The preparation of financial statements in conformity with Canadian generally accepted accounting

principles 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 dates of the financial

statements and the reported amounts of revenues and expenses during the reported periods. Actual results

could differ from those estimates.

Effective January 1, 2009, the Company adopted CICA Section 3064, “Goodwill and Intangible Assets”

which replaces CICA Sections 3062, “Goodwill and Other Intangible Assets” and 3450 “Research and

Development Costs”, as well as EIC-27, "Revenues and Expenditures During the Pre-operating Period",

and part of Accounting Guideline 11, "Enterprises in the development stage". Under previous Canadian

standards, a greater number of items were recognized as assets than are recognized under CICA 3064 and

3450. The provisions relating to the definition and initial recognition of intangible assets under these new

standards reduce the differences with International Financial Reporting Standards ("IFRS") in the

accounting for intangible assets. The objectives of CICA 3064 are: 1) to reinforce the principle-based

approach to the recognition of assets; 2) to establish the criteria for asset recognition; and 3) to clarify the

application of the concept of matching revenues and expenses such that the current practice of

recognizing items that do not meet the recognition criteria is eliminated. The standard also provides

guidance for the recognition of internally developed intangible assets (including research and

development activities), ensuring consistent treatment of all intangible assets. The portions in the standard

relating to goodwill remain unchanged. The adoption of this standard had no impact on the Company's

presentation of its financial position or results of operations as at December 31, 2009.

On March 27, 2009, the Emerging Issues Committee of the CICA approved an abstract EIC7-174 Mining

Exploration Costs, which provides guidance on capitalization of exploration costs related to mining

properties in particular, and on impairment of long-lived assets in general. The adoption of this standard

had no impact on the Company's presentation of its financial position or results of operations as at

December 31, 2009.

In January 2009, the CICA approved EIC 173 Credit Risk and the Fair Value of Financial Assets and

Financial Liabilities. This guidance clarified that an entity's own credit risk and the credit risk of the

counterparty should be taken into account in determining the fair value of financial assets and financial

liabilities including derivative instruments. The adoption of this standard had no impact on the Company's

presentation of its financial position or results of operations as at December 31, 2009.

In June 2009, the CICA issued an amendment to Handbook Section 3862 to provide improvements to fair

value and liquidity risk disclosures. The amendment applies to the Company's fiscal year ending

December 31, 2009. This adoption resulted in additional disclosure presented on Note 2 to the financial

statements.

The CICA issued three new accounting standards in January 2009: Section 1582, Business Combinations,

Section 1601, Consolidated Financial Statements and Section 1602, Non-Controlling interests. These new

standards will be effective for fiscal years beginning on or after January 1, 2011. The Company is in the

process of evaluating the requirements of the new standards.

Sections 1582 replaces section 1581 and establishes standards for the accounting for a business

combination. It provides the Canadian equivalent to IFRS 3 - Business Combinations. The section applies

prospectively to business combinations for which the acquisition date is on or after the beginning of the

first annual reporting period beginning on or after January 1, 2011. Sections 1601 and 1602 together

replace section 1600, Consolidated Financial Statements. Section 1601, establishes standards for the

preparation of consolidated financial statements. Section 1601 applies to interim and annual consolidated

financial statements relating to fiscal years beginning on or after January 1, 2011. Section 1602

establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial

statements subsequent to a business combination. It is equivalent to the corresponding provisions of IFRS

International Accounting Standard ("IAS") 27 - Consolidated and Separate Financial Statements and

applies to interim and annual consolidated financial statements relating to fiscal years beginning on or

after January 1, 2011.

The AcSB has confirmed that IFRS will replace current Canadian GAAP for publicly accountable

enterprises, effective for fiscal years beginning on or after January 1, 2011. Accordingly, the Company

will report interim and annual financial statements (with comparatives) in accordance with IFRS

beginning with the quarter ended December 31, 2011.

The Company has commenced the development of an IFRS implementation plan to prepare for this

transition, and is in the process of analyzing the key areas where changes to current accounting policies

may be required. While an analysis will be required for all accounting policies, the initial key areas of

assessment will include:

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During the year, $7,759 (2008 - $68,325) was paid to a company with a director and officer in common

for administrative services. Included in due to related parties is $132 (2008 - $8,752) owing to this

company.

The above transactions, occurring in the normal course of operations, are measured at the exchange

amount, which is the amount of consideration established and agreed to by the related parties.

The Company is authorized to issue an unlimited number of common shares of which 77,152,867

common shares are issued and outstanding as at December 31, 2009. As of the date of the MD&A, being

April 29, 2010 there were 77,960,367 common shares outstanding.

As of December 31, 2009, the Company had 7,092,500 options outstanding with exercise prices ranging

from C$0.10 to C$1.12 and expiry dates ranging from October 19, 2010 to October 9, 2014. The

Company had 12,000,000 warrants outstanding at an exercise price of $0.72 and expiring on September

29, 2011. The Company also had 1,680,000 compensation options outstanding at an exercise price of

$0.50 and expiring on September 29, 2011. If exercised, each compensation option comprises one unit

consisting of one common share and one-half of one warrant with each whole warrant being issued at an

exercise price of $0.75 and expiring on September 29, 2011.

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts

payable, and amounts due to related parties. Unless otherwise noted, it is management’s opinion that the

Company is not exposed to significant interest, currency or credit risks arising from the financial

instruments. The fair value of these financial instruments approximates their carrying value due to their

short-term maturity or capacity of prompt liquidation.

Management has evaluated the design of the Company’s internal controls over financial reporting during

the period covered by this Management Discussion and Analysis, and has determined that the internal

controls over financial reporting provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with GAAP.

Management has evaluated the effectiveness of the design and operation of the Company’s disclosure

controls and procedures during the period covered by this Management Discussion and Analysis and has

concluded that they provide reasonable assurance that information required to be disclosed by the

Company is recorded, processed, summarized and reported with appropriate timescales.

The Board of Directors of the Company has approved the disclosure contained in this MD&A. A copy of

this MD&A will be provided to anyone who requests it