20FR12G

United States

Securities and Exchange Commission

Washington, D.C. 20549

Form 20-F

(Mark One)

[ X ]        Registration Statement Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

or

[     ]        Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended _____________________

or

[     ]        Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                                                                            to                      

or

[     ]        Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event requiring this shell company report                                                                                                                     

Commission file number: ______________

Mill City Gold Corp.

(Exact name of Registrant as specified in its charter)

Mill City Gold Corp.

(Translation of Registrant’s name into English)

British Columbia, Canada

(Jurisdiction of incorporation or organization)

4719 Chapel Road, N.W., Calgary, Alberta, T2L 1A7

(Address of principal executive offices)

James R. Brown, President & CEO, (403) 640-0110, jim.brown@millcitygold.com, 4719 Chapel Road, N.W., Calgary, Alberta T2L 1A7

(Name, telephone, e-mail and/or facsimile number and address of Company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.  None

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Common Stock, No Par Value

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

(Title of Class)

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

¨Yes                      þNo

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

¨Yes                      þNo

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

¨Yes                      ¨No (not required)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer þ

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board ¨ Other þ  

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.þItem 17¨Item 18

GENERAL INFORMATION:

Unless otherwise indicated, all references herein are to Canadian dollars.

GLOSSARY

The following is a glossary of geological and technical terms used in this registration statement:

Airborne magnetic survey – A geophysical survey using a magnetometer aboard, or towed behind, an aircraft.

Andesite – is an extrusive igneous, volcanic rock, of intermediate composition between basalt and dacite.

Albite – is a plagioclase feldspar mineral.

Alteration – Any physical or chemical change in a rock or mineral subsequent to its formation. Milder and more localized than metamorphism.

Aluminosilicates – are minerals composed of aluminum, silicon and oxygen.  They have a major component of kaolin and other clay minerals.

Anomalies – Any departure from the norm which may indicate the presence of mineralization in the underlying bedrock.

Arkosic sandstones – is a detrital sedimentary rock containing at least 25% feldspar.

Arsenopyrite – is an iron arsenic sulfide. It is a hard metallic, opaque, steel grey to silver white mineral with a relatively high specific gravity.

Assessment work – The amount of work, specified by mining law, that must be performed each year in order to retain legal control of mining claims.

Basalt – An extrusive volcanic rock composed primarily of plagioclase, pyroxene and some olivine.

Basaltic – An extrusive igneous rock that is very dark in color. It is the most common type of rock in the earth’s crust and it makes up most of the ocean floor.

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Calc-alkaline – Rocks that include volcanic types such as basalt andesite, dacite, rhyolite, and also their coarser-grained intrusive equivalents (gabbro, diorite, granodiorite, and granite).

Carbonate – A class of sedimentary rocks composed primarily of carbonate minerals. The two major types are limestone, which is composed of calcite or aragonite (different crystal forms of CaCO3) and dolostone, which is composed of the mineral dolomite.

Clastic metasediments – Composed of fragments, or clasts, of pre-existing rock. Geologists use the term clastic with reference to sedimentary rocks as well as to particles in sediment transport whether in suspension or as bed load, and in sediment deposits.

Conglomerate – A sedimentary rock consisting of rounded, water-worn pebbles or boulders cemented into a solid mass.

Craton – An old and stable part of the continental lithosphere. Having often survived cycles of merging and rifting of continents, cratons are generally found in the interiors of tectonic plates. They are characteristically composed of ancient crystalline basement rock, which may be covered by younger sedimentary rock. They have a thick crust and deep lithospheric roots that extend as much as a few hundred kilometers into the earth’s mantle.

Dacite – An intrusive igneous volcanic rock intermediate in compositions between andesite and rhyolite.

Detrital sedimentary rock – Formed from solid particles of pre-existing rocks or organic debris.

Diabase – A common basic igneous rock usually occurring in dykes or sills.

Diorite – An intrusive igneous rock composed chiefly of sodic plagioclase, hornblende, biotite or pyroxene.

Dykes –Long and relatively thin bodies of igneous rock that, while in the molten state, intruded a fissure

in older rocks.

Exploration stage – Includes all issuers engaged in the search for mineral deposits (reserves) which are not in either the development or production stage.

Folded – Any bending or wrinkling of rock strata.

Fault – A break in the earth’s crust caused by tectonic forces which have moved the rock on one side with respect to the other.

Feldspar – A group of rock-forming tectosilicate minerals which make up as much as 60% of the earth’s crust.

Felsic – Term used to describe light-colored rocks containing feldspar, feldspathoids and silica.

g/t – Grams per tonne.

Gabbro – A dark, coarse-grained igneous rock.

Granite – A coarse-grained intrusive igneous rock consisting of quartz, feldspar and mica.

Granitoid – is a general, descriptive field term for light-colored, coarse-grained igneous rocks.

Greenstone Belts – Zones of variably metamorphosed mafic to ultramafic volcanic sequences with associated sedimentary rocks that occur within Archaean and Proterozoic cratons between granite and gneiss bodies. The name comes from the green hue imparted by the color of the metamorphic minerals within the mafic rocks.

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Greywackes – A variety of sandstone generally characterized by its hardness, dark color, and poorly sorted angular grains of quartz, feldspar, and small rock fragments or lithic fragments set in a compact, clay-fine matrix.

Hematite – An oxide of iron, and one of that metal’s most common ore minerals.

Hornblende – A common constituent of many igneous and metamorphic rocks.

Intrusive – A body of igneous rock formed by the consolidation of magma intruded into other rocks, in contrast to lavas, which are extruded upon the surface.

Induced polarization survey – A method of ground geophysical surveying employing an electrical current to determine indications of mineralization.

Komatites – Ultramafic mantle-derived volcanic rocks.

Lithosphere – Outermost shell of a rocky planet. It comprises the crust and the portion of the upper mantle that behaves elastically on time scales of thousands of years or greater.

Mafic – Igneous rocks composed mostly of dark, iron- and magnesium-rich minerals.

Magnetic survey – A geophysical survey that measures the intensity of the earth’s magnetic field.

Magnetometer – An instrument used to measure the magnetic attraction of underlying rocks.

Metamorphism – The process by which the form or structure of rocks is changed by heat and pressure.

Metasedimentary – A sediment or sedimentary rock which shows evidence of metamorphism.

Metavolcanic – A type of metamorphic rock that was first produced by a volcano, then buried underneath subsequent rock and finally, was subjected to high pressures and temperatures, causing the rock to recrystallize. Metavolcanic rock is commonly found in greenstone belts.

Monzonites –An intermediate igneous intrusive rock composed of approximately equal amounts of sodic to intermediate plagioclase and orthoclase feldspars with minor amounts of hornblende, biotite and other minerals.

Ni-Cu-PGE – Nickel, Copper, Platinum Group Elements.

Orthogneiss - a metamorphic rock form originating from igneous rock characterized by banding caused by segregation of different types of rock, typically light and dark silicates.

Pegmatite - A very coarse-grained, intrusive igneous rock composed of interlocking grains usually larger than 2.5 cm in size.

Plagioclase –An important series of tectosilicate minerals within the feldspar family.

Plutons – Refers to rocks of igneous origin that have come from great depth.

Porphyry – Any igneous rock in which relatively large crystals , called phenocrysts, are set in a fine-grained groundmass.

Proved reserves – Reserves for which (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.

Pyrite – A yellow iron sulphide mineral, normally of little value. It is sometimes referred to as “fool’s gold”.

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Pyroclastic – Clastic rocks composed solely or primarily of volcanic materials. Where the volcanic material has been transported and reworked through mechanical action, such as by wind or water, these rocks are termed volcaniclastic.

Pyroxene – a silicate mineral.

Quartz – Common rock-forming mineral consisting of silicon and oxygen.

Reserves – That part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination.

Rhyolitic – A fine-grained, extrusive igneous rock which has the same chemical composition as granite.

Sandstone – a sedimentary rock consisting of grains of sand cemented together.

Schist –  Medium-grained to coarse-grained metamorphic rock composed of laminated, often flaky parallel layers of chiefly micaceous minerals.

Sericite – A fine grained mica which consist of a group of sheet silicate minerals

Shear or sheared – The deformation of rocks by lateral movement along innumerable parallel planes, generally resulting from pressure and producing such metamorphic structures as cleavage and schistosity.

Silica – Silicon dioxide. Quartz is a common example.

Sills – An intrusive sheet of igneous rock of roughly uniform thickness that has been forced between the bedding planes of existing rock.

Siltstone – A sedimentary rock which has a grain size in the silt range, finer than sandstone and coarser than claystones.

Sulphide – A compound of sulphur and some other element.

Tectonics – A field of study within geology concerned generally with the structures within the lithosphere of the earth and particularly with the forces and movements that have operated in a region to create these structures.

Tectosilicate – Comprises nearly 75% of the earth’s crust. Tectosilicates, with the exception of the quartz group, are aluminosilicates.

Tholeiitic basalts – A type of basalt (an igneous rock) which includes very little sodium as compared with other basalts. Chemically, this type of rock has been described as a subalkaline basalt.

Tuffs – Rock composed of fine volcanic ash.

Ultramafic – Rocks are igneous and meta-igneous rocks with very low silica content and are composed of usually greater than 90% mafic minerals (dark colored, high magnesium and iron content).

VLF electromagnetic survey – Very low frequency geophysical survey method which measures the electromagnetic properties of rocks.

VMS – Volcanic massive sulphide.

Volcanic rocks – Igneous rocks formed from magma that has flowed out or has been violently ejected from a volcano.

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Volcaniclastics – see “Pyroclastic” above.

VTEM – Versatile Time Domaine Electro-Magnetics.  VTEM is the dominate time-domain electromagnetic system in the world.

Wackes – A name for a poorly sorted sandstone, a mixture of grains of sand, silt and clay size.

FORWARD LOOKING STATEMENTS

The Company cautions readers regarding forward looking statements found in the following discussion and elsewhere in this registration statement and in any other statement made by, or on the behalf of the Company, whether or not in future filings with the Securities Exchange Commission (the “SEC”).  Forward looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments.  Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control and many of which, with respect to future business decisions, are subject to change.  These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by or on behalf of the Company.  The Company disclaims any obligation to update forward looking statements.

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PART I

Item 1.   Identity of Directors, Senior Management and Advisers.

Directors and Senior Management

The following are the names, business addresses and positions of the directors and officers of Mill City Gold Corp. (the “Company”), as of December 31, 2010.

Name and Business Address	Position(s)
James R. Brown 4719 Chapel Road NW Calgary, Alberta T2L 1A7 Canada	Chairman, President, CEO and Director
Janice Brown 4719 Chapel Road N.W. Calgary, Alberta T2L 1A7 Canada	Chief Financial Officer, Secretary and Director
Gordon S. McKinnon 141 Adelaide Street West, Suite 520 Toronto, Ontario M5H 3L5 Canada	Director
Herb J. Leary 1620 Palisades Drive Pacific Palisades, CA 90272 USA	Director

Auditors

For the past three years, the Company’s auditors have been D&H Group LLP, Chartered Accountants, 10th Floor, 1333 West Broadway, Vancouver, British Columbia, V6H 4C1, Canada.  D&H Group LLP is licensed to practice public accounting in the Province of British Columbia by the Institute of Chartered Accountants of British Columbia and is registered with the Public Company Accounting Oversight Board and the Canadian Public Accountability Board.

Legal Counsel

The Company’s Canadian legal counsel is DuMoulin Black LLP, 10th Floor, 595 Howe Street, Vancouver, British Columbia V6C 2T5, and its United States legal counsel is Dill Dill Carr Stonbraker & Hutchings, P.C., 455 Sherman Street, Suite 300, Denver, Colorado 80203.

Item 2.   Offer Statistics and Expected Timetable.

Not applicable.

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Item 3.   Key Information.

Selected Financial Data

The selected financial data of the Company for the years ended December 31, 2009, 2008, 2007, 2006 and 2005, was derived from the financial statements of the Company which have been audited by D&H Group LLP, independent Chartered Accountants, as indicated in their report which is included elsewhere in this registration statement.

The selected financial data at and for the nine-month periods ended September 30, 2010 and 2009, have been derived from the unaudited financial statements of the Company, also included herein and, in the opinion of the Company, included all adjustments (consisting of normally recurring adjustments) necessary to present fairly the information set forth therein.

The information in the following table was extracted from the more detailed financial statements and related notes included herein and should be read in conjunction with such financial statements and with the information appearing under the heading “Item 5. Operating and Financial Review and Prospects.”

Reference is made to Note 13 of the Company’s audited financial statements for the years ended December 31, 2009, 2008 and 2007 and Note 12 of the Company’s financial statements for the nine months ended September 30, 2010 and 2009, which are included herein, for a discussion of the material differences between Canadian generally accepted accounting principles (“GAAP”) and US GAAP, and their effect on the Company’s financial statements.

To date, the Company has not generated any cash flow from operations to fund ongoing operational requirements and cash commitments.  The Company has financed its operations principally through the sale of its equity securities.  The Company currently has sufficient funds to maintain operations at its current level of activity.  It will continue to rely on the sale of its equity securities to provide funds for its activities; however, there is no assurance that it will be able to do so.

	Nine Months Ended September 30, (unaudited)						Year Ended December 31,
	2010			2009			2009			2008			2007			2006			2005
Revenues	$	-		$	-		$	-		$	-		$	-		$	-		$	-
(Loss) from Operations	$	(283,803	)	$	(551,737	)	$	(714,570	)	$	(952,222	)	$	(774,408	)	$	(680,764	)	$	(755,325	)
Net (Loss)	$	(287,175	)	$	(323,782	)	$	(465,478	)	$	(1,384,069	)	$	(731,228	)	$	(336,882	)	$	(751,881	)
Total Assets	$	2,409,207		$	2,692,485		$	2,644,740		$	2,985,198		$	1,509,824		$	1,908,042		$	950,788
Net Assets	$	2,382,865		$	2,688,518		$	2,613,224		$	2,955,019		$	1,481,591		$	1,871,120		$	895,853
Capital Stock	$	6,124,765		$	6,329,972		$	6,113,547		$	6,318,792		$	3,891,544		$	3,841,544		$	2,685,063
Weighted Average Number of Shares		51,351,899			50,795,123			50,872,288			46,722,645			37,927,152			36,087,618			26,144,530
Dividends per Share	$	-		$	-		$	-		$	-		$	-		$	-		$	-
Basic and Fully Diluted (Loss) per Share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.03	)	$	(0.02	)	$	(0.01	)	$	(0.03	)

Adjustment to United States Generally Accepted Accounting Principles

The financial statements of the Company have been prepared in accordance with Canadian GAAP which differs in certain material respects from US GAAP.  Material differences between Canadian and US GAAP and their effect on the Company’s consolidated financial statements are summarized in the tables below.

Under US GAAP, the following financial information would be adjusted from Canadian GAAP (references are made to Note 13 of the Company’s audited financial statements for the years ended December 31, 2009, 2008 and 2007 and Note 12 of the Company’s financial statements for the nine months ended September 30, 2010 and 2009, which are included herein):

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	Nine Months Ended September 30, (unaudited)						Year Ended December 31,
		2010			2009			2009			2008			2007
Statement of Loss
Net loss – Canadian GAAP	$	(287,175	)	$	(323,782	)	$	(465,478	)	$	(1,384,069	)	$	(731,228	)
Unproven mineral interests expensed under US GAAP		(7,864	)		(14,138	)		(28,236	)		(1,166,221	)		(94,343	)
Impairment charge not recognized under US GAAP		7,864			14,098			14,198			481,526			-
Reversal of future income tax recovery		--			(225,000	)		(225,000	)					-
Net (loss) – US GAAP	$	(287,175	)	$	(548,822	)	$	(704,516	)	$	(2,068,764	)	$	(825,571	)
(Loss) per share – US GAAP	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(1.04	)	$	(0.02	)

	September 30, (unaudited)						December 31,
	2010			2009			2009			2008
Balance Sheets
Total assets – Canadian GAAP	$	2,409,207		$	2,644,740		$	2,644,740		$	2,985,198
Unproven mineral interests expensed under US GAAP		(1,180,459	)		(1,180,459	)		(1,180,459	)		(1,166,421	)
Goodwill not recognized under US GAAP		(100,000	)		(100,000	)		(100,000	)		(100,000	)
Total assets – US GAAP	$	1,128,748		$	1,364,281		$	1,364,281		$	1,718,777
Closing deficit – Canadian GAAP	$	(5,817,486	)	$	(5,530,311	)	$	(5,530,311	)	$	(5,064,833	)
Unproven mineral interests expensed under US GAAP		(1,180,459	)		(1,180,459	)		(1,180,459	)		(1,166,421	)
Goodwill not recognized under US GAAP		(100,000	)		(100,000	)		(100,000	)		(100,000	)
Reversal of future income tax recovery		(225,000	)		(225,000	)		(225,000	)		-
Deficit – US GAAP	$	(7,322,945	)	$	(7,035,770	)	$	(7,035,770	)	$	(6,331,254	)

	Nine Months Ended September 30, (unaudited)						Year Ended December 31,
	2010			2009			2009			2008			2007
Statements of Cash Flows
Cash flow used in operating activities – Canadian GAAP	$	(223,667	)	$	(286,162	)	$	(350,057	)	$	(422,383	)	$	(513,075	)
Add net loss – Canadian GAAP		287,803			323,782			465,478			1,384,069			731,228
Less net loss – US GAAP		(287,175	)		(548,822	)		(704,516	)		(2,068,764	)		(825,571	)
Cash flows used in operating activities – US GAAP	$	(223,039	)	$	(511,202	)	$	(589,095	)	$	(1,107,078	)	$	(607,418	)
Cash flow from (used in) investing activities – Canadian GAAP	$	-		$	(19,256	)	$	(33,029	)	$	(1,517,472	)	$	102,650
Add unproven mineral interest expensed in US GAAP		-			14,238			28,236			1,517,472			94,343
Cash flows from (used in) investing activities – US GAAP	$	-		$	(5,018	)	$	(4,793	)	$	-		$	196,993

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Exchange Rate History

The following table sets forth the average exchange rate for one Canadian dollar expressed in terms of one U.S. dollar for the fiscal years ended December 31, 2009, 2008, 2007, 2006 and 2005 and the period from January 1, 2010 through September 30, 2010, calculated by using the average of the exchange rates on the last day of each month during the period:

Period	Average
January 1, 2010 - September 30, 2010	0.9598
January 1, 2009 - December 31, 2009	0.8793
January 1, 2008 - December 31, 2008	0.9335
January 1, 2007 - December 31, 2007	0.9376
January 1, 2006 - December 31, 2006	0.8844
January 1, 2005 - December 31, 2005	0.8276

The following table sets forth high and low exchange rates for one Canadian dollar expressed in terms of one U.S. dollar for the past six months:

Month	High	Low
December 2010	0.9843	0.9827
November 2010	0.9988	0.9741
October 2010	0.9972	0.9689
September 2010	0.9786	0.9506
August 2010	0.9848	0.9399
July 2010	0.9727	0.9392

The noon rate of exchange on January 7, 2011, reported by the United States Federal Reserve Bank of New York for the conversion of Canadian dollars into United States dollars was CDN$0.9932 (US$1.0068 = CDN$1.00).

Exchange rates are based upon the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.

Capitalization and Indebtedness

The following table sets forth the Company’s current liabilities and capitalization as of September 30, 2010:

	$
Current Liabilities	26,342
Stockholder’s Equity
Common Shares, no par value, unlimited common shares       authorized, 51,544,207 shares issued and outstanding	6,124,765
Contributed Surplus	2,075,586
Deficit	(5,817,486	)
	2,382,865
Total Capitalization	2,409,207

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Risk Factors

The operations of the Company are speculative due to the high risk nature of its business which involves the exploration of its projects.  The following risk factors apply to the Company’s operations:

The Company is an exploration stage company with limited financial resources and if the Company is unable to secure additional funding and/or if the Company’s exploration programs are unsuccessful, the Company may fail.

Mineral exploration involves significant risk and few properties that are explored are ultimately developed into producing mines.  Substantial expenditures may be required to establish ore reserves through drilling, to develop metallurgical processes to extract the metals from the ore and to construct the mining and processing facilities at any site chosen for mining.  Current exploration programs may not result in any commercial mining operation.  The Company’s options in unproved mineral claims are without a known body of commercial ore and the proposed programs are an exploratory search for ore.  The Company is presently carrying out exploration with the objective of establishing an economic body of ore. If the Company’s exploration programs are successful, additional funds will be re quired for the development of an economic ore body and to place it into commercial production.  The only sources of future funds presently available to the Company are the sale of equity capital, the exercise of warrants and options or the offering by the Company of an interest in the mineral claim to be earned to another party or parties.  If the Company is unable to secure additional funding, the Company may lose its interest in one or more of its mineral claims and/or may be required to cease operations.

Because the Company has limited financial resources and has not generated any revenue from its operations, the Company may not be able to continue its operations and an investment in the Company’s common shares may be worthless.

The Company has limited financial resources, has a history of losses and has no source of operating cash flow.  The Company has not generated any revenues from its mineral claims and does not anticipate any in the foreseeable future.  Additional funding may not be available to it for further exploration of its option interests or to fulfill its obligations under any applicable agreements.  Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration of its projects with the possible loss of such interests.  Historically, the only source of funds available to the Company has been through the sale of its common shares.

As of September 30, 2010, the Company held $554,762 in cash and cash equivalents and had working capital of $533,331. The Company does not have sufficient financial resources to conduct additional exploration of its mineral property interests.  It is intending to raise further equity capital to fund further exploration activities.  The Company may not be able to raise the necessary funds, if any, and may not be able to raise such funds at terms which are acceptable to the Company.  In the event the Company is unable to raise adequate finances to fund the proposed activities, it may have to abandon one or more of its projects.  Any further additional equity financing undertaken by the Company may cause dilution to its shareholders.

See “Item 4.  Information on the Company” and “Item 5.  Operating and Financial Review and Prospects.”

The Company’s financial statements were prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business.

The Company’s operations are subject to government regulations which may subject the Company to penalties for failure to comply and may limit the Company’s ability to conduct exploration activities and could cause the Company to delay or abandon its projects.

Exploration activities require permits from various federal, provincial or territorial and local governmental authorities and are subject to national and local laws and regulations governing prospecting, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety, and others which currently or in the future may have a substantial adverse impact on the Company.  See “Item 4. Information on the Company - Business Overview - Government Regulations.”  Such operations and exploration

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activities are also subject to substantial regulation under these laws by governmental agencies and may require that the Company obtain permits from various governmental agencies. There can be no assurance, however, that all permits which the Company may require for its operations and exploration activities will be obtainable on reasonable terms or on a timely basis or that such laws and regulations would not have an adverse effect on any mining project which the Company might undertake.

In order to comply with applicable laws, the Company may be required to make capital expenditures until a particular problem is remedied. Existing and possible future environmental legislation, regulation and action could cause additional expense, capital expenditures, restriction and delays in the activities of the Company, the extent of which cannot be reasonably predicted. Violators may be required to compensate those suffering loss or damage by reason of their exploration activities and may be fined if convicted of an offense under such legislation.

Failure to comply with applicable laws, regulations, and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions. Parties engaged in exploration operations may be required to compensate those suffering loss or damage by reason of exploration activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations and, in particular, environmental laws.

Amendments to current laws, regulations and permits governing activities of mineral exploration companies, or more stringent implementation thereof, could require increases in exploration expenditures, or require delays in exploration or abandonment of new mineral properties.

Exploration for minerals on the Company’s projects are subject to significant risks which could increase the costs of exploration and could cause the Company to delay or abandon its projects.

Resource exploration and development is a speculative business, characterized by a number of significant risks including, among other things, unprofitable efforts resulting not only from the failure to discover mineral deposits but also from finding mineral deposits that, though present, are insufficient in quantity and quality to return a profit from production. The marketability of minerals acquired or discovered by the Company may be affected by numerous factors which are beyond the control of the Company and which cannot be accurately predicted, such as market fluctuations, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals, and environmental p rotection, the combination of which factors may result in the Company not receiving an adequate return of investment capital.

All of the claims to which the Company has a right to acquire an interest are in the exploration stages only and are without a known body of commercial ore. Development of the subject mineral properties would follow only if favorable exploration results are obtained. The business of exploration for minerals and mining involves a high degree of risk. Few properties that are explored are ultimately developed into producing mines.

There is no assurance that the Company’s mineral exploration and development activities will result in any discoveries of commercial bodies of ore. The long-term profitability of the Company’s operations will in part be directly related to the costs and success of its exploration programs, which may be affected by a number of factors.

Substantial expenditures are required to establish reserves through drilling and to develop the mining and processing facilities and infrastructure at any site chosen for mining. Although substantial benefits may be derived from the discovery of a major mineralized deposit, no assurance can be given that minerals will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.

There is no assurance that the TSX Venture Exchange (the “TSX-V”) will approve the acquisitions of any additional properties by the Company, whether by way of option or otherwise.

Mineral exploration involves many risks, which even a combination of experience, knowledge and careful evaluation may not be able to overcome.  Operations in which the Company has a direct or indirect interest will be subject to all

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the hazards and risks normally incidental to exploration for gold (also “Au”), silver (also “Ag”) and other metals, any of which could result in work stoppages, damage to property, and possible environmental damage.

The Company will continue to rely upon consultants and others for exploration and, if required, development expertise. If any of the Company’s option interests merit development, substantial expenditures will be required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining.  The Company may not discover minerals in sufficient quantities to justify commercial operations and the Company may not be able to obtain the funds required for development on a timely basis.  The economics of developing gold, silver and other mineral properties are affected by many factors including the cost of operations, variations in the grade of or e mined, fluctuations in metal markets, costs of processing equipment and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection.

Because the Company is subject to compliance with governmental regulation, the cost of its exploration programs may increase.

The Company’s operations may be subject to environmental regulations promulgated by government agencies from time to time. Environmental legislation provides for restrictions and prohibitions on spills, releases or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution.  A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments. Environmental legislation is evolving in a manner which means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent.  Environmental assessments of proposed projects carry a heighten ed degree of responsibility for companies and directors, officers and employees.  The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.

The Company may incur liability for certain risks against which the Company does not have insurance, which could reduce or eliminate any future profitability and negatively impact the price of the Company’s shares.

In the course of exploration of mineral concessions, certain risks, and in particular, unexpected or unusual geological operating conditions including rock bursts, cave-ins, fires, flooding and earthquakes may occur.  It is not always possible to fully insure against such risks and the Company may decide not to take out insurance against such risks as a result of high premiums or other reasons.   Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of the securities of the Company.  The Company does not have any insurance coverage on its mineral concessions.

The Company may not be able to obtain supplies and infrastructure necessary to conduct its exploration operations and, as such, may have to delay or abandon its projects.

Some of the Company’s property interests are not in developed areas and the availability of infrastructure (water and power, and in some areas roads) at an economic cost cannot be assured.  Power is an integral requirement of any production facility on the Company’s properties.  In the event the Company is unable to obtain water or power at any of its properties, the Company may not be able to conduct exploration activities, or in the event the Company discovers mineralization, the Company may not be able to begin a development program, in which case the Company may lose its interest in the property or may have to abandon the property.

The Company may not have proper title to its properties and, as a result, may incur significant expenses to obtain proper title, or may have to abandon any such property.

The Company owns, leases or has under option mining claims, mineral claims or concessions which constitute the Company’s property holdings.  The ownership and validity of mining claims and concessions are often uncertain and may be contested.

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In those jurisdictions where the Company has property interests, the Company makes a search of mining records in accordance with mining industry practices to confirm that it has acquired satisfactory title to its properties but does not obtain title insurance with respect to such properties.  The possibility exists that title to one or more of its concessions, particularly title to undeveloped claims, might be defective because of errors or omissions in the chain of title, including defects in conveyances and defects in locating or maintaining such claims, or concessions.

The Company’s mineral property interests may be subject to prior unregistered agreements or transfers or native land claims and title may be affected by undetected defects.  Surveys have not been carried out on any of the Company’s mineral properties; therefore their existence and area could be in doubt. Until competing interests in the mineral lands have been determined, the Company can give no assurance as to the validity of title of the Company to those lands or the size of such mineral lands.

The Company is not aware of challenges to the location or area of its property interests.

If the Company, or the person or entity from which the Company has obtained an option for property interests, does not have proper title to its property interests, the Company may incur significant expenses defending or acquiring proper title and/or may have to abandon such interests, which may result in significant losses for the Company and could result in the Company having to cease operations.

If the Company is unable to effectively compete against other companies, or if the Company cannot market any minerals discovered on its properties, the Company may have to cease operations.

The mineral industry is intensely competitive in all its phases.  The Company competes with many companies possessing greater financial resources and technical facilities than itself for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.

Even if commercial quantities of ore are discovered, a ready market may not exist for their sale.  Factors beyond the control of the Company may affect the marketability of any substances discovered.  These factors include market fluctuations, the proximity and capacity of natural resource markets and processing equipment, government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection.  The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in the Company not receiving an adequate return on invested capital or losing its investment capital.

If the Company obtains funding through the sale of additional common shares, the shareholders may experience dilution.

The Company may in the future grant to some or all of its directors, officers, insiders and key employees options to purchase the Company’s common shares as non-cash incentives to those employees.  Such options may be granted at exercise prices equal to market prices, or at prices as allowable under the policies of the TSX-V, when the public market is depressed.  To the extent that significant numbers of such options may be granted and exercised, the interests of then existing shareholders of the Company may be subject to additional dilution.

The Company is currently without a source of revenue and will most likely be required to issue additional shares to finance its operations and, depending on the outcome of its exploration programs, may issue additional shares to finance additional exploration programs of any or all of its projects or to acquire additional properties.  The issuance of additional shares may cause the Company’s existing shareholders to experience dilution of their ownership interests.

Conflicts of interest may arise among the members of our board of directors and such conflicts may cause the Company to enter into transactions on terms which are not beneficial to the Company.

Several of the Company’s directors are also directors, officers or shareholders of other companies.  Some of the directors and officers are engaged and will continue to be engaged in the search for additional business opportunities on behalf of other corporations, and situations may arise where these directors and officers will be in direct

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competition with the Company. Such associations may give rise to conflicts of interest from time to time.  Such a conflict poses the risk that the Company may enter into a transaction on terms which could place the Company in a worse position than if no conflict existed.  Conflicts, if any, will be dealt with in accordance with the relevant provisions of the Business Corporations Act (British Columbia) (the “BCBCA”).  The directors of the Company are required by law to act honestly and in good faith with a view to the best interest of the Company and to disclose any interest which they many have in any project or opportunity of the Company. However, each director has a similar obligation to other companies for which such director serves as a n officer or director.  No material conflicts of interests which have arisen since January 1, 2007 through the date of this registration statement.

The prices of metals fluctuate in the market and such fluctuations could negatively impact the Company’s ability to raise funding and may cause certain activities to become uneconomic.

Factors beyond the control of the Company may affect the marketability of any substances discovered.  The prices of various metals have experienced significant movement over short periods of time, and are affected by numerous factors beyond the control of the Company, including international economic and political trends, expectations of inflation, currency exchange fluctuations, interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods.  The supply of and demand for metals are affected by various factors, including political events, economic conditions and production costs in major mineral producing regions.  Variations in the market prices of metals may impact the Company’s ability to raise funding to conti nue exploration of its projects.  In addition, any significant fluctuations in metal prices will impact the Company’s decision to accelerate or reduce its exploration activities.

This registration statement contains statements about future events and results which may not be accurate.

Statements contained in this registration statement that are not historical facts are forward-looking statements that involve risks and uncertainties. Such statements may not prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.  Without limiting the generality of the foregoing, such risks and uncertainties include interpretation of results and geology, results of pre-feasibility and feasibility studies, recovery, accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production, delays in exploration activities, political risks involving doing business in other nations and the policies of these other nations, the inherent uncertainty of production fluctuations and failure to obtain adequate financing on a timely basis.

The Company is dependent upon its management and the loss of any of its management and/or if the Company is unable to recruit additional managers could negatively impact the Company’s ability to continue its operations.

The success of the operations and activities of the Company is dependent to a significant extent on the efforts and abilities of its key management, Mr. James R. Brown, the Chairman, President, Chief Executive Officer and a director of the Company, and Mrs. Janice Brown, the Chief Financial Officer, Corporate Secretary, and a director of the Company. The loss of services of either Mr. Brown or Mrs. Brown could have a material adverse effect on the Company.  The Company has not entered into employment agreements with any of its officers and is not expected to do so in the foreseeable future.  The Company has not obtained key-man life insurance on any of its officers or directors.  The Company’s ability to recruit and retain highly qualified management personnel is critical to its success; if it is unable to do so this may materially affect the Company’s financial performance.

The Company’s common shares are not traded in the United States and investors may find it difficult to sell the Company’s common shares.

As of the date of this registration statement, there is no established market in the United States for the Company’s common shares. The Company’s common shares are classified as a grey market security under the symbol “MCYGF”.  There are no market makers in this security. It is not listed, traded or quoted on any stock exchange, the Over the Counter Bulletin Board (“OTCBB”) or the Pink Sheets. Trades in grey market stocks are reported by broker-dealers to their Self Regulatory Organization (SRO) and the SRO distributes the trade data to market data vendors and financial websites so investors can track price and volume. Since grey market securities are not traded

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or quoted on an exchange or interdealer quotation system, investors’ bids and offers are not collected in a central spot so market transparency is diminished and best execution of orders is difficult. Management anticipates that the Company will seek to have its common shares quoted on the OTCBB or Pink Sheets; however, there are no assurances as to if, or when, the Company’s common shares will be quoted on the OTCBB or Pink Sheets.  In addition, even if the Company’s shares are quoted on the OTCBB or Pink Sheets, trading may continue to be sporadic and limited.  Consequently, the Company’s shareholders in the United States may not be able to use their shares for collateral or loans and may not be able to liquidate at a suitable price in the event of an emergency. In addition, the Company’ s shareholders may not be able to resell their shares in the United States and may have to hold them indefinitely.

The Company does not pay dividends on its common shares; therefore, investors seeking dividend income should not purchase the common shares.

The Company has never declared or paid cash dividends on its common shares and does not anticipate doing so in the foreseeable future.  Additionally, the determination as to the declaration of dividends is within the discretion of the Company’s Board of Directors, which may never declare cash dividends on the Company’s common stock.  Investors cannot expect to receive a dividend on the Company’s common shares in the foreseeable future, if at all.

The Company’s common shares are subject to “Penny Stock” regulations which may make it difficult for shareholders to sell their shares and, as a result, shareholders may have to hold their shares indefinitely.

The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in “penny stocks”.  Generally, penny stocks are equity securities with a price of less than US$5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system).  Since the Company’s shares are traded for less than US$5.00 per share, the shares are subject to the SEC’s penny stock rules until such time as (1) the Company’s net tangible assets exceed US$5,000,000 during the Company’s first three years of continuous operations or US$2,000,000 after the Company’s first three years of continuous operations; or (2) the Company has had average revenue of at least US$6,000,000 for three years.  The penny stock rules require a broker-de aler, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prescribed by the SEC that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer must obtain a written acknowledgement from the purchaser that the purchaser has received the disclosure document.  The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account.  In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agre ement to the transaction.  These requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that becomes subject to the penny stock rules.  Such rules and regulations may make it difficult for holders to sell the common stock of the Company, and they may be forced to hold it indefinitely.

Investors in the United States may not be able to enforce their civil liabilities against the Company or its directors and officers.

It may be difficult to bring and enforce suits against the Company. The Company is a corporation incorporated in British Columbia. Only one of the Company’s directors is a resident of the United States, and all or a substantial portion of its assets are located outside of the United States. As a result, it may be difficult for U.S. holders of the Company’s common shares to effect service of process on these persons within the United States or to enforce judgments obtained in the U.S. based on the civil liability provisions of the U.S. federal securities laws against the Company or its officers and directors. In addition, a shareholder should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against the Company, its officers or directors predicated upon the civil liability provi sions of the U.S. federal securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against the Company, its officers or directors predicated upon the U.S. federal securities laws or other laws of the United States.

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However, U.S. laws would generally be enforced by a Canadian court provided that those laws are not contrary to Canadian public policy, are not foreign penal laws or laws that deal with taxation or the taking of property by a foreign government and provided that they are in compliance with applicable Canadian legislation regarding the limitation of actions. Also, a judgment obtained in a U.S. court would generally be recognized by a Canadian court except, for example:

a) where the U.S. court where the judgment was rendered had no jurisdiction according to applicable Canadian law;

b) the judgment was subject to ordinary remedy (appeal, judicial review and any other judicial proceeding which renders the judgment not final, conclusive or enforceable under the laws of the applicable state) or not final, conclusive or enforceable under the laws of the applicable state;

c) the judgment was obtained by fraud or in any manner contrary to natural justice or rendered in contravention of fundamental principles of procedure;

d) a dispute between the same parties, based on the same subject matter has given rise to a judgment rendered in a Canadian court or has been decided in a third country and the judgment meets the necessary conditions for recognition in a Canadian court;

e) the outcome of the judgment of the U.S. court was inconsistent with Canadian public policy;

f) the judgment enforces obligations arising from foreign penal laws or laws that deal with taxation or the taking of property by a foreign government; or

g) there has not been compliance with applicable Canadian law dealing with the limitation of actions.

The Company may be deemed to be a “Passive Foreign Investment Company” for U.S. tax purposes which could subject U.S. shareholders to increased tax liability.

The Company may be deemed to be a “Passive Foreign Investment Company”.  See “Item 10.  Additional Information - Taxation.” As a result, a United States holder of the Company’s common shares could be subject to increased tax liability, possibly including an interest charge, upon the sale or other disposition of the United States holder’s common shares or upon the receipt of “excess distributions,” unless such holder of common shares elects to be taxed currently on his or her pro rata portion of the Company’s income, whether or not the income was distributed in the form of dividends or otherwise. The election requires certain conditions be met such as filing on or before the due date, as extended, for filing the shareholder’s income tax return for the first tax able year to which the election will apply. Otherwise, the election may only partially apply.

Item 4.   Information on the Company.

History and Development of the Company

The Company was incorporated pursuant to the Business Corporations Act (Alberta) on August 28, 1998 under the name “Pantera Enterprises Inc.” The Company changed its name to “Mill City International Corporation” on November 29, 2002 after having acquired 977887 Alberta Inc. from Mill City International Inc. (“MIY”).  The Company issued 13,668,413 of its common shares to MIY in exchange for all of the issued and outstanding shares of 977887 Alberta Inc.  MIY then distributed those shares to its shareholders who were shareholders as of October 31, 2002.

Effective September 1, 2004, the Company continued and became a company under the Business Corporations Act (British Columbia), changing its name to “Mill City Gold Corp.”  See “Item 10. Additional Information - Memorandum and Articles of Association.”

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By acquiring 977887 Alberta Inc., the Company acquired an undivided 44.5% interest in a diamond exploration property in the Northwest Territories (the “Yamba Lake property”).  This property was optioned to another company in 1998 and returned to the Company in January 2007.

In 2003, the Company entered into eight purchase agreements to acquire eleven unproven mineral interests located in Nevada.  Expenditures on the Nevada properties were funded by a short form offering that resulted in gross proceeds of $1,400,000.  The Company optioned these Nevada property interests to other companies in 2004, and these optionees conducted exploration activities on these properties.  In 2007, the company that optioned nine of the eleven mineral interests in Nevada returned these properties to the Company.  The Company terminated these nine interests in April 2008.  The other company that optioned the remaining two properties exercised its option in 2007, resulting in the Company having a 20% carried interest.  During 2008, the Company impaired its interest in the se two properties to $100 due to minimal exploration activities during the year.  In 2009, exploration on these properties was discontinued and the Company wrote off its remaining interests in these Nevada properties.

Beginning in 2007, the Company began to change its focus to properties in northern Ontario.  In 2007, the Company acquired an option to earn a 50% interest in 74 staked mineral claims located in the James Bay Lowlands region of northern Ontario, Canada (the “Northern Star Eagle and Southern Star Eagle properties”) and in 2008, the Company acquired an option to earn an undivided 50% interest in 17 mining claims, also located in the James Bay Lowlands region (the “GP2 property”).

In October 2010, after receiving approval of the TSX-V, the Company acquired an option to earn an undivided 75% participating interest in 59 mining claims in the West Timmins Gold District in northern Ontario (the “Croxall property”) and cancelled its option on the Northern Star Eagle and the Southern Star Eagle claims.

In November 2010, the Company acquired an option to earn a 70% interest in 48 claims located in the Yukon Territory (the “Rosebud 12 property”).

The Company’s head office is located at 4719 Chapel Road N.W., Calgary, Alberta T2L 1A7 and its phone number is (403) 640-0110.  The Company’s registered office is located at 10th Floor, 595 Howe Street, Vancouver, BC V6C 2T5 and its phone number is (604) 602-6802.

Business Overview

The Company is a junior mineral exploration company engaged in the acquisition and exploration of precious metals on mineral properties located in Canada, with the aim of developing them to a stage where they can be exploited at a profit or to arrange joint ventures whereby other companies provide funding for development and exploitation.  The Company is currently focusing on its northern Ontario properties and its newly acquired Yukon property.  As of the date of this registration statement, the Company has not earned any production revenue, nor found any proved reserves on any of its properties.  The Company is a reporting issuer in British Columbia, Alberta and Quebec and its common shares trade on the TSX-V.

No capital expenditures were made by the Company since January 1, 2007 other than expenditures relating to the Company’s mineral property interests.  Such expenditures are outlined as follows:

Year	Description and Amount of Capital Expenditure
2007	Payment of license fees in the amount of $94,343 on its Nevada and Yamba Lake property interests
2008	$402,501 of acquisition costs and $641,148 of exploration costs on the Northern Star Eagle and Southern Star Eagle properties $120,000 of acquisition costs and $525,073 of exploration costs on the GP2 property
2009	$12,500 of acquisition costs and $9,431 of exploration costs on the Northern Star Eagle and Southern Star Eagle properties $12,500 of acquisition costs and $4,807 of exploration costs on the GP2 property

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2010 $12,500 of acquisition costs on the GP2 property $7,864 of annual maintenance costs on the Yamba Lake property $17,500 of acquisition costs on the Croxall property $108,000 of acquisition costs on the Rosebud 12 property

These expenditures have been funded through the sale of the Company’s equity securities.  In January 2008, the exercise of warrants resulted in proceeds of $777,000 and in June 2008, the Company completed a non-brokered private placement to raise net proceeds of $1,478,998.  In October 2010, the Company completed a private placement for $1,500,000 in gross proceeds.

There have been no divestitures of properties since January 1, 2007, except for the termination of its mineral interests in Nevada in 2008 and 2009 and the cancellation of  its option on the Northern Star Eagle and the Southern Star Eagle claims in October 2010.

The Company intends to focus its efforts on its Rosebud 12 property located in the Yukon Territory, Canada, and its Croxall property located in northern Ontario. The Company’s 2011 exploration plans for the Rosebud 12 property include extensive mechanized trenching of existing gold-in-soil anomalies, additional soil sampling, ground magnetic surveys and geological mapping.  The goal of this work is to identify and prioritize drill targets.  The Company’s 2011 exploration plans for the Croxall property will consist of a drilling program comprised of 6 or more holes totaling at least 2,500 meters.  The Company does not have any exploration plans in 2011 for the GP2 property.

Government Regulations

The current and anticipated future operations of the Company, including development activities and commencement of production on its properties, require permits from various federal, territorial and local governmental authorities and such operations are and will be governed by laws and regulations governing prospecting, development, mining, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, land use, environmental protection, mine safety and other matters.  Companies engaged in the development and operation of mines and related facilities generally experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits.  Such operations and exploration activities are also subject to substanti al regulation under these laws by governmental agencies and may require that the Company obtain permits from various governmental agencies.  The Company believes it is in substantial compliance with all material laws and regulations which currently apply to its activities.  There can be no assurance, however, that all permits which the Company may require for construction of mining facilities and conduct of mining operations will be obtainable on reasonable terms or that such laws and regulations, or that new legislation or modifications to existing legislation, would not have an adverse effect on any exploration or mining project which the Company might undertake.

The Company has obtained all necessary permits and authorizations required for its current exploration.   The Company has had no material costs related to compliance and/or permits in recent years, and anticipates no material costs in the next year.  Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could have a materially adverse impact on the Company and cause increases in capital expenditures which could result in a cessation of operations by the Company.

Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment or remedial actions.  Parties engaged in exploration and mining operations may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violation of applicable laws or regulations.

The enactment of new laws or amendments to current laws, regulations and permits governing operations and activities of mining companies, or more stringent implementation thereof, could have a material adverse impact on

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the Company and cause increases in capital expenditures or production costs or reduction in levels of production at producing properties or require abandonment or delays in the development of new mining properties.

Organizational Structure

The Company has one wholly-owned subsidiary, Mill City Gold Inc., a Nevada corporation that is in the process of being wound up.

Property, Plant and Equipment

The Company’s operations are focused on the exploration of its mineral property interests.  As of the date of this registration statement, the Company does not have any plant, material equipment, mines or producing properties.  The Company’s proposed programs are exploratory in nature and all of the Company’s properties are without known reserves.

The Company’s principal assets are its options to acquire interests in unproven mineral claims.  Under Canadian GAAP, option payments and exploration, development and field support costs directly relating to mineral claims are deferred until the claims to which they relate are placed into production, sold or abandoned.  The deferred costs will be amortized over the life of the orebody following commencement of production or written off if the property is sold or abandoned.  Administration costs and other exploration costs that do not relate to any specific property are expensed as incurred.

On a periodic basis, management reviews the carrying values of deferred acquisition and exploration expenditures with a view to assessing whether there has been any impairment in value.  Management takes into consideration various information including, but not limited to, results of exploration activities conducted to date, estimated future metal prices, and reports and opinions of outside geologists, mine engineers and consultants.  In the event that reserves are determined to be insufficient to recover the carrying value of any property, the carrying value will be written down or written off, as appropriate.  As of December 31, 2009, the Company has not established that its option interests or its mineral claims have any known or proven reserves.

Rosebud 12 Property

Location and Access

The Rosebud 12 property was staked to cover the inferred source of a 99th percentile Geological Survey of Canada (“GSC”) gold silt anomaly (greater than 99.9 parts per billion gold) in the headwaters of Rosebud Creek, a tributary of the Stewart River.  The Rosebud 12 property is located on a parallel trend approximately 76 kilometers northeast of Kaminak Gold Corporation’s Coffee Creek discovery, and 72 kilometers east of the White Gold property of Underworld Resources Inc./Kinross Gold Corporation.

Like the Klondike and the rest of the White Gold district, and in contrast to the rest of Canada, the Rosebud 12 property is in the part of the Yukon that was not glaciated during the last ice age. As a result, gold placers, and soil and silt geochemistry are very effective in locating gold deposits. The Stewart River is a historic mining district. An active placer prospecting lease starts 500 meters south of the property and extends 15 kilometers downstream toward the Stewart River, and a historic placer lease extended about 10 kilometers upstream from the south margin of the Rosebud 12 property.

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Mineral Claims Included in Rosebud 12 Property

The Rosebud 12 property consists of 48 claims covering approximately 2,500 acres.  All of the claims expire on June 30, 2011 and can be renewed for twelve-month periods by doing exploration work on the property to the value of $100 per claim or, in the alternative, pay $105 per claim to the Mining Recorder in whose office the claims are recorded and file an Application for Renewal of Grant for Quartz Mining Pay in Lieu with such Mining Recorder.

Agreements

Under the Option and Joint Venture Agreement dated November 8, 2010 with The Yukon Cornelius Syndicate (the “Syndicate”), the Company was granted an option to acquire an undivided 70% interest in the property.  The Company initially paid $75,000 in cash and issued 200,000 common shares to members of the Syndicate.  By December 31, 2010, the Company must give written notice of its commitment to incur and pay exploration expenses aggregating at least $200,000 by November 2011.  The Company is also required to make additional annual cash payments totaling $1,375,000 and issue an additional 2,600,000 shares over a five-year period ending in November 2015.  By November 2015, the Company must provide written notice of its commitment to fund the preparation of a feasibility study and the study must be delivered within three years after the date of such notice.  The Company has the option of issuing shares in lieu of any required annual cash payments.  The Syndicate shall retain a 3% net smelter returns royalty, of which the Company can purchase 1% for $1,500,000 within 90 days of delivery of a positive feasibility study.

Regional and Local Geology

The Rosebud 12 property is underlain by Devono-Mississippian felsic orthogneiss, Devono-Mississippian quartzite and quartz-muscovite schist, the same units that host the gold on the White Gold and Coffee Creek properties.

A detailed magnetic derivative map from the McQuesten Survey flown by the Yukon Government and the GSC in 2009 shows that the area is cut by a grid of structures running north-south, east-west, northeast-southwest and northwest-southeast. These lineaments may be important because structure is the dominant feature in the recent major gold discoveries in Yukon's White Gold district, where gold occurs in quartz veins, hydrothermal breccias, and broad shear zones with multiple parallel faults and shears that show up as linear magnetic lows on geophysical maps. The staking crew reported the presence of quartz float and kill zones on the property, which warrant follow-up.  Based on the favorable geological, geochemical, and geophysical indicators, management of the Company believes that the Rosebud 12 property has excellent potential for a significant gold discovery.

Exploration History

The property area has little history of previous gold exploration.  There is no record of gold exploration on or near the property despite the presence of favorable gold geochemistry and a history of placer gold mining extending upstream to a point close to the property boundary.

Planned Future Work

The Company’s 2011 exploration plans include extensive mechanized trenching of existing gold-in-soil anomalies, additional soil sampling, ground magnetic surveys and geological mapping.  The goal of this work is to identify and prioritize drill targets.

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Croxall Property

Location and Access

The Croxall Property is located within the northwest corner of Price Township and parts of southern Ogden and eastern Thorneloe Townships, approximately 18 kilometers southwest of the city center of Timmins, Ontario.  It consists of 60 contiguous unpatented mining claim units. The property covers several gold occurrences and lies several kilometers east and southeast of the Lake Shore Gold’s Golden River Zone and Lake Shore Gold’s Timmins West Gold Deposit, respectively.

Access to the property is obtained by traveling southwest from the Timmins city center down Dalton Road, a well-maintained gravel road approximately 18 kilometers.  Dalton Road crosses through the northern portion of the claim group and a few secondary logging and cottage access roads provide further access to the southern portions of the property.

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Mineral Claims Included in Croxall Property

The Croxall property consists of 59 unpatented mining claims totaling 60 mining claim units covering approximately 2,400 acres.  The claims expire between February 14, 2016 and August 19, 2016.

Agreements

Under the Letter Agreement dated September 21, 2010 with Temex Resources Corp. (“Temex”), the Company can earn a 75% undivided interest in the property.  The Company initially issued 250,000 common shares to Temex.  To exercise the option, the Company must (1) incur exploration expenditures of at least $250,000 by September 21, 2011 and an additional $500,000 of exploration expenditures by September 21, 2014; and (2) make all remaining cash payments owed by Temex to the vendors of the property, which payments are $30,000 by June 22, 2011 and $30,000 by June 22, 2012.  The Company can extend for one year the time for completion of each milestone of the foregoing work commitment, by notice to Temex if given prior to the applicable anniversary of signing.  Each extension shall require the C ompany, subject to TSX-V approval, to allot and issue to Temex 125,000 common shares.  If no extension is granted to the Company in accordance with the foregoing then the Company shall exercise the option on or before the September 21, 2010 (the expiration of the “Earn-in Period”) provided that each such extension which is granted to the Company shall extend the Earn-in Period by one year.

Upon exercise of the option by the Company, Temex will have 60 days to either (1) continue to participate in the joint venture on the property with the Company, or (2) allow its interest in the joint venture to be diluted by the Company.

Regional and Local Geology

The Croxall property lies within the southern portion of the Abitibi Greenstone Belt of the Superior province of the Canadian Shield, which consists of an east-west trending suite of dominantly mafic to felsic metavolcanic, metasedimentary rocks and lesser ultramafic metavolcanic rocks, and a variety of granitoid intrusives. Within the Porcupine gold camp, the metavolcanic rocks are divided into two groups, the Deloro and the Tisdale Groups (Pyke, 1982). The Deloro group consists of an older calc-alkaline sequence of andesite, basalt, dacite, and rhyolitic pyroclastic rocks capped by iron formation confined to a larger domal feature to the south, referred to as the Shaw Dome. The younger, overlying Tisdale group consists of basal ultramafic volcanics and basaltic komatiites, overlain by a thick sequence of tholeiitic basalts and capped by dacitic volcaniclastics (Pyke, 1982). A major east striking belt of clastic metasediments separate the Tisdale group to the north and Deloro Group to the south, and is bounded on the south side by the regionally extensive Destor-Porcupine Fault. This sedimentary sequence consisting of wackes, siltstones, sandstones and lesser conglomerate has been divided into two groups referred to as the Porcupine and Timiskaming groups (Piroshco and Kettles, 1991). The two groups of sediments are separated by the Timiskaming Unconformity. The Porcupine Group is the older of the two groups and conformably overlies the Tisdale Group of rocks, while the younger Timiskaming group of sediments forms an angular unconformity with both the Tisdale Group volcanics and Porcupine Group sediments within the Timmins area (Piroshco and Kettles, 1991).  The majority of gold deposits within the Timmins area occur proximal to fault structures or within fault-bounded blocks, and the mineralized vein zones commonly occupy brittle fracture zones in these areas. The more productive faults recognized to date within the Timmins area are the Destor-Porcupine, Dome, and Hollinger faults. Most mineralized vein structures in the area are associated with carbonate-quartz-sericite-pyrite-albite alteration envelopes that are superimposed on existing, more extensive carbonate and chlorite alteration zones (Piroshco and Kettles, 1991). Within the western end of the Timmins gold camp, the Destor-Porcupine Fault Zone is offset along the north-south trending Mattagami River Fault approximately 7 kilometers further south into Price Township. Lake Shore Gold Corporation’s Timmins West Gold Deposit lies within the south-central portion of Bristol Township, located to the immediate southwest of Price Township and the current Croxall Property.

The Croxall Property is underlain primarily by a variably sheared and folded sequence of greywackes, minor arkosic sandstones, conglomerates, graphitic sediments, and lesser mafic volcanic flows and tuffs, ultramafic volcanics and feldspar+/- quartz porphyry dykes and sills. Several north and northwest trending diabase dykes traverse the property. One large feldspar porphyry lenticular shaped plug occurs within the north-central portion of the claim group surrounded by magnetic ultramafic volcanics and intrusives. A significant amount of shearing, sericite-

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carbonate, hematite-silica alteration and pyrite+/- arsenopyrite mineralization are documented in historical drill holes throughout the claim group and along geological contacts in particular. The Destor-Porcupine Fault Zone passes eastward along the extreme southern portion of the property. The Mattagami River Fault trending north-south lies along the extreme east property boundary. Gold values ranging from 100 to 500 ppb gold are more common while values greater than 1 or 2 g/t gold are less common. From a review of available data to date and drill core, elevated gold values appear to have been commonly associated with reddish hematite altered porphyritic felsic intrusions within the northern half of the property similar to those further west within West Timmins Mining’s Golden River Zone. The southern half on the Croxall Property had widespread carbonate and sericite alteration, minor sporadic quartz veining, very minor sulphide mineralization and very rare porphyry intrusives along with weaker gold values.

Exploration History

The Croxall Property has seen an extensive amount of exploration work carried out on it previously, including airborne and ground geophysical surveying, soil sampling, geological mapping and various diamond drilling campaigns in which 40 diamond drill holes were completed. The work is summarized below.

1946:  Bruin Yellowknife Mines Ltd carried out a ground magnetic survey over portions of the Croxall Property.

1964:  North Rock Exploration Ltd completed two diamond drill holes (NR-1 and NR-2) and a total of 278.3 meters in the northern part of the current property.

1982-1984:  Prospector Robert Rousseau performed a limited amount of mechanical trenching within the southern portion of the property.

1983:  Samin Canada carried out airborne magnetic and electromagnetic surveys over the property.

1985:  Herman Titley carried out a magnetic survey over a portion of the property.

1986:  Prospectors Jim Croxall and Matti Kangas performed limited mechanical trenching in the southern portion of the property.

1987-1990:  Chevron Canada Ltd carried out airborne magnetic and VLF electromagnetic surveying, line-cutting, ground magnetic and induced polarization surveys, geological mapping, mechanical trenching and soil sampling over the Croxall Property. A follow-up diamond drilling program consisting of four holes and 924.6 meters was reported to have yielded a few low grade intervals of 2.88 g/t gold over 0.6 meters from hole PO-88-2 and 0.55 g/t gold over 12.4 meters from hole PO-88-4.

1991-1995:  Jim Croxall and Matti Kangas completed mechanical trenching to evaluate several induced polarization anomalies outlined by Chevron Canada Ltd.  Follow-up diamond drilling was carried out with 13 holes totaling 1244 meters being completed.

1995-1998:  Inmet Mining Corporation optioned the property and completed line cutting, ground magnetometer and induced polarization surveying followed up by 12 diamond drill holes totaling 3073 meters.

2002-2004:  Porcupine Joint Venture completed airborne magnetic surveying and a Mobile Metal Ion soil sampling survey over the Croxall Property. A six-hole diamond drill program covering 1294 meters was subsequently carried out.

2004-2005:  Lake Shore Gold Corporation optioned from prospectors Jim Croxall and Matti Kangas in 2004.  A total of 5 diamond drill holes and 1884.0 meters and were subsequently drilled in 2005 targeting the feldspar porphyry intrusions within the northern portion of the current property. No significant gold values were obtained and the option was later dropped.

2009:  Temex Resources Corporation optioned the 60 mining claim units from prospector Jim Croxall, Bob DeCarle and Mrs. Matti Kangas.

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Temex carried out a program of diamond drilling and soil sampling on the property from August 2009 to October 2009.  The drilling program consisted of 8 holes and 2,863 meters which targeted various areas with anomalous gold mineralization, felsic intrusives and strong alteration. The drilling program was successful in expanding the geological and structural understanding of the property area and in locating additional gold mineralization.  The northern half of the property was found to have a dominant hematite-silica-pyrite alteration associated with numerous felsic intrusive sills and plugs.  The southern half of the property was found to have a dominant sericite-ankeriate alteration with occasional quartz-ankerite veining, generally very minor sulfides and no felsic intrusions.  A limited amount of Mobile Metal Ion soil sampling was also carried out over selected untested historical induced polarization anomalies within the extreme north part of the claim group and were found to have anomalous concentrations of zinc and lead in the soils.

Planned Future Work

The Company’s 2011 exploration plans for the Croxall property will consist of a drilling program comprised of 6 or more holes totaling at least 2,500 meters.  The Company does not have any exploration plans in 2011 for the GP2 property.

GP2 Property

Location and Access

The property is located in the Norton-McFaulds Lake Area of Northern Ontario in areas BMA 523 864, BMA 523 871 and BMA 522 871.  The property can be found approximately 90 kilometers northwest of Marten Falls First Nation at Ogoki Post, Ontario and approximately 46 kilometers southwest of Noront’s Eagle One discovery.  Fly in access can be obtained from flight bases in Armstrong, Ontario at the end of Highway #527 or from Nakina, Ontario by taking Provincial Secondary Route #584, 65 kilometers north from Geraldton, Ontario.

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Mineral Claims Included in the GP2 Property

The GP2 property consists of 17 unpatented claims totaling 240 claim units covering approximately 9,600 acres.  The claims expire between February 20, 2013 and March 19, 2013.

Agreements

Under the Letter Agreement dated September 2, 2008 with Temex and East West Resource Corporation (now known as Rainy Mountain Royalty Corp. (“Rainy Mountain”)), the Company can earn an undivided 50% interest in the property.  The Company initially issued 375,000 common shares to each of Temex and Rainy Mountain.  To exercise the option, the Company must incur at least $500,000 of exploration expenditures by September 2, 2009, issue an additional 125,000 common shares to each of Temex and Rainy Mountain by September 2, 2009, incur an additional $1,500,000 of exploration expenditures by September 2, 2010, and incur an additional $3,000,000 of exploration expenditures by September 2, 2011.  The Company may extend for one year the time for completion of each milestone of the foregoing work commitment, by notice to Temex and Rainy Mountain if given prior to the applicable milestone deadline.  Each extension requires the Company, subject to TSX-V approval, to allot and issue to each of Temex and Rainy Mountain 125,000 common shares.  If no extension is granted to the Company in accordance with the foregoing then the Company must exercise the option on or before September 2, 2012 (the expiration of the “Earn-in Period”) provided that each such extension which is granted to the Company shall extend the Earn-in Period by one year.  The Company incurred $525,073 of exploration costs during 2008 and issued 250,000 common shares in 2009.  The Company issued an additional 250,000 common shares in 2010 to extend the time to complete its exploration commitments by one year.

Upon exercise of the option by the Company, each of Temex and Rainy Mountain will have 60 days to elect to either (1) continue to participate in the joint venture on the property, or (2) relinquish its participating interest in joint venture in exchange for a 7.5% carried and non-assessable interest in the property to the date of commencement of commercial production.

Regional and Local Geology

The GP2 property is located in the Mameigwess-Rowlandson Lake Greenstone Belt to the unnamed greenstone belt found on surface over 27 kilometers long to the east in the Fishtrap Lake area, which is probably an extension of the Mameigwess-Rowlandson Lake Greenstone Belt located to the west by Lansdowne House, Ontario. This greenstone belt consists of mafic pillow lava volcanics bordered mainly by larger posttectonic plutons of pegmatite granites and monzonites. Specifically, the GP2 property has been mapped as containing quartz diorite rocks along southwest-northeast trend outlined by an original aeromagnetic trend that can be seen from the results of an aeromagnetic survey flown from 1959 to 19601. The rock units of the GP2 property are interpreted t o contain the same stratigraphic package as those of the VMS- and Ni-Cu-PGE-hosting respective Spider-KWG and Noront Double Eagle properties to the northeast, all of which envelop an arcuate magnetic feature seen from a provincial airborne magnetic survey and known to be the “Ring of Fire” in the whole McFauld’s Lake area. Associated with the volcanics in the Mameigwess-Rowlandson Lake Greenstone Belt to the more easterly unnamed belt are the Lansdowne House intrusion to the west and Fishtrap hornblende gabbro intrusion to the east of the property that may represent similar or related intrusions to that discovered in a portion of the GP2 Property. This intrusion either or both intruded along and within the “Ring of Fire” arc and the large crustal scale Stull-Wunnumin Fault mapped out to the west-northwest to east-southeast of which controls the emplacement of Lansdowne House and Fishtrap intrusions in the Mameigwess-Rowlandson Lake Greenstone Belt to the unnamed greenstone belt.

Exploration History

Apart from the earlier reconnaissance geology and geophysics performed by the federal and provincial geological surveys, there has been no previous work on the GP2 property itself and the property was unexplored prior to the recent VTEM and magnetic survey flown for the drill program conducted by the Company in September 2008.

___________________________

11962 Bostock, H.H. of the Geological Survey of Canada.

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However, detailed geology mapped in the Mameigwess-Rowlandson Lake Greenstone and adjacent belts and interpretation of the same magnetic trend on the property as with properties in the greater McFaulds Lake or “Ring of Fire” area provided previous work in the region and analysis leading up to the planning of the drill program.

In September 2008, the Company drilled a total of 8 holes totaling 1,287 meters on the GP2 property.  The holes were designed to test for nickel and copper mineralization on potential ultramafic-mafic intrusions and test for potential VMS mineralization in metavolcanic rocks.  The program was successful in intercepting both types of deposits.  Nickel and copper mineralization was intercepted on an intrusion with as high as 1.432% copper and 0.412% nickel on some intercepts and an overall weighted average of 0.2% copper and 0.057% nickel in 61 samples.

Planned Future Work

The Company has no exploration plans for the GP2 property for 2011.

Item 4A.  Unresolved Staff Comments.

Not Applicable.

Item 5.  Operating and Financial Review and Prospects.

The following discussion of the financial position, changes in financial position and results of operation of the Company for the fiscal years ended December 31, 2009, 2008 and 2007 should be read in conjunction with the accompanying audited financial statements of the Company and related notes included therein.  The discussion for the nine months ended September 30, 2010 and 2009 should be read in conjunction with the interim financial statements of the Company.

The Company’s financial statements are prepared in accordance with Canadian GAAP, the application of which, in the case of the Company, conforms in all material respects for the periods presented with US GAAP, except for the differences noted in Note 13 of the Company’s audited financial statements for the years ended December 31, 2009, 2008 and 2007 and Note 12 of the Company’s financial statements for the nine months ended September 30, 2010 and 2009, which are included herein.  The noon rate of exchange on January 7, 2011, reported by the United States Federal Reserve Bank of New York, for the conversion of Canadian dollars into United States dollars was CDN$0.9932 (US$1.0068 = CDN$1.00).  The effects of inflation and price changes have not had a material impact on the Company’s operations si nce its incorporation.

The Company’s financial statements were prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge liabilities in the normal course of business.

Overview

The Company was incorporated on August 28, 1998 and remained without a business asset until 2002, when it acquired all of the issued and outstanding shares of 977887 Alberta Inc. in exchange for 13,668,413 common shares. The 13,668,413 common shares were then distributed to the shareholders of the company that had owned 977887 Alberta Inc.  Effective September 1, 2004, the Company continued and became a company under the Business Corporation Act (British Columbia).

The Company is a junior mineral exploration company engaged in the business of acquiring, exploring and evaluating natural resource properties, and either joint venturing or developing these properties further depending on the evaluation of the property.  The Company has been focusing on unproven mineral properties it has acquired in northern Ontario and the Yukon Territory.

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Operating Results

Nine Months Ended September 30, 2010 Compared to Nine Months Ended September 30, 2009

During the nine months ended September 30, 2010, the Company incurred expenses of $283,803 compared with expenses of $551,737 in the same period of 2009.  The decrease of $267,934 was primarily due to a decrease in stock-based compensation of $225,503 resulting from the grant of stock options in 2008 and 2009.  During 2010, the Company paid annual maintenance fees of $7,864 for its Yamba Lake property and these costs were recorded as an impairment charge.  During 2009, annual maintenance fees of $13,998 were paid for its Yamba Lake property and the remaining value of $14,098 was recorded as an impairment charge.  During the nine months ended September 30, 2010, the Company earned interest income of $4,492 to reduce the net loss before income taxes to $287,175 or $0.01 per share.  During th e nine months ended September 30, 2009, the Company earned interest income of $17,053 to reduce the net loss to $548,782 or $0.01 per share.

During 2010 and 2009, the Company incurred minimal expenditures on its unproven mineral interests due to insufficient funds.  The Company spent $9,431 on its Northern Star Eagle and Southern Star Eagle property during the nine months ended September 30, 2009 and $-0- in 2010.  Expenditures on the GP2 property were $4,807 plus shares valued at $12,500 for the acquisition cost in 2009.  In 2010, the Company issued shares valued at $12,500 to extend its exploration commitments by one year on the GP2 property.

Fiscal Year Ended December 31, 2009 Compared to Fiscal Year Ended December 31, 2008

During the year ended December 31, 2009, the Company incurred expenses of $714,570 compared with expenses of $952,222 in fiscal 2008, a decrease of $237,652.  The major changes were a decrease of $101,321 in stock-based compensation resulting from a total of 5,625,000 options granted during 2008 and reductions of $34,487 for professional fees and $58,607 for investor relations, both related to financing.  During 2009, the Company recovered $23,297 for a security bond on property in Nevada and recorded it as a recovery of impairment charge, and wrote off the full amount of its Yamba Lake and Nevada properties.  Combined with interest income of $18,052 and foreign exchange losses of $3,059, the net loss before income taxes was $690,478 or $0.01 per share in 2009.  The Company also recorded a future re covery of income taxes in the amount of $225,000 relating to flow-through shares issued in 2008, which further reduced the 2009 net loss to $465,478.  During 2008, the Company recorded an impairment charge of $474,627 on its Nevada properties and wrote down its investment on its Yamba Lake property in the Northwest Territories by $6,899.  This total impairment of $481,526 and a loss on foreign exchange of $613 less interest income of $50,292 increased the net loss to $1,384,069 or $0.03 per share.

During 2008, the Company acquired two options on unproven mineral properties.  The first was an option to acquire a 50% interest in 74 staked mineral claims at Northern Star Eagle and Southern Star Eagle located in the James Bay Lowlands region of northern Ontario, Canada, for $402,501, and incurred exploration expenditures of $641,148 on the properties.  The second was an option to acquire a 50% interest in the GP2 property also located in the James Bay Lowlands region.  GP2 comprises 17 mining claims totalling 240 claim units.  The Company has issued a total of 1,500,000 common shares (valued at $132,500) in 2008 and 2009 towards the acquisition cost of the properties and exploration expenditures of $525,073 were incurred on the property in 2008 and $4,807 in 2009.  In December 2009, the Company issued an additional 250,000 common shares, valued at $12,500, to extend its exploration commitments for an additional year.

Fiscal Year Ended December 31, 2008 Compared to Fiscal Year Ended December 31, 2007

During the year ended December 31, 2008, the Company incurred expenses of $952,222 compared with expenses of $774,408 in fiscal 2007.  The major change was an increase of $138,550 in stock-based compensation resulting from a total of 3,950,000 options granted during 2008.  During the year, the Company recorded an impairment charge of $474,627 on its Nevada properties and wrote off its investment of $6,899 on its Yamba Lake property in the Northwest Territories.  This total impairment of $481,526 and a loss on foreign exchange of $613 less interest income of $50,292 increased the net loss to $1,384,069 or $0.03 per share.  During the prior year, the Company earned interest income of $37,615, realized a net gain of $10,872 on the sale of marketable securities, and incurred foreign exchange losses of $ 5,307.  These items reduced the net loss for 2007 to $731,228 or $0.02 per share.

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Liquidity and Capital Resources

At September 30, 2010, the Company had working capital of $533,331.

The Company had options to earn a 50% interest on two properties in the James Bay Lowlands region of northern Ontario, Canada.  The Company has incurred cumulative exploration expenditures of $1,206,957 to September 30, 2010 on the properties and must incur exploration expenditures totalling $7,500,000 over a three-year period.  In December 2009, the Company extended the time to complete the exploration commitments on the Northern Star Eagle and the Southern Star Eagle property by one year by issuing 250,000 common shares (recorded at their fair value of $12,500), and in July 2010, the Company extended the time to complete the exploration commitments on the GP2 property by one year by issuing 250,000 common shares (recorded at their fair value of $12,500).  In October 2010, the Company terminated its agreemen t on the Northern Star Eagle and the Southern Star Eagle properties.

In October 2010, the Company entered into an option and joint venture agreement allowing the Company to earn not less than a 75% interest in the Croxall property, a 2,400 acre property located in the area known as the West Timmins Gold District, Ontario and has issued 250,000 common shares for the interest.

Also in October 2010, the Company completed a financing of 9,100,000 flow-through common shares at $0.10 per flow-through share and 5,900,000 units at $0.10 per unit for gross proceeds of $1,500,000.  Each unit consists of one common share and one-half warrant.  Each whole warrant may be exercised at a price of $0.15 until October 20, 2012.  The Company paid commissions of $89,400 plus expenses of $30,030 and issued 1,490,000 broker warrants, exercisable to acquire one unit at a price of $0.10 per unit under October 20, 2012.

Exploration activities are required on the Company’s mineral interests in Northern Ontario.  Currently, the Company does not have sufficient funds to complete the exploration activities required during the current year.  These exploration activities may change due to ongoing results and recommendations and the Company may be required to obtain additional financing.  The Company has relied solely on equity financing to raise the requisite financial resources.  While it has been successful in the past, there can be no assurance that the Company will be successful in completing future financings should the need arise.  Each year and on both properties in Northern Ontario, the Company has the option to defer the required exploration expenditures for one year by issuing additional common shares to the optionor.

Trend Information

None of the Company’s assets are currently in production or generate revenue.

Off-Balance Sheet Arrangements

The Company does not have any material off balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Tabular Disclosure of Contractual Obligations

While the Company does not have any contractual obligations, it has several work commitment obligations that must be satisfied if it wishes to exercise its option on several properties.

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Item 6.   Directors, Senior Management and Employees.

Directors and Senior Management

The names, positions held with the Company and terms of office of each director and officer of the Company as of the date of this registration statement, are as follows:

Name	Position with the Company	Term of Office (for each office held)
James R. Brown	Chairman President and Chief Executive Officer Director	October 2002 to present January 2004 to present October 2002 to present
Janice Brown	Chief Financial Officer Corporate Secretary Director	April 2005 to present November 2004 to present January 2004 to present
Gordon S. McKinnon	Director	July 2009 to present
Herb J. Leary	Director	October 2010 to present

Each director’s term of office shall expire at the Company’s next annual general meeting.  The Company does not have an executive committee or a compensation committee. The Company’s audit committee is responsible for reviewing the Company’s financial statements before they are approved by the Company’s directors.

Janice Brown is the spouse of James R. Brown.  There are no other family relationships between any directors or executive officers of the Company.  To the best of the Company’s knowledge, there are no arrangements or understandings with major shareholders, customers, suppliers, or others, pursuant to which any of the Company’s officers or directors was selected as an officer or director of the Company.

The Company is an exploration stage junior exploration company.  As such, at its stage of development it does not require full-time employees.  The Company’s personnel needs will be dependent upon its level of exploration programs and financial condition.  The officers and directors of the Company will devote as much time as is needed.

Set forth below are brief descriptions of recent employment and business experience of the Company’s officers and directors.

James R. Brown (Age 61), Chairman, President, Chief Executive Officer and Director

Mr. Brown graduated from the University of Calgary, Alberta, Canada in 1971 with a Bachelor of Science Degree.  In 1972, Mr. Brown obtained his Graduate Gemologist in Residence Diploma from the Gemological Institute of America (“GIA”), in Los Angeles, California.  Mr. Brown taught gemology at the GIA for approximately two years after graduating from the school.  Mr. Brown was a principal shareholder in International Gemological Laboratories, a gem-trade laboratory operating in Tokyo, Japan.  This company was responsible for grading diamonds for the largest diamond importers in Japan.  In late 1975, Mr. Brown returned to Los Angeles, California and in 1976, moved to Calgary, Alberta, Canada to set up Diamonds International Ltd., a diamond import/export company.  In 198 1, Mr. Brown became involved as a principal shareholder in Futurtek Communications Inc., a publicly traded company involved in manufacturing a series of automatic dialing devices that were marketed to the alternate long distance carriers who were competing with AT&T.  In 1985, Mr. Brown sold his controlling interest in Futurtek Communications Inc. to United Artists Communications of San Francisco.  Since 1986, Mr. Brown has been involved in various Canadian public companies involved in mining exploration and development.

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Janice Brown (Age 60 ), Chief Financial Officer, Corporate Secretary and Director

Mrs. Brown has over 35 years of general accounting experience including over 15 years with various Canadian public companies.  Earlier in her career, Mrs. Brown had a private consulting firm where she provided accounting services to various industries and implemented cost control systems.  She later became involved with oil and gas companies specializing in joint venture accounting as well as converting their accounting from manual systems to computerized systems.  Mrs. Brown also dealt extensively with government Petroleum Incentive Program Grants and Alberta Petroleum Incentive Program Grants.  She has been the Chief Financial Officer of the Company since April 2005.

Gordon S. McKinnon (Age 27), Director

Mr. McKinnon graduated with an Honors Bachelor degree in Management and Organizational Studies from the University of Western Ontario in 2006 and has served as the President, CEO and a Director of Canadian Orebodies Inc. since its inception in January 2008.  From June 2007 to March 2008, Mr. McKinnon provided his services to Baltic Resources Inc. as Manager of Corporate Development.  In addition, Mr. McKinnon is a principal of McKinnon Prospecting Ltd., a private mineral exploration company, and has been a director of PhosCan Chemical Corporation, a bankable-feasibility stage phosphate company, since March 2008.

Herbert J. Leary(Age 48), Director

Mr. Leary has extensive experience in the real estate industry and the financial markets for three decades. He has been principal broker/owner of Leary Estates based in Los Angeles, California since 1994. Mr. Leary has been an investor in the Company and followed the Company since its early years. He brings a background in real estate investing, acquisitions, marketing and finance as well as a broad background in technology. 

Compensation

Summary Compensation Table

The following table (presented in accordance with National Instrument Form 51-102F6) sets forth all annual and long term compensation for services in all capacities to the Company for the financial years ended December 31, 2009 and 2008 (to the extent required by Form 51-102F6) in respect of each of the individuals comprised of each Chief Executive Officer and the Chief Financial Officer who acted in such capacity for all or any portion of the most recently completed financial year, and each of the three most highly compensated executive officers, or the three most highly compensated individuals acting in a similar capacity (other than the Chief Executive Officer and Chief Financial Officer), as at December 31, 2009, whose total compensation was, individually, more than $150,000 for the financial year and any individual who would have sat isfied these criteria but for the fact that the individual was neither an executive officer of the Company, nor acting in a similar capacity, at the end of the most recently completed financial year (collectively the “Named Executive Officers”):

					Non-Equity Incentive Plan Compensation		Pension Value ($)	All Other Compen- sation ($)
Name and Principal Position	Year	Salary ($)	Share-Based Awards ($)	Option-Based Awards ($)	Annual Incentive Plans	Long-term Incentive Plans			Total Compen- sation ($)
James R. Brown CEO and President	2009	Nil	N/A	39,732(1)	N/A	N/A	N/A	137,535	177,267
	2008	Nil	N/A	245,083(2)	N/A	N/A	N/A	129,240	374,323
Janice Brown CFO & Corporate Secretary	2009	Nil	N/A	28,380(3)	N/A	N/A	N/A	54,000	82,380
	2008	Nil	N/A	173,108(4)	N/A	N/A	N/A	54,000	227,108

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(1) The grant date fair values of James R. Brown’s options were calculated using the Black Scholes model with the following assumptions:  expected life of 5 years, weighted average expected volatility of 115.31%, weighted average risk free interest rate of 1.60% per annum and a dividend yield of nil.

(2) The grant date fair values of James R. Brown’s options were calculated using the Black Scholes model with the following assumptions:  expected life of 5 years, weighted average expected volatility of 94.11%, weighted average risk free interest rate of 3.47% per annum and a dividend yield of nil.

(3) The grant date fair values of Janice Brown’s options were calculated using the Black Scholes model with the following assumptions:  expected life of 5 years, weighted average expected volatility of 115.31%, weighted average risk free interest rate of 1.60% per annum and a dividend yield of nil.

(4) The grant date fair values of Janice Brown’s options were calculated using the Black Scholes model with the following assumptions:  expected life of 5 years, weighted average expected volatility of 97.09%, weighted average risk free interest rate of 3.53% per annum and a dividend yield of nil.

Incentive Plan Awards

The Company does not have any incentive plans, pursuant to which cash compensation that depends on achieving certain performance goals or similar conditions within a specified period is awarded, earned, paid or payable to the Named Executive Officer(s).

Outstanding Share-Based Awards and Option-Based Awards

The following table sets forth information concerning all awards outstanding in relation to each of the Named Executive Officers, as at the end of the most recently completed financial year and including awards granted before the most recently completed financial year, under incentive plans of the Company pursuant to which compensation depends on achieving certain performance goals or similar conditions within a specified period:

Name	Option-Based Awards				Share-Based Awards
	Number of Securities Underlying Unexercised Options (#)	Option Exercise Price ($)	Option Expiration Date	Value of Unexercised In-the-Money Options(1) ($)	Number of Shares or Units of Shares that Have not Vested (#)	Market or Payout Value of Share-Based Awards that Have not Vested ($)
James R. Brown CEO & President	1,800,000 1,100,000 300,000 1,400,000	$0.23 $0.19 $0.25 $0.10	Feb/11 Jan/13 June/13 Jan/14	Nil	Nil Nil Nil 525,000	N/A
Janice Brown CFO& Corporate Secretary	465,000 800,000 200,000 1,000,000	$0.23 $0.21 $0.25 $0.10	Feb/11 Jan/13 June/13 Jan/14	Nil	Nil Nil 25,000 375,000	N/A

 (1) This amount is calculated based on the difference between the market value of the securities underlying the options at the end of the most recently completed financial year, which was $0.04 and the exercise or base price of the option.

Value Vested or Earned During the Year

The value vested or earned during the most recently completed financial year of incentive plan awards granted to Named Executive Officers are as follows:

NEO Name	Option-Based Awards – Value Vested During the Year(1) ($)	Share-Based Awards – Value Vested During the Year ($)	Non-Equity Incentive Plan Compensation – Value Earned During the Year ($)
James R. Brown CEO & President	Nil	N/A	N/A
Janice Brown CFO & Corporate Secretary	Nil	N/A	N/A

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 (1) The market price of the underlying securities was lower than the exercise price of the options under the option-based award throughout the vesting periods.

Pension Plan Benefits

The Company does not have a pension plan that provides for payments or benefits to the Named Executive Officers at, following, or in connection with retirement.

Termination and Change of Control Benefits

The Company does not have any contract, agreement, plan or arrangement that provides for payments to a Named Executive Officer at, following, or in connection with any termination (whether voluntary, involuntary or constructive), resignation, retirement, a change in control of the Company or a change in a Named Executive Officer’s responsibilities.

Director Compensation

The following table sets forth all amounts of compensation provided to the directors, who are each not also a Named Executive Officer, for the Company’s most recently completed financial year:

Director Name	Fees Earned ($)	Share-Based Awards ($)	Option-Based Awards ($)	Non-Equity Incentive Plan Compensation ($)	Pension Value ($)	All Other Compensation ($)	Total ($)
Gordon S. McKinnon	Nil	Nil	5,742(1)	Nil	Nil	Nil	5,742

(1) The grant date fair values of Mr. McKinnon’s options were calculated using the Black Scholes model with the following assumptions:  expected life of 5 years, weighted average expected volatility of 115.77%, weighted average risk free interest rate of 2.52% per annum and a dividend yield of nil.

The Company has no arrangements, standard or otherwise, pursuant to which Directors are compensated by the Company or its subsidiary for their services in their capacity as Directors, or for committee participation, involvement in special assignments or for services as consultant or expert during the most recently completed financial year or subsequently, up to and including the date of this registration statement.

The Company has a stock option plan for the granting of incentive stock options to the officers, employees and Directors.  The purpose of granting such options is to assist the Company in compensating, attracting, retaining and motivating the Directors of the Company and to closely align the personal interests of such persons to that of the shareholders.

Incentive Plan Awards – Outstanding Share-Based Awards and Option-Based Awards

The following table sets forth information concerning all awards outstanding in relation to each of the Directors who are not Named Executive Officers, as at the end of the most recently completed financial year and including awards granted before the most recently completed financial year, under incentive plans of the Company pursuant to which compensation depends on achieving certain performance goals or similar conditions within a specified period:

Director Name	Option-Based Awards				Share-Based Awards
	Number of Securities Underlying Unexercised Options (#)	Option Exercise Price ($)	Option Expiration Date	Value of Unexercised in-the-Money Options(1) ($)	Number of Shares or Units of Shares that Have not Vested (#)	Market or Payout Value of Share-Based Awards that Have not Vested ($)
Robert D. Cudney2	500,000 300,000	$0.18 $0.25	Jan/13 June/13	Nil	Nil 37,500	Nil

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Director Name	Option-Based Awards				Share-Based Awards
	Number of Securities Underlying Unexercised Options (#)	Option Exercise Price ($)	Option Expiration Date	Value of Unexercised in-the-Money Options(1) ($)	Number of Shares or Units of Shares that Have not Vested (#)	Market or Payout Value of Share-Based Awards that Have not Vested ($)
Gordon S. McKinnon	200,000	$0.10	Aug/14	Nil	125,000	Nil

(1) This amount is calculated based on the difference between the market value of the securities underlying the options at the end of the most recently completed financial year, which was $0.04, and the exercise or base price of the option.

(2) Mr. Cudney resigned as a director on October 4, 2010.

Incentive Plan Awards – Value Vested or Earned During the Year

The value vested or earned during the most recently completed financial year of incentive plan awards granted to Directors who are not Named Executive Officers are as follows:

Director Name	Option-Based Awards – Value Vested During the Year ($)	Share-Based Awards – Value Vested During the Year ($)	Non-Equity Incentive Plan Compensation – Value Earned During the Year ($)
Robert D. Cudney	63,603	N/A	N/A
Gordon S. McKinnon	2,153	N/A	N/A

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth the Company’s compensation plans under which equity securities are authorized for issuance as at the end of the most recently completed financial year.

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by security holders	9,365,000	$0.18	719,841
Equity compensation plans not approved by security holders	Nil	N/A	Nil
Total	9,365,000	$0.18	719,841

Board Practices

Directors are elected at each annual general meeting and hold office until the next annual general meeting or until their successors are appointed.  See “Item 6. Directors, Senior Management and Employees – Directors and Senior Management” for information regarding the periods of service of the Company’s officers and directors.

Audit Committee

The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its financial oversight responsibilities by reviewing the financial reports and other financial information provided by the Company to regulatory authorities and shareholders, the Company’s systems of internal controls regarding finance and accounting and the Company’ auditing, accounting and financial reporting processes.

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The Company’s Audit Committee is comprised of three directors, the majority of whom are free from any relationship that, in the opinion of the Board of Directors, would interfere with the exercise of his or her independent judgment as a member of the Committee.

At least one member of the Committee has accounting or related financial management expertise.  All members of the Committee that are not financial literate will work towards becoming financially literate to obtain a working familiarity with basic finance and accounting practices.  For the purposes of the Company’s Charter, the definition of “financially literate” is the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can presumably be expected to be raised by the Company’s financial statements.

The members of the Committee are elected by the Board of Directors at its first meeting following the annual shareholders’ meeting.  Unless a Chair is elected by the full Board of Directors, the members of the Committee may designate a Chair by a majority vote of the full Committee membership.

Janice Brown, Herbert J. Leary and Gordon S. McKinnon are the members of the Committee.  Each is considered to be financially literate.  Messrs. Leary and McKinnon are independent as defined by National Instrument 52-110.

Remuneration Committee

The Company does not have a separate remuneration committee.  The independent Directors, Herbert J. Leary and Gordon S. McKinnon, have the responsibility for determining compensation for the directors and senior management.

Employees

As of the date of this registration statement the Company has no employees.  As such, at its stage of development management does believe the Company requires any full-time employees. The Company’s needs will be dependent upon its level of exploration programs and financial condition.

Share Ownership

The following table sets forth certain information regarding ownership of the Company’s shares by the Company’s officers and directors as of November 5, 2010.

Title of Class	Name of Owner	Shares and Rights Beneficially Owned or Controlled (1)	Percent of Class (1)
Common Stock	James R. Brown	4,817,321(2)	6.75%
Common Stock	Janice Brown	3,438,803(3)	4.97%
Common Stock	Gordon S. McKinnon	537,500(4)	0.80%
Common Stock	Herbert J. Leary	250,000(5)	0.37%

NOTES:

(1)   Where persons listed on this table have the right to obtain additional shares of common stock through the exercise of outstanding options or warrants within 60 days from November 5, 2010, these additional shares are deemed to be outstanding for the purpose of computing the percentage of common stock owned by such persons, but are not deemed to be outstanding for the purpose of computing the percentage owned by any other person.  Based on 66,794,207 shares of common stock outstanding as of November 5, 2010.

(2)   Includes 217,321 shares held by Mr. Brown and vested options held by Mr. Brown to acquire 4,600,000 shares.

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(3)   Includes 973,803 shares held by Mrs. Brown and vested options held by Mrs. Brown to acquire 2,465,000 shares.

(4)   Includes 250,000 shares held by Mr. McKinnon, vested options held by Mr. McKinnon to acquire 237,500 shares and warrants held by Mr. McKinnon to acquire 50,000 shares.

(5)   Includes 200,000 shares held by Mr. Leary and vested options held by Mr. Leary to acquire 50,000 shares.

All of the Company’s shareholders have the same voting rights.

Stock Options

The TSX Venture requires all TSX Venture listed companies to adopt stock options plans, and such plans must contain certain provisions. The Company’s existing stock option plan (the “Plan”), which was accepted by the TSX-V on July 28, 2004 and approved by the Company’s shareholders on August 23, 2004, provides that a total of 13,358,841 common shares are reserved for issuance upon exercise of stock options granted under the Plan.  As of September 30, 2010, the Company had options outstanding under the Plan to purchase 9,865,000 common shares.  The purpose of the Plan is to provide incentive to the Company’s employees, officers, directors, and consultants responsible for the continued success of the Company.  The following is a summary of the Plan.

Administration of the Stock Option Plan

The Stock Option Plan provides that it will be administered by the Company’s board of directors (the “Board”).

Description of Stock Option Plan

Options to purchase up to 13,358,841 common shares may be granted under the Plan to directors, senior officers, employees or companies that are wholly-owned by such persons, as well as to consultants.  No more than an aggregate of 5% of the issued and outstanding common shares may be granted to any one individual in any 12-month period, unless the Company is a Tier 1 issuer and has obtained disinterested shareholder approval.  No more than 2% of the issued and outstanding common shares may be granted to any one consultant or to an employee conducting investor relations activities in any 12-month period.

The options issued pursuant to the Stock Option Plan will be exercisable at a price not less than the Discounted Market Price of the Company’s common shares at the time the option is granted.  “Discounted Market Price” is defined in TSX Venture Exchange Policy 1.1 and means the last closing price of the Company’s common shares before the filing of the Notice of the Transaction filed with the Exchange, less a maximum discount of 25% where the closing price does not exceed $0.50 per share.

Options under the Stock Option Plan will be granted for a term not to exceed 10 years from the date of their grant, provided that if the Company is then a “Tier 2” company listed on the TSX Venture, the term of the option will be not more than five years.  The Company is currently a Tier 2 company.

Options under the Stock Option Plan will be subject to such vesting schedule as the Board may determine, with a specified minimum vesting schedule for options granted to consultants who perform investor relations activities.  In the event that an option is to be terminated prior to expiry of its term due to certain corporate events, all options then outstanding shall become immediately exercisable for 30 days after notice thereof, notwithstanding the original vesting schedule.

Options will also be non-assignable and non-transferable, provided that they will be exercisable by an optionee’s legal heirs, personal representatives or guardians for up to 12 months following the death or termination of an optionee due to disability, or up to 12 months following the death of an employee if the employee dies within 12 months of termination due to disability.  All such options will continue to vest in accordance with their original vesting schedule.

If a material alteration in the capital structure of the Company occurs as a result of a recapitalization, stock split, reverse stock split, stock dividend, or otherwise, the Board shall make adjustments to the Stock Option Plan and to

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the options then outstanding under it as the Board determines to be appropriate and equitable under the circumstances in order to preserve the rights of the participants in the Plan substantially proportionate to those existing prior to the event.

The TSX Venture requires all TSX Venture listed companies who have adopted stock option plans which reserve a maximum of 10% of the number of common shares of the Company issued and outstanding on the applicable date of grant, to obtain shareholder approval to the Stock Option Plan on an annual basis.

As of November 5, 2010, an aggregate of 10,065,000 options to purchase shares of the Company’s common stock remain outstanding to the Company’s officers and directors and consultants:

Optionee	Nature of Option	No. of Options	Exercise Price/Share	Expiry Date
			$
James R. Brown	Officer/Director	1,800,000	0.23	Feb 10, 2011
James R. Brown	Officer/Director	1,100,000	0.19	Jan 11, 2013
James R. Brown	Officer/Director	300,000	0.25	Jun 10, 2013
James R. Brown	Officer/Director	1,400,000	0.10	Jan 21, 2014
Janice Brown	Officer/Director	465,000	0.23	Feb 10, 2011
Janice Brown	Officer/Director	800,000	0.21	Jan 29, 2013
Janice Brown	Officer/Director	200,000	0.25	Jun 10, 2013
Janice Brown	Officer/Director	1,000,000	0.10	Jan 21, 2014
Gordon S. McKinnon	Director	200,000	0.10	Aug 5, 2014
Gordon S. McKinnon	Director	250,000	0.10	Sept 3, 2015
Herbert J. Leary	Director	200,000	0.16	Oct 25, 2015
Robert D. Cudney	Director	500,000	0.19	Jan 2, 2011(1)
Robert D. Cudney	Director	300,000	0.25	Jan 2, 2011(1)
Robert D. Cudney	Director	500,000	0.10	Jan 2, 2011(1)
Steven Wildstein	Consultant	350,000	0.20	Jan 5, 2012
Steven Wildstein	Consultant	100,000	0.10	Jan 21, 2014
Bob Nowell	Consultant	100,000	0.23	Feb 10, 2011
Bruch Durham	Consultant	500,000	0.25	Jun 12, 2013
TOTAL:		10,065,000

(1)     Mr. Cudney resigned from the Board of Directors on October 4, 2010 and pursuant to the Company’s Stock Option Plan, Mr. Cudney’s options will expire 90 days after his resignation.

Warrants

As of November 5, 2010, the following non-transferable common share purchase warrants were issued and outstanding:

·     Warrants exercisable for the purchase of 5,354,162 common shares at $0.20 per share, which expire at June 5, 2011

·     Warrants exercisable for the purchase of  270,837 common shares at $0.40 per share, expiring June 5, 2011

·     Warrants exercisable for the purchase of 2,950,000 common shares at $0.15 per share, expiring October 20, 2012

As of November 5, 2010, one director, Gordon S. McKinnon, held 50,000 warrants exercisable at $0.15 expiring on October 20, 2012.

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There are no assurances that the options or warrants described above will be exercised in whole or in part.

Item 7.    Major Shareholders and Related Party Transactions.

Major Shareholders

The following table sets forth certain information regarding ownership of the Company’s shares by all persons who own five percent (5%) or more of the Company’s outstanding shares, as of November 5, 2010.

Title of Class	Name and Address of Owner	Shares and Rights Beneficially Owned or Controlled (1)	Percent of Class (1)
Common Stock	Sheldon Inwentash The Exchange Tower 130 King Street West Suite 2810 Toronto, Ontario M5X 1A9 Canada	6,750,000	10.1

None of the Company’s principal shareholders have different voting rights than any of the Company’s other common shareholders.  There have been no significant changes to the above listed persons’ ownership during the past three years.

United States Shareholders

As of November 30, 2010, there were 9 registered holders of the Company’s common shares in the United States, with combined holdings of 3,038,000 shares, representing 4.55% of the issued shares of the Company on November 5, 2010.  The Company does not know how many beneficial shareholders it has in the United States, but management believes there are less than 300 such shareholders.

Control by Foreign Government or Other Persons

To the best of the Company’s knowledge, the Company is not directly or indirectly owned or controlled by another corporation, any foreign government, or any other natural or legal person, severally or jointly.

Change of Control

As of the date of this registration statement, there are no arrangements known to the Company which may at a subsequent date result in a change of control of the Company.

Related Party Transactions

Since January 1, 2007, the Company has not entered into any transactions or loans between the Company and any:  (a) enterprises that directly or indirectly through one or more intermediaries, control or are controlled by, or are under common control with, the Company; (b) associates; (c) individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the Company, and close members of any such individuals’ family; (d) key management personnel and close members of such individuals’ families; or (e) enterprises in which a substantial interest in the voting power is owned, directly or indirectly by any person described in (c) or (d) or over which such a person is able to exercise significant influence.

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Interests of Experts and Counsel

Not applicable.

Item 8.   Financial Information.

Consolidated Statements and Other Financial Information	Page
Audited Financial Statements for the Years Ended December 31, 2009, 2008 and 2007	F-1
Unaudited Interim Financial Statements for the Nine Months Ended September 30, 2010 and 2009	FF-1

Significant Changes

None.

Dividend Policy

The Company has not paid any dividends on its common shares and does not intend to pay dividends on its common shares in the immediate future.  Any decision to pay dividends on its common shares in the future will be made by the board of directors of the Company on the basis of earnings, financial requirements and other such conditions that may exist at that time.

Legal Proceedings

None.

Item 9.   The Offer and Listing.

Price History

The Company’s common stock commenced trading on the TSX Venture on September 1, 2004.  The Company’s stock currently trades on the TSX Venture under the symbol “MC” and CUSIP number 599805.

The following table sets forth the market price ranges of the common shares of the Company on the TSX Venture for the periods indicated:

TSX Venture Exchange Stock Trading Activity

	Sales Price ($)
Year Ended	High	Low
December 31, 2010	0.22	0.025
December 31, 2009	0.04	0.035
December 31, 2008	0.025	0.025
December 31, 2007	0.19	0.185
December 31, 2006	0.195	0.19

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	Sales Price ($)
Quarter Ended	High	Low
December 31, 2010	0.21	0.085
September 30, 2010	0.085	0.035
June 30, 2010	0.035	0.035
March 31, 2010	0.05	0.045
December 31, 2009	0.04	0.035
September 30, 2009	0.045	0.045
June 30, 2009	0.035	0.035
March 31, 2009	0.035	0.03
December 31, 2008	0.025	0.025
September 30, 2008	0.135	0.095
June 30, 2008	0.275	0.25
March 31, 2008	0.195	0.15

	Sales Price ($)
Month Ended	High	Low
December 31, 2010	0.18	0.135
November 30, 2010	0.21	0.165
October 31, 2010	0.20	0.085
September 30, 2010	0.085	0.035
August 31, 2010	0.05	0.035
July 31, 2010	0.04	0.035

As of the date of this registration statement, the Company’s shares were not being traded on an exchange in the United States, and there was no established market in the United States for the Company’s shares.

The Company intends to seek a listing for its shares on the Over-the-Counter Bulletin Board operated by the Financial Industry Regulatory Authority (FINRA).  The Company does not know if, or when, it will obtain such a listing.

Registration, Transfer and Par Value

The Company’s common shares, no par value, are registered.  The Company’s transfer agent is Olympia Trust Company, 1900 Cathedral Place, 925 West Georgia Street, Vancouver, British Columbia, V6C 3L28, Canada.

Restrictions on Transferability

None

Item 10.   Additional Information.

Share Capital

The following table sets forth information about the Company’s share capital as of September 30, 2010 and November 30, 2010:

	September 30, 2010	November 30, 2010
Number of Common Shares Authorized	Unlimited	Unlimited
Par Value per Share	None	None
Number of Shares Issued and Fully-Paid	51,544,207	66,794,207

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For the fiscal years ended December 31, 2009, 2008, and 2007 and the period from January 1, 2010 through November 30, 2010, the Company issued common shares, as follows:

	Number of Shares		Amount ($)
Balance, December 31, 2006		37,909,207		3,841,544
Shares Issued for Exercise of Warrants		250,000		50,000
Balance, December 31, 2007		38,159,207		3,891,544
Shares Issued for Cash in Private Placement		7,500,000		1,500,000
Shares Issued for Unproven Mineral Interests		1,250,000		171,250
Shares Issued for Exercise of Warrants		3,885,000		777,000
Less: Share Issue Costs		-		(21,002	)
Balance, December 31, 2008		50,794,207		6,318,792
Shares Issued for Unproven Mineral Interests		500,000		25,000
Less: Share Issue Costs		-		(5,245	)
Income Tax Benefit Renounced to Shareholders		-		(225,000	)
Balance, December 31, 2009		51,294,207		6,113,547
Shares Issued for Unproven Mineral Interest		500,000		12,500
Less: Share Issue Costs		-		(1,282	)
Shares Issued for Cash in Private Placement		15,000,000
Less: Share Issue Costs		-
Balance, November 30, 2010		66,794,207

All of the Company’s outstanding shares, options and warrants have been issued in accordance with the pricing policies of the TSX Venture.  The TSX Venture’s policies allow for the issuance of securities at a discount from the market price.

See also “Item 6. Directors, Senior Management and Employees - Share Ownership.”

Memorandum and Articles of Association

The Company was originally incorporated under the laws of Alberta on August 28, 1998, as “Pantera Enterprises Inc.”  Effective September 1, 2004, the Company continued and became a company under the Business Corporations Act (British Columbia) (the “BCBCA”), changing its name to “Mill City Gold Corp.”

The Company is authorized to engage in any lawful business.  The following is a summary of all material provisions of the Company’s Articles and certain provisions of the BCBCA, applicable to the Company:

A. Director’s power to vote on a proposal, arrangement or contract in which the director is materially interested.

Under the BCBCA, subject to certain exceptions, a director or senior officer of the Company must disclose any material interest that he personally has, or that he as a director or senior officer of another corporation has in a contract or transaction that is material to the Company and which the Company has entered into or proposes to enter into.

A director or senior officer of the Company does not hold a disclosable interest in a contract or transaction if:

1. the situation that would otherwise constitute a disclosable interest arose before the coming into force of the BCBCA, and the interest was disclosed and approved under, or was not required to be disclosed under legislation that applied to the Company before the coming into effect of the BCBCA;

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2. both the Company and the other party to the contract or transaction are wholly owned subsidiaries of the same corporation;

3. the Company is a wholly owned subsidiary of the other party to the contract or transaction;

4. the other party to the contract or transaction is a wholly owned subsidiary of the Company; or

5. the director or senior officer is the sole shareholder of the Company or of a corporation of which the Company is a wholly owned subsidiary.

A director or senior officer of the Company does not hold a disclosable interest in a contract or transaction merely because:

1. the contract or transaction is an arrangement by way of a security granted by the Company for money loaned to, or obligations undertaken by, the director or senior officer, or a person in whom the director or senior officer has a material interest, for the benefit of the Company or an affiliate of the Company;

2. the contract or transaction relates to an indemnity or insurance under the BCBCA;

3. the contract or transaction relates to the remuneration of the director or senior officer, in that person’s capacity as director, officer, employee or agent of the Company or of an affiliate of the Company;

4. the contract or transaction relates to a loan to the Company, and the director or senior officer, or a person in whom the director or senior officer has a material interest, is or is to be a guarantor of some or all of the loan; or

5. the contract or transaction has been or will be made with or for the benefit of a corporation that is affiliated with the Company and the director or senior officer is also a director or senior officer of that corporation or an affiliate of that corporation.

A director or senior officer who holds such a material interest must disclose the nature and extent of such interest in writing. The disclosure must be evidenced in writing in a consent resolution, the minutes of a meeting or any other record deposited with the Company’s record office.  A director who has a disclosable interest in a contract or transaction is not entitled to vote on any directors’ resolution to approve that contract or transaction, but may be counted in the quorum at the directors’ meeting at which such vote is taken.

B. Directors’ power, in the absence of an independent quorum, to vote compensation to themselves or any members of their body.

The compensation of the directors is decided by the directors unless the Board of Directors specifically requests approval of the compensation from the shareholders.  If the issuance of compensation to the directors is decided by the directors, a quorum is the majority of the directors in office.

C. Borrowing powers exercisable by the directors and how such borrowing powers may be varied.

The Company, if authorized by the directors, may:

1. borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

2. issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

3. guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

4. mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

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The borrowing powers may be varied by amendment to the Articles of the Company which requires approval of the shareholders of the Company by special resolution, being a resolution passed by at least 2/3 majority of the votes cast on the resolution (a “Special Resolution”).

D. Retirement and non-retirement of directors under an age limit requirement.

There are no such provisions applicable to the Company under the Notice of Articles, Articles or the BCBCA.

E. Number of shares required for a director’s qualification.

A director of the Company is not required to hold a share in the capital of the Company as qualification for his office.

Description of Share Capital

The authorized capital of the Company consists of an unlimited number of common shares and unlimited number of preferred shares, both without par value.

Common Shares

As of November 5, 2010, a total of 66,794,207 common shares were issued and outstanding.  All of the common shares are fully paid and not subject to any future call or assessment.  All of the common shares of the Company rank equally as to voting rights, participation in a distribution of the assets of the Company on a liquidation, dissolution or winding-up of the Company and the entitlement to dividends.  The holders of the common shares are entitled to receive notice of all shareholder meetings and to attend and vote at such meetings.  Each common share carries with it the right to one vote.  The common shares do not have preemptive or conversion rights. In addition, there are no sinking fund or redemption provisions applicable to the common shares or any provisions discriminating agains t any existing or prospective holders of such securities as a result of a shareholder owning a substantial number of shares.  The Company’s board of directors does not stand for re-election at staggered intervals.

Changes to Rights and Restrictions of Shares

Under the BCBCA and the Company’s Articles, if the Company wishes to change the rights and restrictions of the common shares the Company must obtain the approval of the shareholders by Special Resolution.

Dividend Record

The Company has not paid any dividends on its common shares and has no policy with respect to the payment of dividends.

Ownership of Securities and Change of Control

Except for the Investment Canada Act, discussed below, there are no limitations on the rights to own securities, including the rights of non-resident or foreign shareholders to hold or exercise voting rights on the securities imposed by foreign law or by the constituent documents of the Company.

Any person who beneficially owns or controls, directly or indirectly, more than 10% of the Company’s voting shares is considered an insider, and must file an insider report with the British Columbia, Alberta and Ontario Securities Commissions within ten days of becoming an insider disclosing any direct or indirect beneficial ownership of, or control over direction over securities of the Company.  In addition, if the Company itself holds any of its own securities, the Company must disclose such ownership.

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There are no provisions in the Company’s Notice of Articles and Articles that would have an effect of delaying, deferring or preventing a change in control of the Company operating only with respect to a merger, acquisition or corporate restructuring involving the Company or its subsidiaries.

Meetings of the Shareholders

Annual and Extraordinary General Meetings

Under the BCBCA and the Company’s Articles, the Company’s annual general meeting is to be held once in each calendar year and not more than 15 months after the previous meeting.  The Company must give shareholders not less than 21 days’ notice of any general meeting of the shareholders.

The Directors may fix in advance a date, which is no fewer than 21 days or no more than 60 days prior to the date of the meeting, as the record date for the meeting.  All the holders of common shares as at the record date are entitled to attend and vote at a general meeting.

Differences from Requirements in the United States

Except for the Company’s quorum requirements, certain requirements related to related party transactions, the requirement for notice of shareholder meetings and the approval of amendments to the Company’s articles, which are discussed above, there are no significant differences in the law applicable to the Company, in the areas outlined above, in British Columbia versus the United States.  In most states in the United States, a quorum must consist of a majority of the shares entitled to vote.  Some states allow for a reduction of the quorum requirements to less than a majority of the shares entitled to vote.  Having a lower quorum threshold may allow a minority of the shareholders to make decisions about the Company, its management and operations.  In addition, most states in the United States require that a notice of meeting be mailed to shareholders prior to the meeting date.  Additionally, in the United States, a director may not be able to vote on the approval of any transaction in which the director has an interest.  Generally, most states in the United States require amendments to a company’s articles of incorporation to be approved by at least a majority of the votes cast by the holders of the issued and outstanding shares.  Some states, or some older corporations, may require approval of amendments by 2/3 of the votes cast by the holders of the issued and outstanding shares.  In addition, in the United States voting by separate voting groups may be required on the approval of any such amendments.

Material Contracts

The following are material contracts to which the Company is a party and which were entered into during the two years immediately preceding the date of this registration statement:

1. Option and Joint Venture Agreement – Target 12 (Rosebud) Property dated November 8, 2010, between The Yukon Cornelius Syndicate and the Company relating to an option on the Rosebud 12 property.  See “Item 4. Information on the Company – Property, Plant and Equipment – Principal Properties – Rosebud 12 Property.”

2. Letter Agreement dated September 21, 2010 between Temex Resources Corp. and the Company relating to an option on the Croxall property.  See “Item 4. Information on the Company – Property, Plant and Equipment – Principal Properties – Croxall Property.”

3. Agency Agreement with Primary Capital Inc. dated October 1, 2010, pursuant to which Primary Capital agreed to act as lead agent on behalf of a syndicate of agents in respect of a private placement of hard dollar  units and flow-through shares for aggregate gross proceeds of $1,500,000 on an agency best efforts basis.    Primary Capital received a cash commission of 6% of the gross proceeds raised and broker warrants equal to 10% of the aggregate number of flow-through shares and u nits issued.

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Exchange Controls

There is no law, governmental decree or regulation in Canada that restricts the export or import of capital or affects the remittance of dividends, interest or other payments to a non-resident holder of common shares other than withholding tax requirements.  Any such remittances to United States residents are subject to withholding tax.  See “Taxation” below.

There is no limitation imposed by the laws of Canada or by the charter or other constituent documents of the Company on the right of a non-resident to hold or vote the common shares, other than as provided in the Investment Act.  The following discussion summarizes the principal features of the Investment Act for a non-resident who proposes to acquire the common shares.

The Investment Canada Act generally prohibits implementation of a reviewable investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture (each an “entity”) that is not a “Canadian” as defined in the Investment Canada Act (a “non-Canadian”), unless after review, the Director of Investments appointed by the minister responsible for the Investment Canada Act is satisfied that the investment is likely to be of net benefit to Canada.  An investment in the common shares by a non-Canadian other than a “WTO Investor” (as that term is defined by the Investment Canada Act, and which term includes entities which are nationals of or are controlled by nationals of member states of the World Trade Organization) when the Company was not controlled b y a WTO Investor, would be reviewable under the Investment Canada Act if it was an investment to acquire control of the Company and the value of the assets of the Company, as determined in accordance with the regulations promulgated under the Investment Canada Act, was $5,000,000 or more, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada’s cultural heritage or national identity, regardless of the value of the assets of the Company.  An investment in the common shares by a WTO Investor, or by a non-Canadian when the Company was controlled by a WTO Investor, would be reviewable under the Investment Canada Act if it was an investment to acquire control of the Company and the value of the assets of the Company, as determined in accordance with the regulations promulgated under the Investment Canada Act was not less than a specified amount, which as specified in 2009 was any amount in excess of $312 million.  A non-Canadia n would acquire control of the Company for the purposes of the Investment Canada Act if the non-Canadian acquired a majority of the common shares.  The acquisition of one third or more, but less than a majority of the common shares would be presumed to be an acquisition of control of the Company unless it could be established that, on the acquisition, the Company was not controlled in fact by the acquirer through the ownership of the common shares.

Certain transactions relating to the common shares would be exempt from the Investment Canada Act, including:  (a) an acquisition of the common shares by a person in the ordinary course of that person’s business as a trader or dealer in securities; (b) an acquisition of control of the Company in connection with the realization of security granted for a loan or other financial assistance and not for a purpose related to the provisions of the Investment Canada Act; and (c) an acquisition of control of the Company by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of the Company, through the ownership of the common shares, remained unchanged.

Taxation

Material Canadian Federal Income Tax Consequences

Management of the Company considers that the following discussion fairly describes the material Canadian federal income tax consequences applicable to a holder of common stock of the Company who is a resident of the United States and who is not a resident of Canada and who does not use or hold, and is not deemed to use or hold, his shares of common stock of the Company in connection with carrying on a business in Canada (a “non-resident shareholder”).

This summary is based upon the current provisions of the Income Tax Act (Canada) (the “ITA”), the regulations thereunder (the “Regulations”), the current publicly announced administrative and assessing  policies of Revenue Canada, Taxation and all specific proposals (the “Tax Proposals”) to amend the ITA and Regulations announced by

-46-

the Minister of Finance (Canada) prior to the date hereof.  This description is not exhaustive of all possible Canadian federal income tax consequences and, except for the Tax Proposals, does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial action.

Dividends

Dividends paid on the common stock of the Company to a non-resident will be subject to withholding tax.  The Canada-U.S. Income Tax Convention (1980) provides that the normal 25% withholding tax rate is reduced to 15% on dividends paid on shares of a corporation resident in Canada (such as the Company) to residents of the United States, and also provides for a further reduction of this rate to 5% where the beneficial owner of the dividends is a corporation which is a resident of the United States which owns at least 10% of the voting shares of the corporation paying the dividend.  The Company is required to withhold the applicable tax from the dividend payable to the non-resident shareholder, and to remit the tax to the Receiver General of Canada from the account of the non-resident shareholder.

Capital Gains

In general, a non-resident of Canada is not subject to tax under the ITA with respect to a capital gain realized upon the actual or deemed disposition of a share, including a deemed disposition on death, provided that the non-resident shareholder did not hold the common share as capital property used in carrying on a business in Canada.  Non-residents of Canada who dispose of shares of the Company will be subject to income tax in Canada with respect to capital gains if:

(a) the non-resident holder;

(b) persons with whom the non-resident holder did not deal with at arm's length; or

(c) the non-resident holder and persons with whom the non-resident holder did not deal with at arm’s length,

owned not less than 25% of the issued shares of any class or series of the Company at any time during the five-year period preceding the disposition.  In the case of a non-resident holder to whom shares of the Company represent taxable Canadian property and who is resident in the United States, no Canadian taxes will be payable on a capital gain realized on such shares by reason of the Canada-U.S. Income Tax Convention (1980) (the “Treaty”) unless the value of such shares is derived principally from real property situated in Canada.  However, in such a case, certain transitional relief under the Treaty may be available.

Material United States Federal Income Tax Considerations

The following discussion summarizes the material United States federal income tax consequences, under current law, applicable to a U.S. Holder (as defined below) of the Company’s common stock. This discussion does not address consequences peculiar to persons subject to special provisions of federal income tax law, such as tax-exempt organizations, qualified retirement plans, financial institutions, insurance companies, real estate investment trusts, regulated investment companies, broker-dealers, nonresident alien individuals or foreign corporations, and shareholders owning common stock representing 10% of the vote and value of the Company. In addition, this discussion does not cover any state, local or foreign tax consequences.

The following discussion is based upon the sections of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, published Internal Revenue Service (“IRS”) rulings, published administrative positions of the IRS and court decisions that are currently applicable, any or all of which could be materially and adversely changed, possibly on a retroactive basis, at any time. In addition, this discussion does not consider the potential effects, both adverse and beneficial of recently proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.  Holders and prospective holders of the Company’s common stock are urged to consult their own tax advisors about the federal, state, local and foreign tax consequences of purchasing, owning and disposi ng of shares of common stock of the Company.

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U.S. Holders

As used herein, a “U.S. Holder” is defined as (i) citizens or residents of the U.S., or any state thereof, (ii) a corporation or other entity created or organized under the laws of the U.S., or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income tax regardless of source or that is otherwise subject to U.S. federal income tax on a net income basis in respect of the common stock, or (iv) a trust whose administration is subject to the primary supervision of a U.S. court and which has one or more U.S. fiduciaries who have the authority to control all substantial decisions of the trust, whose ownership of common stock is not effectively connected with the conduct of a trade or business in the United States and shareholders who acquired their stock through the exercise of employee stock options or otherwise as compensation.

Distributions on Shares of Common Stock

U.S. Holders receiving dividend distributions (including constructive dividends) with respect to the Company’s common stock are required to include in gross income for United States federal income tax purposes the gross amount of such distributions to the extent that the Company has current or accumulated earnings and profits, without reduction for any Canadian income tax withheld from such distributions. Such Canadian tax withheld may be credited, subject to certain limitations, against the U.S. Holder’s United States federal income tax liability or, alternatively, may be deducted in computing the U.S. Holder’s United States federal taxable income by those who itemize deductions. (See more detailed discussion at “Foreign Tax Credit” below.) To the extent that distributions exceed current or accumulated earni ngs and profits of the Company, they will be treated first as a return of capital up to the U.S. Holder’s adjusted basis in the common stock and thereafter as gain from the sale or exchange of such shares. Preferential tax rates for long-term capital gains are applicable to a U.S. Holder which is an individual, estate or trust. There are currently no preferential tax rates for long-term capital gains for a U.S. Holder which is a corporation. Dividends paid on the Company’s common stock will not generally be eligible for the dividends received deduction provided to corporations receiving dividends from certain United States corporations.

Foreign Tax Credit

A U.S. Holder who pays (or has withheld from distributions) Canadian income tax with respect to the ownership of the Company’s common stock may be entitled, at the option of the U.S. Holder, to either a deduction or a tax credit for such foreign tax paid or withheld. Generally, it will be more advantageous to claim a credit because a credit reduces United States federal income taxes on a dollar-for-dollar basis, while a deduction merely reduces the taxpayer’s income subject to tax. This election is made on a year-by-year basis and applies to all foreign taxes paid by (or withheld from) the U.S. Holder during that year. Subject to certain limitations, Canadian taxes withheld will be eligible for credit against the U.S. Holder’s United States federal income taxes. Under the Code, the limitation on foreign taxes eligible fo r credit is calculated separately with respect to specific classes of income. Dividends paid by the Company generally will be either “passive category income” or “general category income”, depending on the particular U.S. Holder’s circumstances. Foreign tax credits allowable with respect to each class of income cannot exceed the U.S. federal income tax otherwise payable with respect to such class of income. The consequences of the separate limitations will depend on the nature and sources of each U.S. Holder’s income and the deductions appropriately allocated or apportioned thereto. The availability of the foreign tax credit and the application of the limitations on the credit are fact specific and holders and prospective holders of common stock are urged to consult their own tax advisors regarding their individual circumstances.

Disposition of Shares of Common Stock

A U.S. Holder will recognize gain or loss upon the sale of shares of common stock equal to the difference, if any, between (i) the amount of cash plus the fair market value of any property received; and (ii) the shareholder’s tax basis in the common stock. This gain or loss will be capital gain or loss if the shares are a capital asset in the hands of the U.S. Holder, and such gain or loss will be long-term capital gain or loss if the U.S. Holder has held the common stock for more than one year. Gains and losses are netted and combined according to special rules in arriving at the overall capital gain or loss for a particular tax year. Deductions for net capital losses are subject to significant limitations. For U.S. Holders who are individuals, any unused portion of such net capital loss may be carried over to be used in later tax years until such net capital loss is thereby exhausted. For U.S. Holders which are

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corporations (other than corporations subject to Subchapter S of the Code), an unused net capital loss may be carried back three years from the loss year and carried forward five years from the loss year to be offset against capital gains until such net capital loss is thereby exhausted.

Other Considerations

The Company has not determined whether it meets the definition of a “passive foreign investment company” (a “PFIC”). It is unlikely that the Company meets the definition of a “foreign personal holding company” (a “FPHC”) or a “controlled foreign corporation” (a “CFC”) under current U.S. law.

If more than 50% of the voting power or value of the Company were owned (actually or constructively) by U.S. Holders who each owned (actually or constructively) 10% or more of the voting power of the Company’s common shares (“10% Shareholders”), then the Company would become a CFC and each 10% Shareholder would be required to include in its taxable income as a constructive dividend an amount equal to its share of certain undistributed income of the Company. If (1) more than 50% of the voting power or value of the Company’s common shares were owned (actually or constructively) by five or fewer individuals who are citizens or residents of the United States and (2) 60% or more of the Company’s income consisted of certain interest, dividend or other enumerated types of income, then the Company would be a FPHC. If the Company were a FPHC, then each U.S. Holder (regardless of the amount of the Company’s common shares owned by such U.S. Holder) would be required to include in its taxable income as a constructive dividend its share of the Company’s undistributed income of specific types.

If 75% or more of the Company’s annual gross income has ever consisted of, or ever consists of, “passive” income or if 50% or more of the average value of the Company’s assets in any year has ever consisted of, or ever consists of, assets that produce, or are held for the production of, such “passive” income, then the Company would be or would become a PFIC. The Company has not provided assurances that it has not been and does not expect to become a PFIC. Please note that the application of the PFIC provisions of the Code to resource companies is somewhat unclear.

If the Company were to be a PFIC, then a U.S. Holder would be required to pay an interest charge together with tax calculated at maximum tax rates on certain “excess distributions” (defined to include gain on the sale of stock) unless such U.S. Holder made an election either to (1) include in his or her taxable income certain undistributed amounts of the Company’s income or (2) mark to market his or her Company common shares at the end of each taxable year as set forth in Section 1296 of the Code.

Information Reporting and Backup Withholding

U.S. information reporting requirements may apply with respect to the payment of dividends to U.S. Holders of the Company’s shares. Under Treasury regulations currently in effect, non-corporate holders may be subject to backup withholding at a 28% rate with respect to dividends when such holder (1) fails to furnish or certify a correct taxpayer identification number to the payor in the required manner, (2) is notified by the IRS that it has failed to report payments of interest or dividends properly or (3) fails, under certain circumstances, to certify that it has been notified by the IRS that it is subject to backup withholding for failure to report interest and dividend payments.

Consents of Experts

The Company’s auditors for its financial statements for each of the preceding three years was D&H Group LLP, Chartered Accountants, 10th Floor, 1333 West Broadway, Vancouver, British Columbia, V6H 4C1, Canada.   See “Item 1.  Directors, Senior Management and Advisors - Auditors.”  Their audit report for the fiscal years ended December 31, 2009, 2008 and 2007 is included with the related financial statements in this registration statement with their consent.

Inspection of Documents

Copies of the documents referred to in this registration statement may be inspected at the Company’s corporate office at 4719 Chapel Road N.W., Calgary, Alberta, during normal business hours.

-49-

Item 11.   Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 12.   Description of Securities Other than Equity Securities.

Warrants and Rights

Stock options to purchase securities from the Company are currently granted to directors and officers of the Company on terms and conditions under the Plan, as described in “Item 6. Directors, Senior Management and Employees – Share Ownership – Stock Options.”

As of November 5, 2010, the Company had granted an aggregate of 10,065,000 stock options to purchase shares of the Company’s common stock.  See “Item 6. Directors, Senior Management and Employees – Share Ownership – Stock Options.”

The Company has issued warrants which are exercisable for shares of the Company’s common stock.  As of November 30, 2010, there were common share purchase warrants exercisable for the purchase of 8,574,999 common shares, as described in “Item 6. Directors, Senior Management and Employees – Share Ownership – Warrants.”

All of the Company’s outstanding options and warrants are subject to standard anti-dilution provisions.

PART II

Item 13.   Defaults, Dividend Arrearages and Delinquencies.

Not applicable.

Item 14.   Material Modifications to the Rights of Security Holders and Use of Proceeds.

Not applicable.

Item 15.   Controls and Procedures.

Not applicable.

Item 16A.   Audit Committee Financial Expert.

Not applicable.

Item 16B.   Code of Ethics.

Not applicable.

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Item 16C.   Principal Accountant Fees and Services .

Not applicable.

Item 16D.   Exemptions from the Listing Standards for Audit Committees.

Not applicable.

Item 16E.   Purchases of Equity Securities by the Issuer and Affiliated Purchasers.

Not applicable.

Item 16F.   Change in Registrant’s Certifying Accountants.

Not applicable.

Item 16G.   Corporate Governance.

Not applicable.

PART III

Item 17.   Financial Statements.

	Page
Audited Financial Statements for the Years Ended December 31, 2009, 2008 and 2007	F-1
Unaudited Interim Financial Statements for the Nine Months Ended September 30, 2010 and 2009	FF-1

Item 18.   Financial Statements.

Not applicable.

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Item 19.   Exhibits.

Exhibit Number	Description
1.1	Notice of Articles
1.2	Articles
4.1	Stock Option Plan, as amended
4.2	Letter Agreement dated September 2, 2008 with Temex Resources Corp Re: Earn-in on the GP2 Joint Venture Property
4.3	Letter Agreement dated September 21, 2010 with Temex Resources Corp Re: Option and Joint Venture on the Croxall Property, Cancellation of December 12, 2007 Option and Joint Venture James Bay Lowlands
4.4	Agency Agreement with Primary Capital Inc. dated October 1, 2010
4.5	Option and Joint Venture Agreement – Target 12 (Rosebud) Property dated November 8, 2010 with The Yukon Cornelius Syndicate

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SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

	MILL CITY GOLD CORP.
Dated:  January 13, 2011	/s/ James R. Brown
	James R. Brown, President and Director

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Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 2009, 2008 and 2007

F-1

REPORT OF INDEPENDENT

REGISTERED CHARTERED ACCOUNTANTS

To the Board of Directors of

Mill City Gold Corp. (An Exploration Stage Company)

We have audited the consolidated balance sheets of Mill City Gold Corp. (An Exploration Stage Company) as at December 31, 2009 and 2008 and the consolidated statements of loss and comprehensive loss, shareholders’ equity and cash flows for the three years ended December 31, 2009.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and 2008 and the results of its operations and its cash flows for the three years then ended in accordance with Canadian generally accepted accounting principles.

“D&H Group LLP”

Vancouver, B.C.

January 11, 2011 Chartered Accountants

F-2

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

CONSOLIDATED BALANCE SHEETS

	December 31,
	2009			2008
ASSETS
CURRENT ASSETS
Cash	$	779,711		$	1,168,042
Amounts receivable		25,507			18,135
Prepaid expenses		100			-
		805,318			1,186,177
EQUIPMENT (Note 4)		11,462			10,099
UNPROVEN MINERAL INTERESTS (Note 5 and Schedule)		1,727,960			1,688,922
GOODWILL		100,000			100,000
	$	2,644,740		$	2,985,198
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	31,516		$	30,179
SHAREHOLDERS’ EQUITY
SHARE CAPITAL (Note 6)		6,113,547			6,318,792
CONTRIBUTED SURPLUS		2,029,988			1,701,060
RETAINED EARNINGS (DEFICIT)		(5,530,311	)		(5,064,833	)
		2,613,224			2,955,019
	$	2,644,740		$	2,985,198

OPERATIONS (Note 1)

SUBSEQUENT EVENTS (Note 12)

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

Approved by the Board      /s/ James Brown Director     /s/ Janice Brown Director

F-3

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS

	Years ended December 31,
	2009			2008			2007
EXPENSES
Amortization of equipment	$	3,430		$	3,760		$	3,855
Investor relations		-			58,607			59,322
Management fees		137,535			129,240			128,953
Office and miscellaneous		12,006			29,321			14,076
Professional fees		63,294			97,781			71,530
Rent		24,000			24,000			24,000
Secretarial and administrative services		54,000			54,000			54,000
Stock-based compensation		328,928			430,249			291,699
Telephone and fax		9,703			10,363			11,522
Transfer agent and regulatory fees		26,793			37,076			25,211
Travel		54,881			77,825			90,240
		714,570			952,222			774,408
OTHER ITEMS
Foreign exchange loss		3,059			613			5,307
Gain on available-for-sale marketable    securities		−			−			(10,872	)
Recovery of impairment of unproven mineral    interests (Note 5)		(23,297	)		-			−
Impairment of unproven mineral interests		14,198			481,526			−
Interest income		(18,052	)		(50,292	)		(37,615	)
		(24,092	)		431,847			(43,180	)
INCOME (LOSS) BEFORE INCOME TAXES		(690,478	)		(1,384,069	)		(731,228	)
INCOME TAXES (RECOVERY)
Future (Note 8)		(225,000	)		-			−
NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) FOR THE YEAR	$	(465,478	)	$	(1,384,069	)	$	(731,228	)
EARNINGS (LOSS) PER SHARE, basic and diluted	$	(0.01	)	$	(0.03	)	$	(0.02	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		50,872,288			46,722,645			37,927,152

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

F-4

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Share Capital

Shares

Amount

Accumulated other comprehensive income

Contributed surplus

Retained earnings (deficit)

Balance at January 1, 2007

37,909,207

$

3,841,544

$

−

$

979,112

$

(2,949,536

)

Common shares issued for:

Exercise of warrants

250,000

50,000

−

–

−

Stock-based compensation

−

−

−

368,491

−

Deferred stock-based

compensation on non-vested

stock options

−

−

−

(76,792

)

−

Effect of change in accounting

policy (Note 3)

−

−

8,556

−

−

Reclassification adjustment

−

−

(8,556

)

−

−

Net loss for the period

−

−

−

−

(731,228

)

Balance at December 31, 2007

38,159,207

3,891,544

–

1,270,811

(3,680,764

)

Common shares issued for:

Exercise of warrants

3,885,000

777,000

–

–

–

Private placement

7,500,000

1,500,000

−

–

–

Unproven mineral interests

1,250,000

171,250

−

–

–

Less:  Share issue costs

–

(21,002

)

−

–

–

Stock-based compensation

–

–

−

430,249

–

Net income (loss) for the year

–

–

−

–

(1,384,069

)

Balance at December 31, 2008

50,794,207

6,318,792

−

1,701,060

(5,064,833

)

Common shares issued for:

Unproven mineral interests

500,000

25,000

−

–

–

Less:  Share issue costs

–

(5,245

)

−

–

–

Income tax benefit renounced to shareholders

–

(225,000

)

−

–

–

Stock-based compensation

–

–

−

328,928

–

Net income (loss) for the year

–

–

−

–

(465,478

)

Balance at December 31, 2009

51,294,207

$

6,113,547

$

−

$

2,029,988

$

(5,530,311

)

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

F-5

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Years ended December 31,
	2009			2008			2007
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Net income (loss) for the year	$	(465,478	)	$	(1,384,069	)	$	(731,228	)
Adjustments to reconcile net cash provided
by operating activities
Amortization of equipment		3,430			3,760			3,855
Impairment of unproven mineral properties		14,198			481,526			−
Stock-based compensation		328,928			430,249			291,699
Future income tax recovery		(225,000	)		−			−
Gain on sale of available-for-sale marketable
securities		−			−			(10,872	)
Decrease (increase) in
Amounts receivable		(7,372	)		(14,402	)		767
Prepaid expenses and deposit		(100	)		58,607			(58,607	)
Increase (decrease) in
Accounts payable and accrued liabilities		1,337			1,946			(8,689	)
		(350,057	)		(422,383	)		(513,075	)
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES
Issuance of common shares		−			2,277,000			50,000
Share issue costs paid		(5,245	)		(21,002	)		−
		(5,245	)		2,255,998			50,000
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES
Proceeds on sale of available-for-sale    marketable securities		−			−			204,068
Purchase of equipment		(4,793	)		−			(7,075	)
Expenditures on unproven mineral interests		(28,236	)		(1,517,472	)		(94,343	)
		(33,029	)		(1,517,472	)		102,650
INCREASE (DECREASE) IN CASH DURING THE    YEAR		(388,331	)		316,143			(360,425	)
CASH, beginning of year		1,168,042			851,899			1,212,324
CASH, end of year	$	779,711		$	1,168,042		$	851,899

See Note 10.

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

F-6

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

CONSOLIDATED SCHEDULE OF UNPROVEN MINERAL INTERESTS

	2009
	Northern Star Eagle and Southern Star Eagle		GP2		Yamba Lake			Nevada			Total
	Ontario		Ontario		NWT			USA
BALANCE, beginning of year	$	1,043,649	$	645,073	$	100		$	100		$	1,688,922
ACQUISITION COSTS		12,500		12,500		-			-			25,000
EXPLORATION COSTS
Drilling and assays		-		4,807		-			-			4,807
Geologists		5,026		-		-			-			5,026
Travel		1,805		-		-			-			1,805
Mapping and surveying		2,600		-		-			-			2,600
Annual maintenance fees		-		-		13,998			-			13,998
Field equipment		-		-		-			-			-
		9,431		4,807		13,998			-			28,236
IMPAIRMENT		-		-		(14,098	)		(100	)		(14,198	)
BALANCE, end of year	$	1,065,580	$	662,380	$	-		$	-		$	1,727,960

	2008
	Northern Star Eagle and Southern Star Eagle		GP2		Yamba Lake			Nevada			Total
	Ontario		Ontario		NWT			USA
BALANCE, beginning of year	$	-	$	-	$	6,999		$	474,727		$	481,726
ACQUISITION COSTS		402,501		120,000		-			-			522,501
EXPLORATION COSTS
Drilling and assays		233,629		521,889		-			-			755,518
Field equipment		2,095		1,934		-			-			4,029
Geologists		12,897		-		-			-			12,897
License fees		25		-		-			-			25
Mapping and surveying		391,908		1,250		-			-			393,158
Travel and meal		594		-		-			-			594
		641,148		525,073		-			-			1,166,221
IMPAIRMENT		-		-		(6,899	)		(474,627	)		(481,526	)
BALANCE, end of year	$	1,043,649	$	645,073	$	100		$	100		$	1,688,922

F-7

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

1. OPERATIONS

Mill City Gold Corp. (the “Company”) is in the business of acquiring and exploring unproven mineral interests.

The Company presently has no proven or probable reserves and, on the basis of information to date, has not yet determined whether its unproven mineral interests contain economically recoverable reserves.  Consequently the Company considers itself to be an exploration stage company.  The amounts shown as unproven mineral interests and deferred costs represent costs incurred to date, less amounts amortized, written-off or recovered under option agreements, and do not necessarily represent present or future values.  The underlying value of the unproven mineral interests is entirely dependent on the existence of economically recoverable reserves, securing and maintaining title and beneficial interest, the ability of the Company and its optionees to obtain the necessary financing to complete development, and f uture profitable production or sale of the interests.

The Company’s ability to continue exploring its unproven mineral interests is dependent upon its ability to raise additional capital to fund its exploration expenditures as described in Note 5.  Additional capital may be sought from the sale of additional common shares or other equity or debt instruments.  There is no assurance such additional capital will be available to the Company on acceptable terms or at all.

These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) appropriate for a going concern.  The going concern basis of accounting assumes the Company will continue to realize the value of its assets and discharge its liabilities and other obligations in the ordinary course of business.  Should the Company be required to realize the value of its assets in other than the ordinary course of business, the net realizable value of its assets may be materially less than the amounts shown in the consolidated financial statements.  These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that may be necessary should the Company be unable to repay i ts liabilities and meet its other obligations in the ordinary course of business or continue operations.

2. ACCOUNTING POLICIES

Basis of presentation

The financial statements have been prepared in accordance with Canadian generally accepted accounting principles which necessarily involves the use of estimates.  The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of significant accounting policies summarized below.

Use of estimates

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of commitments and contingencies at the date of the financial statements and the reported amount of revenue and expenses during the period

Significant estimates made by management include amortization, the provision for future income tax recoveries and composition of future income tax assets and future income tax liabilities, impairment of unproven mineral interests and capital assets, asset retirement obligations and stock based compensation.

F-8

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

2. ACCOUNTING POLICIES – continued

Basis of consideration

These financial statements include the accounts of the Company and its wholly-owned subsidiary, Mill City Gold Inc.  All intercompany transactions and balances are eliminated on consolidation.

Goodwill

Goodwill is assessed for impairment at least annually and is not subject to amortization.

Unproven mineral interests

The Company’s unproven mineral interests are in the process of being evaluated.  As yet, it has not been determined if the interests contain reserves that are economically recoverable.  The recoverability of the carrying amounts of the unproven mineral interests is dependent upon the existence of economically recoverable reserves, future profitable production and the ability of the Company and its optionees to obtain the necessary financing to complete development.

Acquisition, exploration, development and administration costs relating to unproven mineral interests are capitalized until the interest to which they relate is placed into production, sold or abandoned.  Capitalized costs will be amortized over the useful life of the orebody following commencement of production or written off if the interest is sold or abandoned.  General and administration costs are expensed as incurred.

Management reviews the carrying values of unproven mineral interests with a view to assessing whether there has been any impairment of value. When it is determined that an unproven mineral interest will be abandoned or its carrying value has been impaired, a provision is made for any expected loss on the project or interest.

Title to unproven mineral interests involves certain inherent risks due to the difficulty in determining the validity of certain claims as well as the potential for disputes to arise from the frequently ambiguous conveyance history of many unproven mineral interests.

Option agreements

From time to time, the Company acquires or disposes of unproven mineral interests pursuant to the terms of option agreements.  Options are exercisable entirely at the discretion of the optionee and, accordingly, are accounted for as payments are made or received.  Amounts received under option agreements reduce the carrying amount of the unproven mineral interest under option.

Equipment

Equipment is carried at cost less accumulated amortization.  Amortization is provided over the estimated useful life of the equipment using the declining balance method at the following annual rates:

Computer equipment	-	30%
Office equipment	-	20%

In the year of acquisition, the Company records amortization at 50% of the annual amortization.

F-9

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

2. ACCOUNTING POLICIES - continued

Foreign currency translation

The Company’s wholly-owned U.S. subsidiary is an integrated foreign operation and is translated into Canadian dollars using the temporal method.  Monetary items are translated at the exchange rate in effect at the balance sheet date and non-monetary items are translated at historical exchange rates.  Income and expense items are translated at rates approximating those in effect at the time of the transaction.  Translation gains and losses are reflected in income or loss for the period.

Foreign currency transactions

Monetary assets and monetary liabilities are translated into Canadian dollars at the rate of exchange prevailing at the balance sheet date.  Non-monetary assets and non-monetary liabilities are translated into Canadian dollars at historical rates.  Revenues and expenses are translated into Canadian dollars at the average rate for the year.  Foreign currency transaction gains and losses are included in earnings.

Income taxes

Income taxes are recorded on a tax allocation basis.  Under this method, current income taxes are recognized for the estimated income taxes payable for the current year.  Future income tax assets and liabilities are recognized for the estimated income tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective income tax bases.  Future income tax assets and liabilities are recognized using substantively enacted income tax rates.  The effect of changes in effective income tax rates is recognized in income in the period in which the change is substantively enacted.  Future income tax assets are recognized with respect to deductible temporary differences and loss carryforwards only to the extent their realiza tion is considered more likely than not.

Earnings (loss) per share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding during the period.  The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have a dilutive effect on earnings per share.  The dilutive effect of convertible securities is reflected in diluted earnings per common share by application of the “if converted” method.  The dilutive effect of outstanding options and warrants and their equivalents is reflected in diluted earnings per common share by application of the treasury stock method.

Asset retirement obligations

The fair value of a liability for an asset retirement obligation is recognized when a reasonable estimate of fair value can be made.  The asset retirement obligation is recorded as a liability with a corresponding increase to the carrying amount of the related long-lived asset.  Subsequently, the asset retirement cost is charged to earnings using a systematic and rational method and is adjusted to reflect period-to-period changes in the liability resulting from the passage of time and revisions to either the timing or the amount of the original estimate of undiscounted cash flow.  As at December 31, 2009 the Company does not have any asset retirement obligations.

Impairment of long-lived assets

Long-lived assets are assessed for impairment when events and circumstances warrant.  The carrying value of a long-lived asset is impaired when the carrying amount exceeds the estimated undiscounted net cash flow from use and fair value.  In that event, the amount by which the carrying value of an impaired long-lived asset exceeds its fair value is charged to earnings.

F-10

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

2. ACCOUNTING POLICIES - continued

Stock-based compensation

Stock-based compensation is accounted for at fair value as determined by the Black-Scholes option pricing model using amounts that are believed to approximate the volatility of the trading price of the Company’s stock, the expected lives of awards of stock-based compensation, the fair value of the Company’s stock and the risk-free interest rate.  The estimated fair value of awards of stock-based compensation is charged to expense as awards vest, with offsetting amounts recognized as contributed surplus.

Financial instruments

Financial assets are classified as either held for trading, held to maturity, loans and receivables or available for sale and financial liabilities as either held for trading or as other financial liabilities. Upon initial recognition, ordinarily all financial instruments are recognized at fair value. Subsequently, financial assets classified as held to maturity and as loans and receivables, and other financial liabilities, are accounted for at amortized cost. Financial assets and financial liabilities classified as held for trading are accounted for at fair value with unrealized holding gains and losses included in net income each period. Available for sale financial assets are also accounted for at fair value, however unrealized holding gains and losses on these instruments are included in the statement of loss, comprehensive loss a nd deficit as other comprehensive income and on the balance sheet as a separate component of shareholders’ equity titled accumulated other comprehensive income.

Adoption of new accounting standards

Effective on January 1, 2009, the Company adopted Section 3064, Goodwill and Intangible Assets, which replaced Section 3062, Goodwill and Other Intangible Assets, and Section 3450, Research and Development Costs of the CICA Handbook.  This new section establishes standards for the recognition, measurement, presentation and disclosure of goodwill subsequent to its initial recognition and of intangible assets.  Standards concerning goodwill remain unchanged from the standards including in the previous Section 3062.  Adoption of Section 3064 had no material affect on the Company’ ;s financial statements.

Future accounting standards

The Accounting standards Board (“AcSB”) of the Canadian Institute of Chartered Accountants has issued new accounting standards that the Company is required to consider for adoption, as follows:

Business combinations, consolidated financial statements and non-controlling interests

The CICA issued three new accounting standards in January 2009, Section 1582, Business Combinations, Section 1601, Consolidated Financial Statements, and Section 160 Non-Controlling Interests.  These new standards will be effective for fiscal years beginning on or after January 1, 2011.  The Company is in the process of evaluating the requirements of the new standards.

F-11

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

2. ACCOUNTING POLICIES - continued

New Section 1582 replaces Section 1581, Business Combinations, and establishes standards for the accounting for business combinations.  It provides the Canadian equivalent to IFRS 3, Business combinations.  The section applies prospectively to business combination for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 1, 2011.  Sections 1601 and 1602 together replace Section 1600, Consolidated Financial Statements.  Section 1601 establishes standards for the preparation of consolidated financial statements.  Section 1601 applies to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011.  Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination.  It is equivalent to the corresponding provisions of IFRS IAS 27, Consolidated and Separate Financial Statements, and applies to interim and annual consolidated financial statements relating to fiscal years beginning on or after January 1, 2011.

International financial reporting standards

The AcSB has determined that Canadian accounting standards for publicly-listed companies will converge with International Financial Reporting Standards (“IFRS”) effective for interim and annual periods beginning on and after January 1, 2011. The adoption of IFRS in 2011 will require restatement for comparative purposes of figures presented for the 2010 fiscal year. The Company understands there to be material differences between Canadian GAAP and IFRS, and is therefore monitoring this project with a view to understanding the possible future effects of the transition to IFRS.

3. MANAGEMENT OF CAPITAL

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to explore its unproven mineral interests. The Company manages the components of shareholders’ equity and its cash as capital, and makes adjustments to these components in response to the Company’s business objectives and the economic climate. To maintain or adjust its capital structure, the Company may attempt to issue new common shares from treasury, issue debt instruments or borrow money or acquire or dispose of other assets. The Company does not anticipate the payment of dividends in the foreseeable future.

The Company’s investment policy is to hold excess cash in highly liquid, short-term instruments, such as guaranteed investment certificates issued by major Canadian chartered banks, with initial maturity terms of less than three months from the original date of acquisition, selected with regards to the Company’s anticipated liquidity requirements.

The Company’s common shares are listed on the TSX Venture Exchange (“TSX-V”).  The TSX-V policies impose certain minimum capital requirements upon the Company.  Management believes that the Company is in compliance with these externally imposed restrictions.

F-12

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

4.        EQUIPMENT	2009						2008
			Accumulated
	Cost		amortization		Net		Net
Computer equipment	$	25,792	$	16,876	$	8,916	$	3,183
Office equipment		5,128		2,582		2,546		6,916
	$	30,920	$	19,458	$	11,462	$	10,099

5. UNPROVEN MINERAL INTERESTS

a)    Canadian interests

Northern Star Eagle and Southern Star Eagle

In December 2007, the Company entered into an option agreement to acquire a 50% interest in 74 staked mineral claims located in the James Bay Lowlands region of northern Ontario, Canada.  Of the 74 claims, 41 are subject to a 2% net smelter returns royalty.

The Company paid $ 300,000 and issued 250,000 common shares upon entering into the agreement.  The common shares were accounted for at their estimated fair value of $ 43,750.

The Company will also be required to:

a)         issue 250,000 common shares on the first anniversary of the agreement.  The common shares were issued in 2008 and were accounted for at their estimated fair value of $ 17,500,

b)         incur not less than $ 500,000 in exploration expenditures on the property by December 11, 2008 (commitment satisfied in 2008),

c)         incur not less than an additional $ 500,000 (an aggregate of $ 1,000,000 including the amount spent in b ) in exploration expenditures before December 11, 2009, and

d)         incur not less than an additional $ 1,500,000 (an aggregate of $ 2,500,000 including the amount spent in c) in exploration expenditures before December 11, 2010.

During 2009, the Company extended the time to complete the exploration commitments under (c) and (d) above by one year by issuing an additional 250,000 common shares.  The common shares were accounted for at their estimated fair value of $ 12,500.

Upon exercise of the option, the optionor may elect to form a joint venture with the Company or to convert its 50% working interest to a 15% carried interest through to commencement of commercial production.

F-13

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

5. UNPROVEN MINERAL INTERESTS – continued

GP2

In September 2008, the Company entered into an agreement to acquire an option to earn a 50% interest in 17 mineral claims located in the James Bay Lowlands region of northern Ontario, Canada.

The Company issued 750,000 common shares upon entering into the agreement.  The common shares were accounted for at their estimated fair value of $ 120,000.

The Company will also be required to:

a)         issue 250,000 common shares on the first year anniversary of the agreement.  The common shares were issued in 2009 and were accounted for at the estimated fair value of $ 12,500,

b)         incur not less than $ 500,000 of exploration expenditures on the property by September 2, 2009 (commitment satisfied in 2008),

c)         incur not less than an additional $ 1,500,000 (an aggregate of $ 2,000,000 including the amount spent in b) of exploration expenditures by September 2, 2010, and

d)         incur not less than an additional $ 3,000,000 (an aggregate of $ 5,000,000 including the amount spent in c) of exploration expenditures by September 2, 2011.

The Company may accelerate these obligations at any time, or it may defer any of the exploration commitments by one year by issuing an additional 250,000 common shares to the optionor.

Once the Company satisfies all of its obligations, the Company may exercise its option to acquire a 50% interest in the property.  The optionor shall then have 60 days to elect to either i) continue to participate in the joint venture on the property, or ii) relinquish its interest in the joint venture in exchange for a 7.5% carried and non-assessable interest in the property to the date of commencement of commercial production; in this latter case, the remaining partners shall be responsible for 100% or further exploration and development expenditures.

Yamba Lake

The Company holds a 44.5% interest in mineral claims and mineral licenses covering approximately 15,323 acres in the Northwest Territories. The mineral claims and licenses expire over various periods up to May 2023, and are not being renewed.

During 2008, the Company recorded an impairment charge of $ 6,899 for Yamba Lake to bring the carrying value to $ 100.  During 2009, the $ 100 and additional cost incurred in 2009 of $ 13,998 were written off.

F-14

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

5. UNPROVEN MINERAL INTERESTS – continued

b) USA interests

Nevada

During 2003, the Company entered into eight purchase agreements, as amended, to acquire eleven unproven mineral interests located in Nevada, USA.  The Company paid US$ 295,000 and issued 950,000 common shares under these agreements.  The Company is obligated to maintain the interests in good standing with the applicable regulatory agency.

The agreements require the payment of advance royalties of US$ 450,000 in 2007, US$ 650,000 in 2008 and US$ 800,000 annually thereafter.  These advance royalty payments will be suspended if the Company options any of the interests to a third party and the third party terminates the option.  The payments will recommence once the interests have been optioned to another party.

The vendor retained a 3% net smelter returns royalty on each of the interests covered by the eight agreements.  The Company may acquire 1% of the royalty under each agreement for US$ 1 million per agreement.

During 2004, the Company entered into agreements, as amended, whereby the Company:

a) Optioned two of the unproven mineral interests to Grandview Gold Inc. (“GGI”).  GGI had the option to acquire a 60% interest in the interests by issuing the Company 400,000 common shares (received), reimbursing the Company for costs incurred of US$ 175,376 (received) and incurring US$ 3.5 million of exploration and development expenditures on the interests over a 3 year period.

During 2007, GGI satisfied its obligations and exercised its option.  The Company elected to convert its 40% working interest to a 20% carried interest.  During 2008, the Company impaired its interest in these 2 mineral interests to $ 100 due to minimal exploration activities during the year. In May 2009, the Company and GGI announced the discontinuation of exploration on these properties and the Company wrote off its remaining interests.

During 2009, the Company terminated its period of liability under a Bureau of Land Management bond with the state of Nevada. The $ 23,297 (US $ 22,111) security for the bond is being refunded by the state of Nevada and has been recorded as a recovery of impairment.

b) Optioned nine of the unproven mineral interests to Minterra Resource Corp. (“Minterra”).  During 2007, Minterra terminated the option agreement. During 2008, the Company terminated its option agreements on these nine unproven mineral interests, and all costs relating to these properties were written off during the 2008 fiscal year.

F-15

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008, and 2007

6. SHARE CAPITAL

a) Authorized

Unlimited voting common shares

Unlimited preferred shares

i)	During 2009, the Company issued 500,000 common shares as described in Note 5.
ii)	In June 2008, the Company completed a private placement of 3,750,000 flow through units and 3,750,000 non-flow through units at a price of $ 0.20 per unit for gross proceeds of $ 1,500,000.  Each flow through unit consisted of one common share and one-half of one share purchase warrant.  Each non flow through unit consists of one common share and one share purchase warrant.  Each full share purchase warrant is exercisable at a price of $ 0.40 per share.  The warrants contain an “accelerated expiry provision”, whereby, in the event that the closing price of the Company’s shares exceeds $ 0.60 for a period of 20 consecutive trading days, the Company may give written notice to holders of the warrants that the warrants shall expire on the 20th day from the date of the notice.  The accelerated expiry provision was not triggered during 2009.  Total share issue costs of $ 21,002 were incurred.
iii)	During 2008, the Company issued 1,250,000 common shares as described in Note 5.

b) Details of share purchase warrant transactions during the years ended December 31, 2009, 2008 and 2007 are as follows:

	2009		2008			2007
Outstanding, beginning of year		5,625,000		8,950,000			9,200,000
Issued		-		5,625,000			−
Exercised		-		(3,885,000	)		(250,000	)
Expired		-		(5,065,000	)		−
Outstanding, end of year		5,625,000		5,625,000			8,950,000

    As at December 31, 2009, the Company has outstanding share purchase warrants as follows:

Number	Exercise price	Expiry date
5,625,000	$ 0.40	June 5, 2010

7. STOCK-BASED COMPENSATION

The Company has an incentive stock option plan (the “plan”).  Under the plan the Company may issue options to purchase common shares, at a price to be determined by the Board of Directors on the date of award, for periods of not more than five years.  Stock options awarded under the plan vest 25% on the date of award and 12.5% per quarter thereafter.  The total number of common shares that may be reserved for issue under the stock option plan is limited to 20% of the number of issued common shares.

F-16

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008, and 2007

7. STOCK-BASED COMPENSATION - continued

The following is a summary of the stock option transactions during the years ended December 31, 2009 and 2008:

	2009					2008					2007
	Options			Weighted average exercise price		Options			Weighted average exercise price		Options		Weighted average exercise price
Outstanding, beginning of period		9,665,000		$	0.19		6,860,000		$	0.16		6,510,000	$	0.16
Granted		2,700,000			0.10		3,950,000			0.22		350,000		0.20
Exercised		-			-		-			-		-		-
Expired		(3,000,000	)		0.13		(1,145,000	)		0.105		-		-
Outstanding, end of period		9,365,000		$	0.18		9,665,000		$	0.19		6,860,000	$	0.16

The following summarizes information about stock options outstanding at December 31, 2009:

Exercise Price	Number Outstanding	Number Exercisable	Expiry Dates
$ 0.23	2,365,000	2,365,000	February 2011
$ 0.20	350,000	350,000	January 2012
$ 0.19	1,600,000	1,600,000	January 2013
$ 0.21	800,000	705,980	January 2013
$ 0.25	1,550,000	1,356,250	June 2013
$ 0.10	2,500,000	1,562,500	January 2014
$ 0.10	200,000	75,000	August 2014
	9,365,000	8,014,730

The fair value of stock options awarded during 2009 and 2008 was estimated on the dates of award using the Black-Scholes option pricing model with the following assumptions:

	2009			2008			2007
Risk-free interest rates		1.67	%		3.51	%		3.98	%
Expected volatility		115	%		121	%		101	%
Expected lives	5 years			5 years			3.5 years
Estimated forfeiture rate		-			-			-

The average fair value of stock options awarded during 2009, 2008 and 2007 was $ 0.03, $ 0.18 and $ 0.14 respectively.

The Black-Scholes option pricing model was developed for use in estimating the fair value of stock options that have no vesting provisions and are fully transferable.  Also, option pricing models require the use of estimates and assumptions, including expected volatility rates.  The Company uses expected volatility rates which are based upon historical experience.  Changes in the underlying assumptions used in the Black-Scholes option pricing model could materially affect the fair value estimates.

F-17

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008, and 2007

8. INCOME TAXES

The provision for income taxes differs from the amount that would have been obtained by applying the statutory income tax rate of 30% (2008 – 31%; 2007 – 34%) to the Company’s net income (loss).  The difference results from the following items:

	2009			2008			2007
Expected income tax recovery	$	(207,000	)	$	(427,000	)	$	(249,000	)
Items not deductible for income tax purposes
Stock-based compensation		99,000			131,000			100,000
Impairment of unproven mineral interest		4,000			149,000			−
Other		2,000			2,000			(19,000	)
Recovery of valuation allowance		(225,000	)		-			-
Unrecognized benefit of loss carryforwards		102,000			145,000			168,000
Provision for income taxes (recovery)	$	(225,000	)	$	–		$	–

The income tax effects of temporary differences that give rise to significant portions of future income tax assets and liabilities at December 31, 2009 and 2008 are as follows:

	2009			2008
Future income tax assets
Non-capital losses	$	565,000		$	632,000
Less:  Valuation allowance		(340,000	)		(632,000	)
		225,000			–
Future income tax liabilities
Unproven mineral interests		(225,000	)		-
	$	-		$	-

The Company has non-capital losses for income tax purposes of approximately $ 2,263,000 available to reduce future years’ taxable income.  The benefit of these non-capital losses has not been recognized in the Company’s accounts as there is no reasonable assurance such benefit will be realized.  If unused, the non-capital losses become no longer available subsequent to years ending between 2010 and 2029.

9. RELATED PARTY TRANSACTIONS

Unless otherwise stated, related party transactions are measured at the exchange #amount, being the amount of consideration established and agreed to by the related parties.

Management fees of $ 137,535 (2008 - $ 129,240; 2007 - $ 128,953), secretarial and administrative service fees of $ 54,000 (2008 - $ 54,000; 2007 - $ 54,000), rent of $ 24,000 (2008 - $ 24,000; 2007 - $ 24,000) and a consulting fee of $ Nil (2008 - $ Nil; 2007 - $ 1,084) were paid to directors.

Included in accounts payable and accrued liabilities is $ 1,837 (2008 - $ 12,199) due to directors.

F-18

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008, and 2007

10. SUPPLEMENTAL CASH FLOW INFORMATION

During the year the Company received interest of $ 18,052 (2008 – $ 50,292; 2007 – $ 37,615).

Non-cash financing and investing activities were as follows:

	2009			2008			2007
Financing activities
Shares issued for unproven mineral interests	$	25,000		$	171,250		$	−
Investing activities
Unproven mineral interests purchased through share issues	$	(25,000	)	$	$(171,250	)	$	−

11. FINANCIAL INSTRUMENTS

a) Fair value

The fair value of financial instruments at December 31, 2009 and 2008 as summarized in the following table. Fair value estimates are made at the balance sheet date, based on relevant quoted market and other information about the financial instruments.

	December 31,
	2009				2008
	Carrying value		Fair value		Carrying value		Fair value
Financial assets
Held for trading
Cash	$	779,711	$	779,711	$	1,168,042	$	1,168,042
Loans and receivables
Accounts receivable		25,507		25,507		18,135		18,135
Financial liabilities
Other financial liabilities
Accounts payable and accrued liabilities		31,516		31,516		30,179		30,179

b)    Financial risk management

The Company’s activities potentially expose it to a variety of financial risks, including credit risk, liquidity risk and foreign exchange risk.

Credit risk

Credit risk arises due to the potential to one party to a financial instrument to fail to discharge its obligations and cause the other party to suffer a loss. Financial instruments that potentially subject the Company to credit risk consist of cash and accounts receivable. The maximum credit risk represented by the Company’s financial assets is represented by their carrying amounts. The Company holds its cash with financial institutions that are believed to be creditworthy.

F-19

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

11. FINANCIAL INSTRUMENTS − continued

Liquidity risk

Liquidity risk arises when adequate funds cannot be raised to settle liabilities and commitments when they become payable. The Company manages its liquidity by maintaining adequate cash to meet anticipated cash needs.

Foreign currency risk

The Company is subject to foreign exchange rate risk as the Company enters into transactions and has assets and liabilities denominated in a currency other than theCompany’s functional currency, which is the Canadian dollar.

12. SUBSEQUENT EVENTS

   Subsequent to December 31, 2009, the Company:

a) Elected to extend the time for completion of its commitments relating to the GP2 property by one year in exchange for issuing 250,000 common shares to the optionors.

b) Entered into an option agreement in respect of the Croxall property ("Croxall") located in Ontario, Canada.  To earn a 75% interest in Croxall, the Company must issue 250,000 common shares (issued), incur $ 750,000 of exploration expenditures over a 4 year period, of which $ 250,000 must be incurred in the first year and make cash payments of $ 60,000 by June 2012.  As part of the agreement, the Company also agreed to terminate its options on the Northern Star Eagle and Southern Star Eagle properties.

c) Sold 9,100,000 flow-through common shares for $ 0.10 per share and 5,900,000 units for $ 0.10 per unit for cash of $ 1.5 million.  Each unit comprises one common share and one-half share purchase warrant.  Each share purchase warrant is exercisable into one common share until October 20, 2012 for $ 0.15 per share.  The Company paid commissions of $ 89,400, incurred expenses of $ 30,030 and issued 1,490,000 agent's warrants in respect of the financing.  The agent's warrants are exercisable into common shares until October 20, 2012 for $ 0.10 per share.

d) Issued 200,000 stock options exercisable for 5 years at $ 0.16 per share, 1,650,000 stock options exercisable for 5 years at $ 0.15 per share and 750,000 stock options exercisable for 5 years at $ 0.10 per share.

e) Entered into an option agreement in respect of the Rosebud 12 Property ("Rosebud 12") located in Yukon, Canada.  To earn a 70% interest in Rosebud 12, the Company must pay $ 75,000, issue 200,000 common shares and incur $ 200,000 of exploration expenditures by the first anniversary of the agreement.  The Company must also make cash payments totalling $ 1,375,000 and issue 2,800,000 common shares over a five year period, though the Company may issue common shares in lieu of the annual cash payments.  Rosebud 12 is subject to a 3% net smelter return royalty, of which the Company may purchase 1% for $ 1,500,000.

F-20

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”).  A description of United States generally accepted accounting principles and practices (collectively “US GAAP”) that results in material recognition and measurement differences from Canadian GAAP are as follows:

a.         The effect of the differences between Canadian GAAP and US GAAP on the significant captions of the balance sheets and the statements of loss and comprehensive loss, shareholders’ equity and cash flows is summarized as follows:

	2009			2008			2007
1)           Operations
Net loss – Canadian GAAP	$	(465,478	)	$	(1,384,069	)	$	(731,228	)
Unproven mineral interests expensed under US GAAP (b)		(28,236	)		(1,166,221	)		(94,343	)
Impairment charge not recognized under US GAAP (b)		14,198			481,526			−
Reversal of future income tax recovery (c)		(225,000	)		−			−
Net loss – US GAAP	$	(704,516	)	$	(2,068,764	)	$	(825,571	)
Loss per share − US GAAP	$	(0.01	)	$	(0.04	)	$	(0.02	)

	2009			2008
2)           Assets
Total assets – Canadian GAAP	$	2,644,740		$	2,985,198
Unproven mineral interests expensed under US GAAP (b)		(1,180,459	)		(1,166,421	)
Goodwill not recognized under US GAAP (d)		(100,000	)		(100,000	)
Total assets − US GAAP	$	1,364,281		$	1,718,777
3)           Deficit
Closing deficit – Canadian GAAP	$	(5,530,311	)	$	(5,064,833	)
Unproven mineral interests expensed under US GAAP (b)		(1,180,459	)		(1,166,421	)
Goodwill not recognized under US GAAP (d)		(100,000	)		(100,000	)
Reversal of future income tax recovery (c)		(225,000	)		−
Deficit − US GAAP	$	(7,035,770	)	$	(6,331,254	)

F-21

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES − continued

	2009			2008			2007
4)       Cash flows − operating activities – Canadian GAAP
Cash flow used in operating activities − Canadian GAAP	$	(350,057	)	$	(422,383	)	$	(513,075	)
Add net loss – Canadian GAAP		465,478			1,384,069			731,228
Less net loss − US GAAP		(704,516	)		(2,068,764	)		(825,571	)
Cash flows used in operating activities – US GAAP	$	(589,095	)	$	(1,107,078	)	$	(607,418	)
5)       Cash flows – investing activities
Cash flow from (used in) investing activities – Canadian GAAP	$	(33,029	)	$	(1,517,472	)	$	102,650
Add unproven mineral interest expensed in US GAAP		28,236			1,517,472			94,343
Cash flows from (used in) investing activities − US GAAP	$	(4,793	)	$	-		$	196,993
The components of shareholders’ equity under US GAAP would be as follows:
		2009			2008
Common shares	$	6,338,547		$	6,318,792
Additional paid in capital		2,029,988			1,701,060
Deficit		(7,035,770	)		(6,331,254	)
	$	1,332,765		$	1,688,598

b.        Unproven Mineral Interests

Under Canadian GAAP, mineral exploration expenditures can be deferred on prospective mineral rights until mine development and construction commences, at which time such costs from part of the mineral property costs and are amortized over the life of the mine.  If the property or rights are abandoned, or if management’s assessments of the probability of profitable exploitation of the property are not favorable, the mineral interest is written off.  For  Canadian GAAP purposes, the Company’s policy is to capitalize all expenditures associated with the prospective properties and rights including payments made to maintain the Company’s right to explore these properties and earn its future rights and options to acquire these concessions once all requirements under the option agreements have been satisfied.  In addition, the Company includes proceeds from property option payments received in unproven mineral interests.

Under US GAAP, expenditures incurred to acquire interests in mineral properties or concessions are capitalized.  However, all exploration and evaluation expenditures are expensed.

F-22

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES − continued

Under US GAAP, proceeds from property option payments would be included in other income.  Since no option payments have been received during the reporting periods, there is no difference to report between Canadian and US GAAP.

For Canadian GAAP, cash flows relating to mineral property costs are reported as investing activities.  For US GAAP, these costs would be characterized as operating activities.

c.        Flow – through shares

Under Canadian income tax legislation, a company is permitted to issue shares whereby the company agrees to incur qualifying expenditures and renounce the related income tax deductions to investors.  For Canadian GAAP purposes, the Company accounts for the issue of flow-through shares in accordance with the provision of Emerging Issues Committee Abstract 146, Flow-Through Shares.  At the time of issue, the funds received are recorded as share capital.  At the time of the filing of the renunciation of the flow-through expenditures to the investors, the Company records a future income tax liability with a charge directly to shareholders’ equity.  If future income tax benefits are available and unrecognized, the future income tax liabil ity may be reduced or eliminated with an offsetting amount recognized as a future income tax recovery.

For US GAAP purposes, the premium paid for flow-through shares in excess of the market value of common shares, at the time of issue, is credited to other liabilities and included in income as the qualifying expenditures are made.  There was no premium on the flow-through shares issued for all periods presented.

d.        Goodwill

The Company recognized, for Canadian GAAP purposes, goodwill relating to a reverse acquisition of an inactive publicly-listed company.  At the time of the transaction, Canadian GAAP permitted the recognition of goodwill relating to the value of the stock market listing.

US GAAP does not permit recognition of goodwill under these circumstances.

e.        Income taxes

Under Canadian GAAP, future income tax assets and liabilities are recorded at substantively enacted income tax rates.  Under US GAAP, deferred income tax assets and liabilities are recorded at enacted income tax rates.  There were no significant differences between enacted and substantively enacted income tax rates for any of the periods presented.

FASB issued FIN 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 10, (now ASC 740), which prescribes a recognition threshold and measurement criteria for the financial statement recognition of a tax position taken or expected to be taken in a tax return.  The Company is required to determine whether it is more likely than not that a tax position will be sustained upon examination and such positions that meet this threshold will be measured at the most likely amount to be realized upon settlement.

The Company has reviewed its tax positions and determined that the application of FIN 48 does not result in any material adjustment for US GAAP purposes.

F-23

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES − continued

f.        Adoption of new accounting pronouncements

The Company adopted new general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statement are issued or are available to be issued.  The new guidelines requires an entity to evaluate subsequent events to the date the financial statements were issued or were available to be issued.  The Company adopted this standard in its 2009 fiscal year with no material effect on the consolidated financial statements.

The Company adopted the new accounting standards codification (“ASC”) and the hierarchy of generally accepted accounting principles which became effective on July 1, 2009. All other non-grandfathered non-SEC accounting literature not included in the ASC will become non-authoritative.  The new ASC did not have a material effect on the consolidated financial statements.

In December 2007, FASB issued new guidance for business combinations which requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions (now ASC 805).  It also requires that the acquirer in a business combination achieved in stages to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of assets and liabilities as if they had occurred on the acquisition date.  In addition, all acquisition related costs are to be expensed as incurred, rather than capitalized as part of the purchase price and those restructuring costs that an acquirer expected, but was not obligated to incur, are t o be recognized separately from the business combination.  This guidance applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  The Company adopted this guidance commencing January 1, 2009 and it had no material effect on the consolidated financial statements.

In December 2007, the FASB issued new accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary (now ASC 810).  It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  It also requires consolidated net income and comprehensive income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest on the face of the consolidated statement of income.  Changes in a parent’s ownership interest in a subsidiary that do no result in deconsolidation must be accounted for as equity transactions for the difference between the parent’s carryi ng value and the cash exchanged in the transaction.  The Company adopted this guidance commencing January 1, 2009 and it did not have a material effect on the consolidated financial statements.

New guidance for fair value measurements and disclosures for non-financial assets and non-financial liabilities, other than for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) became effective July 1, 2009 (now ASC 820).  For purposes of applying this pronouncement, non-financial assets and non-financial liabilities would include all assets and liabilities other than those meeting the definition of a financial asset or financial liability.  The adoption of this guidance did not have a material effect on the consolidated financial statements.

F-24

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2009, 2008 and 2007

13. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES − continued

g.        Recently Issued Accounting Pronouncements

In June 2009, FASB issued FAS 167, Amendments to FASB Interpretation No. 46(R) (“FAS 167”) (ASC subtopic 855-10).  FAS 167 eliminates FASB Interpretation 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity.  FAS 167 also contains a new requirement that any term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benef its of an entity must be disregarded in applying FASB Interpretation 46(R)’s provisions.  FAS 167 is effective for fiscal years beginning after November 15, 2009, and for interim periods within that first period, with earlier adoption prohibited.  This will be effective for the Company’s fiscal year starting January 1, 2010.  The Company is currently assessing the potential effects, if any, on its consolidated financial statements.

F-25

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

Interim Consolidated Financial Statements

For the nine months ended September 30, 2010

(Unaudited - Prepared by Management)

FF-1

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

Interim Consolidated Balance Sheet

 (Unaudited - Prepared by Management)

	September 30, 2010			December 31, 2009
ASSETS
CURRENT ASSETS
Cash	$	554,762		$	779,711
Amounts receivable		4,911			25,507
Prepaid expenses		-			100
		559,673			805,318
EQUIPMENT (Note 4)		9,074			11,462
UNPROVEN MINERAL INTERESTS (Note 5 and Schedule)		1,740,460			1,727,960
GOODWILL		100,000			100,000
	$	2,409,207		$	2,644,740
LIABILITIES
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	26,342		$	31,516
SHAREHOLDERS’ EQUITY
SHARE CAPITAL (Note 6)		6,124,765			6,113,547
CONTRIBUTED SURPLUS		2,075,586			2,029,988
RETAINED EARNINGS (DEFICIT)		(5,817,486	)		(5,530,311	)
		2,382,865			2,613,224
	$	2,409,207		$	2,644,740

OPERATIONS (Note 1)

SUBSEQUENT EVENTS (Note 11)

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

FF-2

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

Interim Consolidated Statements of Loss, Comprehensive Loss and Deficit

 (Unaudited - Prepared by Management)

	Nine months ended September 30						Three months ended September 30
	2010			2009			2010			2009
EXPENSES
Stock-based compensation	$	45,598		$	271,101		$	12,202		$	37,401
Professional fees		15,762			32,355			1,349			9,833
Travel		32,729			38,142			6,933			8,101
Management fees		95,815			105,000			32,785			37,401
Secretarial and administration services		40,500			40,500			13,500			13,500
Transfer agent fees and regulatory fees		18,788			24,030			2,696			12,229
Rent		18,000			18,000			6,000			6,000
Telephone and fax		5,273			7,460			1,330			2,201
Office and miscellaneous		8,950			12,551			3,443			6,156
Amortization of equipment		2,388			2,598			796			1,242
Income (loss) before other items		(283,803	)		(551,737	)		(81,034	)		(130,204	)
OTHER ITEMS
Impairment of unproven mineral interests		(7,864	)		(14,098	)		(7,864	)		(13,998	)
Interest income		4,492			17,053			1,492			1,049
Income (loss) before income taxes		(287,175	)		(548,782	)		(87,406	)		(143,153	)
INCOME TAXES (RECOVERY)
Future		-			(225,000	)		-			-
NET AND COMPREHENSIVE INCOME (LOSS)	$	(287,175	)	$	(323,782	)	$	(87,406	)	$	(143,153	)
Basic and diluted earnings (loss) per common share	$	(0.01	)	$	(0.01	)	$	(0.00	)	$	(0.00	)
Weighted average number of common shares outstanding		51,351,899			50,795,123			51,465,403			50,796,924

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

FF-3

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

INTERIM CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

	Share Capital
	Shares		Amount			Contributed surplus		Retained earnings (deficit)
Balance at January 1, 2009		50,794,207	$	6,318,792		$	1,701,060	$	(5,064,833	)
Common shares issued for:
Unproven mineral interests		500,000		25,000			–		–
Share issue costs		–		(5,245	)		–		–
Stock-based compensation		–		–			328,928		–
Income tax benefit renounced to shareholders		–		(225,000	)		–		–
Net loss for the period		–		–			–		(465,478	)
Balance at December 31, 2009		51,294,207	$	6,113,547		$	2,029,988	$	(5,530,311	)
Stock-based compensation		–		–			45,598		–
Common shares issued for:
Unproven mineral interests		250,000		12,500			–		–
Share issue costs		–		(1,282	)		–		–
Net loss for the period		–		–			–		(287,175	)
Balance at September 30, 2010		51,544,207	$	6,124,765		$	2,075,586	$	(5,817,486	)

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

FF-4

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

Interim Consolidated Statements of Cash Flow

(Unaudited - Prepared by Management)

	Nine months ended September 30						Three months ended September 30
	2010			2009			2010			2009
CASH FLOW FROM (USED IN) OPERATING ACTIVITIES
Net income (loss) for the year	$	(287,175	)	$	(323,782	)	$	(87,406	)	$	(143,153	)
Adjustments to reconcile net cash provided
by operating activities
Amortization of equipment		2,388			2,598			796			1,242
Impairment of unproven mineral interest		-			100			-			-
Stock-based compensation		45,598			271,101			12,202			37,401
Future income tax recovery		-			(225,000	)		-			-
Decrease (increase) in
Amounts receivable		20,596			15,333			(1,904	)		400
Prepaid expenses and deposit		100			(300	)		-			(300	)
Increase (decrease) in
Accounts payable and accrued liabilities		(5,174	)		(26,212	)		11,884			(10,978	)
		(223,667	)		(286,162	)		(64,428	)		(115,388	)
CASH FLOW USED IN INVESTING ACTIVITIES
Expenditures on unproven mineral interests		-			(14,238	)		-			-
Acquisition of property and equipment		-			(5,018	)		-			(5,018	)
		-			(19,256	)		-			(5,018	)
CASH FLOW USED IN FINANCING ACTIVITY
Share issue costs		(1,282	)		(1,320	)		(1,282	)		(1,320	)
INCREASE (DECREASE) IN CASH DURING THE PERIOD		(224,949	)		(306,738	)		(65,710	)		(121,726	)
CASH, beginning of period		779,711			1,168,042			620,472			983,030
CASH, end of period	$	554,762		$	861,304		$	554,762		$	861,304

See Note 9.

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

FF-5

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

INTERIM CONSOLIDATED SCHEDULE OF UNPROVEN MINERAL INTERESTS

(Unaudited – Prepared by management)

	Northern Star Eagle and Southern Star Eagle		GP2		Yamba Lake			September 30, 2010			December 31, 2009
	Ontario		Ontario		NWT
Balance, beginning of year	$	1,065,580	$	662,380	$	-		$	1,727,960		$	1,688,922
ACQUISITION COSTS		-		12,500		-			12,500			25,000
OTHER COSTS:
Drilling and assays		-		-		-			-			4,807
Geologists		-		-		-			-			5,026
Travel		-		-		-			-			1,805
Mapping and surveying		-		-		-			-			2,600
Annual maintenance fees		-		-		7,864			7,864			13,998
Field equipment		-		-		-			-			-
TOTAL OTHER COSTS		-		-		7,864			7,864			28,236
Impairment		-		-		(7,864	)		(7,864	)		(14,198	)
BALANCE, September 30, 2010	$	1,065,580	$	674,880	$	-		$	1,740,460		$	1,727,960

FF-6

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

1. OPERATIONS

Mill City Gold Corp. (the “Company”) is in the business of acquiring and exploring unproven mineral interests.

The Company presently has no proven or probable reserves and, on the basis of information to date, has not yet determined whether its unproven mineral interests contain economically recoverable reserves.  Consequently the Company considers itself to be an exploration stage company.  The amounts shown as unproven mineral interests and deferred costs represent costs incurred to date, less amounts amortized, written-off or recovered under option agreements, and do not necessarily represent present or future values.  The underlying value of the unproven mineral interests is entirely dependent on the existence of economically recoverable reserves, securing and maintaining title and beneficial interest, the ability of the Company and its optionees to obtain the necessary financing to complete development, and f uture profitable production or sale of the interests.

The Company’s ability to continue exploring its unproven mineral interests is dependent upon its ability to raise additional capital to fund its exploration expenditures as described in Note 5. Additional capital may be sought from the sale of additional common shares or other equity or debt instruments. There is no assurance such additional capital will be available to the Company on acceptable terms or at all.

These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) appropriate for a going concern. The going concern basis of accounting assumes the Company will continue to realize the value of its assets and discharge its liabilities and other obligations in the ordinary course of business. Should the Company be required to realize the value of its assets other than in the ordinary course of business, the net realizable value of its assets may be materially less than the amounts shown in the consolidated financial statements. These consolidated financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that may be necessary should the Company be unable to repay its liabilities and meets its obli gations in the ordinary course of business or continue operations.

2. SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the interim consolidated financial statements and accompanying notes. Actual results could differ from those estimates. These interim consolidated financial statements have, in management's opinion, been properly prepared using careful judgment with reasonable limits of materiality. These interim consolidated financial statements should be read in conjunction with the most recent annual consolidated financial statements. The significant accounting policies follow that of the most recently reported annual consolidated financial statements.

Future accounting standards

The Accounting standards Board (“AcSB”) of the Canadian Institute of Chartered Accountants has issued new accounting standards that the Company is required to consider for adoption, as follows:

Business combinations, consolidated financial statements and non-controlling interests

The CICA issued three new accounting standards in January 2009, Section 1582, Business Combinations, Section 1601, Consolidated Financial Statements, and Section 1602 Non-Controlling Interests. These new standards will be effective for fiscal years beginning on or after January 1, 2011. The Company is in the process of evaluating the requirements of the new standards.

FF-7

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

2. SIGNIFICANT ACCOUNTING POLICIES - continued

New Section 1582 replaces Section 1581, Business Combinations, and establishes standards for the accounting for business combinations. It provides the equivalent to IFRS 3, Business Combinations. The section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period on or after January 1, 2011. Sections 1601 and 1602 together replace Section 1600, Consolidated Financial Statements. Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1601 applies to interim and annual consolidated financial statements related to fiscal years beginning on or after January 1, 2011. Section 1602 establishes standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. It is equivalent to the corresponding provisions of IFRS IAS 27, Consolidated and Separate Financial Statements, and applies to interim and annual consolidated financial statements related to fiscal years beginning on or after January 1, 2011.

3. MANAGEMENT OF CAPITAL

The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to explore its unproven mineral interests. The Company manages the components of shareholders’ equity and its cash as capital, and makes adjustments to these components in response to the Company’s business objectives and the economic climate. To maintain or adjust its capital structure, the Company may attempt to issue new common shares from treasury, issue debt instruments or borrow money or acquire or dispose of other assets. The Company does not anticipate the payment of dividends in the foreseeable future.

The Company’s investment policy is to hold excess cash in highly liquid, short-term instruments, such as guaranteed investment certificates issued by major Canadian chartered banks, with initial maturity terms of less than three months from the original date of acquisition, selected with regards to the Company’s anticipated liquidity requirements.

The Company’s common shares are listed on the TSX Venture Exchange (“TSXV”). The TSXV policies impose certain minimum capital requirements upon the Company. Management believes that the Company is in compliance with these externally imposed restrictions.

4. EQUIPMENT

	September 30, 2010						December 31, 2009
			Accumulated
	Cost		amortization		Net		Net
Office equipment	$	5,128	$	2,963	$	2,165	$	2,546
Computer equipment		25,792		18,883		6,909		8,916
	$	30,920	$	21,846	$	9,074	$	11,462

FF-8

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

5. UNPROVEN MINERAL INTERESTS

a) Canadian interests

Northern Star Eagle and Southern Star Eagle. During 2007, the Company entered into an option agreement with Temex Resources Corp. (“Temex”) to acquire a 50% interest in 74 staked mineral claims located in the James Bay Lowlands region of northern Ontario, Canada.

Under the terms of the agreement, the Company paid $300,000 and issued 250,000 common shares to Temex (recorded at their fair value of $43,750).  The Company will also be required to a) incur not less than $500,000 in exploration expenditures on the Property in the first year of the agreement (commitment satisfied), b) issue 250,000 common shares to Temex on the first anniversary (issued and recorded at their fair value of $7,500), c) incur not less than an additional $500,000 (an aggregate of $1,000,000 including the amount spent in a) in exploration expenditures before the second anniversary, and d) incur not less than an additional $1,500,000 (an aggregate of $2,500,00 including the amount spent in c) in exploration expenditures before the third anniversary.  During 2009, the Company extended the time to complet e these exploration commitments by one year by issuing an additional 250,000 common shares (recorded at their fair value of $12,500) to Temex. Upon Mill City earning its 50% interest in the claims, Temex may elect to form a joint venture with the Company or to convert its 50% working interest to a 15% carried interest through to commencement of commercial production.

Of the 74 claims, 41 are subject to a 2% net smelter returns royalty.

See Note 11.

GP2. During 2008, the Company also entered into an agreement with Temex and Rainy Mountain Royalty Corp. (“Rainy Mountain”) (formerly East West Resource Corporation) to acquire an option to earn an undivided 50% participating interest in the GP2 property, also located in the James Bay Lowlands region of northern Ontario, Canada. The GP2 property (the “Property”) comprises 17 mining claims totaling 240 claim units.

Under the terms of the agreement, the Company issued 375,000 common shares each to Temex and Rainy Mountain at the time of signing the agreement (the combined shares were recorded at their fair value of $120,000). The Company will also be required to: a) incur not less than $500,000 of exploration expenditures on the Property in the first year of the agreement (commitment satisfied), b) issue 125,000 common shares to each of Temex and East West on the first year anniversary (issued and recorded at their  fair value of $12,500, c) incur not less than an additional $1,500,000 (an aggregate of $2,000,000 including the amount spent in a) of exploration expenditures before the second anniversary, and d) incur not less than an additional $3,000,000  (an aggregate of $5,000,000 including the amount spent in c) of explorat ion expenditures before the third anniversary. The Company may accelerate these obligations at any time, or it may defer any of the exploration commitments by one year by issuing an additional 125,000 common shares to each of Temex and East West. During 2010, the Company extended the time to complete these exploration commitments by one year by issuing an additional 250,000 common shares (recorded at their fair value of $12,500) to Temex and Rainy Mountain.

Once the Company satisfies all of its obligations, the Company may exercise its option to acquire a 50% interest in the Property. Temex and Rainy Mountain shall then each have 60 days to elect to either: a) to continue to participate in the joint venture on the Property, or b) to relinquish its interest in the joint venture in exchange for a 7.5% carried and non-assessable interest in the Property to the date of commencement of commercial production; in this latter case, the remaining partners shall be responsible for 100% of further exploration and development expenditures.

FF-9

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

5. UNPROVEN MINERAL INTERESTS – continued

Yamba Lake. The Company holds a 44.5% interest in mineral claims and mineral licenses covering approximately 15,323 acres in the Northwest Territories. The mineral claims and licenses expire over various periods up to May 2023, and are not being renewed. At the end of 2008, the Company recorded an impairment charge at Yamba Lake to bring its interests to $100. During 2009, the Company paid license fees of $13,998 and recorded an impairment charge of the remaining Yamba Lake balance of $14,098. During 2010, the Company paid license fees of $7,864 and recorded it as an impairment of unproven mineral interests.

b) Nevada USA interests

During 2003, the Company entered into eight purchase agreements, as amended, to acquire eleven unproven mineral interests located in Nevada, USA.  The Company paid US$ 295,000 and issued 950,000 common shares under these agreements.

During 2008 and 2009, the Company wrote off these interests due to minimal exploration activities. Also during 2009, the Company terminated its period of liability under a Bureau of Land Management bond with the state of Nevada. The US $22,111 security for the bond was refunded by the state of Nevada and was recorded as a recovery of impairment.

6. SHARE CAPITAL

            a) Authorized

Unlimited voting common shares

Unlimited preferred shares

b)	During 2009, the Company issued 500,000 common shares as described in Note 5.
c)	During 2010, the Company issued 250,000 common shares as described in Note 5.
d)	As at September 30, 2010, there were 5,624,999 share purchase warrants outstanding. During 2010, the Company extended the expiry dates on these warrants by one year to June 5, 2011 and decreased the exercise price on 5,354,162 warrants from $0.40 to $0.20 and the remaining 270,837 warrants may be exercised at $0.40.

As at September 30, 2010, the Company has outstanding share purchase warrants as follows:

Number	Exercise price	Expiry Date
5,354,162	$      0.20	June 5, 2011
270,837	$      0.40	June 5, 2011

FF-10

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

7. STOCK-BASED COMPENSATION

The Company has an incentive stock option plan (the “plan”).  Under the plan, the Company may issue options up to 20% of the issued shares to purchase common shares at a price to be determined by the Board of Directors on the date of award for a period not more than five years.Stock options awarded under the plan vest 25% on the date of award and 12.5% per quarter thereafter.

The following is a summary of the stock option transactions during the nine months ended September 30, 2010 and the year ended December 31, 2009:

	September 30, 2010					December 31, 2009
	Options			Weighted average exercise price			Options			Weighted average exercise price
Outstanding, beginning of period		9,365,000			0.18			9,665,000			0.19
Granted		750,000			0.10			2,700,000			0.10
Expired		(250,000	)		0.25			(3,000,000	)		0.13
Outstanding, end of period		9,865,000			0.18			9,365,000			0.18

The following summarizes information about stock options outstanding at September 30, 2010:

Exercise Price	Number Outstanding	Number Exercisable	Expiry Dates
$ 0.23	2,365,000	2,365,000	February 2011
$ 0.20	350,000	350,000	January 2012
$ 0.19	1,600,000	1,600,000	January 2013
$ 0.21	800,000	800,000	January 2013
$0.25	1,300,000	1,300,000	June 2013
$0.10	2,500,000	2,500,000	January 2014
$0.10	200,000	150,000	August 2014
$0.10	750,000	187,500	September 2015
	9,865,000	9,252,500

The fair value of stock options awarded during the nine months ended September 30, 2010 and the year ended December 31, 2009 was estimated on the dates of award using the Black-Scholes option pricing model with the following assumptions:

	September 30, 2010	December 31, 2009
Risk-free interest rates:	1.95%	1.67%
Expected volatility	115%	115%
Expected lives	5 years	5 years

The average fair value of stock options awarded during 2009 was $ 0.03 and $0.16 during the nine months ended September 30, 2010.

The Black-Scholes option pricing model was developed for use in estimating the fair value of stock options that have no vesting provisions and are fully transferable.  Also, option pricing models require the use of estimates and assumptions, including expected volatility rates.  The Company uses expected volatility rates which are based upon historical experience.  Changes in the underlying assumptions used on the Black-Scholes option pricing model could materially affect the fair value estimates.

FF-11

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

8. RELATED PARTY TRANSACTIONS

Unless otherwise stated, related party transactions are measured at the exchange amount, being the amount of consideration established and agreed to by the related parties.

Management fees of $ 95,815 (2009 - $ 105,000), secretarial and administrative service fees of $ 40,500 (2009 – $ 40,500), rent of $ 18,000 (2009 - $ 18,000) were paid to directors.

Included in accounts payable and accrued liabilities is $ 18,323 (2009 - $ Nil) due to a director.

9. SUPPLEMENTAL CASH FLOW INFORMATION

Non-cash financing and investing activities were as follows:

	Nine months ended September 30, 2010		Year ended Dec. 31, 2009
Financing activities
Shares issued for unproven mineral interests	$	12,500	$	25,000
Investing activities
Unproven mineral interests purchased through  share issuances	$	12,500		(25,000	)
Interest received	$	4,492	$	18,052

10. FINANCIAL INSTRUMENTS

a)        Fair value

The fair value of financial instruments at September 30, 2010 and December 31, 2009 are summarized in the following table. Fair value estimates are made at the balance sheet date, based on relevant quoted market and other information about the financial instruments.

	September 30, 2010				December 31, 2009
	Carrying Value		Fair  Value		Carrying Value		Fair Value
Financial assets
Held for trading
Cash	$	554,762	$	554,762	$	779,717	$	779,717
Loans and receivables
Accounts receivable		4,911		4,911		25,507		25,507
Financial liabilities
Other financial liabilities
Accounts payable and         Accrued liabilities		26,342		26,342		31,516		31,516

FF-12

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

10. FINANCIAL INSTRUMENTS - continued

b)        Financial risk management

The Company’s activities potentially expose it to a variety of financial risks, including credit risk, liquidity risk and foreign exchange risk.

Credit risk

Credit risk arises due to the potential to one party to a financial instrument to fail to discharge its obligations and cause the other party to suffer a loss. Financial instruments that potentially subject the Company to credit risk consist of cash and accounts receivable. The maximum credit risk represented by the Company’s financial assets is represented by their carrying amounts. The Company holds its cash with financial institutions that are believed to be creditworthy.

Liquidity risk

Liquidity risk arises when adequate funds cannot be raised to settle liabilities and commitments when they become payable. The Company manages its liquidity by maintaining adequate cash to meet anticipated cash needs.

Foreign currency risk

The Company is subject to foreign exchange rate risk as the Company enters into transactions and has assets and liabilities denominated in a currency other than theCompany’s functional currency, which is the Canadian dollar.

11. SUBSEQUENT EVENTS

Subsequent to September 30, 2010, the Company:

a)   After receiving TSXV approval, entered into an option and joint venture agreement with Temex Resources Corp. (“Temex”) allowing the Company to earn not less than a 75% interest in the Croxall Property in northern Ontario. The Company issued 250,000 common shares to Temex and must spend a total of $750,000 prior to the fourth anniversary in order to earn a 75% interest. At the same time the Company terminated the agreement with Temex relating to the Northern Star Eagle and Southern Star Eagle properties.

b)   Completed a financing of 9,100,000 flow-through common shares (the “FT Shares”) at $0.10 per FT share and 5,900,000 units (the “Units”) at $0.10 per Unit for gross proceeds of $1,500,000. Each Unit consists of one common share and one-half warrant; each whole warrant may be exercised at a price of $0.15 until October 20, 2012. The Company paid commissions of $90,000 plus expenses of $49,340 and issued 1,490,000 broker warrants, exercisable to acquire one Unit at a price of $0.10 per Unit until October 20, 2012.

c)   Wound up its wholly owned USA subsidiary.

d)   Granted 200,000 stock options exercisable at $0.16, and 1,650,000 stock options exercisable at $0.15, for five years.

FF-13

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

11. SUBSEQUENT EVENTS - continued

e) Entered into an option agreement in respect of the Rosebud 12 Property ("Rosebud 12") located in Yukon, Canada.  To earn a 70% interest in Rosebud 12, the Company must pay $ 75,000, issue 200,000 common shares and incur $ 200,000 of exploration expenditures by the first anniversary of the agreement.  The Company must also make cash payments totalling $ 1.375 million and issue 2.8 million common shares over a five year period, though the Company may issue common shares in lieu of the annual cash payments.  Rosebud 12 is subject to a 3% net smelter returns royalty, of which the Company may purchase 1% for $ 1.5 million.

12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”).  A description of United States generally accepted accounting principles and practices (collectively “US GAAP”) that results in material recognition and measurement differences from Canadian GAAP are as follows:

a.         The effect of the differences between Canadian GAAP and US GAAP on the significant captions of the interim balance sheet and the interim statements of loss and comprehensive loss, shareholders’ equity and cash flows is summarized as follows:

	2010			2009
1)          Operations
Net loss – Canadian GAAP	$	(287,175	)	$	(323,782	)
Unproven mineral interests expensed under US GAAP (b)		(7,864	)		(14,138	)
Impairment charge not recognized under US GAAP (b)		7,864			14,098
Reversal of future income tax recovery (c)		−			(225,000	)
Net loss – US GAAP	$	(287,175	)	$	(548,822	)
Loss per share − US GAAP	$	(0.01	)	$	(0.01	)

	September 30, 2010			December 31, 2009
2)         Assets
Total assets – Canadian GAAP	$	2,409,207		$	2,644,740
Unproven mineral interests expensed under US GAAP (b)		(1,180,459	)		(1,180,459	)
Goodwill not recognized under US GAAP (d)		(100,000	)		(100,000	)
Total assets − US GAAP	$	1,128,748		$	1,364,281
3)         Deficit
Closing deficit – Canadian GAAP	$	(5,817,486	)	$	(5,530,311	)
Unproven mineral interests expensed under US GAAP (b)		(1,180,459	)		(1,180,459	)
Goodwill not recognized under US GAAP (d)		(100,000	)		(100,000	)
Reversal of future income tax recovery (c)		(225,000	)		(225,000	)
Deficit − US GAAP	$	(7,322,945	)	$	(7,035,770	)

FF-14

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - continued

4)    Cash flows − operating activities – Canadian GAAP
Cash flow used in operating activities − Canadian GAAP	$	(223,667	)	$	(286,162	)
Add net loss – Canadian GAAP		287,803			323,782
Less net loss − US GAAP		(287,175	)		(548,822	)
Cash flows used in operating activities – US GAAP	$	(223,039	)	$	(511,202	)
5)    Cash flows – investing activities
Cash flow from (used in) investing activities – Canadian GAAP	$	-		$	(19,256	)
Add unproven mineral interest expensed in US GAAP		-			14,238
Cash flows from (used in) investing activities − US GAAP	$	-		$	(5,018	)

The components of shareholders’ equity under US GAAP would be as follows:

	2010			2009
Common shares	$	6,349,765		$	6,338,547
Additional paid in capital		2,075,586			2,029,988
Deficit		(7,322,945	)		(7,035,770	)
	$	1,102,406		$	1,332,765

b.         Unproven Mineral Interests

Under Canadian GAAP, mineral exploration expenditures can be deferred on prospective mineral rights until mine development and construction commences, at which time such costs from part of the mineral property costs and are amortized over the life of the mine.  If the property or rights are abandoned, or if management’s assessments of the probability of profitable exploitation of the property are not favorable, the mineral interest is written off.  For  Canadian GAAP purposes, the Company’s policy is to capitalize all expenditures associated with the prospective properties and rights including payments made to maintain the Company’s right to explore these properties and earn its future rights and options to acquire these concessions once all requirements under the option agreements have been satisfied.  In addition, the Company includes proceeds from property option payments received in unproven mineral interests.

Under US GAAP, expenditures incurred to acquire interests in mineral properties or concessions are capitalized.  However, all exploration and evaluation expenditures are expensed.

Under US GAAP, proceeds from property option payments would be included in other income.  Since no option payments have been received during the reporting periods, there is no difference to report between Canadian and US GAAP.

FF-15

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - continued

For Canadian GAAP, cash flows relating to mineral property costs are reported as investing activities.  For US GAAP, these costs would be characterized as operating activities.

c.         Flow – through shares

Under Canadian income tax legislation, a company is permitted to issue shares whereby the company agrees to incur qualifying expenditures and renounce the related income tax deductions to investors.  For Canadian GAAP purposes, the Company accounts for the issue of flow-through shares in accordance with the provision of Emerging Issues Committee Abstract 146, Flow-Through Shares.  At the time of issue, the funds received are recorded as share capital.  At the time of the filing of the renunciation of the flow-through expenditures to the investors, the Company records a future income tax liability with a charge directly to shareholders’ equity.  If future income tax benefits are available and unrecognized, the future income tax liabil ity may be reduced or eliminated with an offsetting amount recognized as a future income tax recovery.

For US GAAP purposes, the premium paid for flow-through shares in excess of the market value of common shares, at the time of issue, is credited to other liabilities and included in income as the qualifying expenditures are made.  There was no premium on the flow-through shares issued for all periods presented.

d.         Goodwill

The Company recognized, for Canadian GAAP purposes, goodwill relating to a reverse acquisition of an inactive publicly-listed company.  At the time of the transaction, Canadian GAAP permitted the recognition of goodwill relating to the value of the stock market listing.

US GAAP does not permit recognition of goodwill under these circumstances.

e.        Income taxes

Under Canadian GAAP, future income tax assets and liabilities are recorded at substantively enacted income tax rates.  Under US GAAP, deferred income tax assets and liabilities are recorded at enacted income tax rates.  There were no significant differences between enacted and substantively enacted income tax rates for any of the periods presented.

FASB issued FIN 48, Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 10, (now ASC 740), which prescribes a recognition threshold and measurement criteria for the financial statement recognition of a tax position taken or expected to be taken in a tax return.  The Company is required to determine whether it is more likely than not that a tax position will be sustained upon examination and such positions that meet this threshold will be measured at the most likely amount to be realized upon settlement.

The Company has reviewed its tax positions and determined that the application of FIN 48 does not result in any material adjustment for US GAAP purposes.

FF-16

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - continued

f.         Adoption of new accounting pronouncements

The Company adopted new general standards of accounting for, and disclosure of, events that occur after the balance sheet date but before financial statement are issued or are available to be issued.  The new guidelines requires an entity to evaluate subsequent events to the date the financial statements were issued or were available to be issued.  The Company adopted this standard in its 2009 fiscal year with no material effect on the consolidated financial statements.

The Company adopted the new accounting standards codification (“ASC”) and the hierarchy of generally accepted accounting principles which became effective on July 1, 2009. All other non-grandfathered non-SEC accounting literature not included in the ASC will become non-authoritative.  The new ASC did not have a material effect on the consolidated financial statements.

In December 2007, FASB issued new guidance for business combinations which requires an acquirer to recognize the assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions (now ASC 805).  It also requires that the acquirer in a business combination achieved in stages to recognize the identifiable assets and liabilities, as well as the non-controlling interest in the acquiree, at the full amounts of assets and liabilities as if they had occurred on the acquisition date.  In addition, all acquisition related costs are to be expensed as incurred, rather than capitalized as part of the purchase price and those restructuring costs that an acquirer expected, but was not obligated to incur, are t o be recognized separately from the business combination.  This guidance applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  The Company adopted this guidance commencing January 1, 2009 and it had no material effect on the consolidated financial statements.

In December 2007, the FASB issued new accounting and reporting standards for the non-controlling (minority) interest in a subsidiary and for the deconsolidation of a subsidiary (now ASC 810).  It clarifies that a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements.  It also requires consolidated net income and comprehensive income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest on the face of the consolidated statement of income.  Changes in a parent’s ownership interest in a subsidiary that do no result in deconsolidation must be accounted for as equity transactions for the difference between the parent’s carryi ng value and the cash exchanged in the transaction.  The Company adopted this guidance commencing January 1, 2009 and it did not have a material effect on the consolidated financial statements.

New guidance for fair value measurements and disclosures for non-financial assets and non-financial liabilities, other than for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) became effective July 1, 2009 (now ASC 820).  For purposes of applying this pronouncement, non-financial assets and non-financial liabilities would include all assets and liabilities other than those meeting the definition of a financial asset or financial liability.  The adoption of this guidance did not have a material effect on the consolidated financial statements.

FF-17

Mill City Gold Corp.

(An Exploration Stage Company)

(Canadian dollars)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the nine months ended September 30, 2010

(Unaudited – Prepared by management)

12. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES - continued

g.         Recently Issued Accounting Pronouncements

In June 2009, FASB issued FAS 167, Amendments to FASB Interpretation No. 46(R) (“FAS 167”) (ASC subtopic 855-10).  FAS 167 eliminates FASB Interpretation 46(R)’s exceptions to consolidating qualifying special-purpose entities, contains new criteria for determining the primary beneficiary, and increases the frequency of required reassessments to determine whether a company is the primary beneficiary of a variable interest entity.  FAS 167 also contains a new requirement that any term, transaction, or arrangement that does not have a substantive effect on an entity’s status as a variable interest entity, a company’s power over a variable interest entity, or a company’s obligation to absorb losses or its right to receive benef its of an entity must be disregarded in applying FASB Interpretation 46(R)’s provisions.  FAS 167 is effective for fiscal years beginning after November 15, 2009, and for interim periods within that first period, with earlier adoption prohibited.  This will be effective for the Company’s fiscal year starting January 1, 2010.  The Company is currently assessing the potential effects, if any, on its consolidated financial statements.

FF-18

EX-1.1

EXHIBIT 1.1

NOTICE OF ARTICLES

EX-1.2

    exh1-2_articles.htm
    
    
    

EX-4.1

EXHIBIT 4.1

STOCK OPTION PLAN, AS AMENDED

MILL CITY INTERNATIONAL CORPORATION

(the “Company”)

STOCK OPTION PLAN

1.           Purpose.  The purpose of this Stock Option Plan (the “Plan”) is to advance the interests of the Company and its shareholders by enhancing the ability of the Company to attract and retain the best available talent and to encourage the highest level of performance by senior officers, key employees, directors and consultants of the Company and of its subsidiaries through ownership of Common Shares in the Company.  This form of Plan supersedes and replaces the terms and conditions of previously granted stock options of the Company (other than their exercise price and expiry date).

2.           Defined Terms.  For the purposes of this Plan, the following terms shall have the following meanings:

(a) “Applicable Laws” means all relevant provisions of law, including, without limitation, the Securities Act and the rules and regulations thereunder of Alberta, and the jurisdictions in which Optionees may reside, and all policies, notices, instruments and blanket orders in force from time to time that are applicable to the Company and the Optionees;

(b) “Board” means the Board of Directors of the Company or any committee duly empowered or authorized to grant options under this Plan;

(c) “Common Shares” means common shares without par value in the capital of the Company providing such class is listed on the Exchange;

(d) “Consultant” means, in relation to the Company, a Person or Consultant Company, other than an Employee, Senior Officer or a Director of the Company, that:

(i) is engaged to provide on an ongoing bona fide basis, consulting, technical, management or other services to the Company or to an affiliate of the Company, other than services provided in relation to a Distribution;

(ii) provides the services under a written contract between the Company or an affiliate of the Company and the Person or the Consultant Company;

(iii) in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the affairs and business of the Company or an affiliate of the Company; and

(iv) has a relationship with the Company or an affiliate of the Company that enables the Person to be knowledgeable about the business and affairs of the Company;

(e) “Consultant Company” means a company or partnership of which the Consultant is an employee, shareholder or partner;

(f) “Director” means a director of the Company as may be elected or appointed from time to time;

(g) “Discounted Market Price” has the meaning assigned by Exchange Policy 1.1;

(h) “Disinterested Shareholder Approval” means approval by a majority of the votes cast by all the Company’s shareholders at a duly constituted shareholders’ meeting, excluding votes attached to shares beneficially owned by a Director, Senior Officer, Employee, Management Company Employee or Consultant, and also includes a company, of which 100% of the share capital is beneficially owned by one or more persons who is a service provider;

-2-

(i) “Distribution” means the sale of securities from the Company’s treasury, the sale of securities by a purchaser who acquired securities pursuant to a prospectus exemption, other than in accordance with the resale restrictions of Applicable Laws or the Exchange Policies, or the sale of securities by a control person other than in accordance with the resale restrictions of Applicable Laws or the Exchange Policies;

(j) “Employee” means:

(i) a Person who is considered an employee of the Company or its Subsidiary under the Income Tax Act (Canada) (i.e. for whom income tax, employment insurance and CPP deductions must be made at source);

(ii) a Person who works full-time for the Company or its Subsidiary providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source; or

(iii) a Person who works for the Company or its Subsidiary on a continuing and regular basis for a minimum amount of time per week providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source;

(k) “Exchange” means the TSX Venture Exchange and any successor thereto;

(l) “Exchange Policies” means the policies of the Exchange, as amended from time to time;

(m) “Investor Relations Activities” means any activities, by or on behalf of the Company or a shareholder of the Company, that promote or reasonably could be expected to promote the purchase or sale of securities of the Company, but does not include:

(i) the dissemination of information provided, or records prepared, in the ordinary course of business of the Company

A. to promote the sale of products or services of the Company; or

B. to raise public awareness of the Company,

that cannot reasonably be considered to promote the purchase or sale of securities of the Company;

(ii) activities or communications necessary to comply with the requirements of

A. applicable Laws,

B. the Exchange Policies or the by-laws, rules or other regulatory instruments of any other self regulatory body or exchange having jurisdiction over the Company;

(iii) communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

A. the communication is only through the newspaper, magazine or publication, and

-3-

B. the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

(iv) activities or communications that may be otherwise specified by the Exchange;

(n) “Management Company Employee” means an individual employed by a Person providing management services to the Company, which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Person engaged in Investor Relations Activities;

(o) “Market Price” means the last closing price per Common Share on the Exchange prior to the Board granting the option;

(p) “Optionee” means a Person to whom an option to acquire Common Shares has been granted under the terms of the Plan;

(q) “Person” means company or an individual;

(r) “Senior Officer” means a duly appointed senior officer of the Company or any Subsidiary;

(s) “Subsidiary” means any corporation, partnership, joint venture or other entity in which the Company owns or controls, directly or indirectly, not less than 50% of the total voting power or equity interests, and includes a subsidiary of a Subsidiary;

(t) “Tier 1 Issuer” has the same meaning ascribed thereto under the Exchange Policies; and

(u) “Tier 2 Issuer” has the same meaning ascribed thereto under the Exchange Policies.

3.          Administration.  The Plan will be administered by the Board.  The Board will have authority, consistent with the Plan:

(a) to grant options priced in accordance with this Plan;

(b) to prescribe the form of certificate evidencing grants of options to Optionees and any other instruments required under the Plan and to change such forms from time to time;

(c) to adopt, amend and rescind rules and regulations for the administration of the Plan, provided however, that except as specified in Section 6(c), if the Common Shares of the Company are listed on the Exchange, no amendment which would increase the maximum number of Common Shares for which options may be granted will be made by the Board without the approval of the Exchange;

(d) to interpret and administer the Plan and to decide all questions and settle all controversies that may arise in connection with the Plan, all of which decisions of the Board will be final and conclusive;

(e) to determine who is eligible to receive options pursuant to the eligibility criteria of Section 5; and

(f) to make all other determinations necessary or advisable for administration of the Plan.

4.          Compliance with Laws.  Transactions under the Plan are intended to comply with the Applicable Laws and the Exchange Policies.  To the extent any provision of the Plan or action by the Board fails to so comply, it will be deemed null and void, to the extent permitted by law and deemed advisable by the Board.

5.          Eligibility.  The Board may from time to time authorize the grant of options to anyone who is at the time of such authorization:

-4-

(a) a Director, Senior Officer, Employee or a company that is wholly-owned by a Director, Senior Officer or Employee; or

(b) subject to the Applicable Laws and the Exchange Policies, a Consultant or a Consultant Company.

6.          Shares Subject to the Plan.

(a) Subject to adjustment as provided in Section 6(d):

(i) the total number of Common Shares to be issued or allotted and reserved for issuance from time to time upon the exercise of options granted under the Plan shall not exceed 4,900,000 Common Shares, subject to the applicable rules and regulations of all regulatory authorities to which the Corporation is subject, including the Exchange;

(ii) no more than an aggregate of 5% of the issued and outstanding Common Shares may be granted to any one individual in any 12 month period, unless the Company is a Tier 1 Issuer and has obtained Disinterested Shareholder Approval;

(iii) no more than an aggregate of 2% of the issued and outstanding Common Shares may be granted to any one Consultant in any 12 month period; and

(iv) no more than an aggregate of 2% of the issued and outstanding Common Shares may be granted to Employee conducting Investor Relations Activities, in any 12 month period.

(b) If any option granted under the Plan expires unexercised or terminates by reason of dismissal of the Optionee for cause, or otherwise is lawfully cancelled without having been exercised, the number of Common Shares that were issuable thereunder will be returned to the Plan within the limits set forth in Section 6(a) and will be eligible for re-issue.

(c) No options can be granted under the Plan if the Company is designated “Inactive” (as defined in the Exchange Policies) by the Exchange.

(d) In the event of a stock split, consolidation or reclassification or other change in the Company’s capital, other than an issue of Common Shares or by way of stock dividend, the number and exercise price of options will be adjusted by the Board to preserve the rights of the participants in this Plan substantially proportionate to those existing prior to such event.

7.          Terms and Conditions of Options.  All options granted under the Plan will be subject to the following terms and conditions:

(a) The per-share exercise price of each option will be set by the Board at the time of grant and will be not less than the Discounted Market Price of a Common Share;

(b) An option may be exercised no later than five years from the date it was granted, unless the Company is, at the time of the grant, a Tier 1 Issuer, in which case such option may be exercised no later than 10 years from the date it was granted;

(c) With the exception of any options granted to a Consultant who performs Investor Relations Activities, all options granted to each Optionee under the Plan will become vested on the grant date, or at such other time as may be established by the Board at the time of the grant in compliance with the Exchange Policies.  The Board will, at the time of grant, determine the vesting date or dates of any options granted to a Consultant who performs Investor Relations Activities provided that such options must vest in stages over 12 months with no more than ¼ of the options vesting in any three-month period.

-5-

(d) Optionees will not exercise options until they have vested;

(e) Each option granted to an Optionee will be evidenced by the stock option agreement attached as Appendix “A” to this Plan;

(f) Any exercise of an option must be in writing, signed by the Optionee and delivered or mailed to the Company and payment in full as provided below for the number of Common Shares for which the option is exercised;

(g) The price of Common Shares purchased on the exercise of an option must be paid in full by cash or certified cheque, payable to the Company;

(h) No option or any interest therein will be transferable or assignable otherwise than by will or pursuant to the laws of succession;

(i) An Optionee will have no rights as a shareholder of the Company with respect to any Common Shares covered by any option until such time as and to the extent only that such option has been exercised;

(j) If any Optionee ceases to be eligible for a grant of options under this Plan for any reason (a “Termination”), except the death of an Optionee or by reason of retirement pursuant to an established retirement policy of the Board or dismissal from employment or service for cause, all options granted to the Optionee under the Plan and then held by the Optionee will, to the extent such options were vested and exercisable immediately prior to Termination, continue to be exercisable by the Optionee for a period of 90 days following Termination or until the expiration date of the option if earlier;

(k) If Termination is by reason of retirement pursuant to an established retirement policy of the Board, all options held by the retiring Optionee will become vested and exercisable, to the extent no already vested and exercisable immediately prior to retirement, and they continue to be exercisable until their original expiration date;

(l) Notwithstanding Section 7(j), any options granted to an Optionee who is engaged in Investor Relations Activities will expire within 30 days after such Optionee ceases to be employed to provide Investor Relations Activities;

(m) In the event of the death of an Optionee, all options granted to the Optionee under the Plan and held by the Optionee immediately before death will, to the extent such options were vested and exercisable at that time, continue to be exercisable by the legal representative of the Optionee for a period of 1 year following the death of the Optionee or until the expiration date of the option if earlier;

(n) If the Company wishes to reduce the exercise price of any outstanding options held by any person who is an “insider” as defined by the Exchange, the Company shall first obtain such disinterested shareholder approval as may be required by the Exchange; and

(o) In the case of an Optionee being dismissed from employment or service for cause, such Optionee’s Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise the same.

8.          Legend Requirements.

(a) All options granted to Optionees pursuant to the Plan and any Common Shares issued on the exercise of such options will bear a legend stipulating any resale restrictions as may be prescribed by the Applicable Laws.

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(b) Further, if the Company is a Tier 2 issuer, or the exercise price is set below the Market Price of the Common Shares on the Exchange, the certificate will bear a legend stipulating that the optioned shares are subject to a 4 month Exchange hold period commencing the date of the grant.

9.          Tax Consequences of the Plan.  The Company does not assume responsibility for the income or other tax consequences for Optionees or persons eligible under the Plan and they are advised to consult with their own tax advisors.

10.          Effect of Certain Corporate Transactions.  In the event of a consolidation or merger in which the Company is not the surviving company, or in the event its outstanding shares are converted into securities of another entity or exchanged for other consideration, or in the event of an offer for Common Shares being made by a third party that constitutes a take-over bid as that term is defined in the Securities Act (Alberta) or would constitute a take-over bid as that term is defined in the Securities Act (Alberta) but for the fact that the offeree is not in British Columbia, all outstanding options will immediately vest and all options granted to the optionee under this Plan and held by the Optionee will continue to be exerc isable after the Company has sent notice to each of the Optionees to exercise the options only for a period of 30 days from the date of such notice or until the expiration of the option, if earlier.  After such time, the options will terminate, provided, however, that if such transaction does not close, all such options will be deemed not to have vested nor expired.

11.          Bona Fide Employee or Consultant.  In respect of any options granted to Employees or Consultants pursuant to the Plan, the Board shall make a determination that such Optionee is, at the date of the grant of the options, a bona fide Employee or Consultant, as the case may be.

12.          Effective Date of Plan.  The Plan will become effective on the date it receives acceptance by the Exchange, including any shareholder approval required by the Exchange.

13.          Restrictions on Corporate Optionee.  If the Optionee is not an individual, the Optionee will not, for the duration of time that the Optionee is the holder of options granted pursuant to this Plan, effect or permit any transfer of ownership or option of shares of the Optionee or allot and issue further shares of any class of shares of the Optionee to any Person.

14.          Amendments to Plan.  The Board reserves the right, in its absolute discretion, to at any time amend, modify or terminate the Plan.  Subject to Section 15, amendments to the Plan, from time to time, will become effective on the later of the date of the approval of such amendments by the Board and the date of the approval of such amendments by the Exchange.

15.          Prior Approval.  The Plan, and any subsequent amendments thereto, are subject to the prior approval of the Exchange and ratification by the shareholders of the Company at each annual general meeting of the Company, and accordingly so long as the Common Shares are listed on the Exchange, no option granted under the Plan shall be exercised prior to these approvals having been obtained by the Company.

16.          Governing Law.  The Plan will be governed by and construed in accordance with the laws of the Province of British Columbia.

**************************

AMENDMENT NO. 1 TO THE STOCK OPTION PLAN

OF MILL CITY GOLD CORP.

(the “Company”)

WHEREAS the Directors of the Company previously approved a stock option plan (“Stock Option Plan”) accepted by the TSX Venture Exchange on July 28, 2004 subject to shareholder approval and was approved by the shareholders of the Company on August 23, 2004;

AND WHEREAS the Company is desirous of amending the Stock Option Plan, subject to shareholder and TSX Venture Exchange approval, by increasing the number of shares that may be issued under the Stock Option Plan to 5,200,000 shares;

NOW THEREFORE this Amendment witnesseth that:

1.          The Stock Option Plan is hereby amended as follows:

(a) By deleting the reference to 4,900,000 shares in Paragraph 6(a)(i) and substituting 5,200,000 shares.

2.          All other terms and conditions of the Stock Option Plan shall remain in full force and effect.

Approved by the Board of Directors on April 6, 2005.

SCHEDULE “A”

To the Consent Resolutions of the Directors of

Mill City Gold Corp. dated as of February 10, 2006

AMENDMENT NO. 2 TO THE STOCK OPTION PLAN

OF MILL CITY GOLD CORP.

(the “Company”)

WHEREAS the Directors of the Company previously approved a stock option plan (“Stock Option Plan”) which was accepted by the TSX Venture Exchange on July 28, 2004 subject to shareholder approval which was approved by the shareholders of the Company on August 23, 2004 and subsequently amended on April 6, 2005;

AND WHEREAS the Company is desirous of amending the Stock Option Plan, subject to shareholder and TSX Venture Exchange approval, by increasing the number of shares that may be issued under the Stock Option Plan to 7,260,000 shares;

NOW THEREFORE this Amendment witnesseth that:

1.          The Stock Option Plan is hereby amended as follows:

(a) By deleting the reference to 5,200,000 shares in Paragraph 6(a)(i) and substituting 7,260,000 shares.

2.          All other terms and conditions of the Stock Option Plan shall remain in full force and effect.

Approved by the Board of Directors on February 10, 2006.

AMENDMENT NO. 3 TO THE STOCK OPTION PLAN

OF MILL CITY GOLD CORP.

(the “Company”)

WHEREAS the Directors of the Company previously approved a stock option plan (“Stock Option Plan”) which was accepted by the TSX Venture Exchange on July 28, 2004 subject to shareholder approval which was approved by the shareholders of the Company on August 23, 2004 and subsequently amended on April 6, 2005 and February 10, 2006 respectively;

AND WHEREAS the Company is desirous of amending the Stock Option Plan, subject to shareholder and TSX Venture Exchange approval, by increasing the number of shares that may be issued under the Stock Option Plan to 7,707,841 shares;

NOW THEREFORE this Amendment witnesseth that:

1.          The Stock Option Plan is hereby amended as follows:

(a) By deleting the reference to 7,260,000 shares in Paragraph 6(a)(i) and substituting 7,707,841 shares.

2.          All other terms and conditions of the Stock Option Plan shall remain in full force and effect.

Approved by the Board of Directors on June 18, 2007.

SCHEDULE “A”

To the Consent Resolutions of the Directors of

Mill City Gold Corp. dated as of January 29, 2008

AMENDMENT NO. 4 TO THE STOCK OPTION PLAN

OF MILL CITY GOLD CORP.

(the “Company”)

WHEREAS the Directors of the Company previously approved a stock option plan (“Stock Option Plan”) which was accepted by the TSX Venture Exchange on July 28, 2004 subject to shareholder approval which was approved by the shareholders of the Company on August 23, 2004 and subsequently amended on April 6, 2005, February 10, 2006 and June 18, 2007 respectively;

AND WHEREAS the Company is desirous of amending the Stock Option Plan, subject to shareholder and TSX Venture Exchange approval, by increasing the number of shares that may be issued under the Stock Option Plan to 8,534,841 shares;

NOW THEREFORE this Amendment witnesseth that:

1.          The Stock Option Plan is hereby amended as follows:

(a) By deleting the reference to 7,707,841 shares in Paragraph 6(a)(i) and substituting 8,534,841 shares.

2.          All other terms and conditions of the Stock Option Plan shall remain in full force and effect.

Approved by the Board of Directors on January 29, 2008.

SCHEDULE “A”

To the Consent Resolutions of the Directors of

Mill City Gold Corp. dated as of June 10, 2008

AMENDMENT NO. 5 TO THE STOCK OPTION PLAN

OF MILL CITY GOLD CORP.

(the “Company”)

WHEREAS the Directors of the Company previously approved a stock option plan (“Stock Option Plan”) which was accepted by the TSX Venture Exchange on July 28, 2004 subject to shareholder approval which was approved by the shareholders of the Company on August 23, 2004 and subsequently amended on April 6, 2005, February 10, 2006 and June 18, 2007 respectively;

AND WHEREAS the Company amended the Stock Option Plan on January 29, 2008, subject to shareholder and TSX Venture Exchange approval, by increasing the number of shares that may be issued under the Stock Option Plan to 8,534,841 shares;

AND WHEREAS the Company is desirous of further amending the Stock Option Plan, subject to shareholder and TSX Venture Exchange approval, by increasing the number of shares that may be issued under the Stock Option Plan from 8,534,841 shares to 10,084,841 shares;

NOW THEREFORE this Amendment witnesseth that:

1.          The Stock Option Plan is hereby amended as follows:

(a) By deleting the reference to 8,534,841 shares in Paragraph 6(a)(i) and substituting 10,084,841 shares.

2.          All other terms and conditions of the Stock Option Plan shall remain in full force and effect.

Approved by the Board of Directors on June 10, 2008.

AMENDMENT NO. 6 TO THE STOCK OPTION PLAN

OF MILL CITY GOLD CORP.

(the “Company”)

WHEREAS the Directors of the Company previously approved a stock option plan (“Stock Option Plan”) which was accepted by the TSX Venture Exchange on July 28, 2004 subject to shareholder approval which was approved by the shareholders of the Company on August 23, 2004 and subsequently amended on April 6, 2005, February 10, 2006, June 18, 2007, January 29, 2008 and June 10, 2008 respectively;

AND WHEREAS the Company is desirous of amending the Stock Option Plan, subject to shareholder and TSX Venture Exchange approval, by increasing the number of shares that may be issued under the Stock Option Plan to 13,358,841 shares;

NOW THEREFORE this Amendment witnesseth that:

1.          The Stock Option Plan is hereby amended as follows:

(a) By deleting the reference to 10,084,841 shares in Paragraph 6(a)(i) and substituting 13,358,841 shares.

2.          All other terms and conditions of the Stock Option Plan shall remain in full force and effect.

Approved by the Board of Directors on October 29, 2010.

EX-4.2

EXHIBIT 4.2

LETTER AGREEMENT DATED SEPTEMBER 2, 2008 WITH

TEMEX RESOURCES CORP RE: EARN-IN ON THE GP2 JOINT VENTURE PROPERTY

TEMEX RESOURCES CORP

1660-141 Adelaide Street West

Toronto, Ontario CANADA  M5H 3L5

tel: 416-862-2246 fax: 416-862-2244

website: www.temexcorp.com

email: info@temexcorp.com

September 2, 2008

Mill City Gold Corp.

4719 Chapel Road N.W.

Calgary, AB T2L 1A7

Attention:  James R. Brown, President

Dear James:

Re:  Earn-in on the GP2 Joint Venture Property

Temex Resources Corp. (“Temex”) and East West Resource Corporation (“East West”), carrying on business as the GP2 Joint Venture, are pleased to confirm the basis upon which they jointly will grant to Mill City Gold Corp. (“Mill City”) an option to earn an undivided 50% participating interest (the “Option”) in the GP2 Joint Venture.  The subject matter of the GP2 Joint Venture is the GP2 Property comprising 17 mining claims totaling 240 claim units (the “Claims”) currently recorded in the name of East West but held by the GP2 Joint Venture under a 50:50 Joint Venture Agreement (the “GP2 JVA”) made between Temex and East West dated January 25, 2008, a true and complete copy of which is enclosed herewith.  The GP2 Property (as more p articularly described on Schedule A and depicted on Figure 1 hereto annexed) is located in the Sachigo Greenstone Belt in the James Bay Lowlands region of Northern Ontario within Areas BMA 523 864 and BMA 523 871 on Plans G-4263 and G-4273, respectively, in the Thunder Bay Mining Division.

To exercise the Option, Mill City shall be required:

1. subject to TSX-V approval, to issue 375,000 Mill City common shares to each of Temex and East West within 10 days of execution and delivery (“upon signing”) hereof;

2. to incur not less than $500,000 of exploration expenditures on or in respect of the GP2 Property before the first anniversary of signing;

3. to allot and issue to each of Temex and East West an additional 125,000 Mill City Shares on the first anniversary of signing;

4. to incur not less than an additional $1,500,000 (an aggregate of $2,000,000 inclusive of the $500,000 referred to in paragraph 2) of exploration expenditures on or in respect of 

the GP2 Property before the second anniversary of signing; and

5. to incur not less than an additional $3,000,000 (an aggregate of $5,000,000 inclusive of the $2,000,000 referred to in paragraph 4) of exploration expenditures on or in respect of the GP2 Property before the third anniversary of signing (the aggregate of $5,000,000 of exploration expenditures is herein referred to as the “Work Commitment”;

provided that, the obligations set forth in paragraphs 1 and 2 are firm commitments made by Mill City to Temex and East West, and the obligations set forth in paragraphs 3, 4 and 5 are optional in the sole discretion of Mill City, and  Mill City shall be entitled to accelerate such obligations at any time in its sole discretion.

Mill City shall be entitled to extend for one year the time for completion of each milestone of the Work Commitment, by notice to Temex and East West if given prior to the applicable anniversary of signing.  Each extension shall require Mill City, subject to TSX-V approval, to allot and issue to each of Temex and East West 125,000 Mill City Shares.  For greater certainty, if an extension of time is granted by Temex and East West to Mill City for completion of a specified cumulative level of exploration expenditures by a particular anniversary date, it shall operate to defer the time of performance of each subsequent anniversary expenditure milestone by one year and require Mill City to allot and issue to each of Temex and East West 125,000 Mill City Shares.  If no extension is granted to Mil l City in accordance with the foregoing then Mill City shall exercise the Option on or before the third anniversary of signing (the expiration of the “Earn-in Period”) provided that each such extension which is granted to Mill City shall extend the Earn-in Period by one year.

Temex is currently the Operator of the GP2 Joint Venture, and will continue to be Operator during the Earn-in Period and shall carry out all exploration programs to be funded by the Work Commitment.  As Operator, Temex is entitled to charge an overhead allowance for managing exploration programs equal to 10% of all exploration expenditures, except where the cost of an individual item exceeds $100,000, in which case such overhead allowance is reduced to 5% of the cost of such items.  Temex reserves the right to designate East West as the manager of field operations during the Earn-in Period.

If during the Earn-in Period Mill City satisfies all its obligations set forth in paragraphs 1 through 5 inclusive, which are conditions precedent to the exercise of the Option, Mill City shall be entitled to give notice to Temex and East West of the exercise of the Option by certifying compliance with the Work Commitment.  If the Option is exercised there shall be a novation of the GP2 JVA whereby Mill City shall be deemed to have acquired a Participating Interest (as therein defined) in the GP2 Joint Venture

giving Mill City an undivided 50% interest in the GP2 Property, and the Participating Interests of Temex and East West, respectively, shall each be deemed to be diluted to 25%.

Temex and East West shall then each have 60 days from the date of exercise of the Option to elect either:

(a) to continue to participate in the GP2 Joint Venture with Mill City for the further exploration and development of the GP2 Property; or

(b) to relinquish its Participating Interest in the GP2 Joint Venture in exchange for a 7.5% carried and non-assessable interest in the GP2 Property to the date of commencement of Commercial Production (as defined in the GP2 JVA);

provided that, if Temex and East West make disparate elections pursuant to paragraphs (a) and (b) above, then the party electing to continue to participate in the GP2 Joint Venture and Mill City shall be deemed to have acquired the Participating Interest of the party electing to relinquish its Participating Interest in the GP2 Joint Venture pro rata to their respective Participating Interests in the GP2 Joint Venture (for greater certainty, in the ratio of 2:1 in favour of Mill City over the party electing to continue to participate in the GP2 Joint Venture).

For greater certainty, if either Temex or East West elects to retain a 7.5% carried and non-assessable interest in the GP2 Property to the date of commencement of Commercial Production, then the parties electing to continue to participate in the GP2 Joint Venture shall be responsible for 100% of the cost of all further exploration and development expenditures to be incurred on or in respect of the GP2 Property, from the date of such election to the date of commencement of Commercial Production from the GP2 Property.  The party electing to retain a 7.5% carried and non-assessable interest in the GP2 Property to the date of commencement of Commercial Production shall be deemed to maintain an undivided 7.5% undivided interest in the GP2 Property as a tenant in common with parties electing to continue to participat e in the GP2 Joint Venture, however, the party electing to retain a 7.5% carried and non-assessable interest in the GP2 Property to the date of commencement of Commercial Production shall not be responsible to contribute to the cost of any further exploration or development expenditures to be incurred on or in respect of the GP2 Property for the purpose of achieving Commercial Production after the date of its election.  For greater certainty, after the date of commencement of Commercial Production each of the parties shall be responsible to contribute to operating costs in accordance with its undivided interest in the GP2 Property and no party shall be carried and non-assessable with respect to operating costs after the date of commencement of Commercial Production.

If both Temex and East West elect to continue to participate in the GP2 Joint Venture with Mill City for the further exploration and development of the GP2 Property, then each of Temex and East West shall be deemed to have an initial investment in the GP2 Joint Venture of $1,250,000, and Mill City shall be deemed to have an initial investment of $2,500,000 as at the date of exercise of the Option, for the purposes of Section 7.8 of the GP2 JVA.

If you concur with the foregoing please so signify by signing and returning a copy hereof to each of Temex and East West.

Yours very truly,

TEMEX RESOURCES CORP.

/s/ Ian Campbell

Ian Campbell, President and CEO

EAST WEST RESOURCE CORPORATION

/s/ Maurice Lavigne

Maurice Lavigne, President and CEO

Agreed to and accepted this  2     day of September, 2008

by and on behalf of

MILL CITY GOLD CORP.

/s/ James R. Brown

James R. Brown, President and CEO

SCHEDULE A: CLAIMS LIST FOR GP2 PROPERTY

Claim	Division	Area	G-Plan	Date Recorded	Date Due	Count	Units
4216155	Thunder Bay	BMA 523864	G-4263	2008-Feb-20	2010-Feb-20	1	16
4216156	Thunder Bay	BMA 523864	G-4263	2008-Feb-20	2010-Feb-20	2	16
4216157	Thunder Bay	BMA 523864	G-4263	2008-Feb-20	2010-Feb-20	3	8
4216158	Thunder Bay	BMA 523864	G-4263	2008-Feb-20	2010-Feb-20	4	16
4216159	Thunder Bay	BMA 523864	G-4263	2008-Feb-20	2010-Feb-20	5	16
4216160	Thunder Bay	BMA 523864	G-4263	2008-Feb-20	2010-Feb-20	6	16
4216161	Thunder Bay	BMA 523871	G-4273	2008-Feb-20	2010-Feb-20	7	16
4216162	Thunder Bay	BMA 523871	G-4273	2008-Feb-20	2010-Feb-20	8	16
4216163	Thunder Bay	BMA 523871	G-4273	2008-Feb-20	2010-Feb-20	9	16
4216164	Thunder Bay	BMA 523871	G-4273	2008-Feb-20	2010-Feb-20	10	16
4216165	Thunder Bay	BMA 522871	G-4260	2008-Feb-20	2010-Feb-20	11	16
4216185	Thunder Bay	BMA 523871	G-4273	2008-Mar-19	2010-Mar-19	12	16
4216186	Thunder Bay	BMA 523871	G-4273	2008-Mar-19	2010-Mar-19	13	10
4216187	Thunder Bay	BMA 523871	G-4273	2008-Mar-19	2010-Mar-19	14	10
4216188	Thunder Bay	BMA 523864	G-4263	2008-Mar-19	2010-Mar-19	15	8
4216189	Thunder Bay	BMA 523864	G-4263	2008-Mar-19	2010-Mar-19	16	16
4216190	Thunder Bay	BMA 523864	G-4263	2008-Mar-19	2010-Mar-19	17	12
					Total	17	240

EX-4.3

EXHIBIT 4.3

LETTER AGREEMENT DATED SEPTEMBER 21, 2010 WITH

TEMEX RESOURCES CORP RE: OPTION AND JOINT VENTURE ON THE

CROXALL PROPERTY, CANCELLATION OF DECEMBER 12, 2007

OPTION AND JOINT VENTURE JAMES BAY LOWLANDS

TEMEX RESOURCES CORP.

1660-141 Adelaide Street West

Toronto, Ontario CANADA  M5H 3L5

tel: 416-862-2246 fax: 416-862-2244

website: www.temexcorp.com

email: info@temexcorp.com

September 21, 2010

Mill City Gold Corp.

4719 Chapel Road NW

Calgary, AB   T2L 1A7

Attention:  James R. Brown, President

Dear Jim:

Re:  Option and Joint Venture on the Croxall Property,

Cancellation of December 12, 2007 Option and Joint Venture James Bay Lowlands

Temex Resources Corp. (“Temex”) is pleased to confirm the basis upon which they will grant to Mill City Gold Corp. (“Mill City”) an option to earn an undivided 75% participating interest (the “Option”) in the Croxall Property.  The subject matter of this letter agreement is the Croxall Property comprising 59 mining claims totalling 60 claim units (the “Claims”) currently recorded in the name of Temex Resources Corp. but held by Temex Resources Corp. pursuant to an agreement dated June 22, 2009 with the vendors of the Croxall property namely, James E. Croxall, Margaret M. Kangas, and Robert John DeCarle, a true and complete copy of which is enclosed herewith (the “Croxall Agreement”).  The Croxall Property (as more particularly described on Sc hedule A and depicted on Figure 1 hereto annexed) is located near Timmins in Northern Ontario within Ogden, Price and Thorneloe townships in the Porcupine Mining Division.

To exercise the Option, Mill City shall be required:

1. subject to TSX-V approval, to issue 250,000 Mill City common shares to Temex within 30 days of execution and delivery (“upon signing”) hereof;

2. to incur not less than $250,000 of exploration expenditures on or in respect of the Croxall Property before the first anniversary of signing;

3. to incur not less than an additional $500,000 (an aggregate of $750,000 inclusive of the $250,000 firm commitment referred to in paragraph 2) of exploration expenditures on or in respect of the Croxall Property before the fourth anniversary of signing; and

4. to make all remaining cash payments in a timely manner as required under the Croxall Agreement (items 2.2.3 and 2.2.4 and any advanced royalty payments required in the Croxall Agreement). Temex shall be responsible to issue the Temex shares due to the vendors under the Croxall Agreement;

5. to execute a document agreeing to immediately and finally terminate its agreement with Temex regarding the “Option and Joint Venture Agreement dated December 12, 2007 covering 1012 claim units in the Sachigo Greenstone Belt in the James Bay Lowlands in northern Ontario (the Northern and Southern Star Eagle claims) for no additional consideration

provided that, the obligations set forth in paragraphs 1 and 2 and 5 are firm commitments made by Mill City to Temex , and the obligations set forth in paragraphs 3, 4 and are optional in the sole discretion of Mill City, and Mill City shall be entitled to accelerate such obligations at any time in its sole discretion.

Mill City shall be entitled to extend for one year the time for completion of each milestone of the Work Commitment, by notice to Temex if given prior to the applicable anniversary of signing.  Each extension shall require Mill City, subject to TSX-V approval, to allot and issue to Temex 125,000 Mill City Shares.  For greater certainty, if an extension of time is granted by Temex to Mill City for completion of a specified cumulative level of exploration expenditures by a particular anniversary date, it shall operate to defer the time of performance of each subsequent anniversary expenditure milestone by one year and require Mill City to allot and issue to Temex 125,000 Mill City Shares.  If no extension is granted to Mill City in accordance with the foregoing then Mill City shall exercise th e Option on or before the fourth anniversary of signing (the expiration of the “Earn-in Period”) provided that each such extension which is granted to Mill City shall extend the Earn-in Period by one year.

Temex is currently the Operator of the Croxall Property, and Mill City will replace Temex as Operator during the Earn-in Period and shall appoint Temex as its agent (“Agent”) to carry out all exploration programs to be funded by Mill City under this letter agreement or other replacement document.  As Agent, Temex is entitled to charge an overhead allowance for managing exploration programs equal to 10% of all exploration expenditures, except where the cost of an individual item exceeds $100,000, in which case such overhead allowance is reduced to 5% of the cost of such items.

If during the Earn-in Period Mill City satisfies all its obligations set forth in paragraphs 1 through 5 inclusive, which are conditions precedent to the exercise of the Option, Mill City shall be entitled to give notice to Temex of the exercise of the Option by certifying compliance with the terms in paragraphs 1 through 5.  If the Option is exercised there shall be a novation of the Croxall Joint Venture Agreement whereby Mill City shall be deemed to have acquired a Participating Interest (as therein defined) in the Croxall Joint Venture giving Mill City an undivided 75% interest in the Croxall Property, and the Participating Interest of Temex shall be 25%.

Temex shall then have 60 days from the date of exercise of the Option to elect either:

(a) to continue to participate in the Croxall Joint Venture with Mill City for the further exploration and development of the Croxall Property; or

(b) Temex shall allow its interest in the Joint Venture to be diluted by Mill City

provided that, Temex shall have the right to participate at any time until its interest is diluted to less than 10% at which time its interest in the Croxall Property shall automatically and for no further consideration be reduced to zero.

For clarity of matters relating to the Joint Venture on the Croxall Property and the operations to be carried out thereupon, the parties agree to negotiate the framework for the Joint Venture on the Croxall Property in good faith subsequent to the exercise of the Option by Mill City. In the absence of such agreement for any reason, the parties agree that the document dated December 12, 2007 between the parties referred to above shall provide the terms and conditions that will govern the parties in relation to this property (with the appropriate changes to claim numbers etc. contained herein).

Any advance royalty payments due after the formation of the Joint Venture shall be an expense of the Joint Venture.

If Temex elects to continue to participate in the Croxall Joint Venture with Mill City for the further exploration and development of the Croxall Property, then Temex shall be deemed to have an initial investment in the Croxall Joint Venture of $750,000, and Mill City shall be deemed to have an initial investment of $750,000 as at the date of exercise of the Option, for the purposes of establishing dilution under the Croxall Joint Venture Agreement.

Temex agrees to, while this agreement or any subsequent agreement relating to the Croxall Property remains in full force and effect, vote any and all of its Mill City shares in favour of the then current management.

If you concur with the foregoing please so signify by signing and returning a copy hereof to Temex.

Yours very truly,

TEMEX RESOURCES CORP.

Ian Campbell, President and CEO

/s/ Ian Campbell

Agreed to and accepted this    21st   day of September, 2010

by and on behalf of

MILL CITY GOLD CORP.

/s/ James R. Brown

James R. Brown, President and CEO

SCHEDULE A:  Claims Description

Recorded Holder:  Temex Resources Corp. 100%

	Claim	Township/Area	G-Plan	Units	Acres	Recording Date	Claim Due Date
1	849065	PRICE	M-0307	1	40	1986-Feb-14	2016-Feb-14
2	849066	PRICE	M-0307	1	40	1986-Feb-14	2016-Feb-14
3	849067	PRICE	M-0307	1	40	1986-Feb-14	2016-Feb-14
4	849068	PRICE	M-0307	1	40	1986-Feb-14	2016-Feb-14
5	849069	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
6	871790	PRICE	M-0307	1	40	1986-Mar-17	2016-Mar-17
7	871791	PRICE	M-0307	1	40	1986-Mar-17	2016-Mar-17
8	871792	PRICE	M-0307	1	40	1986-Mar-17	2016-Mar-17
9	871793	PRICE	M-0307	1	40	1986-Mar-17	2016-Mar-17
10	871794	PRICE	M-0307	1	40	1986-Mar-17	2016-Mar-17
11	871795	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
12	871796	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
13	871797	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
14	880296	THORNELOE	G-3229	1	40	1986-Feb-14	2016-Feb-14
15	880297	THORNELOE	G-3229	1	40	1986-Feb-14	2016-Feb-14
16	880298	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
17	880299	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
18	880300	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
19	880301	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
20	880302	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
21	880303	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
22	880304	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
23	880305	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
24	880306	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
25	880307	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
26	880308	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
27	880309	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
28	880310	PRICE	M-0307	1	40	1986-Feb-28	2016-Feb-28
29	889259	PRICE	M-0307	1	40	1986-Mar-26	2016-Mar-26
30	889260	PRICE	M-0307	1	40	1986-Mar-26	2016-Mar-26
31	889261	PRICE	M-0307	1	40	1986-Mar-26	2016-Mar-26
32	889262	PRICE	M-0307	1	40	1986-Mar-26	2016-Mar-26
33	889263	PRICE	M-0307	1	40	1986-Mar-26	2016-Mar-26
34	889264	PRICE	M-0307	1	40	1986-Mar-26	2016-Mar-26
35	900409	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
36	900410	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
37	900411	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
38	900412	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
39	900413	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
40	900414	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01

41	900415	PRICE	M-0307	1	40	1986-Apr-01	2016-Apr-01
42	905586	THORNELOE	G-3229	1	40	1986-Aug-19	2016-Aug-19
43	905587	THORNELOE	G-3229	1	40	1986-Aug-18	2016-Aug-18
44	905588	PRICE	M-0307	1	40	1986-Aug-19	2016-Aug-19
45	988131	PRICE	M-0307	1	40	1987-May-06	2016-May-06
46	988132	PRICE	M-0307	1	40	1987-May-06	2016-May-06
47	988133	PRICE	M-0307	1	40	1987-May-06	2016-May-06
48	998017	OGDEN	G-3979	1	40	1987-Aug-11	2016-Aug-11
49	998021	OGDEN	G-3979	1	40	1987-Aug-11	2016-Aug-11
50	998246	OGDEN	G-3979	1	40	1987-Jul-28	2016-Jul-28
51	998247	OGDEN	G-3979	1	40	1987-Jul-28	2016-Jul-28
52	998248	OGDEN	G-3979	1	40	1987-Jul-28	2016-Jul-28
53	1033734	PRICE	M-0307	1	40	1988-Mar-31	2016-Mar-31
54	1033736	PRICE	M-0307	1	40	1988-Mar-31	2016-Mar-31
55	1033737	PRICE	M-0307	1	40	1988-Mar-31	2016-Mar-31
56	1126672	PRICE	M-0307	1	40	1994-Mar-02	2016-Mar-02
57	1159644	THORNELOE	G-3229	1	40	1991-Feb-18	2016-Feb-18
58	1159645	THORNELOE	G-3229	1	40	1991-Feb-18	2016-Feb-18
59	1177832	THORNELOE	G-3229	2	80	1993-May-25	2016-May-25
59				60	2400

EX-4.4

EXHIBIT 4.4

AGENCY AGREEMENT WITH PRIMARY CAPITAL INC.

DATED OCTOBER 1, 2010

AGENCY AGREEMENT

October 20, 2010

Mill City Gold Corp.

4719 Chapel Road NW

Calgary, AB  T2L 1A7

Attention:        James R. Brown, President & Chief Executive Officer

Dear Sir:

Re:         Private Placement of Flow-Through Shares and Units

Primary Capital Inc. (the “Agent”) understands that:

(a) Mill City Gold Corp. (the “Corporation”) is authorized to issue an unlimited number of Common Shares (as hereinafter defined) and an unlimited number of preferred shares (“Preferred Shares”).

(b) As at October 19, 2010, 51,794,207 Common Shares were issued and outstanding as fully paid and non-assessable shares and an aggregate of 15,739,999 Common Shares were reserved for issue pursuant to outstanding options, warrants, share incentive plans, convertible and exchangeable securities and other rights to acquire Common Shares as set out in Schedule A.

(c) As at October 19, 2010, no Preferred Shares were issued and outstanding or reserved for issue.

(d) The Corporation is prepared to issue and sell Flow-Through Shares (as hereinafter defined) at a price of $0.10 per Flow-Through Share (the “Flow-Through Offering”) and Units (as hereinafter defined) at a price of $0.10 per Unit (the “Unit Offering”).  Each Unit shall be comprised of one Common Share (a “Unit Share”) and one-half of one Common Share purchase warrant (each whole Common Share purchase warrant, a “Warrant”).  Each Warrant shall entitle the holder thereof to acquire one Warrant Share (as hereinafter defined) at a exercise price of $0.15 per Warrant Share at any time during the 24 month period following the Closing Date (as hereinafter defined).

(e) The aggregate gross proceeds of the Flow-Through Offering and the Unit Offering (collectively, the “Offering”) will be up to $1,500,000.

Based upon the understanding of the Agent set out above and upon the terms and subject to the conditions contained hereinafter, upon the acceptance hereof by the Corporation, the Corporation hereby appoints the Agent to act as the sole and exclusive agent of the Corporation to solicit, on a reasonable best efforts basis, offers to purchase the Offered Securities, and the Agent hereby agrees to act as such agent.  It is understood and agreed that the Agent will offer the Offered Securities (as hereinafter defined) on a private placement best efforts basis to raise gross proceeds of up to $1,500,000 in the Offering Jurisdictions (as hereinafter defined).

1.   Definitions, Interpretations and Schedules

(a)            Definitions: Whenever used in this Agreement:

(i)         “Agent” means  Primary Capital Inc.;

(ii)         “Agreement” means the agreement resulting from the acceptance by the Corporation of the offer made by the Agent herein, including the schedules attached hereto, as amended or supplemented from time to time;

(iii)         “Ancillary Documents” means all agreements, indentures, certificates (including the Warrant Certificates, Broker Warrant Certificates and Broker Warrant Underlying Warrant Certificates) and documents executed and delivered, or to be executed and delivered, by the Corporation in connection with the transactions contemplated by this Agreement or the Subscription Agreements and includes the Subscription Agreements;

(iv)         “Auditor” means D&H Group LLP, the auditor of the Corporation;

(v)         “BC Act” means the Securities Act (British Columbia) and the regulations thereunder, together with the instruments, policies, rules, orders, codes, notices and interpretation notes of the British Columbia Securities Commission, as amended, supplemented or replaced from time to time;

(vi)         “Broker Units” means those Units issuable upon exercise of the Broker Warrants;

(vii)         “Broker Warrant Certificates” means the certificates representing the Broker Warrants;

(viii)         “Broker Warrant Shares” means those Common Shares comprising part of the Units issuable upon exercise of the Broker Warrants (which will not be Flow-Through Shares);

(ix)         “Broker Warrant Underlying Warrant Certificate” means the certificates representing the Broker Warrant Underlying Warrants;

(x)         “Broker Warrant Underlying Warrant Shares” means the Common Shares issuable upon exercise of the Broker Warrant Underlying Warrants (which will not be Flow-Through Shares);

(xi)         “Broker Warrant Underlying Warrants” means those Warrants comprising part of the Broker Units issuable upon exercise of the Broker Warrants;

(xii)         “Broker Warrants” means the broker warrants to purchase Broker Units issuable to the Agent in connection with the Offering as part of its Commission;

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(xiii)         “Business Day” means a day on which Canadian chartered banks are open for the transaction of regular business in the City of Vancouver, British Columbia and the City of Toronto, Ontario;

(xiv)         “Canadian Exploration Expense” or “CEE” means one or more expenses referred to in paragraph (f) of the definition of Canadian exploration expense in subsection 66.1(6) of the Tax Act other than amounts which are prescribed to be “Canadian exploration and development overhead expense” for the purposes of paragraph 66(12.6)(b) of the Tax Act or the cost of acquiring or obtaining the use of seismic data described in paragraph 66(12.6)(b.1) of the Tax Act or any expenses for prepaid services or rent that do not qualify as outlays and expenses for the period as described in the definition “expense” in subsection 66(15) of the Tax Act;

(xv)         “Closing” means the closing of the purchase and sale of the Offered Securities subscribed for by the Purchasers pursuant to the Subscription Agreements;

(xvi)         “Closing Date” means October 20, 2010 or such other date as the Corporation and the Agent may mutually agree upon in writing, but in any event not later than October 31, 2010;

(xvii)         “Closing Time” means 7:30 a.m. (Vancouver time) on the Closing Date or such other time on the Closing Date as the Corporation and the Agent may mutually agree upon in writing;

(xviii)         “Commitment Amount” means the aggregate amount paid by the FT Purchasers for the Flow-Through Shares;

(xix)         “Common Shares” means the common shares in the capital of the Corporation as constituted on the date hereof;

(xx)         “Corporation” means Mill City Gold Corp., a corporation existing under the Business Corporations Act (British Columbia) and includes any successor corporation thereto, and as applicable, its wholly owned subsidiary, Mill City Gold, Inc.;

(xxi)         “CRA” means Canada Revenue Agency;

(xxii)         “Debt Instrument” means any loan, bond, debenture, promissory note or other instrument evidencing indebtedness (demand or otherwise) for borrowed money or other liability;

(xxiii)         “Dollars” or “$” means lawful money of Canada;

(xxiv)         “Expenditure Period” means the period commencing on the Closing Date and ending on the Termination Date;

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(xxv)         “Flow-Through Mining Expenditure” means an expense which would constitute a “flow-through mining expenditure” as defined in subsection 127(9) of the Tax Act;

(xxvi)         “Flow-Through Offering” means the offering of Flow-Through Shares to be offered for sale on a private placement basis pursuant to NI 45-106, through the Agent;

(xxvii)         “Flow-Through Shares” means the Common Shares which are “flow-through shares” as defined in subsection 66(15) of the Tax Act;

(xxviii)         “FT Purchasers” means the purchasers of Flow-Through Shares pursuant to the Flow-Through Offering;

(xxix)         “FT Subscription Agreements” means the subscription and renunciation agreements entered into between the Corporation and the FT Purchasers in respect of the Flow-Through Shares, pursuant to the Flow-Through Offering;

(xxx)         “Information” means all information regarding the Corporation that is, or becomes, publicly available on SEDAR;

(xxxi)         “June 30, 2010 Financial Statements” has the meaning given to such term in section 8(u) of this Agreement;

(xxxii)         “NI 45-106” means National Instrument 45-106 - Prospectus and Registration Exemptions of the Canadian Securities Administrators;

(xxxiii)         “Offered Securities” means, collectively, the Flow-Through Shares and the Units to be issued and sold pursuant to the Offering;

(xxxiv)         “Offering” means, collectively, the Flow-Through Offering and the Unit Offering;

(xxxv)         “Offering Jurisdictions” means, collectively, the Provinces of Ontario, British Columbia and Alberta and such other provinces and territories of Canada as may be mutually agreed upon by the Agent and the Corporation, and in respect of the Units, jurisdictions outside of North America, where the Offered Securities are offered to prospective purchasers, as the context permits or requires;

(xxxvi)         “Person” means an individual, a firm, a corporation, a syndicate, a partnership, a trust, an association, an unincorporated organization, a joint venture, an investment club, a government or an agency or political subdivision thereof and every other form of legal or business entity of any nature or kind whatsoever;

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(xxxvii)         “Preferred Shares” means the preferred shares in the capital of the Corporation as constituted on the date hereof;

(xxxviii)         “Prescribed Forms” means the forms prescribed from time to time under subsection 66(12.7) of the Tax Act and under the applicable provision of the Taxation Act (Québec) as described in paragraph 1(e) hereof filed or to be filed by the Corporation within the prescribed times renouncing to the FT Purchasers the Resource Expenses incurred pursuant to the FT Subscription Agreements and all parts or copies of such forms required by the CRA and under the Taxation Act (Québec) as described in paragraph 1(e) hereof to be delivered to the FT Purchasers;

(xxxix)         “Prescribed Relationship” means a relationship between the Corporation and a Person where such Person and the Corporation are related or otherwise do not deal at arm’s length for purposes of the Tax Act;

(xl)         “Property Agreements” means the agreements related to the material properties of the Corporation which include, collectively: the option and joint venture agreement with Temex dated September 22, 2010 related to the Croxall property and the option and joint venture agreement made September 2, 2008 with Temex and Rainy Mountain Royalty Corp. related to the GP2 property, and amendments thereto;

(xli)         “Purchase Price” means, as the context requires, the price to be paid by the Purchasers for each Flow-Through Share or Unit under the Offering, being $0.10 per Flow-Through Share and $0.10 per Unit, respectively;

(xlii)         “Purchasers” means, collectively, the purchasers of the Offered Securities;

(xliii)         “Reporting Provinces” means, collectively, the Provinces of British Columbia, Alberta and Quebec;

(xliv)         “Resource Expense” means an expense which is CEE, which qualifies as a Flow-Through Mining Expenditure that is incurred on or after the Closing Date and on or before the Termination Date which will be renounced by the Corporation pursuant to subsections 66(12.6) and 66(12.66) of the Tax Act with an effective date not later than December 31, 2010 and in respect of which, but for the renunciation, the Corporation would be entitled to a deduction from income for income tax purposes;

(xlv)         “Securities Commissions” means, collectively, the securities regulatory authorities of the Offering Jurisdictions or the Reporting Provinces, as applicable;

(xlvi)         “Securities Laws” means the securities legislation and regulations of, and the instruments, policies, rules, orders, codes, notices, interpretation notes

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and policy statements of the applicable securities regulatory authorities in each of the provinces of Canada, and the rules of the Stock Exchange;

(xlvii)         “Stock Exchange” means the TSX Venture Exchange;

(xlviii)         “Stock Option Plan” means the incentive stock option plan of the Corporation;

(xlix)         “Subject Shares” means, collectively, the Flow-Through Shares, the Unit Shares, the Warrant Shares, the Broker Warrant Shares and Broker Warrant Underlying Warrant Shares;

(l)         “Subscription Agreements” means, collectively, the FT Subscription Agreements and the subscription agreements to be entered into between the Corporation and each of the Purchasers with respect to the purchase of Units;

(li)         “Tax Act” means the Income Tax Act (Canada), and all rules and regulations made pursuant thereto, all as may be amended, re-enacted or replaced from time to time and any proposed amendments thereto announced publicly from time to time;

(lii)         “Temex” means Temex Resources Corp;

(liii)         “Termination Date” means December 31, 2011;

(liv)         “Unit” means a unit of the Corporation, comprised of one Unit Share and one-half of one Warrant;

(lv)         “Unit Offering” means the offering of Units to be offered for sale on a private placement basis pursuant to NI 45-106, through the Agent;

(lvi)         “Unit Shares” means the Common Shares comprising part of the Units;

(lvii)         “United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia;

(lviii)         “Warrant Certificates” means the certificates representing the Warrants;

(lix) “Warrant Shares” means the Common Shares issuable upon the exercise of the Warrants; and

(lix)         “Warrants” means the Common Share purchase warrants of the Corporation comprising part of the Units with each whole Warrant entitling the holder thereof to acquire one Warrant Share at an exercise price of $0.15 at any time during the 24 month period after the Closing Date.

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(b)           Other Defined Terms:  Whenever used in this Agreement, the words and terms “affiliate”, “associate”, “material fact”, “material change”, “misrepresentation”, “senior officer” and “subsidiary” shall have the meaning given to such word or term in the BC Act unless specifically provided otherwise herein.

(c)           Plural and Gender:  Whenever used in this Agreement, words importing the singular number only shall include the plural and vice versa and words importing the masculine gender shall include the feminine gender and neuter.

(d)           Currency:  All references to monetary amounts in this Agreement are to lawful money of Canada.

(e)           Taxation Act (Québec):  Any reference to a word or term defined in the Tax Actincludes, for purposes of Québec income taxation, a reference to the equivalent word or term, if any, defined in the Taxation Act (Québec) and all rules and regulations made pursuant thereto, all as may be amended, re-enacted or replaced from time to time and any proposed amendments thereto as may be announced publicly from time to time.  Any reference to the Tax Act or a provision thereof includes, for purposes of Québec income taxation, a reference to the Taxation Act (Québec)or the equivalent provision thereof as such act may be amended, re-enacted or replaced from time to time.  Any reference to a filing or similar requirement imposed under the Tax Act includes, for purposes of Québec income taxation, a reference to the equivalent filing or similar requirement, where applicable, under the Taxation Act (Québec)as such act may be amended, re-enacted or replaced from time to time; provided that, if no filing or similar requirement is provided under the Taxation Act (Québec), a copy of any material filed under the Tax Act shall be filed with the ministère du Revenu du Québec.

(f)         Schedules:  The following schedules are attached to this Agreement and are deemed to be a part of and incorporated in this Agreement:

Schedule	Title
A	Outstanding Convertible Securities
B	Property Interests

2.   The Offered Securities

(a)           Offered Securities:  The Offered Securities consist of Flow-Through Shares and Units to be sold under the Offering.

(b)           Incurring and Renouncing of CEE:  The Corporation hereby agrees to incur Resource Expenses in an amount equal to the Commitment Amount on or before the Termination Date in accordance with the FT Subscription Agreements and agrees to renounce to the FT Purchasers, with an effective date no later than December 31, 2010, pursuant to subsection 66(12.6) of the Tax Act, and in respect of Resource Expenses incurred in 2011, pursuant to subsections 66(12.6)

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and 66(12.66) of the Tax Act, Resource Expenses in an amount equal to the Commitment Amount.

(c)           Renunciation:  The Corporation shall deliver to the FT Purchasers, on or before February 15, 2011, the relevant Prescribed Forms (including T-101 Forms), fully completed and executed, renouncing to each FT Purchaser, Resource Expenses in an amount equal to the Commitment Amount applicable to such FT Purchaser with an effective date of no later than December 31, 2010, such delivery constituting the authorization of the Corporation to the FT Purchasers to file such Prescribed Forms with applicable taxation authorities.

(d) The Warrants:  The terms and conditions, and the material attributes and characteristics, of the Warrants shall be satisfactory to the Corporation and the Agent and consistent with the provisions of this Agreement.  Such terms and conditions, and material attributes and characteristics, will be contained in the Warrant Certificates which will contain, among other things, anti-dilution provisions and provisions for the appropriate adjustment in the class and number of Warrant Shares or other securities to be received on the exercise of Warrants upon the occurrence of certain events, including any subdivision, consolidation or reclassification of the Common Shares or any payment of dividends or the amalgamation of, or other reorganization involving, the Corporation.  Subject to adjustment in accordance with the provision s of the Warrant Certificates, each whole Warrant shall entitle the holder thereof to purchase one Warrant Share at an exercise price of $0.15 per Warrant Share for a period of 24 months following the Closing Date.

3.   The Offering

(a)           Sale on Exempt Basis:  The Agent will use its reasonable best efforts to arrange for Purchasers of the Offered Securities in the Offering Jurisdictions. The Agent shall offer for sale on behalf of the Corporation the Offered Securities in the Offering Jurisdictions in compliance with the Securities Laws of the Offering Jurisdictions and only to such Persons and in such manner so that, pursuant to the provisions of the Securities Laws of the Offering Jurisdictions, no prospectus, registration statement or offering memorandum or other similar document need be filed with, or delivered to, any Securities Commission in any Offering Jurisdiction in connection therewith.

(b)           Agency Group:  The Corporation agrees that the Agent has the right to invite one or more investment dealers to form an agency group to participate in the soliciting of offers to purchase the Offered Securities.  The Agent shall have the exclusive right to control all compensation arrangements between the members of the agency group.  The Corporation grants all of the rights and benefits of this Agreement to any investment dealer who is a member of any agency group formed by the Agent and appoints the Agent as trustee of such rights and benefits for all such investment dealers, and the Agent hereby accepts such trust and agrees to hold such rights and benefits for and on behalf of all such investment 

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dealers.  The Agent shall ensure that any investment dealer who is a member of any agency group or syndicate formed by the Agent pursuant to the provisions of this subsection 3(b) or with whom the Agent has a contractual relationship with respect to the Offering, if any, agrees with the Agent to comply with the covenants and obligations given by the Agent herein.

(c)           Covenants of the Agent:  The Agent covenants with the Corporation that (i) it will comply with the Securities Laws of the Offering Jurisdictions in which they solicit or procure subscriptions for Offered Securities in connection with the Offering, (ii) it will not solicit or procure subscriptions for Offered Securities so as to require the registration thereof or the filing of a prospectus with respect thereto under the laws of any jurisdiction, and (iii) it will obtain from each Purchaser an executed Subscription Agreement in a form acceptable to the Corporation and the Agent, acting reasonably. The Agent represents and warrants that it is, and, to the best of its knowledge, each member of any agency group formed by the Agent is:

(i)         an "accredited investor" within the meaning of such term as defined in NI 45-106 by virtue of being a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors; and

(ii)         registered in a category permitting it to participate in the distribution of the Offered Securities as contemplated in this Agreement and has complied with all applicable laws applicable to its registration in connection with its involvement in the Offering.

(d)           Filings:  The Corporation undertakes to file or cause to be filed all forms and undertakings required to be filed by the Corporation in connection with the Offering so that the distribution of the Offered Securities may lawfully occur in the Offering Jurisdictions without the necessity of filing a prospectus or an offering memorandum in Canada and the Agent undertakes to use its commercially reasonable best efforts to cause the Purchasers of the Offered Securities to complete (and it shall be a condition of closing in favour of the Corporation that the Purchasers complete and deliver to the Corporation) any forms and undertakings required by the Securities Laws of the Offering Jurisdictions.  All fees payable in connection with such filings shall be at the expense of the Corporation.

(e)           No Offering Memorandum:  Neither the Corporation nor the Agent shall provide to prospective purchasers of Offered Securities any document or other material that would constitute an offering memorandum within the meaning of the Securities Laws of the Offering Jurisdictions.

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4.   Due Diligence

The Corporation shall allow the Agent to conduct all due diligence investigations, including meeting with senior management of the Corporation, the Auditor and legal counsel to the Corporation, as the Agent shall consider appropriate in connection with the Offering.

5.   Deliveries By Closing Time

(a)           Deliveries:  By the Closing Time:

(i)         all actions required to be taken by or on behalf of the Corporation including, without limitation, the passing of all required resolutions of the directors, including committees of the directors, and shareholders of the Corporation, shall have occurred in order to complete the transactions contemplated by this Agreement and the Subscription Agreements, including, without limitation, to issue the Flow-Through Shares and Unit Shares, to create and issue the Warrants and the Broker Warrants, to allot and reserve for issuance the Broker Warrant Underlying Warrants and Broker Warrant Underlying Warrant Shares and a certified copy of all such resolutions shall have been delivered by the Corporation to the Agent;

(ii)         the Corporation shall have delivered or caused to be delivered to the Agent:

(A)         a favourable legal opinion dated the Closing Date of counsel to the Corporation, DuMoulin Black LLP and favourable legal opinions of local counsel and tax counsel, acceptable to the Agent, which counsel may rely on a certificate of a senior officer of the Corporation with respect to the factual matters addressed in such opinion addressed to, among others, the Agent and the Purchasers in form and substance acceptable to the Agent and its counsel,

(B)         a certificate dated the Closing Date signed by an appropriate officer of the Corporation and addressed to, among others, the Agent and the Purchasers with respect to the articles of the Corporation, the resolutions of the directors and shareholders, if any, of the Corporation and any other corporate action taken relating to this Agreement and the Ancillary Documents and with respect to such other matters as the Agent may reasonably request, and including specimen signatures of the signing officers of the Corporation,

(C)         a certificate dated the Closing Date addressed to, among others, the Agent and the Purchasers signed by the chief executive officer and the chief financial officer of the Corporation or any two other senior officers of the Corporation acceptable to the Agent

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acknowledging that the Agent and the Purchasers are relying on such certificate, the Subscription Agreement and the Information in deciding to invest, certifying for and on behalf of the Corporation to the best or their knowledge, information and belief that:

(I)         no order, ruling or determination having the effect of suspending the sale or ceasing the trading in any securities of the Corporation (including the Offered Securities) has been issued by any regulatory authority and is continuing in effect and no proceedings for that purpose have been instituted or threatened, or to the knowledge of such officers, are pending or contemplated by any regulatory authority;

(II)         the Corporation has duly complied with all the terms, covenants and conditions of this Agreement on its part to be complied with up to the Closing Time;

(III)         the representations and warranties of the Corporation contained in this Agreement are true and correct as of the Closing Time with the same force and effect as if made at and as of the Closing Time after giving effect to the transactions contemplated by this Agreement,

(IV)         sinceDecember 31, 2009, except as disclosed in the Information, there has been no material adverse change (whether actual, anticipated, proposed, prospective or threatened) in the financial condition, assets, liabilities (contingent or otherwise), business, affairs, operations or prospects of the Corporation or in the capital of the Corporation; and

(V)         no transaction of a nature material to the Corporation has been entered into by the Corporation, except as disclosed in the Information,

(D)         favourable title opinions dated as of a recent date addressed to the Agent and the Purchasers in form and substance acceptable to the Agent and its counsel, acting reasonably with respect to title to the Croxall property and the GP2 property,

(E)         a Subscription Agreement from each Purchaser accepted by the Corporation,

(F)         definitive certificates representing the Flow-Through Shares, Unit Shares and Warrants registered in the names of the Purchasers or

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in such other name or names as the Purchasers or the Agent may direct,

(G)         definitive certificates representing the Broker Warrants registered in the name of the Agent or in such other name or names as the Agent may direct, and

(H)         such further documents as may be contemplated by this Agreement or as the Agent may reasonably require,

all in form and substance satisfactory to the Agent;

(iii)         the Agent shall have delivered or cause to be delivered to the Corporation:

(A)         payment in an aggregate amount equal to: (i) the aggregate Purchase Price for the Offered Securities net of the commission payable by the Corporation to the Agent as provided for in section 7 of this Agreement and the expenses payable by the Corporation to the Agent as provided for in section 12 of this Agreement; and (ii) the Commitment Amount, by cheque, bank draft or wire transfer payable to the Corporation against delivery from the Corporation to the Agent of a receipt for such amounts,

(B)         a Subscription Agreement signed by or on behalf of each Purchaser, and

(C)         such further documents as may be contemplated by this Agreement or as the Corporation may reasonably require, all in form and substance satisfactory to the Corporation.

6.   Closing

(a)           Closing:  The Closing shall be completed at the offices of counsel for the Corporation at the Closing Time on the Closing Date.

(b)           Conditions of Closing:  The following are conditions precedent to the obligation of the Agent to complete the Closing and of the Purchasers to purchase the Offered Securities, which conditions the Corporation hereby covenants and agrees to use its commercially reasonable efforts to fulfill within the time set out herein therefor, and which conditions may be waived in writing in whole or in part by the Agent:

(i)         the Corporation shall have received all necessary approvals and consents, including all necessary regulatory approvals and consents (including those of the Stock Exchange) required for the completion of the transaction contemplated by this Agreement, all in a form satisfactory to the Agent, acting reasonably, and the Stock Exchange shall have conditionally

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approved the listing thereon of the Subject Shares, subject to the fulfillment of normal conditions;

(ii)         receipt by the Agent of the documents set forth in section 5 of this Agreement to be delivered to the Agent;

(iii)         the representations and warranties of the Corporation contained herein being true and correct as of the Closing Time with the same force and effect as if made at and as of the Closing Time after giving effect to the transactions contemplated hereby;

(iv)         the Corporation having complied with all covenants, and satisfied all terms and conditions, contained herein to be complied with and satisfied by the Corporation at or prior to the Closing Time; and

(v)         the Agent not having previously terminated its obligations pursuant to this Agreement.

7.   Fee

(a)           Commission:  In consideration of the agreement of the Agent to act as Agent of the Corporation in respect of the Offering, and in consideration of the services performed and to be performed by the Agent in connection therewith, including, without limitation:

(i)         acting as agent of the Corporation to solicit offers to purchase the Offered Securities;

(ii)         participating in the preparation of the form of the Subscription Agreements and certain of the Ancillary Documents; and

(iii)         advising the Corporation with respect to the private placement of the Offered Securities;

the Corporation shall pay to the Agent or as the Agent may otherwise direct at the Closing Time against receipt of payment of the aggregate Purchase Price for the Offered Securities, a cash commission equal to 6% of the aggregate Purchase Price for the Offered Securities, out of the proceeds of the Offering. In addition, the Agent will receive Broker Warrants which will entitle the Agent to purchase that number of Broker Units as is equal to 10% of the number of Offered Securities sold, exercisable at a price of $0.10 per Broker Unit at any time during the 24 month period after the Closing Date.

For greater certainty, in the event that Closing does not occur, no cash commission will be payable to the Agent and no Broker Warrants will be issuable to the Agent.

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8.   Representations and Warranties

The Corporation hereby represents and warrants to the Agent and the Purchasers, and acknowledges that the Agent and the Purchasers are relying upon each of such representations and warranties in completing the Closing, as follows:

(a)           Incorporation and Organization:  The Corporation has been amalgamated and organized and is a valid and subsisting corporation under the laws of its jurisdiction of amalgamation and has all requisite corporate power and authority to carry on its business as now conducted or proposed to be conducted and to own or lease and operate the property and assets thereof and the Corporation has all requisite corporate power and authority to enter into, execute and deliver this Agreement and the Ancillary Documents and to carry out the obligations thereof hereunder and thereunder.

(b)           Extra-provincial Registration:  The Corporation is licensed, registered or qualified as an extra-provincial or foreign corporation in all jurisdictions where the character of the property or assets thereof owned or leased or the nature of the activities conducted by it make licensing, registration or qualification necessary and is carrying on the business thereof in compliance with all applicable laws, rules and regulations of each such jurisdiction.

(c)           Authorized Capital:  The Corporation is authorized to issue an unlimited number of Common Shares of which, as of October 19, 2010, 51,794,207 Common Shares were issued and outstanding as fully paid and non-assessable shares. The Corporation is also authorized to issue an unlimited number of Preferred Shares, of which as of October 19, 2010, no Preferred Shares were issued and outstanding.

(d)           Listing:  The Common Shares are listed on the Stock Exchange and the Subject Shares will, at the time of issue of the Offered Securities, have been conditionally accepted for listing on the Stock Exchange and any other consents or approvals required by the Stock Exchange in respect of the Offering, to the extent necessary to be obtained, shall have been obtained. The Corporation has not issued, or agreed to issue, any Common Shares or any securities exchangeable or exercisable for, or convertible into, Common Shares at an effective price per Common Share which is less than the Purchase Price during the 60 day period immediately preceding the date hereof. except for Common Shares issued pursuant to the Property Agreements.

(e)           Certain Securities Law Matters:  The Corporation is a reporting issuer or the equivalent in the Reporting Provinces and is not in default of any requirement of the Securities Laws of any of such provinces.

(f)           Resale of Securities:  None of the Subject Shares, Warrants or Broker Warrant Underlying Warrants will be subject to a restricted period or statutory hold period under the Securities Laws of the Offering Jurisdictions or to any resale restriction

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under the policies of the Stock Exchange which extends beyond four months and one day after the Closing Date.

(g)           Rights to Acquire Securities:  No Person has any agreement, option, right or privilege (whether pre-emptive, contractual or otherwise) capable of becoming an agreement for the purchase, acquisition, subscription for or issue of any of the unissued shares or other securities of the Corporation, except for, as at October 19, 2010, an aggregate of 15,489,999 Common Shares were reserved for issue pursuant to outstanding options, warrants, share incentive plans, convertible, exercisable and exchangeable securities and other rights to acquire Common Shares (including property acquisitions), as set out in Schedule A.

(h)           Rights Plan:  The directors of the Corporation have not adopted a shareholder rights plan or a similar plan and the Corporation is not party to what is commonly referred to as a shareholder rights plan agreement.

(i)           No Pre-emptive Rights:  The issue of the Offered Securities will not be subject to any pre-emptive right or other contractual right to purchase securities granted by the Corporation or to which the Corporation is subject.

(j)           Offered Securities:  The execution of this Agreement and the Subscription Agreements, the issue by the Corporation to the Purchasers of the Flow-Through Shares, Unit Shares and Warrants (and Warrant Shares on exercise of the Warrants), the issue by the Corporation to the Agent of the Broker Warrants (and Broker Warrant Shares and Broker Warrant Underlying Warrants on exercise of the Broker Warrants and Broker Warrant Underlying Warrant Shares on exercise of the Broker Warrant Underlying Warrants) will be exempt from the registration and prospectus requirements of the Securities Laws of the Offering Jurisdictions.

(k)           Subsidiaries:  The Corporation does not have any subsidiaries within the meaning of the BC Act other than its wholly owned subsidiary, Mill City Gold, Inc. and all of the outstanding shares of Mill City Gold, Inc. are issued and outstanding as fully paid and non assessable shares and 100% of such outstanding shares, are legally and beneficially owned, directly or indirectly by the Corporation and no Person has any agreement, option, right or privilege (whether pre-emptive, contractual or otherwise) capable of becoming an agreement for the purchase, acquisition, subscription for or issue of any such shares or for the issue or allotment of any unissued shares or other securities convertible or exchangeable for any such shares of Mill City Gold, Inc.

(l)           Issue of Offered Securities:  All necessary corporate action has been taken to authorize the issue and sale of, and the delivery of certificates representing, the Flow-Through Shares, Unit Shares and Warrants and, upon payment of the requisite consideration therefor, the Flow-Through Shares and Unit Shares will be validly issued as fully paid and non-assessable Common Shares, the Warrants will be validly created, authorized and issued, the Warrant Shares will be validly allotted and reserved for issuance, and upon the valid exercise of the Warrants,

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including receipt of the requisite consideration therefore, the Warrant Shares will be validly issued as fully paid and non-assessable Common Shares.

(m)           Issue of Broker Warrants:  All necessary corporate action has been taken to validly create and authorize the issue and the delivery of the Broker Warrants and to validly create, authorize, allot and reserve for issuance the Broker Warrant Shares and Broker Warrant Underlying Warrants upon exercise of the Broker Warrant and the Broker Warrant Underlying Warrant Shares upon valid exercise of the Broker Warrant Underlying Warrants.  Upon receipt of the requisite consideration thereof, the Broker Warrants and Broker Warrant Underlying Warrants, as applicable, will be validly issued and, upon the valid exercise of the Broker Warrants, including receipt of the requisite consideration therefor, in accordance with the terms of the Broker Warrant Certificates, the Broker Warra nt Shares on exercise of the Broker Warrants will be validly issued as fully paid and non-assessable Common Shares and, upon the valid exercise of the Broker Warrant Underlying Warrants in accordance with the terms of the Broker Warrants Underlying Warrant Certificates, the Broker Warrant Underlying Warrant Shares on exercise of the Broker Warrant Underlying Warrants will be validly issued as fully paid and non-assessable Common Shares.

(n)           Consents, Approvals and Conflicts:  None of the offering and sale of the Offered Securities, the execution and delivery of this Agreement or the Ancillary Documents, the compliance by the Corporation with the provisions of this Agreement and the Ancillary Documents or the consummation of the transactions contemplated herein and therein including, without limitation, the incurring of Resource Expenses, the issue of the Offered Securities to the Purchasers for the consideration and upon the terms and conditions as set forth herein, the issue of the Broker Warrants to the Agent for the consideration and upon the terms and conditions as set forth herein, and the issue of the Broker Warrant Shares and Broker Warrant Underlying Warrants for the consideration and upon the terms and co nditions set forth in the Broker Warrant Certificates, the issue of the Broker Warrant Underlying Warrant Shares for the consideration and upon the terms and conditions set forth in the Broker Warrant Underlying Warrant Certificates and the issue of the Warrant Shares for the consideration and upon the terms and conditions set forth in the Warrant Certificates, do or will (i) require the consent, approval, or authorization, order or agreement of, or registration or qualification with, any governmental agency, body or authority, court, stock exchange, securities regulatory authority or other Person, except (A) such as have been obtained, or (B) such as may be required under the Securities Laws of the Offering Jurisdictions and the policies of the Stock Exchange and will be obtained by the Closing Date, or (ii) conflict with or result in any breach or violation of any of the provisions of, or constitute a default under, any indenture, mortgage, deed of trust, lease or other agreement or instrument to which the Corporation is a party or by which it or any of the properties or assets thereof is bound, or the articles of the Corporation or any resolution passed by the directors (or any committee thereof) or shareholders of the Corporation, or any statute or any judgment, decree, order, rule, policy or regulation of any court, governmental authority,

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arbitrator, stock exchange or securities regulatory authority applicable to the Corporation or any of the properties or assets thereof which could have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations of the Corporation.

(o)           Authority and Authorization:  The Corporation has full corporate power and authority to enter into this Agreement and the Ancillary Documents and to do all acts and things and execute and deliver all documents as are required hereunder and thereunder to be done, observed, performed or executed and delivered by it in accordance with the terms hereof and thereof and the Corporation has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement and the Ancillary Documents and to observe and perform the provisions of this Agreement and the Ancillary Documents in accordance with the provisions hereof and thereof including, without limitation, the incurring of Resource Expenses, the issue of the Offered Securities to the Purchasers for the consideration and upon the terms and conditions set forth herein, the issue of the Broker Warrants to the Agent for the consideration and upon the terms and conditions as set forth herein, the issue of the Broker Warrant Shares and Broker Warrant Underlying Warrants on exercise of the Broker Warrants for the consideration and upon the terms and conditions set forth in the Broker Warrant Certificates and the issue of the Broker Warrant Underlying Warrant Shares on exercise of the Broker Warrant Underlying Warrants for the consideration and upon the terms and conditions set forth in the Broker Warrant Underlying Warrant Certificates and the issue of the Warrant Shares on exercise of Warrants for the consideration and upon the terms and conditions set forth in the Warrants Certification.

(p)           Validity and Enforceability:  Each of this Agreement, the Subscription Agreements, the Warrant Certificates and the Broker Warrant Certificates has been duly authorized, executed and delivered by the Corporation and constitutes a valid and legally binding obligation of the Corporation enforceable against the Corporation in accordance with the terms thereof.

(q)           Public Disclosure:  Each of the documents which contains any of the Information is, as of the date thereof, in compliance in all material respects with the Securities Laws of the Reporting Provinces and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and such documents collectively constitute full, true and plain disclosure of all material facts relating to the Corporation and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made , not misleading, as of the date hereof.  There is no fact known to the Corporation which the Corporation has not publicly disclosed which materially adversely affects the assets, liabilities (contingent or otherwise), capital, affairs, business, prospects, operations or condition (financial or otherwise) of the Corporation or the ability of the

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Corporation to perform its obligations under this Agreement or the Ancillary Documents.

(r)           Timely Disclosure:  The Corporation is in compliance with all timely disclosure obligations under the Securities Laws of the Reporting Provinces and, without limiting the generality of the foregoing, there has not occurred any material adverse change in the assets, liabilities (contingent or otherwise), capital, affairs, business, prospects, operations or condition (financial or otherwise) of the Corporation which has not been publicly disclosed and none of the documents filed by or on behalf of the Corporation pursuant to the Securities Laws of the Reporting Provinces contain a misrepresentation at the date of the filing thereof.

(s)           No Cease Trade Order:  No order preventing, ceasing or suspending trading in any securities of the Corporation or prohibiting the issue and sale of securities by the Corporation has been issued and no proceedings for either of such purposes have been instituted or, to the best of the knowledge of the Corporation, are pending, contemplated or threatened.

(t)           Accounting Controls:  The Corporation maintains a system of internal accounting controls sufficient to provide reasonable assurance that:  (i) transactions are completed in accordance with the general or a specific authorization of management of the Corporation; (ii) transactions are recorded as necessary to permit preparation of consolidated financial statements for the Corporation in conformity with Canadian generally accepted accounting principles and to maintain asset accountability; (iii) access to assets of the Corporation is permitted only in accordance with the general or a specific authorization of management of the Corporation; and (iv) the recorded accountability for assets of the Corporation is compared with the existing assets of the Corporation at reason able intervals and appropriate action is taken with respect to any differences therein.

(u)           Financial Statements:  The audited consolidated financial statements of the Corporation for the year ended December 31, 2009, together with the auditors’ report thereon and the notes thereto, and the unaudited interim consolidated financial statements of the Corporation for the six months ended June 30, 2010 and the notes thereto (the “June 30, 2010 Financial Statements”), have been prepared in accordance with Canadian generally accepted accounting principles applied on a basis consistent with prior periods (except as disclosed in such financial statements), are substantially correct in every particular and present fairly the financial condition and position of the Corporation on a consolidated basis , as at the dates thereof and such financial statements contain no direct or implied statement of a material fact which is untrue on the date of such financial statements and do not omit to state any material fact which is required by Canadian generally accepted accounting principles or by applicable law to be stated or reflected therein or which is necessary to make the statements contained therein not misleading.

(v)           Changes in Financial Position:  Since June 30, 2010:

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(i)         the Corporation has not paid or declared any dividend or incurred any material capital expenditure or made any commitment therefor;

(ii)         the Corporation has not incurred any obligation or liability, direct or indirect, contingent or otherwise, except in the ordinary course of business and which is not, and which in the aggregate are not, material; and

(iii)         the Corporation has not entered into any material transaction;

except in each case as disclosed in the Information.

(w)           Insolvency:  Within the last 10 years, the Corporation has not committed an act of bankruptcy or sought protection from the creditors thereof before any court or pursuant to any legislation, proposed a compromise or arrangement to the creditors thereof generally, taken any proceeding with respect to a compromise or arrangement, taken any proceeding to be declared bankrupt or wound up, taken any proceeding to have a receiver appointed of any of the assets thereof, had any Person holding any encumbrance, lien, charge, hypothec, pledge, mortgage, title retention agreement or other security interest or receiver take possession of any of the property thereof, had an execution or distress become enforceable or levied upon any portion of the property thereof or had any petition for a receiving order in bankruptcy filed against it.

(x)           No Contemplated Changes:  The Corporation has not approved, is not contemplating, has not entered into any agreement in respect of, or has any knowledge of:

(i)         the sale, transfer or other disposition of any material property or assets or any interest therein currently owned, directly or indirectly, by the Corporation whether by asset sale, transfer of shares or otherwise; or

(ii)         the change of control (by sale or transfer of shares or sale of all or substantially all of the property and assets of the Corporation or otherwise) of the Corporation.

(y)           Insurance:  The assets of the Corporation and the business and operations thereof are insured against loss or damage with responsible insurers on a basis consistent with insurance obtained by reasonably prudent participants in a comparable business in comparable circumstances, such coverage is in full force and effect and the Corporation has not failed to promptly give any notice or present any material claim thereunder.

(z)           Taxes and Tax Returns:  The Corporation has filed in a timely manner all necessary tax returns and notices and has paid all applicable taxes of whatsoever nature for all tax years ending prior to the date hereof to the extent that such taxes have become due or have been alleged by the CRA or other taxing authority to be due and the Corporation is not aware of any tax deficiencies or interest or penalties accrued or accruing, or alleged by the CRA or other taxing authority to

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be accrued or accruing, thereon where, in any of the above cases, it might reasonably be expected to result in any material adverse change in the condition (financial or otherwise), or in the earnings, business, affairs or prospects of the Corporation on a consolidated basis and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any tax return by the Corporation or the payment of any material tax, governmental charge, penalty, interest or fine against the Corporation.  There are no material actions, suits, proceedings, investigations or claims now pending or, to the best knowledge of the Corporation, threatened against the Corporation which could result in a material liability in respect of taxes, charges or levies of any governmental authority , penalties, interest, fines, assessments or reassessments or any matters under discussion with any governmental authority relating to taxes, governmental charges, penalties, interest, fines, assessments or reassessments asserted by any such authority and the Corporation has withheld (where applicable) from each payment to each of the present and former officers, directors, employees, consultants and suppliers thereof the amount of all taxes and other amounts, including, but not limited to, income tax and other deductions, required to be withheld therefrom, and have paid the same or will pay the same when due to the proper tax or other receiving authority within the time required under applicable tax legislation.

(aa)           Compliance with Laws, Licenses and Permits:  The Corporation has conducted and is conducting the business thereof in compliance in all material respects with all applicable laws, rules, regulations, tariffs, guidelines, orders and directives of each jurisdiction in which it carries on business and possesses all material approvals, consents, certificates, registrations, authorizations, permits and licenses issued by the appropriate provincial, state, municipal, federal or other regulatory agency or body necessary to carry on the business currently carried on, or, except as disclosed in the Information, contemplated to be carried on by it, is in compliance in all material respects with the terms and conditions of all such approvals, consents, certificates, authorizations, permits and licenses and with all laws, rules, regulations, tariffs, guidelines, orders and directives material to the operations thereof, and the Corporation has not received any notice of the modification, revocation or cancellation of, or any intention to modify, revoke or cancel or any proceeding relating to the modification, revocation or cancellation of any such approval, consent, certificate, authorization, permit or license which, singly or in the aggregate, if the subject of an unfavourable decision, order, ruling or finding, would materially adversely affect the conduct of the business or operations of, or the assets, liabilities (contingent or otherwise), condition (financial or otherwise) or prospects of, the Corporation on a consolidated basis.

(bb)           Agreements and Actions:  The Corporation is not in violation of any term of the articles, notice of articles or constating documents thereof.  The Corporation is not in violation of any material term or provision of any agreement, indenture or other instrument applicable to it which would, or could, reasonably be expected to result in any material adverse effect on the business, condition (financial or otherwise), capital, affairs or operations of the Corporation on a consolidated

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basis, nor is the Corporation in default in the payment of any obligation owed which is now due and there is no action, suit, proceeding or investigation commenced, pending or, to the knowledge of the Corporation after due inquiry, threatened which, either in any case or in the aggregate, might reasonably be expected to result in any material adverse effect on the business, condition (financial or otherwise), capital, affairs, prospects or operations of the Corporation on a consolidated basis or in any of the material properties or assets thereof or in any material liability on the part of the Corporation on a consolidated basis or which places, or could reasonably be expected to place, in question the validity or enforceability of this Agreement, the Ancillary Documents or any document or instrument delivered, or to be d elivered, by the Corporation pursuant hereto or thereto.

(cc)           Owner of Property:  The Corporation is the absolute legal and beneficial owner of, and has good and marketable title to, all of the material property or assets thereof as described in Schedule B, free of all mortgages, liens, charges, pledges, security interests, encumbrances, claims or demands whatsoever, other than those described in Schedule B, and no other property rights are necessary for the conduct of the business of the Corporation on a consolidated basis as currently conducted or contemplated to be conducted, except as disclosed in Schedule B, the Corporation does not know of any claim or the basis for any claim that might or could reasonably be expected to adversely affect the right thereof to use, transfer or otherwise exploit such property rights and, exce pt as disclosed in Schedule B, the Corporation does not have any responsibility or obligation to pay any commission, royalty, licence fee or similar payment to any Person with respect to the property rights of the Corporation.

(dd)           Mineral Rights:  The Corporation holds a right to earn an interest in the properties described in Schedule B, under valid, subsisting and enforceable title documents or other recognized and enforceable option agreements, sufficient to permit the Corporation to explore the minerals relating thereto, all such property, leases, claims or permits and all property, leases, claims or permits in which the Corporation has any interest or right have, to the best of the Corporation’s knowledge, been validly located and recorded in accordance with all applicable laws and are valid and subsisting, the Corporation has all necessary surface rights, access rights and other necessary rights and interests relating to the properties in which the Corporation has an interest as describe d in Schedule B, granting the Corporation the right and ability to explore for minerals, ore and metals for development purposes and subsequently produce therefrom, except as disclosed in Schedule B, and each of the proprietary interests or rights and each of the documents, agreements and instruments and obligations relating thereto referred to above is currently in good standing to the best of the Corporation’s knowledge.

(ee)           Property Agreements:  The Property Agreements and any documents and instruments referred to in the Property Agreements are, collectively, all of the agreements and other documents and instruments pursuant to which the Corporation holds its interests in its material property and assets (including any

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interest in, or right to earn an interest in, any material property).  Each of the Property Agreements and the documents and instruments referred to therein are valid and subsisting agreements, documents or instruments, are in full force and effect, enforceable in accordance with the terms thereof, and the Corporation is not in default of any of the material provisions of any such agreements, documents or instruments nor has any such default been alleged.  All of the properties and assets of the Corporation are in good standing under the applicable statutes and regulations of the jurisdictions in which they are situated, all leases, licences, claims and permits pursuant to which the Corporation derives the interests thereof in such property and assets are in good standing and there has been no material default under any such lease, licence, claim or permit and all taxes required to be paid with respect to such properties and assets to the date hereof have been paid.  None of the properties (or any interest in, or right to earn an interest in, any property) of the Corporation is subject to any right of first refusal or purchase or acquisition right which is not disclosed in the Information.

(ff)           Technical Reports:  The Corporation has duly filed with the applicable regulatory authorities all reports required by National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI 43-101”), and to the best of the Company’s knowledge, all such reports comply in all material respects with the requirements of NI 43-101.

(gg)           No Defaults:  The Corporation is not in default of any material term, covenant or condition under or in respect of any judgement, order, agreement or instrument to which it is a party or to which it or any of the property or assets thereof are or may be subject, and no event has occurred and is continuing, and no circumstance exists which has not been waived, which constitutes a default in respect of any commitment, agreement, document or other instrument to which the Corporation is a party or by which it is otherwise bound entitling any other party thereto to accelerate the maturity of any amount owing thereunder or which could have a material adverse effect upon the condition (financial or otherwise), capital, property, assets, operations or business of the Corporation on a c onsolidated basis.

(hh)           Compliance with Employment Laws:  The Corporation is in compliance with all laws and regulations respecting employment and employment practices, terms and conditions of employment, pay equity and wages, and has not and is not engaged in any unfair labour practice, there is no labour strike, dispute, slowdown, stoppage, complaint or grievance pending or, to the best of the knowledge of the Corporation after due inquiry, threatened against the Corporation, no union representation question exists respecting the employees of the Corporation and no collective bargaining agreement is in place or currently being negotiated by the Corporation, the Corporation has not received any notice of any unresolved matter and there are no outstanding orders under the Employment Standards Act (Ontario), the Human Rights Code (Ontario), the Occupational Health and Safety Act (Ontario) or the Workers’ Compensation Act (Ontario) or any other similar legislation in any jurisdiction in which the Corporation carries on business or has employees, no employee has any agreement as to the length of notice required to

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terminate his or her employment with the Corporation in excess of twelve months or equivalent compensation and all benefit and pension plans of the Corporation are funded in accordance with applicable laws and no past service funding liability exist thereunder.

(ii)           Employee Plans:  Each plan for retirement, bonus, stock purchase, profit sharing, stock option, deferred compensation, severance or termination pay, insurance, medical, hospital, dental, vision care, drug, sick leave, disability, salary continuation, legal benefits, unemployment benefits, vacation, pension, incentive or otherwise contributed to, or required to be contributed to, by the Corporation for the benefit of any current or former officer, director, employee or consultant of the Corporation has been maintained in material compliance with the terms thereof and with the requirements prescribed by any and all statutes, orders, rules, policies and regulations that are applicable to such plan.

(jj)           Debt Instruments:  The Corporation is not a party to any Debt Instrument or any agreement, contract or commitment to create, assume or issue any Debt Instrument other than in the ordinary course of business.

(kk)           Accruals:  All material accruals for unpaid vacation pay, premiums for unemployment insurance, health premiums, federal or provincial pension plan premiums, accrued wages, salaries and commissions and payments for any plan for any officer, director, employee or consultant of the Corporation have been accurately reflected in the books and records of the Corporation, as applicable.

(ll)           Work Stoppage:  There has not been, and there is not currently, any labour dispute which is adversely affecting or could reasonably be expected to adversely affect, in a material manner, the conduct of the business of the Corporation.

(mm)           Environmental Compliance:

(i)         The Corporation and the property, assets and operations thereof comply in all material respects with all applicable Environmental Laws (which term means and includes, without limitation, any and all applicable international, federal, provincial, state, municipal or local laws, statutes, regulations, treaties, orders, judgments, decrees, ordinances, official directives and all authorizations relating to the environment, occupational health and safety, or any Environmental Activity (which term means and includes, without limitation, any past, present or currently contemplated future activity, event or circumstance in respect of a Contaminant (which term means and includes, without limitation, any pollutants, dangerous substances, liquid wastes, hazardous wastes, hazardous materials, hazardous substances or contaminants or any other matter including any of the foregoing, as defined or described as such pursuant to any Environmental Law), including, without limitation, the storage, use, holding, collection, purchase, accumulation, assessment, generation, manufacture, construction, processing, treatment, stabilization,

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disposition, handling or transportation thereof, or the release, escape, leaching, dispersal or migration thereof into the natural environment, including the movement through or in the air, soil, surface water or groundwater);

(ii)         The Corporation does not have any knowledge of, and has not received any notice of, any material claim, judicial or administrative proceeding, pending or threatened against, or which may reasonably be expected to affect, the Corporation or any of the property, assets or operations thereof, relating to, or alleging any violation of any Environmental Laws, the Corporation is not aware of any facts which could give rise to any such claim or judicial or administrative proceeding and the Corporation does not have any knowledge that it or any of its property, assets or operations is the subject of any investigation, evaluation, audit or review by any Governmental Authority (which term means and includes, without limitation, any national, federal government, province, state, municipality or other political subdivision of any of the foregoing, any entity exer cising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing) to determine whether any violation of any Environmental Laws has occurred or is occurring or whether any remedial action is needed in connection with a release of any Contaminant into the environment, except for compliance investigations conducted in the normal course by any Governmental Authority;

(iii)         The Corporation has not given or filed any notice under any federal, state, provincial or local law with respect to any Environmental Activity, and the Corporation does not have any knowledge of, and is not aware of, any liability (whether contingent or otherwise) in connection with any Environmental Activity and the Corporation is not aware of any notice being given under any federal, state, provincial or local law or of any liability (whether contingent or otherwise) with respect to any Environmental Activity relating to or affecting the Corporation or the property, assets, business or operations thereof;

(iv)         The Corporation does not store any hazardous or toxic waste or substance on the property thereof and the Corporation has not disposed of any hazardous or toxic waste, in a manner contrary to any Environmental Laws, and there are no Contaminants on any of the premises at which the Corporation carries on business, other than in compliance with Environmental Laws;

(v)         The Corporation is not subject to any contingent or other liability relating to the restoration or rehabilitation of land, water or any other part of the environment or non-compliance with Environmental Law; and

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(vi)         There are no environmental audits, evaluations, assessments, studies or tests relating to the Corporation except for ongoing assessments conducted by or on behalf of the Corporation in the ordinary course.

(nn)           No Litigation:  There are no actions, suits, proceedings, inquiries or investigations existing, pending or, to the knowledge of the Corporation after due inquiry, threatened against or which adversely affect the Corporation or to which any of the property or assets thereof is subject, at law or equity, or before or by any court, federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which may in any way materially adversely affect the condition (financial or otherwise), capital, property, assets, operations or business of the Corporation on a consolidated basis or the ability of the Corporation to perform the obligations thereof and the Corporation is not subject to any judgement, order, writ, injunction, decree, award, rule, policy or regulation of any Governmental Authority, which, either separately or in the aggregate, may reasonably be expected to result in a material adverse effect on the condition (financial or otherwise), capital, property, assets, operations or business of the Corporation on a consolidated basis or the ability of the Corporation to perform its obligations under this Agreement or the Ancillary Documents.

(oo)           Intellectual Property:  The Corporation owns or possesses no intellectual property.

(pp)           Non-Arm’s Length Transactions:  The Corporation does not owe any amount to, nor has the Corporation any present loans to, or borrowed any amount from or is otherwise indebted to, any officer, director, employee or securityholder thereof or any Person not dealing at “arm’s length” (as such term is defined in the Tax Act) with any of them except for usual employee reimbursements and compensation paid in the ordinary and normal course of the business of the Corporation.  Except usual employee or consulting arrangements made in the ordinary and normal course of business, the Corporation is not a party to any contract, agreement or understanding with any officer, director, employee or securityholder thereof or any other Person not dealing at armR 17;s length with the Corporation.  No officer, director or employee of the Corporation and no Person which is an affiliate or associate of any of the foregoing Person, owns, directly or indirectly, any interest (except for shares representing less than 10% of the outstanding shares of any class or series of any publicly traded company) in, or is an officer, director, employee or consultant of, any Person which is, or is engaged in, a business competitive with the business of the Corporation (i.e., mineral exploration and development) which could reasonably be expected to materially adversely impact on the ability to properly perform the services to be performed by such Person for the Corporation.  No officer, director, employee or securityholder of the Corporation has any cause of action or other claim whatsoever against, or owes any amount to, the Corporation except for claims in the ordinary and normal course of the business of the Corporation such as for accrued vacation pay or other a mounts or matters which would not be material to the Corporation.

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(qq)           Flow-Through Shares:  Except as a result of any agreement, arrangement, undertaking, obligation or understanding to which the Corporation is not a party and of which it has no knowledge, upon issue, the Flow-Through Shares will be “flow-through shares” as defined in subsection 66(15) of the Tax Act and are not and will not be “prescribed shares” within the meaning of section 6202.1 of the regulations to the Tax Act and the applicable provisions of the Taxation Act (Québec).

(rr)           Principal-Business Corporation:  The Corporation is a “principal-business corporation” as defined in subsection 66(15) of the Tax Act.

(ss)           Commitment Amount:  The Corporation has no reason to believe that it will be unable to incur, on or after the Closing Date and on or before the Termination Date or that it will be unable to renounce to the FT Purchasers, effective on or before December 31, 2010, Resource Expenses in an aggregate amount equal to the Commitment Amount and the Corporation has no reason to expect any reduction of such amount by virtue of subsection 66(12.73) of the Tax Act.

(tt)           Material Contracts:  The only material contracts to which the Corporation is a party or by which it is bound are disclosed in the Information and all such contracts are valid and subsisting agreements in full force and effect unamended and there exists no material default or event, occurrence, condition or act which, with the giving of notice, the lapse of time or the happening of any event or condition, would become a material default hereunder by any party thereto.

(uu)           Website:  The website of the Corporation does not contain material information with respect to the Corporation which is incomplete, incorrect or omits to state a fact so as to render such information misleading, or any news release which has not been disseminated on a news wire service and all information contained on such website complies with the Securities Laws of the Offering Jurisdictions including, without limitation, restrictions on promotional material disseminated before and during the Offering.

9.   Covenants of the Corporation

(a)           Consents and Approvals:  Immediately following the acceptance by the Corporation hereof, the Corporation covenants and agrees with the Agent and the Purchasers that the Corporation will use all reasonable commercial efforts to:

(i)         obtain the approval of the Stock Exchange in respect of the listing of the Subject Shares, and any other necessary regulatory consents or approvals of the Stock Exchange and the Securities Commissions of the Offering Jurisdictions for the Offering, to the extent not already obtained, on such terms as are mutually acceptable to the Agent and the Corporation, acting reasonably;

(ii)         arrange for the listing of the Subject Shares on the Stock Exchange as soon as possible; and

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(iii)         make all necessary filings to obtain all other necessary regulatory and other consents and approvals required in connection with the transactions contemplated by this Agreement.

(b)           General:  The Corporation hereby covenants and agrees with the Agent and the Purchasers that the Corporation will:

(i)         fulfill all legal requirements to permit the creation, issue, offering and sale of the Offered Securities, the issue of the Broker Warrants, the issue of the Broker Warrant Shares and Broker Warrant Underlying Warrants upon exercise of the Broker Warrants, and the issue of the Broker Warrant Underlying Warrant Shares upon exercise of the Broker Warrant Underlying Warrants, in each case, as contemplated in this Agreement including, without limitation, compliance with the Securities Laws of the Offering Jurisdictions to enable the Offered Securities to be offered for sale and sold to the Purchasers and the Broker Warrants to be issued to the Agent without the necessity of filing a prospectus, registration statement or similar document in the Offering Jurisdictions;

(ii)         use all reasonable commercial efforts to deliver to the Agent a copy of all press releases made and material change reports and other documents filed with any regulatory authority forthwith upon such press release being made or material change report or other document being filed in connection with the Offering;

(iii)         use all reasonable commercial efforts to maintain the listing of the Common Shares on the Stock Exchange and the status thereof as a reporting issuer not in default under the Securities Laws of each of the Reporting Provinces for a period of at least 24 months from the Closing Date; and

(iv)         forthwith after the Closing Date file such documents as may be required under the Securities Laws of the Offering Jurisdictions relating to the offering of the Offered Securities which, without limiting the generality of the foregoing, shall include a Form 45-106F1 as prescribed under NI 45-106.

(c)           Flow-Through Shares:  The Corporation hereby covenants with the Agent and the FT Purchasers that:

(i)         for a period of at least 24 months from the Closing Date, the Corporation shall use all reasonable commercial efforts to remain a validly subsisting corporation licensed, registered or qualified as an extra-provincial or foreign corporation in all jurisdictions where the character of the properties owned or leased by the Corporation or the nature of the activities conducted by the Corporation make such licensing, registration or qualification necessary and shall carry on the business thereof in the

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ordinary course and in compliance in all material respects with all applicable laws, rules and regulations of each such jurisdiction

(ii)         the Corporation shall incur, during the Expenditure Period, Resource Expenses in an amount not less than the Commitment Amount;

(iii)         the Corporation shall renounce Resource Expenses in an amount equal to the Commitment Amount, in favour of the FT Purchasers and take all other actions necessary under the Tax Act and the Taxation Act (Québec) and within the time periods required under the Tax Act and the Taxation Act (Québec) in order for such renunciation to be valid and effective on or before December 31, 2010;

(iv)         the Corporation shall provide to the FT Purchasers as soon as possible after the Corporation has renounced Resource Expenses, all information and documents that the FT Purchasers may reasonably require for income tax purposes;

(v)         the Corporation shall keep proper and complete books, records and accounts  of all expenses incurred by the Corporation and all transactions affecting the FT Purchasers and the use of the Commitment Amount and, upon reasonable notice, if required by any FT Purchaser, by CRA or by the ministère du Revenue du Québec, shall make such books, records and accounts available for inspection and audit by or on behalf of any FT Purchaser by CRA or by the ministère du Revenue du Québec, as applicable;

(vi)         if the Corporation fails to renounce in favour of the FT Purchasers, Resource Expenses in an amount, after any adjustment pursuant to subsection 66(12.73) of the Tax Act, equal to the Commitment Amount in accordance with the Tax Act and the Taxation Act (Québec), the Corporation shall pay forthwith to the FT Purchasers after such failure becomes known an amount equal to the amount of any tax (within the meaning of “excluded obligation” in paragraph 6202.1(5)(b) of the regulations to the Tax Act or proposed paragraph 6202.1(5)(c) of the regulations to the Tax Act) payable under the Tax Act (and under any corresponding provincial legislation) by the FT Purchasers as a consequence of such failure to renounce by the Corporation, provided that nothing in this paragraph shall derogate from any rights or remedies the FT Purchasers may have at common law;

(vii)         the Corporation shall file with CRA and with the appropriate authorities in the Province of Québec and any other applicable provincial authorities within the time prescribed, and in any event on or before February 15, 2011, under subsection 66(12.68) of the Tax Act and the applicable section of the applicable provincial tax statute the forms prescribed for the purposes of such legislation, including, without limitation, the form T101

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and any applicable provincial tax statute required to be filed by the end of the month after the month in which the Closing Date occurs together with a copy of the FT Subscription Agreements and any “selling instrument” contemplated by such legislation and by the FT Subscription Agreements and shall provide to the applicable FT Purchasers a copy of such forms certified by two officers of the Corporation;

(viii)         the Corporation shall maintain its status as a “principal-business corporation” as defined in subsection 66(15) of the Tax Act hereof until such time as all the Resource Expenses required to be renounced to FT Purchasers pursuant to the Offering have been incurred and validly renounced pursuant to the Tax Act;

(ix)         the Corporation shall not enter into any other agreement which would prevent or restrict its ability to renounce to the FT Purchasers Resource Expenses in an amount equal to the Commitment Amount and, if the Corporation is required under the Tax Act or otherwise to reduce Resource Expenses previously renounced to the FT Purchasers, the reduction shall be made pro rata by number of Flow-Through Shares purchased, provided that the Corporation shall not reduce Resource Expenses renounced to the FT Purchasers under the FT Subscription Agreements until it has first reduced, to the extent required, all CEE renounced to Persons other than the FT Purchasers under any other agreement pursuant to private placements or pursuant to other public offerings subsequent to the Offering;

(x)         the Resource Expenses to be renounced by the Corporation to the FT Purchasers:

(A)         will constitute CEE on the effective date of the renunciation and will qualify as Flow-Through Mining Expenditures,

(B)         will not include expenses that are “Canadian exploration and development overhead expenses” (as defined in the Regulations to the Tax Act for purposes of paragraph 66(12.6)(b) of the Tax Act) of the Corporation or amounts which constitute the cost of acquiring or obtaining the use of seismic data described in paragraph 66(12.6)(b.1) of the Tax Act or any expenses for prepaid services or rent that do not qualify as outlays and expenses for the applicable period as described in the definition of “expense” in subsection 66(15) of the Tax Act,

(C)         will not include any amount that has previously been renounced by the Corporation to the FT Purchasers or to any other Person, and

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(D)         would be deductible by the Corporation in computing its income for the purposes of Part I of the Tax Act but for the renunciation thereof to the FT Purchasers;

(xi)         except as required by the Tax Act, the Corporation shall not reduce the amount renounced to the FT Purchasers pursuant to subsection 66(12.6) and 66(12.66) of the Tax Act;

(xii)         the Corporation shall not be subject to the provisions of subsection 66(12.67) of the Tax Act in a manner which impairs its ability to renounce Resource Expenses to the FT Purchasers in an amount equal to the Commitment Amount;

(xiii)         if the Corporation receives, or becomes entitled to receive, any government assistance which is described in the definition of “excluded obligation” in subsection 6202.1(5) of the regulations made under the Tax Act and the receipt of or entitlement to receive such government assistance has or will have the effect of reducing the amount of CEE validly renounced to the FT Purchasers to less than the Commitment Amount, the Corporation will incur additional Resource Expenses using funds from other sources in an amount equal to such assistance such that the aggregate Resource Expenses renounced to the FT Purchasers will be equal to the Commitment Amount; and

(xiv)         upon the Corporation becoming aware of the fact that the amount purportedly renounced pursuant to this Agreement exceeds the amount that it is entitled to renounce under the Tax Act, the Corporation will notify the Purchaser and the CRA immediately and comply with subsection 66(12.73) of the Tax Act, including the filing with the CRA of the statement contemplated therein, in an expeditious manner.

(d)           Use of Proceeds:  The gross proceeds raised from the issuance of the Flow-Through Shares will be used for Canadian Exploration Expenses which qualify as Flow-Through Mining Expenditures on the exploration of the Croxall property and the GP2 property as described in the information part of the claims listed in Schedule B to this Agreement. The gross proceeds from the Unit Offering will be used for general working capital purposes, including payment of the Agent’s cash commission and other expenses of the Offering.

(e)           Lock Up:  For a period of five months following the Closing Date, the Corporation agrees that it shall not without the prior written consent of the Agent, which consent shall not be unreasonably withheld or delayed, issue or announce the issuance of any of its Common Shares or other securities, other than pursuant to: (i) a bona fide acquisition by the Corporation or one of its affiliates; (ii) the issue of Common Shares upon the exercise of existing warrants and the exercise of options issued under the Stock Option Plan; or (iii) the grant of options under the Stock Option Plan.

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(f)           Right of First Refusal:  The Agent shall have a right of first refusal to act as lead agent or underwriter or lead advisor with respect to any offering of securities by the Corporation, where an investment dealer or advisor is involved or proposes to be involved during the period ending six months after the Closing Date. Primary shall have a period of five days from the date of receipt of written notice from the Corporation of any such proposed financing, in which notice, the Corporation shall set forth in reasonable detail the terms of such proposed offering and the terms of compensation payable by the Corporation to Primary, to provide written notice to the Corporation that Primary intends to exercise its right of first refusal.  If Primary does not give written not ice within such five day period, it shall be deemed to have waived its right in respect of such transaction. Should Primary fail, or be deemed to fail, to give notice within five days of the receipt of the Corporation’s notice, the Corporation may then make other arrangements to engage another source to obtain financing or advice on terms no less favourable to the Corporation than as set out in the written notice for a period of 30 days thereafter. Primary’s waiver of its right in respect of any one or more transactions will not constitute a waiver of its right of first refusal in respect of any other transaction. If another source is not engaged in connection with a transaction where Primary waives or is deemed to have waived its right of first refusal within 30 days following the date on which the five day period set forth above expires, the transaction shall be deemed to be a new transaction requiring the Corporation to give written notice to Primary as set forth above.

10.   Termination

(a)           Right of Termination:  The Agent shall be entitled, at its sole option, to terminate and cancel, without any liability on the part of the Agent, all of the obligations thereof under this Agreement and the obligations of any Person who has executed a Subscription Agreement, by notice in writing to that effect delivered to the Corporation prior to or at the Closing Time if:

(i)         the Agent is not satisfied in its sole discretion with the results of the due diligence review and investigation of the Corporation conducted by the Agent;

(ii)         there is in the sole opinion of the Agent a material change, change in a material fact, new material fact or a material fact or material change which has not been publicly disclosed, which might be expected to have a significant adverse effect on the condition (financial or otherwise), capital, property, assets, operations, business, affairs, profitability or prospects of the Corporation or on the market price or value of the Common Shares or any other securities of the Corporation or on the marketability of the Offered Securities;

(iii)         there should develop, occur or come into effect any occurrence of national or international consequence, or any action, law or regulation, inquiry or other event, act of terrorism, action or occurrence of any nature

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whatsoever which, in the sole opinion of the Agent, seriously affects, or would reasonably be expected to seriously affect, the financial markets, the condition (financial or otherwise), capital, property, assets, operations, business, affairs, profitability or prospects of the Corporation or the market price or value of the Common Shares or any other securities of the Corporation or the marketability of the Offered Securities;

(iv)         the state of the financial markets is such that in the sole opinion of the Agent it would be unprofitable to offer or continue to offer for sale the Offered Securities;

(v)         any order or ruling is issued, or any inquiry, action, suit, proceeding or investigation (whether formal or informal) is instituted or announced or threatened in relation to the Corporation or any of the directors, officers or principal shareholders of the Corporation (other than one based solely upon the activities or alleged activities of the Agent) or any law or regulation is promulgated or changed which prevents or restricts trading in or the distribution of the Offered Securities, the Common Shares or any other securities of the Corporation (other than one based solely upon the activities or alleged activities of the Agent) or any law or regulation is promulgated or changed which prevents or restricts trading in or the distribution of the Offered Securities, the Common Shares or any other securities of the Corporation (other than one based solely upon the activities or alleged activities of the Agent) or any law or regulation is promulgated or changed which prevents or restricts trading in or the distribution of the Offered Securities, the Common Shares or any other securities of the Corporation;

(vi)         any order to cease or suspend trading in any securities of the Corporation is made, threatened or announced by the Stock Exchange or any other securities regulatory authority; or

(vii)         the Corporation is in breach of any term, condition, covenant or agreement contained in this Agreement or in any Subscription Agreement or any representation or warranty given by the Corporation in this Agreement or in any Subscription Agreement is or becomes untrue, false or misleading.

(b)           Rights on Termination:  Any termination by the Agent pursuant to subsection 10(a) hereof shall be effected by notice in writing delivered by the Agent to the Corporation at the address thereof as set out in section 14 hereof.  The right of the Agent to so terminate the obligations thereof under this Agreement is in addition to such other remedies as the Agent may have in respect of any default, act or failure to act of the Corporation in respect of any of the matters contemplated by this Agreement.  In the event of a termination by the Agent pursuant to subsection 10(a) hereof there shall be no further liability on the part of the Agent to the Corporation or of the Corporation to the Agent except any liability which may have arisen or may thereafter arise un der either section 11 or 12 hereof.

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11.   Indemnity and Contribution

(a)           Indemnity:  The Corporation hereby covenants and agrees to protect, indemnify and hold harmless the Agent and each investment dealer which is a member of any agency or selling group formed by the Agent in connection with the Offering, each of the associates and affiliates of each of them and the respective directors, officers, employees, shareholders, partners and advisors (collectively, the “Personnel”) of the Agent and each investment dealer which is a member of any agency group formed by the Agent in connection with the Offering and of each of the associates and affiliates of each of them (in this section 11 each an “Indemnified Person” and collectively the “Indemnified Persons”) from and against all losses (other than a loss of profits), claims, damages, payments, liabilities, costs, fines, penalties and expenses (including the amount paid in settlement of any claim, action, suit or proceeding and the fees and expenses of counsel on a solicitor and his own client basis incurred obtaining advice in respect of, or in defending or settling, any such claim, action, suit or proceeding), joint or several, of whatsoever nature or kind to which an Indemnified Person may become subject or otherwise involved in any capacity under statute or common law or otherwise caused or incurred by reason of or in any way arising, directly or indirectly, from, by virtue of, or related to, enforcing the provisions of this Agreement or any Subscription Agreement, or:

(i)         the Agent having acted as the Agent of the Corporation in respect of the Offering (other than by reason of the negligence, wilful misconduct or bad faith of the Agent);

(ii)         any statement or information contained in the Information which at the time and in light of the circumstances under which it was made containing or being alleged to contain a misrepresentation or being or being alleged to be untrue, false or misleading;

(iii)         the omission or alleged omission to state in the Information any material fact required to be stated therein or necessary to make any statement therein not misleading in light of the circumstances under which it was made;

(iv)         any order made or inquiry, investigation or proceeding commenced or threatened by any officer or official of the Stock Exchange, any securities commission or authority or any other competent authority, not based upon the activities or the alleged activities of the Agent or any member of any agency group formed by the Agent in connection with the Offering;

(v)         the non-compliance or alleged non-compliance by the Corporation with any of the Securities Laws of the Offering Jurisdictions or any other applicable law in connection with the transactions contemplated herein;

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(vi)         any negligence or wilful misconduct by the Corporation relating to or connected with the sale by the Corporation of the Offered Securities;

(vii)         any misrepresentation or alleged misrepresentation (except any made by the Agent and for which the Agent did not rely on any information provided by the Corporation or anyone acting on its behalf) relating to the Offering or the Offered Securities, whether oral or written and whether made during and in connection with the Offering or in respect of the trading of the Offered Securities in the secondary market after the completion of the Offering, where such misrepresentation or alleged misrepresentation may give or gives rise to any other liability under any statute in any jurisdiction which is in force on the date of this Agreement or which comes into force after that date;

(viii)         any failure or alleged failure to make timely disclosure of any material change by the Corporation, whether such failure or alleged failure occurs during the Offering or after the completion of the Offering, where such failure relates to the Offering or the Offered Securities and may give or gives rise to any liability under any statute in any jurisdiction which is in force on the date of this Agreement or which comes into force after that date; or

(ix)         the breach of, or default under, any term, condition, covenant or agreement of the Corporation made or contained herein or in any other document of the Corporation delivered pursuant hereto or made by the Corporation in connection with the sale of the Offered Securities or any representation or warranty of the Corporation made or contained herein or in any other document of the Corporation delivered pursuant hereto or in connection with the sale of the Offered Securities being or being alleged to be untrue, false or misleading.

provided, however, that this indemnity shall not apply to the extent that a court of competent jurisdiction in a final judgment that has become non-appealable shall determine that:

(i)   the Indemnified Person or any Personnel has been negligent or dishonest or has committed any fraudulent act or engaged in wilful misconduct in the course of such performance or has breached any material provision of this Agreement; and

(ii)   the expenses, losses, claims, damages or liabilities, as to which indemnification is claimed were caused by the negligence, dishonesty, fraud, wilful misconduct or material breach of this Agreement.

If any matter or thing contemplated by this section 11 shall be asserted against any Indemnified Person in respect of which indemnification is or might reasonably be considered to be provided hereunder, such Indemnified Person shall notify the Corporation as soon as possible of the nature of such claim and the

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Corporation shall be entitled, but not required, to assume the defence of any action, suit or proceeding brought to enforce such claim; provided, however, that the defence shall be through legal counsel reasonably acceptable to the Indemnified Person and that no settlement may be made by the Corporation or the Indemnified Person without the prior written consent of the other of them and the Corporation shall not be liable for any settlement of any such claim unless it has consented in writing to such settlement.

Failure by the Agent and/or the Indemnified Person to so notify the Corporation as contemplated in this paragraph shall not relieve the Corporation of its obligation of indemnification hereunder unless (and only to the extent that) such failure results in forfeiture by the Corporation or material impairment of its substantive rights or defences. The Corporation shall, throughout the course of any investigation as contemplated herein, provide copies of all relevant documentation to the Agent, will keep the Agent advised of the progress thereof and will discuss with the Agent all significant actions proposed.

The Corporation agrees that in case any legal proceeding shall be brought against the Corporation and/or any Indemnified Person by any governmental commission or regulatory authority or any stock exchange or other entity having regulatory authority, either domestic or foreign, shall investigate the Corporation and/or any Indemnified Person and any Personnel shall be required to testify in connection therewith or shall be required to respond to procedures designed to discover information regarding, in connection with, or by reason of the performance of professional services rendered to the Corporation by any Indemnified Person under this Agreement, such Indemnified Person shall have the right to employ its own counsel in connection therewith, and the reasonable fees and expenses of such counsel as well as the reasonable costs (includin g an amount to reimburse the Agent and/or each investment dealer which is a member of the agency group formed by the Agent in respect of the Offering and/or each of their associates and affiliates, for time spent by its Personnel in connection therewith) and out-of-pocket expenses incurred by its Personnel in connection therewith shall be paid by the Corporation as they occur on demand by the Agent.

(b)           Counsel:  In any claim referred to in section 11 hereof, the Indemnified Person shall have the right to retain separate legal counsel to act on behalf of such Indemnified Person provided that the fees and disbursements of such separate legal counsel shall be paid by the Indemnified Person unless:

(i)         the Corporation fails to assume the defence of such claim on behalf of the Indemnified Person within ten days of receiving notice of such claim;

(ii)         the Corporation and the Indemnified Person shall have mutually agreed to the retention of such separate legal counsel; or

(iii)         the named parties to such claim (including any added, third or impleaded parties) include both the Corporation and the Indemnified Person and the

-35-

Indemnified Person has been advised by legal counsel that representation of both the Corporation and the Indemnified Person by the same legal counsel would be inappropriate due to actual or potential differing interests between them;

in which event or events the fees and disbursements of such separate legal counsel shall be paid by the Corporation, subject as hereinafter provided.  Where more than one Indemnified Person is entitled to retain separate counsel in the circumstances described in this subsection 11(b), all Indemnified Persons shall be represented by one separate legal counsel and the fees and disbursements of only one separate legal counsel for all Indemnified Persons shall be paid by the Corporation, unless:

(i)         the Corporation and the Indemnified Persons have mutually agreed to the retention of more than one legal counsel for the Indemnified Persons; or

(ii)         the Indemnified Persons have or any of them has been advised in writing by legal counsel that representation of all of the Indemnified Persons by the same legal counsel would be inappropriate due to actual or potential differing interests between them.

(c)           Waiver of Right:  The Corporation hereby waives its right to recover contribution from the Agent and the other Indemnified Persons with respect to any liability of the Corporation by reason of or arising out of the indemnity provided by the Corporation in this section 11; provided, however, that such waiver shall not apply in respect of the Agent for any liability directly caused or incurred by reason or arising out of any information or statements relating solely to, and provided by, the Agent or any failure by the Agent in connection with the Offering to provide to Purchasers any document which the Corporation is required to provide to the Purchasers and which the Corporation has provided or made available to the Agent to forward to the Purchasers, or any breach by the Agent, for any reason, of its covenants contained in subsection 3(c) hereof.

(d)           Contribution:

(i)         In order to provide for just and equitable contribution in circumstances in which the indemnity contained in this section 11 is, for any reason of policy or otherwise, held to be unavailable to or unenforceable by, in whole or in part, an Indemnified Person other than in accordance with the provisions of this section 11, the Corporation shall contribute to the aggregate losses (other than a loss of profit), claims, damages, payments, liabilities, costs, fines, penalties and expenses (including the amount paid in settlement of any claim, action, suit or proceeding and the fees and expenses of counsel on a solicitor and his own client basis incurred obtaining advice in respect of, or in defending or settling, any such claim, action, suit or proceeding) of the nature contemplated by such indemnity incurred or paid by the Indemnified Person in such propor tion as is

-36-

appropriate to reflect not only the relative benefits received by the Corporation on the one hand and the Indemnified Person on the other hand in connection with the Offering but also the relative fault of the Corporation on the one hand and the Indemnified Person on the other hand in connection with the matters, things and actions which resulted in such losses, claims, damages, payments, liabilities, costs, fines, penalties or expenses as well as any other relevant equitable considerations or, if such allocation is not permitted by applicable law, in such proportion so that the Indemnified Person shall be responsible for the proportion represented by the percentage that the Agent’s commission per Offered Security bears to the Purchase Price and the Corporation shall be responsible for the balance, whether or not they are a party to the same or separate claims; provided, however, that no Person who has engaged in any dishonesty, fraud, fraudulent misrepresentation, negligence or wilful default shall be entitled to contribution from any Person who has not engaged in any dishonesty, fraud, fraudulent misrepresentation, negligence or wilful default and further provided that in no event shall the Agent be responsible for any amount in excess of the cash commission actually received from the Corporation under this Agreement and retained by the Agent.  For purposes of this subsection 11(d), relative fault shall be determined by reference to, among other things, whether any untrue or alleged untrue statement of a material fact or any omission or alleged omission to state a material fact relates to information supplied by the Corporation on the one hand or the Agent on the other hand and the relevant intent, knowledge, access to information and opportunity to correct or prevent any such untrue statement or omission of the Corporation and the Inde mnified Person.

(ii)         In the event that the Corporation is held to be entitled to contribution from the Agent under the provisions of any statute or law, the Corporation shall be limited to such contribution in an amount not exceeding the lesser of:

(A)         the portion of the amount of the loss or liability giving rise to such contribution for which the Agent is responsible as determined in accordance with this subsection 11(d); and

(B)         the amount of the Agent’s commission actually received from the Corporation under this Agreement and retained by the Agent.

(iii)         For purposes of this subsection 11(d), each party hereto shall give prompt notice to the other party hereto of any claim, action, suit or proceeding threatened or commenced in respect of which a claim for contribution may be made under this subsection 11(d) , provided that failure by a party to so notify the other party as contemplated in this paragraph shall not relieve the other party of its obligations of contribution hereunder unless (and only to the extent that) such failure results in forfeiture by the other party or material impairment of its substantive rights or defences.

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(e)           Held in Trust:  To the extent that the indemnity contained in subsection 11(a) hereof is given in favour of a Person who is not a party to this Agreement, the Corporation hereby constitutes the Agent as trustee for such Person for such indemnity and the covenants given by Corporation to such Person in this Agreement.  The Agent hereby accepts such trust and hold such indemnity and covenants for the benefit of such Persons.  The benefit of such indemnity and covenants shall be held by the Agent in trust for the Persons in favour of whom such indemnities and covenants are given and may be enforced directly by such Persons.

12.   Expenses

The Corporation will pay all reasonable costs and expenses incurred in connection with the Offering including, without limitation, the fees and expenses of the Agent and counsel to the Agent (to a maximum in respect of fees of counsel to the Agent of $25,000 (exclusive of taxes)), all expenses of or incidental to the creation, issue, sale and distribution of the Offered Securities and the expenses of the counsel, auditors and transfer agent of the Corporation and all filing fees.  All fees and expenses shall be payable by the Corporation immediately upon receiving an invoice therefore from the Agent and shall be payable by the Corporation whether or not the Offering is completed.

13.   Conditions

All of the terms and conditions contained in this Agreement to be satisfied by the Corporation prior to the Closing Time shall be construed as conditions and any breach or failure by the Corporation to comply with any of such terms and conditions shall entitle the Agent to terminate the obligations thereof to complete the Closing by written notice to that effect given by the Agent to the Corporation prior to the Closing Time.  It is understood and agreed that the Agent may waive in whole or in part, or extend the time for compliance with, any of such terms and conditions without prejudice to the rights thereof in respect of any other such term and condition or any other or subsequent breach or non-compliance; provided that to be binding on the Agent any such waiver or extension must be in writing and signed by the Agent. 0; If the Agent shall elect to terminate the obligations thereof to complete the Closing as aforesaid, whether the reason for such termination is within or beyond the control of the Corporation, the liability of the Corporation hereunder shall be limited to the indemnity referred to in section 11 hereof and the right to contribution referred to in section 11 hereof.

14.   Notices

Any notice or other communications required or permitted to be given hereunder shall be in writing and shall be personally delivered or sent by telecopier on a Business Day to the following addresses:

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(a) in the case of the Corporation

Mill City Gold Corp.

4719 Chapel Road NW

Calgary, Alberta

T2L 1A7

Attention:       James R. Brown, President & Chief Executive Officer

Telecopier:     (403) 640-4024

with a copy to:

DuMoulin Black LLP

10th Floor, 595 Howe Street

Vancouver, British Columbia

V6C 2T5

Attention:        Corey Dean

Telecopier:      (604) 687-8772

(b) in the case of the Agent:

Primary Capital Inc.

Exchange Tower

130 King Street West, Suite 2110

P.O. Box 91

Toronto, Ontario

M5X 1B1

Attention:         Robert Pollock, Chief Executive Officer

Telecopier:       (416) 214-5954

with a copy to:

Cassels Brock & Blackwell LLP

2100 Scotia Plaza

40 King Street West

Toronto, ON M5H 3C2

Attention:          Jay Goldman

Telecopier:        (416) 644-9337

Either the Corporation or the Agent may change its address for notice by notice given in the manner aforesaid.  Any such notice or other communication shall be in writing, and unless delivered to a responsible officer of the addressee, shall be given by telecopier, and shall be deemed to have been given on the day on which it was delivered or sent by telecopier.

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15.   Miscellaneous

(a)           Governing Law:  This Agreement shall be governed by and be interpreted in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein and the parties hereto irrevocably attorn to the jurisdiction of the courts of such province.

(b)           Time of Essence:  Time shall be of the essence of this Agreement.

(c)           Survival:  All representations, warranties, covenants and agreements of the parties herein contained or contained in any documents contemplated by, or delivered pursuant to, this Agreement or in connection with the purchase and sale of the Offered Securities shall survive the purchase and sale of the Offered Securities and the termination of this Agreement and shall continue in full force and effect, for a period of two years regardless of any subsequent disposition of the Offered Securities or the Warrants Shares, or any investigation by or on behalf of the Agent.  Notwithstanding the foregoing, the representations, warranties and covenants of the Corporation contained in this Agreement in respect of the Flow-Through Shares and the Flow-Through Offering, shall contin ue in full force and effect for the benefit of the FT Purchasers.

(d)           Counterparts:  This Agreement may be executed by any one or more of the parties to this Agreement by facsimile or other electronic means, in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.

(e)           Entire Agreement:  This Agreement constitutes the entire agreement between the Corporation and the Agent in connection with the issue and sale of the Offered Securities by the Corporation and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, including, but not limited to, any engagement agreement or term sheet relating to the Offering between the Corporation and the Agent.

(f)           Severability:  If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it shall be deemed not to affect or impair the validity of any other provision of this Agreement and such void or unenforceable provision shall be severed from this Agreement.

(g)           Language: The parties hereto acknowledge and confirm that they have requested that this Agreement as well as all notices and other documents contemplated hereby be drawn up in the English language.  Les parties aux présentes reconnaissent et confirment qu’elles ont convenu que la présente convention ainsi que tous les avis et documents qui s’y rattachent soient rédigés dans la langue anglaise.

THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.

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Would you kindly confirm the agreement of the Corporation to the foregoing by executing four duplicate copies of this Agreement and thereafter returning two such executed copies to the Agent.

Yours truly,

PRIMARY CAPITAL INC.

Per:  /s/ Robert Pollock               

      Authorized Signing Officer

The undersigned hereby accepts and agrees to the foregoing as of the 20th day of October, 2010.

MILL CITY GOLD CORP.

Per:   /s/ James R. Brown                                               

Authorized Signing Officer

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Schedule A

Outstanding Convertible Securities

Securities	Common Shares Reserved	Details
Stock Options	9,865,000	Exercisable at prices ranging from $0.10 to $0.25 per Common Share, with expiry dates between February 2011 and September 2015.
Warrants	5,624,999	Exercisable at prices ranging from $0.20 to $0.40 per Common Share, expiring in June 2011.
Property Agreements	Nil(1)	N/A
TOTAL	15,489,999

(1)           Under the terms of the Property Agreements, the Corporation may extend for one year the time for completion of each milestone of the Corporation's work commitments by giving notice to the optionor(s) under the applicable Property Agreement and issuing common shares to said optionor(s), being 125,000 common shares in respect of the Croxall property and 250,000 common shares in respect of the GP2 property.

A - 1

Schedule B

Property Interests

Croxall Property – the Corporation has an option to acquire a 75% interest in the Croxall property comprised of the claims set out below pursuant to a letter agreement dated September 21, 2010 between the Corporation and Temex Resources Corp. ("Temex"), subject to the terms and conditions set out therein.  The claims comprising the Croxall property are currently recorded in the name of Temex pursuant to an option agreement dated June 22, 2009 (the "Croxall Agreement") among James Croxall, Margaret Kangas, Robert John De Carle (collectively, the "Optionors") and Temex, pursuant to which the Optionors have granted Temex an option to earn a 100% interest to the Croxall Property.  There is a 2.5% net smelter returns royalty ("NSRR") payable to the Optionors under the Croxall Agreement, of which 1.3% of the NSRR may be purchased for $1,300,000, subject to adjustment.  An advance minimum royalty of $9,000 per annum for a period not to exceed 10 years is also payable, subject to adjustment, in the event commercial production has not occurred by the 1st anniversary of the date of exercise of the option under the Croxall Agreement.

Claims comprising Croxall property

	Claim Number	Ontario Mining Division
1	998017	Porcupine
2	998021	Porcupine
3	998246	Porcupine
4	998247	Porcupine
5	998248	Porcupine
6	1033734	Porcupine
7	1033736	Porcupine
8	1033737	Porcupine
9	1126672	Porcupine
10	849065	Porcupine
11	849066	Porcupine
12	849067	Porcupine
13	849068	Porcupine
14	849069	Porcupine
15	871790	Porcupine
16	871791	Porcupine
17	871792	Porcupine
18	871793	Porcupine
19	871794	Porcupine
20	871795	Porcupine
21	871796	Porcupine
22	871797	Porcupine
23	880298	Porcupine
24	880299	Porcupine
25	880300	Porcupine
26	880301	Porcupine
27	880302	Porcupine
28	880303	Porcupine

B-1

29	880304	Porcupine
30	880305	Porcupine
31	880306	Porcupine
32	880307	Porcupine
33	880308	Porcupine
34	880309	Porcupine
35	880310	Porcupine
36	889259	Porcupine
37	889260	Porcupine
38	889261	Porcupine
39	889262	Porcupine
40	889263	Porcupine
41	889264	Porcupine
42	900409	Porcupine
43	900410	Porcupine
44	900411	Porcupine
45	900412	Porcupine
46	900413	Porcupine
47	900414	Porcupine
48	900415	Porcupine
49	905588	Porcupine
50	988131	Porcupine
51	988132	Porcupine
52	988133	Porcupine
53	1159644	Porcupine
54	1159645	Porcupine
55	1177832	Porcupine
56	880296	Porcupine
57	880297	Porcupine
58	905586	Porcupine
59	905587	Porcupine

GP2 Property – the Corporation has an option to acquire an undivided 50% participating interest in the GP2 property comprised of the claims set out below pursuant to a letter agreement dated September 2, 2008 among the Corporation, Temex and Rainy Mountain Royalty Corp. (formerly East West Resource Corporation) in connection with an option and joint venture agreement relating to the GP2 property, subject to the terms and conditions therein.

	Claim Number	Ontario Mining Division
1	4216155	Thunder Bay
2	4216156	Thunder Bay
3	4216157	Thunder Bay
4	4216158	Thunder Bay
5	4216159	Thunder Bay
6	4216160	Thunder Bay
7	4216161	Thunder Bay
8	4216162	Thunder Bay
9	4216163	Thunder Bay
10	4216164	Thunder Bay
11	4216165	Thunder Bay

B-2

12	4216185	Thunder Bay
13	4216186	Thunder Bay
14	4216187	Thunder Bay
15	4216188	Thunder Bay
16	4216189	Thunder Bay
17	4216190	Thunder Bay

B-3

EX-4.5

EXHIBIT 4.5

OPTION AND JOINT VENTURE AGREEMENT - TARGET 12 (ROSEBUD) PROPERTY

DATED NOVEMBER 8, 2010 WITH THE YUKON CORNELIUS SYNDICATE

OPTION AND JOINT VENTURE AGREEMENT

TARGET 12 (ROSEBUD) PROPERTY

THIS AGREEMENT made as of the    8th    day of November, 2010

BETWEEN:

THE YUKON CORNELIUS SYNDICATE, Suite 1300 – 1111 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4M3 (Fax No.: 604-888-7929 / Email: billsc@shaw.ca)

(the "Optionor")

AND:

MILL CITY GOLD CORP., a British Columbia corporation having an office at 4719 Chapel Road NW, Calgary, Alberta, T2L 1A7 (Fax No.: 403-640-4024 / Email: jim.brown@millcitygold.com)

(the "Optionee")

WITNESSES THAT WHEREAS:

A. The Optionor is the registered and beneficial owner of the Claims, which are situate in the Dawson Mining District, Yukon, Canada, and are generally collectively known and described as the “Target 12”, “RB” or “Rosebud” project;

B. The Optionor has agreed to grant to the Optionee an option to acquire an undivided 70% interest in and to the Property, subject only to the Royalty, by, inter alia, making certain payments, issuing shares and carrying out exploration work on the Claims;

THEREFORE, in consideration of the sum of $10.00 now paid by the Optionee to the Optionor and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by the Optionor, the parties covenant and agree as follows:

DEFINITIONS

1.01           For the purposes of this Agreement the following words and phrases shall have the following meanings, namely:

“Approval Date” means the day on which the Optionee receives written notice from the TSXV of its acceptance of all filings required to be made with the TSXV in respect of this Agreement and the subject matter hereof; provided that if no such filings are required by the policies of the TSXV, such term shall mean the date of execution and delivery of this Agreement;

"Area of Interest" means all lands situate within five kilometers of the external boundary of any portion of the Property;

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"Claims" means the mineral claims described in Schedule 1.01-1 hereto;

“Commercial Production” means the commercial exploitation of Ore but does not include milling for the purpose of testing or milling or leaching by a pilot plant or during an initial tune up period of the plant. Commercial Production with respect to the Property shall be deemed to have commenced on the first day of the month following the first period of 30 consecutive days during which Ore from the Property have been processed through the plant at an average rate of not less than 85% of the initial rated capacity of the plant as set forth in the Positive Feasibility Report.

"Effective Date" means the fifth business day next following the Approval Date;

"Exploration Expenses" means out-of-pocket costs and expenses of whatsoever kind or nature except those of a capital nature, incurred and actually paid in connection with or otherwise attributable to the exploration and/or development of the Property, specifically excluding administrative and office overhead expenses;

"Governmental Authority" means any federal, provincial, state, municipal, county or regional government or governmental authority, domestic or foreign, and includes any department, commission, bureau, board, administrative agency or regulatory body of any of the foregoing;

"Hazardous Substances" means any contaminants, pollutants, dangerous substances, liquid wastes, industrial wastes, hauled liquid wastes, toxic substances, hazardous wastes, hazardous materials, or hazardous substances as defined in or pursuant to any law, judgment, decree, order, injunction, rule, statute and regulation of any court, arbitrator or Governmental Authority;

"Interest" means a 70% right, title and interest in and to the Property, free and clear of all Liens, charges, encumbrances, rights or interests of others and adverse claims whatsoever, subject only to the Royalty;

"Joint Venture" means the joint venture which may be formed by the parties to this Agreement pursuant to section 8.01;

"Joint Venture Agreement" means the agreement between the Optionor and Optionee attached as Schedule 1.01-2 to and forming part of this Agreement;

"Lien” means any Lien, security interest, mortgage, charge, encumbrance, or other claim of a third party, whether registered or unregistered, and whether arising by agreement, statute or otherwise;

“Manager” means the manager for the time being of the Syndicate, and means William Chornobay as at the date of this Agreement;

“Members” means those persons who are from time to time members of the Syndicate, and “Membership Interest” means the respective beneficial percentage interest of each Member in the Property, the Option Payments and the Royalty, and until written notice from the Manager to the contrary, means the persons described in Schedule 1.01-3 hereto and the interests set out opposite their names in that schedule;

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"Option" means the sole and exclusive right and option to acquire the Interest, granted to the Optionee by the Optionor pursuant to section 4.01 of this Agreement;

“Option Payments” means, collectively, all monetary payments and Share issuances provided for in section 4.02 of this Agreement;

"Option Period" means the period from the date hereof to and including the date of exercise or termination of the Option;

"Optionor" means, collectively, the Members;

"Ore" means any material containing a mineral of commercial economic value mined from the Claims;

"Positive Feasibility Report" means a detailed study or report showing that placing the Property or part thereof into Commercial Production is feasible and economic, and including at least:

(a) a description of that part of the Property to be covered by the proposed mine;

(b) the estimated recoverable reserves of minerals and the estimated composition and content thereof;

(c) the proposed procedure for development, mining and production;

(d) the results of ore amenability tests (if any);

(e) the nature and extent of the facilities proposed to be acquired, including a preliminary design for the mill facilities if the size, extent and location of the ore body makes such mill facilities feasible;

(f) the total costs, including capital budget, reasonably required to purchase, construct and install all structures, machinery and equipment required for the proposed mine and a schedule indicating the times at which such moneys will be required, including in particular the operating capital requirements for the first four months of operation;

(g) all environmental impact studies and the costs thereof;

(h) the period in which it is proposed the Property will be brought into Commercial Production; and

(i) such other data and information as are reasonably necessary to substantiate the existence of an ore deposit of sufficient size and grade to justify development of a mine, taking into account all relevant business, tax and other considerations;

"Property" means the Claims, together with all minerals in, on or under the Claims, whether or not severed or extracted therefrom, all relocations and amendments affecting such claims and all veins, lodes and ledges, and all dips, spurs, angles, pits, dumps, tailings, and stockpiles situate thereon or pertaining thereto; and all structures (if any) and plant situate thereon; and all Property Rights and other rights and privileges belonging or in any way appurtenant thereto;

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"Property Rights" means any exploration, exploitation and mining licenses, permits, leases, easements, rights-of-way, certificates and other mining interests and approvals obtained by any person before or after the date of this Agreement and in which the Optionor holds an ownership interest and which are necessary or desirable for the exploration and development of the Claims, and all geological, geophysical, geochemical and engineering reports, charts, maps and other data and documentation relating to the Claims and owned or controlled by the Optionor (in electronic format as well as paper format where available), including prior exploration and development results, proposed work programs and budgets, pre-feasibility or feasibility studies and reports, valuations, reserve estimat es and the like);

“Royalty” means the royalty equal to 3.0% of net smelter returns from the Property hereby reserved to the Members according to their respective Membership Interests, and more particularly described in Schedule 1.01-4 hereto;

“Shares” means common shares without par value in the capital of the Optionee;

“Syndicate” means “The Yukon Cornelius Syndicate”, a joint venture of the Members established to, inter alia, stake or otherwise acquire the Property;

"TSXV" means the TSX Venture Exchange.

1.02           The words "section", "subsection", "paragraph", "subparagraph", "clause", "herein" and "hereunder" refer to this Agreement, and the words "this Agreement" include every schedule attached hereto and each schedule forms part of this Agreement.

REPRESENTATIONS AND WARRANTIES OF THE OPTIONOR

2.01           The Optionor hereby represents and warrants to the Optionee that:

(a) the Optionor is, and at the time of transfer to the Optionee of the Interest will be, the legal and beneficial owner of the Property free and clear of all Liens, charges, encumbrances, rights or interests of others and adverse claims whatsoever;

(b) the Optionor will not breach any other agreement or commitment by entering into and performing the Optionor’s obligations under this Agreement;

(c) the Claims have been legally and validly staked and recorded pursuant to all applicable laws, and are in good standing under all applicable laws until the Annual Expiry Dates recorded in Schedule 1.01-1 hereto;

(d) there are no fees, taxes or other assessments of any Governmental Authority due and owing or accruing due in respect of the Property, there are no work or other assessment filings due in respect of the Property, there are no outstanding work orders or other orders of any Governmental Authority relating to the Property and there are no actions required or reasonably anticipated to be required to be taken with respect to any rehabilitation work done or to be done on the Property;

(e) , there is no adverse claim or challenge made against or with regard to the ownership of or title to any of the Claims, or any of the mineral rights granted thereunder, there are no

-5-

outstanding agreements or options to acquire or purchase the Property or any portion thereof, and no person has any royalty, net profits or other interest whatsoever in production from any of the Claims except as provided for herein;

(f) the Optionor has good and sufficient right and authority to grant the Option and to sell, transfer and assign the Interest to the Optionee;

(g) this Agreement has been duly executed and delivered by the Manager, on behalf of the Optionor, as lawful attorney for each of the Members; and the consummation of the transactions herein contemplated will not conflict with or result in any breach of any covenants or agreements contained in, or constitute a default under, or result in the creation of any encumbrance under the provisions of any agreement or other instrument whatsoever to which the Optionor is a party or by which the Optionor is bound or to which the Optionor or the Optionor’s interest in the Property may be subject;

(h) the Optionor has complied with all laws applicable to its activities on and in respect of the Property, and without limiting the generality of the foregoing, the Optionor has not used any part of the Property, or permitted any part of the Property to be used, to generate, manufacture, refine, treat, transport, store, handle, dispose of, transfer, produce or process Hazardous Substances, and, to the best of the Optionor’s knowledge and belief, neither has any other person; and none of the Claims is the subject of any investigation by any Governmental Authority evaluating whether any remedial action is needed to respond to a release of any Hazardous Substance into the environment;

(i) no proceedings are pending for, and the Optionor is unaware of any basis for the institution of, any proceedings leading to the dissolution or winding up of the Optionor or the placing of the Optionor in bankruptcy or subject to any other laws governing the affairs of insolvent persons; and the Optionor is not aware of any facts relating to any of the Claims which, if known to the Optionee, could reasonably be expected to cause the Optionee to decide not to enter into this Agreement or not to exercise the Option;

(k) no Member is a non-resident of Canada for the purposes of section 116 of the Income Tax Act (Canada).

2.02           The representations and warranties contained in section 2.01 are provided for the exclusive benefit of the Optionee, and any misrepresentation or breach of warranty may be waived by the Optionee in whole or in part at any time without prejudice to its rights in respect of any other misrepresentation or breach of the same or any other representation or warranty; and the representations and warranties contained in section 2.01 shall survive the execution and performance of this Agreement for a period of one year; and the Optionor will indemnify and save the Optionee harmless from and against any loss or damage the Optionee may suffer or incur as a result of any material misrepresentation or breach of any warranty by the Optionor.

REPRESENTATIONS AND WARRANTIES OF THE OPTIONEE

3.01           The Optionee represents and warrants to the Optionor that:

(a) the Optionee validly exists as a corporation in good standing under the laws of British Columbia;

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(b) the Optionee has duly obtained all corporate authorizations for the execution of this Agreement and for the performance of this Agreement by it, and this Agreement has been duly executed and delivered by the Optionee as a legal and binding agreement, enforceable against the Optionee;

(c) the Optionee is a "reporting issuer" as that expression is defined in the Securities Act (British Columbia), is a reporting issuer not in default in each of Alberta,  British Columbia and Quebec, and has its shares listed and trading on the TSXV; and the Optionee will use reasonable commercial efforts to obtain any required TSXV or other regulatory approvals and acceptances in respect of this Agreement and the transactions contemplated by this Agreement as soon as practicable.

3.02           The representations and warranties contained in section 3.01 are provided for the exclusive benefit of the Optionor and a misrepresentation or breach of warranty may be waived by the Optionor in whole or in part at any time without prejudice to its rights in respect of any other misrepresentation or breach of the same or any other representation or warranty; and the representations and warranties contained in section 3.01 shall survive the execution hereof.

GRANT OF OPTION AND RESERVATION OF ROYALTY

4.01           The Optionor hereby grants the Option to the Optionee and reserves the Royalty to the Optionor.

4.02           The Option may be maintained and exercised by the Optionee by doing all of the following things within the times stipulated:

(a) paying:

(i) $75,000 (Canadian funds) to the order of the Optionor not later than 4:30 p.m. (local Vancouver time) on the Effective Date;

(ii) an additional $75,000 (Canadian funds) to the order of the Optionor not later than 4:30 p.m. (local Vancouver time) on the first anniversary of the Effective Date;

(iii) an additional $100,000 (Canadian funds) to the order of the Optionor not later than 4:30 p.m. (local Vancouver time) on the second anniversary of the Effective Date;

(iv) an additional $200,000 (Canadian funds) to the order of the Optionor not later than 4:30 p.m. (local Vancouver time) on the third anniversary of the Effective Date;

(v) an additional $400,000 (Canadian funds) to the order of the Optionor not later than 4:30 p.m. (local Vancouver time) on the fourth anniversary of the Effective Date; and

(vi) an additional $600,000 (Canadian funds) to the order of the Optionor not later than 4:30 p.m. (local Vancouver time) on the fifth anniversary of the Effective Date;

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provided that, subject to necessary approvals of the TSXV, the Optionor shall have the option of making the payments referred to in (ii), (iii), (iv), (v) and (vi) above in cash or by issuing Shares on the specified Effective Dates, in each case at a price per Share equal to the average of the closing prices of the Optionor’s shares on the TSXV over the 20 trading days immediately preceding the relevant Effective Date, less in each case the maximum discount from such average permitted by the policies of the TSXV; and

(b) issuing:

(i) 200,000 Shares to and in the names of the Members according to their respective Membership Interests not later than 4:30 p.m. (local Vancouver time) on the Effective Date;

(ii) an additional 300,000 Shares to and in the names of the Members according to their respective Membership Interests not later than 4:30 p.m. (local Vancouver time) on the first anniversary of the Effective Date;

(iii) an additional 400,000 Shares to and in the names of the Members according to their respective Membership Interests not later than 4:30 p.m. (local Vancouver time) on the second anniversary of the Effective Date;

(iii) an additional 400,000 Shares to and in the names of the Members according to their respective Membership Interests not later than 4:30 p.m. (local Vancouver time) on the third anniversary of the Effective Date;

(iii) an additional 500,000 Shares to and in the names of the Members according to their respective Membership Interests not later than 4:30 p.m. (local Vancouver time) on the fourth anniversary of the Effective Date; and

(iii) an additional 1,000,000 Shares to and in the names of the Members according to their respective Membership Interests not later than 4:30 p.m. (local Vancouver time) on the fifth anniversary of the Effective Date; and

(c) giving written notice to the Optionor not later than December 31, 2010 of its commitment to incur and pay Exploration Expenses aggregating not less than $200,000 by the first anniversary of the Effective Date, and thereafter incurring and paying such Exploration Expenses by the first anniversary of the Effective Date; and

(d) delivering to the Optionor, not later than the fifth anniversary of the Effective Date, written notice of the Optionee’s commitment to fund the preparation of a feasibility study in respect of the Property or part thereof, and delivering a Positive Feasibility Report to the Optionor within  three years after the date of such written notice.

4.03           The Optionor acknowledges that:

(a) all Shares issued to the Members pursuant to this Agreement will be issued in accordance with the information provided in Schedule 1.01-3  at a deemed price equal to the higher of the closing price of the Optionee’s shares on the day immediately preceding

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the date of the news release announcing this Agreement and the closing price of the Optionee’s shares on the day immediately preceding the date of issue of such Shares and that such Shares, when issued, will be subject to such resale restrictions as are prescribed by law at the time of issue of such Shares, and that the certificates representing such Shares will bear legends to such effect; and each Member will provide such information regarding beneficial ownership, acknowledgments or other information of such Member as may be required by the TSXV;

(b) in the event of any subdivision, consolidation or other change in the share capital of the Optionee prior to the exercise in full of the Option, the number of Shares to be delivered or issued to the Optionor thereafter in connection with the exercise of the Option shall be adjusted in accordance with such subdivision, consolidation or other change in the Share capital of the Optionee;

(c) in the event the Optionee undertakes an amalgamation, merger, reorganization or other arrangement prior to the exercise in full of the Option, the Shares to be delivered or issued to the Optionor thereafter shall be adjusted in accordance with such amalgamation, merger, reorganization or other arrangement.

4.04           Subject only to exercise of the Option and commencement of Commercial Production from the Property as contemplated in Schedule 1.01-2, the Optionee will pay the Royalty to the Optionor.

4.05           The Royalty constitutes an interest in the Property, and the Optionor shall be entitled to register notice of the Royalty in any applicable office or public record of a Governmental Authority.

4.06           The Optionee will make an annual payment (each an “Advance Royalty”) of $100,000 (Canadian funds) to the Optionor on the sixth anniversary of the Effective Date and on  each anniversary of the Effective Date thereafter until the earlier of the date of termination of the Option and the first Royalty payment after commencement of Commercial Production from the Property, when the obligation to pay such Advance Royalties shall terminate.

4.07           All Advance Royalties paid by the Optionee will be deducted from the Royalties otherwise payable after the commencement of Commercial Production.

4.08           All payments stipulated in this Agreement to be made “to the Optionor” shall be made to “Holmes & King, in trust” for the benefit of the Members according to their respective Membership Interests until directed otherwise in writing by the Manager or Holmes & King.

4.09           The Optionee will have and is hereby granted the exclusive right and option to purchase one-third of the Royalty (i.e. a royalty equal to 1% of net smelter returns) for $1,500,000 (Canadian funds) at any time up to the 90th day after delivery of a Positive Feasibility Report to the Optionor.

EXERCISE OF OPTION

5.01           If the Optionee makes the payments, issues the Shares, incurs the Exploration Expenses and delivers a Positive Feasibility Report to the Optionor as described in, and within the time permitted by, section 4.02, it will, without any further act or payment, have and be deemed for all purposes to have exercised the Option.

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5.02           If and when the Option has been exercised, all right, title and interest in and to the Interest will vest in the Optionee, subject only to the Royalty.

5.03           If the Option is exercised, the Optionor will forthwith following written notice from the Optionee, and insofar as same has not previously been accomplished, take all and any actions necessary to effect the transfer to and registration in the name of the Optionee of the Interest, subject only to the Royalty.

OPERATORSHIP AND RIGHT OF ENTRY

6.01           Throughout the Option Period, the Optionee will be the "operator" in respect of the Property and, as such, shall have the sole and exclusive right in respect of the Property to:

(a)           enter thereon;

(b)           have exclusive and quiet possession thereof;

(c) do such prospecting, exploration, development and/or mining work thereon and thereunder as the Optionee may determine to be necessary, desirable or advisable;

(d) bring upon and erect upon the Property and use in its operations, at any time and from time to time, such buildings, plant, machinery, equipment, vehicles, tools, appliances and supplies as the Optionee may deem necessary, desirable or advisable; and

(e) remove therefrom and dispose of reasonable quantities of ores, minerals and metals for the purposes of sampling, including bulk sampling, obtaining assays or making other tests.

6.02           Throughout the Option Period the Manager and agents and independent contractors retained by the Optionor shall, on reasonable written advance notice to the Optionee, have the right in respect of the Property to enter thereon at the sole risk and expense of the Optionor and such Manager and agents and independent contractors of the Optionor, for the purpose of viewing the same.

6.03           The Optionee shall be entitled to all income and other tax deductions, allowances, credits, incentives and other benefits available pursuant to exploration incentive programs or similar programs in connection with the exploration of the Property.

6.04           The Optionee shall not have any right to and will not grant mortgages, charges or liens of or upon the Property or any portion thereof, any mill or other fixed assets located thereon, or any of the tangible personal property located on or used in connection with the Property without the prior written consent of the Optionor.

OBLIGATIONS DURING OPTION PERIOD / AREA OF INTEREST

7.01           Forthwith following execution of this Agreement, and in any event prior to the Effective Date, the Optionor shall, at the Optionor’s expense, deliver to the Optionee copies of all geological, geophysical and geochemical reports, maps and other data and documentation relating to the Claims and

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in the possession or control of the Optionor, in printed and, where available, electronic formats; provided that all such information and documentation will be delivered without warranty as to completeness and the Optionor will not be held liable for any errors or omissions in any such information and documentation or for any loss, damage or expense incurred by the Optionee from the utilization and results of utilization of any such information and documentation by the Optionee.

7.02           During the Option Period and, in the case of subsection 7.02(a), for a period of not less than 6 months following any termination of the Option, the Optionee shall:

(a) maintain the Property in good standing by incurring Exploration Expenses, filing assessment work reports and taking all other actions which may be necessary in that regard and in order to keep the Claims free and clear of all Liens and other charges arising from the Optionee's activities thereon; and without limiting the generality of the foregoing, the Optionee shall in each calendar year during the Option Period:

(i) either:

(A) do or cause to be done work to the value of at least $100 per Claim (or such greater amount as may be prescribed from time to time by any Yukon Governmental Authority) [subject to grouping of Claims for such purpose as permitted by the Quartz Mining Act (Yukon) (the “QMA”)]; or, alternatively

(B) pay $105 per Claim (or such greater amount as may be prescribed from time to time by any Yukon Governmental Authority) to the Mining Recorder in whose office the Claim is recorded and file an Application for Renewal of Grant for Quartz Mining Pay in Lieu with such Mining Recorder;

in either case not less than 15 days prior to the Annual Expiry Date set forth in Schedule 1.01-1 in respect of such Claim (which is the anniversary of the date on which such Claim was recorded), as required to assure the Optionee and Optionor that the Optionor (or the registered owner of the Claims holding them in trust for the Optionor) will have title to the Claims for at least one year after each Annual Expiry Date;

(ii) give written notice to the Optionor not less than 15 days prior to the Annual Expiry Date for such Claim stating that the Optionee has taken one of the actions described in clause (i) in respect of such Claim, and describing such action;

(iii) within 14 days after each Annual Expiry Date, file an Application for a Certificate of Work in respect of each Claim described in clause (i)(A) in accordance with the Schedule of Representation Work under the QMA and, where applicable, an Application to Group Mineral Claims, with the Mining Recorder in whose office the Claim is recorded;

(iv) obtain a Certificate of Work in Form 5 of Schedule 1 to the QMA in respect of each Claim described in clause (i)(A) and a receipt for each payment made in respect of a Claim described in clause (i)(B);

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(b) permit the designated consultants of the Optionor, and its servants, agents and independent contractors, at their own risk, access to the Property at all reasonable times; provided that the Optionor agrees (and the Optionor does hereby so agree) to indemnify the Optionee against and to save it harmless from all Liens, costs, claims, actions, causes of action, liabilities and expenses that the Optionee may incur or suffer as a result of any injury (including injury causing death) to any such person while on the Property;

(c) do all work on the Property in a careful, minerlike and workmanlike fashion, and in accordance with all applicable laws, regulations, orders and ordinances of any Governmental Authority, and all applicable permits and licenses; and comply with all laws, rules, regulations, policies and orders of Governmental Authorities with respect to reclamation and rehabilitation of all disturbances resulting from the Optionee's use and occupancy of the Property; and promptly pay or cause to be paid all workers and wage earners employed by it or its contractors on the Property, and pay for all materials, services and supplies purchased or delivered in connection with its activities on or with respect to the Property;

(d) furnish the Optionor with a report with respect to each work program carried out by the Optionee on the Property or part thereof, including material results obtained and a detailed list of Exploration Expenses incurred together with evidence of payment thereof, within six months of completion of such work program.

7.03           If at any time after the date of this Agreement, before or after exercise of the Option, the Optionee stakes or otherwise acquires, directly or indirectly, any right or title to or any legal or beneficial interest in any mineral claim or any license, lease, grant, concession, permit, patent or other interest (in each case an "AMI Interest") in any mineral property located wholly or partly within the Area of Interest, the Optionee will immediately give written notice of the acquisition of such AMI Interest to the Optionor together with copies of all information in the possession of the acquiring party relating to such AMI Interest, and, unless the Optionor notifies the Optionee in writing within 60 days next foll owing receipt of such notice that the Optionor does not wish to acquire any ownership interest in the AMI Interest, such AMI Interest will thereafter be and will be deemed for all purposes to be part of the Property, and to be subject to the Option if the Option has not yet been exercised; and in such event the Optionee will transfer legal title to the AMI Interest by appropriate conveyance to the Optionor; provided that if an AMI Interest is acquired by the Optionee otherwise than by staking such AMI Interest, and if the Optionee is obligated to pay a royalty (in each case a “Third Party Royalty”) on net smelter returns from such AMI Interest to an arm’s length third party, then the Royalty otherwise payable to the Optionor in respect of such AMI Interest shall be reduced by an amount equal to the Third Party Royalty so that, for example, if the the Third Party Royalty is 2% of net smelter returns from such AMI Interest, then the Roya lty will be reduced from 3% of net smelter returns from such AMI Interest to 1% of net smelter returns from such AMI Interest.

7.04           If the Optionee acquires an AMI Interest and, before or after acquiring such AMI Interest, stakes any mineral claim (in each case an “Additional Claim”) which is more than five kilometers from the Property as originally constituted and is at the time of such staking contiguous, or subsequently by reason of additional staking becomes contiguous, to any Claim or any Additional Claim which is part of a group of Additional Claims contiguous to a Claim, the Optionee will immediately give written notice of the acquisition of such Additional Claim to the Optionor together with copies of all information in the possession of the acquiring party relating to such Additional Claim, and, unless the Optionor notif ies the

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Optionee in writing within 60 days next following receipt of such notice that the Optionor does not wish to acquire any ownership interest in the Additional Claim, such Additional Claim will thereafter be and will be deemed for all purposes to be part of the Property, and to be subject to the Option if the Option has not yet been exercised; and in such event the Optionee will transfer legal title to the Additional Claim by appropriate conveyance to the Optionor.

7.05           The Optionee will indemnify and save the Optionor harmless from and against any and all claims, suits, actions, causes of action, administrative orders and notices,  demands, losses, damages, interest, fines, penalties and expenses, including reasonable legal fees and expenses, expert’s and consultant’s fees and expenses, court costs and all other out-of-pocket expenses arising or suffered or incurred by the Optionor as a result of any act or omission of the Optionee, or any breach of this agreement by the Optionee, including without limitation claims, suits, demands, losses, damages and expenses relating to any work, act or thing done or omitted to be done by the Optionee on or with respect to the Property.

FORMATION OF JOINT VENTURE

8.01           On the date of exercise of the Option, the Optionor and the Optionee will without any further act or formality associate themselves,  will be deemed for all purposes to have associated themselves, by way of Joint Venture on the terms and conditions contained in the Joint Venture Agreement, and the parties hereby agree to enter into an agreement in substantively the form attached as Scheduled 1.10-2 to evidence their agreement with regard to such Joint Venture.

8.02           If the Joint Venture is constituted pursuant to this Agreement, the relationship of the Optionor and the Optionee will, from and after the date of constitution of such Joint Venture, be that of co-venturers and will, subject to express provisions of this Agreement, be governed by the terms and conditions of the Joint Venture Agreement.

TRANSFERS OF PROPERTY INTERESTS

9.01           The Optionee shall have the right to assign any of the Optionee’s rights hereunder to any person without the prior written consent of the Optionor, and any purchaser, grantee or transferee of any such rights must, before such assignment becomes effective, have delivered to the Optionor its written agreement related to this Agreement and to the Property, containing:

(a) a covenant by such transferee to perform all the obligations of the Optionee to be performed under this Agreement in respect of the rights to be acquired by it from the Optionee to the same extent as if this Agreement had been originally executed by the Optionee and such transferee as joint and several obligors making joint and several covenants; and

(b) a provision subjecting any further sale, transfer or other disposition of such rights in the Property or this Agreement to the restrictions contained in this section;

and for greater certainty, no such assignment shall operate to discharge the Optionor from any of its obligations hereunder or alter the terms of the Option.

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9.02           The Optionor shall have the right to transfer any or all of its right, title and interest in and to the Property (subject to the Option) and/or assign any or all of its right, title and interest in, to and/or under this Agreement and/or any or all of the Optionor’s rights and obligations herein and/or hereunder to any person without the consent of the Optionee provided that any such transferee or assignee (including any subsequent transferee or assignee) shall have delivered to the Optionee a written agreement whereby such transferee or assignee covenants to perform all of the obligations and committments of the Optionor and otherwise be bound by the terms of this Agreement as they relate to the Optionor; and in any such event, such assignment shall operate to discharge the Optionor from any of its obligations hereunder in respect of such interest save and except for the fulfillment of contractual commitments having accrued due prior to the date of such assignment.

REGULATORY APPROVALS AND REQUIREMENTS

10.01         The Optionor and Optionee acknowledge and agree that their respective rights and obligations hereunder are subject to acceptance of filings to be made by both parties in respect of this Agreement by the TSXV.

10.02         The Optionee will use reasonable commercial efforts to have this Agreement accepted for filing by the TSXV forthwith following execution of this Agreement.

10.03         The Optionor agrees to cooperate, and shall use reasonable efforts to facilitate the cooperation of the Members, in the provision of all personal information, acknowledgements and other information as may be required by the TSXV with regarding to the filing of this Agreement and other related approvals.

TERMINATION OF OPTION

11.01         The Option may be terminated by the Optionor by delivering a written notice of termination to the Optionee if the Optionee fails to make any cash Option Payment, issue any Shares or incur any Exploration Expenses described in section 4.02, or deliver a Positive Feasibility Report, within the time periods permitted by section 4.02; provided that the Optionor shall have first delivered to the Optionee a written notice of default specifying the default and the Optionee shall have failed to cure such default within 30 days next following the date of receipt of such default notice by appropriate payment or performance.

11.02         The Option may also be terminated by the Optionor delivering a written notice of termination to the Optionee if the Optionee breaches any of its covenants set forth herein or fails to perform any of its obligations set forth herein; provided that the Optionor shall have first delivered to the Optionee a written notice of default specifying the default and the Optionee shall have failed to cure such default within 30 days next following the date of receipt of such default notice by appropriate payment or performance.

11.03         If the Option is terminated pursuant to section 11.01 or 11.02 hereof, the Optionee shall:

(a) at no cost to the Optionor and within 30 days of such termination, deliver to the Optionor copies of all reports, maps, assay results and other relevant technical data in the possession of the Optionee with respect to the Property;

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(b) leave the Property in good standing for at least 6 months after the date of such termination, free and clear of all Liens arising from its operations on the Property, in a safe and orderly condition and in a condition which is in compliance with all laws, rules, regulations, policies and orders of Governmental Authorities with respect to reclamation and rehabilitation of all disturbances resulting from the Optionee's use and occupancy of the Property;

(c) have the right (and, if required by the Optionor within 90 days of the effective date of termination, the obligation) to remove from the Property within six months of termination of the Option, all plant, equipment and facilities erected, installed or brought upon the Property by or at the instance of Optionee, failing which the facilities shall become the property of the Optionor.

SURRENDER OF PROPERTY INTERESTS PRIOR TO TERMINATION

12.01         The Optionee may at any time elect to abandon and surrender the Option in respect of any one or more of the Claims comprised in the Property by giving written notice to the Optionor of such proposed abandonment and surrender, and in each such event the Claims in respect of which such notice has been given shall cease to be subject to the Option and shall cease to be part of the subject matter of this Agreement; and the Option shall in each such event remain in full force and effect with respect to the Claims which are not so abandoned and surrendered.

12.02         If the Optionee makes an election pursuant to section 12.01 hereof, the Optionee shall:

(a) at no cost to the Optionor and within 30 days of the Optionor making such election, deliver to the Optionor party a transfer, quitclaim, bill of sale or other appropriate deed or assurance in registrable form transferring its interest in such Claims to the Optionor, together with copies of all reports, maps, assay results and other relevant technical data in the possession of the Optionee with respect to the Property;

(b) leave the Claims so abandoned or surrendered in good standing for at least 6 months after the date of such surrender or abandonment, free and clear of all Liens arising from its operations hereunder, in a safe and orderly condition and in a condition which is in compliance with all laws, rules, regulations, policies and orders of Governmental Authorities with respect to reclamation and rehabilitation of all disturbances resulting from the Optionee's use and occupancy of the Property.

12.03         The Area of Interest will not be diminished by any surrender of Claims pursuant to section 12.01.

FORCE MAJEURE

13.01         If the Optionee is at any time either during the Option Period or thereafter prevented from or delayed in complying with any provisions of this Agreement by reason of strikes, lock-outs, labour shortages, power shortages, fuel shortages, fires, wars, acts of war, insurrection or terrorism, inclement weather, acts of God, governmental regulations restricting normal operations, shipping or other transportation delays, delays in obtaining required governmental or regulatory approvals or permits not due to fault or default on the part of the Optionee, or any other reason or reasons (other than lack of funds) beyond the control of the Optionee, the time limited for the performance by the Optionee of its

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obligations hereunder shall be extended by a period of time equal in length to the period of each such prevention or delay; provided that if the duration of any event of force majeure exceeds six months, the Optionor may terminate the Option by written notice to the Optionee and in such event the provisions of section 11.03 will apply.

13.02         The Optionee shall give prompt notice to the Optionor of each event of force majeure under section 13.01 and upon cessation of such event shall furnish the Optionor with notice to that effect together with particulars of the number of days by which the obligations of the Optionee hereunder have been extended by virtue of such event of force majeure and all preceding events of force majeure.

NEWS RELEASES

14.01         The text of any news release respecting the execution and delivery of this Agreement will be subject to approval by both parties, and both parties will act reasonably in that regard.

14.02         All matters concerning the Optionor and the contents of this Agreement shall be treated as and kept confidential and not disclosed by the parties, except as required by applicable securities laws, the rules of any stock exchange on which the Optionee’s shares are listed or other applicable laws or regulations, without the prior written consent of the other party, such consent not to be unreasonably withheld; provided that, notwithstanding the foregoing, the parties are entitled to disclose confidential information to prospective investors or lenders, who shall be required to keep all such confidential information confidential.

NOTICES

15.01         Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be sent by prepaid registered mail addressed to the party entitled to receive the same, or delivered to such party by hand, or communicated by telecopy or email, at the address for such party specified above, on any business day, in each case directed to the attention of the President or Manager, as the case may be.

15.02         The date of receipt of any notice, demand or other communication shall be the date of delivery thereof if delivered, the date of transmission if communicated by telecopy or email, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the fifth day after the same shall have been so mailed except in the case of interruption of postal services for any reason whatever, in which case the date of receipt shall be the date on which the notice, demand or other communication is actually received by the addressee.

15.03         Either party may at any time and from time to time notify the other party in writing of a change of address (including telecopy or email address) and the new address to which notice shall be given to it thereafter until further change.

GENERAL

16.01         This Agreement supersedes and replaces all other agreements or arrangements, whether oral or written, heretofore existing between the parties in respect of the subject matter of this Agreement.

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16.02         No consent or waiver, expressed or implied, by either party in respect of any breach or default by the other in the performance by such other of its obligations hereunder shall be deemed or construed to be a consent to or a waiver of any other breach or default.

16.03         The parties will promptly execute or cause to be executed all documents, deeds, conveyances and other instruments of further assurance which may be reasonably necessary or advisable to carry out fully the intent of this Agreement or to record wherever appropriate the respective interests from time to time of the parties in the Property.

16.04         This Agreement will be interpreted in accordance with and governed by the laws of the Province of British Columbia and the laws of Canada applicable therein, and the parties hereby irrevocably attorn to the exclusive jurisdiction of the courts of British Columbia, Vancouver Registry.

16.05         If any term, provision, covenant or condition of this Agreement, or any application thereof, should be held by a court of competent jurisdiction to be invalid, void or unenforceable, all provisions, covenants and conditions of this Agreement, and all applications thereof, not held invalid, void or unenforceable shall continue in full force and effect, and in no way be affected, impaired or invalidated thereby.

16.06         The parties hereto agree to do and perform all such further and other acts and things, and to execute all such further and other instruments and documents, and to give all such further and other assurances as may be necessary to give effect to the intent of this Agreement.

16.07         Except as may be specifically provided for herein, time is of the essence of this Agreement.

16.08         This Agreement shall enure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.

16.09         This Agreement may be executed in any number of counterparts and delivered by fax or email, and each of such counterparts when so executed and delivered shall be deemed to be an original, (and each signed copy sent by electronic facsimile transmission shall be deemed to be an original) and all such counterparts together shall constitute one and the same instrument.

[Next Page is Execution Page]

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IN WITNESS WHEREOF the Optionor and the Optionee have executed this Agreement as of the day first set forth above.

THE YUKON CORNELIUS SYNDICATE

Per:

/s/ William Chornobay

_________________________________________

William Chornobay

Manager for The Yukon Cornelius Syndicate

MILL CITY GOLD CORP.

Per:

/s/ James R. Brown

_______________________________________

James R. Brown, Authorized Signatory

This is page 17 of an Option Agreement in respect of the Target 12 (Rosebud) mineral claims, made as of November   8 , 2010 between The Yukon Cornelius Syndicate and Mill City Gold Corp.

SCHEDULE 1.01-1

Attached to and forming part of an Option Agreement made as of November   8  , 2010 between The Yukon Cornelius Syndicate and Mill City Gold Corp.

DESCRIPTION OF MINERAL CLAIMS

Grant Number	Claim Name	Claim Number	Claim Expiry Date	NTS Map Number
YD15851	RB	1	June 30	115O08
YD15852	RB	2	June 30	115O08
YD15853	RB	3	June 30	115O08
YD15854	RB	4	June 30	115O08
YD15855	RB	5	June 30	115O08
YD15856	RB	6	June 30	115O08
YD15857	RB	7	June 30	115O08
YD15858	RB	8	June 30	115O08
YD15859	RB	9	June 30	115O08
YD15860	RB	10	June 30	115O08
YD15861	RB	11	June 30	115O08
YD15862	RB	12	June 30	115O08
YD15863	RB	13	June 30	115O08
YD15864	RB	14	June 30	115O08
YD15865	RB	15	June 30	115O08
YD15866	RB	16	June 30	115O08
YD15867	RB	17	June 30	115P05
YD15868	RB	18	June 30	115P05
YD15869	RB	19	June 30	115P05
YD15870	RB	20	June 30	115P05
YD15871	RB	21	June 30	115O08
YD15872	RB	22	June 30	115O08
YD15873	RB	23	June 30	115O08
YD15874	RB	24	June 30	115O08
YD15875	RB	25	June 30	115O08
YD15876	RB	26	June 30	115O08
YD15877	RB	27	June 30	115O08
YD15878	RB	28	June 30	115O08
YD15879	RB	29	June 30	115O08
YD15880	RB	30	June 30	115O08
YD15881	RB	31	June 30	115O08
YD15882	RB	32	June 30	115O08
YD15883	RB	33	June 30	115O08

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YD15884	RB	34	June 30	115O08
YD15885	RB	35	June 30	115O08
YD15886	RB	36	June 30	115O08
YD15887	RB	37	June 30	115O08
YD15888	RB	38	June 30	115O08
YD15891	RB	41	June 30	115O08
YD15892	RB	42	June 30	115O08
YD15893	RB	43	June 30	115O08
YD15894	RB	44	June 30	115O08
YD15895	RB	45	June 30	115O08
YD15896	RB	46	June 30	115O08
YD15897	RB	47	June 30	115O08
YD15898	RB	48	June 30	115O08
YD15899	RB	49	June 30	115O08
YD15900	RB	50	June 30	115O08

SCHEDULE 1.01-2

Attached to and forming part of an Option Agreement made as of November   8  , 2010 between The Yukon Cornelius Syndicate and Mill City Gold Corp.

JOINT VENTURE AGREEMENT

THIS JOINT VENTURE AGREEMENT made as of and entered into effective _______________________

BETWEEN:

THE YUKON CORNELIUS SYNDICATE, Suite 1300 – 1111 West Georgia Street, Vancouver, British Columbia, Canada, V6E 4M3 (Fax No.: 604-888-7929 / Email: billsc@shaw.ca)

("The YC Syndicate")

AND:

MILL CITY GOLD CORP., a British Columbia corporation having an office at 4719 Chapel Road NW, Calgary, Alberta, T2L 1A7 (Fax No.: 403-640-4024 / Email: jim.brown@millcitygold.com)

("Mill City")

WITNESSES THAT WHEREAS:

A. The YC Syndicate owns a 30% interest in the Property;

B. Mill City owns a 70% interest in the Property, acquired from The YC Syndicate pursuant to the Head Agreement;

C. The YC Syndicate and Mill City have agreed to form a joint venture for the purpose of conducting Joint Operations to further explore and, if deemed advisable, to develop and mine the Property and to process and sell or otherwise dispose of any Minerals from the Property;

THEREFORE, in consideration of the premises and the mutual covenants, commitments and undertakings hereinafter contained, and for other good and valuable consideration, the parties agree as follows:

INTERPRETATION

1.01           In this Agreement the following words, phrases and expressions shall have the following meanings:

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"Accounting Procedure" means the procedure attached to this Agreement as Appendix I.

"Affiliate" shall have the meaning attributed to it in the Head Agreement.

"Assets" means all tangible and intangible goods, chattels, improvements or other items including, without limiting the generality of the foregoing, the Property Rights and land, buildings and equipment (excluding the Property), acquired for or made to the Property under the Head Agreement or this Agreement in connection with the Mining Operations.

“Commercial Production” means the commercial exploitation of Ore but does not include milling for the purpose of testing or milling or leaching by a pilot plant or during an initial tune up period of the plant. Commercial Production with respect to the Property shall be deemed to have commenced on the first day of the month following the first period of 30 consecutive days during which Ore from the Property have been processed through the plant at an average rate of not less than 85% of the initial rated capacity of the plant as set forth in the Positive Feasibility Report.

"Completion Date" means the date on which it is demonstrated to the satisfaction of the Management Committee that any Construction done pursuant to a Production Notice is complete.

"Construction" means every kind of work carried out during the Construction Period by the Operator in accordance with a Feasibility Report approved by the Management Committee.

"Construction Period" means, unless a Production Notice is subsequently withdrawn, the period beginning on the date a Production Notice is given and ending on the Completion Date.

"Costs" means, except as to Prior Exploration Costs, all costs and expenses whatsoever, direct or indirect, with respect to Mining Operations, recorded by Mill City in accordance with the Head Agreement, and by the Operator in accordance with this Agreement, and without limiting the generality of the foregoing, the following categories of Costs shall have the following meanings:

"Construction Costs" means the Costs of Construction recorded by the Operator during the Construction Period, including, without limiting the generality of the foregoing, the Operator's fee contemplated in section 11;

"Exploration Costs" means those Costs, exclusive of Prior Exploration Costs, Construction Costs and Operating Costs, recorded by the Operator during the Exploration Period in connection with the exploration and development of the Property, including, without limiting the generality of the foregoing, the Operator's fee contemplated in section 11;

"Mine Costs" means Construction Costs and Operating Costs;

"Operating Costs" means those Costs recorded by the Operator subsequent to the Operative Date including, without limiting the generality of the foregoing, the Operator's fee contemplated in section 11, but specifically excluding Construction Costs and Exploration Costs; and

"Prior Exploration Costs" means, for Mill City, 70% of “Exploration Expenses” recorded by it under the Head Agreement before the Operative Date and, for The YC Syndicate, an amount equal to 30% of “Exploration Expenses” recorded by Mill City under the Head Agreement before the Operative Date.

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"Exploration Period" means the period beginning the Operative Date and ending the date an effective Production Notice is given.

"Feasibility Report" means that document or those documents consisting of reports, estimates, studies and comprehensive financial analyses prepared at the direction of the Management Committee and in such form and of such a standard as may be required by the Management Committee, to examine the feasibility of bringing into commercial production any Mineral deposit on the Property and establishing and operating a Mine or increasing production from an existing Mine, but does not include the Positive Feasibility Report or any other feasibility report prepared pursuant to the Head Agreement.

"Head Agreement" means that certain Option and Joint Venture Agreement made between the parties hereto as of _________________, 2010 and to which this Agreement is attached as a Schedule and pursuant to which this Agreement has been entered into.

"Interest" means an undivided beneficial percentage interest in and to the Property, the Assets and any Mine calculated according to sections 7 and 10 during the commencement of this Agreement.

"Joint Operation" means the joint operation described in subsection 2.01.

"Management Committee" means the committee established pursuant to section 4.

"Mine" means the workings established and Assets acquired, including, without limiting the generality of the foregoing, development headings, plant and concentrator installations, infrastructure, housing, airport and other facilities in order to bring a portion of the Property into Commercial Production in accordance with a Production Notice, or to increase Commercial Production from the Property.

"Minerals" means any and all ores (and concentrates and metals derived therefrom) and minerals, precious and base, metallic and non-metallic, and any and all gemstones (including diamonds), in, on or under the Property which may lawfully be explored for, mined and sold.

"Mining Operations" means every kind of work done by the Operator:

(a) on or in respect of the Property in accordance with a Program or Production Notice, or pursuant to the Head Agreement; or

(b) if not provided for in a Program or Production Notice or in the Head Agreement, unilaterally and in good faith to maintain the Property in good standing, to prevent waste or to otherwise discharge any obligation which is imposed upon it pursuant to this Agreement and in respect of which the Management Committee has not given it directions;

including, without limiting the generality of the foregoing, investigating, prospecting, exploring, developing, property maintenance, preparing reports, estimates and studies, designing, equipping, improving, surveying, Construction and mining, milling, concentrating, rehabilitation, reclamation, and environmental protection.

"Net Proceeds of Production" shall have the meaning attributed to it in Appendix II.

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"Operative Date" means the date upon which this Agreement becomes effective.

"Operator" means the party appointed as the Operator in accordance with section 5.

"Participant" means a party that is contributing to Exploration Costs or Mine Costs, as the case may be.

"party" or "parties" means the parties to this Agreement and their respective successors and permitted assigns which become parties pursuant to this Agreement.

"Prime Rate" means the rate of interest published and declared as such from time to time and stated by the Bank of Montreal, Main Branch, Vancouver, British Columbia, as being charged by it on Canadian Dollar demand loans to its most creditworthy domestic commercial customers.

"Production Notice" means a notice which is given to each of the parties pursuant to subsection 9.02.

"Program" means an exploration program conducted on the Property during the Exploration Period and adopted pursuant to subsection 7.02.

"Property" means the mineral properties that become subject to this Agreement on the Operative Date, as are particularly set forth in Schedule 101-1 [NTD: Schedule to list all properties that are subject to the Agreement on the Operative Date],and any additional mineral properties that become part of the Property pursuant to this Agreement, the Minerals thereon, all information obtained from Mining Operations and those rights and benefits appurtenant to the Property that are acquired for the purpose of conducting Mining Operations.

"proportionate share" means that share which is equal to a party's Interest.

"Simple Majority" means a decision made by the Management Committee by a majority in Interest representing in excess of 50 percent of the votes entitled to be cast.

"$" means Canadian Dollars.

1.02           The words "section", "subsection", "paragraph", "subparagraph", "herein", "hereto" and "hereunder" refer to this Agreement. The words "this Agreement" or "the Agreement" include every Schedule and Appendix attached hereto but exclude the Head Agreement. Every Schedule and Appendix attached hereto forms part of this Agreement.

1.03           The captions and the emphasis of the defined terms have been inserted for convenience and do not define the scope of any provision.

1.04           Unless specifically defined in this Agreement, words and expressions defined in the Head Agreement have their defined meanings in this Agreement.

FORMATION OF THE JOINT VENTURE

2.01           The parties hereby agree to associate and participate in a joint operation (herein called the "Joint Operation") for the purpose of exploring and, if warranted, carrying on Commercial Production from the Property.

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2.02           The right of each party to mine and market production from other sources in competition with the other parties and of each Participant to market its share of any Minerals in competition with any other Participant is hereby confirmed; and this Agreement shall not be construed so as to preclude or restrict such rights.

INTERESTS

3.01           Except as otherwise provided herein and in the Head Agreement, the parties shall bear all Costs and all liabilities arising under this Agreement and the Head Agreement, and shall own the Property, the Assets and any Mine, in proportion to their respective Interests.

3.02           On the Operative Date the respective Interests of the parties shall be equal to the respective Interests which the parties held under the Head Agreement immediately prior to the Operative Date.

MANAGEMENT COMMITTEE

4.01           A Management Committee will be established on or forthwith after the Operative Date. Except as herein otherwise provided, the Management Committee will make all decisions in respect of Mining Operations.

4.02           Each party shall forthwith appoint one representative and one alternate representative to the Management Committee. The alternate representative may act for a party's representative in its absence.

4.03           The Operator shall call a Management Committee meeting at least once every 12 months, and, in any event within 14 days of being requested to do so by any representative or alternate representative.

4.04           The Operator shall give notice, specifying the time and place of, and the agenda for, the meeting, to all representatives at least seven days before the time appointed for the meeting. All meetings of the Management Committee will be held at a place in Vancouver, British Columbia designated by The YC Syndicate unless otherwise agreed in writing by the parties.

4.05           Notice of a meeting shall not be required if representatives of all the parties are present and unanimously agree upon the agenda.  If the Operator does not comply with section 4.03, any party may call a Management Committee meeting in accordance with section 4.04.

4.06           A quorum for any Management Committee meeting shall be present if the representative or all the representatives of parties totalling over 50 percent in Interest are present.  If a quorum is present at the meeting, the Management Committee shall be competent to exercise all of the authorities, powers and discretions herein bestowed upon it hereunder.  The Management Committee shall not transact any business at a meeting unless a quorum is present at the commencement of the meeting; provided that in such event such meeting will be set over to the same time and place in the immediately following week and at the reconvened meeting, the representative or representatives present shall constitute a quorum.

4.07           The Management Committee shall decide every question submitted to it by a vote with each representative being entitled to cast that number of votes which is equal to its party's Interest percentage.  The Management Committee shall make decisions by Simple Majority.

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4.08           The representative and alternate representative of the Operator shall be the chairman and secretary, respectively, of Management Committee meetings.  In the event of an equality of votes on any matter, neither party will have a casting vote.

4.09           The secretary of each Management Committee meeting shall take minutes of that meeting and circulate copies thereof to each representative.

4.10           The Management Committee may make decisions by obtaining the consent in writing of the representatives of all parties.  Any decision so made shall be as valid as a decision made at a duly called and held meeting of the Management Committee.

4.11           Management Committee decisions made in accordance with this Agreement shall be binding upon all of the parties.

4.12           Each party shall bear the expenses incurred by its representatives and alternate representatives in attending meetings of the Management Committee.

4.13           The Management Committee may, by agreement of the representatives of all the parties, establish such other rules of procedure, not inconsistent with this Agreement, as the Management Committee deems fit.

4.14           Reference in this section to the "parties" shall apply during the Exploration Period.  After the date of a Production Notice this section shall be read as if the word "Participant" appeared wherever the word "party" appears.

OPERATOR

5.01           Mill City shall act as Operator until and unless:

(a) its Interest is diluted below 50%, in which event the party then holding the greatest Interest and which has consented thereto shall thereafter act as Operator;

(b) it shall fail during any period of twelve consecutive months (calculated from the date of commencement of the Joint Operation or any anniversary thereof, as the case may be) to propose a Program calling for the expenditure of at least $1,000,000, in which event The YC Syndicate shall, if The YC Syndicate’s Interest is at least 30% at the end of such period, have the right to propose a Program calling for the expenditure of at least $1,000,000 and containing a statement in reasonable detail of the proposed Mining Operations and estimates of all Exploration Costs budgeted to be incurred, and act as Operator in respect of that Program;

and the provisions of subsection 5.01(b) will apply to the operatorship during each subsequent 12 month period, regardless of which party is then Operator.

5.02           The party acting as Operator may resign as Operator on at least 90 days' notice to all the parties, and the Management Committee shall thereupon select another party to be Operator upon the 90th day after receipt of the Operator's notice of resignation.

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5.03           The new Operator shall assume all of the rights, duties and status of the previous Operator as provided in this Agreement.The new Operator shall have no obligation to hire any of the employees of the former Operator.

5.04           Upon ceasing to be Operator, the former Operator shall forthwith deliver to the person nominated for that purpose by the Management Committee, custody of all Assets, Property, books, records and other property both real and personal relating to this Agreement or the Property.

5.05           If the Operator resigns and no other party consents to act as Operator the Joint Operation shall terminate and the provisions of section 12 shall apply mutatis mutandis.

RIGHTS, DUTIES AND STATUS OF OPERATOR

6.01           The Operator in its operations hereunder shall be deemed to be an independent contractor, and the Operator shall not act or hold itself out as agent for any of the parties nor make any commitments on their individual behalf unless specifically permitted by this Agreement or directed in writing by a party.

6.02           Subject to any specific provision of this Agreement and subject to it having the right to reject any direction on reasonable grounds by virtue of its status as an independent contractor, the Operator shall perform its duties hereunder in accordance with the directions of the Management Committee and in accordance with this Agreement.

6.03           The Operator shall manage and carry out such Mining Operations as are provided for in the Head Agreement and otherwise as the Management Committee may direct, and in connection therewith shall, in advance if reasonably possible, notify the Management Committee of any change in Mining Operations which the Operator considers material, and if it is not reasonably possible, the Operator shall notify the Management Committee so soon thereafter as is reasonably possible.

6.04           The Operator shall have the sole and exclusive right and authority to manage and carry out all Mining Operations and to incur the Costs required for that purpose, and in so doing the Operator shall, unless it obtains the approval of the Management Committee:

(a) comply with the provisions of all agreements or instruments of title under which the Property or Assets are held;

(b)           pay all Costs properly incurred promptly as and when due;

(c) keep the Property and Assets free of all Liens and encumbrances (other than those, if any, in effect on the Operative Date or the creation of which is permitted pursuant to this Agreement or the Head Agreement) arising out of the Mining Operations and, in the event of any Lien being filed as aforesaid, proceed with diligence to contest or discharge the same;

(d) prosecute claims or, where a defence is available, defend litigation arising out of the Mining Operations, provided that any Participant may join in the prosecution or defence at its own expense;

(e) subject to section 20, perform such assessment work or make payments in lieu thereof and pay such rentals, taxes or other payments and do all such other things as may be

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necessary to maintain the Property in good standing, including, without limiting the generality, staking and restaking mining claims, and applying for licenses, leases, grants, concessions, permits, patents and other rights to and interests in the Minerals;

(f) maintain accounts in accordance with the Accounting Procedure; provided, that the judgment of the Operator as to matters related to the accounting, for which provision is not made in the Accounting Procedure, shall govern if the Operator's account practices are in accordance with accounting principles generally accepted in the mining industry in Canada; and

(g) perform its duties and obligations hereunder in a sound and workmanlike manner, in accordance with sound mining and engineering practices, and in compliance with all applicable federal, provincial and local laws, by-laws, ordinances, rules and regulations, and this Agreement.

EXPLORATION PROGRAMS / DILUTION OF NON-PARTICIPANTS

7.01           The Operator may, in addition to carrying on Mining Operations on behalf of the parties hereto, prepare draft Programs for consideration by the Management Committee, and all draft Programs shall contain a statement in reasonable detail of the proposed Mining Operations and estimates of all Exploration Costs budgeted to be incurred.

7.02           The Management Committee shall review each Program prepared and, if it deems fit, adopt the Program with such modifications, if any, as the Management Committee deems necessary; and the Operator shall be entitled to an allowance for a Cost overrun of 10 percent in addition to any budgeted Exploration Costs and any Costs so incurred shall be deemed to be included in the Program, as adopted.

7.03           The Operator shall forthwith submit the adopted Program to the parties other than itself, and each party may, within 30 days of receipt of the Program, give notice to the Operator committing to contribute its proportionate share of the Exploration Costs on that Program, and any party which fails to give that notice within the 30 day period shall be deemed to have elected not to contribute.

7.04           If any party is deemed under subsection 7.03 to have elected not to contribute to a Program, the proportion to be contributed by the parties who elected to contribute shall be increased pro rata, subject to the right of any of them to elect not to contribute more than its proportionate share.

7.05           The Operator shall be entitled to invoice each Participant:

(a) no more frequently than monthly, for its proportionate share of Exploration Costs incurred and paid by the Operator; or

(b) reasonably in advance of requirements, for an advance of that Participant's proportionate share of Exploration Costs;

and each invoice shall be signed by some responsible official of the Operator, and each Participant shall pay to the Operator the amount invoiced, within 30 days of receipt of the invoice; and if a Participant protests the correctness of an invoice it shall nevertheless be required to make the payment.

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7.06           If any Participant, having elected to contribute to a Program, fails to pay its proportionate share within the 30-day period referred to in subsection 7.05 the Operator may by notice demand payment, and if no payment is made within the period of 30 days next succeeding the receipt of the demand notice, that Participant shall be deemed to have elected not to contribute.

7.07           The Operator shall expend all monies advanced by a Participant rateably with the advance of the other Participants, and if the Operator suspends or prematurely terminates a Program, any funds advanced by a Participant in excess of that Participant's proportionate share of Exploration Costs incurred prior to the suspension or premature termination shall be refunded forthwith.

7.08           If any Program is altered, suspended or terminated prematurely so that the Exploration Costs incurred on that Program as altered, suspended or terminated are less than 80 percent of the Exploration Costs originally proposed, any party which elected not to contribute to that Program shall be given notice of the alteration, suspension or termination by the Operator and shall be entitled to contribute its proportionate share of the Exploration Costs incurred on that Program by payment thereof to the Operator within 30 days after receipt of the notice, and if payment is not made by that party within the 30 days aforesaid, it shall forfeit its right to contribute to that Program without a demand for payment being required to be made thereafter by the Management Committee.

7.09           If a party elects or is deemed to have elected not to contribute to the Exploration Costs of any Program, the Interest of that party shall be decreased and the Interest of each Participant contributing in excess of its proportionate share of the Exploration Costs shall be increased so that, subject to subsection 7.10, at all times the Interest of each party will be that percentage which is equivalent to its Exploration Costs and Prior Exploration Costs and its contributions to Mine Costs expressed as a percentage of the Exploration Costs and Prior Exploration Costs of, and the total of contributions to Mine Costs by, all Parties; and notwithstanding the foregoing the party whose Interest has been reduced shall be entitled to receive details of and to contribute to fu ture Programs to the extent of its then Interest.

7.10           If the effect of the application of subsection 7.09 is to reduce the Interest of any party to less than 10% it shall forfeit its Interest to the Participants (if more than one, then in proportion to their respective Interests), and that party shall have no further right or Interest under this Agreement except for a 1% royalty on production from the Property on the terms of the Royalty (as that term is defined in the Head Agreement) provided for in the Head Agreement. Accordingly, for greater certainty, such royalty on production from the Property shall be 1% of Net Smelter Returns as determined under Schedule 1.01-4 of the Head Agreement.

FEASIBILITY REPORT

8.01           A Feasibility Report (other than any Feasibility Report provided for under the Head Agreement) shall only be prepared with the approval of the Management Committee, and the Operator shall provide copies of each completed Feasibility Report to each of the parties forthwith upon receipt.

8.02           The parties shall meet at reasonable intervals and times to review the Feasibility Reports prepared otherwise than pursuant to the Head Agreement referred to in subsection 8.01 and discuss whether the Mining Operations which are the subject of the applicable Feasibility Report are feasible or desirable.

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PRODUCTION NOTICE

9.01           The Operator shall call a Management Committee meeting to consider each Feasibility Report for a date no sooner than six months after the Feasibility Report was provided to each of the parties or such earlier date as the representatives of all parties may agree.

9.02           The Management Committee shall consider each Feasibility Report prepared pursuant to subsection 8.02 and may approve any Feasibility Report, with such modifications, if any, as it considers necessary or desirable, and if such a Feasibility Report is approved as aforesaid the Management Committee shall forthwith cause a Production Notice to be given to each of the parties by the Operator stating that the Management Committee intends to conduct the Mining Operations which are the subject of the Feasibility Report in conformity with the Feasibility Report as so approved.

ELECTION TO CONTRIBUTE / CONVERSION OF NON-PARTICIPANT’S INTEREST

10.01         Each party may, within 60 days of receipt of a Production Notice, give the Operator notice committing to contribute its proportionate share of the Mine Costs.

10.02         If any party fails to give notice pursuant to subsection 10.01 that party shall forfeit the right to contribute to Mine Costs and shall suffer dilution and conversion of its Interest as provided in this subsection.  Those parties which elected to contribute as aforesaid may thereupon elect to increase their contribution to the Mine Costs, if more than one party then in proportion to their respective Interests, by the amount which any party has declined to contribute. If elections are made so that Mine Costs are fully committed:

(a) the Interest of each Participant shall be increased and that of each non-Participant shall be decreased so that the Interest of each party at all times is that percentage which is equivalent to:

(i) the sum of its Exploration Costs, its Prior Exploration Costs and its contribution to Mine Costs, multiplied by 100; divided by:

(ii) the sum of the total Exploration Costs, Prior Exploration Costs and Mine Costs of all the parties;

(b) each non-Participant shall then be deemed to have assigned and conveyed its Interest to the Participants, if more than one then in proportion to their respective Interests, and shall be entitled to receive as its sole remuneration and benefit in consideration of that assignment and conveyance, by way of royalty, that percentage of the Net Proceeds of Production, as and when available, which is equivalent to its Interest (which has been reduced by the application of Paragraph 10.02(a);

(c) each Participant shall severally calculate and cause to be paid to each non-Participant any Net Proceeds of Production derived from the Property in the manner provided in Appendix II; and

(d) notwithstanding the provisions of paragraphs 10.02(b) and (c) if the effect of the application of paragraph 10.02(a) reduces any party's Interest to less than one percent it shall forfeit its Interest to the Participants, if more than one then in proportion to their

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respective Interests, and that party shall have no further right or Interest under this Agreement.

10.03         If, after the operation of subsection 10.02, Mine Costs are not fully committed the Production Notice shall be deemed to be withdrawn.

OPERATOR'S FEE

11.01         The Operator may charge the following sums in return for its head office overhead functions which are not charged directly:

(a) with respect to Programs: ten percent of all Exploration Costs;

(b) with respect to Mine development and Construction: two percent of all Construction Costs;

(c) subsequent to the Completion Date: ten percent of all Operating Costs.

MINE FINANCING

12.01         The contributions of the Participants toward the Mine Costs shall be individually and separately provided by them.

12.02         Any party may pledge, mortgage, charge or otherwise encumber its Interest in order to secure moneys borrowed and used by that party for the sole purpose of enabling it to finance its participation under this Agreement or in order to secure by way of floating charge and as part of the general corporate assets of that party moneys borrowed for its general corporate purposes, provided that the pledgee, mortgagee, holder of the charge or encumbrance (in this subsection called the "Chargee") shall hold the same subject to the provisions of this Agreement and that if the Chargee realizes upon any of its security it will comply with this Agreement. The Agreement between the party hereto, as borrower, and the Chargee shall contain specific provisions to the same effect as the provision s of this paragraph.

CONSTRUCTION

13.01         Subject to subsections 10.02 and 10.03 the Management Committee shall cause the Operator to, and the Operator shall, proceed with Construction with all reasonable dispatch after a Production Notice has been given.  Construction shall be substantially in accordance with the Feasibility Report subject to any variations proposed in the Production Notice, and subject also to the right of the Management Committee to cause such other reasonable variations in Construction to be made as the Management Committee deems advisable.

MINE OPERATION

14.01         Commencing with the Operative Date, all Mining Operations shall be planned and conducted and all estimates, reports and statements shall be prepared and made on the basis of a calendar year (the "Operating Year").

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14.02         With the exception of the first Operating Year, a plan (the "Operating Plan") for each Operating Year shall be submitted by the Operator to the Participants not later than September 30 in the year immediately preceding the Operating Year to which the Operating Plan relates. Each Operating Plan shall contain the following:

(a) a plan of the proposed Mining operations;

(b) a detailed estimate of all Mine Costs plus a reasonable allowance for contingencies;

(c) an estimate of the quantity and quality of the ore to be mned and the concentrates, metal and/or gemstones to be produced; and

(d) such other facts as may be necessary to reasonably illustrate the results intended to be achieved by the Operating Plan.

Upon request of any Participant the Operator shall meet with that Participant to discuss the Operating Plan and shall provide such additional or supplemental information as that Participant may reasonably require with respect thereto.

14.03         The Management Committee shall adopt each Operating Plan, with such changes as it deems necessary, by November 30 in the year immediately preceding the Operating Year to which the Operating Plan relates; provided, however, that the Management Committee may from time to time and any time amend any Operating Plan.

PAYMENT OF MINE COSTS

15.01         Subject to subsection 15.03, the Operator may invoice each Participant, from time to time, for that Participant's proportionate share of Mine Costs incurred to the date of the invoice; or at the beginning of each month for an advance equal to that Participant's proportionate share of the estimated cash disbursements to be made during the month.  Each Participant shall pay its proportionate share of the Mine Costs or the estimated cash disbursements aforesaid to the Operator within 30 days after receipt of the invoice.  If the payment or advance requested is not so made, the amount of the payment or advance shall bear interest calculated monthly not in advance from the 30th day aft er the date of receipt of the invoice thereof by that Participant at a rate equivalent to the weighted average Prime Rate for the month plus two percent until paid.  The Operator shall have a Lien on each Participant's Interest in order to secure the payment or advance together with interest which has accrued thereon.

15.02         If any Participant fails to pay an invoice contemplated in subsection 15.01 within the 30 day period aforesaid, the Operator may, by notice, demand payment.  If no payment is made within 30 days of the Operator's demand notice, the Operator may, without limiting its other rights at law, including its right, hereby granted, to sell that Participant's proportionate share of ores and concentrates derived from the Minerals produced from the Mine, enforce the Lien created by subsection 15.01 by taking possession of all or any part of that Participant's Interest.  The Operator may sell and dispose of the Interest which it has so taken into its possession by:

(a) first offering that Interest to the other Participants, if more than one then in proportion to the respective Interests of the Participants who wish to accept that offer, for that price which is the fair market value stated in the lowest of two appraisals obtained by the

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Operator from independent well recognized appraisers competent in the appraisal of Mining properties; and

(b) if the Participants have not purchased all or part of that Interest as aforesaid, then by selling the balance, if any, either in whole or in part or in separate parcels at public auction or by private tender (the Participants being entitled to bid) at a time and on whatever terms the Operator shall arrange, having first given notice to the defaulting Participant of the time and place of the sale.

As a condition of the sale as contemplated in paragraph 15.02(b), the purchaser shall agree to be bound by this Agreement and, prior to acquiring the Interest, shall deliver notice to that effect to the parties, in form acceptable to the Operator.  The proceeds of the sale shall be applied by the Operator in payment of the amount due from the defaulting Participant and interest as aforesaid, and the balance remaining, if any, shall be paid to the defaulting Participant after deducting reasonable costs of the sale.  Any sale or disposal made as aforesaid shall be a perpetual bar both at law and in equity by the defaulting Participant and its successors and assigns against all other Participants.

15.03         Following Commencement of Commercial Production from the Property, all Minerals produced from the Property will, after payment by the Operator on behalf of all parties of all Costs other than Prior Exploration Costs, be distributed to Mill City until such time as Mill City has received Minerals equal in value to 100% of its Prior Exploration Costs.

DISTRIBUTION IN KIND

16.01         It is expressly intended that the association of the parties hereto shall be limited to the efficient production of Minerals from the Property and that each of the parties shall, subject to subsection 15.03, be entitled to use, dispose of or otherwise deal with its proportionate share of ores, concentrates, metals and gemstones as it sees fit.  Each Participant shall take in kind, f.o.b. truck or railcar at the concentrator, and separately dispose of its proportionate share of the ores, concentrates or metals derived from the Minerals produced from the Mine.  Any extra costs and expenses incurred by reason of the Participants taking in kind and making separate dispositions shall be paid by each Participant directly and not through the Operator or Management Committee.

16.02         Each Participant shall construct, operate and maintain, all at its own cost and expense, any and all facilities which may be necessary to receive and store and dispose of its proportionate share of the Minerals at the rate the same are produced.

16.03         If a Participant has not made the necessary arrangements to take in kind and store its share of production as aforesaid the Operator shall, at the sole cost and risk of that Participant store, in any location where it will not interfere with Mining Operations, the production owned by that Participant.  The Operator and the other parties shall be under no responsibility with respect thereto.  All of the Costs involved in arranging and providing storage shall be billed directly to, and be the sole responsibility of, the Participant whose share of production is so stored.  The Operator's charges for such assistance and any other related matters shall be billed directly to and be the sole responsibility of the Participant.

SURRENDER OF INTEREST

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17.01         Any party may, at any time upon notice, surrender its entire Interest to the other parties by giving those parties notice of surrender. The notice of surrender shall:

(a) indicate a date for surrender not less than three months after the date on which the notice is given;

(b)           contain an undertaking that the surrendering party will;

(i) satisfy its proportionate share, based on its then Interest, of all obligations and liabilities which arose at any time prior to the date of surrender;

(ii) pay its proportionate share, based on its then Interest, of any Costs of rehabilitating the Mine site and of reclamation as at the date of surrender; and

(iii) will hold in confidence, for a period of two years from date of surrender, all information and data which it acquired pursuant to this Agreement.

17.02         Upon the surrender of its entire Interest as contemplated in subsection 17.01 and upon delivery of a release in writing, in form acceptable to counsel for the Operator, releasing the other parties from all claims and demands hereunder, the surrendering party shall be relieved of all obligations or liabilities hereunder except for those which arose or accrued or were accruing due on or before the date of the surrender.

17.03         A party to whom a notice of surrender has been given as contemplated in subsection 17.01 may elect, by notice within 90 days to the party which first gave the notice to accept the surrender, in which case subsections 17.01 and 17.02 shall apply, or to join in the surrender. If all of the parties join in the surrender the Joint Operation shall be terminated in accordance with section 18.

TERMINATION OF MINING OPERATIONS

18.01         The Operator, at the direction of the Management Committee, may at any time by notice to all the Participants terminate permanently all Mining Operations.

18.02         The Operator shall thereupon remove, sell and dispose of such Assets, other than timbers and structures affixed to the underground workings and the shafts of the Mine, if any, as may be removed and disposed of profitably and such other Assets as the Operator may be required to remove pursuant to applicable environmental and mining laws.  The disposal price shall be the best price obtainable and the net revenues from the sale shall be divided between the Participants in proportion to their respective Interests.

18.03         On termination of Mining Operations the Participants shall pay the Costs of rehabilitating the Mine site and of reclamation as may be required by the applicable environmental and mining laws in proportion to their respective Interests.

THE PROPERTY

19.01         Title to the Property shall be held in the name of the Operator in trust for the parties in proportion to their Interests as adjusted from time to time.  Each of the parties shall have the right to

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receive, forthwith upon making demand therefor, from the Operator such documents as it may reasonably require to confirm its Interest.

INFORMATION AND DATA

20.01         At all times during the subsistence of this Agreement the duly authorized representatives of each Participant shall, at its and their sole risk and expense and at reasonable intervals and times, have access to the Property and to all technical records and other factual engineering data and information relating to the Property which is in the possession of the Operator.

20.02         During the Exploration Period while Programs are being carried out the Operator shall furnish the Participants with monthly progress reports and with a final report on conclusion of each Program.  The final report shall show the Mining Operations performed and the results obtained and shall be accompanied by a statement of Costs and copies of pertinent plans, assay maps, diamond drill records and other factual engineering data.  During the Construction Period the Operator shall provide monthly progress reports to the Participants, which reports shall include information on any changes or improvements affecting the Mine that the Operator considers are material.

20.03         All information and data concerning or derived from the Mining Operations shall be kept confidential and, except to the extent required by law, by regulation of any Securities Commission or Stock Exchange, or in connection with the filing of a prospectus or other offering document by any party or any of its Affiliated Corporations, shall not be disclosed to any person other than an Affiliated Corporation without the prior consent of all the Participants, which consent shall not unreasonably be withheld.

20.04         The text of any news releases or other public statements which a party desires to make with respect to the Property shall be made available to the other parties prior to publication and the other parties shall have the right to make suggestions for changes therein.

LIABILITY OF THE OPERATOR

21.01         Subject to subsection 21.02, each party shall indemnify and save the Operator harmless from and against any loss, liability, claim, demand, damage, expense, injury and death (including, without limiting the generality of the foregoing, legal fees) resulting from any acts or omissions of the Operator or its officers, employees or agents.

21.02         Notwithstanding subsection 21.01, the Operator shall not be indemnified nor held harmless by any of the parties for any loss, liability, claim, demand, damage, expense, injury or death (including, without limiting the generality of the foregoing, legal fees) resulting from the negligence or willful misconduct of the Operator or its officers, employees or agents.

21.03         An act or omission of the Operator or its officers, employees or agents done or omitted to be done:

(a) at the direction, or within the scope of the direction, of the Management Committee; or

(b) with the concurrence of the Management Committee; or

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(c) unilaterally and in good faith by the Operator to protect life or property;

shall be deemed not to be negligence or willful misconduct.

21.04         The obligation of each of the other parties to indemnify and save the Operator harmless pursuant to subsection 21.01 shall be in proportion to its Interest as at the date that the loss, liability, claim, demand, damage, expense, injury or death occurred or arose.

21.05         The Operator shall not be liable to any other party nor shall any party be liable to the Operator in contract, tort or otherwise for special or consequential damages, including, without limiting the generality of the foregoing, loss of profits or revenues.

22.           INSURANCE

22.01         Commencing on the Operative Date, the Management Committee shall cause the Operator to place and maintain with a reputable insurer or insurers such insurance, if any, as the Management Committee in its discretion deems advisable in order to protect the parties together with such other insurance as any Participant may by notice reasonably request.  The Operator shall, upon the written request of any Participant, provide it with evidence of that insurance.

22.02         Subsection 22.01 shall not preclude any party from placing, for its own account, insurance for greater or other coverage than that placed by the Operator.

RELATIONSHIP OF PARTIES

23.01         The rights, duties, obligations and liabilities of the parties shall be several and not joint nor joint and several, it being the express purpose and intention of the parties that their respective Interests shall be held as tenants in common.

23.02         Nothing herein contained shall be construed as creating a partnership of any kind or as imposing upon any party any partnership duty, obligation or liability to any other party hereto.

23.03         No party shall, except when required by this agreement or by any law, by-law, ordinance, rule, order or regulation, use, suffer or permit to be used, directly or indirectly, the name of any other party for any purpose related to the Property.

PARTITION

24.01         Each of the parties hereto waives, during the term of this Agreement, any right to partition of the Property or the Assets or any part thereof and no party shall seek or be entitled to partition of the Property or the Assets whether by way of physical partition, judicial sale or otherwise during the term of this Agreement.

TAXATION

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25.01         All Costs incurred hereunder shall be for the account of the party or parties making or incurring the same, if more than one then in proportion to their respective Interests, and each party on whose behalf any Costs have been incurred shall be entitled to claim all tax benefits, write-offs and deductions with respect thereto.

25.02         The Operator shall prepare and shall file, after approval of the Management Committee, any tax returns or other tax forms required in connection with the Joint Operation.

FORCE MAJEURE

26.01         Notwithstanding anything herein contained to the contrary, if any Participant is prevented from or delayed in performing any obligation under this Agreement and such failure is occasioned by any cause beyond its reasonable control, excluding only lack of finances, then, subject to subsection 26.02, the time for the observance of the condition or performance of the obligation in question shall be extended for a period equivalent to the total period the cause of the prevent or delay persists or remains in effect regardless of the length of such total period.

26.02         Any party hereto claiming suspension of its obligations as aforesaid shall promptly notify the other parties to that effect and shall take all reasonable steps to remove or remedy the cause and effect of the force majeure described in the said notice insofar as it is reasonably able to do so and as soon as possible; provided that the terms of settlement of any labour disturbance or dispute, strike or lockout shall be wholly in the discretion of the party claiming suspension of its obligations by reason thereof; and that party shall not be required to accede to the demands of its opponents in any such labour disturbance or dispute, strike or lockout solely to remedy.

NOTICE

27.01         Each notice, demand or other communication required or permitted to be given under this Agreement shall be in writing and shall be sent by prepaid registered mail addressed to the party entitled to receive the same, or delivered to such party by hand, or communicated by telecopy or email, at the address for such party specified above, on any business day, in each case directed to the attention of the President.

27.02         The date of receipt of any notice, demand or other communication shall be the date of delivery thereof if delivered, the date of transmission if communicated by telecopy or email, or, if given by registered mail as aforesaid, shall be deemed conclusively to be the fifth day after the same shall have been so mailed except in the case of interruption of postal services for any reason whatever, in which case the date of receipt shall be the date on which the notice, demand or other communication is actually received by the addressee.

27.03         Either party may at any time and from time to time notify the other party in writing of a change of address and the new address to which notice shall be given to it thereafter until further change.

WAIVER

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28.01         No waiver of any breach of this Agreement shall be binding unless evidenced in writing executed by the party against whom charged. Any waiver shall extend only to the particular breach so waived and shall not limit any rights with respect to any future breach.

AMENDMENTS

29.01         Except for those provisions, if any, of the Head Agreement specifically incorporated herein by reference, this Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof. An amendment or variation of this Agreement shall only be binding upon a party if evidenced in writing executed by that party.

TERM

30.01         Unless earlier terminated by agreement of all parties having an Interest or as a result of one party acquiring a 100 percent Interest, the Joint Operation and this Agreement shall remain in full force and effect for so long as any party has any right, title or interest in the Property.  Termination of the Agreement shall not, however, relieve any party from any obligations theretofore accrued but unsatisfied, nor from its obligations with respect to rehabilitation of the Mine site and reclamation.

TIME OF ESSENCE

31.01         Time is of the essence of this Agreement.

SUCCESSORS AND ASSIGNS

32.01         This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.

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GOVERNING LAW

33.01         This Agreement shall be governed by and interpreted in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein, and the parties hereto irrevocably attorn to the exclusive jurisdiction of the courts of British Columbia, Vancouver Registry.

IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.

THE YUKON CORNELIUS SYNDICATE

By its Manager:

___________________________________

William Chornobay

Authorized Signatory

MILL CITY GOLD CORP.

Per:

___________________________________

James R. Brown

Authorized Signatory

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APPENDIX I

Attached to and forming part of a Joint Venture Agreement between The Yukon Cornelius Syndicate and Mill City Gold Corp. made as of _________________________.

ACCOUNTING PROCEDURE

INTERPRETATION

1.01           In this Appendix the following words, phrases and expressions shall have the following meanings:

"Agreement" means the Agreement to which this Accounting Procedure is attached as Appendix I.

"Count" means a physical inventory count.

"Employees" means those employees of the Operator who are assigned to and directly engaged in the conduct of Mining Operations, whether on a full-time or part-time basis.

"Employee Benefits" means the Operator's cost of holiday, vacation, sickness disability benefits, field bonuses, paid to and the Operator's cost of established plans for employee's group life insurance, hospitalization, pension, retirement and other customary plans maintained for the benefit of Employees and Personnel, as the case may be, which costs may be charged as a percentage assessment on the salaries and wages of Employees or Personnel, as the case may be, on a basis consistent with the Operator's cost experience.

"Field Offices" means the necessary sub-office or sub-offices in each place where a Program or Construction is being conducted or a Mine is being operated.

"Government Contributions" means the costs or contributions made by the Operator pursuant to assessments imposed by governmental authority which are applicable to the salaries or wages of Employees or Personnel, as the case may be.

"Joint Account" means the books of account maintained by the Operator to record all costs, expenses, credits and other transactions arising out of or in connection with the Mining Operations.

"Material" means the personal property, equipment and supplies acquired or held, at the direction or with the approval of the Management Committee for use in the Mining Operations and, without limiting generality, more particularly "Controllable Material" means such Material which is ordinarily classified as Controllable Material, as that classification is determined or approved by the Management Committee, and controlled in mining operations.

"Personnel" means those management, supervisory, administrative, clerical and other personnel of the Operator normally associated with the Supervision Offices whose salaries and wages are charged directly to the Supervision Office in question.

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"Reasonable Expenses" means the reasonable expenses of Employees or Personnel, as the case may be, for which those Employees or Personnel may be reimbursed under the Operator's usual expense account practice; including, without limiting generality, any relocation expenses necessarily incurred in order to properly staff the Mining Operations if the relocation is approved by the Management Committee.

"Supervision Offices" means the Operator's offices or departments within the Operator's offices from which the Mining Operations are generally supervised.

STATEMENTS AND BILLINGS

2.01           The Operator shall, by invoice, charge each Participant with its proportionate share of Exploration Costs and Mine Costs in the manner provided in sections 7 and 15 of the Agreement respectively.

2.02           The Operator shall deliver, with each invoice rendered for Costs incurred a statement indicating:

(a) all charges or credits to the Joint Account relating to Controllable Material in detail; and

(b) all other charges and credits to the Joint Account summarized by appropriate classifications indicative of the nature of the charges and credits.

2.03           The Operator shall deliver with each invoice for an advance of Costs a statement indicating:

(a) the estimated Exploration Costs or, in the case of Mine Costs, the estimated cash disbursements, to be made during the next succeeding month;

(b) the addition thereto or subtraction therefrom, as the case may be, made in respect of Exploration Costs or Mine Costs actually having been incurred in an amount greater or lesser than the advance which was made by each Participant for the penultimate month preceding the month of the invoice; and

(c) the advance made by each Participant to date and the Exploration Costs or Mine Costs incurred to the end of the penultimate month preceding the month of the invoice.

DIRECT CHARGES

3.01           The Operator shall charge the Joint Account with the following items:

(a)           Contractor's Charges:

(i) All proper costs relative to the Mining Operations incurred under contracts entered into by the Operator with third parties.

(b)           Labour Charges:

(i) The salaries and wages of Employees in an amount calculated by taking the full salary or wage of each Employee multiplied by that fraction which has as its numerator the total time for the month that the Employees were directly engaged

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in the conduct of Mining Operations and as its denominator the total normal working time for the month of the Employee;

(ii) the Reasonable Expenses of the Employees; and

(iii) Employee Benefits and Government Contributions in respect of the Employees in an amount proportionate to the charge made to the Joint Account in respect to their salaries and wages.

(c)           Office Maintenance:

(i) The cost or a pro rata portion of the cost, as the case may be, of maintaining and operating the Offices.  The basis for charging the Joint Account for Office maintenance costs shall be as follows:

(A) the expense of maintaining and operating Field Offices, less any revenue therefrom; and

(B) that portion of maintaining and operating the Supervision Offices which is equal to:

(1) the anticipated total operating expenses of the Supervision Offices divided by:

(2) the anticipated total staff man days for the Employees whether in connection with the Mining Operations or not;

multiplied by:

(3) the actual total time spent on the Mining Operations by the Employee expressed in days.

(ii) Without limiting generality, the anticipated total operating expenses of the Supervision Offices shall include:

(A) the salaries and wages of the Operator's Personnel which have been directly charged to those Offices;

(B) the Reasonable Expense of the Personnel; and

(C) Employee Benefits and Government Contributions in respect of the Personnel.

(iii) The Operator shall make an adjustment in respect of the Office Maintenance cost forthwith after the end of each Operating Year upon having determined the actual operating expenses and actual total staff man days referred to in clause 3.01(c)(i)(B) of this Appendix I.

(d)           Material:

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Material purchased or furnished by the Operator for use on a Property as provided under section 6 of this Appendix I.

(e)           Transportation Charges:

The cost of transporting Employees and Material necessary for the Mining Operations.

(f)           Service Charges:

(i) The cost of services and utilities procured from outside sources other than services covered by paragraph 3.01(i). The cost of consultant services shall not be charged to the Joint Account unless the retaining of the consultant is approved in advance by the Management Committee; and

(ii) Use and service of equipment and facilities furnished by the Operator as provided in subsection 4.05 of this Appendix I.

(g)           Damages and Losses to Joint Property:

All costs necessary for the repair or replacement of Assets made necessary because of damages or losses incurred by fire, flood, storm, theft, accident or other cause. The Operator shall furnish each Participant with written particulars of the damages or losses incurred as soon as practicable after the damage or loss has been discovered. The proceeds, if any, received on claims against any policies of insurance in respect of those damages or losses shall be credited to the Joint Account.

(h)           Legal Expense:

All costs of handling, investigation and settling litigation or recovering the Assets, including, without limiting generality, attorney's fees, court costs, costs of investigation or procuring evidence and amounts paid in settlement or satisfaction of any litigation or claims; provided, however, that, unless otherwise approved in advance by the Management Committee, no charge shall be made for the services of the Operator's legal staff or the fees and expenses of outside solicitors.

(i)           Taxes:

All taxes, duties or assessments of every kind and nature (except income taxes) assessed or levied upon or in connection with a Property, the Mining Operations thereon, or the production therefrom, which have been paid by the Operator for the benefit of the parties.

(j)           Insurance:

Net premiums paid for:

(i) such policies of insurance on or in Operations as may be required to be carried by law; and

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(ii) such other policies of insurance as the Operator may carry for the accordance with the Agreement; and

the applicable deductibles in event of an insured loss.

(k)           Rentals:

Fees, rentals and other similar charges required to be paid for acquiring, recording and maintaining permits, mineral claims and mining leases and rentals and of the Mining Operations.

(l)           Permits:

Permit costs, fees and other similar charges which are assessed by various governmental agencies.

(m)           Other Expenditures:

Such other costs and expenses which are not covered or dealt with in the foregoing provisions of this subsection 3.01 of this Appendix I as are incurred with the approval of the Management Committee for Mining Operations or as may be contemplated in the Agreement.

PURCHASE OF MATERIAL

4.01           Subject to subsection 4.04 of this Appendix I the Operator shall purchase all Materials and Operations.

4.02           Materials purchased and services procured by the Operator directly for the Mining Operations shall be charged to the Joint Account at the price paid by the Operator less all discounts actually received.

4.03           So far as it is reasonably practical and consistent with efficient and economical operations, the Operator shall purchase, furnish to otherwise acquire only such Material and the Operator shall attempt to minimize the accumulation of surplus stocks of Material.

4.04           Any Participant may sell Material or services required in the Mining Operations to the Operator for such price and upon such terms and conditions as the Management Committee may approve.

4.05           Notwithstanding the foregoing provisions of this section 4, the Operator shall be entitled to supply for use in connection with the Mining Operations equipment and facilities which are owned by the Operator and to charge the Joint Account with such reasonable Costs which is commensurate with the ownership and use thereof.

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DISPOSAL OF MATERIAL

5.01           The Operator, with the approval of the Management Committee, may, from time to time, sell any Material which has become surplus to the forseeable needs of the Mining Operations terms and conditions available.

5.02           Any Participant may purchase from the Operator any Material which may from time to time become surplus to the forseeable needs of the Mining Operations for such price and upon such terms and conditions as the Management Committee may approve.

5.03           Upon termination of the Agreement, the Management Committee may approve the division of any Material held by the Operator at that date may be between the Participants in kind or be taken by a Participant in lieu of a portion of its proportionate share of the net revenues received from the disposal of the Assets and Property. If the division to a Participant be in lieu, it shall be for such price and on such terms and conditions as the Management Committee may approve.

5.04           The net revenues received from the sale of any Material to third parties or to a Participant shall be credited to the Joint Account.

INVENTORIES

6.01           The Operator shall maintain records of Material in reasonable detail and records of Controllable Material in detail.

6.02           The Operator shall perform Counts from time to time at reasonable intervals and in connection therewith shall give notice of its intention to perform a Count to each Participant at least 30 days in advance of the date set for performing of the Count. Each Participant shall be entitled to be represented at the performing of a Count upon giving notice thereof to the Operator within 20 days of the Operator's notice. A Participant who is not represented at the performing of the Count shall be deemed to have approved the Count as taken.

6.03           Forthwith after performing a Count, the Operator shall reconcile the inventory with the Joint Account and provide each Participant with a statement listing the overages and shortages. The Operator shall not be held accountable for any shortages of inventory except such shortages as may have arisen due to a lack of diligence on the part of the Operator.

ADJUSTMENTS

7.01           Payment of any invoice by a Participant shall not prejudice the right of that Participant to protest the correctness of the statement supporting the payment; provided, however, that all invoices and statements presented to each Participant by the Operator during any Operating Year shall conclusively be presumed to be true and correct upon the expiration of 12 months following the end of the Operating Year to which the invoice or statement relates, unless within that 12 month period that Participant gives notice to the Operator making claim on the Operator for an adjustment to the invoice or statement.

7.02           The Operator shall not adjust any invoice or statement in favour of itself after the expiration of 12 months following the end of the Operating Year to which the invoice or statement relates.

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7.03           Notwithstanding subsections 7.01 and 7.02 of this Appendix I, the Operator may make adjustments to an invoice or statement which arises out of a physical inventory of Material or Assets.

7.04           A Participant shall be entitled upon notice to the Operator to examine the accounting records and books maintained by the Operator in respect of the Joint Operations and to request that the independent external auditors of the Operator provide that Participant with their opinion that any invoice or statement delivered pursuant to the Agreement in respect of the period referred to in subsection 7.01 of this Appendix I has been prepared in accordance with this Agreement.

7.05           The time required for giving the audit opinion contemplated in subsection 7.04 of this Appendix I shall not extent the time for the taking of exception to and making claim on the Operator for adjustment as provided in subsection 7.01 of this Appendix I.

7.06           The cost of the auditors opinion referred to in subsection 7.04 of this Appendix I shall be solely for the account of the Participant requesting the auditor's opinion, unless the audit disclosed a material error adverse to that Participant, in which case the cost shall be solely for the account of the Operator.

APPENDIX II

Attached to and forming part of a Joint Venture Agreement between The Yukon Cornelius Syndicate and Mill City Gold Corp. made as of _________________________.

NET PROCEEDS OF PRODUCTION

OBLIGATION

1.01           If any non-Participant becomes entitled to a royalty pursuant to paragraph 10.02(b) of the Agreement, each Participant shall separately calculate, as at the end of each calendar quarter subsequent to the Completion Date, the Net Proceeds of Production.

1.02           Each Participant shall within 60 days of the end of each calendar quarter, as and when any Net Proceeds of Production are available for distribution:

(a) severally pay or cause to be paid to each non-Participant that percentage of the Net Proceeds of Production to which that non-Participant is entitled under paragraph 10.02(b) of the Agreement;

(b) deliver to each non-Participant a statement indicating:

(i) the Gross Receipts during the calendar quarter;

(ii) the deductions therefrom made in the order itemized in subsection 3.01 of this Appendix II;

(iii) the amount of Net Proceeds of Production remaining; and

(iv) the amount of those Net Proceeds of Production to which that non-Participant is entitled;

provided, however, that, until such time as there are Net Proceeds of Production available, each Participant shall deliver to each non-Participant, within 60 days of the end of each calendar quarter commencing with the first calendar quarter following the Completion Date, a statement indicating the Gross Receipts during the calendar quarter less the deductions therefrom made in the order itemized in subsection 3.01 of this Appendix II.

1.03           Nothing contained in the Agreement or this Appendix shall be construed as:

(a) imposing on a Participant any obligation with respect to the payments of royalty due hereunder to a non-Participant from any other Participant; or

(b) conferring on any non-Participant any right to or interest in any Property or Assets except the right to receive royalty payments from each Participant as and when due.

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1.04           The Participants agree that on request of any non-Participant they will execute and deliver such documents as may be necessary to permit that non-Participant to record its royalty right against the Property.

DEFINITIONS

2.01           In addition to the definitions of the classes of Costs provided in paragraph 1.01(g) of the Agreement and without limiting the generality thereof:

(a) "Distribution Costs" means all Costs of:

(i) transporting ore, concentrate or gemstones from a Mine or a concentrating plant to a smelter or other place of delivery designated by the purchaser;

(ii) handling, warehousing and insuring the concentrates, metal and gemstones;

(iii) in the case of concentrates tolled, of smelting and refining, including any penalties thereon or in connection therewith; and

(iv) in the case of gemstones, of any cutting and polishing.

(b) "Interest Costs" means interest computed quarterly and not in advance calculated as follows:

the average of the opening and closing monthly outstanding balance for each month during the quarter of the net unrecovered amounts of all Costs in the classes enumerated in subparagraphs 1.01(g)(i), (ii) (iv) and (v) of the Agreement, and in paragraphs 2.01(a), (b), (c) and (d) of this Appendix II; multiplied by, (ii) the Prime Rate plus two percent; multiplied by, (iii) the number of days in the quarter; divided by, (iv) the number of days in the Year;

(c) "Marketing Costs" means such reasonable charge for marketing of ore, concentrate or gemstones sold or of concentrates tolled as is consistent with generally accepted marketing practices; and

(d) "Taxes and Royalties" means all taxes (other than income taxes), royalties or other charges or imposts provided for pursuant to any law or legal obligation imposed by any government if paid by the Participant.

2.02           Wherever used in this Appendix II, "Gross Receipts" means the aggregate of all receipts, recoveries or amounts received by or credited to a Participant in connection with its participation under the Agreement including, without limiting the generality of the foregoing:

(a) the receipts from the sale of that Participant's proportionate share of the ore, concentrate or gemstones from the Mine together with interest on those receipts calculated as follows:

(i) the aggregate of the cumulative daily receipts for each day of the quarter; divided by,

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(ii) the number of days in the quarter; multiplied by,

(iii) the Prime Rate; multiplied by,

(iv) the number of days in the quarter;

divided by,

(v) the number of days in the Year;

(b) all proceeds received from the sale of the Property or Assets subsequent to the Operative Date;

(c) all insurance recoveries (including amounts received to settle claims) in respect of loss of, or damage to any portion of the Property or Assets subsequent to the Operative Date;

(d) all amounts received as compensation for the expropriation or forceable taking of any portion of the Property or Assets subsequent to the Operative Date;

(e) the fair market value, at the Property, of those Assets, if any, purchased for the Joint Account, that are transferred from the Property for use by a Participant elsewhere subsequent to the Operative Date; and

(f) the amount of any negative balance remaining after the reallocation of negative balances pursuant to subsection 3.03 of this Appendix II;

to the extent that those receipts, recoveries or amounts have not been applied by the Participant as a recovery of any of the classes of Costs itemized in subsection 3.01 of this Appendix II.

NET PROCEEDS OF PRODUCTION

3.01           "Net Proceeds of Production" means the Gross Receipts minus deductions therefrom, to the extent of but not exceeding the amount of those Gross Receipts, of the then net unrecovered amounts of the following classes of Costs made in the following itemized order:

(a)           Marketing Costs;

(b)           Distribution Costs;

(c)           Operating Costs;

(d)           Taxes and Royalties;

(e)           Interest Costs;

(f)           Capital Costs;

(g)           Exploration Costs; and

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(h)           Prior Exploration Costs;

it being understood that the deductions in respect of the Costs referred to in paragraphs 3.01(a), (b), (d) and (e) of this Appendix II shall be based on those Costs as recorded by that Participant and the deductions in respect of the Costs referred to in paragraphs 3.01(e), (f), (g) and (h) of this Appendix II shall be based on that Participant's proportionate share of those Costs as recorded by the Operator.

3.02           For greater certainty, in calculating Net Proceeds of Production at any time, each of the classes of Costs shall constitute a separate pool from which all Costs deducted on any previous quarterly calculation shall be removed and to which, in the case of all classes of Costs, excepting Prior Exploration Costs, Costs of those classes recorded since the Operative Date (in the case of the first quarterly calculation) or since the date of the last quarterly calculation (in the case of any calculation subsequent to the first quarterly calculation) shall be added.

3.03           If the application of credits to a pool of Costs results in a negative balance in that pool of Costs, the amount of any negative balance from a Cost pool shall be applied to reduce the balance then remaining in pools itemized in subsection 3.01 of this Appendix II in the order itemized.

ADJUSTMENTS AND VERIFICATION

4.01           Payment of any Net Proceeds of Production by a Participant shall not prejudice the right of that Participant to protest the correctness of the statement supporting the payment; provided, however, that all statements presented to the non-Participant by that Participant for any quarter shall conclusively be presumed to be true and correct upon the expiration of 12 months following the end of the quarter to which the statement relates, unless within that 12 month period that Participant gives notice to the non-Participant making claim on the non-Participant for an adjustment to the statement which will be reflected in subsequent payment of Net Proceeds of Production.

4.02           The Participant shall not adjust any statement in favour of itself after the expiration of 12 months following the end of the quarter to which the statement relates.

4.03           The non-Participant shall be entitled upon notice to any Participant to request from any Participant that the auditors of that Participant provide the non-Participant with their opinion that any statement delivered pursuant to subsection 1.01 of this Appendix II in respect of any quarterly period falling with the 12 month period immediately preceding the date of the non-Participant's notice has been prepared in accordance with this Agreement.

4.04           The time required for giving the audit opinion contemplated in subsection 4.03 of this Appendix II shall not extend the time for the taking of exception to and making claim on the non-Participant for adjustment as provided in subsection 4.01 of this Appendix II.

4.05           The cost of the auditors opinion referred to in subsection 4.03 of this Appendix II shall be solely for the account of the non-Participant requesting the auditors' opinion.

SCHEDULE 1.01-3

Attached to and forming part of an Option Agreement made as of November ___, 2010 between The Yukon Cornelius Syndicate and Mill City Gold Corp.

MEMBERS AND MEMBERSHIP INTERESTS

Name and Mailing Address	Interest in Syndicate Assets
16406 YUKON INC. Bag 7080 Dawson City, Yukon Territory Y0B 1G0	20.0%
0865381 B.C. LTD. 1640 Spray Avenue Coquitlam, British Columbia V3J 5Y6	5.0%
BRUCE DURHAM 907 – 251 Quay West Toronto, Ontario M5J 2N6	7.5%
GOLDPLAY INVESTMENTS INC. 1585 Springfield Road Kelowna, British Columbia V1Y 5V5	10%
1511558 ALBERTA INC. 2735 Brecken Road NW Calgary, Alberta T2L 1H4	7.5%
0760180 B.C. LTD. #303 – 10090 – 152nd Street Langley, British Columbia V3R 8X8	5.0%
0739796 BC LTD. PO Box 759 Fort Langley, British Columbia V1M 2S2	10.0%
517769 B.C. LTD. PO Box 759 Fort Langley, British Columbia V1M 2S2	10.0%
TERRENCE E. KING LAW CORPORATION 1300 - 1111 West Georgia Street Vancouver, British Columbia V6E 4M3	5.0%
2258501 ONTARIO INC. 2500 – 130 King Street West Toronto, Ontario M5X 1A9	20.0%

SCHEDULE 1.01-4

Attached to and forming part of an Option Agreement made as of November   8  , 2010 between The Yukon Cornelius Syndicate and Mill City Gold Corp.

CALCULATION AND PAYMENT OF ROYALTY

1.           In this Schedule the following words and phrases shall have the following meanings and other capitalized words and phrases have the meanings assigned to them in the agreement to which this Schedule is attached:

“Commercial Production” means the commercial exploitation of Ore but does not include milling for the purpose of testing or milling or leaching by a pilot plant or during an initial tune up period of the plant. Commercial Production with respect to the Property shall be deemed to have commenced on the first day of the month following the first period of 30 consecutive days during which Ore from the Property have been processed through the plant at an average rate of not less than 85% of the initial rated capacity of the plant as set forth in the Positive Feasibility Report;

"Net Smelter Returns" with respect to the Claims means the gross proceeds actually received by the Optionee in any year from the sale of Product from the mining operation on the Claims, less successively:

(a) smelting costs, treatment charges and penalties, including, but not limited to, metal losses, penalties for impurities and charges for refining, selling and handling by the smelter, refinery or other purchaser; provided that in the case of leaching operations or other solution mining techniques, where the metal being treated is precipitated or otherwise directly derived from such leach solution, all processing and recovery costs incurred beyond the point at which the metal being treated is in solution shall be considered as treatment charges;

(b) costs of handling, transporting and insuring Product, whether situated on or off the Property, to a smelter, refinery or other place of treatment, and sampling and assaying procedures carried out after Product has left the Property; and

(c) government royalties and other government charges and imposts, and ad valorem taxes and taxes based upon production, but not income taxes;

"Ore" means any material containing a mineral of commercial economic value mined from the Claims;

"Product" means Ore mined from the Claims and any concentrates or other materials or products derived therefrom; provided that if any such Ore, concentrates or other materials or products are further treated as part of the mining operation in respect of the Claims, such Ore, concentrates or other materials or products shall not be considered to be "Product" until after they have been so treated.

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2.           The Optionee shall give notice to the Optionor of the date on which Ore is first mined.  For clarity, pilot plant operations and the mining or milling of Ore in connection therewith shall not be considered Commercial Production.

3.           The amount of Royalty payable to the Optionor, namely 3.0% of Net Smelter Returns, shall be calculated by the Optionee at the end of such quarter and shall be paid to the Optionor on or before the last day of the next following quarter.  Any adjustments in the payment of Royalties hereunder arising out of an audit referred to in paragraph 9hereof shall be made and paid at that time.

4.           For the purposes of calculating the amount of any Royalty payable to the Optionor, if after the date of commencement of Commercial Production from the mining operation on the Claims the Optionee sells any Product to one of its subsidiaries or affiliates, and if the sale price of such Product is not negotiated on an arm's length basis, the Optionee shall for the purposes of calculating Net Smelter Returns only and notwithstanding the actual amount of such sale price, add to the proceeds from the sale of such Product an amount which would be sufficient to make such sale price represent a reasonable net sale price for such Product as if negotiated at arm's length and after taking into account all pertinent circumstances (including, without limitation, then current market conditions relating to Ore, concentrates or other materials or products similar to such Product).

5.           The Optionee shall by notice inform the Optionor of the quantum of such reasonable net sale price and if the Optionor does not object thereto within 60 days after receipt of such notice, said quantum shall be final and binding for the purposes of this paragraph.

6.           On or before the last day of each quarter of each year after the date of commencement of Commercial Production, the Optionee shall deliver to the Optionor a statement indicating in reasonable detail, as of the last day of the immediately preceding quarter, the calculation of Net Smelter Returns and the aggregate Royalty payable for such quarter.

7.           The Optionee may remove reasonable quantities of Ore and rock from the Claims for the purpose of bulk sampling and of testing, and there shall be no Royalty payable to the Optionor with respect thereto unless significant profits are derived therefrom.

8.           The Optionee agrees to maintain for each Mining operation on the Claims up to date and complete records relating to the production and sale of Product including accounts, records, statements and returns relating to treatment and smelting arrangements of the Product, and the Optionor or its agents shall have the right at all reasonable times, including for a period of 12 months following the expiration or termination of this Agreement, to inspect such records, statements and returns and make copies thereof at its own expense for the purpose of verifying the amount of Royalty payments to be made by the Optionee to the Optionor pursuant hereto.  The Optionor shall have the right at its own expense to have such accounts audited by independent auditors once each y ear.

9.           The Optionee shall have an audited statement prepared by its auditors for each year with respect to the Royalty payable to the Optionor hereunder, by the last day of the sixth month in the following financial year of the Optionee, and the Optionee shall forthwith deliver a copy of such statement to the Optionor.

10.           All Royalty payments shall be considered final and in full satisfaction of all obligations of the Optionee making same in respect thereof if such payments or the calculation in respect thereof are not disputed by the Optionor within 60 days after receipt by the Optionor of the audited statement referred to in paragraph 9 hereof.

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11.           The Optionee shall have the right to commingle with Ores from the Property ore produced from other properties provided that prior to such commingling, the Optionee shall adopt and employ reasonable practices and procedures for weighing, determination of moisture content, sampling and assaying, as well as utilize reasonably accurate recovery factors in order to determine the amounts of Products derived from, or attributable to Ore mined and produced from the Claims.  The Optionee shall maintain accurate records of the results of such sampling, weighing and analysis as pertaining to Ore mined and produced from the Claims.