BASIS OF PRESENTATION AND NATURE OF OPERATIONS

The unaudited financial information furnished herein reflects all adjustments, all of which are of a normal recurring nature, which in the opinion of management are necessary to fairly state the interim consolidated financial position of Pengram Corporation (“the Company”) and the results of its operations for the periods presented. This report on Form 10-Q should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended November 30, 2009. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the fiscal year ended November 30, 2009, has been omitted. The results of operations for the three month period ended February 28, 2010 are not necessarily indicative of results for the entire fiscal year ending November 30, 2010.

Consolidated Financial Statements

These consolidated financial statements include the accounts of Pengram Corporation (“the Company”) and its wholly owned subsidiaries, Magellan Acquisition Corp. (Nevada) (“MAC”) and Clisbako Minerals Inc. (British Columbia) (“CMI”). All intercompany balances have been eliminated.

Organization

The Company was incorporated in the State of Nevada, U.S.A., on April 28, 2006. The Company’s principal executive offices are in Bellingham, Washington, U.S.A. The Company’s year end is November 30.

Exploration Stage Activities

The Company has been in the exploration stage since its formation and has not yet realized any revenues from its planned operations. The Company was formed for the purpose of acquiring exploration and development stage natural resource properties. The Company has not commenced business operations. The Company is an exploration stage company as defined in the Securities and Exchange Commission (“S.E.C.”) Industry Guide No. 7.

BASIS OF PRESENTATION AND NATURE OF OPERATIONS (Continued)

Forward Stock Split

During the year ended November 30, 2009, the Company completed a three-for-one forward stock split of its common stock. The Company’s authorized common stock was increased from 100,000,000 shares with a par value of $0.001 per share to 300,000,000 shares with a par value of $0.001. Share and per share amounts (except par value) for the periods presented have been adjusted to reflect the effects of this stock split.

Going Concern

The accompanying financial statements have been prepared assuming the Company will continue as a going concern.

As shown in the accompanying financial statements, the Company has incurred a net loss of $722,475 for the period from April 28, 2006 (inception) to February 28, 2010, and has no revenues. The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its natural resource properties. Management has plans to seek additional capital through a private placement and public offering of its common stock. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgement.

The financial statements have, in management’s opinion, been properly prepared within the framework of the significant accounting policies summarized below:

Organization and Start-up Costs

Costs of start up activities, including organizational and incorporation costs, are expensed as incurred.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Exploration Stage Enterprise

The Company’s financial statements are prepared using the accrual method of accounting. Until such properties are acquired and developed, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the exploration stage.

Mineral Property Interests

The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged in the acquisition, exploration and development of mining properties. Exploration costs are expensed as incurred regardless of the stage of development or existence of reserves. Costs of acquisition are capitalized subject to impairment testing when facts and circumstances indicate impairment may exist.

The Company regularly performs evaluations of any investment in mineral properties to assess the recoverability and/or the residual value of its investments in these assets. All long-lived assets are reviewed for impairment whenever events or circumstances change which indicate the carrying amount of an asset may not be recoverable.

Management periodically reviews the carrying value of its investments in mineral leases and claims with internal and external mining related professionals. A decision to abandon, reduce or expand a specific project is based upon many factors including general and specific assessments of mineral deposits, anticipated future mineral prices, anticipated future costs of exploring, developing and operating a producing mine, the expiration term and ongoing expenses of maintaining mineral properties and the general likelihood that the Company will continue exploration on such project. The Company does not set a pre- determined holding period for properties with unproven deposits, however, properties which have not demonstrated suitable metal concentrations at the conclusion of each phase of an exploration program are re-evaluated to determine if future exploration is warranted, whether there has been any impairment in value and that their carrying values are appropriate.

If an area of interest is abandoned or it is determined that its carrying value cannot be supported by future production or sale, the related costs are charged against operations in the year of abandonment or determination of value. The amounts recorded as mineral leases and claims represent costs to date and do not necessarily reflect present or future values.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Mineral Property Interests (Continued)

The Company’s exploration activities are subject to various laws and regulations governing the protection of the environment. These laws are continually changing, generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations.

The accumulated costs of properties that are developed on the stage of commercial production will be amortized to operations through unit-of-production depletion.

Cash

Cash consists primarily of cash on deposit.

Marketable Securities

The Company has designated its marketable securities, comprised of common shares not yet listed on a recognized stock exchange, as held-for-trading securities and reports them at an estimated fair value (see Note 2(p)). The amounts by which future market values of these securities will differ from recorded cost will represent unrealized gains and losses and will be recognized in the Company’s consolidated statement of operations. All realized gains and losses will be recognized in the net income (loss) in the period of disposition.

Computer Equipment

Computer equipment is recorded at cost and will be depreciated over an estimated useful life of three years on a straight-line basis.

Financial Instruments

The Company’s financial instruments include cash, marketable securities, accounts payable and accrued liabilities, amounts due to related parties, amount due to shareholder, promissory notes payable, promissory notes payable to related parties, loan payable and convertible notes. All such instruments are carried at cost, which, due to the short maturity of these financial instruments, approximate fair value at February 28, 2010.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Foreign Currency Translation

The Company’s functional currency is the US dollar. Transactions in a foreign currency are translated into U.S. dollars as follows:

monetary items are translated at the exchange rate prevailing at the balance sheet date;

non-monetary items are translated at the historical exchange rate;

revenue and expense items are translated at the average rate in effect during the applicable accounting period.

Use of Estimates

The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Actual results may differ from the estimates.

Basic and Diluted Loss Per Share

Basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.

The following outstanding convertible notes, stock options, and share purchase warrants were excluded from the diluted EPS computation as their effect would have been anti- dilutive:

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Income Taxes

The Company uses an asset and liability approach for financial accounting and reporting on income taxes. If it is more likely than not that some portion or all of a deferred tax asset will not be realized, a valuation allowance is recognized.

Impairment of Long-Lived Assets

The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. In such cases, the amount of the impairment is determined based on the relative fair values of the impaired assets. The Company tests the recoverability of the assets whenever events or changes in circumstances indicate that its carrying amount may not be recoverable.

Asset Retirement Obligations

An asset retirement obligation (“ARO”) is a legal obligation associated with the retirement of a tangible long-lived asset and is recognized as a liability in the period which it is incurred and becomes determinable, with an offsetting increase in the carrying amount of the associated asset.

The cost of the tangible asset, including the initially recognized ARO, is depleted, such that the cost of the ARO is recognized over the useful life of the asset. The ARO is recorded at fair value, and accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The fair value of the ARO is measured using expected future cash flows, discounted at the Company’s credit-adjusted risk-free interest rate. To date, no significant asset retirement obligation exists due to the early stage of exploration. Accordingly, no liability has been recorded.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Share-based Compensation

The Company accounts for stock-based compensation under the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 718, Stock Compensation, which requires the recognition of the fair value of stock- based compensation. Under the fair value recognition provisions for ASC 718, stock-based compensation cost is estimated at the grant date based on the fair value of the awards expected to vest and recognized as expense ratably over the requisite service period of the award. The Company has used the Black-Scholes valuation model to estimate fair value of its stock-based awards which requires various judgmental assumptions including estimating stock price volatility and expected life. The Company’s computation of expected volatility is based on a combination of historical and market-based volatility. In addition, the Company considers many factors when estimating expected life, including types of awards and historical experience. If any of the assumptions used in the Black-Scholes valuation model change significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period.

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with ASC 718 and the conclusions reached by ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by ASC 505-50.

Environmental Protection and Reclamation Costs

The operations of the Company have been, and may in the future be affected from time to time in varying degrees by changes in environmental regulations, including those for future removal and site restorations costs. Both the likelihood of new regulations and their overall effect upon the Company may vary from region to region and are not predictable.

Environmental expenditures that relate to ongoing environmental and reclamation programs are charged against statements of operations as incurred or capitalized and amortized depending upon their future economic benefits. The Company does not currently anticipate any material capital expenditures for environmental control facilities because its property holding is at an early stage of exploration.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market.

The Company uses a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value as follows:

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair Value of Financial Instruments (Continued)

The following table presents information about the Company’s financial instruments that have been measured at fair value as of February 28, 2010, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair values:

Comparative Figures

Certain comparative figures have been reclassified to conform with the current year’s presentation.

Recent Accounting Pronouncements

In February 2010, FASB issued Accounting Standards Update (“ASU”) 2010-09 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements. ASU 2010-09 removes the requirement for an SEC filer to disclose a date in both issued and revised financial statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective application of GAAP. All of the amendments in ASU 2010-09 are effective upon issuance of the final ASU, except for the use of the issued date for conduit debt obligors. That amendment is effective for interim or annual periods ending after June 15, 2010. The Company adopted ASU 2010-09 in February 2010 and it did not have a material impact on the Company’s interim financial statements.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, amending ASC 820. ASU 2010-06 requires entities to provide new disclosures and clarify existing disclosures relating to fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2010-06, but does not expect its adoption to have a material impact on the Company’s financial position or results of operations.

In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605), Multiple-Deliverable Revenue Arrangements amending ASC 605. ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. ASU 2009-13 eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The Company is currently evaluating the impact of ASU 2009-13, but does not expect its adoption to have a material impact on the Company’s financial position or results of operations.

In June, 2009, the FASB issued Update No. 2009-01, The FASB Accounting Standards Codification^TM (“ASC”) as the source of authoritative U.S. generally accepted accounting principles (GAAP) recognized by the FASB to be applied by nongovernmental entities. This guidance is set forth in Topic 105 (“ASC 105”). Rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of this Statement, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other nongrandfathered non-SEC accounting literature not included in the Codification will become nonauthoritative. This statement is effective for financial statements issued for fiscal years and interim periods ending after September 15, 2009, which, for the Company, is the fiscal year ending November 30, 2009. The adoption of this statement did not have a material effect on its financial results.

SIGNIFICANT ACCOUNTING POLICIES (Continued)

Recent Accounting Pronouncements (Continued)

In May, 2009, the FASB issued ASC 855, Subsequent Events. The new standard is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. This statement is effective for financial statements issued for interim or annual financial periods ending after June 15, 2009, which, for the Company, was the interim period ending August 31, 2009. The adoption of ASC 855 did not have a material effect to the Company’s current practice.

Spelter Claim

During the period ended November 30, 2006, the Company entered into a purchase agreement to acquire an undivided 100% interest in a mineral claim (known as the “Spelter” property) located in the Yellow Pine Mining District, Clark County, Nevada. The consideration was $6,000 cash (paid) on execution of the agreement.

During the year ended November 30, 2008, the Company abandoned and wrote off all costs incurred with respect to the Spelter property.

Clisbako Claims

On December 16, 2008, the Company entered into a purchase agreement to acquire an undivided 100% interest in a group of ten mineral claims (collectively known as the “Clisbako” claims) located in the Cariboo Mining Division of British Columbia, Canada. Consideration for the claims was 6,000,000 shares (issued – see Note 8(a)) of the Company’s common stock with a value of $300,000 and the issuance to the vendor of a promissory note in the amount of $56,600 (CDN$70,000 translated to US$66,584 as at February 28, 2010) payable June 30, 2009. On July 23, 2009, the Company reached an agreement with the vendor to extend the deadline of the promissory note to December 31, 2009. In consideration of the extension of the deadline, the Company issued 60,000 common shares to the vendor with a fair value of $36,000. The promissory note is unsecured and free of interest.

On January 21, 2010, the Company reached an agreement with the vendor to further extend the due date of the promissory note to February 15, 2010. In consideration of the further extension of the deadline, the Company will issue 10,000 shares of its common stock to the vendor (issued subsequent to the period ended February 28, 2010).

MINERAL PROPERTY AND ACQUISITION COSTS (Continued)

Clisbako Claims (Continued)

On March 15, 2010, the Company entered into a third extension agreement dated for reference February 15, 2010, with the vendor to extend the due date of a non-interest bearing promissory note in the amount of CDN $70,000 payable to the vendor from February 15, 2010 to June 30, 2010. In consideration of the extension, the Company agreed to pay $5,000 of the promissory note and issue to the vendor 20,000 common shares (issued subsequent to the period ended February 28, 2010).

Eureka Claims

On May 29, 2009, the Company entered into an assignment agreement to acquire an undivided 100% interest in a series of mineral claims (collectively known as the “Eureka” claims) situated in the Eureka County, Esmeralda County and Mineral County, Nevada. Consideration for the claims is as follows:

150,000 common shares (issued) with a value of $37,500;

$10,000 advance royalty payment due on or before August 28, 2009 (paid);

$15,000 advance royalty payment due on or before August 28, 2010;

$20,000 advance royalty payment due on or before August 28, 2011;

$25,000 advance royalty payment due on or before August 28, 2012;

$30,000 advance royalty payment due on or before August 28, 2013, with an additional $30,000 due each year thereafter for a period of five years.

Manado Gold Claims

On January 19, 2010, the Company entered into an option agreement dated for reference November 2, 2009 (the “Agreement”) to acquire interests in four mineral claims (collectively referred to as the “Manado Gold claims”) in the Lobongan District of Northern Sulawesi, Indonesia.

In consideration of $35,000 (paid) to be paid on execution of this Agreement, the Company has been granted an exclusive right, for a period of 90 days (to January 31, 2010) from the date of execution of this Agreement (the “Due Diligence Period”) to enter into an acquisition agreement (the “Acquisition Agreement”) to acquire up to an 85% undivided interest in the Manado Gold claims. At any time prior to the expiration of the Due Diligence Period, the Company may elect, by notice in writing, to exercise its option to enter into the Acquisition Agreement.

MINERAL PROPERTY AND ACQUISITION COSTS (Continued)

The Acquisition Agreement shall provide for the earning of interests by the Company in the Manado Gold claims by making cash payments, stock issuances and completing work programs as follows:

A 10% interest by:

Making a cash payment of $90,000 on execution of the Acquisition Agreement;

Issuing 150,000 shares of the Company’s common stock on execution of the Acquisition Agreement; and

Completing a mineral exploration program at a cost of not less than $250,000 within one year of the Acquisition Agreement.

An additional 15% interest by:

Making an additional cash payment of $100,000 on the first anniversary of the Acquisition Agreement;

Issuing an additional 300,000 shares of the Company’s common stock on the first anniversary of the Acquisition Agreement; and

Completing an additional mineral exploration program at a cost not less than $500,000 prior to the second anniversary of the Acquisition Agreement.

An additional 26% interest by:

Making an additional cash payment of $200,000 on the second anniversary of the Acquisition Agreement;

Issuing an additional 500,000 shares of the Company’s common stock on the second anniversary of the Acquisition Agreement; and

Completing an additional mineral exploration program at a cost not less than $1,000,000 prior to the third anniversary of the Acquisition Agreement.

An additional 34% interest on completion of a scoping study on the claims.

Upon the Company earning an 85% interest as outlined above, the vendor shall be carried and shall not be obligated to pay their proportionate share of the costs to complete a feasibility study and to place the claims into commercial production. On completion of the feasibility study, the Company shall have the option to acquire the remaining 15% interest for a cash payment of $5,000,000.

On March 29, 2010, the Company and the vendor agreed to extend the Due Diligence Period from January 31, 2010 to April 30, 2010.

MINERAL PROPERTY AND ACQUISITION COSTS (Continued)

June Claims

On February 5, 2010, the Company entered into an option agreement to acquire an undivided 100% interest in a series of mineral claims (collectively known as the “June claims”) situated in the Alberni Mining Division of British Columbia, Canada. Consideration for the claims is as follows:

Payment of $3,000 due on February 5, 2010 (paid);

Payment of $10,000 due on or before May 6, 2010;

Payment of $10,000 and the issuance of 100,000 shares of the Company’s common stock due on or before February 5, 2011;

Payment of $10,000 and the issuance of 100,000 shares of the Company’s common stock due on or before February 5, 2012;

Payment of $10,000 and the issuance of 100,000 shares of the Company’s common stock due on or before February 5, 2013.

PROMISSORY NOTE PAYABLE

The Company entered into a promissory note agreement whereby it borrowed $75,000 from an arm’s length party. The note bears interest at 10% per annum, is unsecured and repayable on demand. As at February 28, 2010, a total of $986 has been accrued as interest on this note.

PROMISSORY NOTES PAYABLE TO RELATED PARTIES

On December 19, 2007, the Company entered into a promissory note whereby it borrowed $20,000. The note is unsecured, repayable on demand and bears interest at 10% per annum, payable annually. As at February 28, 2010, a total of $4,395 has been accrued as interest payable on the loan. During the year ended November 30, 2008, the owner of the company holding the promissory note became an officer and director of the Company.

On August 26, 2009, the Company received two demand loans for a total of $7,000 from companies controlled by an officer and director of the Company. During the year ended November 30, 2009, the Company repaid these loans in full. These notes were unsecured, repayable on demand and free of interest.

LOAN PAYABLE

On October 1, 2008, the Company received a loan from an arm’s length party of $10,000. The loan is unsecured, repayable on demand and bears interest at 10% per annum, payable annually. During the year ended November 30, 2009, the Company paid back $4,610 of this balance. As at February 28, 2010, a total of $1,219 has been accrued as interest payable on the loan.

CAPITAL STOCK

Common Stock

On June 19, 2006, the Company issued 27,000,000 common shares to the Company’s founder (9,000,000 pre-stock split shares at a price of $0.001 for gross proceeds of $9,000).

During the year ended November 30, 2006, pursuant to a private placement, the Company issued 17,997,144 common shares (5,999,048 pre-stock split shares at a price of $0.02 for gross proceeds of $119,981).

During the year ended November 30, 2008, the Company received $80,000 from completing a private placement of 3,000,000 units (1,000,000 pre-stock split units at a price of $0.08 per unit). Each unit was comprised of one share of the Company’s common stock and one share purchase warrant. Each warrant entitles the subscriber to purchase one share of the Company’s common stock for a period expiring two years from the date of issue at an exercise price of $0.033 per share.

During the year ended November 30, 2009, the Company completed the following stock transactions:

issued 6,000,000 common shares pursuant to a mineral property purchase agreement (see Note 4). The Company recorded these shares at a price of $0.05 per share for a total value of $300,000;

issued 150,000 common shares pursuant to a mineral property assignment agreement (see Note 4). The Company recorded these shares at a price of $0.25 per share for a total value of $37,500; and

issued 60,000 common shares pursuant to an extension to a mineral property purchase agreement (see Note 4). The Company recorded these shares at a price of $0.60 per share for a total value of $36,000.

No shares were issued during the three month period ended February 28, 2010.

CAPITAL STOCK (Continued)

Share Purchase Warrants

As at February 28, 2010, share purchase warrants were outstanding for the purchase of common shares as follows:

The fair value of the warrants issued in connection with the private placement during the year ended November 30, 2008 was measured at the award date using the Black-Scholes option pricing model with the following weighted average assumptions: expected dividend yield of 0%; average risk free interest rate of 4.90%; expected volatility of 162% and a term of 0.75 years. Of the total proceeds, $35,700 was allocated to share purchase warrants.

The fair value of the warrants issued during the year ended November 30, 2009 was measured as disclosed in Note 9.

Stock Options

As at February 28, 2010, the Company does not have an incentive stock option plan.

CONVERTIBLE NOTES

On April 30, 2009, the Company issued 55, $2,500 Convertible Notes (the “notes”) in the aggregate amount of $137,500 due and payable on or before October 31, 2010, with interest charged at the rate of 10% per annum payable annually. Attached to the Notes were 550,000 share purchase warrants (10,000 attached to each of the 55 notes). Each warrant entitles the holder to purchase three shares of the Company’s common stock for a period expiring one year from the date of issuance of the notes at an exercise price of $0.25 ($0.083 per share). At the election of the holder, the notes and interest accrued thereon are convertible into such number of shares of the Company’s common stock as shall be equal to the principal amount of the convertible note to be converted divided by $0.05. Conversion of the notes does not affect the warrants.

During the year ended November 30, 2008, the Company had received $67,500 towards the convertible notes offering. During the year end November 30, 2009, the Company received the remaining $70,000 towards this offering.

The Company has allocated the proceeds received between the notes and the detachable warrants on a relative fair value basis. The fair value of the warrants was estimated using the Black-Scholes option pricing model at the date of issue with the following weighted average assumptions: expected dividend yield of 0%; average risk free interest rate of 0.63%; expected volatility of 229% and a term of 1.0 year. The fair value of the notes was estimated by multiplying the number of shares that would result from an immediate exercise of the conversion option, by the market price on the date of issue. The relative fair values of the notes and the warrants determine the debt discount attributable to the warrants. The result was $47,479 of the proceeds being allocated to the warrants and $90,021 being allocated to the notes. The resulting discount on the notes is amortized over the term of the notes to maturity such that, in the absence of any conversions, the carrying value of the notes at maturity would be equal to the face amount of $137,500. In the event of a conversion of any or all of the face amount of the notes, the proportionate amount of the unamortized discount as of the date of conversion is immediately charged to operations.

CONVERTIBLE NOTES (Continued)

In accordance with the provisions of ASC 470 – 20, the Company determines the intrinsic value of the beneficial conversion feature on the notes by comparing the market price of the Company’s common stock at issuance of the notes to the effective conversion price of the notes, as determined by dividing the proceeds allocated to the notes by the number of shares that would result from an immediate exercise of the conversion option. The initial beneficial conversion feature was determined to be $734,250; however, in accordance with the provisions of ASC 470 – 20, it is limited to the proceeds allocated to the notes, being $90,021. This beneficial conversion feature is recorded as an immediate charge to additional paid-in capital and a further discount on the convertible note carrying value. This further discount is amortized over the term of the notes to maturity. In the event of a conversion of any, or all of, the face amount of the notes, the proportionate amount of the unamortized beneficial conversion feature as of the date of conversion is immediately charged to operations.

During the three month period ended February 28, 2010, the Company recorded as finance charges, $7,804 of amortization of the discount resulting from the allocation of proceeds to the warrants and a further $14,799 of the intrinsic value of the beneficial conversion feature, leaving total unamortized amounts of $61,278.

During the three month period ended February 28, 2010, no amounts of principal or accrued interest were converted into shares of the Company’s common stock.

UNIT AND SHARE SUBSCRIPTIONS RECEIVED IN ADVANCE

Unit subscriptions received

During the year ended November 30, 2009, the Company received $18,860 in advance of a private placement. Under the terms of the financing, a total of 188,600 units will be issued at a price of $0.10 per unit. Each unit will consist of one common share and one share purchase warrant, each whole warrant entitling the holder thereof to purchase an additional common share at a price of $0.15 for a period of two years. Due to the provision in the subscription agreements that the subscription funds will constitute non-interest bearing demand loans to the Company in the event the subscriptions are not accepted by the Company, the Company classified the unit subscriptions received in advance as current liabilities.

UNIT AND SHARE SUBSCRIPTIONS RECEIVED IN ADVANCE (Continued)

Share subscriptions received in advance

During the year ended November 30, 2009, the Company received $2,500 towards the exercise of share purchase warrants. A total of 30,000 shares of the Company’s common stock were issued in March 2010.

During the three month period ended February 28, 2010, the Company received $10,000 towards the exercise of share purchase warrants. A total of 120,000 shares of the Company’s common stock will be issued in the following quarter of fiscal 2010.

RELATED PARTY TRANSACTIONS

During the three month period ended February 28, 2010, the Company paid or accrued management fees for services performed in the amount of $9,000 (2009 - $9,000) to the board of directors of MAC.

MARKETABLE SECURITIES AND ADVANCES

The Company entered into a letter of intent dated August 6, 2008 with Magellan Copper and Gold PLC (“Magellan”) to acquire 100% of the issued and outstanding shares of Magellan Resources PTE Ltd. and St. Anthony Resources PTE Ltd. (“Magellan Subsidiaries”). Consideration for the transaction will consist of the following:

MARKETABLE SECURITIES AND ADVANCES (Continued)

On December 15, 2008, the Company decided not to pursue with the letter of intent and entered into an agreement with Solfotara Minerals Corp., a private Canadian company, whereby the Company would transfer their option to acquire the Magellan Subsidiaries for consideration as follows:

$20,000 cash payment within three days of the agreement date (received in February 2009);

$30,000 note receivable due March 15, 2009 and free of interest (received in July 2009);

$50,000 note receivable due June 15, 2009 and free of interest (received in September 2009); and

250,000 shares of common stock (received in February 2009).

The total value attributed to the common stock received from Solfotara Minerals Corp. was $10,367, or approximately $0.04 per share.

COMMITMENTS AND CONTRACTUAL OBLIGATIONS

The Company has no significant commitments or contractual obligations with any parties respecting executive compensation, consulting arrangements or other matters. Rental of premises and investor relations services are provided on a month-to-month basis.

SEGMENT INFORMATION

The Company has one reportable operating segment, being the acquisition and exploration of mineral properties. Details of identifiable assets by geographic segments are as follows:

On March 29, 2010, we entered into a second extension agreement to the Manado Agreement between Agus Abidin and us whereby the parties agreed to extend the expiry of the due diligence period from March 31, 2010 to April 30, 2010. See “Manado Gold Property” below.

On April 5, 2010, our Board of Directors approved amendments to the terms of the outstanding offering of up to 3,000,000 units (the "Foreign Offering") originally approved by our Board of Directors on May 1, 2009. The units and the warrants under the Foreign Private Placement were amended as follows:

the subscription price for each Unit was reduced from $0.20 to $0.10 per Unit;

the warrant exercise price was reduced from $0.30 to $0.15 per share; and

the warrant expiry date was extended from a one year period to a two year period from the date of issuance of the warrant.

Also on April 5, 2010, our Board of Directors approved a private placement offering (the “U.S. Offering”) of up to 5,000,000 units (the “Units”) at a price of $0.10 US per Unit, with each Unit consisting of one share of the our common stock and one share purchase warrant. Each warrant entitles the holder to purchase an additional share of common stock exercisable for a period of two years at a price of $0.15 US per share.

an initial 10% interest in the Manado Gold Property by paying $90,000 and issuing 150,000 shares of our common stock to the Owners on execution of the Acquisition Agreement, and completing a mineral exploration program at a cost of not less than $250,000 prior to the first anniversary of the Acquisition Agreement;

an additional 15% interest in the Manado Gold Property by paying $100,000 and issuing 300,000 shares of our common stock to the Owners on the first anniversary of the Acquisition Agreement, and completing a mineral exploration program at a cost of not less than $500,000 prior to the second anniversary of the Acquisition Agreement;

an additional 26% interest in the Manado Gold Property by paying $200,000 and issuing 500,000 shares of our common stock to the Owner on the second anniversary of the Acquisition Agreement, and completing a mineral exploration program at a cost of not less than $1,000,000 prior to the third anniversary of the Acquisition Agreement; and

an additional 34% interest in the Manado Gold Property by completing a scoping study.

pay to Claremont:

$10,000 on August 28, 2009 (which amount has been paid);

$15,000 on August 28, 2010;

$20,000 on August 28, 2011;

$25,000 on August 28, 2012; and

$30,000 on August 28, 2013 and each subsequent year of the term of the Nevada Option Agreement (the term is for ten years and may be renewed for an additional ten years);

pay the annual claim maintenance fees for the Optioned Properties during the term of the Nevada Option Agreement. The Eureka Optioned Properties are in good standing until September 1, 2010; and

pay $1,000 to Claremont in conjunction with the delivery to Claremont of a copy of a mine plan of operations in respect of the Eureka Optioned Properties, or a final feasibility study in respect of the Optioned Properties.

paying the Optionor US $3,000 on execution of the June Option Agreement, which payment has been made;

paying the Optionor US $10,000 on or before May 6, 2010;

paying the Optionor US $10,000 and issuing 100,000 shares of our common stock on or before February 5, 2011;

paying the Optionor US $10,000 and issuing 100,000 shares of our common stock on or before the February 5, 2012; and

paying the Optionor US $10,000 and issuing 100,000 shares of our common stock on or before February 5, 2013.

contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;

contains a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of securities laws;

contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price;

contains a toll-free telephone number for inquiries on disciplinary actions;

defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and

contains such other information and is in such form, including language, type, size and format, as the SEC shall require by rule or regulation.

Purchase Agreement dated December 15, 2008 among Magellan Acquisition Corp., Solfotara Mining Corp. and Magellan Copper and Gold plc (Magellan Singapore Subsidiaries).⁽⁴⁾

Purchase Agreement dated December 16, 2008 between the Company and Bako Resources Inc. (Clisbako Property).⁽⁴⁾

Extension Agreement dated July 23, 2009 between the Company and Bako Resources Inc.⁽⁷⁾

Assignment Agreement dated May 29, 2009 among the Company, Portal Resources US Inc. and Portal Resources Ltd. (Golden Snow Project, Fish Project and CPG Project)⁽⁶⁾

Agreement dated for reference November 2, 2009 executed on January 19, 2010 between the Company and Agus Abidin (Manado Gold Property).⁽⁸⁾

Second Extension Agreement dated January 21, 2010 between the Company and Bako Resources Inc. (Clisbako Property).⁽⁹⁾

Extension Agreement Dated January 21, 2010 between the Company and Agus Abidin (Manado Gold Property). ⁽¹⁰⁾

Option agreement dated February 5, 2010 between the Company and Larry Sostad (June Claims). (8)

Third Extension Agreement dated March 15, 2010 between the Company and Bako Resources Inc. (Clisbako Property).⁽¹⁰⁾

Second Extension Agreement Dated March 29, 2010 between the Company and Agus Abidin (Manado Gold Property).⁽¹¹⁾

Loan Agreement dated January 11, 2010 between the Company and Laverne Assets Group Corp.

Code of Ethics.⁽³⁾

Letter of Williams & Webster, P.S. (Former Auditor).⁽⁸⁾

List of Subsidiaries.⁽¹⁰⁾

Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer and Chief Financial Officer as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.