Interim Consolidated Balance Sheets as of December 31, 2011 (unaudited) and June 30, 2011 (audited)

Interim Consolidated Statements of Operations and Comprehensive Loss for the six-months and three-months ended December 31, 2011 and December 31, 2010, and for the period from inception to December 31, 2011

Interim Consolidated Statements of Changes in Stockholders’ Equity for the six-months ended December 31, 2011 and for the period from inception to December 31, 2011

Interim Consolidated Statements of Cash Flows for the six-months ended December 31, 2011 and December 31, 2010, and for the period from inception to December 31, 2011

Condensed Notes to Interim Consolidated Financial Statements

For the period from inception (June 3, 1999) through July 1, 2004

Net (loss)

Balance June 30, 2005 (audited)

Contribution to additional paid-in capital

Cancelled shares

Common shares issued for nil consideration

Common shares issued for cash

Subscription for stock

Stock issuance cost

Net loss for the year

Balance June 30, 2006 (audited)

Common shares issued for cash

Common shares issued to agents in lieu of commission for placement of common shares and convertible debentures

Common shares issued for acquisition of interests in mineral claims

Common shares issued for acquisition of interests in mineral claims

Common shares issued for acquisition interests in a refinery

Common shares issued for purchase of a mill with capital equipments

Stock issuance cost

Stock based compensation

Net loss for the year

Balance June 30, 2007 (audited)

Common stock issued to consultants

Stock based compensation

Warrant modification expense

Conversion of convertible debentures with accrued interest

Common shares issued for acquisition of interests in mineral claims

Common stock issued to a consultant

Amortization of deferred stock compensation

Net loss for the year

Balance June 30, 2008 (audited)

Common shares issued for cash (net)

Common stock issued to a consultant

Common stock issued on acquisition of a subsidiary

Common shares issued on warrant exercises

Stock based compensation

Warrant modification expense

Amortization of deferred stock compensation

Net loss for the year

Balance June 30, 2009 (audited)

Common shares issued for cash

Common stock issued on acquisition of a subsidiary

Stock based compensation

Amortization of deferred stock compensation

Net loss for the year

Balance June 30, 2010 (audited)

Common shares issued for cash

Stock based compensation

Common stock options exercised

Net loss for the year

Balance June 30, 2011 (audited)

Common shares issued for cash (net)

Preferred shares converted to common shares

Unrealized loss on marketable securities

Net loss for the period

Balance December 31, 2011 (unaudited)

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Infrastructure Materials Corp. (the “Company”), have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP); however, such information reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto together with Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in the Company’s Annual Report on Form 10-K for the year ended June 30, 2011. In the opinion of management, the accompanying condensed consolidated financial statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at December 31, 2011 and June 30, 2011, the results of its operations for the three and six-month periods ended December 31, 2011 and December 31, 2010, and its cash flows for the six-month periods ended December 31, 2011 and December 31, 2010. In addition, some of the Company’s statements in this Quarterly Report on Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. The results of operations for the six-month period ended December 31, 2011 are not necessarily indicative of results to be expected for the full year.

The condensed consolidated financial statements include the accounts of the Company and its subsidiaries, Infrastructure Materials Corp US (“IMC US”), Silver Reserve Corp. (“SRC” or “Silver Reserve”) and Canadian Infrastructure Corp. (“CIC”). All material inter-company accounts and transactions have been eliminated.

Exploration Stage Activities

The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

The Company is in the exploration stage and has not yet realized revenues from its planned operations. The Company has incurred a cumulative loss of $20,022,279 from inception to December 31, 2011. The Company has funded operations primarily through the issuance of capital stock, convertible debentures and redeemable preferred stock. In May and June of 2006, the Company closed a private placement of shares of its common stock (“Common Shares” or a “Common Share”) for gross proceeds of $415,000. During the year ended June 30, 2007 the Company raised $848,935 (including $300,000 received in the prior year as stock subscriptions) through private placement of Common Shares for cash. The Company also issued Convertible Debentures in the amount of $1,020,862 during the year ended June 30, 2006 and issued Convertible Debentures in the amount of $2,480,205 during the year ended June 30, 2007. During the fiscal year ended June 30, 2009, the Company completed private placements of Common Shares for proceeds of $3,373,000 net of cash expenses and issued Common Shares as a result of warrant exercises for proceeds of $2,225,227. In June 2010 and February 2011 the Company completed private placements of Common Shares for gross proceeds of $1,603,831 and $500,000, respectively. In June 2011 the Company completed a private placement of redeemable preferred stock for gross proceeds of $300,000. In December 2011 the Company completed a public offering in Canada of its common stock for gross proceeds of $2,507,180 (CDN$2,600,000).

Exploration Stage Activities – Cont’d

Management’s plan is to continue raising additional funds through future equity or debt financing until it achieves profitable operations from production of minerals or metals on its properties, if feasible.

Nature of Operations

The Company’s focus is on the exploration and development, if feasible, of limestone, silver and other metals from its claims in the states of Nevada and Arizona and the Canadian province of Manitoba.

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 and exploration of mineral properties. Mineral property acquisition costs are initially capitalized in accordance with ASC 805-20-55-37, previously referenced as the FASB Emerging Issues Task Force ("EITF") Issue 04-2. The Company assesses the carrying costs for impairment under ASC 930 at each fiscal quarter end. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property will be capitalized. The Company has determined that, except for the amount capitalized as Mineral Property Interests for $514,525 (See Note 8, Mineral Property Interests), all property payments are impaired and accordingly the Company has written off the acquisition costs to project expenses. Once capitalized, such costs will be amortized using the units-of-production method over the estimated life of the probable reserve.

To date, mineral property exploration costs have been expensed as incurred. To date the Company has not established any proven or probable reserves on its mineral properties.

The Company’s limestone subsidiary, IMC US, controls 12 limestone projects in Nevada, made up of 658 mineral claims covering approximately 13,594 acres on land owned or controlled by the United States Department of Interior Bureau of Land Management (“BLM”). IMC US has acquired 100% of the Mineral Rights on an additional 1,120 acres, 50% of the Mineral Rights on 7,400 acres, and 25% of the Mineral Rights on 160 acres. IMC US also holds 14 mineral exploration permits covering approximately 7,939 acres at two projects in the state of Arizona.

On December 18, 2008, the Company incorporated a second wholly owned subsidiary in the state of Delaware under its former name, “Silver Reserve Corp.” The Company assigned all fourteen of its silver/base metal projects in Nevada to SRC. As of June 1, 2010, SRC terminated its interest in one of the projects. SRC’s remaining thirteen claim groups contain 472 mineral claims covering approximately 9,710 acres and 10 patented claims and 2 leased patented claims covering approximately 238 acres. SRC also has a milling facility located in Mina, Nevada on six mill site claims covering approximately 30 acres.

In December 2009, the Company further expanded its limestone exploration activities by acquiring CIC, a Canadian corporation, as its wholly-owned subsidiary. At the time of its acquisition by the Company, CIC controlled 95 limestone quarry leases issued by the province of Manitoba, Canada, covering 6090 hectares (15,049 acres). The Company acquired CIC pursuant to a Share Exchange Agreement (the “CIC Agreement”) between the Company, CIC and Todd D. Montgomery dated as of December 15, 2009.

Nature of Operations – Cont’d

Mr. Montgomery was the sole shareholder of CIC. Because Mr. Montgomery is also the Company’s Chief Executive Officer and a member of its Board of Directors, the CIC Agreement was approved by the disinterested members of the Company’s Board of Directors on November 27, 2009, after obtaining an independent appraisal and market study for the properties. Under the terms of the CIC Agreement, the Company acquired all of the issued and outstanding stock of CIC in exchange for 1,021,777 shares of the Company’s common stock. The CIC Agreement closed on February 9, 2010. Also see Note 8, Mineral Property Interests. In January 2011 and May 2011, the Company decided to forfeit a total of 60 quarry leases covering approximately 3,709 hectares (9,166 acres). As of December 31, 2011, CIC controls 35 quarry leases covering 2,381 hectares (5,883 acres).

The Company has not yet determined that any of its claims, mineral rights, mineral exploration permits or quarry leases can be economically developed and has expensed related costs to project expense. The Company’s assessment of the claims, mineral exploration permits, mineral rights and quarry leases may change after further exploration.

Fair Value of Financial Instruments

The fair values of financial assets measured in the balance sheet as of December 31, 2011 are as follows:

Fair Value of Financial Instruments – Cont’d

The fair values of financial assets measured in the balance sheet as of June 30, 2011 are as follows:

Restricted Cash

Amounts reflected as Restricted Cash represent collateral pledged toward reclamation liabilities assessed by the BLM. Periodically, the BLM may require the Company to pledge additional cash collateral or the Company may be allowed to remove restrictions on this cash by completing its reclamation obligations, as the case may be.

Reclamation Deposit

The Company posted a reclamation bond of $240,805 pursuant to the Plan of Operations for its Blue Nose limestone project, as required by the BLM to secure remediation costs if the project is abandoned or closed. The Company must complete certain reclamation work for these funds to be released, but may leave the bond in place for future exploration programs, even if such reclamation work is completed.

Plant and Equipment, Net

Plant and equipment are recorded at cost less accumulated depreciation. Depreciation is provided commencing in the month following acquisition using the following annual rate and method:

Mineral Property Interests

The Company entered into an agreement to acquire CIC as a wholly-owned subsidiary, pursuant to the CIC Agreement between the Company, CIC and Todd D. Montgomery dated as of December 15, 2009. Under the terms of the CIC Agreement, the Company acquired all of the issued and outstanding stock of CIC in exchange for 1,021,777 shares of the Company’s common stock. The CIC Agreement closed on February 9, 2010.

Mineral Property Interests – Cont’d

The Company accounted for the acquisition of CIC as a business combination under the acquisition method as discussed in FASB ASC Topic 805. ASC 805 requires acquisition-date fair value measurement of identifiable assets, liabilities assumed and non-controlling interests in the acquiree. The only assets acquired were CIC’S quarry leases having a fair value of $514,525 (CAD $550,000) that were recorded as an asset, “Mineral Property Interests,” on the date of acquisition. The Company obtained an independent appraisal and market study to determine the fair value of the quarry leases acquired. The stock of the Company traded at $0.27 per share on February 9, 2010, and the Company recorded a $275,880 increase in shareholders’ equity reflecting the issuance of 1,021,777 Common Shares in exchange for all of the issued and outstanding shares of CIC. There were no liabilities assumed by the Company and no non-controlling interests in CIC, yielding a bargain purchase price of $238,645 that was recorded as Other Income in the Company’s Consolidated Statements of Operations and Comprehensive Loss. Costs incurred in connection with the acquisition were expensed.

Amounts recognized as assets as of the acquisition date:

Note Payable

As of August 24, 2011, the Company borrowed $100,000 from Mont Strategies Inc., a corporation that is owned and controlled by Todd D. Montgomery, the Company’s Chief Executive Officer and a member of its Board of Directors. The loan was made pursuant to a demand promissory note that bore interest at a rate of four percent (4%) per annum and had a maturity date of August 24, 2013, the second anniversary of such promissory note. On December 27, 2011, the Company retired the promissory note by paying Mont Strategies Inc. the principal amount of the note along with accrued interest. For the six-month period ended December 31, 2011, the Company recorded interest expense of $1,381 for the promissory note.

Deferred Revenue and Marketable Securities

On February 25, 2011, SRC entered into an option and joint venture agreement (the “IMMI Option Agreement”) with International Millennium Mining Inc. (“IMMI”), a wholly-owned subsidiary of International Millennium Mining Corp. (“IMMC”), to sell an 85% interest in SRC’s NL Extension Project Claim Group (the “NL Project”) for total consideration of $350,000 and 1,925,000 shares of IMMC’s common stock (the “Consideration”). The NL Project consists of 18 mineral claims located in Esmeralda County, Nevada, approximately 6 miles southwest of Silver Peak, Nevada on Highway 47. Under the terms of the IMMI Option Agreement, the Consideration is payable over a five-year period that ends on September 15, 2015, with IMMI’s interest in the NL Project vesting at the end of such period. As of June 30, 2011, the Company had received Consideration of $93,429, consisting of 275,000 shares of IMMC’s common stock with a fair market value of $68,429 that was recorded as Marketable Securities in the Company’s Consolidated Balance Sheets and $25,000 in cash. On September 2, 2011, the Company received Consideration of $100,164 consisting of 300,000 shares of IMMC’s common stock with a fair market value of $65,164 and $35,000 in cash. Because IMMI’s interest in the NL Project vests at the end of the five-year period, this Consideration is accounted for in the Consolidated Balance Sheets as Deferred Revenue, a non-current liability. The unrealized loss of $54,437 arising from the reduction in the market value of the Company’s shares of IMMC’s common stock as of December 31, 2011, is accounted for in the Stockholders’ Equity section of the Consolidated Balance Sheets as Accumulated Other Comprehensive Loss.

On August 24, 2011, SRC entered into an option agreement dated as of August 19, 2011 (the “MGold Option Agreement”) with MGold Resources Inc. (“MGold”), pursuant to which MGold will have an option (the “Option) to earn a 50% interest in each of SRC’s Silver Queen Claim Group (the “Silver Queen Property”) and Klondyke Claim Group (the “Klondyke Property”) after expenditure of certain Option Costs and the full payment of the Cash Consideration, as defined below. The Silver Queen Property consists of 147 mineral claims and the Klondyke Property consists of 118 mineral claims, with both Properties located in Esmeralda County, Nevada. The MGold Option Agreement was preceded by a Letter of Intent between SRC and MGold dated as of June 8, 2011. Under the terms of the MGold Option Agreement, MGold is required to advance exploration expenditures totaling CDN$4,000,000 with regards to the Silver Queen Property and CDN$1,350,000 with regards to the Klondyke Property (together, the “Option Costs”). MGold also will make total cash payments to SRC of CDN$2,000,000 for the Silver Queen Property and CDN$265,000 for the Klondyke Property (together, the “Cash Consideration”). The Option Costs are to be made over a period of 30 months, and the Cash Consideration is to be paid over a period of 33 months. Upon full expenditure of the Option Costs and payment of the total Cash Consideration, the Option can be exercised and MGold will hold a 50% equity interest in each of the Silver Queen Property and Klondyke Property. Following exercise of the Option, SRC and MGold will enter into a joint venture with regards to the operation of the properties. During the period prior to the exercise of the Option, MGold has the right to discontinue its Option with respect to either property and retain its Option with respect to the other property. On September 26, 2011, the Company received $145,875 (CDN$150,000) and $29,175 (CDN$30,000) from MGold representing the first Cash Consideration payments for the Silver Queen Property and the Klondyke Property, respectively. Because MGold’s interests in the Silver Queen and Klondyke Properties vest at the end of the 33-month period, this Cash Consideration is accounted for in the Consolidated Balance Sheets as Deferred Revenue, a non-current liability.

Deferred Revenue and Marketable Securities – Cont’d

The components of Deferred Revenue are summarized as follows:

Asset Retirement Obligation

The Company is required to recognize a liability for its legal obligation to perform reclamation and disturbance monitoring activities once any of its projects are abandoned or closed. Although these activities are conditional upon future events, the Company is required to make a reasonable estimate of the fair value of the liability. Based on the existing level of ground disturbance and monitoring requirements, the discounted asset retirement obligation ("ARO") was estimated to be $22,455 as of June 30, 2011, assuming payments made over a three year period. Determination of the undiscounted ARO and the timing of these obligations were based on internal estimates using information currently available and existing regulations.

At the end of each reporting period, ARO’s are equal to the present value of all estimated future costs required to remediate any ground disturbances that exist as of the end of the period, using discount rates applicable at the time of initial recognition of each component of the liability. A liability for an asset retirement obligation may be incurred over more than one reporting period if the events that create the obligation occur over more than one reporting period. Any incremental liability incurred in a subsequent reporting period will be considered to be an additional layer of the original liability. Each layer will be initially measured at fair value. Included in this liability are the costs of reclamation and monitoring and maintenance costs. A discount rate of 10% was determined to be applicable. The Company recorded accretion expense of $1,122 for the six-month period ended December 31, 2011. The Company’s entire ARO as of December 31, 2011 and June 30, 2011 relates to the Company’s Blue Nose limestone project.

Redeemable Preferred Stock

Redeemable preferred stock represents preferred stock that is either redeemable for cash on a specific date or contingently redeemable for cash for events that are not within the control of management. Preferred stock where redemption for cash is certain to occur is classified in liabilities. The Company currently has no preferred stock classified in liabilities. The Company’s Series A Convertible Preferred Stock was redeemable preferred stock and was required to be classified outside of stockholders’ equity (in the mezzanine section). Redeemable preferred stock as of June 30, 2011 equaled $300,000.

Terms, Features and Conditions of the Company’s Series A Redeemable Preferred Stock:

Redeemable Preferred Stock – Cont’d

contract, with all features included, was more akin to an equity instrument or a debt instrument. Significant indicators of equity were that the instrument did not have a term or a maturity date; it was a perpetual financial instrument, the non-existence of a cumulative dividend feature and the existence of voting rights based upon the if-converted number of Common Shares. The sole indicator of debt was the Holder’s ability to redeem the preferred stock upon the occurrence of a specific event. The weight of these indicators led the Company to the conclusion that the hybrid contract was more akin to an equity instrument. Accordingly, the conversion option does not require bifurcation because its risks and the risks of the hybrid are clearly and closely related.

Further consideration of the classification of the Series A Preferred Stock as either equity or mezzanine was required. Generally, redeemable instruments, where redemption is either stated or outside the control of management, require classification outside of stockholders’ equity. Because the instrument was redeemable at any time on or after the first anniversary of the closing absent the Company’s ability to net share settle, the instrument was required to be classified outside of stockholders’ equity in the mezzanine.

On September 29, 2011, all of the outstanding shares of the Company’s Series A Preferred Stock were converted to Common Shares. Also see Note 13, Issuance of Common Shares.

Issuance of Common Shares

The Company held an annual meeting of shareholders on July 29, 2011. At the meeting, among other actions, the shareholders of the Company approved and adopted an amendment increasing the number of authorized Common Shares to 500,000,000. On August 1, 2011 the Company filed with the Secretary of State of the State of Delaware a certificate of amendment (the “Amendment”) to the Company’s certificate of incorporation containing the change in the number of authorized Common Shares approved by shareholders on July 29, 2011. The Amendment increased the number of authorized Common Shares, par value $0.0001, from 100,000,000 to 500,000,000.

Six-month period ended December 31, 2011

On September 29, 2011, 2,608,696 outstanding shares of the Company’s Series A Preferred Stock were converted to 2,608,696 Common Shares, which results in an increase of $261 and $299,739 to common stock and additional paid-in capital, respectively. Also see Note 12, Redeemable Preferred Stock.

On December 16, 2011, the Company completed the sale of 26,000,000 Common Shares to the public in Canada at a price of $0.096 (CDN$0.10) per share to raise gross proceeds of $2,507,180 (CDN$2,600,000). The shares were sold pursuant to a long form prospectus filed in the Canadian provinces of Alberta, Saskatchewan, British Columbia and Ontario. PI Financial Corp. (“PI Financial”) acted as lead agent and received a corporate finance fee of $14,464 (CDN$15,000), was reimbursed $127,529 (CDN$132,250) for its expenses, was paid cash commissions $20,236 (CDN$20,985) and received non-transferable agent’s options valued at $14,644 entitling PI Financial to acquire 209,850 Common Shares at a price of $0.096 (CDN$0.10) per share exercisable for 24 months. The fair value of the agent’s options was determined using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 1.63%, expected dividend yield of 0%, annualized volatility of 142.45% and expected life of two years. In connection with the offering, in addition to payments made to PI Financial, the Company incurred legal and other direct expenses, which resulted in net proceeds from the offering of $2,215,399.

Issuance of Common Shares – Cont’d

The foregoing sale of securities was made entirely outside the United States pursuant to an exemption afforded by Regulation S promulgated under the Securities Act. Following the sale of our securities in Canada, the Company’s Common Shares were listed for trading on the TSX-V exchange under the symbol “IFM.” The Company’s Common Shares continue to be traded in the United States on the OTC Bulletin Board under the symbol “IFAM.”

Year ended June 30, 2011

On September 30, 2010, the Company issued 50,000 Common Shares pursuant to the exercise of options granted in accordance with its employee stock option plan (the “2006 Stock Option Plan”). Also see Note 14, Stock Based Compensation.

On February 8, 2011, the Company completed a private placement (the “Private Placement”) of 2,083,333 Common Shares at a price of $0.24 per share for total consideration of $500,000. The Private Placement was exempt from registration under the Securities Act pursuant to an exemption afforded by Regulation S. The sole investor (the “Investor”) participating in the private placement was a non-U.S. corporation that is owned and controlled by Todd D. Montgomery, the Company’s Chief Executive Officer and a member of its Board of Directors. The Investor and Mr. Montgomery are not “U.S. Person(s)” as that term is defined in Regulation S.

Stock Based Compensation

In April of 2006, the Board of Directors approved the Company’s 2006 Stock Option Plan, the purpose of which was to enhance the Company’s stockholder value and financial performance by attracting, retaining and motivating the Company’s officers, directors, key employees and consultants and to encourage stock ownership by such individuals by providing them with a means to acquire a proprietary interest in the Company’s success through stock ownership.

The Company held an annual meeting of shareholders on July 29, 2011. At the meeting, among other actions, the shareholders of the Company approved the amendment and restatement of the 2006 Stock Option Plan resulting in the Company’s Amended Stock Option Plan (the “Amended Plan”). The Amended Plan replaces the Company’s 2006 Stock Option Plan and no further options will be issued under the 2006 Stock Option Plan. The terms of the Amended Plan include, among others, that (a) officers, directors, employees and consultants who provide services to the Company may be granted options to acquire the Company’s Common Shares at the fair market value of the stock on the date of grant, (b) options may have a term of up to 10 years, (c) the Company may issue options in a number up to a maximum of 10% of the outstanding Common Shares, and (d) outstanding stock options previously granted pursuant to the 2006 Stock Option Plan will remain in effect and be exercisable in accordance with, and be deemed to be issued under, the terms of the Amended Plan.

Six-month period ended December 31, 2011

No options were granted pursuant to the 2006 Stock Option Plan or the Amended Plan during the six-month period ended December 31, 2011.

Stock Based Compensation – Cont’d

On August 31, 2011, 250,000 options that were not granted pursuant to the Company’s 2006 Stock Option Plan or the Amended Plan expired.

On December 16, 2011, in connection with the sale in Canada of 26,000,000 Common Shares (See Note 13, Issuance of Common Shares), the Company issued 209,850 non-transferable Agent’s Options valued at $14,644 to PI Financial, the lead agent in the Canadian offering. Each Agent’s Option entitles PI Financial to acquire one Common Share at a price of $0.096 (CDN$0.10) per share and is exercisable for a period of 24 months. The fair value of the agent’s options was determined using the Black-Scholes option pricing model with the following assumptions: risk-free rate of 1.63%, expected dividend yield of 0%, annualized volatility of 142.45% and expected life of two years. These Agent’s Options were not granted pursuant to the Company’s 2006 Stock Option Plan or the Amended Plan.

The following table summarizes the options outstanding at December 31, 2011:

As of December 31, 2011, there was no unrecognized expenses related to non-vested stock-based compensation arrangements granted. There was no stock-based compensation expense for the six-month period ended December 31, 2011.

Commitments and Contingencies

On August 1, 2006, the Company acquired the Pansy Lee Claims Group from Anglo Gold Mining Inc. in exchange for 1,850,000 Common Shares pursuant to an Asset Purchase Agreement dated August 1, 2006 (the “Pansy Lee Purchase Agreement”). Pursuant to the Pansy Lee Purchase Agreement, a 2% net smelter royalty pertains to 8 of the 30 claims in this group. In the event that any one or more of the 8 claims becomes a producing claim, our revenue is subject to a 2% net smelter return royalty where net smelter returns are based upon gross revenue. Gross revenue would be calculated after commercial production commences and includes the aggregate of the following amounts: revenue received by the Company from arm’s length purchasers of all mineral products produced from the property, the fair market value of all products sold by the Company to persons not dealing with the Company at arms length and the Company’s share of the proceeds of insurance on products. From such revenue, the Company would be permitted to deduct: sales charges levied by any sales agent on the sale of products; transportation costs for products; all costs, expenses and charges of any nature whatsoever which are either paid or incurred by the Company in connection with the refinement and beneficiation of products after leaving the property and all insurance costs and taxes.

Commitments and Contingencies – Cont’d

On September 14, 2007, the Company engaged Lumos & Associates, Inc. (“Lumos”) to complete the regulatory permitting process for the Company’s Mill in Mina, Nevada. The estimated total consideration to be paid under the contract was $351,300 and was subsequently increased to $366,800. The permitting process is being carried out in twelve stages. The completion date has not been determined. The Company is required to authorize in writing each stage of the work before the work proceeds. In December 2010 this contract was assigned by Lumos to Tetra Tech, Inc. by mutual agreement of the Company, Lumos, and Tetra Tech, Inc. As of December 31, 2011, the Company had recorded total expenses of $364,795 for this contract (June 30, 2011 -$353,450).

The Company obtained 25 mineral claims (the “Option Claims”), located in Elko County, Nevada pursuant to an option agreement (the “Option Agreement”) dated as of May 1, 2008 (the “Date of Closing”) with Nevada Eagle Resources, LLC and Steve Sutherland (together, the “Optionees”). The provisions of the Option Agreement included, among others, payments of specified annual amounts ranging from $10,000 to $80,000 by the Company to the Optionees over a period of ten years. Effective June 1, 2010, the Company and the Optionees agreed to terminate the Company’s interests in the Option Claims pursuant to (1) payment by the Company of $8,750 to each of the Optionees, (2) performance by the Company of such reclamation and remediation as required to discharge the surface management bond posted by the Company pursuant to a Notice of Intent filed with the BLM prior to undertaking exploration activity on the Option Claims, and (3) conveyance by the Company to Nevada Eagle Resources, LLC of the 124 mineral claims staked by the Company after the Date of Closing that are within the Area of Interest described in the Option Agreement. As of December 31, 2011, the undertakings described in (1) and (3) above have been completed and (2) above is in progress. The 25 Option Claims together with 124 mineral claims staked by the Company have been referred to by the Company as the “Medicine Claim Group.”

Effective as of June 23, 2008, the Company appointed Mason Douglas as the President of the Company. Mr. Douglas is also a director of the Company. In connection with the appointment, the Company entered into a consulting services agreement with a corporation that is controlled by Mr. Douglas (the “Consulting Agreement”). The Consulting Agreement has a term of one year and is then automatically renewable. Either party may terminate the Consulting Agreement upon 90 days notice to the other party. During the term of the Consulting Agreement the Company will pay a fee of $8,500 per month and reimburse related business expenses. Mr. Douglas does not receive a salary from the Company.

On December 8, 2008 IMC US entered into a Mineral Rights Lease Agreement (the “Edgar Lease Agreement”) with the Earl Edgar Mineral Trust (“Edgar”) to lease certain mineral rights in Elko County, Nevada described below (the “Edgar Property”). The term of the Edgar Lease Agreement is ten years and will automatically renew on the same terms and conditions for additional ten-year periods, provided IMC US is conducting exploration, development or mining either on the surface or underground at the property. The rent is to be paid each year on January 1st. $1.00 per net acre was paid upon execution of the Edgar Lease Agreement. On January 1 of each year commencing in 2010 and extending for so long as the Edgar Lease Agreement is in effect, IMC US is obligated to make the following payments:

Commitments and Contingencies – Cont’d

Commitments and Contingencies – Cont’d

Also as of January 15, 2010, IMC US entered into a Mineral Rights Agreement with Eugene M. Hammond (the “Hammond Mineral Rights Agreement”) pursuant to which the Company purchased a 25% interest in any and all minerals extracted from 160 acres (the “Hammond Mineral Rights Property”) covered by the Hammond Mineral Rights Agreement. The purchase price was $400. In addition, the seller is entitled to receive a royalty of $0.125 per ton on material mined and removed from the Hammond Mineral Rights Property. The Hammond Mineral Rights Agreement does not cover petroleum.

Effective July 1, 2010, the Company entered into an employment agreement with an individual to provide business and administrative services. The employment agreement has a term of one year and is automatically renewable thereafter. Either party may terminate the employment agreement upon 60 days notice. During the term of the employment agreement the Company will pay the individual no less than $6,083 per month and reimburse related business expenses.

Effective July 1, 2010, the Company entered into an employment agreement with an individual to provide receptionist and administrative services at its Reno, Nevada corporate headquarters. The employment agreement has a term of one year and is automatically renewable thereafter. Either party may terminate the employment agreement upon 30 days notice. Pursuant to this employment agreement, the Company will pay no less than $51,000 per year for such services.

On February 25, 2011, SRC entered into an option and joint venture agreement (the “IMMI Option Agreement”) with International Millennium Mining Inc. (“IMMI”), a wholly-owned subsidiary of International Millennium Mining Corp. (“IMMC”), to sell an 85% interest in SRC’s NL Extension Project Claim Group (the “NL Project”) for total consideration of $350,000 and 1,925,000 shares of IMMC’s common stock (the “Consideration”). The NL Project consists of 18 mineral claims located in Esmeralda County, Nevada, approximately 6 miles southwest of Silver Peak, Nevada on Highway 47. Under the terms of the IMMI Option Agreement, the Consideration is payable over a five-year period that ends on September 15, 2015, with IMMI’s interest in the NL Project vesting at the end of such period. In the event of early termination, IMMI is not entitled to the return of Consideration previously paid to SRC. If the NL Project is determined to be economically feasible, based upon criteria contained in the IMMI Option Agreement, SRC will be required to fund its portion of an operating budget proposed by IMMI in order to retain its 15% interest in the NL Project and to acquire a 15% interest in IMMI’s Nivloc Mine Project (the NL Project and the Nivloc Mine Project, collectively, the “IMMI Project”). In the event that SRC decides not to fund its portion of the budget, its 15% interest would be forfeited, but SRC would be entitled to a 2% net smelter return royalty if and when the IMMI Project enters the production phase. Upon funding of the operating budget and SRC’s acquisition of a 15% interest in the IMMI Project, SRC and IMMI would enter into a joint venture agreement.

On August 24, 2011, SRC entered into an option agreement dated as of August 19, 2011 (the “MGold Option Agreement”) with MGold Resources Inc. (“MGold”), pursuant to which MGold will have an option (the “Option) to earn a 50% interest in each of SRC’s Silver Queen Claim Group (the “Silver Queen Property”) and Klondyke Claim Group (the “Klondyke Property”) after expenditure of certain Option Costs and the full payment of the Cash Consideration, as defined below. The Silver Queen Property consists of 147 mineral claims and the Klondyke Property consists of 118 mineral claims, with both Properties located in Esmeralda County, Nevada. The MGold Option Agreement was preceded by a Letter of Intent between SRC and MGold dated as of June 8, 2011. Under the terms of the MGold Option Agreement, MGold is required to advance exploration expenditures totaling CDN$4,000,000 with regards to the Silver Queen Property and CDN$1,350,000 with regards to the Klondyke Property (together, the “Option Costs”). MGold also will make total cash payments to SRC of CDN$2,000,000 for the Silver Queen Property and CDN$265,000 for the Klondyke Property (together, the “Cash Consideration”). The Option Costs are to be made over a period of 30 months, and the Cash Consideration is to be paid over a period of 33 months. Upon full expenditure of the Option Costs and payment of the total Cash Consideration, the Option can be exercised and MGold will hold a 50% equity interest in each of the Silver Queen Property and Klondyke Property. Following exercise of the Option, SRC and MGold will enter into a joint venture with regards to the operation of the properties. During the period prior to the exercise of the Option, MGold has the right to discontinue its Option with respect to either property and retain its Option with respect to the other property.

Commitments and Contingencies – Cont’d

On September 1, 2011, SRC engaged Tetra Tech, Inc. to complete the exploration permitting activities for its Silver Queen property near Silver Peak, Nevada. The estimated total consideration to be paid under the agreement is $68,900. As of December 31, 2011, the Company had recorded total expenses of $7,854 for this contract.

As of November 4, 2011, the Company engaged Railroad Industries Incorporated to perform a detailed market study for specific types of cement that could potentially be produced at the Company’s Blue Nose limestone project. The cost of the study is estimated to be between $33,115 and $45,510, depending on the number of hours required. As of December 31, 2011, the Company had recorded total expenses of $33,624 for this contract.

The Company has entered into operating leases for its office space and certain office furniture and equipment. Rent payments associated with those leases for the six-month periods ended December 31, 2011, and December 31, 2010, were $15,467 and $15,863, respectively. As of December 31, 2011, the Company’s estimated future minimum cash payments under non-cancelable operating leases for the years ending June 30, 2012, June 30, 2013, and June 30, 2014, are $12,414, $23,138, and $9,500, respectively.

Maintaining Claims in Good Standing

The Company is required to pay to the BLM on or before September 1^st of each year, a fee in the amount of $140 per mineral claim held by the Company. The total amount paid on August 30, 2011, was $148,680 for 1,062 claims held by the Company at that date. The BLM fee for the 18 NL Project claims held by the Company were paid by IMMI pursuant to the IMMI Option Agreement described above.

The Company is also required to pay on or before November 1^st of each year, annual fees to counties in Nevada in which the claims are held. In September 2011, the Company paid $11,190 to nine counties in Nevada for annual claims-related fees.

The Company also holds 10 patented claims and 2 leased patented claims in Nevada. A patented claim is fee simple title to the property. Patented claims are subject to taxes assessed by the local community based on assessment rates set annually.

Commitments and Contingencies – Cont’d

As of December 31, 2011, the Company holds 14 mineral exploration permits covering 20 sections or portions of sections in the state of Arizona. Mineral exploration permits have a duration of one year from the date of issuance. The permits can be renewed for up to four additional one-year terms for a total of five years and provide the holder of the permit with an exclusive right to explore for minerals within the state land covered by the permit and to apply for mineral leases to such land. The holder of a permit may remove from the land only the amount of material required for sampling and testing and is responsible for any damage or destruction caused by the holder’s exploration activities. The holder of a permit is entitled to ingress and egress to the covered site along routes approved by the Arizona State Land Department. IMC US has posted a bond required by the state of Arizona to back any reclamation required as a result of work performed. The permit is renewable if the holder has expended not less than $10.00 per acre during each of the first two year-long periods and $20.00 per acre during each of the next three year-long periods. Each permit fee is $500 per year plus $2.00 per acre for the first two years and $1.00 per acre per year for the following three years. Upon termination of a mineral exploration permit, the state of Arizona is entitled to information collected by the permit holder. In the event that a permit holder discovers a valuable mineral deposit, the permit holder may apply to the Arizona State Land Department for a mineral lease having a term of 20 years and renewable for an additional 20 years. A permit holder shall be the preferred recipient of the mineral lease, provided that all applicable requirements are met. A mineral lease entitles the lessee to develop and establish a mine on the leased premises, provided that a mine plan and all necessary approvals are obtained.

Each of the Company’s quarry leases located in Manitoba, Canada is renewable annually upon payment of rent to the province of Manitoba in the amount of CDN$24 per hectare or fraction thereof. During the fiscal year ended June 30, 2011, the Company paid CDN$57,504 in rent for these leases.

Related Party Transactions

There are no amounts owed to or from related parties as of December 31, 2011, or June 30, 2011.

The following transactions were undertaken in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the Company and the related parties.

Six-months ended December 31, 2011

A corporation owned and operated by the Company’s President who is also a member of the Company’s Board of Directors, received $51,000 for the President’s services.

The Company recorded expenses of $20,553 for legal services rendered and expenses incurred on behalf of the Company by a law firm, a partner of which is also a member of the Company’s Board of Directors. In addition the same law firm was paid $70,853 for legal services rendered and expenses incurred on behalf of the Company that were capitalized as costs for raising capital.

The Company’s Chief Financial Officer received $12,382 for consulting services provided to the Company.

Related Party Transactions – Cont’d

The Company’s Corporate Secretary received $28,500 for administrative services provided to the Company.

The Company recorded interest expense of $1,381 pursuant to a promissory note issued to a corporation that is owned and controlled by the Company’s Chief Executive Officer who is also a member of its Board of Directors. Also see Note 9, Note Payable.

Six-months ended December 31, 2010

A corporation owned and operated by the Company’s President who is also a member of the Company’s Board of Directors, received $51,000 for the President’s services.

The Company’s Chief Financial Officer received $11,758 for consulting services provided to the Company.

The Company’s Corporate Secretary received $27,575 for administrative services provided to the Company.

)

$

 (1,704,437

recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms, and

accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

THE COMPANY HAS NO SOURCE OF OPERATING REVENUE AND EXPECTS TO INCUR SIGNIFICANT EXPENSES BEFORE ESTABLISHING AN OPERATING COMPANY, IF IT IS ABLE TO ESTABLISH AN OPERATING COMPANY AT ALL.

Currently, the Company has no source of revenue, limited working capital and no commitments to obtain additional financing. The Company will require additional working capital to carry out its exploration programs. The Company has no operating history upon which an evaluation of its future success or failure can be made. The ability to achieve and maintain profitability and positive cash flow is dependent upon:

further exploration of our properties and the results of that exploration.

raising the capital necessary to conduct this exploration and preserve the Company’s Properties.

raising capital to develop our properties, establish a mining operation, and operate this mine in a profitable manner if any of these activities are warranted by the results of our exploration programs and a feasibility study.

Because the Company has no operating revenue, it expects to incur operating losses in future periods as it continues to spend funds to explore its properties. Failure to raise the necessary capital to continue exploration could cause the Company to go out of business.

WE WILL NEED TO RAISE ADDITIONAL FINANCING TO COMPLETE FURTHER EXPLORATION

We will require significant additional financing in order to continue our exploration activities and our assessment of the commercial viability of our properties. There can be no assurance that we will be successful in our efforts to raise these require funds, or on terms satisfactory to us. The continued exploration of current and future mineral properties and the development of our business will depend upon our ability to establish the commercial viability of our properties and to ultimately develop cash flow from operations and reach profitable operations. We currently are in an exploration stage and we have no revenue from operations and we are experiencing significant cash outflow from operating activities. If we are unable to obtain additional financing, we will not be able to continue our exploration activities and our assessment of the commercial viability of our precious metal and mineral properties.

WE HAVE NO RESERVES AND WE MAY FIND THAT OUR PROPERTIES ARE NOT COMMERCIALLY VIABLE

Our properties do not contain reserves in accordance with the definitions adopted by the Securities and Exchange Commission, and there is no assurance that any exploration programs that we undertake will establish reserves. All of our mineral properties are in the exploration stage as opposed to the development stage and have no known body of economic mineralization. The known mineralization at these projects has not yet been determined, and may never be determined to be economic. We plan to conduct further exploration activities on our properties, which future exploration may include the completion of feasibility studies necessary to evaluate whether a commercial mineable mineral exists on any of our properties. There is a substantial risk that these exploration activities will not result in discoveries of commercially recoverable quantities of minerals. Any determination that our properties contain commercially recoverable quantities of minerals may not be reached until such time that final comprehensive feasibility studies have been concluded that establish that a potential mine is likely to be economic. There is a substantial risk that any preliminary or final feasibility studies carried out by us will not result in a positive determination that our mineral properties can be commercially developed.

WE HAVE A HISTORY OF OPERATING LOSSES AND THERE CAN BE NO ASSURANCES WE WILL BE PROFITABLE IN THE FUTURE.

We have a history of operating losses, expect to continue to incur losses, and may never be profitable. Further, we have been dependent on sales of our equity securities and debt financing to meet our cash requirements. We have incurred losses totaling $20,022,279 from inception to December 31, 2011, and incurred losses of $563,502 during the six-month period ended December 31, 2011. Further, we do not expect positive cash flow from operations in the near term. There is no assurance that actual cash requirements will not exceed our estimates. In particular, additional capital may be required in the event that: (i) the costs to acquire additional mineral exploration claims are more than we currently anticipate; or (ii) exploration and or future potential mining costs for additional claims increase beyond our expectations.

THE RISKS ASSOCIATED WITH EXPLORATION COULD CAUSE PERSONAL INJURY OR DEATH, ENVIRONMENTAL DAMAGE AND POSSIBLE LEGAL LIABILITY.

We are not currently engaged in mining operations because we are in the exploration phase. However, our exploration operations could expose the Company to liability for personal injury or death, property damage or environmental damage. Although we carry property and liability insurance, cost effective insurance contains exclusions and limitations on coverage and may be unavailable in some circumstances.

BECAUSE OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN MINERAL EXPLORATION VENTURES AND CURRENT DETERIORATION IN EQUITY MARKETS, WE FACE A HIGH RISK OF BUSINESS FAILURE.

Investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. Our prospects are further complicated by a pronounced deterioration in equity markets and constriction in equity capital available to finance and maintain our exploration activities. Our likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake and the difficult economy and market volatility that we are experiencing. Moreover, most exploration projects do not result in the discovery of commercial mineable deposits.

OUR BUSINESS IS AFFECTED BY CHANGES IN COMMODITY PRICES.

Our ability to raise capital and explore our properties and the future profitability of those operations is directly related to the market price of certain minerals such as silver and limestone as well as the price and availability of cement. The Company is negatively affected by the current decline in commodity prices

THE COMPANY COULD ENCOUNTER REGULATORY AND PERMITTING DELAYS.

The Company could face delays in obtaining permits to operate on the property covered by the claims. Such delays could jeopardize financing, if any is available, which could result in having to delay or abandon work on some or all of the properties.

THERE ARE PENNY STOCK SECURITIES LAW CONSIDERATIONS THAT COULD LIMIT YOUR ABILITY TO SELL YOUR SHARES.

Our common stock is considered a "penny stock" and the sale of our stock by you will be subject to the "penny stock rules" of the Securities and Exchange Commission. The penny stock rules require broker-dealers to take steps before making any penny stock trades in customer accounts. As a result, the market for our shares could be illiquid and there could be delays in the trading of our stock which would negatively affect your ability to sell your shares and could negatively affect the trading price of your shares.

CURRENT LEVELS OF MARKET VOLATILITY COULD HAVE ADVERSE IMPACTS

The capital and credit markets have been experiencing volatility and disruption. If the current levels of market disruption and volatility continue or worsen, there can be no assurance that the Company will not experience adverse effects, which may be material. These effects may include, but are not limited to, difficulties in raising additional capital or debt and a smaller pool of investors and funding sources. There is thus no assurance the Company will have access to the equity capital markets to obtain financing when necessary or desirable.

WE DO NOT INTEND TO PAY DIVIDENDS IN THE FORESEEABLE FUTURE.

We have never declared or paid a dividend on our common stock. We intend to retain earnings, if any, for use in the operation and expansion of our business and, therefore, do not anticipate paying any dividends in the foreseeable future.

None.

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.

Certificate of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

In addition, the following are incorporated by reference:

Current Report on Form 8-K “Item 3.02 Sale of Unregistered Securities”, dated December 16, 2011