabeng and Pameng Projects, and our Kwabeng Project and our Pameng Project, are contiguous to our Banso and Muoso Projects.

Title to Properties

We hold 30-year mining leases expiring on July 26, 2019 on our Kwabeng and Pameng Concessions (see “Kwabeng Project – Kwabeng Mining Lease” and “Pameng Project – Pameng Mining Lease”), a 7-year mining lease on our Apapam Concession expiring on December 17, 2015 (see “Kibi Project – Apapam Mining Lease”), a 14-year mining lease on our Banso Concession (see “Banso Project – Banso Mining Lease” and a 13-year mining lease on our Muoso Concession (see “Muoso Project – Muoso Mining Lease”).

Recovery of Placer Gold

In 2007 and 2008, we recovered and sold placer gold from our Kwabeng Project. We did not recover any placer gold during 2009. In July 2010, we entered into (a) agreements with independent Ghanaian contract miners to recover placer gold and produce the mineralized material from our Kibi and Pameng Projects; (b) an agreement with Ravenclaw Mining Limited (“Ravenclaw”), a Swiss company, to assist in overseeing the contract miners to (i) limit our involvement in the recovery of placer gold operations; and (ii) enable our company to focus on lode gold exploration activities. Our General Manager of XG Mining received compensation from Ravenclaw for assisting Ravenclaw in fulfilling its contract with our company (see Item 11 – Executive Compensation – Summary Compensation Table and Item 13 – Certain Relationships and Related Transactions, and Director Independence – Consulting Agreement with Principal Shareholder” for further details.

VTEM Survey

In 2011, an airborne Versatile Time-domain Electromagnetic (“VTEM”), Magnetic and Radiometric survey (the “VTEM Survey”) was completed by our company on our Projects located in the Kibi Gold Belt and encompassed approximately 4,000 line-kilometers at 200 m line spacing, with approximately 490 line-kilometers of detail 100 m line spacing coverage over our core Kibi Project mining lease area. The VTEM system is renowned for its superior penetration depth of greater than 400 m, low base frequency for enhanced penetration in conductive ground cover and high spatial resolution which permits the spotting of drill targets directly off the airborne anomalies. The primary purpose of the VTEM Survey was to delineate auriferous graphitic or sulphidic shears but resistivity-depth data may also help further define and/or identify the granitoid bodies hosting the Kibi Project mineralization In addition to helping map lithological contacts, including the gold prospective granitoid bodies, the aeromagnetic survey will permit the detection of low-magnetic domains possibly reflecting demagnetization resulting from intense gold-related hydrothermal alteration. The radiometric survey may also help further define and/or identify the gold-hosting granitoid bodies.

The VTEM data was incorporated into the geological compilation following our receipt of the final survey interpretation data from Geotech (see “Description of Properties - Interpretation Report of VTEM Survey” for further details). This integrated survey, in combination with previous soil geochemistry and reconnaissance geology surveys will help further further delineate known gold occurrences outside Zone 2 of the Kibi Project, and evaluate the remainder of the Apapam Mining Lease area for the hosting of granitoid-hosted and Ashanti style shear zone gold mineralization. Similarly the VTEM survey will help further define the extent and regional controls of the gold-bearing structures discovered to date by scout trenching on the Ankaase Gold Trend, located on the Muoso Concession, and Banso Area No. 3 gold-in-soil anomalies; with the objective of guiding follow-up trenching designed to outline high priority, cost effective drill targets.

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Technical Reports

Interpretation Report of VTEM Survey

In August 2011, Geotech provided our company with a report setting forth its interpretation of approximately 4,027 line km of electromagnetic (“EM”), magnetic and radiometric data for gold exploration in our Kibi Project area.

The airborne geophysical datasets display a complex signals largely dominated by NE-SW to NNE-SSW structures that are interpreted as shear zones and graphitic sediments. Metasediments, metavolcanics and granitoids units have been delineated from their geophysical (magnetic, electromagnetic and radiometric) characteristics. The EM anomaly picks show elongated patterns of conductors located in NE-SW to NNE-SSW trending areas interpreted as graphitic layers within the interpreted shear zone and graphitic sediments.

The available geological and geophysical data was interpreted in terms of gold potential within the area of interest. The geophysical interpretation used the genetic model for stockworks/silicification gold emplacement and the genetic model of granitoid gold emplacement. A total of 38 targets were delineated and ranked according to a priority level for ground follow-up. Geotech suggested that these targets should be further investigated in the field using geology and geochemistry prior to planning for a drilling program.

Modified Gold Deportment Study

 In October 2011, SGS provided our company with a mineralogical report relating to mineralogical test work consisting of a modified gold deportment study (the “Study”) aimed at characterizing the gold, in two samples, in order to recommend a process route to maximize gold recoveries. Approximately 10 kilograms (“kg”) of sample G478923 sulphide material (drill core) and 10 kg of composite oxide (saprolite) material were utilized for the test work. The composite oxide sample was created by SGS from trench samples that were crushed and combined. The mineralogical test work included metallurgical and mineralogical tests. The mineralogical test work was done in conjunction with gravity test work conducted by the Metallurgical Section of SGS South Africa. Among other things, the report outlined the methodology as to how the different tests were conducted, the results of the test work, conclusions and recommendations.

The objective of the Study was to gain an understanding of the nature and mode of occurrence of the gold in each sample. The Study included the following:

• test work to determine the amenability of the ore to gravity recovery;
• gold distribution across size fractions (grading analysis);
• heavy liquid separation to determine the amount of free gold or gold in heavy particles such as sulphides;
• exposure and mineral association analysis of the particulate gold grains in the gravity concentrate;
• chemical composition of the ore and metallurgical test products;
• general mineralogical characterization of the ore;
• identification and quantification of gold minerals including native gold, gold-tellurides, etc. in the gravity concentrates;
• grain size distribution of the gold grains in the gravity concentrate;
• test work to determine the gold recovery by direct cyanidation; and
• diagnostic leach analysis of the gravity tailings in order to determine the gold deportment in the gravity tails.

SGS made the following preliminary gold recovery conclusions in their report:

• The gold in the G478923 gold ore samples (3.49 g/t Au) is highly amenable to cyanidation leaching with ~97% recoverable by means of direct cyanidation. This ore is also amenable to gravity upgrading, with ~67% of the gold recovered at a mass pull of ~3%. In the gravity concentrate (97.5 g/t Au), a total of 143 particulate gold grains were observed in the gravity concentrate of this sample.

• The grading analysis on the G478923 gold ore sample indicated a very high upgrading of gold in the +106µm size fraction (~69%). This indicates that the gold is either large gold grains or locked in large gold-bearing particles. From the liberation and mineral association characteristics determined by QEMSCAN, on the gravity concentrate, the gold was found to be ~63% liberated and ~25% was associated with pyrite. This indicates that the gold is either large, liberated gold grains or locked in large gold-bearing pyrite particles.

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• The direct cyanidation and diagnostic leach indicates that the sample is highly amenable to cyanide leaching, with ~97% of the gold recovered from the head sample at a grind of 80%-75µm by direct cyanidation and ~96% for the gravity tailings at a grind of~50%-75µm. This is corroborated by the exposure and the mineral association characteristics as determined by QEMSCAN analysis of the gravity concentrate. Approximately 90% of the particulate gold grains are ≥10% exposed and should be leachable.

• The gold in the composite gold ore sample (7.28 g/t Au) is also highly amenable to cyanidation, with ~97% of the gold recoverable by means of direct cyanidation. The ore is also amenable to gravity upgrading, to some degree, with only ~56% of the gold recovered at a mass pull of ~3%. In the gravity concentrate (134.83 g/t Au) a total of 125 particulate gold grains were observed by QEMSCAN.

• The grading analysis on the composite gold ore sample indicated a very high upgrading of gold in the +106µm size fraction (~74%). This indicates that the gold is either large gold grains or locked in large gold-bearing particles. From the liberation and mineral association characteristics determined by QEMSCAN analysis of the gravity tailings, it was found that the gold grains were moderately liberated (~76%) and that ~10% was occurring in silicates and ~14% in oxides. This indicates that the gold is either large, liberated gold grains or locked in large gold-bearing silicate/oxide particles.

• The direct cyanidation and diagnostic leach tests indicated that the sample is highly amenable to cyanide leaching, with ~98% of the gold recovered from the head sample at a grind of 80%-75µm and ~99% of the gold in the gravity tailings at a grind of 50%-75µm. This is corroborated by the exposure and mineral association characteristics of particulate gold in the gravity concentrate, as determined by QEMSCAN analysis. Approximately ~96% of the gold grains are ≥10% exposed and should be leachable.

• The most simplistic processing option would be to mill the ore to ~80%-75µm followed by Carbon-in-leach (“CIL”) cyanidation. Another option, which may result in somewhat lower operational cost is to mill the ore relatively coarsely (say 80%-106µm) followed by gravity concentration and intensive cyanidation of the gravity concentrate. The gravity tailings could then be milled finer to ~80%-75 µm, followed by CIL. Taking out the coarse gold and some of the sulphides by gravity, will allow shorter retention times in the leach tanks and possibly even lower cyanide consumption.

Report on Structural Geological Investigations of Zone 2, Kibi Project

In November 2011, SRK provided our company with a report of their structural geological investigations of Zone 2 (Big Bend Zone, South Zone and other zones including the Mushroom Zone) on our Kibi Project.

Objectives and Overview

• to review geological mapping to date and to provide on ground structural geological guidance; and

• to conduct structural geological investigations of key exposures and drill core at Zone 2 with a focus on understanding:

-          the 3D geometry of diorite dykes;
-          structural controls on the distribution of gold mineralization (including ore plunge); and
-          kinematics of shear/fault zones and their influence on the distribution of gold mineralization.

SRK Conclusions

• The distribution of gold mineralization in the Big Bend Zone is controlled by two NNE-trending shear zones that bound the auriferous zone in a quartz diorite.

• Auriferous quartz veins in the Big Bend Zone comprise:

-          shear and extensional veins related to the development of NNE-trending shear zones; and
-          stockwork veins in a particular portion of the quartz diorite.

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• Vein geometry, rare kinematic indicators and steeply plunging mineral lineation imply that deformation associated with gold mineralization in the Big Bend Zone resulted from a protracted episode of reverse SE over NW movement.

• The controls on gold mineralization at the South Zone and other zones are not well understood and require further oriented core drilling followed by structural geology investigations.

SRK Recommendations

Big Bend Zone

• complete infill drilling at the Big Bend Zone to confirm gold grade continuity in preparation for resource estimation;
• conduct detailed petrography studies to identify compositional variations in the quartz diorite and verify their potential control on the distribution of gold mineralization;
• include structural contours of auriferous diorite contacts on geological maps to investigate the relationship between the geometry of the auriferous portion of the diorite body and the distribution of gold mineralization; and
• define the continuation of (auriferous) shear zones to the north and south of the Big Bend diorite.

South Zone and Other Zones (including the Mashroom Zone)

• undertake further oriented core drilling to verify the extent and potential presence of shear zones at the South Zone (drill orientations to SW and SE); and
• determine the shear zone kinematics and controls on gold distribution.

Regional Structural Geology Interpretation of the Aeromagnetic Data from the VTEM Survey

In December 2011, SRK provided our company with a report of their structural geological interpretation of aeromagnetic data covering our Kibi Gold Belt mining concessions to assist in understanding the structural setting of gold mineralization in the area and to provide a practical structural framework for future exploration targeting. The defined area of interest (“AOI”) is ~705 km² in area and is located at the northern extremity of the Kibi Gold Belt. The AOI was based on the extent of the VTEM Survey conducted by Geotech. The SRK report documents the methodology, results, conclusion and recommendations from the structural geological interpretation.

The scope of work included a desktop structural interpretation of the airborne geophysical data we acquired over the AOI. On the basis of available airborne geophysical data, SRK constructed form lines outlining the internal geometry of stratigraphy within our AOI. In general, form lines within our AOI display a strong southwest-northeast trend, parallel to the tectonic grain in the known greenstone belts of Ghana. Variations from this trend occur in a north-west-southeast-trending belt along the lower portion of our AOI.

SRK Conclusions

• A fault network was interpreted and subdivided in terms of age. The fault network comprises dominant southwest- northeast-trending faults, subparallel to the dominant trend observed in the form lines that include early reactivated D_E extensional faults. These faults are interpreted to have developed (or reactivated) during the Eburnean Orogeny (D₂ -D₅) and are believed to be closely linked to gold mineralization.

• Two types of instrusions (belt and basin type granitoids) were identified in our AOI, both of which were emplaced prior to the culmination of the Eburnean Orogeny (D₅) and therefore are overprinted by D₅ deformation.

• A late (D₆) fault set is represented by east-west-rending faults that are linked by minor northwest-southeast-trending faults. These are characterized by narrow, linear breaks in the magnetic data often with little to no visible offset in the magnetic stratigraphy. These late faults are interpreted to have resulted from northeast-southwest compression that may have occurred at the final stages of the Eburnean Orogeny or post-dated the Eburnean Orogeny.

• Several areas of structural complexity were identified within our AOI, including left and right-hand steps along the major fault corridors, intersections between D₂ -D₅ faults and intersections between D₂ -D₅ and D₅ faults, particularly in the vicinity of intrusions.

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SRK Recommendations

• Regional ground-truthing of the regional structural interpretation should be conducted. This should aim to not only identify whether a given fault is present, but also characterize each fault in terms of:

-          fault products (including the brittle/brittle-ductile/ductile nature of the fault);
-          orientation of associated foliations and lineations if present;
-          kinematics; and
-          alteration or gold mineralization present.

• A confidence rating should be compiled for each interpreted fault identified as part of this interpretation. This may include using existing geological mapping, satellite imagery, other geophysical datasets, or ground-truthing to produce a confidence rating based on the number of datasets, a given fault is identified in, or based on the resolution of datasets a given interpreted fault is based on.

• Regional ground-truthing of the regional lithological interpretation should be conducted. This should focus on the location of the boundary between the basin and belt assemblages, as well as better defining the internal variation within both these assemblages, including their known relationships with gold mineralization.

• Conduct a regional geochemical survey to verify the validity of identified target areas and conduct close-spaced soil geochemical sampling to guide exploration drilling in areas of positive results.

Kibi Project

Overview

Our Kibi Project (also referred to as the “Apapam Concession”) is comprised of 33.65 sq km and our company’s interest in the Apapam Concession is secured by the Apapam Mining Lease (see “Kibi Project – Apapam Mining Lease” for further details). Our Kibi Project is our company’s flagship project and is the only material project of our company.

 Our Kibi Project land position also encompasses two land staking applications: (i) a reconnaissance license contiguous to the southwest extremity of our Kibi Project covering an area of 7.0 sq km (700 ha) (the “Akim Apapam Concession”); and, (ii) a ground extension along the northwest boundary of the Kibi Project covering an area of 1.42 sq km (142 ha) (the “Apapam Concession Extension”). The Akim Apapam Concession was made to provide a buffer area. The Akim Apapam Concession was covered by a first pass (200m x 25m) soil geochemistry survey in 2011; with the results still being compiled as at the date of this Report. There is no current knowledge of past exploration activity or lode gold occurrences on this ground. The Apapam Concession Extension was made to cover certain trench and drill gold intercepts. The applications for the Akim Apapam Concession and the Apapam Concession Extension were submitted by the Company to Mincom on January 15, 2008 and, as at the date of this Report, approval of these applications is still pending and there is no assurance that either of them will be granted.

The Apapam Concession contains two (2) small scale mining (“SSM”) licenses, comprising approximately 0.1012 sq km (10.12 ha) located within the northwest portion of the concession which were granted to third parties prior to our company’s application for the Apapam Concession. None of the in situ, lode gold mineralization occurrences, described in an independent 43-101 technical report prepared by SEMS in 2010, are located within and/or proximal to these third party SSM licenses, and there is no current knowledge of any lode gold occurrences being present on these parcels. No information is available on past and/or current alluvial gold mining activity on these SSM licenses (see “NI 43-101 Reports” hereunder).

Location and Access

Our Kibi Project lies within the Kibi-Winneba area in the Eastern Region of Ghana and is located on the eastern flank of the Atewa Range along the headwaters of the Birim River in the immediate vicinity of the district capital of Kibi, approximately 75 km NNW of the nation’s capital city of Accra. Access to our Kibi Project is by driving northwest from Accra on the paved Accra-Kumasi Trunk Road which is the main national highway for approximately 90 km until the town of Kibi, marked by a road sign, is reached. One would make a left hand turn at the Kibi sign and drive southwest for approximately 5 km to arrive at our Apapam concession. A tarred road emanating from the Accra-Kumasi Trunk Road approximately 15 km northeast of Kibi dissects the north-central and south-eastern portions of our concession, while the tarred road servicing the town of Apapam provides access to the concession’s south-western extremity. Our Kibi Project is located approximately 20 km south-southeast from our Field Camp.

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The Kibi-Winneba area is characterized by a narrow sequence of Birimian metavolcanics underlying most of the Atewa Range, which is covered by an extensive laterite/bauxite capping, and surrounded by a thick package of Birimian metasediments dominating the flanks and the lower lying areas. Our Kibi Project covers the Birimian volcanic-sediment contact which we believe represents a highly favorable environment for the hosting of lode gold deposits throughout Ghana.

Historic Work

Prior to the exploration work conducted by our company as noted hereunder, very little systematic exploration work for bedrock gold deposits has been conducted in the Kibi area since the 1930s.

Prior Exploration by Xtra-Gold

General

 All gold results for the following exploration programs are reported in “ppm Au” (part per million gold). The term “ppm” represents “part per million” where 1 ppm = 1 gram per tonne (g/t) = 1,000 part per billion (ppb).

Please refer to our annual reports on Form 10-K previously filed with the SEC for any exploration activities conducted by us prior to the three years required by this Report.

Phase I Drill Program

The Phase I Drill Program carried out on our Kibi Project from 2008 to 2009 encompassed 18 diamond drill holes (NQ2 core), ranging from 60 m to 320.5 m in length, and totaling 3,001 linear meters. This reconnaissance drilling was designed to test the depth continuity of gold mineralization discovered in trenches excavated on Zone 2 and Zone 1 of our Kibi Project; an over 5.5 km long, NE-trending, anomalous gold-in-soil trend characterized by four (4) extensive, higher grade zones ranging from approximately 800 m by 75-300 m to 1,000 m by 100-500 m in area. The Phase I Drill Program was implemented from August 30 to October 28, 2008 by Burwash Drilling of Cobble Hill, British Columbia, Canada.

This initial reconnaissance drilling program yielded very encouraging results and demonstrated that the granitoid-hosted gold mineralization occurrences intersected along the Kibi gold-in-soil trend offers potential for shallow oxide mineralization amenable to bulk mining and heap leaching, as well as large primary gold systems at depth.

The first 15 holes of the Phase II Drill Program targeted gold mineralization discovered in four (4) trenches, TKB005, TKB004, TKB006, and TKB009-010, spread out over an approximately 975 m E-W distance on the Zone 2 gold-in-soil anomaly. Thirteen (13) out of the 15 holes on Zone 2 yielded significant gold intercepts, including 10 holes intersecting significant granitoid-hosted gold mineralization over 7 m to 45 m core lengths. Significant gold intercepts are presented in Table 4 below. The term “ppm” represents “part per million” where 1 ppm = 1 gram per tonne (g/t) = 1,000 part per billion (ppb).

Mineralized material consists of altered quartz diorite and tonalite exhibiting quartz-iron carbonate veining, and disseminated sulphides. Mineralization discovered by trenching and/or drilling on Zone 2 and Zone 3 appears to be hosted by swarms of granitoid bodies, ranging from 5.5 m to 79 m in core length, interpreted to be emplaced along splay structures off an inferred NE-trending regional structure.

Limited drilling to date traced the granitoid-hosted gold mineralization over a 200 m strike length and to a vertical depth of 100 m at the Trench TKB004 Zone, including gold intercepts of: 2.11 ppm gold over 25.4 m; 0.87 ppm gold over 15 m and 1.28 ppm gold over 33 m; 2.24 ppm gold over 16 m; and 2.78 ppm gold over 15 m in holes KBD08012, KBD08013, KBD08014, and KBD08015, respectively. Similarly, mineralization at the Trench TKB005 Zone was traced over an approximately 135 m strike length and to a vertical depth of 76 m in holes KBD08003 and KBD08004 and KBD08010 and KBD08011, including significant intercepts of 8.49 ppm gold over 12 m and 4.83 ppm gold over 7 m in holes KBD08004 and KBD08010, respectively.

Limited Zone 1 scout drilling (3 holes) intersected a typical “Ashanti” style shear zone setting developed proximal to a metavolcanic-metasediment contact with a spatially associated granitoid body. Hole KBD08017 yielded intermittent, exploration significant, anomalous gold values over a 60 m core length, including encouraging intercepts of 1.43 ppm gold over 13.5 m, 1.04 ppm gold over 6 m, and 1.02 ppm gold over 8 m. In addition, Trench TKB012 excavated on a gold-in-soil anomaly, located approximately 100 m west of hole KBD08017, returned a channel sample intercept of 2.51 ppm gold over a 4 m trench length.

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Recommended work to further advance our Project includes: (a) additional mechanical trenching to further define the geological / structural nature and extent of the granitoid-host gold mineralization in Zone 2 and 3; and (b) a 5,000 m combined reverse circulation / diamond drilling program. The estimated cost of the follow-up exploration program is approximately $800,000.

Table 2: Significant Drill Intercepts – Kibi Project (Length Weighted Average Grades)

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Phase II Drill Program

The Phase II drill program (the “Phase II Drill Program”) on our Kibi Project encompassed 50 RC holes, ranging from 40 m to 150 m in length, and totalling 4,715 linear meters including 27 holes for 2,478 m on Zone 2 and 23 holes totaling 2,237 m on Zone 3. Fifteen initial RC holes targeted the Trench TKB005 and Trench TKB004 gold zones located at the southeast extremity of Zone 2 of the Kibi Gold Trend; an over 5.5 km long, northeast trending, anomalous gold-in-soil trend characterized by four extensive higher grade zones ranging from approximately 800 m by 75 to 300 m to 1,000 m by 100 to 500 m in area. The Phase II Drill Program was designed to: (i) test the dip and strike extensions of the four gold target zones identified in Zone 2 during the Phase I Drill Program; (ii) assess the depth continuity of gold mineralization discovered in trenches excavated in Zone 3, an approximately 1,000 m by 100 to 500 m gold-in-soil anomaly located approximately 700 m southwest of the Zone 2 drilling conducted under the Phase I Drill Program in 2008; and (iii) test IP / Resistivity anomalies spatially associated with the Kibi gold-in-soil trend. The Phase II Drill Program was designed to build upon the 2008 Phase I diamond drill results and to continue to demonstrate that the widespread, classical granitoid-hosted gold mineralization developed along our Kibi Project offers potential for shallow oxide mineralization amenable to bulk mining and heap leaching, as well as large primary gold systems at depth. The Phase II Drill Program was implemented from July 14, 2009 to September 26, 2009 by BLY Ghana Ltd., a subsidiary of Boart Longyear.

Drilling Results from Trenches TKB005 and TKB004 Zones (15 Holes) – Zone 2 – Kibi Project

Eleven out of the initial 15 of the 27 RC holes on Zone 2 yielded significant gold intercepts, with all mineralized intercepts consisting of granitoid-hosted gold mineralization spanning from one m to 78 m in core length. Mineralization identified by trenching and drilling on Zone 2 appears to be hosted by a series of sill-like granitoid bodies hosted within a folded metasediment-metavolcanic rock sequence. Mineralized material consists of altered quartz diorite and tonalite exhibiting quartz-iron carbonate veining and disseminated sulphides. Significant gold intercepts for the Trench TKB005 and TKB004 zones are set forth in Table 3 hereunder.

As at September 28, 2009, gold mineralization at the Trench TKB005 zone has been traced over an approximately 220 m strike length and to a vertical depth of approximately 75 m. Highlights from the present drilling includes intercepts of 6.29 g/t over 23 m, including 8.55 g/t over 10 m, in hole KBRC09047 and 2.97 g/t over 18 m, including 6.32 g/t over 8 M in hole KBRC09042. These two holes tested the central portion of the zone in a scissor pattern designed to better characterize the lithological and structural controls of the gold mineralization intersected in diamond drill holes KBD08003 and KBD08004 from the Phase I drill program. Field and trench mapping indicates that the Trench TKB005 zone mineralization is hosted by a moderate, easterly dipping granitoid body exhibiting an extensive, shallow to moderate, westerly dipping, sheeted quartz vein system. Hole KBD09042 (270° AZ / -50° dip) intersected the host granitoid sill at approximately right angles from a collar position on the eastern (hanging wall) flank of the granitoid body. While hole KBRC09047 (090° Az / -55° dip) was drilled down the dip of the host granitoid sill in order to transect the westerly dipping, sheeted quartz veining at approximately right angles, with the hole remaining within the confines of the host granitoid body to a down hole depth of 23 m.

Table 3: Significant Drill Intercepts – Kibi Project –Zone 2 – RC Holes KBRC09042 to KBRC09056

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Drilling Results from Trenches TKB006 and TKB010 Zones (12 Holes) – Zone 2 – Kibi Project

Seven out of the 12 remaining drill holes on Zone 2 were designed to better define gold mineralization at Trench TKB006 and Trench TKB010 zones identified during the initial scout Phase I Drill Program at the northwest extremity of Zone 2 of our Kibi Project; one hole targeted a new gold zone exposed in recent trenching (trenches TKB014E and TKB014F); two holes probed previously untested gold-in-soil anomalies and two holes tested an IP / Resistivity anomaly spatially associated with a gold-in-soil anomaly. In addition, a total of 960 linear meters of mechanized trenching (38 trenches) was also conducted on Zone 2 in conjunction with this drill program to better define the surface trace of the host granitoid bodies, to test strike extension of known mineralization and to test gold-in-soil anomalies and geophysical targets.

Five out of the above-noted seven holes targeting the Trench TKB006, TKB010 and TKB014E-TKB014F zones yielded significant gold intercepts, with all mineralized intercepts consisting of granitoid-hosted gold mineralization spanning from one meter to 76 m in core length. As at October 28, 2009, mineralization identified by trenching and drilling, spread out over an approximately 975 m east-west distance on the Zone 2 gold-in-soil trend, appears to be hosted by a series of sill-like granitoid bodies hosted within a folded metasediment-metavolcanic rock sequence.

Mineralized material consists of altered quartz diorite and tonalite exhibiting quartz-iron carbonate veining and disseminated sulphides.

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Drilling highlights include granitoid-hosted gold mineralization intercepts from surface of 39.0 m grading 9.23 g/t gold uncut (3.54 g/t gold cut) including 10.0 m grading 33.15 g/t gold uncut (10.95 g/t gold cut) in drill hole KBRC09060 and 76.0 m grading 1.62 g/t gold, including 20.0 m grading 3.36 g/t gold (and including 5.25 g/t gold over 9.0 m) in hole KBRC09068. Significant gold intercepts for holes KBRC09057 to KBRC09068 are set forth in Table 4 hereunder.

Table 4: Significant Drill Intercepts – Kibi Project – Zone 2 – RC Holes KBRC09057 to KBRC09068

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Holes KBRC09057, KBRC09059 to KBRC09061 and KBRC09065 further tested the Trench TKB006 gold zone situated in the north-central portion of the approximately 1,000 m long Zone 2 gold-in-soil anomaly. Additional mechanized trenching and geological mapping during this drilling campaign appears to indicate that the Trench TKB006 Zone is characterized by two, NNW-trending, approximately eight (8) m and 40 mwide, sill-like granitoid bodies lying approximately 25 m apart within a metasediment rock sequence. Hole KBRC09060 targeting an extensive system of NE to SE trending quartz veining developed within the wider, eastern granitoid body returned an intercept from surface of 39.0 m grading 9.23 g/t gold uncut (3.54 g/t gold cut), including 10.0 m grading 33.15 g/t gold uncut (10.95 g/t gold cut). Drilling, including initial scout drill hole KBD08005, which returned intercepts of 1.18 g/t gold over 17.0 m and 1.02 g/t gold over 15.0 m, has traced the Trench TKB006 gold zone mineralization over an approximately 160 m strike distance.

Hole KBRC09062, designed to undercut gold mineralization discovered by trenching of a previously untested gold-in-soil anomaly lying approximately 225 m west-northwest of the Trench TKB006 zone, yielded a granitoid-hosted gold mineralization intercept of 4.03 g/t gold over 4.0 m, including one m grading 9.32 g/t gold. The two target trenches positioned end to end on the same soil geochemical anomaly line both returned significant channel sample intercepts separated by an approximately 20.5 m distance, including 8.49 g/t gold over a 5.0 m trench-length, including 2.0 m grading 14.85 g/t gold, in trench TKB014E and 6.86 g/t gold over an 8.0 m trench-length, including 1.0 m grading 22.4 g/t gold, in trench TKB014F. This new gold zone is considered especially interesting given the values defined at this early stage and the extent of the untested gold-in-soil anomalies present along lines 167N to L169N within the approximately 400 m gap between the Trench TKB006 and TKB010 zones.

Holes KBRC09067 and KBRC09068 further tested the Trench TKB010 gold zone located at the north-western extremity of the approximately 1,000 meter long Zone 2 gold-in-soil anomaly. Hole KBRC09068 targeting an extensive system of NE to NW trending quartz veining exposed in Trench TKB010 returned a granitoid-hosted gold mineralization intercept from surface of 76.0 m grading 1.62 g/t gold, including 20.0 m grading 3.36 g/t gold (and including 5.25 g/t gold over 9.0 m). Drilling and trenching to date, including initial scout drill hole KBD08008, which returned an intercept of 1.01 g/t gold over 45.0 m (including 2.01 g/t gold over 12.0 m), have traced the Trench TKB010 gold zone mineralization over an approximately 150 meter distance along the inner, northern margin of an east to southeast trending granitoid body.

Results from 23 Scout RC Holes – Zone 3–- Kibi Project

Drilling highlights for Zone 3 include granitoid-hosted gold mineralization intercepts of 30.0 m grading 3.52 g/t gold, including 14.0 m grading 6.47 g/t gold, from a down hole depth of 8.0 m in hole KBRC09019; 4.0 m grading 4.86 g/t gold from a down hole depth of 26 m in hole KBRC09023 and 8.0 m grading 4.95 g/t gold, including 3.0 m grading 12.89 g/t gold, from surface in hole KBRC09024. Significant gold intercepts for holes KBRC09019 to KBRC09041 are set forth in Table 5 hereunder.

Similarly to Zone 2, all Zone 3 mineralization targets are near surface, remain open in all directions and offer potential for shallow oxide mineralization amenable to bulk mining and heap leaching, as well as large primary gold systems at depth. The limited scout drilling returned several significant gold intercepts over an approximately 825.0 m E-W distance across Zone 3. Zone 2 and Zone 3 drilling has traced the granitoid-hosted gold mineralization over an approximately 2,100 m distance along the NE-trending Kibi Gold Trend.

This initial Zone 3 scout drilling formed part of the 4,715 meter Phase II RC Drill Program which included 27 holes for 2,478 m on Zone 2 and 23 holes totaling 2,237 m on Zone 3; an over 5.5 km long, NE-trending, anomalous gold-in-soil trend characterized by four extensive higher grade zones ranging from approximately 800 m by 75-300 m to 1,000 m by 100-500 m in area. The present drilling was designed to undercut surface gold mineralization exposed in reconnaissance trenches, and to test geophysical Induced Polarization (“IP”) / Resistivity and/or gold-in-soil anomalies on Zone 3; an approximately 1,000 m by 100-500 m, gold-in-soil anomaly located approximately 700 m to the southwest of the main Zone 2 drilling area.

Table 5: Significant Drill Intercepts – Kibi Project (Zone 3 – RC Holes KBRC09019 to KBRC09041)

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As at February 11, 2010, drilling included five holes to test the Trench TAD019 and TAD007 targets located at the southeastern extremity of the Zone 3 gold-in-soil anomaly, and 18 holes to assess the Trench TAD001 – TAD004, TAD015 – TAD021 and TAD016 targets within the north-central portion of the gold-in-soil anomaly. Fourteen out of the 23 scout holes returned significant gold intercepts, with an additional three holes yielding anomalous gold intercepts. (see QA-QC disclosure section for “Significant” and “Anomalous” intercept criteria). All mineralized intercepts consisted of granitoid-hosted and/or granitoid-associated gold mineralization, with mineralized material typically consisting of altered quartz diorite and tonalite exhibiting quartz-iron carbonate veining and disseminated sulphides.

Hole KBRC09019 targeting an extensive system of granitoid-hosted, NE-trending, moderately NW-dipping, sheeted quartz veins discovered in Trench TAD019 returned a significant mineralized intercept of 30.0 m grading 3.52 g/t gold, including 14.0 m grading 6.47 g/t gold, from a down hole depth of 8.0 m. For reference purposes, Trench TAD019 yielded a channel sample intercept of 4.93 g/t gold over 45.0 m, including 10.12 g/t gold over 12.0 m. Hole KBRC09039, representing the second hole of a scissor drill pattern designed to determine the dip attitude of the host granitoid body, returned an intercept of 39.80 g/t gold over 1.0 m from a quartz vein in mafic metavolcanic rock along the footwall flank of the granitoid body. Hole KBRC09020, targeting a zone of anomalous gold values in Trench TAD007 located approximately 65.0 m to the west of the KBRC09019 collar, yielded granitoid-hosted mineralization intercepts of 1.01 g/t gold over 3.0 m and 4.10 g/t gold over 2.0 m.

A total of 18 holes were drilled within the north-central portion of the Zone 3 gold-in-soil anomaly which is characterized by an approximately 800 meter long IP Chargeability anomaly exhibiting a spatial relationship with a geophysically inferred, NE-trending, regional structural trend. Eleven of these holes tested the north-eastern, Moderate Chargeability / Very High Resistivity portion (200 m) of the IP anomaly exhibiting a coincidental gold-in-soil signature and anomalous trench results (i.e. Trench TAD001 – TAD004 Zone).

The limited, shallow RC drilling outlined an approximately 135.0 meter wide, NE-trending, granitoid hosted, structural corridor appearing to encompass at least five (5) distinct, gold-bearing, sheeted vein zones ranging from 1.0 m to 31.0 m in core length. Eight (8) out of the 11 Trench TAD001 – TAD004 Zone holes returned significant gold intercepts, including seven (7) holes yielding multiple significant and/or anomalous gold intercepts.

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The mineralized structural corridor is characterized by significant gold intercepts over 1.0 m to 8.0 m core lengths occurring within more extensive, lower grade, mineralization envelopes attaining 15.0 m to 31.0 m in core length. Holes KBRC09024 and KBRC0937, intersecting what appears to be the same sheeted vein zone approximately 35.0 m horizontally apart within the central section of the structural corridor returned mineralized intercepts of 8.0 m grading 4.95 g/t gold, including 3.0 m grading 12.89 g/t gold, and 28.0 m grading 0.87 g/t gold, respectively. Similarly, holes KBRC09023 and KBRC09038, drilled in a scissor pattern along the northern margin of the structural corridor, yielded 4.0 m grading 4.86 g/t gold and 31.0 m grading 0.57 g/t gold, respectively from intercepts located approximately 8.0 m horizontally apart along the same mineralized structure.

Thirteen out of the 18 holes described above were drilled on open ground along the northern flank of the Apapam Mining Lease (see “Kibi Project – Apapam Mining Lease” for details of this mining lease), with the drill traces extending from approximately 50.0 m to 300.0 m outside the concession boundary, and two (2) additional holes straddle the concession boundary. Following the completion of a professional land survey, the approximately 1.42 sq km wedge of open ground lying between the Apapam Mining Lease and the Atewa Forest Reserve boundary was staked by us to cover the mineralization targets identified by the holes in question. The staking application was formally received by Mincom on November 19, 2009 and is currently being processed, thus securing our priority staking status, however, as at the date of this Report, the application is still pending and there is no absolute assurance that this parcel of ground will be granted to our company. Refer to the Significant Intercept Table above for the claim status of individual Zone 3 drill holes.

NI 43-101 Reports

In July 2010, SEMS prepared an independent technical report consistent with the Canadian Securities Administrators National Instrument 43-101 – Standards of Disclosure for Mineral Projects, Form 43-101F1 – Technical Report and Companion Policy 43-101 CP on our Kibi Project.

As at the date of this Report, we have commissioned SEMS to prepare an initial NI 43-101 compliant mineral resource estimate on the Big Bend and East Dyke gold zones located within Zone 2 of our Kibi Gold Project. This will constitute the first ever mineral resource estimate generated on a gold project within the underexplored Kibi Gold Belt.

Phase III Drill Program

Based on the results of the 2009 Phase II Drill Program, we commenced and completed our follow-up Phase III Drill Program on our Kibi Project during 2010 to: (i) further test the dip and strike extensions of the gold mineralization zones identified in the Phase I and Phase II drill programs; and (ii) test IP / Resistivity anomalies spatially associated with the Kibi gold-in-soil trend. The Phase III Drill Program was implemented from July 2010 to December 15, 2010 by Burwash Drilling of Cobble Hill, British Columbia, Canada.

Results of Phase III Drill Program

Drilling highlights from the South Ridge Granitoid of Zone 2 include surface or near surface granitoid–hosted gold mineralization intercepts of 19.5 m grading 1.52 g/t gold in drill hole #KBDD10085; 25.5 m grading 1.50 g/t gold in hole #KBDD10086 and 23 m grading 1.74 g/t gold in hole #KBDD10090. Hole #KBDD10091 encountered a 17.0 m intersection grading 2.42 g/t gold as noted in the following table. These holes yielded significant gold intercepts, with all mineralized intercepts consisting of granitoid-hosted gold mineralization spanning from 2 m to 72 m in core length. Drilling and trenching traced an extensive system of en echelon extension vein arrays across an approximately 440 m distance along the SE-trending South Ridge Granitoid body. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite to tonalite composition. Additional trenching/drilling is required to further define the extent and strike length of the quartz vein arrays, the structural controls of the mineralization and the contacts of the host granitoid body.

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Ongoing diamond drilling has significantly expanded known gold mineralization down dip on the Zone 2 - Central Granitoid at our Kibi Project. Three step-back holes (685 m) successfully expanded the gold mineralization to a down dip depth of up to approximately 115 m. Drilling highlights include classical granitoid-hosted gold mineralization intercepts of 20 m grading 2.43 g/t gold in KBDD10099; 58 m grading 2.46 g/t gold, including 28 m grading 3.67 g/t gold, in KBDD10101; 27 m grading 1.98 g/t gold and 25 m grading 1.76 g/t gold in KBDD10103.

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The above-noted drill holes targeted the depth potential of the gold mineralization along the southeast portion of the Central Granitoid body located at the south-eastern extremity of the approximately 1,200 m long by 500 m to 800 m wide Zone 2 gold-in-soil anomaly. All three holes were designed to test the down dip extension of gold mineralization along an approximately 100 m strike extension of the host granitoid body; with the drilling centered on a flexure or possible fold nose imparting a change from a northwesterly trend to an easterly trend to the moderate, northerly dipping granitoid body. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite to tonalite composition.

Hole #KBDD10099 was drilled in a southwest direction on the NW-trending segment of the granitoid body. It was designed to undercut a mineralized intercept of 27.0 m grading 4.03 g/t gold in hole #KBDD10069 and yielded two significant mineralization intercepts located approximately 75 m down dip of the #KBDD10069 intercept, including: 20.0 metres grading 2.43 g/t gold from a down hole depth of 141 m; and 7.0 m grading 2.53 g/t gold from a down hole depth of 176 m. Significant mineralization was traced over an approximately 115 m down dip distance from surface on the KBDD10069 – KBDD10074 – KBDD10099 drill section.

Hole #KBDD10101, consisting of a south trending borehole designed to test the nose of the flexure in the granitoid body at depth below an intercept of 25.4 m grading 2.11 g/t gold yielded by scout diamond core hole #KBD08012, returned a wide mineralized intercept of 58.0 m grading 2.46 g/t gold from a down hole depth of 112 m; approximately 45 m down dip of the #KBD08012 intercept. This 58 m mineralized intercept encompasses an essentially barren, 11.0 m core-length interval (130 m - 141 m) appearing to reflect the truncation of the mineralization by a post mineralization dyke; with the mineralized section above the dyke yielding an intercept of 18.0 m grading 2.18 g/t gold (112 m - 130 m), and the segment below the dyke returning 28.0 m grading 3.67 g/t gold (142 m - 170 m), including 15 m grading 5.42 g/t gold. Hole #KBDD10103, also consisting of a south trending borehole collared approximately 50 m to the east of hole #KBDD10101 along the northern, hanging wall flank of the easterly trending granitoid body, was designed to undercut intercepts of 15.0 m grading 0.87 g/t gold and 33 m grading 1.28 g/t yielded by scout diamond core hole #KBD08013. Hole #KBDD10103 returned two significant mineralization intercepts extending approximately 45 m to 75 m down dip from the lower #KBD08013 mineralized intercept, including: 27.0 m grading 1.98 g/t gold from a down hole depth of 131.0 m, including 15.0 m grading 3.23 g/t gold; and 25.0 m grading 1.76 g/t gold from a down hole depth of 180.0 m.

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The 2010 drilling and trenching efforts traced significant gold mineralization within the southeastern segment of the Central Granitoid over an approximately 300 m strike extension of the host granitoid body and down to a maximum down dip distance 115 m.

2011 Drill Program

On January 15, 2011, we commenced our 2011 Drill Program on our Kibi Project. The drilling was primarily designed to expand known gold mineralization along strike and at depth within the southeast portion of the Central Granitoid body located at the south-eastern extremity of the approximately 1,200 m long by 500 m to 800 m wide Zone 2 gold-in-soil anomaly.

Results of 2011 Drill Program

The first two diamond core holes from our 2011 Drill Program have significantly expanded known gold mineralization down plunge on the Zone 2 – East Dyke Granitoid at our Kibi Project. The vertical fan pattern holes (379 m) successfully expanded the gold mineralization to a down plunge depth of approximately 200 m.

Highlights of these holes include classical granitoid–hosted gold mineralization intercepts of:

• 15 m grading 2.05 g/t gold, including 5 m grading 4.00 g/t gold, in KBDD11105; and
• 14 m grading 2.36 g/t gold, including 5 m grading 5.18 g/t gold, in KBDD11106.

At the time, drilling targeted the depth potential of the gold mineralization along the northern portion of the East Dyke Granitoid body located at the south-eastern extremity of the approximately 1,200 m long by 500 m to 800 m wide Zone 2 gold-in-soil anomaly. The two west trending, vertical fan pattern holes (-50^o & -70^o) were designed to undercut a mineralized intercept of 7 m grading 4.83 g/t gold in scout hole #KBD08010 located at the northern extremity of the easterly dipping host granitoid body. Other drilling highlights from the North Zone – East Dyke Granitoid include intercepts of: 8.49 g/t gold over 12 m in hole #KBD08004 and 6.29 g/t over 23 m, including 8.66 g/t over 10 m, in hole #KBRC09047, and 2.97 g/t over 18 m, including 6.32 g/t over 8 m, in hole #KBRC09042. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite composition.

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The upper #KBDD11105 borehole (-50^o dip) yielded a significant mineralized intercept of 15 m grading 2.05 g/t gold, including 5 m grading 4.0 g/t gold, from a down hole depth of 105 m, approximately 60 m down dip from the scout hole #KBD08010 intercept; and the steeper #KBDD11106 borehole (- 70^o) returned a mineralized intercept of 14 m grading 2.36 g/t gold, including 5 m grading 5.18 g/t gold from a down hole depth of 141 m, approximately 65 m down dip of the #KBDD11105 intercept. To date, significant gold mineralization had been traced over an approximately 100 m strike length and 200 m down plunge distance along the North Zone of the East Dyke Granitoid. Drilling to date indicated that the North Zone consists of a northerly plunging (approx. 65^o) mineralized vein package appeared to be developed at a flexure in the host granitoid body.

Geological mapping and trenching efforts appear to indicate that the four auriferous Granitoid bodies discovered to date on Zone 2 may form part of a continuous, folded Granitoid body. To date, gold mineralization had been traced by drilling and trenching over an approximately 1,500-metre aggregate distance along the limbs and nose of this SE-trending fold structure. The mineralization remained open in all directions and drilling/trenching to further define the extent and geological controls of the mineralization was ongoing.

In April 2011, a spectacular, coarse native gold-bearing, vein quartz clast was discovered by our local contracted placer gold miners along the Birim River valley within the north-central portion of the Apapam Mining Lease area. A photograph of the gold specimen has been posted on our website at www.xtragold.com. Although the complex geomorphologic setting and depositional history of the auriferous gravel deposits present along the base of the Atewa Range make it difficult to determine conclusive bedrock sources for the widespread placer gold occurrences, the high grade nature of this quartz vein gold mineralization renders it of considerable lode gold exploration significance.

A 3.5 km long, NE-trending, chargeable/resistive Induced Polarization (IP) anomaly exhibiting a spatial relationship with a geophysically inferred, NE-trending, regional structural trend, and characterized by coincidental gold-in-soil anomalies and/or auriferous floats, lying approximately 1 km northwest of the Birim River along the south-western margin of the approximately 5.5 km long Kibi Project gold trend, represents a possible bedrock source for the vein gold material; based on the fact that the gold specimen was discovered at the confluence of an alluvial gold-bearing, secondary stream dissecting this anomalous trend. Another possible bedrock source for the gold mineralization is the southwest extension of the Kibi Old Mine structure inferred to pass to the south of the Birim River.

At the time, a mechanised trenching program targeting the 3.5 km long geophysical/geochemical trend and an extensive soil sampling program (75 line-km) covering the possible southwest extension of the Kibi Old Mine structure within the central portion of the Apapam Concession was scheduled for initiation in mid May, 2011. See the NI 43-101 Technical Report entitled “Kibi Project, Eastern Region, Ghana” dated July 12, 2010, filed under our company’s profile on SEDAR at www.sedar.com for further details regarding the aforementioned geophysical/geochemical target, the Kibi Old Mine prospect, and the geology and geomorphology of the Kibi Gold Belt placer gold deposits.

Two additional diamond core holes (586 m) were drilled on the newly named Big Bend Gold Zone - Central Granitoid at our Kibi Gold Project.

Highlights of these holes include classical granitoid–hosted gold mineralization intercepts of:

• 42 m grading 2.39 g /t gold in KBDD11108 from 189 m down-hole; and
• 27 m grading 0.89 g/t gold in KBDD11107 from 127 m down-hole.

The Big Bend Gold Zone was intersected approximately 215 m down-plunge of previously identified mineralization; extending down-plunge potential from surface to approximately 360 m along a through-like flexure within the Central Granitoid body.

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These two southwest (225^o) trending, vertical fan pattern holes (-50^o & -75^o) targeting an embayment or wallrock protrusion developed along the hanging wall of the Central Granitoid body represent the first holes drilled on the Big Bend gold zone during the current 20,000 m drill campaign to follow up on the significant gold intercepts yielded by Phase III holes KBDD10101 and KBDD10103. Hole KBDD10101 collared approximately 210 m to the west of the present drill collars returned 2.46 g/t gold over 58 m, including 3.67 g/t gold over 28 m; and KBDD10103 located 40 m to the east of KBDD10101 yielded intercepts of 1.98 g/t gold over 27 m and 1.76 g/t gold over 25 m. To date, significant gold mineralization had been traced over an approximately 300 m strike length and approximately 360 m down plunge distance from surface along the Big Bend gold zone hosted by the Central Granitoid body. Drilling to date indicated that the Big Bend zone consisted of northeasterly plunging, en echelon, mineralized vein packages appearing to be developed along a through-like flexure within the Central Granitoid body.

The upper KBDD11107 borehole (-50^o dip) yielded a mineralized intercept of 27 m grading 0.89 g/t gold from a down hole depth of 127 m; and the steeper KBDD11108 borehole (-75^o) returned a mineralized intercept of 42 m grading 2.39 g/t gold, including 14 m grading 3.11 g/t gold and 9 m grading 3.19 g/t gold from a down hole depth of 189 m, approximately 100 m down dip of the KBDD11107 intercept. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite composition.

Both boreholes also intersected mineralization spatially associated with a northerly trending shear zone cross-cutting the Central Granitoid; with KBDD11107 yielding a sheared diorite intercept grading 8.44 g/t gold over 3 m from a down-hole depth of 60 m; and sheared, graphitic metasedimentary rocks in KBDD11108 returning mineralized intercepts grading 2.12 g/t gold over 4 m and 2.36 g/t gold over 5 m, including 5.36 g/t gold over 2 m, from down-hole depths of 87 m and 116 m, respectively. This newly discovered gold-bearing shear zone represented a very prospective target to be followed-up by additional trenching and drilling.

To date, we had completed 31 holes totaling 7,692 m (#KBDD11105 - #KBDD11135) of our 2011 Drill Program (including KBDD11116 which was abandoned at 71 m); with 15 out of the 31 holes (4,390 m) targeting the Big Bend gold zone on the Central Granitoid body. At the time, ongoing drilling efforts were focused on the further delineation of the Big Bend gold zone.

Ongoing drilling on the Big Bend Gold Zone on our Kibi Gold Project continues to intersect significant gold mineralization, including 2.42 g/t gold over 52 m. At the time, assay results from six new diamond core holes (1,308 m) noted hereunder continued to confirm the down-plunge continuity and the multiple en-echelon vein package structural style of the mineralization, and demonstrated the occurrence of higher grade mineralization within the Big Bend gold system.

Highlights of the holes noted hereunder include classical granitoid – hosted gold mineralization intercepts of:

• 52 m grading 2.42 g/t gold in KBDD11113 from 84 m down-hole, including 27 m grading 3.58 g/t gold (and including 6.09 g/t gold over 12 m);
• 50 m grading 1.64 g/t gold in KBDD11110 from 158 m down-hole, including 24 m grading 2.45 g/t gold; and
• 50 m grading 1.31 g/t gold in KBDD11114 from surface, including 20 m grading 2.21 g/t gold.

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To date, significant gold mineralization had been traced over an approximately 300 m strike length and approximately 360 m down plunge distance from surface along the Big Bend gold zone hosted by the Central Granitoid body. Drilling to date indicated that the Big Bend zone consisted of north-easterly plunging, en echelon, mineralized vein packages appearing to be developed along a through-like flexure within the Central Granitoid body. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite composition. Irregularities or flexures in the geometry of the host diorite bodies appear to strongly influence the development of veining and grade distribution; as is exemplified by the Big Bend Zone on the Central Granitoid and the East Dyke Granitoid Zone. Similar flexures have potential to host mineralization elsewhere along the strike or down-dip extensions of the extensive dioritic bodies characterizing our Kibi Gold Project.

Boreholes KBDD11109 – KBDD11110 and KBDD11111 – KBDD11112 consisting of a pair of south trending, vertical fan drill sections (-50^o & -75^o), collared approximately 45 m apart were designed to test the quartz diorite body at depth between holes KBDD10103 and KBDD11108 which yielded significant gold intercepts located approximately 45 m west and 50 m east of the present drill sections, respectively. With KBDD10103 returning mineralized intercepts of 1.98 g/t gold over 27 m and 1.76 g/t gold over 25 m; and KBDD11108 returning an intercept of 42 m grading 2.39 g/t gold.

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The upper KBDD11109 borehole (-50^o) of the KBDD11109 – KBDD11110 vertical fan pattern yielded a mineralized intercept of 2 m grading 5.75 g/t gold from a down-hole depth of 91 m; and the steeper KBDD11110 borehole (-75^o) returned a mineralized intercept of 50 m grading 1.64 g/t gold, including 24 m grading 2.45 g/t gold, from a down-hole depth of 158 m, approximately 75 to 125 m down dip of the KBDD11109 intercept. The shorter KBDD11109 intercept appeared to represent the upper fringes of the north-easterly plunging mineralization zone.

The upper KBDD11111 borehole (-50^o) of the KBDD11111 – KBDD11112 vertical fan pattern yielded mineralized intercepts of 22 m grading 1.25 g/t gold and 18 m grading 2.09 g/t gold, including 7 m grading 4.18 g/t gold, from down-hole depths of 94 m and 133 m, respectively. The steeper KBDD11112 borehole (-75^o) yielded three (3) mineralized intercepts developed over a 115 m core-length starting at a down-hole depth of 130 m, including: 47 m grading 0.71 g/t gold, including 2.71 g/t gold over 6 m; 18 m grading 1.31 g/t gold; and 17 m grading 2.0 g/t gold, including 3.89 g/t gold over 7 m. The KBDD11112 mineralization envelope extended from approximately 55 m to 120 m down-dip of the upper KBDD11111 intercepts.

KBDD11113 and KBDD11114, consisting of vertical boreholes (-90^o) collared approximately 35 m apart at the western extremity of the Big Bend Gold Zone, were designed to test the extensive system of shallowly dipping, extension (ladder) vein arrays associated with the mineralized system; and to obtain additional information on the structural controls of the mineralization. Hole KBDD11113 returned a mineralized intercept of 52 metres grading 2.42 g/t gold, including 27 m grading 3.58 g/t gold (and including 6.09 g/t gold over 12 m), from a down-hole depth of 84 m; and KBDD11114 yielded an intercept of 50 m grading 1.31 g/t gold from surface, including 20 m grading 2.21 g/t gold.

To date, we had completed 34 holes totaling 8,550 m (#KBDD11105 - #KBDD11138) of our 2011 Drill Program (including KBDD11116 which was abandoned at 71 m after encountering seven m of 2.57 g/t gold from 64-71 m); with 18 out of the 31 holes (5,248 m) targeting the Big Bend gold zone on the Central Granitoid body. Ongoing drilling efforts during that time frame focused on the further delineation of the Big Bend gold zone.

In June 2011, field preparations were underway for exploration programs in the third quarter of the Fiscal Year designed to fully maximize the discovery potential on our Kibi Gold Project.

The comprehensive and systematic field programs will include a combination of follow-up work to define drill targets on untested gold-in-soil and Induced Polarization (“IP”) anomalies lying along the approximately 5.5 km long Kibi Project gold trend located along the north-western margin of the Apapam Mining Lease; as well as first pass, grassroots exploration covering the southeastern portion (70%) of the concession, and the contiguous Akim Apapam reconnaissance license area. The multi-faceted work programs, including first pass (200m x 25m) and in-fill (100m x 25m) soil sampling, geological mapping and prospecting, hand auger sampling, and mechanized trenching, will also permit the prioritization and definition of geophysical anomalies produced by the completed, detail 100 m line-spacing, airborne Versatile Time Domain Electromagnetic (“VTEM”), magnetic, and radiometric survey over the Apapam property area.

To date, only approximately 15% of the existing Kibi Gold Project soil geochemistry / IP survey grid, covering approximately 30% of the 33.65 km² Apapam Mining Lease, had been subjected to follow-up work; with the ongoing 2011 Drill Program focused on Zone 2 of our Kibi Gold Project only representing approximately 3% of the total concession area. Limited trenching and scout drilling outside Zone 2 has traced the granitoid–hosted gold mineralization over an approximately 2,100 m distance along the approximately 5.5 km NE – trending Kibi Gold Trend. In combination with VTEM/Mag/Radiometric survey, these target generation/definition programs will enable our company to further define known gold occurrences outside Zone 2, and evaluate the remainder of this very prospective land position for the hosting of granitoid-hosted and Ashanti style shear zone gold mineralization.”

Line cutting for the Apapam South control grid, to be followed by soil sampling, commenced on June 13, 2011. Hand auger sampling and mechanized trenching will follow-up on untested gold-in-soil and IP anomalies on the existing Kibi Gold Project grid and was expected to start by the end of June. At the time, these target generation/definition work programs were scheduled to be implemented concurrently over the next two to three months; with arrangements in progress for the booking of a second diamond drill rig to start testing high priority targets towards the end of the third quarter of the Fiscal Year.

Regional government mapping indicated that the Apapam South / Akim Apapam soil geochemistry survey area covers highly prospective terrain for the hosting of Ashanti style shear zone gold mineralization in the form of two major Birimian unit contacts, including the contact between an extensive metavolcanic rock sequence, forming the core of the Kibi Gold Belt, and a metasedimentary/volcaniclastic rock package; and a major north-east trending reverse fault along the eastern margin of the belt. The Kibi Old Mine historical lode gold prospect located at the north-central extremity of the Apapam Concession is spatially associated with this regional structure.

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The first pass soil survey will cover an approximately 25 km² area and encompass an estimated 5,450 samples to be collected at a sampling density of 200 m x 25 m. Reconnaissance geology and prospecting will also be conducted along the approximately 136 km of NW-SE trending cross-lines. Every second sample (50 m stations) will initially be submitted for gold and arsenic analysis (approximately 2,725 samples); with the “held – back” samples subsequently subjected for analysis where required to delineate / bracket anomalous gold-in-soil anomalies. Detailed (100m x 25m) follow-up soils and hand auger sampling will be conducted upon reception of analytical results to provide greater definition of gold-in-soil anomalies.

Untested gold-in-soil and IP anomalies lying within the existing Kibi Gold Project grid area will be followed-up by in-fill (100m x 25m) soil sampling and/or hand auger sampling, and mechanized trenching designed to identify high priority, cost-effective drill targets. Of particular interest is a 3.5 km long, NE-trending, chargeable/resistive IP anomaly exhibiting a spatial relationship with a geophysically inferred, NE-trending, regional structural trend, and characterized by coincidental gold-in-soil anomalies and/or auriferous floats lying along the south-western margin of the approximately 5.5 km long Kibi Project gold trend.

See the NI 43-101 Technical Report entitled “Kibi Project, Eastern Region, Ghana” dated July 12, 2010, filed under our company’s profile on SEDAR at www.sedar.com for further details regarding to the aforementioned Kibi Old Mine historical prospect and the high priority geophysical/geochemical target.

In August 2011, ongoing drilling on our Kibi Gold Project continued to intersect significant gold mineralization, including 2.67 g/t gold over 38 m on the Big Bend Gold Zone – Central Granitoid and 4.88 g/t gold over 16 m on the newly defined Mushroom Gold Zone at the southeastern extremity of the Upper Central Granitoid. Assay results from 19 new diamond core holes (5,055 m), as noted hereunder, continued to confirm the down-plunge continuity and the multiple en-echelon vein package structural style of the Big Bend Gold Zone, and demonstrated the multiple gold deposit potential within Zone 2 of our Kibi Gold Project.

Highlights of the holes noted hereunder include:

• 16 m grading 2.25 g/t gold and 38 m grading 2.67 g/t gold in KBDD11133 from 152 m and 182 m down-hole, respectively (Big Bend Gold Zone);
• 32 m grading 2.41 g/t gold in KBDD11136 from 149 m down-hole, including 17 m grading 4.01 g/t gold (Big Bend Gold Zone);
• Big Bend Gold Zone now traced over approximately 325 m strike length and 450 m down plunge from surface within the Central Granitoid body;
• 16 m grading 4.88 g/t gold, including 10 m grading 7.38 g/t gold, from 67 m down hole in KBDD11117, on the newly defined Mushroom Gold Zone on the Upper Central Granitoid (as noted below); and
• 3 newly defined Shear Targets, including 34.80 g/t gold over 1 m in coarse visible gold-bearing shear zone in KBDD11133.

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These drill results are part of 2011 Drill Program. Holes included nine holes (2,913 m) on the Big Bend Gold Zone, 3 holes (612 m) on the newly defined Mushroom Gold Zone on the Upper Central Granitoid, and 7 exploration holes (1,530 m) on newly discovered shear and Induced Polarization (IP) / soil geochemistry targets.

At the time, drilling included nine holes on the Big Bend Gold Zone, including 8 holes (2,446 m) designed to further delineate/infill the gold zone and 1 hole (#KBDD11134; 467 m) drilled down the plunge of the zone in order to obtain additional structural information on the multiple en-echelon vein package system and to test the continuity of the mineralization down plunge. The delineation/infill holes, with the exception of #KBDD11115, consist of southerly trending boreholes (- 50^o to -75^o inclinations) collared on the northern, hanging wall flank of the easterly trending host diorite body and drilled across the ESE-trending, northerly dipping mineralization sheets.

Holes #KBDD11128, #KBDD11133, and #KBDD11135 to #KBDD11137 were designed to further delineate/infill the Big Bend Gold Zone along strike at vertical depths ranging from approximately 90 m to 175 m. Boreholes #KBDD11138 and #KBDD11139 tested the down plunge extension of the zone at vertical depths of approximately 200 m to 300 m. Hole #KBDD11115 consists of a vertical borehole (-90^o) collared at the western extremity of the Big Bend Gold Zone designed to test the extensive system of shallowly dipping, extension (ladder) vein arrays associated with the mineralized system; and to obtain additional information on the structural controls of the mineralization.

All eight Big Bend Gold Zone delineation/infill holes returned significant gold mineralization, including: intercepts of 2.25 g/t gold over 16 m and 2.67 g/t gold over 38 m from down hole depths of 152 m and 182 m, respectively in hole #KBDD11133; and 0.78 g/t gold over 7 m and 2.41 g/t gold over 32 m (including 4.01 g/t gold over 17 m) from down hole depths of 134 m and 149 m, respectively in #KBDD11136. The #KBDD11133 gold intercepts are located approximately 25 m west and below mineralized intercepts of 1.98 g/t gold over 27 m and 1.76 g/t gold over 25 m yielded by previously reported hole #KBDD10103. The #KBDD11136 gold intercepts are located approximately 50 m below mineralized intercepts of 22 m grading 1.25 g/t gold and 18 m grading 2.09 g/t gold in previously reported hole #KBDD11111, and approximately 40 m above and east of mineralized intercepts of 47 m grading 0.71 g/t gold, 18 m grading 1.31 g/t gold, and 17 m grading 2.0 g/t gold in hole #KBDD11112.

Hole #KBDD11134 was drilled down the plunge of the Big Bend Gold Zone in order to obtain additional structural information on the multiple en-echelon vein package system, to test the continuity of the mineralization down plunge, and to serve as a pilot hole to permit better targeting of deeper holes along the down plunge extension of the zone. The NE-trending borehole (060^o/-58^o) was collared at the western, surface expression, extremity of the Big Bend Gold Zone and allowed to run unaided down the plunge and diagonally across (down dip) the system of stacked, approximately 70^o northerly dipping, mineralization sheets. KBDD11134 remained within the confines of the host Central Granitoid body to its final depth of 467 m; with the borehole stopped due to a shortage of drill rods.

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Hole #KBDD11134 yielded multiple mineralized intervals, ranging from 3 m to 73 m in core length, reflecting the en-echelon style vein packages forming the Big Bend Gold Zone mineralization, including: 1.51 g/t gold over 26 m from a down hole depth of 6 m, 3.03 g/t gold over 41 m from a down hole depth of 96 m, 2.04 g/t gold over 42 m from a down hole depth of 223 m, and 1.06 g/t gold over 73 m from a down hole depth of 312 m (see Table 2). The array of mineralized intervals produced a length weighted average grade of 1.62 g/t gold over a cumulative core length of 276 m, and the hole returned 1.01 g/t gold, including internal dilution, over its 464 m core length (3m – 467m); exemplifying the down plunge continuity of the Big Bend Gold Zone mineralization.

To date, significant gold mineralization had been traced over an approximately 325 m strike length and approximately 450 m down plunge distance from surface along the Big Bend Gold Zone hosted by the Central Granitoid body. Drilling to date indicated that the Big Bend Zone consisted of north-easterly plunging, en-echelon, mineralized vein packages appearing to be developed along a trough-like flexure within the Central Granitoid body. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite composition.

Mushroom Gold Zone

Holes #KBDD11117, #KBDD11118 and #KBDD11120 were designed to follow up on significant drill intercepts yielded by RC hole #KBRC09060 and diamond drill hole #KBDD10081 within the southeastern portion of the Upper Central Granitoid, i.e. the newly defined Mushroom Gold Zone.

Hole #KBDD11117 consisting of the re-drilling of hole #KBDD11116, which returned 7 m grading 2.57 g/t gold before being abandoned due to technical difficulties at the 71 m mark, was designed to follow up on scout hole #KBRC09060 drilled down the dip of the host granitoid body in order to transect an extensive system of westerly dipping, sheeted quartz veining; with the borehole returning an intercept from surface of 39.0 m grading 9.23 g/t gold uncut (3.54 g/t gold cut). The southeast trending #KBDD11117 borehole designed to intersect the Upper Central Granitoid at right angles from a collar position on the northeastern, hanging wall flank of the host granitoid body returned a mineralized intercept of 4.88 g/t gold over 16 m, including 10 m grading 7.38 g/t gold, from a down hole depth of 67 m, approximately at the same vertical depth as the bottom of the #KBRC09060 intercept.

Hole #KBDD11118 designed to undercut a mineralized intercept of 9 m grading 3.60 g/t gold in #KBDD10081, approximately 60 m to the northwest of #KBDD11117, returned 2.57 g/t gold over 11 m, including 5 m grading 4.23 g/t gold, from a down hole depth of 84 m, approximately 45 m down dip of the #KBDD10081 intercept. Drilling to date appeared to indicate that the Mushroom Gold Zone consists of a northeast plunging vein system spatially related to a series of pinch and swells in the Upper Central Granitoid body.

Irregularities or flexures in the geometry of the host diorite bodies appear to strongly influence the development of veining and grade distribution; as is exemplified by the Big Bend Gold Zone on the Central Granitoid, the East Dyke Granitoid Zone, and the newly defined Mushroom Gold Zone on the Upper Central Granitoid. Similar flexures have potential to host mineralization elsewhere along the strike or down-dip extensions of the extensive dioritic bodies characterizing our Kibi Gold Project.

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Shear Zone Targets

An approximately 0.5 m wide, coarse visible gold bearing, quartz vein hosted within a fault breccia forming part of a prominent shear zone spanning over an approximately 10 m core length returned 34.80 g/t gold over a 1 m core length at a down hole depth of 398 m in hole #KBDD11133. This newly discovered northwest trending/northeasterly dipping shear zone represented a very prospective exploration target due to its emplacement along the southern limb of the Central Granitoid body.

Boreholes #KBDD11122 and #KBDD11123 consisting of a west trending, vertical fan drill section (-50^o & -70^o) was designed to further test the northerly trending Junction Shear cross-cutting the Central Granitoid; approximately 80 m south of a 8.44 g/t gold over 3 m intercept yielded from the same structure in hole #KBDD11107. The upper KBDD11122 borehole (-50^o) of the vertical fan pattern returned mineralized intercepts of 3 m grading 3.14 g/t gold, including 7.59 g/t gold over 1 m, and 5.15 g/t gold over 1 m from down hole depths of 78 m and 92 m, respectively; and the steeper KBDD11123 hole (-70^o) returned an intercept of 2.45 g/t gold over 1 m at a down hole depth of 126 m, approximately 50 m down dip of the KBDD11122 intercept.

To date, , we had completed 54 holes totaling approximately 14,825 m (#KBDD11105 - #KBDD11158) in our 2011 Drill Program (including KBDD11116 which was abandoned at 71 m); with 24 out of the 54 holes (7,704 m) targeting the Big Bend gold zone on the Central Granitoid body. Ongoing drilling efforts during that time frame are currently focused on the further delineation of the newly defined Mushroom Gold Zone on the Upper Central Granitoid.

In November 2011, ongoing drilling continued to confirm the down-plunge continuity and the multiple en-echelon vein package structural style of the Big Bend gold zone, and demonstrated the multiple gold deposit potential within Zone 2 of our Kibi Gold Project.

Highlights of the 15 diamond core holes (5,714 m) noted hereunder include:

• 62 m grading 1.57 g/t gold, including 2.00 g/t gold over 42 m (and including 2.76 g/t gold over 19 m) in #KBDD11141 from 232 m down-hole (Big Bend Zone);
• 41 m grading 1.62 g/t gold, including 2.18 g/t gold over 20 m, in #KBDD11143 from 249 m down-hole (East Dyke- North Zone);
• Big Bend Zone now traced over approximately 325 m strike length and 500 m down plunge from surface within the Central Granitoid body;
• South Ridge Gold Zone extended 170 m further down dip than from 2010 drilling; gold mineralization now traced over distances of approximately 440 m along the strike and 400 m down the dip of the South Ridge Granitoid body;
• New typical Kibi-type granitoid hosted vein system (i.e. Road Cut Zone) discovered in diorite body located 60 m due south of the Central Granitoid’s Big Bend Zone; and
• Second diamond drill rig contracted to accelerate delineation/infill drilling of the Big Bend Zone and East Dyke – North Zone geared towards an initial resource estimate.

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The following drill results are part of our 2011 Drill Program designed to delineate/infill the Big Bend Gold Zone – Central Granitoid; as well as further test/delineate other prominent gold systems and geophysical/geochemical anomalies on the approximately 1,200 m long by 500 m to 800 m wide Zone 2 gold-in-soil anomaly of our Kibi Gold Project. The 15 holes (#KBDD11129 to #KBDD11150) drilled at the time included: 6 holes (2,327 m) on the Big Bend Zone, including #KBDD11142 which tested both the East Dyke and Big Bend zones; 3 holes (899 m) on the East Dyke Zone; 3 holes (1,211 m) on the newly discovered Road Cut Zone; 1 hole on the South Ridge Granitoid Zone (578 m); and 3 geology/exploration holes (699 m) designed to further define the geometry of Zone 2 diorite bodies.

Big Bend Zone (Central Granitoid)

Drilling included 6 holes (2,327 m) on the Big Bend Zone, including 4 holes designed to further delineate/infill the gold zone and 2 holes targeting the down plunge extension of the mineralized body. In addition, hole #KBDD11146 targeting the southern diorite body hosting the Road Cut Zone was collared on the footwall margin of the Central Granitoid (i.e. Big Bend Zone) but exited the Central Granitoid body at a down-hole depth of 25 m.

The Big Bend Zone holes, with the exception of #KBDD11142, consist of southerly trending boreholes (- 60o to -77o inclinations) collared on the northern, hanging wall flank of the easterly trending host diorite body and drilled across the ESE-trending, northerly dipping mineralization sheets. KBDD11142 consists of a WNW-trending borehole originally designed to test the East Dyke Zone but extended down to the Central Granitoid to test the down plunge extension of the Big Bend Zone and to obtain additional structural information on the mineralized vein system.

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Holes #KBDD11140 and #KBDD11141 were drilled in a vertical fan pattern (-60^o and -72^o) with the upper borehole designed as an infill hole along the eastern portion of the Big Bend Zone and the lower borehole targeting the down plunge extension of the mineralized body. The upper #KBDD11140 borehole (-60^o) yielded mineralized intercepts of 7 m grading 1.46 g/t gold and 15 m grading 1.39 g/t gold from down-hole depths of 162 m and 192 m, respectively, and the steeper #KBDD11141 borehole (-72^o) intersected 2.00 g/t gold over 42 m from 241 m down-hole, including a higher-grade core grading 2.76 g/t gold over 19 m (251m-270m), in a broader intercept grading 1.57 g/t gold over 62 m from a down-hole depth of 232 m; approximately 100 m vertically below the #KBDD11140 intercept. This mineralization exhibited good continuity with an intercept of 42 m grading 2.39 g/t gold, including 3.11 g/t gold over 14 m and 3.19 g/t gold over 9 m, in hole #KBDD11108; approximately 50 m above the #KBDD11141 intercept.

Hole #KBDD11142 initially targeted the East Dyke Zone (see description below) but was extended down to the Central Granitoid to test the down plunge extension of the Big Bend Zone and to obtain additional structural information on the mineralized vein system. The westerly trending (285^o) borehole diagonally transected (down dip) the easterly trending, steep northerly dipping system of stacked, mineralized vein sheets. This lower segment of #KBDD11142 yielded multiple mineralized intervals, spanning from 350 m to 468 m down-hole, reflecting the en-echelon style vein packages forming the Big Bend Zone mineralization, including: 6 m grading 1.98 g/t gold; 20.1 m grading 1.71 g/t gold; 3 m grading 2.14 g/t gold; and 22 m grading 1.43 g/t gold, including 3.19 g/t gold over 5 m. The lowermost #KBDD11142 intercept (446m-468m) lies approximately 150 m below the #KBDD11141 mineralized intercept and approximately 500 m down plunge from the surface expression of the mineralized body.

Holes #KBDD11130, #KBDD11131, and #KBDD11132 were designed to further delineate/infill the down-dip extension of the western portion of the Big Bend gold zone, approximately 150 m down-plunge from surface, at vertical depths ranging from approximately 150 m to 280 m. All 3 holes returned significant gold mineralization, including: intercepts of 1.75 g/t gold over 26 m, including 12 m grading 2.56 g/t gold, from a down-hole depth of 211 m in hole #KBDD11131; and 1.72 g/t gold over 6 m, 3.21 g/t gold over 3 m, and 0.81 g/t gold over 20 m (including 5 m grading 2.30 g/t gold) from down hole-depths of 237 m, 264 m, and 280 m, respectively. The #KBDD11131 gold intercept is located approximately 70 m vertically below mineralized intercepts of 27 m grading 1.98 g/t gold and 25 m grading 1.76 g/t gold in #KBDD10103, and approximately 70 m below and 22 m west of intercepts of 16 m grading 2.25 g/t gold and 38 m grading 2.67 g/t gold in #KBDD11133.

To date, significant gold mineralization had been traced over an approximately 325 metre strike length and approximately 500 metre down plunge distance from surface along the Big Bend gold zone hosted by the Central Granitoid body. Drilling to date indicated that the Big Bend zone consisted of north-easterly plunging, en-echelon, mineralized vein packages appearing to be developed along a trough-like flexure within the Central Granitoid body. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite composition.

East Dyke – North Zone (#KBDD11142 and #KBDD11143)

Holes #KBDD11142 and #KBDD11143 consisting of a pair of west trending, vertical fan pattern holes (-55^o and -70^o) collared on the eastern (hanging wall) flank of the northern segment of the East Dyke Granitoid, targeted the down-plunge extension of significant gold mineralization intersected earlier in the Fiscal Year by fan pattern holes #KBDD11105 and #KBDD11106; which returned 15 m grading 2.05 g/t gold, including 5 m grading 4.0 g/t gold, and 14 m grading 2.36 g/t gold, including 5 metres grading 5.18 g/t, respectively.

The upper #KBDD11142 borehole (-55^o dip) yielded a mineralized intercept of 26 m grading 1.41 g/t gold, including 8 m grading 2.37 g/t gold, from a down-hole depth of 200 m, approximately 50 m north and 25 m below the #KBDD11106 intercept; and the steeper #KBDD11143 borehole (-70^o) returned a significant mineralized intercept grading 1.62 g/t gold over 41 m, including 2.18 g/t gold over 20 m, from a down-hole depth of 249 m, approximately 80 m down dip of the #KBDD11142 intercept.

To date, significant gold mineralization had been traced over an approximately 150 m strike length and 320 m down plunge distance along the North Zone of the East Dyke Granitoid (i.e. East Dyke – North Zone). Drilling to date indicated that the North Zone consisted of a northerly plunging (approx. 65^o) mineralized vein package appearing to be developed at a flexure in the host granitoid body.

Road Cut Zone (#KBDD11144; New Zone)

Hole #KBDD11144 (100^o/-55^o) returned a mineralized intercept of 30 m grading 0.79 g/t gold (34 m – 64 m), including 19 m grading 1.05 g/t gold, across a NNE-trending system of typical Kibi-type granitoid hosted quartz-albite-carbonate-sulphide veining. This new gold zone (i.e. Road Cut Zone) is emplaced within an easterly trending quartz diorite body lying approximately 60 m south of the Central Granitoid; due south of the flexure along the Central Granitoid appearing to control the Big Bend Gold Zone mineralization. Additional trenching/drilling is planned to further define the geometry of the host diorite body and the structural controls of the mineralization.

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South Ridge Zone (#KBDD11148)

Hole #KBDD11148 (225^o/-55^o) was drilled as a combination geology/exploration borehole designed to further delineate the western extensions of the Central Granitoid and South Ridge Granitoid bodies, define the stratigraphy across the colluvium-filled valley separating the Central Granitoid and South Ridge Granitoid, and test the down dip potential of the central portion of the South Ridge Gold Zone.

Hole #KBDD11148 returned a significant, quartz diorite-hosted, mineralized intercept of 15 m grading 1.40 g/t gold (452 m – 467 m), including 7 m grading 2.53 g/t gold, appearing to correspond to the down dip extension of the South Ridge Gold Zone; approximately 170 m down dip of the lowermost intercept of 47 m grading 0.58 g/t gold in hole #KBDD10086. The borehole also intersected two previously unmapped iron-carbonate altered quartz diorite bodies prospective for the hosting of Kibi-type granitoid hosted gold mineralization.

Drilling and trenching to date had traced an extensive system of en-echelon extension vein arrays across an approximately 440 m distance along the SE-trending, moderately NE-dipping South Ridge Granitoid body; with the present borehole appearing to extend the mineralization to a down-dip depth of approximately 400 m.

Drilling Progress and Exploration Outlook

At the time, 70 holes totalling 18,932 m had been completed by our company in our 2011 Drill Program, of which, including the 15 holes (5,714 m) noted in the preceding paragraphs, 50 drill holes have been reported.

In November 2011, a new 20,000 m drill contract, to be initiated following the completion of our 2011 Drill Program, had been signed with Burwash Drilling Limited, and our company also contracted Global Drilling Services for a second diamond drill rig (10,000 m minimum) which commenced drilling on December 16, 2011.

One drill rig will be dedicated to the further delineation/infill drilling of the Big Bend Zone and East Dyke – North Zone geared towards an initial resource estimate. The second drill rig will focus on the further testing/delineation of other prominent Zone 2 gold systems including the South Ridge and Mushroom zones, the scout drilling of Zone 3 and Zone 4 trench showings and gold-in-soil anomalies, and the testing of priority geophysical targets yielded by the airborne VTEM, magnetic, and radiometric survey completed earlier in the Fiscal Year.

The results from 26 additional diamond core holes totaling 6,713 m from Zone 2 of our Kibi Gold Project are noted hereunder.

Highlights of the drill results include:

• 17 m grading 5.47 g/t gold, including 12.66 g/t gold over 4 m, in #KBDD11172 from 127 m down-hole (Big Bend Zone);
• 24.5 m grading 3.43 g/t gold, including 4.70 g/t gold over 17 m, in #KBDD11176 from 165.5 m down-hole (East Dyke-North Zone);
• 20 m grading 2.82 g/t gold in #KBDD11157 from 92 m down-hole (Mushroom Zone – Upper Central Granitoid);
• North Zone traced approximately 465 m down plunge from surface within the East Dyke Granitoid body (#KBDD11175);
• New typical Kibi-type granitoid hosted vein system discovered at depth within the apparent fold nose developed within the Central Granitoid (#KBDD11161); and
• Ongoing follow-up trenching on Double 19 Zone within extensive Zone 3 gold-in-soil anomaly returns channel sample intercept of 2.27 g/t gold over 36 m trench-length, including 2 m grading 22.22 g/t gold, in trenches #TAD022 - #ADRS001.

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These drill results are part of our 2011 Drill Program of our Kibi Gold Project. The 26 holes (#KBDD11151 to #KBDD11176) include: 6 holes (2,148 m) on the Big Bend Zone; 5 holes (1,157 m) on the East Dyke Zone; 7 holes (1,290 m) on the Mushroom Zone – Upper Central Granitoid; 2 holes (433 m) on the South Ridge Granitoid Zone; 2 holes (510 m) on the recently defined Road Cut Zone; and 4 geology/exploration holes (1175 m) designed to further define the geometry of Zone 2 diorite bodies.

Big Bend Zone (Central Granitoid)

Drilling included 6 holes (2,148 m) on the Big Bend Zone, including: 3 holes designed to further delineate/infill the gold zone (KBDD11160, KBDD11171, KBDD11172); 2 holes targeting the down plunge extension of the mineralization along the northwestern limb of the trough-like flexure (i.e. Big Bend) developed within the Central Granitoid body (KBDD11169 - 170); and 1 hole (KBDD11161) drilled down the plunge of the zone in order to obtain additional structural information on the multiple en-echelon vein package system and to test the continuity of the mineralization down plunge.

Hole #KBDD11172 consisting of a southwest trending borehole designed to further delineate the western extremity of the Big Bend Zone, along the north-western limb of the trough-like flexure developed within the Central Granitoid body, returned a high grade mineralized intercept grading 5.47 g/t gold over 17 m, including 4 metres grading 12.66 g/t gold, from a down-hole depth of 127 m. This mineralization exhibited good continuity with an intercept of 27.13 m grading 2.12 g/t gold, including 4.01 g/t gold over 6.93 m in #KBDD10070, lying approximately 40 above and 20 m to the south of the #KBDD11172 intercept.

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Hole #KBDD11170 consisting of a deep exploratory borehole targeting the down plunge extension of the mineralization along the north-western limb of the trough-like flexure intersected several exploration significant intercepts distributed over an approximately 100 m core-length from a down-hole depth of 243 m, including 8 m grading 1.10 g/t gold; approximately 175 m down plunge from the #KBDD11172 intercept.

Hole #KBDD11161 was drilled down the plunge of the Big Bend Zone, parallel to and approximately 75 m to the southeast of similar down-plunge hole #KBDD11134; with these down-plunge boreholes designed to obtain additional structural information on the multiple en-echelon vein package system, to test the continuity of the mineralization down plunge, and to serve as pilot holes to permit better targeting of deeper holes along the down plunge extension of the zone. The ENE-trending borehole (070^o/-55^o) was collared along the inner footwall margin of the host granitoid body, along the eastern limb of the trough-like flexure, and allowed to run unaided down the plunge and diagonally across (down dip) the system of stacked, approximately 70^o northerly dipping, mineralization sheets. KBDD11161 remained within the confines of the host Central Granitoid body for its entirety; with technical difficulties forcing the borehole to be abandoned within a new mineralization zone at a down-hole depth of 537 m.

Hole #KBDD11161 yielded multiple mineralized intervals, ranging from 10 m to 45 m in core length, reflecting the en-echelon style vein packages forming the Big Bend Zone mineralization, including: 1.50 g/t gold over 28 m from a down hole depth of 3 m; 1.22 g/t gold over 20 m from a down hole depth of 116 m; 2.0 g/t gold over 45 m from a down hole depth of 159 m; 1.57 g/t gold over 35 m from a down hole depth of 231 m; and 1.40 g/t gold over 25 m from a down hole depth of 283 m (see Table 2). The array of mineralized intervals produced a length weighted average grade of 1.60 g/t gold over a cumulative core length of 185 m, and the hole returned 1.03 g/t gold, including internal dilution, over a 305 m core length (3m – 308m); exemplifying the down plunge continuity of the Big Bend zone gold mineralization.

Technical difficulties forced #KBDD11161 to be abandoned at the 537 m mark within a zone of typical Kibi-type quartz-albite-carbonate-sulphide veining; with the bottom 11 m of the borehole returning 1.23 g/t gold, including 2 m grading 2.79 g/t gold. This new mineralization zone lies at a vertical depth of approximately 400 m, approximately 160 m east of the deepest down plunge extent of the Big Bend Zone, within the apparent fold nose developed within the Central Granitoid.

At the time, significant gold mineralization had been traced over an approximately 325 m strike length and approximately 500 m down plunge distance from surface along the Big Bend gold zone hosted by the Central Granitoid body. Drillingto indicated that the Big Bend zone consisted of north-easterly plunging, en-echelon, mineralized vein packages appearing to be developed along a trough-like flexure within the Central Granitoid body. Gold mineralization is associated with quartz-albite-carbonate-sulphide veining developed within a rock body of quartz diorite composition.

East Dyke – North Zone

Drilling efforts on the East Dyke included a deep hole targeting the down plunge extension of the mineralized system and a delineation hole in the upper portion of the zone. KBDD11175 consisting of a deep, westerly trending borehole collared on the eastern, hanging wall flank of the East Dyke Granitoid returned typical granitoid hosted quartz-albite-carbonate-sulphide veining intercepts grading 0.88 g/t gold over 7 m and 1.14 g/t gold over 10 m from down-hole depths of 359 m and 385 m, respectively; approximately 145 m further down plunge than the previous extent of the mineralization.

To date, significant gold mineralization had been traced over an approximately 150 m strike length and 465 m down plunge distance along the North Zone of the East Dyke Granitoid (i.e. East Dyke – North Zone). Drilling to date indicated that the North Zone consisted of a northerly plunging (approx. 65^o) mineralized vein package appearing to be developed at a flexure in the host granitoid body.

Hole #KBDD11176 designed to further define the northern extent of the East Dyke – North Zone at a vertical depth of approximately 160 m returned a significant mineralized intercept of 24.5 m grading 3.43 g/t gold, including 4.70 g/t gold over 17 m. This mineralization exhibited good continuity with an intercept of 14 m grading 2.36 g/t gold in #KBDD11106, approximately 45 m to the east; and intercepts of 1.41 g/t gold over 26 m and 1.62 g/t gold over 41 m, including 20 m grading 2.18 g/t gold, in holes #KBDD11142 and #KBDD11143, respectively, approximately 35 m and 105 m below the #KBDD11176 intercept, respectively.

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Mushroom Zone (Upper Central Granitoid)

Holes #KBDD11151, #KBDD11153 – #KBDD11154, #KBDD11157, and #KBDD11158 were designed to further test the recently defined Mushroom Zone; following a significant, near surface intercept of 4.88 g/t gold over 16 m yielded by hole #KBDD11117. Drilling to date appeared to indicate that the Mushroom Zone consisted of a northeast plunging, en-echelon, vein system spatially related to a constriction in the south-eastern portion of the Upper Central Granitoid body; with present hole #KBDD11154 tracing the mineralization to a down-plunge depth of approximately 190 m.

Hole #KBDD11151 consisting of a southwest trending borehole targeting the down-plunge extension of the #KBDD11117 intercept from a collar position on the north-eastern, hanging wall flank of the host granitoid body returned a mineralized intercept of 2.45 g/t gold over 15 m from a down-hole depth of 110 m, approximately 50 m down plunge of the #KBDD11117 intercept. The mineralization zone was also tested in a west-northwest direction by #KBDD11157 which yielded an intercept of 2.82 g/t gold over 20 m from a down-hole depth of 92 m, approximately 20 m below and 10 m west of the #KBDD11151 intercept.

Hole #KBDD11154 consisted of the re-drilling (i.e. twinning) of #KBDD11153 which was abandoned at 128 m due to technical difficulties; with the boreholes having the same basic trace down to the 128 metre mark. KBDD11154 was drilled to a final depth of 344 m. The northeast trending boreholes, drilled down the dip extension of the host granitoid body in order to obtain additional information on the structural controls of the mineralization, dissected the extensive system of south-westerly dipping, sheeted quartz veining in a down-plunge fashion along the mineralization shoot. These holes were collared adjacent to hole #KBRC09060, a due east trending scout RC borehole, which returned an intercept from surface of 39.0 m grading 9.23 g/t gold uncut (3.54 g/t gold cut). KBDD11154 returned a mineralized intercept of 81 m grading 1.52 g/t gold from a down-hole depth of 3 m, including 2.94 g/t gold over 13.5 m, 2.56 g/t gold over 19 m, and 2.21 gold over 10 m. The borehole also yielded additional intercepts of 7 m grading 2.20 g/t gold and 6.23 g/t gold over 1 m from down-hole depths of 169 m and 190 m, respectively.

Double 19 Zone (Zone 3 Gold-In-Soil Anomaly)

Gold assay results for the first two trenches (109 m) of an ongoing trenching program to follow-up on very encouraging 2008 trenching and 2009 scout RC drilling results on the Double 19 Zone, located at the south-eastern extremity of the approximately 1,250 m long Zone 3 gold-in-soil trend; approximately 600 metres southwest of the South Ridge Zone on the Zone 2 gold-in-soil anomaly, are noted hereunder. The trenching program is designed to further define the geometry of the host diorite body and the structural controls of the mineralization in preparation for diamond drilling in the first quarter of 2012.

Trench #TAD022 (58 m) and road cut #ADRS001 (51 m) consisting of southeast and northwest trending excavations with a common start point yielded a combined channel sample intercept of 2.27 g/t gold over a 36 m trench-length, including 2 m grading 22.22 g/t gold, approximately 40 m southwest of the #TAD019 discovery trench. The Double 19 Zone is characterized by an extensive system of granitoid-hosted, NE-trending, moderately NW-dipping, sheeted quartz veins exhibiting a spatial relationship with northeasterly trending shearing.

For reference purposes, RC hole #KBRC09019 targeting the #TAD019 trench returned a mineralized intercept of 30 m grading 3.52 g/t gold, including 6.47 g/t gold over 14 m, from a down-hole depth of 8 m; with the discovery trench yielding a channel sample intercept of 4.93 g/t gold over a 45 m trench-length, including 12 m grading 10.12 g/t gold.

Drilling Progress

As at the year ended December 31, 2011, 80 holes totalling 21,795 m have been completed by our company in our 2011 Drill Program.

Gold Intercept Reporting Criteria

Unless otherwise indicated, “Reported Intercepts” represent core-lengths; true width of mineralization is unknown at this time. Individual sample results were length weighted to yield average composite interval grades as reported. Unless otherwise indicated “Significant Intercepts” satisfy following criteria: greater than (>) 5.0 gram gold x metre product and > 0.5 g/t gold. “Anomalous” signifies at least one intercept > 2.0 gram gold x metre product and > 0.25 g/t gold. Unless otherwise indicated intercepts are constrained with a 0.25 g/t gold minimum cut-off grade at the top and bottom of the intercept, with no upper cut-off grade applied, and a maximum of five consecutive metres of internal dilution (less than 0.25 g/t gold). All internal intervals yielding above 15 g/t gold are indicated within the intersection.

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Quality-Control Program

We have implemented a quality-control program to ensure best practice in the sampling and analysis of the drill core, RC samples and trench channel samples. Drill core is HQ diameter (63.5 mm) in upper oxidized material (regolith) and NQ diameter (47.6 mm) in the lower fresh rock portion of the hole. Drill core is saw cut and half the core is sampled in standard intervals. The remaining half of core is stored in a secure location. RC samples are taken at one meter intervals under dry drilling conditions by experienced geologists, with all samples weighed on site. Trench samples consist of continuous, horizontal channels collected from a canal excavated along the bottom sidewall of the trench (~ 0.10 meter above floor). All samples are transported in security-sealed bags to ALS. ALS is an ISO 9001:2000 certified laboratory. As of the date of this Report, a 250 gram split of the sample is pulverized to better than 85% passing 75 microns, and analyzed by industry standard 50 gram fire assay fusion with atomic absorption spectroscopy (AAS) finish. Samples with observed visible gold and/or exhibiting typical Kibi-type granitoid hosted mineralization characterized by liberated, particulate gold grains are pulverized in their entirety to better than 85% passing 75 microns, and analyzed four (4) times by industry standard 50 gram fire assay fusion with AAS finish; with the arithmetic average of the four (4) assays reported. Our company inserts a certified reference standard (low to high grade), analytical blank, and field duplicate sample in every batch of 20 drill core / RC chip / trench channel samples. Validation parameters are established in the database to ensure quality control.

2012 Diamond Drill Program

Initial Results of 2012 Drill Program

As at the date of this Report, we have drilled a total of 37 holes for a total of 7,843 m of core. The present drilling is designed to further delineate/infill the Big Bend Zone – Central Granitoid and the South Ridge Granitoid Zone; as well as further test/delineate other prominent gold systems and geophysical/geochemical anomalies along the approximately 5.5 km NE–trending Kibi Gold Trend. The 37 holes (#KBDD12186 to #KBDD12222) drilled in this year’s campaign to date include:

• 3 holes (1,092 m) on the Big Bend Zone;
• 3 holes (381 m) on the South Ridge Granitoid Zone in Zone 2;
• 10 holes (2,293 m) on the Double 19 Zone in Zone 3 - East;
• 4 holes (491 m) on the Kibi Old Mine prospect;
• 3 holes (782 m) on Zone 1;
• 10 holes (2,184 m) on the Zone 4 Gold Trend; and
• 4 holes (620 m) testing grassroots geophysical targets with coincidental gold-in-soil anomalies.

Double 19 Zone (Zone 3 – East Gold-In-Soil Anomaly)

The Double 19 Zone located at the south-eastern extremity of the approximately 1,250 m long Zone 3 gold-in-soil trend, approximately 600 m southwest of the South Ridge Zone on the Zone 2 gold-in-soil anomaly, was tested by a 10 hole (2,293 m) drill program designed to further define the mineralization along strike and at depth, gain additional insight on the mineralization’s structural setting, and further delineate the geometry of the host diorite body. The Double 19 Zone is characterized by an extensive system of granitoid-hosted, NE-trending, moderately NW-dipping, sheeted quartz veins exhibiting a spatial relationship with northeasterly trending shearing. To date, the mineralization has been traced over an approximately 125 m distance along the diorite body and to a vertical depth of 175 m.

The present drilling program was designed to follow-up on very encouraging trenching and 2009 scout RC drilling results. RC hole #KBRC09019 targeting the #TAD019 trench returned a mineralized intercept of 30 m grading 3.52 g/t gold, including 6.47 g/t gold over 14 m, from a down-hole depth of 8 m; with the discovery trench yielding a channel sample intercept of 4.93 g/t gold over a 45 m trench-length, including 12 m grading 10.12 g/t gold. Trench #TAD022 (58 m) and road cut #ADRS001 (51 m) consisting of southeast and northwest trending excavations with a common start point yielded a significant channel sample intercept of 2.27 g/t gold over a 36 m trench-length, including 2 m grading 22.22 g/t gold, approximately 40 m southwest of the #TAD019 discovery trench. Trenching is ongoing on the Double 19 Zone to further define the surface extent of the mineralization and the geometry of the host diorite body.

Kibi Gold Mine Prospect

The Kibi Old Mine prospect located at the north-central extremity of the Apapam Mining Lease was the focus of exploration and underground development work in the mid 1920’s and late 1930’s; including a main shaft sunk to a depth of 172 feet (~ 52.5 m) with levels driven at depths of 65 feet and 150 feet (~20 m and ~45.5 m). Mineralization consists of a series of auriferous quartz veins emplaced within sheared Birimian metasedimentary rock; spatially associated with a geophysically-interpreted dilational jog developed along a regional NE-trending structure. The present drilling encompassed 4 holes (491 m) designed to better characterized the gold grade and structural setting of the Kibi Old Mine vein system, including; 3 holes targeting the down dip extension of the veining below the 150 foot level at vertical depths of approximately 60 m to 145 m; and a shallow vertical hole testing the veining above the 65 foot level.

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Zone 1 Target

Three holes (782 m) were drilled on the Zone 1 gold-in-soil anomaly to follow up on 2008 scout drill hole KBD08017 which yielded intermittent, exploration significant, anomalous gold values over a 60 m core length, including individual intercepts of 1.43 g/t gold over 13.5 m, 1.04 g/t gold over 6 m and 1.02 g/t gold over 8 m. The Zone 1 target is characterized by shear-hosted gold mineralization developed within a tightly folded metasedimentary (turbititic) rock sequence; spatially associated with an induced polarization (IP)/resistivity anomaly lying along a geophysically-inferred, NE-trending, regional structural trend.

Scout Drilling Program - Zone 4 Target

A 10 hole (2,184 m) scout drilling program was conducted on the Zone 4 Target area to test high priority geophysical, soil geochemical, and geological targets along the 3.5 km long Zone 4 gold trend located within the south-western portion of the Apapam Mining Lease. The Zone 4 trend is characterized by a NE-trending, chargeable/resistive induced polarization (IP) anomaly exhibiting a spatial relationship with a Versatile Time Domain Electromagnetic (VTEM) - inferred, NE-trending, regional structural trend, and characterized by coincidental gold-in-soil anomalies and/or auriferous, sheared, silicified/sulphidized, metasedimentary rock floats.

Phase II Soil Geochemistry Program

Approximately 90% of the first pass soil geochemistry survey, initiated in June 2011, covering an approximately 25 km² area encompassing the south-eastern portion (70%) of the Apapam Mining Lease and the contiguous Akim Apapam reconnaissance license area has been completed. To date, approximately 106.5 km of NW-SE trending cross-lines have been established with a total of 4,162 samples collected at a sampling density of 200 m x 25 m; including a total of 2,129 samples submitted to the laboratory for gold analysis. As per program design every second sample (50 m stations) was initially submitted for gold analysis; with the “held – back” samples to be subsequently analyzed where required to delineate / bracket anomalous gold-in-soil anomalies. Based on gold results received to date for 1,991 samples, as at the date of this Report, approximately 900 in-fill (25 m station) samples have been selected for analysis to further define the newly detected anomalous gold-in-soil trends. Gold-in-soil anomalies exhibit a close spatial relationship with an array of structural features associated with a geophysically-interpreted dilational jog developed along a regional NE-trending structure.

Follow-up hand auger sampling and scout trenching is also planned to investigate the subsurface geochemical signature of the gold-in-soil anomalies.

Future Exploration Plans

We plan to continue our 2012 Drill Program throughout 2012 at an estimated cost of $5,000,000.

Resources and Reserves

No mineral resources or mineral reserves have been identified on our Kibi Project. As at the date of this Report, we have commissioned SEMS to prepare an initial NI 43-101-compliant mineral resource estimate on the Big Bend and East Dyke gold zones located within Zone 2 of our Kibi Project.

Apapam Mining Lease

XG Mining’s interest in the Kibi Project was previously held by a prospecting license granted by the Government of Ghana on March 29, 2004 covering a licensed area of 33.65 sq km. Subsequently, in May 2008, XG Mining made an application to the Government of Ghana to convert the prospecting license to a mining lease. Our application received parliamentary approval resulting in the Government of Ghana granting and registering the Apapam Mining Lease to XG Mining on the following terms and conditions.

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The Apapam Mining Lease is dated December 18, 2008 and is owned and controlled by Xtra-Gold, as to a 90% interest; and is registered to our subsidiary, XG Mining, with the remaining 10% free carried interest in XG Mining being held by the Government of Ghana. The Apapam Mining Lease covers an area of 33.65 sq km (the “Apapam Lease Area”) and is located in the East Akim District of the Eastern Region of the Republic of Ghana. The Apapam Mining Lease has a seven (7) year term expiring on December 17, 2015 and can be renewed for a further 30 year term in accordance with the Mining Act (Ghana), by making application not less than six months prior to the expiration of this mining lease. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the Apapam Lease Area (including the processing, storing and transportation of ore and materials). With respect to the Apapam Mining Lease, we are: (i) required to pay applicable taxes and annual rental fees to the Government of Ghana in the amount of approximately $19 (GH¢32.80); and (ii) committed to pay a royalty in each quarter to the Government of Ghana, through the Commissioner of Internal Revenue, based on the production for that quarter within 30 days from the quarter end as well as a royalty on all timber felled in accordance with existing legislation. Under the terms and conditions of the Apapam Mining Lease, we are required to (i) commence commercial production of gold within two years from the date of the mining lease; (ii) conduct our operations with due diligence, efficiency, safety and economy, in accordance with good commercial mining practices and in a proper and workmanlike manner, observing sound technical and engineering principles using appropriate modern and effective equipment, machinery, materials and methods and paying particular regard to the conservation of resources, reclamation of land and environmental protection generally; (iii) mine and extract ore in accordance with subparagraph (ii) herein, utilizing methods which include dredging, quarrying, pitting, trenching, stoping and shaft sinking in the Apapam Lease Area.

We are further required to furnish to the Minister of Lands, Forestry and Mines (“MLFM), the Head of the Inspectorate Division of the Minerals Commission (“HIDMC”), the Chief Executive of the Minerals Commission (“CEMC”) and the Director of Ghana Geological Survey (“DGGS”) (collectively referred to as the “Government Authorities”) technical records (the “Technical Records”) which include (i) a report in each quarter not later than 30 days after the quarter end to the Government Authorities in connection with quantities of gold won in that quarter, quantities sold, revenue received and royalties payable; (ii) a report half-yearly not later than 40 days after the half year end to the Government Authorities summarizing the results of operations during the half year and Technical Records, which report shall also contain a description of any geological or geophysical work carried out by our company in that half year and a plan upon a scale approved by HIDMC showing dredging areas and mine workings; (iii) a report in each financial year not later than 60 days after the end of the financial year summarizing the results of our operations in the Lease Area during that financial year and the Technical Records, which report shall further contain a description of the proposed operations for the following year with an estimate of the production and revenue to be obtained; (iv) a report not later than three months after the expiration or termination of the Apapam Mining Lease, to the Government Authorities giving an account of the geology of the Lease Area including the stratigraphic and structural conditions and a geological map on scale prescribed in the Mining Regulations; (v) a report to the Government Authorities (except for HIDMC and DGGS) of any proposed alteration to our regulations, (vi) a report to the Government Authorities (except for HIDMC and DGGS) on the particulars of any fresh share issuance or borrowings in excess of an amount equal to the stated capital of XG Mining; (vii) having regard to items (v) and (vi), these reports shall be submitted not less than 21 days in advance of the proposed alteration, issuance or borrowing; (viii) a copy of XG Mining’s annual financial reports to the Government Authorities (except for HIDMC and DGGS) including a balance sheet, profit and loss account and notes thereto certified by a qualified accountant, who is a member of the Ghana Institute of Chartered Accountants, not later than 180 days after the financial year end; and (ix) such other reports and information in connection with our operations to Government Authorities as they may reasonably require. We are entitled to surrender all of our rights in respect of any part of the Lease Area not larger in aggregate than 20% of the Lease Area by providing not less than two months’ notice to the Government of Ghana. We may surrender a larger part of the Lease Area by providing not less than 12 months’ notice. We have the right to terminate our interest in the Apapam Mining Lease if the mine can no longer be economically worked, by giving not less than nine months’ notice to the Government Authorities, without prejudice to any obligation or liability incurred prior to such termination. The Government of Ghana has the right to terminate our interest in the Apapam Mining Lease if (i) we fail to make payments when due; (ii) contravene or fail to comply with terms and conditions of the mining lease (however, we have 120 days to remedy from the notice of such event); (iii) become insolvent or commit an act of bankruptcy; or (iv) submit false statements to the Government Authorities.

 The Apapam Mining Lease further provides that XG Mining shall report forthwith to the Government Authorities in the event it discovers any other mineral deposits apart from gold and silver in the Lease Area, who in turn will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements between made between XG Mining and the Government Authorities.

Kwabeng Project

Overview

Our Kwabeng Project (also referred to as the “Kwabeng Concession”) is comprised of 44.76 sq km and our company’s interest in the Kwabeng Concession is secured by the Kwabeng Mining Lease (see “Kwabeng Project – Kwabeng Mining Lease” for further details).

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Location and Access

The Kwabeng Concession is located in the East Akim District of the Eastern Region of the Republic of Ghana, along the western, lower flank and base of the Atewa Range, approximately 8.5 km north-northwest of our Kibi Project which is located on the Apapam Concession. The eastern boundary of the Kwabeng Concession is demarcated by the Atewa Forest Reserve.

Access to our Kwabeng Project can be gained by driving northwest from the City of Accra on the Accra-Kumasi Trunk Road, which is the main paved national highway, for approximately 110 km until arrival at Anyinam. Make a left hand turn at the road sign that reads “Kwabeng” in the middle of the Town of Anyinam and drive in a southwesterly direction approximately 10 km until arrival at a sign reading “Xtra-Gold Mining” before reaching the town of Kwabeng.

Historical Work

There has been very little exploration for lode source gold deposits at our Kwabeng and Pameng Projects; however, there has been detailed exploration for placer gold deposits. Our Kibi, Kwabeng and Pameng Projects contain approximately 12,583,000 bank cubic meters (“BCM”) with an average grade of 0.568 grams of gold/BCM. In addition to the mineralized material, there is potential to define reserves with further exploration.

The placer gold deposit currently located at our Kwabeng Concession was mined by the former owner in the early 1990’s for 15 months and produced approximately 16,800 ounces of gold before operations were ceased due to mining difficulties as noted hereunder. The placer gold is contained in a gravel deposit distributed across the floor of the river valleys west of the Atewa Range which can easily be excavated.

Prior Exploration by Xtra-Gold

Please refer to our annual reports on Form 10-K previously filed with the SEC for any exploration activities conducted by us prior to the three years required by this Report.

2009 to 2011 Exploration Programs

No significant work program was carried out by our company on the Kwabeng Concession during 2009 through to 2011.

Future Exploration Plans for 2012

As at the date of this Report, we have not planned for any additional exploration activities during the next 12 months, however, we may consider doing so at a later date. A mechanized trenching and/or first pass drilling program to further evaluate the Kwabeng Old Mine prospect on our Kwabeng Project is currently under consideration for 2012.

Recovery and Sale of Placer Gold

In January 2007, we commenced an early stage pre-production mining process whereby a sample area of ore was processed, the results of which assisted us in determining the best way and most profitable manner in which to mine the placer gold to be recovered from the mineralized material at our Kwabeng Project. The foregoing process was internally referred to by our company as a “Bulk Test”. We tested 32,906.70 BCM of mineralized material at our Kwabeng Project that we processed through our floating placer gold washing processing plant and recovered 608.50 ounces of placer gold. Following completion of the Bulk Test, our company made modifications to our Wash Plant. We recovered placer gold from the mineralized material at our Kwabeng Project since January 19, 2007. In October 2008, we temporarily suspended our operations at the Kwabeng Project while management of our company considered a more economic and efficient manner in which to extract and process the placer gold recovered from the mineralized material at this Project. As at December 31, 2011, we have sold an aggregate of 8,814.82 ounces of placer gold recovered from the mineralized material at our Kwabeng Project, however we did not conduct any recovery of placer gold operations at this Project during the Fiscal Year. We did not have an exclusive agreement with any company or entity to buy the placer gold that we recovered.

Resumption of Recovery of Placer Gold Operations at our Kwabeng Project

As at the date of this Report, we have not resumed recovery of placer gold operations at our Kwabeng Project. As stated elsewhere in this Report, we plan to focus our efforts and our financial resources primarily on planned exploration activities on our Kibi Project. In particular, as of the date of this Report, we have been conducting our 2012 Drill Program at our Kibi Project (see “Kibi Project – 2012 Diamond Drillng Program”) since January 6, 2012. With respect to any mineralized material at our Kwabeng Project, we plan to enter into negotiations with independent Ghanaian contract miners and operators to assume such operations at this Project on fixed payment terms to our company. Also, the current gold price (approximately $1,669 per ounce) is significantly greater compared to the gold price during the previous mining effort by the former operator of this Project (approximately $300 per ounce). On the basis of an annual recovery of placer gold of approximately 360,000 BCM, we anticipate that recovery of placer gold operations at this Project could be sustained for 20 years, however, this will depend upon numerous factors including the grade and commercial recoverability of the mineralized material and the selling gold price at the relevant time.

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Former Ownership

In the early 1990’s, the former mining lessee invested approximately $24,000,000 to open and operate a mine at the Kwabeng concession. The mining operation lasted for 15 months and 16,800 ounces of gold was produced before the mine was shut down due to a poor gold price, mining methodology and a lack of funds to continue mining operations.

Resources and Reserves

No mineral resources or mineral reserves have been identified on our Kwabeng Project.

Kwabeng Mining Lease

The Kwabeng Mining Lease is dated July 26, 1989 and is owned and controlled by Xtra-Gold, as to a 90% interest; and is registered to our subsidiary, XG Mining, with the remaining 10% free carried interest in XG Mining being held by the Government of Ghana. The Kwabeng Mining Lease covers an area of 44.76 sq km (the “Kwabeng Lease Area”). The Kwabeng Mining Lease has a 30 year term expiring on July 26, 2019. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the lease area (including processing, storing and transportation of ore and materials). See “Kibi Project – Apapam Mining Lease” for identical terms for the Kwabeng Mining Lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual rental fees payable in the amount of approximately $19 (GH¢32.80) .

The Kwabeng Mining Lease further provides that XG Mining shall report forthwith to the Government Authorities in the event we discover any other minerals in the Kwabeng Lease Area, who in turn will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the Government Authorities.

Ancillary Operations

Field Camp at Kwabeng Project

Our company possesses our fully operational and well maintained Field Camp comprised of an administrative office, living quarters and workshop facilities located on our Kwabeng Concession which is accessible by paved road located approximately two (2) hours drive from the capital city of Accra. Our Field Camp is the base of operations for the majority of our administrative activities and all of our exploration activities. All of our senior Ghanaian staff are accommodated in the Field Camp with our junior staff located in the surrounding towns and villages. XG Mining has rehabilitated the Field Camp which included installation of a communication system for Internet access, electronic mail, telephone and facsimile service and minor construction repairs. Our Field Camp is within cell phone coverage and is supplied with electricity from the national power grid, which lines run along the road accessing our Field Camp.

Fuel and Spare Parts Supply

We deliver fuel from Accra by tanker and discharge the fuel into and store the fuel in the fuel tank facility located within our Field Camp. We purchase spare parts for all of our equipment either locally or from suppliers overseas and store such parts in the secure spare parts warehouse located at our Field Camp.

Workspace

There is adequate office space at our Field Camp to accommodate our administrative, geology, surveying, equipment maintenance and other departments, as well as their technical support and our laborers.

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Equipment Maintenance

Any maintenance of our excavator, or other equipment which we may own, will be carried out in the workshops located within our Field Camp.

Capital Expenditures

We do not anticipate any significant capital expenditures in the next 12 months in connection with recovery of placer gold operations as we have not planned to conduct such operations during this period. As stated elsewhere in this Report, we plan to negotiate with independent Ghanaian contract miners and operators to assume such operations.

Pameng Project

Overview

Our Pameng Project (also referred to as the “Pameng Concession”) is comprised of 40.51 sq km and our company’s interest in the Pameng Concession is secured by the Pameng Mining Lease (see “Pameng Project – Pameng Mining Lease” for further details).

The Pameng Concession is located in the East Akim District of the Eastern Region of Ghana, along the western, lower flank and base of the Atewa Range, approximately 2 km west-northwest of our Kibi Project which is located on the Apapam Concession. Access to our Pameng Project can be gained by driving northwest from the City of Accra on the Accra-Kumasi Trunk Road, which is the main paved national highway, for approximately 125 km until arrival at the village of Pameng where there is a road sign reading “Pameng”. Make a left hand turn at the Pameng sign and drive southwest approximately 2 km to reach our Pameng Concession. Our Pameng Concession is located approximately 15 km south-southwest from our Field Camp.

Historical Work

To the best of our company’s knowledge, the Pameng Concession has never been subjected to modern, systematic exploration for lode gold mineralization.

Prior Exploration by Xtra-Gold

General

Please refer to our annual reports on Form 10-K previously filed with the SEC for exploration activities conducted by us prior to the three years required by this Report.

2009 to 2011 Exploration Programs

No significant work program was carried out in 2009 through to 2011. Lode gold exploration efforts to date by our company on our Pameng Project have been limited to a few reconnaissance geology/prospecting traverses. No significant lode gold exploration work was conducted in 2011 on this Project.

Future Exploration Plans for 2012

As at the date of this Report, we have not planned for any additional exploration activities during the next 12 months, however, we may consider doing so at a later date. A first pass work program including soil geochemistry and scout trenching is currently under consideration for 2012.

Recovery and Sale of Place Gold

During the Fiscal Year, we negotiated with independent Ghanaian contract miners and operators in connection with their recovery of placer gold operations on fixed payment terms to our company.

Resources and Reserves

No mineral resources or mineral reserves have been identified on our Pameng Project.

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Pameng Mining Lease

The Pameng Mining Lease is dated July 26, 1989 and is owned and controlled by Xtra-Gold, as to a 90% interest; and is registered to our subsidiary, XG Mining, with the remaining 10% free carried interest in XG Mining being held by the Government of Ghana. The Pameng Mining Lease covers an area of 40.51 sq km (the “Pameng Lease Area”). The Pameng Mining Lease has a 30 year term expiring on July 26, 2019. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the lease area (including processing, storing and transportation of ore and materials). See “Kibi Project – Apapam Mining Lease” for identical terms for the Pameng Mining Lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual rental fees payable in the amount of approximately $19 (GH¢32.80) .

The Pameng Mining Lease further provides that XG Mining shall report forthwith to the Government Authorities in the event we discover any other minerals in the Pameng Lease Area, who in turn will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the Government Authorities.

Banso Project

Overview

Our Banso Project (also referred to as the “Banso Concession”) is comprised of 55.28 sq km and our company’s interest in the Banso Concession is secured by the Banso Mining Lease (see “Banso Project – Banso Mining Lease” for further details).

Location and Access

The Banso Concession is located in the East Akim District of the Eastern Region of Ghana, approximately 11 km south-southeast from our Field Camp.

Both of the Banso Concession and the Muoso Concession lie in the Kibi-Winneba Gold Belt on the western flanks of the prominent Atewa Range, which is underlain by Birimian greenstone, phyllites, meta-tuffs, epi-diorite, meta-greywacke and chert. The valleys, over which this concession isare located, are underlain by thick sequences of Birimian metasediments. The north-western end of the Atewa Range is the type-locality for the Birimian metasediments and metavolcanics. The area where both of our Banso and Muoso Projects are located is one of the oldest placer gold mining areas of Ghana, dating back many centuries.

Access to the Banso Concession is gained by driving northwest approximately 136 km from Accra on the paved Accra-Kumasi Trunk Road.

Historic Work

Historical exploration and mining has mainly focused on placer gold. Prior to the acquisition of our interest in the Banso Concession, to the best of our knowledge and based on mining records in Ghana, there has never been a detailed documented bedrock exploration program conducted on this concession.

Prior Exploration by Xtra-Gold

General

Please refer to our annual reports on Form 10-K previously filed with the SEC for exploration activities conducted by us prior to the three years required by this Report.

All gold results for the following exploration programs are reported in “ppm Au” (part per million gold). The term “ppm” represents “part per million” where 1 ppm = 1 gram per tonne (g/t) = 1,000 part per billion (ppb).

2009 to 2011 Exploration Programs

Our Banso Project is at an early stage of evaluation and no mineralized material or mineral resource or mineral reserve estimates have been made. Prior to the period covered by this Report, we had completed preliminary lode gold exploration programs including grid establishment, soil sampling, prospecting/geological mapping, pitting/trenching and geophysics, aimed at identifying lode gold (hardrock) mineral occurrences at our Banso Project, the results of which are noted hereunder.

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No significant lode gold exploration work was conducted by our company in 2009 to 2011 on our Banso Project, however, Buccaneer carried out exploration work during the Fiscal Year in preparation for the Buccaneer Drill Program noted hereunder.

Future Exploration Plans for 2012

As at the date of this Report, we have not planned for any additional exploration activities during the next 12 months, however, we may consider doing so at a later date.

Exploration Activities by Buccaneer in 2011 and 2012

With a view to Buccaneer meeting the required exploration expenditures to earn the 55% Interest, Buccaneer commenced exploration activities on this Project during the Fiscal Year. As at the date of this Report, Buccaneer has commenced the Buccaneer Drill Program on this Project and on our Muoso Project. The Buccaneer Drill Program is designed to test several drill targets identified on the Banso and the Muoso Concessions.

Resources and Reserves

No mineral resources or mineral reserves have been identified on our Banso Project.

Banso Mining Lease

The Banso Mining Lease is dated January 6, 2011 and is owned and controlled by Xtra-Gold, as to a 90% interest; and is registered to our subsidiary, XG Mining, with the remaining 10% free carried interest in XG Mining being held by the Government of Ghana. The Banso Mining Lease covers an area of 51.67 sq km (the “Banso Lease Area”). The Banso Mining Lease has a 14 year term expiring on January 5, 2025. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the lease area (including processing, storing and transportation of ore and materials). See “Kibi Project – Apapam Mining Lease” for identical terms for the Banso Mining Lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual rental fees payable in the amount of approximately $148 (GH¢260.00) .

The Banso Mining Lease further provides that XG Mining shall report forthwith to the Government Authorities in the event we discover any other minerals in the Banso Lease Area, who in turn will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the Government Authorities.

Muoso Project

Overview

Our Muoso Project (also referred to as the “Muoso Concession”) is comprised of 55.28 sq km and our company’s interest in the Muoso Concession is secured by the Muoso Mining Lease (see “Muoso Project – Muoso Mining Lease” for further details).

Location and Access

The Muoso Concession is located in the East Akim District of the Eastern Region of Ghana, approximately 10 km south-southeast from our Field Camp.

Access to our Muoso Project is gained by driving northwest approximately 80 km from Accra on the paved Accra-Kumasi Trunk Road. This highway passes through the easternmost portion of the Muoso Concession and shares a common boundary with the Kwabeng Concession. From the town of Osino, one would drive northwest approximately 5 km to the town of Anyinam, from which an all weather direct road heads south through the centre of the Muoso Concession and onto the Banso Concession, approximately 15 km south of the Accra-Kumasi Trunk Road. The town of Muoso is approximately 10 km from Anyinam. A number of dirt roads, trails and footpaths offer additional access to this concession.

Historic Work

Historical exploration and mining has mainly focused on placer gold. Prior to the acquisition of our interest in the Muoso Concession, to the best of our knowledge and based on mining records in Ghana, there has never been a detailed documented bedrock exploration program conducted on this concession.

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Prior Exploration by Xtra-Gold

General

Please refer to our annual reports on Form 10-K previously filed with the SEC for exploration activities conducted by us prior to the three years required by this Report.

All gold results for the following exploration programs are reported in “ppm Au” (part per million gold). The term “ppm” represents “part per million” where 1 ppm = 1 gram per tonne (g/t) = 1,000 part per billion (ppb).

2009 to 2010 Exploration Programs

Our Muoso Project is at an early stage of evaluation and no mineralized material or mineral resource or mineral reserve estimates have been made.

2009 and 2010 Trenching Program

From December 1, 2009 to February 20, 2010, we conducted a 546 linear-meters trenching program at our Muoso Project. Details of the trenching program are noted below under “Ankaase Trench 2009 Trenching Program”.

Ankaase Trend Auger Sampling

As a follow up to the Phase II (2006) soil geochemistry survey, a hand-auger program was implemented on the Ankaase gold-in-soil anomaly located at the eastern extremity of the Muoso Concession. The auger sampling was designed to test the geochemical signature of the gold-in-soil anomalies at depth within the saprolite horizon in order to better define trenching targets. A total of 99 sites, totaling 371 linear-meters, were augered to an average depth of approximately 3.75 m (5 m max.). A one (1) m sample was collected from the saprolite horizon at the bottom of each hole. Auger hole spacing was typically at 25 m, with some 12.5 meter infilling.

The anomalous threshold for the auger sample results was set at 0.10 ppm gold based on past work experience in the Kibi Belt. 21 (21%) out of the 99 auger samples returned gold values greater than the 0.10 ppm anomalous threshold; including four samples over 0.5 ppm and a maximum value of 2.46 ppm. The auger sampling proved to be an efficient trench target definition method.

Ankaase Trend 2009-2010 Trenching Program

The 2009-2010 trenching program encompassed 12 hand dug trenches, ranging from 30 m to 68 m in length and from 1.2 m to 3.5 m in depth, and totaling 546.0 linear meters. This trenching program commenced on December 1, 2009 and was completed on February 20, 2010. By the end of 2009, five trenches totaling approximately 208.0 m had been excavated and channel sampled. The reconnaissance follow-up trenching was designed to better define the structural controls of the mineralization identified during the initial 2008 scout trenching program.

2011 Exploration Program

No significant lode gold exploration work was conducted by our company in 2011 on our Muoso Project, however, Buccaneer carried out exploration work in 2011 in preparation for the Buccaneer Drill Program noted hereunder.

Future Exploration Plans for 2012

As at the date of this Report, we have not planned for any additional exploration activities during the next 12 months, however, we may consider doing so at a later date.

Exploration Activities by Buccaneer in 2011 and 2012

With a view to Buccaneer meeting the required exploration expenditures to earn the 55% Interest, Buccaneer commenced exploration activities on this Project during the Fiscal Year including building a road in preparation for drilling and some limited trenching. As at the date of this Report, Buccaneer has commenced the Buccaneer Drill Program on this Project and on our Banso Project. The Buccaneer Drill Program is designed to test several drill targets identified on the Banso and the Muoso Concessions.

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The initial drill target on the Muoso Concession is a mineralized shear zone identified in trenches, over strong soil geochemical anomalies combined with geophysical interpretations.

As at the date of this Report, 16 drill holes totaling 2,587 m of drilling have been completed by Buccaneer in the Ankaase area, in the eastern portion of the Muoso Concession.

Assay results received by Buccaneer from Intertek Lab, in Tarkwa, Ghana, have indicated the following gold mineralized intersections:

Assay results for holes AN12-05 and AN12-07 to AN12-16 are still pending.

The gold mineralization encountered in Ankaase is typical for the Kibi Gold Belt and exhibits many similar features to Ghana’s main gold belt, the Ashanti Belt. It consists of lode gold deposit, with structurally controlled mineralization.

Typical mineralization occurs in dioritic sills and in meta-volcanic host units, and is characterized by the presence of quartz-carbonate veining and sulphide mineralization.

Resources and Reserves

No mineral resources or mineral reserves have been identified on our Muoso Project.

Muoso Mining Lease

The Muoso Mining Lease is dated January 6, 2011 and is owned and controlled by Xtra-Gold, as to a 90% interest; and is registered to our subsidiary, XG Mining, with the remaining 10% free carried interest being held by the Government of Ghana. The Muoso Mining Lease covers an area of 55.28 sq km (the “Muoso Lease Area”). The Muoso Mining Lease has a 13 year term expiring on January 5, 2024. We have been granted surface and mining rights by the Government of Ghana to work, develop and produce gold in the Muoso Lease Area (including processing, storing and transportation of ore and materials). See “Kibi Project – Apapam Mining Lease” for identical terms for the Muoso Mining Lease, except for the name of the mining lease, the lease registration particulars, the lease area and annual rental fees payable in the amount of approximately $159 (GH¢280.00) .

The Muoso Mining Lease further provides that XG Mining shall report forthwith to the Government Authorities in the event we discover any other minerals in the Muoso Lease Area, who in turn will provide XG Mining with the first option to prospect further and to work the said minerals subject to satisfactory arrangements made between XG Mining and the Government Authorities.

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Edum Banso Project

Location and Access

The Edum Banso Concession lies within the south Ashanti gold belt in the Western Region of Ghana and is located approximately 235 km west of Accra and 15 km northwest of Takoradi, the regional capital. The north-western extremity of this concession falls within the grounds of the Benso Oil Palm Plantation.

Overview

We previously held an interest, from 2005 through the Fiscal Year covered by this Report, in the Edum Banso Concession (also referred to in our previously filed annual reports on Form 10-K filed with the SEC, as the “Edum Banso Project”). The Edum Banso Concession is comprised of 20.60 sq km and lies at the southern extremity of the Ashanti gold belt in the Western Region of Ghana.

In October, 2005, our wholly-owned subsidiary, XGEL, entered into an option agreement (the “Option Agreement”) with Adom Mining Limited (“Adom”) to acquire 100% of Adom’s right, title and interest in and to a prospecting license on the Edum Banso Concession. Adom further granted XG Exploration the right to explore, develop, mine and sell mineral products from this concession. The prospecting license was renewed by Adom for a two year period expiring on July 21, 2013.

The consideration paid for the Option Agreement was $15,000 with additional payments of $5,000 to be paid on the anniversary date of the Option Agreement in each year during the term which term has been extended to November 11, 2013. Further net smelter royalty payments, based on proven and probable reserves and gold production, was also payable to Adom.

Assignment of Interest

During August 2011, our company assigned its interest in the Edum Banso Project to Norman Cay Development, Inc. (“NCD”) for cash of $125,000 (paid in the Fiscal Year), 1,000,000 NCD shares, valued at $260,000 on the date of issuance (issued to our company in the Fiscal Year), and a final option payment of $135,000 payable in six months from the date of assignment of the option interest (paid subsequent to the Fiscal Year). If NCD did not exercise its six-month option the Project reverted to our company. Of the payments received, $20,000 reduced the carrying value of the Edum Banso Project on the balance sheet and the balance reduced exploration spending in the third quarter of 2011.

General

 Please refer to our annual reports on Form 10-K previously filed with the SEC for further details including exploration activities conducted by us.

Our company or any of our subsidiaries is not a party to, and our property is the subject of, any material pending legal proceeding, other than ordinary routine litigation incidental to our business. Our company is also not aware of any such proceeding being contemplated by a government authority.

Not applicable to our operations.

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PART II

Market information

Our common stock has traded on the Toronto Stock Exchange (the “TSX”) under the trading symbols “XTG” since November 23, 2010, following the completion of our IPO in Canada. Bid and ask prices for our common stock are quoted from broker dealers on the Over-the-Counter Bulletin Board (“OTCBB”) under the symbol “XTGR”.

The following table sets forth the range of high and low bid prices for our common stock on the TSX and OTCBB for each full quarterly period within the two most recent fiscal years and any subsequent interim period for which financial statements are included, or are required to be included by Article 3 of Regulation S-X. The quotations reflect inter-dealer prices and do not include mark-ups or mark-downs or commissions and do not represent actual transactions.

The last reported closing price of our common stock on the TSX on March 27, 2012 was CAD$1.30 (USD$1.29) and the last reported sales price of our common stock on OTCBB on March 27, 2012 was $1.33.

Holders

As of March 22, 2012, we have 148 shareholders of record holding 44,569,217 issued and outstanding Shares having a par value of $0.001 per common share.

Dividends

We have never declared or paid any cash dividends on our common stock. We intend to retain future earnings, if any, to finance the expansion of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future. Any future determination to pay dividends will be at the discretion of our board of directors (“our Board”) and will depend on our earnings, capital requirements, expansion plans, financial condition and other relevant factors. Our retained earnings deficit currently limits our ability to pay dividends.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

We have not sold any unregistered equity securities during the period covered by this Report, other than those previously reported in our quarterly reports on Form 10-Q or in our current reports on Form 8-K filed with the Securities and Exchange Commission.

Issuer Purchases of Equity Securities

None.

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As a smaller reporting company, we are not required to provide the information required under this item.

The following discussion and analysis of our consolidated financial conditions and results of operations for the year ended December 31, 2011 and 2010 should be read in conjunction with the consolidated financial statements and the related notes to our consolidated financial statements and other information presented elsewhere in this Report. Our consolidated audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this Report, particularly in the item entitled “Risk Factors” beginning on page 8 of this Report.

The information in this annual report contains forward-looking statements. These forward-looking statements involve risks and uncertainties, including statements regarding Xtra-Gold’s financial condition, results of operations, business prospects, plans, objectives, goals, strategies, expectations, future events, capital expenditure and exploration efforts. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “anticipates”, “expects”, “intends”, “plans”, “forecasts”, “projects”, “budgets”, “believes”, “seeks”, “estimates”, “could”, “might”, “should” “may”, “will”, “predict”, “potential” or “continue”, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined from time to time, in other reports that Xtra-Gold files with the Securities and Exchange Commission. These factors may cause our company’s actual results to differ materially from any forward-looking statement. Our company disclaims any obligation to publicly update these statements, or disclose any difference between its actual results and those reflected in these statements.

2011 Highlights

• On February 21, 2011, we announced 58 metres at 2.46 g/t gold in our Kibi Project.

• In May 2011, we announced (i) 52 metres at 2.42 g/t gold (May 31); (ii) 50 metres at 1.62 g/t gold (May 31); and (iii) 42 metres at 2.39 g/t gold (May 17) in our Kibi Project.

• In August 2011, we announced (i) 38 metres at 2.62 g/t gold; (ii) 16 metres at 2.25 g/t gold; (iii) 32 metres at 2.41 g/t gold; and 16 metres at 4.88 g/t gold in our Kibi Project.

• In November 2011, we announced (i) 62 metres at 1.57 g/t gold; (ii) 42 metres at 2.00 g/t gold; and (iii) 41 metres at 1.62 g/t gold in our Kibi Project.

• In December 2011, we announced (i) 17 metres at 5.47 g/t gold; and (ii) 24.5 metres at 3.43 g/t gold in our Kibi Project.

• In October 2011, we announced positive intitial metallurgical results with a 97% gold recovery at our Kibi Project.

• Completed an agreement for exploration of the Banso and Muoso properties with Buccaneer which allows Buccaneer to explore these properties while our company maintains a 45% interest in the properties.

• Completed an assignment of our Edun Banso Project with Norman Cay Development, Inc. (“NCD”) in September 2011 for (i) $125,000 cash; (ii) 1,000,000 NCD shares; and (iii) a six-month option payment for $135,000. The $135,000 option payment was received subsequent to December 31, 2011.

Plan of Operations

We are a gold exploration company engaged in the exploration of gold properties in the Republic of Ghana, West Africa. Our mining portfolio currently consists of 225.87 sq km comprised of 33.65 sq km for our Kibi Project, 51.67 sq km for our Banso Project, 55.28 sq km for our Muoso Project, 44.76 sq km for our Kwabeng Project, and 40.51 sq km for our Pameng Project, or 55,873 acres, pursuant to the leased areas set forth in our respective mining leases.

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Our strategic plan is, with respect to our mineral projects: (i) to focus our efforts and dedicate our financial resources toward the potential to drill out a mineral resource and, perhaps ultimately, a mineral reserve of our Kibi Project located on the Kibi Gold Belt; (ii) to define a mineral resource and, perhaps ultimately, a mineral reserve on our other exploration projects and, in this regard, we will also attempt to do this by optioning to other qualified exploration entities; (iii) to enter into negotiations with independent Ghanaian contract miners and operators to assume our recovery of gold operations at our Kwabeng Project with a view to these contractors conducting recovery of placer gold operations for fixed payments to our company; and (iv) to acquire further interests in gold mineralized projects that fall within the criteria of providing a geological basis for development of drilling initiatives that can enhance shareholder value by demonstrating the potential to define reserves.

As part of our current business strategy, we plan to continue engaging technical personnel under contract where possible as our management believes that this strategy, at its current level of development, provides the best services available in the circumstances, leads to lower overall costs, and provides the best flexibility for our business operations.

We anticipate that our ongoing efforts will continue to be focused on the exploration and development of our Projects and completing acquisitions in strategic areas.

In October 2008, we temporarily suspended our placer mining operations at our Kwabeng Project while our management evaluated a more economic and efficient manner in which to extract and process the gold from the mineralized material at this Project. Our operations resumed in 2010, which focused primarily on reclamation. As at the date of this Report, operations at our Kwabeng Project have not resumed. During the next 12 months, we plan to (i) enter into negotiations to contract out the recovery of placer gold operations at this Project, as noted above; (ii) advance the development of our Kibi Project by carrying out our 2012 Drill Program; and (iii) acquire further interests in mineral projects by way of acquisition or joint venture participation.

We anticipate that, over the next 12 months, we will spend an aggregate of approximately $6,000,000 comprised of $5,000,000 for exploration expenses in connection with our 2012 Drill Program of our Kibi Project located on the Kibi Gold Belt to identify a potential mineral resource and approximately $1,000,000 for general and administrative expenses (which excludes approximately $500,000 in non-cash expenses).

Our company has historically relied on equity and debt financings to finance its ongoing operations. Existing working capital, possible debt instruments, anticipated warrant exercises, further private placements and anticipated cash flow are expected to be adequate to fund our company’s operations over the next year. During the current year and subsequent to 2012, we require additional capital to implement our plan of operations. We anticipate that these funds primarily will be raised through equity and debt financing or from other available sources of financing. If we raise additional funds through the issuance of equity or convertible debt securities, it may result in the dilution in the equity ownership of investors in our common stock. There can be no assurance that additional financing will be available upon acceptable terms, if at all. If adequate funds are not available or are not available on acceptable terms, we may be unable to take advantage of prospective new opportunities or acquisitions, which could significantly and materially restrict our operations, or we may be forced to discontinue our current projects.

Trends

In 2011, many commodity and stock market indices continued to experience historically high levels of volatility in the face of the global economic uncertainty. Financial market conditions continued to improve during the year as global credit markets started to return to a more normal position, investor confidence improved and most economies experienced positive growth.

During the year, the US dollar was generally in decline, primarily from concerns about the level of US government borrowings and the growing US deficit and from the low interest rates offered on US dollar deposits. The EURO also weakened against the Canadian dollar as a result of low interest rates, concerns about the solvency of certain European economies and the level of sovereign debt in those countries. During the third quarter of 2011, the US dollar rallied against the Canadian dollar as compared to results in the first six months of 2011.

Gold price volatility in 2011 remained high with the price reaching a high of US$1,424 per ounce. During the second quarter of 2011, the gold price continued to increase and to be volatile, reaching a high of $1,895.00 per ounce on September 4, 2011 of the September 2011 quarter and a low of $1,319 on January 28, 2011. The average market price for 2011 was $1,572 per ounce. The tone for the precious metals market in the near future will depend on whether the US dollar will be supported, and if the central banks will continue to maintain interest rates at low levels to support economic growth. The continued global easing of monetary policy could lead to higher inflation and further US dollar depreciation in the coming years. This dollar depreciation could have a positive impact on gold prices in the future and the long–term upward trend in prices may continue. Conversely, subdued inflation rates and the recovering global economy could put downward pressure on the gold price in the future. Additionally, recent events in Europe could continue to have a positive effect on the gold price.

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Overall, a lower US dollar should lead to higher costs in US dollar terms to identify and explore for gold but could be more than offset by higher gold prices, resulting in greater interest in gold exploration companies. Conversely, if the US dollar strengthens, interest in the gold exploration sector could be reduced.

Results of Operations for the Year Ended December 31, 2011 Compared to the Year Ended December 31, 2010

Our company’s loss for the year ended December 31, 2011 was $5,794,927 as compared to a loss of $2,976,645 for the year ended December 31, 2010, an increased loss of $2,818,282. Increased exploration spending over a full year of operations was partly offset by gold recovery and a gain on disposition of equipment, especially in the first quarter of 2011. Gold recovery was reduced in the balance of 2011. The investment portfolio posted an unrealized gain from shares held and a small gain from the sale of other shares. The company recognized value in optioning non-strategic properties in Ghana during 2011.

Our company’s basic and diluted loss per share for the year ended December 31, 2011 was $0.12 compared to net loss of $0.09 per share for the year ended December 31, 2010. The weighted average number of shares outstanding was 43,815,678 for the year ended December 31, 2011 compared to 35,160,827 for the year ended December 31, 2010. The increase in the weighted average number of shares outstanding can be mostly attributed to the issuance of 8,092,593 shares in the November 2010 placement and the issuance of 1,608,038 shares in connection with the conversion of warrants and finders’ warrants during 2011.

We incurred expenses of $7,713,627 in the year ended December 31, 2011 as compared to $4,463,116 in the year ended December 31, 2010, an increase of $3,250,511. The increase in expenses in the year ended December 31, 2011 can be primarily attributed to an increase of $3,472,705 in exploration costs to $6,465,637 (2010 - $2,992,932) resulting from drilling and other exploration activities conducted at our Kibi Project. All exploration costs for the year ended December 31, 2011 were booked as exploration expenses. General and administrative expenses (“G&A”) of $1,278,577 for the year ended December 31, 2011, as compared to $1,355,399 for the year ended December 31, 2010, can be primarily attributed to the legal, regulatory and marketing costs associated with the TSX listing of our company’s shares. Stock-based compensation, a non-cash component of G&A, was of $361,239 in 2011 (2010 - $411,507), representing the expense with respect to stock options vested during the period.

Other G&A costs included consulting fees, legal, auditor and regulatory filing fees, travel and promotional expenses. Amortization for the year ended December 31, 2011 was $284,413 as compared to $114,785 for the year ended December 31, 2010, an increase of $169,628. We added two excavators, two bulldozers, a flatbed trailer for transporting equipment between exploration sites, two vehicles, and purchased a 50% interest in an additional excavator and bulldozer, at a purchase cost of $946,956 to the assets, which increased the comparative amortization expense in 2011. During the final quarter of 2011, we sold a 50% interest in an excavator and a bulldozer to another company. Costs and usage is shared.

Exploration work was focused primarily on our Kibi Project in the year ended December 31, 2011. Exploration spending in 2011 reflected the funds available from our IPO completed in November 2010 while spending in 2010 reflected conservation of cash available at that time.

Exploration results from the 2011 year included drilling of 21,877 metres, and 18,853 drill assays received from the lab.

Other items totalled a gain of $1,918,700 for the year ended December 31, 2011 compared to a gain of $1,486,471 for the year ended December 31, 2010. During the year ended December 31, 2011, our company had a foreign exchange gain of $16,028 compared to a gain of $179,124 in the year ended December 31, 2010 which can be attributed to a stronger US dollar in 2011. Gold recovery during the year ended December 31, 2011 was $1,316,330 as compared to $1,227,394 for the year ended December 31, 2010. Gold recovery efforts in the final three quarters of 2011 were focused on land remediation rather than production while the 2010 results reflected a startup of gold recovery efforts in the third quarter of 2010. Our company’s portfolio of marketable securities had an unrealized gain of $212,073 in the year ended December 31, 2011 compared to an unrealized loss of $98,290 in the year ended December 31, 2010. Our company recognized a $60,317 realized gain on sale of securities in the year ended December 31, 2011 compared to a gain of $170,422 from the sale of securities in the year ended December 31, 2010. Other income, primarily derived from interest earned and other miscellaneous items reported a gain of $53,894 in the year ended December 31, 2011 as compared to a gain of $34,104 in 2010. During the year ended December 31, 2011, we sold a placer gold recovery plant with book value of $27,942 for $288,000 for a net gain of $260,058. Our decision to use local Ghanaian contractors for placer gold operations made the plant a non-core asset to us. Most of the cash received was used to purchase a bulldozer and excavator which we will use in our continuing exploration efforts.

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During the year ended December 31, 2011, we received 1,375 ounces of gold from our share of the placer gold operations. These placer gold operations have been contracted to local Ghanaian groups which pay a portion of their gold receipts to us for the right to work on our projects. We pay all government royalties due on all of the production. This method promotes the local economy while avoiding illegal workings on our Projects.

During the first half of 2011, our company granted Buccaneer the option to earn a 55% interest in our minerals rights of our Banso and Muoso Projects on completion of certain commitments and cash payments totalling $5,000,000 over a five-year period. The value of the cash option payments ($425,000) and shares ($411,440) received to date reduced the carrying value of the mineral properties on the December 31, 2011 balance sheet and a further $300,000 cash payment reduced our exploration spending during 2011. Also during 2011, our company assigned our interest in the Edum Banso Project to NCD and reduced the carrying value of the mineral properties on the balance sheet by $20,000 for cash and recognized the remaining $340,000 for cash and shares received in the income statement as options received in excess of property value. Our company paid a $25,000 fee to a broker who provided an introduction to NCD. Subsequent to December 31, 2011, NCD remitted the final option payment of US$135,000 for our Edum Banso Project, completing the requirements for transfer of our interest in this Project to NCD.

Liquidity and Capital Resources

Our activities, principally the exploration and acquisition of properties for gold and other metals, may be financed through joint ventures or through the completion of equity transactions such as equity offerings and the exercise of stock options and warrants. In November 2010, our company issued 8,092,593 common shares for proceeds of $10.8 million in conjunction with our IPO and listing on the TSX. We issued 566,482 broker warrants related to our IPO completed in November 2010.

At December 31, 2011, accounts payable and accrued liabilities increased to $745,860 (December 31, 2010 - $517,236), due to general business payables. Our cash and cash equivalents as at December 31, 2011 was sufficient to pay these liabilities.

At December 31, 2011, we had total cash of $4,498,753 (December 31, 2010 - $10,096,122). Working capital as of December 31, 2011 was $6,629,046 (December 31, 2010 - $9,833,381). The decrease in cash mostly reflects exploration and administrative spending net of gold recovery. Proceeds from the sale of equipment were mostly absorbed by the purchase of other equipment. During the year ended December 31, 2011, our company purchased $1,763,196 in investments, including equities and a bank bond with a maturity beyond 90 days, resulting in a reclassification from cash to investment.

We received cash for property options in 2011. A fee of $425,000 was paid as an option fee on our Banso and Muoso Projects and a further $300,000 for exploration work done on these Projects to date. A further $100,000 in cash was received from NCD for the assignment of our interest in our Edum Banso Project.

During the year ended December 31, 2011, we received $1,992,475 in connection with the conversion of 1,608,038 warrants and finders’ warrants.

We are an exploration company focused on gold and associated commodities and do not have operating revenues; and therefore, we must utilize our current cash reserves, income from placer gold sales, income from investments, funds obtained from the exercise of stock options and warrants and other financing transactions to maintain our capacity to meet the planned exploration programs, or to fund any further development activities. There is no certainty that future financing will be available to us in the amounts or at the times desired on terms acceptable to us, if at all.

Our common shares, warrants and stock options outstanding as at March 29, 2012, December 31, 2011, and December 31, 2010 were as follows:

As of the date of this Report, the full exercise of all warrants and options would raise approximately $2.8 million. Exercise of these warrants and options is not anticipated until the market value of our common shares increases in value.

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We remain debt free and our credit and interest rate risk is limited to interest-bearing assets of cash and bank or government guaranteed investment vehicles. Accounts payable and accrued liabilities are short-term and non-interest bearing.

Our liquidity risk with financial instruments is minimal as excess cash is invested with a Canadian financial institution in government-backed securities or bank-backed guaranteed investment certificates.

Our fiscal 2012 budget is approximately $6.0 million as disclosed above under the heading “Plan of Operations”. We expect to be adequately capitalized to fund ongoing operations at the current level in the short-term for fiscal 2012. Thereafter from 2012, we will require additional funds from equity sources to maintain the current momentum on our projects. Exploration expenditures are subject to change if management decides to scale back or accelerate operations.

Recent Capital Raising Transactions

During November 2010, we raised $10.8 million from the issuance of 8,092,593 common shares.

Material Commitments

Mineral Property Commitments

Save and except for fees payable from time to time to (i) the Minerals Commission for an extension of an expiry date of a prospecting license (current consideration fee payable is $15,000) or mining lease or annual operating permits; (ii) the EPA for the issuance of permits prior to the commencement of any work at a particular concession or the posting of a bond in connection with any mining operations undertaken by our company; and (iii) a legal obligation associated with our mineral properties for clean up costs when work programs are completed, we are committed to expend an aggregate of less than $500 in connection with annual or ground rent and mining permits to enter upon and gain access to the following concessions and such other financial commitments arising out of any approved exploration programs in connection therewith:

Upon and following the commencement of gold production at any of our Projects, a royalty of the net smelter returns is payable quarterly to the Government of Ghana as prescribed by legislation.

Repayment of Convertible Debentures and Accrued Interest

We issued Convertible Debentures aggregating the face value of $900,000 in July 2005 under which interest was calculated at 7% per annum. Interest only payments were payable quarterly on the last days of September, December, March and June in each year of the term or until such time that the principal was repaid in the full. The Convertible Debenture holders were entitled, at their option, to convert, at any time and from time to time, until payment in full of their respective Convertible Debentures, all or any part of the outstanding principal amount of the Convertible Debenture, plus the Accrued Interest, into shares (the “Conversion Shares”) of our common stock at the conversion price of $1.00 per share (the “Conversion Price”). Each Convertible Debenture provided for the automatic conversion of the outstanding principal amount and all accrued but unpaid interest, into shares of our common stock, at the Conversion Price, in the event that our common stock traded for 20 consecutive trading days (a) with a closing bid price of at least $1.50 per share and (b) a cumulative trading volume during such twenty (20) trading day period of at least 1,000,000 shares.

In June 2008, we provided notice of the automatic conversion of the Convertible Debentures and in July 2008 we converted $650,000 of the aggregate principal of $900,000 of the Convertible Debentures by way of the issuance of 650,000 Conversion Shares. In February 2010, we converted the outstanding principal of $250,000 owing under one remaining Convertible Debenture by way of the issuance of 250,000 Conversion Shares.

Purchase of Significant Equipment

We consider the availability of equipment to conduct our exploration activities. Due to demand from the mining and exploration industry, at this time it is difficult to source resources for exploration work in Ghana, including drills, excavators and bulldozers. We will consider the further acquisition of equipment pieces to allow work to expand on our Projects.

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Off Balance Sheet Arrangements

We have no off balance sheet arrangements.

Significant Accounting Applications

Application of Critical Accounting Policies

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Generally accepted accounting principles

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America (“US GAAP”).

Principles of consolidation

These consolidated financial statements include the accounts of our company, our wholly-owned subsidiaries, Xtra Energy (from October 31, 2003), XGEL (from February 16, 2004), XOG (from October 20, 2005) and XOGG (from March 2, 2006) and our 90% owned subsidiary, XG Mining (from December 22, 2004). All significant intercompany accounts and transactions have been eliminated on consolidation.

Use of estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents

Our company considers highly liquid investments with original maturities of three months or less to be cash equivalents. At December 31, 2011 and 2010, cash and cash equivalents consisted of cash held at financial institutions.

Receivables

No allowance for doubtful accounts has been provided. Management has evaluated all receivables and believes they are all collectible.

Recovery of gold

Recovery of gold and other income is recognized when title and the risks and rewards of ownership to delivered bullion and commodities pass to the buyer and collection is reasonably assured.

Trading securities

Our company’s trading securities are reported at fair value, with unrealized gains and losses included in earnings.

Non-Controlling Interest

Our consolidated financial statements include the accounts of XG Mining (from December 22, 2004). All intercompany accounts and transactions have been eliminated upon consolidation. Our company records a non-controlling interest which reflects the 10% portion of the earnings (loss) of XG Mining allocable to the holders of the minority non-controlling interest.

Equipment

Equipment is recorded at cost and is being amortized over its estimated useful lives using the declining balance method at the following annual rates:

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Deferred financing costs

Deferred financing costs consist of expenses incurred to obtain funds pursuant to the issuance of the convertible debentures and are being amortized straight-line over the term of the debentures.

Mineral properties and exploration and development costs

The costs of acquiring mineral rights are capitalized at the date of acquisition. After acquisition, various factors can affect the recoverability of the capitalized costs. If, after review, our management concludes that the carrying amount of a mineral property is impaired, it will be written down to estimated fair value. Exploration costs incurred on mineral properties are expensed as incurred. Development costs incurred on proven and probable reserves will be capitalized. Upon commencement of production, capitalized costs will be amortized using the unit-of-production method over the estimated life of the ore body based on proven and probable reserves (which exclude non-recoverable reserves and anticipated processing losses). When our company receives an option payment related to a property, the proceeds of the payment are applied to reduce the carrying value of the exploration asset.

Long-lived assets

Long-lived assets held and used by our company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

Asset retirement obligations

Our company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and/or normal use of the long-lived assets. Our company also records a corresponding asset which is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).

Stock-based compensation

Our company accounts for share-based compensation under the provisions of ASC 718, “Compensation-Stock Compensation”. Under the fair value recognition provisions, stock-based compensation expense is measured at the grant date for all stock-based awards to employees and directors and is recognized as an expense over the requisite service period, which is generally the vesting period. The Black-Scholes option valuation model is used to calculate fair value.

Our company accounts for stock compensation arrangements with non-employees in accordance with ASC 718 which require that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. Non-employee stock-based compensation charges are amortized over the vesting period on a straight-line basis. For stock options granted to non-employees, the fair value of the stock options is estimated using a Black-Scholes valuation model.

Income taxes

Our company accounts for income taxes under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under the asset and liability method the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recognized if it is more likely than not that some portion or all of the deferred tax asset will not be recognized.

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Loss per share

Basic loss per common share is computed using the weighted average number of common shares outstanding during the year. To calculate diluted loss per share, our company uses the treasury stock method and the if converted method. As of December 31, 2011, there were 566,482 warrants (2010 – 2,439,320) and 2,067,000 stock options (2010 – 1,788,000) outstanding which have not been included in the weighted average number of common shares outstanding as these were anti-dilutive.

Foreign exchange

Our company’s functional currency is the U.S. dollar. Any monetary assets and liabilities that are in a currency other than the U.S. dollar are translated at the rate prevailing at year end. Revenue and expenses in a foreign currency are translated at rates that approximate those in effect at the time of translation. Gains and losses from translation of foreign currency transactions into U.S. dollars are included in current results of operations.

Financial instruments

Our company’s financial instruments consist of cash and cash equivalents, trading securities, receivables, accounts payable and accrued liabilities and convertible debentures. It is our management’s opinion that our company is not exposed to significant interest, currency or credit risks arising from its financial instruments. The fair values of these financial instruments approximate their carrying values unless otherwise noted. Our company has its cash primarily in government or bank guaranteed deposit certificates or in one commercial bank in Toronto, Ontario, Canada.

Fair value of financial assets and liabilities

Our company measures the fair value of financial assets and liabilities based on GAAP guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Effective January 1, 2008, our company adopted the provisions for financial assets and liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis. Effective January 1, 2009, our company adopted the provisions for non-financial assets and liabilities that are required to be measured at fair value.

Our company classifies financial assets and liabilities as held-for-trading, available-for-sale, held-to-maturity, loans and receivables or other financial liabilities depending on their nature. Financial assets and financial liabilities are recognized at fair value on their initial recognition, except for those arising from certain related party transactions which are accounted for at the transferor’s carrying amount or exchange amount.

Financial assets and liabilities classified as held-for-trading are measured at fair value, with gains and losses recognized in net income. Financial assets classified as held-to-maturity, loans and receivables, and financial liabilities other than those classified as held-for-trading are measured at amortized cost, using the effective interest method of amortization. Financial assets classified as available-for-sale are measured at fair value, with unrealized gains and losses being recognized as other comprehensive income until realized, or if an unrealized loss is considered other than temporary, the unrealized loss is recorded in income.

Financial instruments, including cash and cash equivalents, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short term nature of these instruments. Investments in trading securities are classified as held for trading, with unrealized gains and losses being recognized in income.

The following table presents information about the assets that are measured at fair value on a recurring basis as of December 31, 2011, and indicates the fair value hierarchy of the valuation techniques our company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:

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The fair values of cash and cash equivalents and marketable securities are determined through market, observable and corroborated sources.

Concentration of credit risk

The financial instrument which potentially subjects our company to concentration of credit risk is cash. Our company maintains cash in bank accounts that, at times, may exceed federally insured limits. As of December 31, 2011 and 2010, our company has exceeded the federally insured limit. Our company has not experienced any losses in such accounts and believes it is not exposed to any significant risks on its cash in bank accounts.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Business Combinations

In December 2010, the ASC guidance for business combinations was updated to clarify existing guidance which requires a public entity to disclose pro forma revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual period only. The update also expands the supplemental pro forma disclosures required to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the reported pro forma revenue and earnings. Adoption of the updated guidance, effective for the Company’s fiscal year beginning January 1, 2011, had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Fair Value Accounting

In January 2010, the ASC guidance for fair value measurements and disclosure was updated to require additional disclosures related to transfers in and out of level 1 and 2 fair value measurements. The guidance was amended to clarify the level of disaggregation required for assets and liabilities and the disclosures required for inputs and valuation techniques used to measure the fair value of assets and liabilities that fall in either level 2 or level 3. The updated guidance was effective for the Company’s fiscal year beginning January 1, 2010. The adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Also in January 2010, the ASC guidance for fair value measurements and disclosure was updated to require enhanced detail in the level 3 reconciliation. Adoption of the updated guidance, effective for the Company’s fiscal year beginning January 1, 2011, had no impact on the Company’s consolidated financial position, results of operations or cash flows.

Recently Issued Accounting Pronouncements

Comprehensive Income

In June 2011, the ASC guidance was issued related to comprehensive income. Under the updated guidance, an entity will have the option to present the total of comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. In addition, the update required certain disclosure requirements when reporting other comprehensive income. The update does not change the items reported in other comprehensive income or when an item of other comprehensive income must be reclassified to income. Subsequently, in December 2011, the FASB issued its final standard to defer the new requirement to present components of reclassifications of other comprehensive income on the face of the income statement. Companies will still be required to adopt the other requirements contained in the new standard on comprehensive income. The Company adopted the new guidance and its deferral and opted to present the total of comprehensive income in two separate but consecutive statements effective for its fiscal year beginning January 1, 2011. The early adoption had no impact on the Company’s consolidated financial position, results of operations or cash flows.

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Fair Value Accounting

In May 2011, the ASC guidance was issued related to disclosures around fair value accounting. The updated guidance clarifies different components of fair value accounting including the application of the highest and best use and valuation premise concepts, measuring the fair value of an instrument classified in a reporting entity’s shareholders’ equity and disclosing quantitative information about the unobservable inputs used in fair value measurements that are categorized in Level 3 of the fair value hierarchy. The update is effective for the Company’s fiscal year beginning January 1, 2012. The Company does not expect the updated guidance to have a significant impact on the consolidated financial position, results of operations or cash flows.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required under this item.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements are contained in pages F-1 through F-33, which appear at the end of this annual report.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no changes in and disagreements with our accountants on accounting and financial disclosure from the inception of our company through to the date of this Report.

Item 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Report.

Based on that evaluation, our management has concluded that as of the end of the period covered by this Report our disclosure controls and procedures were effective such that the information required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms; and (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosure.

Our management does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is 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. Our internal control over financial reporting 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 our assets;

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

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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Because of the 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.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2011. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management’s assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment, our management has concluded that as of December 31, 2011, our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with our evaluation that occurred during our last fiscal quarter (our fourth fiscal quarter in the case of our annual report) that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. OTHER INFORMATION

None.

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Directors and Executive Officers

The following individuals serve as our executive officers and members of our Board:

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Paul Norman Zyla
President, Chief Executive Officer and Director

Mr. Zyla was appointed President and CEO of our company in May 2010 and has been a director of our company since January 2010. Mr. Zyla has over 26 years of resource-based public company experience. Since September 1993 to the present, Mr. Zyla has been a self-employed consultant to the mining industry. Mr. Zyla was the former President, Chief Executive Officer, Secretary and Treasurer and a director of the Company from November 2003 to August 2005.

Mr. Zyla graduated from the University of Toronto with a Bachelor of Science degree in 1966.

As at the date of this Report, Mr. Zyla devotes approximately 60% of his time in consulting services to our company. He provides 40% of his time to unrelated companies. Our company and Mr. Zyla entered into a management consulting agreement dated September 1, 2010 which was superseded by a management consulting agreement dated January 1, 2011 (the “Zyla Agreement”) for a one year term expiring on December 31, 2011. As of the date of this Report, Mr. Zyla provides his services to our company on a month-to-month basis (see “Management Consulting Agreements - Management Consulting Agreement with President and Chief Executive Officer”). Mr. Zyla has not entered into a non-competition and non-disclosure agreement with our company.

During the prior five years, Mr. Zyla has been an officer and/or director of the following public companies:

John C. Ross

Chief Financial Officer

Mr. Ross was appointed Chief Financial Officer of our company in July 2010. Mr. Ross has been involved with resource-based companies for over 20 years in various roles and capacities. Over the last four years, Mr. Ross has served as Chief Financial Officer, on a part time basis, to U308 Corp., Tri Origin Exploration Ltd., Colossus Minerals Inc., Continental Gold Limited and SonnenEnergy Corp.

Mr. Ross obtained his Chartered Accountant designation from the Institute of Chartered Accountants of Ontario in 1987, an M.B.A. from the University of Western Ontario and a B.A. in Economics and Mathematics from the University of Western Ontario.

As at the date of this Report, Mr. Ross devotes approximately 20% of his time in consulting services to our company. He provides 80% of his time to unrelated companies. Our company and Mr. Ross entered into a management consulting agreement dated September 1, 2010 (the “Ross Agreement”) for an undefined term (see “Management Consulting Agreements - Management Consulting Agreement with Chief Financial Officer”). Mr. Ross has not entered into a non-competition and non-disclosure agreement with our company.

During the prior five years, Mr. Ross has been an officer and/or director of the following public companies:

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Mr. Grayston was appointed as Chairman and a director of our company in March 2007. Since 1985, Mr. Grayston has been a self-employed business consultant with more than 27 years of experience in financial and economic consulting and public company management including preparation of valuations, feasibility studies, capital budgeting, financial reorganizations, profit improvement studies and business plans and going public and business brokerage during which time he has provided his consulting services to oil and gas, mineral exploration, technology, manufacturing, retail and wholesale consumer businesses.

Mr. Grayston received a Ph.D. in Finance and Economics from the University of Chicago in 1971, a MBA from the University of Chicago in 1969, a BA of Commerce from the University of British Columbia in 1966 and has been a certified general accountant since 1977.

During the prior five years, Mr. Grayston has been an officer and/or director of the following public companies.

Peter C. Minuk
Secretary and Treasurer and Director

Mr. Minuk was appointed as Vice-President, Finance (“VP, Finance”) and a director of our company in March 2007. He resigned as VP, Finance effective January 31, 2009 and was subsequently appointed Secretary and Treasurer on August 11, 2009 following the resignation of Kiomi Mori from this office. Mr. Minuk has more than 24 years of experience in finance and investment as well as experience in project management, training and developing staff and client relationships. From February 1, 2009 to May 31, 2009, he provided limited consulting services to our company. From April 2, 2011 to the present time, Mr. Minuk has been providing freelance management and consulting services to unrelated companies. From June 1, 2009 to April 1, 2011, Mr. Minuk was a business analyst consultant for Industry Canada where he was responsible for reviewing proposals relating to regional development of public infrastructure projects and providing oversight over 40 projects assigned to him by the Fed Dev Ontario which is responsible for administering a variety of government stimulus programs, resources and initiatives for the southern Ontario region. Prior to joining our company, from 1990 to 2006, Mr. Minuk was employed by BMO InvestorLine (“BMO”) in connection with implementing project management protocols. Mr. Minuk received a Masters Certificate in Project Management from the Schulich School of Business, York University in 2005. He obtained his FCSI (Fellow of the Canadian Securities Institute) in 1989 and completed the Business Administration program from Southern Alberta Institute of Technology in 1985.

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During the prior five years, Mr. Minuk has been an officer and/or director of the following public companies.

Mr. Minuk devotes approximately 25% of his time in consulting services to our company. He provides 75% of his time to unrelated companies. There is no management consulting agreement in force at this time nor has Mr. Minuk entered into a non-competition and non-disclosure agreement with our company.

Yves Pierre Clement, P. Geo.
Vice-President, Exploration

Mr. Clement was appointed Vice-President, Exploration of our company in May 2006. Mr. Clement has over 23 years experience in the generation, evaluation and development of a wide variety of mineral resources hosted by a broad spectrum of geological environments in Canada and South America. Prior to joining our company, Mr. Clement was senior project geologist for Lake Shore Gold Corp. in the Timmins lode gold camp from August 2005 to April 2006 and was formerly exploration manager for Aurora Platinum Corp.’s Sudbury operations from August 2000 to July 2005. Prior to joining Aurora, Mr. Clement was senior project geologist/exploration manager for Southwestern Resources Corp. where he was responsible for the generation of precious and base metal exploration opportunities in Peru and Chile. Mr. Clement’s experience will allow us to further maximize the value of our existing portfolio of projects, as well as allowing us to expand our strategy of growth through strategic acquisitions.

During the prior five years, Mr. Clement has been an officer and/or director of the following public companies:

As of the date of this Report, Mr. Clement devotes approximately 90% of his time in consulting services to our company. He provides 10% of his time to unrelated companies. Our company and Mr. Clement entered into a management consulting agreement on May 1, 2006 for a three year term expiring on May 1, 2009 which agreement has been renewed from time to time and has been superseded by a management consulting agreement dated March 1, 2011 (the “Clement Agreement”) for a three year term expiring on March 1, 2014 (see “Management Consulting Agreements - Management Consulting Agreement with Vice-President, Exploration”). Mr. Clement has not entered into a non-competition and non-disclosure agreement with our company.

Victor Nkansa, CA, BA, Economics, MBA, Finance
Vice-President, Ghana Operations

Mr. Nkansa was appointed as Vice-President, Ghana Operations of our company in December 2009. Mr. Nkansa has assumed the responsibilities of this position previously held by Mr. Alhaji Abudalai, which includes overseeing our operations in Ghana under the supervision of our President and CEO, Paul Zyla and James Longshore, who is also the President and General Manager of our Ghanaian subsidiaries. Mr. Nkansa is also the Secretary and a director of our Ghanaian subsidiaries. Mr. Nkansa is familiar and experienced with respect to obtaining mining leases, prospecting and reconnaissance licenses and the government regulations relating thereto and is knowledgeable in connection with environmental and forestry issues, immigration and customs affairs. His experience and background will assist us with respect to acquiring approvals, prospecting licenses, mining leases and related permits and renewals from the relevant government authorities in order to advance our operations in Ghana and acting as our primary government liaison in connection therewith. Mr. Nkansa has more than 27 years of business experience, the last 13 years of which have been in the mining industry. Since 2004, he has been the Controller of our Ghanaian subsidiaries where his responsibilities include the provision of accounting services and assisting with the facilitation of license renewals with respect to our property interests.

During the prior five years, Mr. Nkansa has not been an officer and/or director of any other public companies.

As at the date of this Report, Mr. Nkansa devotes a variable amount of his time in consulting services to our company, as he is currently engaged on an “as needed” basis. Our company and Mr. Nkansa entered into a management consulting agreement on June 1, 2010 (the “Nkansa Agreement”) for a one year term expiring on June 1, 2011. The Nkansa Agreement was renewed for a subsequent one year term expiring on May 31, 2012 (see “Management Consulting Agreements - Management Consulting Agreement with Vice-President, Ghana Operations”). Mr. Nkansa has not entered into a non-competition and non-disclosure agreement with our company.

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Robert John Casaceli
Director

Mr. Casaceli was appointed as a director of our company in June 2010. Mr. Casaceli is currently a consultant to the mining industry and served as Chief Geologist for Franco-Nevada Corporation from 2008 to March 2010. Mr. Casaceli has also served as President and Chief Executive Officer of Franc-Or Resources (now Crocodile Gold Inc.) from 1996 to 2008. Mr. Casaceli has been involved in the design, funding and implementation of numerous reconnaissance and advanced-stage exploration projects and prospect/mine evaluations in over 50 countries.

Mr. Casaceli received a M.S. in Geology from Oregon State University and a B.A. in Geology from the University of Colorado.

During the prior five years, Mr. Casaceli has been an officer and/or director of the following public companies.

James Harold Schweitzer
Director

Mr. Schweitzer was appointed as a director of our company in June 2011. Mr. Schweitzer has been employed in the investment industry in Canada, in particular, in the securities sector, in various capacities for 55 years. Mr. Schweitzer was employed as a registered representative (“Registered Representative”) with Haywood Securities Inc. (“Haywood”) since February 2003 to June 2011, at which time he resigned from Haywood. His former employment as a Registered Representative of Haywood was approved by IIROC (Investment Dealers Association of Canada). As a Registered Representative, Mr. Schweitzer acted as an account executive and investment advisor for clients whereby, among other things, Mr. Schweitzer was licensed to provide advice to clients as to which securities (primary resource stocks) a client can buy and sell. Prior thereto, Mr. Schweitzer became a director and shareholder in the brokerage firm of Wills Bickle and Co. Ltd. in 1975. In 1979, he joined McDermid Miller and McDermid (“McDermid”) as a Registered Representative and was appointed as a trading officer for Ontario and was in charge of McDermid’s Toronto branch office until its merger with St. Lawrence Securities in 1984. Mr. Schweitzer remained with McDermid through two mergers with other brokerage firms over the years until 2000 when Raymond James Financial Inc. (“Raymond James”) acquired the then named firm of Goepel McDermid Inc. He resigned as trading officer of Raymond James in 2002.

During the prior five years, Mr. Schweitzer has been an officer and/or director of the following public companies.

There are no family relationships between any of the executive officers and directors. Each director currently holds office until he resigns or his successor is elected at an annual stockholders’ meeting.

Consultants

One of our business strategies is to outsource other services as required by our company from time to time by engaging consultants on an “as needed” basis or entering into special purpose contracts with a view to maintaining our overhead at a reasonable, affordable cost.

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Compliance with Section 16(a) of the Exchange Act

We are not currently subject to Section 16(a) of the Securities Exchange Act of 1934, and, therefore, our directors and executive officers, and persons who own more than 10% of our common stock are not required to file with the Securities and Exchange Commission reports disclosing their initial ownership and changes in their ownership of our common stock.

Corporate Governance Matters

Audit Committee

As our company is also a reporting issuer in Canada, we are required to have an audit committee that complies with the requirements of Multilateral Instrument 52-110 – Audit Committees. Prior to becoming a issuer, in November 2009, our Board determined it advisable and in the best interests of our stockholders to establish an audit committee (the “Audit Committee”).

Our Audit Committee assists our Board in fulfilling its oversight responsibility relating to:

• the integrity of our financial statements;

• our compliance with legal and regulatory requirements; and

• the qualifications and independence of our independent registered public accountants.

Our Audit Committee has adopted a written charter pursuant to which the committee provides: (i) an independent review and oversight of our company’s financial reporting processes, internal controls and independent auditors; (ii) a forum separate from Management in which auditors and other interested parties can candidly discuss concerns. By effectively carrying out its functions and responsibilities, our Audit Committee helps to ensure that: (i) Management properly develops and adheres to a sound system of internal controls; (ii) procedures are in place to objectively assess Management’s practices and internal controls; and (iii) the outside auditors, through their own review, objectively assess our company’s financial reporting practices. Our Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for our company.

Our Audit Committee is composed of three directors; namely Richard Grayston, who is also Chair of our Audit Committee, Robert Casaceli and James Schweitzer, all of whom have been determined by the Board to be “independent,” as defined in the Marketplace Rules of the NASDAQ and within the meaning of National Instrument 52-110 – Audit Committees adopted by the Canadian Securities Administration.

Board of Directors Independence

Our Board consists of five members. Although, we are not currently subject to any law, rule or regulation requiring that all or any portion of our Board include “independent” directors, three of our directors are considered to be “independent” directors, as defined in the Marketplace Rules of the NASDAQ and within the meaning of National Instrument 52-110 – Audit Committees adopted by the Canadian Securities Administration.

Audit Committee Financial Expert

Richard Grayston is an “audit committee financial expert” within the meaning of Item 401(h)(1) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee who (a) understands generally accepted accounting principles and financial statements, (b) is able to assess the general application of such principles in connection with accounting for estimates and accruals, (c) has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the company’s financial statements, (d) understands internal controls over financial reporting (e) understands audit committee functions, and (f) is an independent director.

Code of Ethics

In December 2009, we adopted a new and expanded Code of Ethics applicable to our principal executive officer, principal financial and accounting officers and persons performing similar functions. A Code of Ethics is a written standard designed to deter wrongdoing and to promote (a) honest and ethical conduct, (b) full, fair, accurate, timely and understandable disclosure in regulatory filings and public statements, (c) compliance with applicable laws, rules and regulations, (d) the prompt reporting violation of the code; and (e) accountability for adherence to the Code. A copy of our Code of Ethics was previously filed as an exhibit to our annual report filed on Form 10-K for the year ended December 31, 2009. We will provide a copy of our Code of Ethics, without charge, to any person desiring a copy of the Code of Ethics, by written request to us at our principal offices.

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Nominating and Corporate Governance Committee

We established a nominating and governance committee in November 2009. The Nominating and Corporate Governance Committee has adopted a written charter pursuant to which the committee: (i) recommends the slate of director nominees for election to our Board; (ii) identifies and recommends candidates to fill vacancies on our Board; (iii) reviews the composition of Board committees; and (iv) monitors compliance with, reviews and recommends changes to our various corporate governance policies and guidelines.

The committee also prepares and supervises the Board’s annual review of director independence and the Board’s annual self-evaluation. The Nominating and Corporate Governance Committee is composed of three directors, all of whom have been determined by the Board to be “independent,” as defined in the Marketplace Rules of the NASDAQ and within the meaning of National Instrument 52-110 – Audit Committees adopted by the Canadian Securities Administration.

A majority of the persons serving on our Board must be “independent”. Thus, the committee has considered transactions and relationships between each director or any member of his immediate family and us or our affiliates, including those reported under “Certain Relationships and Related Transactions” below. The committee also reviewed transactions and relationships between directors or their affiliates and members of our senior management or their affiliates. As a result of this review, the committee affirmatively determined that each of Messrs. Grayston, Casaceli and Schweitzer are independent.

Nomination of Directors

The committee considers all qualified candidates for our Board identified by members of the committee, by other members of the Board, by senior management and by our stockholders. The committee reviews each candidate including each candidate’s independence, skills and expertise based on a variety of factors, including the person’s experience or background in management, finance, regulatory matters and corporate governance. Further, when identifying nominees to serve as director, the Nominating and Corporate Governance Committee seeks to create a Board that is strong in its collective knowledge and has a diversity of skills and experience with respect to accounting and finance, management and leadership, vision and strategy, business operations, business judgment, industry knowledge and corporate governance. In addition, prior to nominating an existing director for re-election to the Board, the Nominating and Corporate Governance Committee will consider and review an existing director’s Board and committee attendance and performance, length of Board service, experience, skills and contributions that the existing director brings to the Board, equity ownership in our company and independence.

The committee follows the same process and uses the same criteria for evaluating candidates proposed by members of the Board, members of senior management and stockholders. Based on its assessment of each candidate, the committee recommends candidates to the Board. However, there is no assurance that there will be any vacancy on the Board at the time of any submission or that the committee will recommend any candidate for the Board.

Director Qualification

The following is a discussion for each director of the specific experience, qualifications, attributes or skills that led the Nominating and Corporate Governance Committee to recommend to our Board, and for our Board to conclude that the individual should be serving as a director of Xtra-Gold.

Paul Zyla – Mr. Zyla’s extensive career in leadership positions in the mining industry and, in particular, his previous success as CEO with Carib Gold and other junior exploration companies, were factors considered by the Nominating and Corporate Governance Committee and our Board.

Richard W. Grayston – Mr. Grayston’s extensive experience as a CGA and Ph.D., together with his previous directorships and/or position as Chief Financial Officer of four mineral exploration public companies prior to joining our company, were factors considered by the Nominating and Corporate Governance Committee and our Board. Currently, Mr. Grayston is President of two mineral exploration issuers and the Audit Committee Chair of two other mineral exploration issuers in Canada.

Peter Minuk – Mr. Minuk’s extensive experience with respect to project management and his years of experience at the Bank of Montreal were factors considered by the Nominating and Corporate Governance Committee and our Board.

Robert J. Casaceli – Mr. Casaceli is currently President and Chief Executive Officer of Creso Exploration Inc. and, together with his former position of Chief Geologist at Franco-Nevada U.S. Corporation, were factors considered by the Nominating and Corporate Governance Committee and our Board.

James H. Schweitzer – Mr. Schweitzer’s extensive career as a trader, salesman in the investment industry makes him knowledgeable with respect to markets and companies and, together with his financial knowledge, were factors considered by the Nominating and Corporate Governance Committee and our Board. In addition to keeping up to date with the changing rules and policies of the Securities Regulators under which he operated, he also had to monitor and keep abreast of all the economic factors that would affect the financial health of his clientele.

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In addition to the each of the individual skills and background described above, the Nominating and Corporate Governance Committee and our Board also concluded that each of these individuals will continue to provide knowledgeable advice to our other directors and to senior management on numerous issues facing our company and on the development and execution of our strategy.

Compensation Committee

We established a compensation committee (the “Compensation Committee”) in November 2009. The Compensation Committee has adopted a written charter pursuant to which the committee is responsible for overseeing our compensation programs and practices, including our executive compensation plans and incentive compensation plans. Our Chief Executive Officer provides input to the Compensation Committee with respect to the individual performance and compensation recommendations for the other executive officers. Although the committee’s charter authorizes the committee to retain an independent consultant, no third party compensation consultant was engaged for 2011. The Compensation Committee is composed of three directors; namely Richard Grayston, Robert Casaceli, who is also Chair of our Compensation Committee, and James Schweitzer, all of whom have been determined by the Board to be “independent,” as defined in the Marketplace Rules of the NASDAQ and within the meaning of National Instrument 52-110 – Audit Committees adopted by the Canadian Securities Administration.

Risk Management

We separate the role of our CEO and the Chairman of our Board. Our management has approval limits which it must not exceed without Board approval. These approval limits span hiring, asset purchases and the issuance of shares. Our Board administers its oversight function through three sub-committees which report to the full Board, being our Audit Committee, our Corporate Governance Committee and our Compensation Committee. We are a very small company at this time and consider five Board members adequate for the purpose of directing its activities. Our Board self-assesses on an ongoing basis and has the scope to increase its size if the need is determined.

Item 11. EXECUTIVE COMPENSATION

Summary Compensation Table

The following table sets forth information relating to all compensation awarded to, earned by or paid by us during each of the two fiscal years ended December 31, 2011 and 2010 respectively, to: (a) our chief (principal) executive officer; (b) each of our executive officers who was awarded, earned or we paid more than $100,000; and (c) up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer of our company at December 31, 2011. The value attributable to any option awards is computed in accordance with ASC 718 (Accounting Standards Codification, Topic 718).

SUMMARY COMPENSATION TABLE

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During the Fiscal Year, our Compensation Committee considered and determined compensation be paid to Mr. Zyla as noted under “Management Consulting Agreements – Management Consulting Agreement with President and Chief Executive Officer”. In determining the compensation to be paid to Mr. Zyla, our Compensation Committee considered a number of factors including the scope of his duties and responsibilities to our company, the time he devotes to our business, his length of services to our company and industry standards for compensation paid for similar positions in other comparable reporting companies. Our Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Zyla’s compensation.

During the Fiscal Year, our Compensation Committee considered and determined compensation be paid to Mr. Ross as noted under “Management Consulting Agreements – Management Consulting Agreement with Chief Financial Officer”. In determining the compensation to be paid to Mr. Ross, our Compensation Committee considered a number of factors including the scope of his duties and responsibilities to our company, the time he devotes to our business, his length of service to our company and industry standards for compensation paid for similar positions in other comparable reporting companies. Our Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Ross’ compensation.

In 2010, Mr. Longshore did not receive any monetary compensation in his capacity as our CEO or as our CFO. In 2010 and in the Fiscal Year, Mr. Longshore received a compensation package, through Brokton, for providing his consulting services as general manager to XG Mining and XGEL as noted under “Management Consulting Agreements – Management Consulting Agreement with Brokton”. Mr. Longshore was reimbursed for out-of-pocket expenses incurred on behalf of our company in connection with carrying out his duties and responsibilities. The terms of any future compensation to be paid to Mr. Longshore will be determined by our Compensation Committee. At such time, our Compensation Committee will consider a number of factors in determining Mr. Longshore’s compensation including the scope of his duties and responsibilities to our company and our subsidiaries, the time he devotes to our business, his length of service to our company and industry standards for compensation paid for similar positions in other comparable reporting companies and whether to consult with any experts or third parties in fixing such compensation.

During the Fiscal Year, our Compensation Committee considered and determined compensation be paid to Mr. Clement as noted under “Management Consulting Agreements – Management Consulting Agreement with Vice-President, Exploration”. In determining the compensation to be paid to Mr. Clement, our Compensation Committee considered a number of factors including the scope of his duties and responsibilities to our company and our subsidiaries, the time he devotes to our business, his length of service to our company and industry standards for compensation paid for similar positions in other comparable reporting companies. Our Compensation Committee did not consult with any experts or other third parties in fixing the amount of Mr. Clement’s compensation.

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Management Consulting Agreements

During the Fiscal Year, we entered into management consulting agreements with the following officers of our company.

Management Consulting Agreement with President and Chief Executive Officer

We entered into a management consulting agreement with our President and CEO, Paul Zyla, dated September 1, 2010 for the provision of his services as our President and CEO. This agreement was not for a defined term and may be terminated by Mr. Zyla upon 60 days’ notice. Our CEO was paid CAD$2,000 (USD$2,040) at the commencement of each calendar quarter and was reimbursed for certain expenses incurred in performing his duties to our company. Our CEO provided certain services to our company including, but not limited to, the stewardship of our company, overseeing day-to-day managerial functions of our business, reviewing all business opportunities, reporting to our Board and performing the duties and responsibilities generally associated with being the most senior executive of a reporting company. This agreement has been superseded by the Zyla Agreement noted hereunder.

Our company entered into the Zyla Agreement with our President and CEO, Paul Zyla for a term of one year which expired on December 31, 2011. As of the date of this Report, Mr. Zyla provides his services to our company on a month-to-month basis. Our CEO is paid CAD$3,000 (USD$3,060) per month to provide the services set forth in the preceding paragraph and is reimbursed for certain expenses incurred in performing his duties to our company. There is no provision for a payment to be made to our CEO in the event of Mr. Zyla’s termination, without cause.

Management Consulting Agreement with Brokton

We entered into a management consulting agreement on January 3, 2009 with Brokton to provide the consulting services of our Chief Executive Officer at the time, James Longshore, as general manager for XG Mining and XGEL for a one year term which expired on December 31, 2009. Brokton was paid $5,000 per month for providing Mr. Longshore’s services. Brokton was reimbursed for certain expenses incurred by Mr. Longshore in performing his duties to our Ghanaian subsidiaries. This agreement has been superseded by the Brokton Agreement noted hereunder.

Our company entered into the Brokton Agreement with Brokton to provide the consulting services of James Longshore, as general manager for XG Mining and XGEL for a one year term which expired on December 31, 2010. Pursuant to the Brokton Agreement, Brokton is paid $10,000 per month for providing Mr. Longshore’s services and is reimbursed for certain expenses incurred by Mr. Longshore in performing his duties to our Ghanaian subsidiaries. Either Brokton or our company may terminate the Brokton Agreement, without reason or cause, by providing one month’s written notice in advance of such termination. This agreement provides for a payment of one month of consulting fees to Brokton in lieu of notice being provided by our company. The Brokton Agreement was renewed by way of renewal agreement on November 30, 2010 for a one year term commencing on January 1, 2011 and expiring on December 31, 2011. As of the date of this Report, Brokton provides Mr. Longshore’s services to our company on a month-to-month basis.

Management Consulting Agreement with Chief Financial Officer

We entered into the Ross Agreement with our CFO, John Ross for the provision of his services as CFO of our company. This agreement is not for a defined term. Our CFO is paid CAD$500 (USD$510) per day and is reimbursed for certain expenses incurred in performing his duties to our company. Our CFO provides certain accounting services to our company including, but not limited to, financial and general management duties, accounting, financial and reporting control and regulatory reporting duties. Our company may give written notice to our CFO of our intention to terminate the Ross Agreement on the date therein specified in the notice which shall in any event be a date at least 15 and not more than 30 days after giving of such notice. Our CFO may terminate the Ross Agreement at any time upon providing our company with 60 days’ notice. There is no provision for a payment to be made to our CFO in the event of early termination of the Ross Agreement, without cause.

Management Consulting Agreement with Vice-President, Exploration

We entered into a management consulting agreement with our Vice-President, Exploration (“VPE”), Yves Clement, on May 1, 2006 for a term of 36 months which expired on May 1, 2009. Prior to the expiration of this agreement, we negotiated terms for renewal of this agreement for a further one year term with our VPE. Pursuant to this agreement, our VPE is paid approximately CAD$10,000 (USD$10,200) per month and is reimbursed for certain expenses incurred in performing his duties to our company. Our VPE shall be paid compensation equivalent to 18 months’ fees, based on the rate of compensation being paid at the relevant time in the event of (i) termination without cause; or (ii) a Change of Control. Our VPE provides certain consulting services to our company including, but not limited to, making project or property site attendances as may be required from time to time, preparing progress reports with respect to our mineral exploration projects, conducting due diligence as may be required from time to time in connection with potential mineral properties; reviewing geological data and liaising with principal owners of mineral properties in which our company may wish to acquire an interest, meeting with government authorities and retaining technical experts, making recommendations to the Board and its relevant committees with respect to the acquisition and/or abandonment of mineral exploration properties and preparing and implementing, subject to Board approval, plans for the operation of our company including plans for exploration programs, costs of operations and other expenditures in connection with our mineral projects. This agreement has been superseded by the Clement Agreement noted hereunder.

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Our company entered into the Clement Agreement with our VPE for a term of three years which will expire on March 1, 2014. The Clement Agreement supersedes the May 1, 2006 agreement or any renewal thereof. Our VPE is paid CAD$12,500 (USD$12,225) per month to provide the services set forth in the preceding paragraph and is reimbursed for certain expenses incurred in performing his duties to our company. In the event that our company terminates the Clement Agreement prior to September 30, 2012 (the “Early Termination”), our VPE shall be paid additional remuneration of CAD$10,000 (USD$10,200) per month for each additional month of Early Termination. In the event that our company terminates the Clement Agreement on or after October 1, 2012, then no additional remuneration shall be owed and paid to the VPE.

Management Consulting Agreement with Vice-President, Ghana Operations

We entered into the Nkansa Agreement with our Vice-President, Ghana Operations (“VPGO”), Victor Nkansa for a term of one year which expired on June 1, 2011. As of the date of this Report, the Nkansa Agreement has been renewed by way of renewal agreement for a further term of one year commencing on June 1, 2011 and expiring on May 31, 2012. Our VPGO is paid $2,500 per month by XG Mining to provide his consulting services on an “as needed” basis. There is no provision for a payment to be made to our VPGO in the event of early termination of the Nkansa Agreement, without cause.

Compensation of Management

The terms of the foregoing management consulting agreements were determined by our Compensation Committee and subsequently approved by our Board. As at the date of this Report, our Compensation Committee has complete authority to determine the amount of compensation to be paid and the other terms of management compensation. At the time of entering into the foregoing agreements, our Compensation Committee did not consult with any consultants or other third parties in determining the amount of compensation to be paid under the management consulting agreements.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth information concerning our grant of options to purchase shares of our common stock during the fiscal year ended December 31, 2011 to each person named in the Summary Compensation table.

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2011 10% Rolling Stock Option Plan

During the Fiscal Year, our Board considered and believed that it was advisable and in the best interests of our company to terminate the fixed 2005 Equity Incentive Compensation Plan and replace it with a new 10% rolling stock option plan (the “2011 Plan”). On May 12, 2011, our Board authorized, approved and adopted our 2011 Plan which received approval by our stockholders at our annual and special stockholders’ meeting held on June 10, 2011 (the “2011 ASM”). We subsequently received final acceptance of the 2011 Plan from the TSX on July 13, 2011. The 2011 Plan replaced our 2005 Equity Incentive Compensation Plan. As of the date of this Report, total of 4,366,117 shares of our common stock have been reserved for issuance under the 2011 Plan. As at the date of this Report, we have granted options to purchase an aggregate of 1,957,000 shares of our common stock. During the Fiscal Year, 130,000 options were cancelled pursuant to Board approval. Subsequent to the Fiscal Year, 110,000 options were exercised by a consultant.

The terms of the 2011 Plan are in compliance with the policies of the TSX. Our Board is of the opinion that the implementation of the 2011 Plan and the effective increase in the number of common shares available for issuance pursuant to the granting of stock options under the 2011 Plan will assist our company in continuing to attract, retain and motivate our directors, officers, key employees and consultants and other eligible persons (the “Eligible Persons”) whose contributions are important to the future success of our company.

General

Any capitalized terms not specifically defined in this section have the meaning ascribed in the 2011 Plan.

Purpose of the 2011 Plan

The purpose of the 2011 Plan is to encourage stock ownership by our officers, directors, key employees and consultants, and to give such persons a greater personal interest in the success of our company’s business and an added incentive to continue to advance and contribute to our company.

Eligibility

Eligible Persons of our company are eligible to receive stock grants and NSO’s under the 2011 Plan. As we obtained stockholder approval of the 2011 Plan at the 2011 ASM, our company is permitted to issue options qualifying as incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended.

Administration

As of the date of this Report, the Plan is administered by our Compensation Committee who determines from time to time those of the Eligible Persons to whom stock grants or plan options are to be granted, the terms and provisions of the respective option agreements, the time or times at which such options shall be granted, the dates such Plan options become exercisable, the number of shares subject to each option, the purchase price of such shares and the form of payment of such purchase price. All other questions relating to the administration of the 2011 Plan, and the interpretation of the provisions thereof and of the related option agreements, are resolved by our Compensation Committee. Our Board approves grants of non-qualified stock options on recommendation from our Compensation Committee.

Shares Subject to Awards

Pursuant to the 2011 Plan, our company may issue no more than 10% of our issued and outstanding common shares in the aggregate from time to time, and a maximum of 5% of the common shares may be issued to any one Eligible Person, except consultants, in any 12 month period, unless disinterested stockholder approval is obtained. The maximum number of common shares that may be issued to a consultant under the 2011 Plan in a 12 month period shall not exceed 2% of the common shares outstanding. The number of securities issuable to our company’s insiders, at any time, under all security-based compensation arrangements, shall not exceed 10% of the issued and outstanding securities and the number of securities issued to insiders, within any one-year period, under all security-based compensation arrangements, shall not exceed 10% of the issued and outstanding securities. Common shares used for stock grants and the 2011 Plan options may be authorized and unissued shares or shares reacquired by our company. Common shares covered by the 2011 Plan options which terminate unexercised or shares subject to stock awards which are forfeited or cancelled will again become available for grant as additional options or stock awards, without decreasing the maximum number of shares issuable under the 2011 Plan.

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Terms of Exercise

The 2011 Plan provides that the options granted thereunder shall be exercisable from time to time in whole or in part, unless otherwise specified by our Compensation Committee, and provided that no option shall have a term exceeding 10 years.

Exercise Price

The purchase price for common shares subject to options is determined at the time of grant by our Board or our Compensation Committee at the discretion of our Board. The exercise price shall not be less than the closing price of the common shares on the TSX, on the trading day immediately preceding the day of the grant of the option. If the purchase price is paid with consideration other than cash, the Compensation Committee shall determine the fair value of such consideration to our company in monetary terms. The appropriate adjustment in any particular circumstance shall be conclusively determined by our Compensation Committee in its sole discretion, subject to approval by the stockholders of our company and to acceptance by the TSX respectively, if applicable.

Option Period

The period during which options may be exercised shall be determined by our Board in its discretion, to a maximum of 10 years from the date that the option is granted and the options shall vest on the date of the grant, except that options issued to persons employed in Investor Relations Activities must vest in stages over not less than 12 months with no more than one-quarter (1/4) of the options vesting in any three month period.

Reduced Option Period due to Termination of Employment or Death

Termination of Employment

If a Participant shall:

Death of Participant

In the event of the death of a Participant who is a director or officer of our company or any of our Designated Affiliates or who is an employee having been continuously in the employ of our company or any of our Designated Affiliates or who has continuously provided consulting services to our company or any of our Designated Affiliates for one year from and after the date of the granting of his or her Option, the Option theretofore granted to him or her shall be exercisable within the 365 days next succeeding such death and then only:

The Option Period may be reduced in the event of termination of employment or death of the Participant as provided for in the 2011 Plan.

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Transferability

The benefits, rights and options accruing to any Optionee in accordance with the terms and conditions of the 2011 Plan shall not be transferable or assignable by an Optionee unless specifically provided herein. During the lifetime of a Participant, all benefits, rights and options shall only be exercised by the Optionee or by his or her guardian or legal representative.

Amendment, Modification or Termination of the 2011 Plan

Subject the requisite stockholder and regulatory approvals set forth under subparagraphs (a) and (b) below, our Board or our Compensation Committee may from time to time amend or revise the terms of the 2011 Plan or may discontinue the 2011 Plan at any time provided however that no such right may, without the consent of the Optionee, in any manner adversely affect his rights under any Option theretofore granted under the 2011 Plan.

Disinterested stockholder approval, pursuant to the Policies of the TSX, is required for any reduction in the exercise price of options, if the Optionee is an insider of our company at the time of the proposed amendment.

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Compensation of Directors

We established compensation arrangements for our directors for each individual’s service and expense on our Board in March 2007. Directors’ fees are paid on a quarterly basis. As of December 31, 2011, we did not pay fees to directors for their attendance at Board meetings.

The following table sets forth information relating to the compensation paid to our directors for the fiscal year ended December 31, 2011:

DIRECTOR COMPENSATION

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

At March 29, 2012, we had 44,569,217 shares of common stock issued and outstanding. The following table sets forth information known to us as of March 29, 2012 relating to the beneficial ownership of shares of our common stock by:

• each person who is known by us to be the beneficial owner of more than 5% of our outstanding common stock;

• each director;

• each named executive officer; and

• all named executive officers and directors as a group.

Unless otherwise indicated, the business address of each person listed is in care of our Field Camp located at 2 Masalakye Street, Kwabeng, Ghana. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

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The following table sets forth information relating to our outstanding equity compensation plans as of December 31, 2011:

A description of our 2011 10% Rolling Stock Option Plan is contained in this Report under Part III, Item 11 - “Executive Compensation - Stock Option Plans”.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Consulting Agreement with Principal Shareholder

From February 1, 2004 through February 1, 2006, we were a party to a consulting agreement with Brokton, a company which, as of the date of this Report, owns 6.89% of our common stock and is one of only two shareholders that owns more than 5% of our issued and outstanding shares of common stock. Under the terms of this agreement, we engaged Brokton as a consultant to advise our Management with respect to hiring additional qualified management, providing support with respect to operational matters and government compliance in Ghana, mergers and acquisitions and financial advisory. James Longshore, our former President and a former director of our company, is the President of Brokton and exercises sole investment, voting and disposition powers over the shares of Brokton. Mr. Longshore is a director of our wholly-owned subsidiaries, XGEL and XOG Ghana (since April 2006) and Chief Operating Officer (since February 2007) and General Manager (since June 2006) and a director of XG Mining (since June 2006) and Chief Operating Officer (since February 2007) and General Manager (since June 2006) and a director and officer of Xtra Energy (since March 2007). From February 2004 to February 2006, we paid Brokton an aggregate of $53,176 for its consulting services and reimbursed Brokton for expenses incurred by Brokton on behalf of our company.

On January 3, 2009, we were a party to a consulting agreement with Brokton, whereby we engaged Brokton as a consultant to provide the consulting services of Mr. Longshore as General Manager of our subsidiaries, XG Mining and XGEL, for a one year term ending on December 31, 2009. During the term of this agreement, we paid Brokton an aggregate of $60,000 and reimbursed Brokton for expenses incurred by Brokton on behalf of our company and our subsidiaries.

On June 1, 2010, we entered into the Brokton Agreement for the continued consulting services of Mr. Longshore as General Manager of our subsidiaries, XG Mining and XGEL, for a one year term which expired on December 31, 2010. During this term of the Brokton Agreement, we paid Brokton an aggregate of $95,000 and reimbursed Brokton for expenses incurred by Brokton on behalf of our company and our subsidiaries. The Brokton Agreement was renewed by way of renewal agreement on November 30, 2010 for a one year term commencing on January 1, 2011 and expiring on December 31, 2011. See “Executive Compensation – Summary Compensation Table” for all compensation paid to Brokton during the Fiscal Year. As of the date of this Report, Brokton provides Mr. Longshore’s services to our company on a month-to-month basis.

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During the Fiscal Year, Mr. Longshore also received compensation of $102,646 from Ravenclaw for assisting Ravenclaw in fulfilling its agreement with our company. Ravenclaw entered into an agreement dated July 1, 2010 (the “Ravenclaw Agreement”) with our company for a term of one year whereby Ravenclaw will receive a maximum payment of 2% gross overriding royalty (“GOR”) on all placer gold produced by the independent Ghanaian contract miners who carry out recovery of placer gold operations at our Kibi and Pameng Projects. Ravenclaw is not entitled to receive the GOR until our company receives its 10% GOR on all placer gold produced from the contract miners. Ravenclaw has to the option to take their payment in cash or kind. The Ravenclaw Agreement is renewable on an annual basis.

Director Independence

As our common stock is currently traded on the OTCBB, we are not subject to the rules of any national securities exchange which requires that a majority of a listed company’s directors and specified committees of its board of directors meet independence standards prescribed by such rules. For the purpose of preparing the disclosures in this Report on Form 10-K with respect to director independence, we have used the definition of “independent director” within the meaning of National Instrument 52-110 – Audit Committees adopted by the Canadian Securities Administration and as set forth in the Marketplace Rules of the NASDAQ, which defines an “independent director” generally as being a person, other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Consistent with these standards, our Board has determined that Richard Grayston, Robert Casaceli and James Schweitzer are “independent”.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Davidson & Company LLP is our principal accountant for our audit of annual financial statements and review of the financial statements included in this Report and served as our independent registered public accounting firm for 2011 and 2010. The following table shows the fees that were billed for the audit and other services provided by such firm for 2011 and 2010.

Audit Fees

This category includes the audit of our annual financial statements, review of financial statements included in this Report and services that are normally provided by the independent auditors in connection with their engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of our interim financial statements.

Audit-Related Fees

This category consists of assurance and related services by the independent auditors that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the SEC and other accounting consulting.

Tax Fees

This category consists of professional services rendered by our independent auditors for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

Our Audit Committee has adopted a procedure for pre-approval of all fees charged by our independent auditors. Under the procedure, the Audit Committee approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by our Audit Committee. The audit and tax fees paid to the auditors with respect to 2011 were pre-approved by our Audit Committee.

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PART IV

Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES