redmetal_10q-043010.htm

RED METAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

							From January 10,
	Three months ended April 30,						2005 (Inception)
	2010			2009			to April 30, 2010
Revenue

Royalties	$	-		$	-		$	15,658

Operating Expenses

Administration		25,611			18,451			204,878
Advertising and promotion		42,367			26,592			264,133
Automobile		7,452			4,740			49,047
Bank charges and interest		6,155			1,265			18,549
Consulting fees		32,923			36,916			325,533
Interest on notes payable		561			12,788			70,553
Mineral exploration costs		555			23,937			726,748
Office		2,329			1,702			21,551
Professional development		4,008			-			4,008
Professional fees		37,130			34,083			393,531
Rent		3,126			3,117			31,835
Regulatory		4,515			3,404			38,161
Travel and entertainment		28,553			6,074			174,764
Salaries, wages and benefits		1,015			6,374			47,210
Foreign exchange (gain) loss		551			(18	)		524
Write-down of unproved mineral properties		-			110,763			225,685
Total operating expenses		196,851			290,188			2,596,710

Net loss	$	(196,851	)	$	(290,188	)	$	(2,581,052	)


Net loss per share - basic and diluted	$	(0.02	)	$	(0.07	)

Weighted average number of shares
outstanding - basic and diluted		9,856,975			4,156,002

The accompanying notes are an integral part of these consolidated financial statements

RED METAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM JANUARY 10, 2005 (INCEPTION) TO APRIL 30, 2010

(UNAUDITED)

	Common Stock Issued											Accumulated
	Number of Shares			Amount			Additional Paid-in Capital		Accumulated Deficit			Other Comprehensive Loss			Total
Balance at January 10, 2005 (Inception)		-		$	-		$	-	$	-		$	-		$	-

Net loss		-			-			-		(825	)		-			(825	)

Balance at January 31, 2005		-			-			-		(825	)		-			(825	)

Common stock issued for cash		5,525,000			5,525			53,725		-			-			59,250
Common stock adjustment		45			-			-		-			-			-
Donated services		-			-			3,000		-			-			3,000
Net loss		-			-			-		(12,363	)		-			(12,363	)

Balance at January 31, 2006		5,525,045			5,525			56,725		(13,188	)		-			49,062

Donated services		-			-			9,000		-			-			9,000
Net loss		-			-			-		(43,885	)		-			(43,885	)

Balance at January 31, 2007		5,525,045			5,525			65,725		(57,073	)		-			14,177

Donated services		-			-			2,250		-			-			2,250
Return of common stock to treasury		(1,750,000	)		(1,750	)		1,749		-			-			(1	)
Common stock issued for cash		23,810			24			99,976		-			-			100,000
Net loss		-			-			-		(232,499	)		-			(232,499	)

Balance at January 31, 2008		3,798,855			3,799			169,700		(289,572	)		-			(116,073	)

Common stock issued for cash		357,147			357			1,299,643		-			-			1,300,000
Net loss		-			-			-		(1,383,884	)		-			(1,383,884	)
Foreign currency exchange loss		-			-			-		-			(21,594	)		(21,594	)
Comprehensive loss		-			-			-		-			-			(1,405,478	)

Balance at January 31, 2009		4,156,002			4,156			1,469,343		(1,673,456	)		(21,594	)		(221,551	)

Net loss for the three months ended April 30, 2009		-			-			-		(290,188	)		-			(290,188	)
Foreign currency exchange loss		-			-			-		-			(15,856	)		(15,856	)
Comprehensive loss		-			-			-		-			-			(306,044	)

Balance at April 30, 2009		4,156,002			4,156			1,469,343		(1,963,644	)		(37,450	)		(527,595	)

Common stock issued for cash		1,678,572			1,678			160,822		-			-			162,500
Common stock issued for debt		3,841,727			3,843			1,148,675		-			-			1,152,518
Net loss		-			-			-		(420,557	)		-			(420,557	)
Foreign currency exchange loss		-			-			-		-			(19,960	)		(19,960	)
Comprehensive loss		-			-			-		-			-			(440,517	)

Balance at January 31, 2010		9,676,301			9,677			2,778,840		(2,384,201	)		(57,410	)	$	346,906

Common stock issued for cash		540,000			540			134,460		-			-			135,000
Net loss		-			-			-		(196,851	)		-			(196,851	)
Foreign currency exchange loss		-			-			-		-			(4,666	)		(4,666	)
Comprehensive loss		-			-			-		-			-			(201,517	)

Balance at April 30, 2010		10,216,301		$	10,217		$	2,913,300	$	(2,581,052	)	$	(62,076	)	$	280,389

The accompanying notes are an integral part of these consolidated financial statements

RED METAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

							From January 10,
	Three months ended April 30,						2005 (Inception)
	2010			2009			to April 30, 2010
Cash flows used in operating activities:
Net loss	$	(196,851	)	$	(290,188	)	$	(2,581,052	)
Adjustments to reconcile net loss to net cash used in operating activities:
Donated services and rent		-			-			14,250
Write-down of unproved mineral properties		-			110,763			225,685
Changes in operating assets and liabilities:
Prepaids and other receivables		2,801			9,654			(14,374	)
Accounts payable		75,282			42,878			214,601
Accrued liabilities		(31,295	)		2,554			200,245
Due to related parties		98,423			51,089			526,345
Accrued interest on notes payable to related party		561			12,788			70,553

Net cash used in operating activities		(51,079	)		(60,462	)		(1,343,747	)

Cash flows used in investing activities:
Acquisition of unproved mineral properties		(12,298	)		(17,126	)		(1,020,519	)

Net cash used in investing activities		(12,298	)		(17,126	)		(1,020,519	)

Cash flows provided by financing activities:
Cash received on issuance of notes payable to related party		50,000			106,000			794,500
Proceeds from issuance of common stock		135,000			-			1,756,750

Net cash provided by financing activities		185,000			106,000			2,551,250

Effects of foreign currency exchange		(4,666	)		(15,856	)		(62,076	)

Increase in cash		116,957			12,556			124,908

Cash, beginning		7,951			26,115			-

Cash, ending	$	124,908		$	38,671		$	124,908

Supplemental disclosures:
Cash paid for:
Income tax	$	-		$	-		$	-
Interest	$	-		$	-		$	-

Non-cash financing transactions:
Conversion of debt to related parties to shares of common stock	$	-		$	-		$	(338,026	)
Conversion of notes payable to shares of common stock	$	-		$	-		$	(744,500	)
Conversion of accrued interest to shares of common stock	$	-		$	-		$	(69,992	)

The accompanying notes are an integral part of these consolidated financial statements

RED METAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010

(UNAUDITED)

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Red Metal Resources Ltd. (the “Company”) was incorporated on January 10, 2005 under the laws of the state of Nevada as Red Lake Exploration, Inc. and changed its name to Red Metal Resources Ltd. on August 27, 2008. On August 21, 2007, Red Metal acquired a 99% interest in Minera Polymet Limitada (“Polymet”), a limited liability company formed on August 21, 2007 under the laws of the Republic of Chile. Red Metal is involved in acquiring and exploring mineral properties in Chile. The Company has not determined whether its properties contain mineral reserves that are economically recoverable.

Unaudited Interim Consolidated Financial Statements

The unaudited interim financial statements of Red Metal Resources Ltd (the “Company”) have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the financial statements for the year ended January 31, 2010 included in the Company’s Annual Report on Form 10-K, filed with the SEC. The interim unaudited financial statements should be read in conjunction with those financial statements included in Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation, consisting solely of normal recurring adjustments, have been made. Operating results for the three month period ended April 30, 2010 are not necessarily indicative of the results that may be expected for the year ending January 31, 2011.

Recent Accounting Pronouncements

The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. It does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows.

Subsequent Events

The Company has evaluated subsequent events through the date of issuance of these unaudited interim financial statements. During this period, the Company did not have any material recognizable subsequent events.

RED METAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010

(UNAUDITED)

NOTE 2 – RELATED-PARTY TRANSACTIONS

Due to Related Parties

The following amounts were due to related parties:

	April 30, 2010		January 31, 2010
Due to a company owned by an officer	$	70,903	$	26,324

Due to a company controlled by directors		102,857		48,920

Due to a company owned by a major shareholder and a relative of the president		13,329		18,594

Due to a major shareholder		10,891		5,719

Due to a relative of the president		125		125

Total due to related parties (a)	$	198,105	$	99,682

Note payable to a related party (b)	$	50,561		–

(a) Amounts due to related parties are unsecured, bear no interest and are due on demand.

(b) The principal amount of the note is $50,000, is payable on demand, is unsecured and bears interest at 6%. Interest of $561 had accrued as at April 30, 2010.

Expenses Incurred with Related Parties

During the three months ended April 30, 2010 and 2009 the Company incurred the following expenses with related parties:

•	$35,446 and $34,960, respectively, in consulting and other business expenses with a company owned by the chief financial officer of the Company

•	$52,249 and $35,821, respectively, in administration, advertising and promotion, mineral exploration, travel and other business expenses with a company controlled by two directors

•	$16,290 and $17,032, respectively, in administration, automobile, rental, and other business expenses with a company owned by a major shareholder and a relative of the president

•	$6,346 and $5,948, respectively, in administration expenses with a major shareholder

RED METAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010

(UNAUDITED)

NOTE 3 – UNPROVED MINERAL PROPERTIES

	April 30, 2010		January 31, 2010
Unproven mineral properties, beginning	$	643,481	$	753,519
Acquisition		12,298		58,702
Unproven mineral properties written down		-		(168,740	)
Unproven mineral properties, ending	$	655,779	$	643,481

Farellon Property

Farellon Alto Uno al Ocho Mineral Claims

On September 25, 2007, the Company entered into an agreement with a related company to acquire, by assignment, the option to purchase the Farellon Alto Uno al Ocho mining claims located in the Commune of Freirina, Province of Huasco, III Region of Atacama, Chile. On April 25, 2008, the Company exercised the option to acquire the right to purchase the property by paying $550,000 to acquire the claims. The claims are subject to a 1.5% royalty on the net sales of minerals extracted from the property to a total of $600,000. The royalty payments are due monthly once exploitation begins, and are subject to minimum payments of $1,000 per month. The Company has no obligation to pay the royalty if it does not commence exploitation. At April 30, 2010, the Company had spent a total of $550,539 on the ac quisition of those claims.

Cecil Mineral Claims

On September 5, 2008, the Company paid $20,000 to acquire the Cecil mining claims. The properties are located near the Farellon property in commune of Freirina, Province of Huasco, III Region of Atacama, Chile. The acquisition of the Cecil properties was completed on September 17, 2008. At April 30, 2010, the Company had spent a total of $27,676 on the acquisition of these claims.

Mateo Property

Margarita Claims

On November 27, 2008, the Company purchased the Margarita mining claims for $16,072. At April 30, 2010 the Company had spent a total of $17,078 on the acquisition of these claims.

Che Claims

On October 10, 2008, the Company entered into an option to purchase contract with a related company to acquire an option to purchase the Che Uno and Che Dos mining claims. Under the terms of the option, as amended, the Company agreed to pay $444 on December 2, 2008 as consideration for the option agreement and $20,000 by April 10, 2011 to acquire the Che claims. On December 2, 2008, the Company paid the consideration and acquired the option agreement. The claims are subject to a 1% royalty on the net sales of minerals extracted from the property to a total of $100,000. The royalty payments are due monthly once exploitation begins and are not subject to minimum payments. The Company has no obligation to pay the royalty if it does not commence exploitation. At April 30, 20 10 the Company had spent a total of $778 on the acquisition of these claims.

Irene Claims

On February 2, 2009, the Company entered into a letter of intent to purchase the Irene claims from a related company for 21 million Chilean pesos (approximately $40,500US).

Mateo Exploration Claims

At April 30, 2010 the Company had spent a total of $3,839 on the acquisition of these claims.

RED METAL RESOURCES LTD.

(AN EXPLORATION STAGE COMPANY)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

APRIL 30, 2010

(UNAUDITED)

NOTE 4 – COMMON STOCK

On March 23, 2010, the Company issued 200,000 shares of the Company’s common stock at $0.25 per share in a private placement for cash of $50,000. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant is exercisable at $0.30 for a period of two years. A fair value of $0 has been assigned to the warrants.

On March 29, 2010, the Company issued 200,000 units at $0.25 per share in a private placement for cash of $50,000. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant is exercisable at $0.30 for a period of two years. A fair value of $0 has been assigned to the warrants.

On April 14, 2010, the Company issued 40,000 units at $0.25 per share in a private placement for cash of $10,000. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant is exercisable at $0.30 for a period of two years. A fair value of $0 has been assigned to the warrants.

On April 20, 2010, the Company issued 100,000 units at $0.25 per share in a private placement for cash of $25,000. Each unit consists of one common share and one share purchase warrant. Each share purchase warrant is exercisable at $0.30 for a period of two years. A fair value of $0 has been assigned to the warrants.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This quarterly report on form 10-Q filed by Red Metal Resources Ltd. contains forward-looking statements. These are statements regarding financial and operating performance and results and other statements that are not historical facts. The words “expect,” “project,” “estimate,” “believe,” “anticipate,” “intend,” “plan,” “forecast,” and similar expressions are intended to identify forward-looking statements. Certain important risks could cause results to differ materially from those anticipated by some of the forward-looking statements. Some, but not all, of these risks include, among other things:

•	general economic conditions, because they may affect our ability to raise money

•	our ability to raise enough money to continue our operations

•	changes in regulatory requirements that adversely affect our business

•	changes in the prices for minerals that adversely affect our business

•	political changes in Chile, which could affect our interests there

•	other uncertainties, all of which are difficult to predict and many of which are beyond our control

We caution you not to place undue reliance on these forward-looking statements, which reflect our management’s view only as of the date of this report. We are not obligated to update these statements or publicly release the results of any revisions to them to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. You should refer to and carefully review the information in future documents we file with the Securities and Exchange Commission.

General

You should read this discussion and analysis in conjunction with our interim unaudited consolidated financial statements and related notes included in this form 10-Q and the audited consolidated financial statements and related notes included in our annual report on form 10-K for the fiscal year ended January 31, 2010. The inclusion of supplementary analytical and related information may require us to make estimates and assumptions to enable us to fairly present, in all material respects, our analysis of trends and expectations with respect to our results of operations and financial position taken as a whole. Actual results may vary from the estimates and assumptions we make.

Overview

Red Metal is a mineral exploration company engaged in locating and, eventually, developing mineral resources in Chile. Our business strategy is to identify, acquire and explore prospective mineral claims with a view to either developing them ourselves or, more likely, finding a joint venture partner with the mining experience and financial means to undertake the development. All of our claims are in the Candelaria IOCG belt in the Chilean Coastal Cordillera.

We have no revenue-generating operations and are entirely dependent upon the equity markets for our working capital. The collapse of the equity markets late in 2008 and the economic uncertainty and market instability that followed and persist have affected our ability to raise equity capital despite the generally positive market prices of copper and gold in 2009 and 2010.

In response to the difficulty in raising equity capital, we have reduced our costs in Chile by abandoning certain mineral claims that we hadn’t the capital to maintain or explore; reduced our administration, travel and promotion costs; and even terminated our duty to file reports with the Securities and Exchange Commission to save the legal and auditing costs. These measures significantly reduced our operating costs. We own nothing in Chile except our claims and have no long term commitments except the obligation to pay royalties if we exploit our properties. All of our support there—vehicles, office and equipment, and administrative personnel—is supplied under short-term contracts. We resumed filing reports with the Securities and Exchange Commission as of April 13, 2010, which has increased our legal and auditing costs for the three months ended April 30, 2010.

We conducted a drilling program on our Farellon property in September of 2009. We have analyzed the results and believe that further drilling of the property is warranted. Micon International Limited, from whom we commissioned a Canadian National Instrument 43-101 technical report summarizing the drilling results, has recommended that we conduct a two-phase drilling program. The first phase would consist of 1,200 meters of diamond drilling to define the structural controls on the mineralization, which may have been misinterpreted in the past due to the limited geological information available from the historic RC drilling, and assist in defining the depth and nature of the sulphide mineralization. The estimated cost of this phase is $220,000.

If the first phase is successful, we propose to conduct a larger exploration program consisting of 10,000 meters of RC drilling, 5,000 meters of diamond drilling, geophysical surveys and geological mapping to ascertain the extent of the structural controls and the potential size of the mineralization. The estimated cost of this phase is $1.9 million.

The cost and timing of both phases are subject to the availability of qualified mining personnel, such as consulting geologists and geo-technicians, and drillers and drilling equipment. When we first started exploring in Chile in late 2007 and early 2008, geologists, geo-technicians, drillers and drilling rigs were in short supply, those that were available were often unreliable and very expensive, and we had to work to their schedules rather than to ours. This changed following the market collapse in 2008, but the increasing prices of copper and gold—the price of copper increased steadily from a low of $1.26 per pound in December 2008 to $3.55 per pound in March, 2010, has fluctuated somewhat since then, and is now approximately $2.85 per pound; and the price of gold has increased from a low of $750 per ounce in December 2008 to a high of more than $1,230 per ounce in June 2010—have caused mining companies to increase their operations, reducing the availability of personnel and equipment. Although Chile has a well-trained and qualified mining workforce from which to draw, we have good contacts within the local mining community, and not a lot of early-stage companies such as Red Metal are competing for the available resources, if we are unable to find the personnel and equipment that we need when we need them at the prices that we have estimated today, we might have to revise or postpone our plans.

At April 30, 2010, we had a working capital deficit of $375,390 and $124,908 cash. To complete our exploration programs, we will have to raise approximately $2.1 million in capital. We will also have to raise approximately $400,000 to cover our estimated expenditures for legal, audit and other professional fees, administration, consulting, advertising and promotion, office and vehicle rental that we will incur over the next 12 months. We have engaged a broker-dealer to assist us with our capital raising efforts. We cannot predict whether the equity markets will stabilize or whether we will be able to raise the capital necessary to carry on operating or to execute our proposed exploration programs. If we are unable to raise the capital that we need to meet our working capital needs, we might have to alter our business plan and revise or postpone our exploration and development plans.

Results of operations

summary of financial condition

Table 1 summarizes and compares our financial condition at the three months ended April 30, 2010 and year ended January 31, 2010.

Table 1: Comparison of financial condition
	April 30, 2010			January 31, 2010
Working capital deficit	$	(375,390	)	$	(296,575	)
Current assets	$	139,282		$	25,126
Unproved mineral properties	$	655,779		$	643,481
Total liabilities	$	514,672		$	321,701
Common stock and additional paid in capital	$	2,923,517		$	2,788,517
Deficit	$	(2,581,052	)	$	(2,384,201	)

comparison of prior quarterly results

Tables 2.1 and 2.2 present selected financial information for each of the past eight quarters.

Table 2.1: Summary of quarterly results (July 31, 2009 – April 30, 2010)
	July 31, 2009			October 31, 2009			January 31, 2010			April 30, 2010
Revenue		–			–			–			-
Net loss	$	(111,162	)	$	(105,334	)	$	(204,061	)	$	(196,851	)
Basic and diluted loss per share	$	(0.03	)	$	(0.02	)	$	(0.03	)	$	(0.02	)

Table 2.2: Summary of quarterly results (July 31, 2008 – April 30, 2009)
	July 31, 2008			October 31, 2008			January 31, 2009			April 30, 2009
Revenue	$	4,537		$	4,462		$	1,397			-
Net loss	$	(362,241	)	$	(374,250	)	$	(371,841	)	$	(290,188	)
Basic and diluted loss per share	$	(0.09	)	$	(0.09	)	$	(0.09	)	$	(0.07	)

All of the revenue that we received during the three quarters ended July 31 and October 31, 2008 and January 31, 2009 was the result of a 5% royalty from Minera Farellon, which had the right to mine our Santa Rosa claims. On October 27, 2008, Minera Farellon stopped mining the Santa Rosa claims, which ended our royalty revenue. In November 2008, we terminated our option agreement to purchase the Santa Rosa. Due to the exploration rather than production nature of our business, we do not expect to have operating revenue within the next year.

During the quarters ended July 31 and October 31, 2008 we began acquiring mineral claims, which increased our administration, advertising, mineral exploration and professional overheads. Due to the downturn in the economy, we substantially decreased our operations during the quarters ended April 30, 2009 and July 31, 2009. Excluding the written down unproved mineral claims, our net losses for these quarters were $179,425 and $95,037 respectively. During the quarter ended October 31, 2009 we conducted a drilling program on one of our properties, which increased our mineral exploration expenses. Excluding the recovery of written down unproved mineral property costs, our net loss for the third quarter of fiscal 2010 was $202,537. During the quarter ended January 31, 2010, we filed a registration statement on form 10 t o resume our reporting obligations, which resulted in a substantial increase in our professional fees. During the quarter ended April 30, 2010 we filed an amendment to our form 10 and increased our investor related activities, which increased our travel and entertainment costs, investor relations costs and professional fees.

Selected Financial Results

Three months ended April 30, 2010 and 2009

Our operating results for the three months ended April 30, 2010 and 2009 and the changes in our operating results between those periods are summarized in Table 3.

Table 3: Changes in operating results
	Three months ended April 30,					Changes between the periods ended April 30, 2010
	2010		2009			and 2009
Operating Expenses
Administration	$	25,611	$	18,451		$	7,160
Advertising and promotion		42,367		26,592			15,775
Automobile		7,452		4,740			2,712
Bank charges and interest		6,155		1,265			4,890
Consulting fees		32,923		36,916			(3,993	)
Interest on notes payable		561		12,788			(12,227	)
Mineral exploration costs		555		23,937			(23,382	)
Office		2,329		1,702			627
Professional development		4,008		-			4,008
Professional fees		37,130		34,083			3,047
Rent		3,126		3,117			9
Regulatory		4,515		3,404			1,111
Travel and entertainment		28,553		6,074			22,479
Salaries, wages and benefits		1,015		6,374			(5,359	)
Foreign exchange loss (gain)		551		(18	)		569
Write-down of unproved mineral properties		-		110,763			(110,763	)
Net loss	$	196,851	$	290,188		$	(93,337	)

Operating expenses. Our operating expenses decreased by $93,337, or 32%, from $290,188 for the three months ended April 30, 2009 to $196,851 for the three months ended April 30, 2010. The most significant changes were:

•	During the three months ended April 30, 2009, we wrote down $110,763 in mineral property acquisition costs after we wrote down several generative claims. During the three months ended April 30, 2010, we did not write down any of our properties.

•

During the three months ended April 30, 2009, we incurred approximately $24,000 in mineral exploration costs as a result of active operations in Chile. During the three months ended April 30, 2010, we incurred approximately $560 in mineral exploration costs as we had no active operations during this period.

•	Our advertising and promotion and travel and entertainment expenses increased by $15,775 and $22,479, respectively, as a result of increased investor relating activities.

•	Our bank service charges and interest increased by $4,890 during the three months ended April 30, 2009 compared to the three months ended April 30, 2009. This increase was caused by interest accrued on certain outstanding accounts payable.

•	On April 14, 2010, we resumed our duty to file reports with the Securities and Exchange Commission, which resulted in an increase of our professional fees by approximately $3,000.

•	During the three months ended April 30, 2010 and 2009 we accrued $561 and $12,788, respectively, in interest on the promissory notes issued to the father of our president.

Liquidity

going concern

The unaudited consolidated financial statements included in this form 10-Q have been prepared on a going concern basis, which implies that we will continue to realize our assets and discharge our liabilities in the normal course of business. We have not generated any significant revenues from mineral sales since inception, have never paid any dividends and are unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. Our continuation as a going concern depends upon the continued financial support of our shareholders, our ability to obtain necessary equity or debt financing to continue operations, and the attainment of profitable operations. Our ability to achieve and maintain profitability and positive cash flow depends upon our ability to locate profitable mineral claims, genera te revenue from mineral production and control our production costs. Based upon our current plans, we expect to incur operating losses in future periods, which we plan to mitigate by controlling our operating costs. We plan to obtain sufficient working capital through additional debt or equity financing and private loans, although there is no guarantee that we will be successful in our efforts to raise working capital. At April 30, 2010, we had a working capital deficit of $375,390 and accumulated losses of $2,581,052 since inception. These factors raise substantial doubt about our ability to continue as a going concern. We cannot assure you that we will be able to generate significant revenues in the future. Our consolidated financial statements do not give effect to any adjustments that would be necessary should we be unable to continue as a going concern and therefore be required to realize our assets and discharge our liabilities in other than the normal course of business and at am ounts different from those reflected in our financial statements.

internal and external sources of liquidity

To date we have funded our operations by selling our securities and borrowing funds, and, to a lesser extent, from mining royalties.

Sources and uses of cash

Three months ended April 30, 2010 and 2009

Table 4 summarizes our sources and uses of cash for the years ended January 31, 2010 and 2009.

Table 4: Summary of sources and uses of cash
	April 30,
	2010			2009
Net cash provided by financing activities	$	185,000		$	106,000
Net cash used in operating activities		(51,079	)		(60,462	)
Net cash used in investing activities		(12,298	)		(17,126	)
Effect of foreign currency exchange		(4,666	)		(15,856	)
Net increase in cash	$	116,957		$	12,556

Net cash provided by financing activities. During the three months ended April 30, 2010, we issued 540,000 shares of our common stock for $135,000, and borrowed $50,000 from a company owned by the father of a director. During the three months ended April 30, 2009, we borrowed $106,000 from the father of a director.

Net cash used in operating activities. During the three months ended April 30, 2010, we used net cash of $51,079 in operating activities. We used $196,851 to cover operating costs and decreased our accrued liabilities by $31,295.

These uses of cash were offset by net increases in prepaid expenses and accounts receivable of $2,801, accounts payable of $75,282, consisting mainly of legal fees incurred in preparing and filing our form 10 and the amendments to it; accounts payable to related parties of $98,423 for administration, consulting, advertising and promotion, office, automobile, rental and travel expenses; and accrued interest on our notes payable to a related party of $561.

During the three months ended April 30, 2009, we used $60,462 net cash in operating activities. We used $290,188 to cover our operating costs for the period. We increased our prepaid expenses and accounts receivable by $9,654, primarily for advertising and marketing; accounts payable by $42,878; accrued liabilities and professional fees by $2,554; amounts due to related parties by $51,089; and interest accrued on our notes payable by $12,788.

Net cash used in investing activities. During the three months ended April 30, 2010, we spent $12,298 acquiring mineral claims and capitalized Chilean value-added tax as part of the unproved mineral claims. This VAT is recoverable from future VAT payable.

During the three months ended April 30, 2009, we spent $17,126 acquiring mineral claims and options to acquire mineral claims.

Since inception through April 30, 2010, we have invested $1,020,519 acquiring our mineral claims.

Unproved mineral properties

We have two principal properties—the Farellon and Mateo—consisting of both mining claims and exploration claims that we have assembled since the beginning of 2007 as described in Table 5. These properties are accessible by road from Vallenar as illustrated in Figure 1.

Table 5: Principal properties
		Hectares
Property	Percentage and type of claim	Per claim	Total
Farellon
Farellon 1 – 8 claim	100%, mensura	66
Cecil 1 – 49 claims	100%, mensura	230
Cecil 1 – 40 and Burghley 1 – 60 claims	100%, manifestacion	500	796
Mateo
Margarita claim	100%, mensura	56
Che 1 & 2 claims	Option for 100%, mensura	76
Irene 1 & 2 claims	Letter of intent for 100%, mensura	60
Mateo	100%, pedimentoa		2,200
			2,996
aThis pedimento is staked over the three mensuras to claim the mineral interests between them and includes the hectares covered by the mensuras.

Figure 1: Location and access to principal properties.

Capital resources

Our ability to acquire and explore our Chilean claims is subject to our ability to obtain the necessary funding. To assist us with our funding efforts, we have retained the services of the following consultants:

On December 1, 2009 we retained the services of an independent investor relations specialist to handle our corporate communications. We agreed to pay him a monthly compensation in the amount of $5,000 Cdn (approximately $5,000 US) on a month-to-month contract that can be cancelled any time with 30 day’s written notice.

On April 22, 2010 we entered into a one-year agreement with a broker-dealer as our exclusive agent to arrange funding for us of either equity or debt. We agreed to pay the broker-dealer the following compensation for any financing attributable to the broker-dealer during the term of the agreement and for one year following the termination of the agreement if we complete a financing with anyone introduced to us during the term:

•	a cash fee equal to ten percent of the proceeds that we receive from a financing

•	warrants equal to ten percent of the common stock or common stock equivalent that we issue in a financing on the same terms as any warrants that are a part of the financing

•	all reasonable out-of-pocket expenses up to 1.5 percent of the funds raised

The securities offered will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Contingencies and commitments

We had no contingencies at April 30, 2010.

We have the following long-term contractual obligations and commitments:

•

Farellon royalty. We are committed to paying the vendor a royalty equal to 1.5% on the net sales of minerals extracted from the Farellon claims up to a total of $600,000. The royalty payments are due monthly once exploitation begins and are subject to minimum payments of $1,000 per month. We have no obligation to pay the royalty if we do not commence exploitation. As of the date of this report we have not commenced exploitation.

•

Che option. Under the terms of our option agreement with Minera Farellon, we must pay $20,000 by April 10, 2011 to exercise the option and purchase the Che claims. If we exercise our option, then we must pay a royalty equal to 1% of the net sales of minerals extracted from the claims to a maximum of $100,000 to the former owner. The royalty payments are due monthly once exploitation begins, and are not subject to minimum payments.

Equity financing

To generate working capital, between August 13, 2007 and June 10, 2010 we issued 6,441,256 shares of our common stock and warrants for the purchase of 861,430 shares to raise $2,850,018 under Regulation S promulgated under the Securities Act of 1933. See Table 6 below.

Table 6: Sales of unregistered securities
	Shares							Warrants
Date of issue	Number			Price		Proceeds		Number		Price		Expiry
August 13, 2007		23,810		$	4.20	$	100,000		11,905	$	7.00	August 13, 2009a
April 21, 2008		285,717		$	3.50		1,000,000		285,717	$	4.90	April 21, 2010a
May 14, 2008		71,430		$	4.20		300,000		71,430	$	7.00	May 14, 2010a
September 15, 2009		1,428,572		$	0.07		100,000
January 19, 2010		250,000		$	0.25		62,500		250,000	$	0.30	January 19, 2012
January 19, 2010		3,841,727	b	$	0.30		1,152,518
March 23, 2010		200,000		$	0.25		50,000		200,000	$	0.30	March 23, 2012
March 29, 2010		200,000		$	0.25		50,000		200,000	$	0.30	March 29, 2012
April 14, 2010		40,000		$	0.25		10,000		40,000	$	0.30	April 14, 2012
April 20, 2010		100,000		$	0.25		25,000		100,000	$	0.30	April 20, 2012
		6,441,256				$	2,850,018		1,159,052
a These warrants expired unexercised. b These shares were issued to pay three related-party creditors.

Based on our operating plan, we anticipate incurring operating losses in the foreseeable future and will require additional equity capital to support our operations and develop our business plan. If we succeed in completing future equity financing, the issuance of additional shares will result in dilution to our existing shareholders.

Debt financing

As of January 6, 2010, we had borrowed $744,500 from Richard Jeffs, the father of our president, to whom we issued demand promissory notes for the principal sum together with interest of 8%. We accrued $76,785 in interest payable on these notes. On January 7, 2010, we agreed to convert $814,492 in principal and interest on these loans into 2,714,973 shares of our common stock. In return, Mr. Jeffs agreed to forgive $6,792 in interest accumulated from December 1, 2009 to January 7, 2010. On February 22, 2010, we borrowed $50,000 from a company owned by Mr. Jeffs, to which we issued a demand promissory note to secure the repayment of the principal sum together with interest at 6% per annum.

Challenges and risks

Although we have raised $2,850,018 since January 31, 2007, our cash position is inadequate to satisfy our working capital needs for the next twelve months. Over the next twelve months we will need to raise capital to cover our operating costs, fulfill the obligations we may incur under our property agreements, and pay exploration or development costs on our properties.

With the exception of legal and accounting fees which we expect to increase since we have resumed the obligation to file reports with the SEC, we expect our general and administrative expenses to remain about the same. These costs include exploring and developing our mineral properties and sourcing additional mineral properties and exploration claims. We are reviewing other mineral claims and could decide to buy or stake more mineral claims or to acquire options to buy more claims, which would require that we raise more capital.

We do not anticipate generating any revenue over the next twelve months. We plan to fund our operations through any combination of equity or debt financing from the sale of our securities, private loans, joint ventures or through the sale of a part interest in our mineral properties. Other than the letter agreement dated April 22, 2010 relating to the private placement of our securities, we do not have any financing arranged. We cannot assure you that we can raise significant funds through this offering. Although we have succeeded in raising funds as we have needed them, we cannot assure you that we will be able to raise sufficient funds in order to cover our general and administrative expenses and acquire and develop properties. The downturn in the United States economy could affect p otential investors’ willingness to invest in risky ventures such as ours. We may consider entering into a joint venture partnership with a more senior resource company to provide the funding that we need to complete a mineral exploration program in Chile. If we enter into a joint venture arrangement, we would likely have to assign a percentage of our interest in our mineral claims to our joint venture partner in exchange for the funding.

Investments in and expenditures on mineral interests

Realization of our investments in mineral properties depends upon our maintaining legal ownership, producing from the properties or gainfully disposing of them.

Title to mineral claims involves risks inherent in the difficulties of determining the validity of claims as well as the potential for problems arising from the ambiguous conveyancing history characteristic of many mineral claims. Our contracts and deeds have been notarized, recorded in the registry of mines and published in the mining bulletin. We review the mining bulletin regularly to discover whether other parties have staked claims over our ground. We have discovered no such claims. To the best of our knowledge, we have taken the steps necessary to ensure that we have good title to our mineral claims.

Foreign exchange

We are subject to foreign exchange risk for transactions denominated in foreign currencies. Foreign currency risk arises from the fluctuation of foreign exchange rates and the degree of volatility of these rates relative to the United States dollar. We do not believe that we have any material risk due to foreign currency exchange.

Trends, events or uncertainties that may impact results of operations or liquidity

The economic crisis in the United States and the resulting economic uncertainty and market instability may make it harder for us to raise capital as and when we need it and have made it difficult for us to assess the impact of the crisis on our operations or liquidity and to determine if the prices we will receive on the sale of minerals, assuming we begin production in the future, will exceed the cost of mineral exploitation. If we are unable to raise cash, we may be required to cease our operations. As noted above, we expect our legal and accounting fees to increase since we have resumed the obligation to file reports with the SEC. Other than as discussed in this report, we know of no other trends, events or uncertainties that have or are reasonably likely to have a material impact on our short-te rm or long-term liquidity.

Off-balance sheet arrangements

We have no off-balance sheet arrangements and no non-consolidated, special-purpose entities.

Related-party transactions

Table 7 describes amounts due to related parties that were incurred during the three months ended April 30, 2010 and 2009.

Table 7: Due to related parties
	Quarter ended April 30, 2010		Year ended January 31, 2010
Due to Da Costa Management Corp.a	$	70,903	$	26,324
Due to Fladgate Exploration Consulting Corporation b	$	102,857	$	48,920
Due to Minera Farellon Limitadac	$	13,329	$	18,594
Due to Kevin Mitchelld	$	10,891	$	5,718
a During the three months ended April 30, 2010 and 2009 we paid or accrued a total of $35,446 and $34,960, respectively in consulting and other business expenses to Da Costa Management Corp. This company became related on May 13, 2008 when its owner was appointed CFO and treasurer of Red Metal. b During the three months ended April 30, 2010 and 2009, we paid or accrued a total of $52,249 and $35,821, respectively in administration, advertising and promotion, mineral exploration, travel and other business expenses to Fladgate Exploration Consulting Corporation., a company controlled by two directors. The travel and entertainment expenses were incurred primarily for geologists’ travel to and from Chile and for our directors’ to travel to and participate in mining trade shows. c During the three months ended April 30, 2010 and 2009, we paid or accrued a total of $16,290 and $17,032 in administration, automobile, rental, and other business expenses to Minera Farellon Limitada, a company owned by Kevin Mitchell, a major shareholder, and Richard Jeffs, the father of our president. d During the period from May 1, 2010 to June 10, 2010 we paid or accrued a total of $2,809 in administration expense to Kevin Mitchell, a major shareholder. During the three months ended April 30, 2010 and 2009, we paid or accrued a total of $6,346 and $5,948, respectively, in administration expenses to Kevin Mitchell, a major shareholder.

Notes payable to related party

Table 8 describes the promissory note and accrued interest payable to Mr. Jeffs, the father of our president, at April 30, 2010, and January 31, 2010.

Table 8: Note payable to Richard Jeffs
	April 30, 2010		January 31, 2010
Note payable, on demand, unsecured, bearing interest
At 6% per annum, compounded monthly	$	50,000	$	-
Accrued interest		561		-
Total payable to Mr. Jeffs	$	50,561	$	-

Critical accounting estimates

An appreciation of our critical accounting judgments is necessary to understand our financial results. These policies may require that we make difficult and subjective judgments regarding uncertainties, and as a result, such estimates may significantly impact our financial results. The precision of these estimates and the likelihood of future changes depend on a number of underlying variables and a range of possible outcomes. Other than our accounting for the fair value of our unproved mineral properties, accruals for accounting, auditing, legal expenses and mineral property costs, our critical accounting policies do not involve the choice between alternative methods of accounting. We have applied our critical accounting judgments consistently.

Reclassifications

Certain prior-period amounts in the accompanying consolidated financial statements have been reclassified to conform to the current period’s presentation. These reclassifications had no effect on the consolidated results of operations or financial position for any period presented.

Unproved mineral property costs

We have been in the exploration stage since our inception on January 10, 2005 and have not yet generated significant revenue from our operations. We are primarily engaged in acquiring and exploring mining claims. We expense our mineral exploration costs as we incur them. We initially capitalize them at each fiscal quarter end. When we have determined that a mineral claim can be economically developed as a result of establishing proven and probable reserves, we capitalize the costs then incurred to develop the claim and will amortize them using the units-of-production method over the estimated life of the probable reserve. If mineral claims are subsequently abandoned or impaired, we will charge capitalized costs to operations.

Financial instruments

Our financial instruments include cash, accounts receivable, accounts payable, accrued liabilities, accrued professional fees and accrued mineral property costs. The fair value of these financial instruments approximates their carrying values due to their short maturities.

Recently Adopted Accounting Guidance

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

As a smaller reporting company, we are not required to provide this disclosure.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures

Caitlin Jeffs, our chief executive officer, and John daCosta, our chief financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as the term is defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934) as of the end of the period covered by this report (the “evaluation date”). Based on their evaluation, they have concluded that, as of the evaluation date, our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

(b) Changes in internal control over financial reporting

During the period covered by this report, there were no changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

We are not a party to any pending legal proceedings and, to the best of our knowledge, none of our properties or assets is the subject of any pending legal proceedings.

Item 1A. Risk Factors.

As a smaller reporting company we are not required to provide this information.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On March 23, 2010 we sold 200,000 shares of our common stock and two-year warrants for the purchase of 200,000 shares of our common stock to an accredited investor. The warrant exercise price is $0.30 per share. The price per unit was $0.25. We raised $50,000 from this offering.

On March 29, 2010 we sold 200,000 shares of our common stock and two-year warrants for the purchase of 200,000 shares of our common stock to an accredited investor. The warrant exercise price is $0.30 per share. The price per unit was $0.25. We raised $50,000 from this offering.

On April 14, 2010 we sold 40,000 shares of our common stock and two-year warrants for the purchase of 200,000 shares of our common stock to an accredited investor. The warrant exercise price is $0.30 per share. The price per unit was $0.25. We raised $10,000 from this offering.

On April 20, 2010 we sold 100,000 shares of our common stock and two-year warrants for the purchase of 100,000 shares of our common stock to an accredited investor. The warrant exercise price is $0.30 per share. The price per unit was $0.25. We raised $25,000 from this offering.

We sold all of these securities to non-US persons in offshore transactions, relying on the registration exemption in Rule 903 of Regulation S promulgated under the Securities Act of 1933, as amended. We did not engage in any directed selling efforts in the United States, and each investor represented to us that the investor was not a U.S. person and was not acquiring the stock for the account or benefit of a U.S. person. The subscription agreements included statements that the securities had not been registered pursuant to the Securities Act and could not be offered or sold in the United States unless they are registered under the Securities Act or an exemption from registration is available to the seller. Each investor agreed (i) to resell the securities only in accordance with the provisions of Regulation S or pu rsuant to registration or an exemption from registration under the Securities Act, (ii) that we must refuse to register any sale of the securities purchased unless the sale is in accordance with the provisions of Regulation S or pursuant to registration or an exemption from registration under the Securities Act, and (iii) not to engage in hedging transactions with the securities purchased unless the transaction complies with the Securities Act. The certificates representing the securities issued were endorsed with a restrictive legend confirming that the securities had been issued pursuant to Regulation S of the Securities Act and could not be resold without registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act.

We gave each investor adequate access to sufficient information about the company to make an informed investment decision. We sold none of the securities through underwriters and had no underwriting discounts or commissions; and we granted no registration rights to any of the investors.

Item 3. Defaults upon Senior Securities.

None.

Item 4. (Removed and Reserved).

Item 5. Other Information.

None

Item 6. Exhibits.

The following table sets out the exhibits either filed herewith or incorporated by reference.

Exhibit	Description
3.1	Articles of Incorporation1
3.2	By-laws1
10.1	Loan Agreement and Promissory Note dated February 11, 2010 between Red Metal Resources Ltd. and Wet Coast Management Corp. in favor of Wet Coast Management Corp.2
16	Letter re change in certifying accountant3
31.1	Certification Pursuant to Rule 13a-14(a) and 15d-14(a) (4)4
31.2	Certification Pursuant to Rule 13a-14(a) and 15d-14(a) (4)4
32	Certification Pursuant to Section 1350 of Title 18 of the United States Code4
1 Incorporated by reference from the registrant’s report on Form SB-2 filed with the Securities and Exchange Commission on May 22, 2006 as file number 333-134-363 2 Incorporated by reference from the registrant’s report on Form 10-K filed with the Securities and Exchange Commission on April 30, 2010 3 Incorporated by reference from the registrant’s report on Form 10 filed with the Securities and Exchange Commission on February 12, 2010 4 Filed herewith.

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, Red Metal Resources Ltd. has caused this report to be signed on its behalf by the undersigned, duly authorized.

June 14, 2010

		RED METAL RESOURCES LTD.

		By:	/s/ Caitlin Jeffs
			Caitlin Jeffs, President

		By:	/s/ John Da Costa
			John DaCosta, Chief Financial Officer

Nevada (State or other jurisdiction of incorporation or organization)	20-2138504 (I.R.S. Employer Identification No.)
195 Park Avenue, Thunder Bay Ontario, Canada P7B 1B9 (Address of principal executive offices) (Zip Code)
(807) 345-5380 (Issuer’s telephone number)

Large accelerated filer	o		Accelerated filer	o
Non-accelerated filer	o	(Do not check if a smaller reporting company)	Smaller reporting company	x

PART I - FINANCIAL INFORMATION		1

	ITEM 1. FINANCIAL STATEMENTS	1

	CONSOLIDATED BALANCE SHEETS APRIL 30, 2010 (UNAUDITED) AND JANUARY 31, 2010	1

	CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 2010 AND 2009 (UNAUDITED), AND THE PERIOD FROM INCEPTION (JANUARY 10, 2005)	2

	CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE PERIOD FROM JANUARY 10, 2005 (INCEPTION) TO APRIL 30, 2010	3

	CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED APRIL 30, 2010 AND 2009 (UNAUDITED), AND THE PERIOD FROM INCEPTION (JANUARY 10, 2005)	4

	NOTES TO CONSOLIDATED FINANCIAL STATEMENTS	5

	ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	9

	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	19

	ITEM 4. CONTROLS AND PROCEDURES.	19

PART II - OTHER INFORMATION		19

	ITEM 1. LEGAL PROCEEDINGS.	19

	ITEM 1A. RISK FACTORS.	19

	ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	20

	ITEM 3. DEFAULTS UPON SENIOR SECURITIES.	20

	ITEM 4. (REMOVED AND RESERVED).	20

	ITEM 5. OTHER INFORMATION.	20

	ITEM 6. EXHIBITS.	21

	April 30, 2010 (unaudited)			January 31, 2010
ASSETS
Current assets

Cash	$	124,908		$	7,951
Prepaids and other receivables		14,374			17,175
Total current assets		139,282			25,126

Unproved mineral properties		655,779			643,481
Total assets	$	795,061		$	668,607

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities

Accounts payable	$	204,816		$	129,534
Accrued liabilities		61,190			92,485
Due to related parties		198,105			99,682
Notes payable to related party		50,561			-
Total liabilities		514,672			321,701

Stockholders' equity

Common stock, $0.001 par value, authorized 500,000,000,
10,216,301 and 9,676,301 issued and outstanding at
April 30, 2010 and January 31, 2010		10,217			9,677
Additional paid in capital		2,913,300			2,778,840
Deficit accumulated during the exploration stage		(2,581,052	)		(2,384,201	)
Accumulated other comprehensive loss		(62,076	)		(57,410	)
Total stockholders' equity		280,389			346,906
Total liabilities and stockholders' equity	$	795,061		$	668,607


/s/ Caitlin Jeffs
Caitlin Jeffs, Chief Executive Officer and President