e424b3

/s/ John M. Leask

/s/ Megan Cameron-Jones

John M. Leask

Megan Cameron-Jones

Filed Pursuant to Rule 424(b)(3)

Registration No. 333-138233

U.S. GOLD CORPORATION and

US GOLD CANADIAN ACQUISITION CORPORATION

OFFER TO PURCHASE

all of the outstanding common shares of

WHITE KNIGHT RESOURCES LTD.

on the basis of

0.35 of an exchangeable share of US Gold Canadian Acquisition Corporation

for each White Knight common share

U.S. Gold Corporation (“U.S. Gold,” “we,” “us,” or “our company”) and its wholly-owned subsidiary, US Gold Canadian Acquisition Corporation, or Canadian Exchange Co., hereby offer to purchase all of the outstanding common shares of White Knight Resources Ltd. (“White Knight”). The offer will be open for acceptance until the expiry time, which is 5:00 p.m. (Vancouver time) on March 23, 2007, unless extended or withdrawn.

White Knight’s common shares are listed for trading on the TSX Venture Exchange, or the TSX-V, under the symbol “WKR-V.” Our common stock was quoted on the Over-the-Counter Bulletin Board, or OTCBB, under the symbol “USGL” until it began trading on the American Stock Exchange, or the AMEX, under the symbol “UXG” on December 11, 2006 and is listed for trading on the Toronto Stock Exchange, or the TSX, under the symbol “UXG”.

Under the offer, each White Knight common share that is tendered in the offer and accepted for purchase will be exchanged for 0.35 of an exchangeable share of Canadian Exchange Co. The exchangeable shares of Canadian Exchange Co. will be exchangeable for shares of common stock of U.S. Gold on a one-for-one basis and will have the rights, privileges, restrictions and conditions described in this prospectus.

The offer is subject to certain conditions, each of which is set forth in the section entitled “The Offer — Conditions of the Offer” on page 43 of this prospectus.

The offer is being made only for White Knight’s common shares and is not being made for any warrants, options or other securities that may entitle the holder to acquire common shares of White Knight. Any holder of these securities who wishes to accept the offer must exercise or convert those securities according to their terms and deposit the common shares received upon exercise or conversion in accordance with the procedures described in this prospectus for the offer under the sections entitled “The Offer — Time for Acceptance” and “The Offer — Manner of Acceptance” on pages 45 and 47, respectively, of this prospectus. Any such exercise or conversion must be sufficiently in advance of the expiry time to permit the common shares acquired on the exercise or conversion of those securities to be tendered in the offer in accordance with these procedures. However, after completion of the offer, we may implement a statutory plan of arrangement or similar transaction providing for the mandatory exchange of all remaining outstanding White Knight common shares for additional exchangeable Shares of Canadian Exchange Co. in order to acquire full ownership of White Knight, which we expect we would structure so that warrants to purchase White Knight common shares would be exchanged for warrants to purchase exchangeable shares of Canadian Exchange Co. and U.S. Gold would assume or adopt the White Knight stock option plan so that options under that plan would be exercisable for shares of common stock of U.S. Gold. See the section entitled “The Offer — Other Terms — Subsequent Acquisition Transaction” on page 54 of this prospectus.

In this prospectus we are not asking you for, and you are requested not to send us, a proxy. We are registering on the registration statement, of which this prospectus is a part, the exchangeable shares of Canadian Exchange Co. to be issued in the offer, as well as the shares of common stock of U.S. Gold issuable upon exchange of the exchangeable shares in accordance with the terms described in this prospectus.

The securities offered in this prospectus involve certain risks. For a discussion of risk factors that you should consider in evaluating the offer, see the section entitled “Risk Factors” beginning on page 20 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense. Important Notice to Arizona-Resident Stockholders: This investment involves a high degree of risk. You should purchase these securities only if you can afford a complete loss of your investment.

The dealer managers for the offer are:


In the United States:		In Canada and Countries Outside the United States:
*GEORGESON SECURITIES CORPORATION*		*GMP SECURITIES L.P.*

The date of this prospectus is February 12, 2007

ABOUT THIS PROSPECTUS

We have filed with the SEC a registration statement on Form S-4, under the Securities Act of 1933, as amended, or the Securities Act, with respect to the securities offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all of the business and financial information about U.S. Gold set forth in the registration statement, certain parts of which have been incorporated by reference into the registration statement in accordance with the rules and regulations of the SEC. You should review the registration statement and the exhibits to the registration statement for further information with respect to us and our securities.

References to “us”, “we”, “our” and similar terms refer to U.S. Gold.

IMPORTANT NOTE

You should rely only on information contained or incorporated by reference in this prospectus. We have not authorized anyone to provide you with information different from that contained or incorporated in this prospectus.

This document does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which such offer or solicitation is unlawful. The offer is not being made or directed to, nor is this document being mailed to, nor will deposits be accepted from or on behalf of, shareholders in any jurisdiction in which the making or acceptance of the offer would not be in compliance with the laws of such jurisdiction. However, we may, in our sole discretion, take such action as we may deem necessary to extend the offer to shareholders in any such jurisdiction.

You should not assume that the information contained or incorporated by reference in this prospectus is accurate as of any date other than the date on the front of this prospectus or the dates of the documents incorporated by reference.

WHERE YOU CAN FIND MORE INFORMATION

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, and we file annual, quarterly and periodic reports and proxy statements and file or furnish other information with the SEC. White Knight is subject to the reporting requirements of the Exchange Act applicable to foreign private issuers and accordingly files or furnishes reports, including annual reports on Form 20-F, reports on Form 6-K and other information, with the SEC. The SEC maintains a web site (http://www.sec.gov) on which these reports, proxy statements and other information are made available. These reports, proxy statements and other information may also be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

THIS PROSPECTUS AND THE ACCOMPANYING LETTER OF ACCEPTANCE AND TRANSMITTAL AND NOTICE OF GUARANTEED DELIVERY CONTAIN IMPORTANT INFORMATION. YOU SHOULD CAREFULLY READ THESE DOCUMENTS IN THEIR ENTIRETY BEFORE MAKING A DECISION WITH RESPECT TO THE OFFER.

INCORPORATION BY REFERENCE OF CERTAIN DOCUMENTS AND INFORMATION OF U.S. GOLD FOR U.S. SHAREHOLDERS

The SEC allows us to “incorporate by reference” certain information we have filed with them into this prospectus. This means that we can disclose important information about us by referring U.S. shareholders to another document filed separately with the SEC. The information incorporated by reference is considered to be part of this prospectus, except for any information that is superseded by information that is included directly in this document. For U.S. shareholders, the prospectus incorporates important business and financial information about us that is not included in or delivered with this prospectus.

The following documents filed with the SEC are incorporated by reference into this prospectus:


	•	Annual Report on Form 10-KSB, as amended, for the fiscal year ended December 31, 2005, filed with the SEC on January 24, 2007;

	•	Quarterly Reports on Form 10-QSB for the quarterly periods ended March 31, 2006, June 30, 2006 and September 30, 2006 (as amended), filed with the SEC on May 22, 2006, August 24, 2006 and January 24, 2007, respectively;

	•	Current Reports on Form 8-K filed with the SEC on February 27, March 6, March 31, May 1, June 30, July 6, July 7, July 25, August 8, August 9, August 29, September 6, October 20, November 28, November 30, December 7, and December 27, 2006, and January 19, 2007 (except to the extent any information contained in a current report is furnished to, and not filed with, the SEC); and

	•	Any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the earlier of the date that the offer is consummated or the date the offer is terminated.

These documents incorporated by reference form an important part of this prospectus and investors should review all such documents. In particular, the information relating to us contained directly in this prospectus is not comprehensive and should be read together with the information contained in the incorporated documents. Additionally, descriptions contained or incorporated by reference in this prospectus as to the contents of any contract or other document filed as an exhibit to our filings may not contain all of the information which is of interest to you. You should refer to the copy of the contract or other document filed as an exhibit to our filings. You may review our subsequent reports filed from time to time with the SEC on Forms 10-KSB, 10-QSB and 8-K and any amendments thereto. See the section entitled “Where You Can Find More Information” on page iv of this prospectus.

You may request a copy of these filings incorporated herein by reference, including exhibits to these documents that are specifically incorporated by reference, at no cost to you, by writing or calling us at the following address or telephone number:

Corporate Secretary

U.S. Gold Corporation

2201 Kipling Street, Suite 1000

Lakewood, Colorado 80215-1545

303-238-1438

In order to obtain timely delivery, you must request the information no later than March 16, 2007, which is five business days before the proposed expiry date of the offer.

INFORMATION CONCERNING WHITE KNIGHT

We have not had complete access to the non-public books and records of White Knight. We have obtained the information about White Knight contained in this prospectus from White Knight and publicly available sources. In addition to the information filed by White Knight with the SEC under the Exchange Act, White Knight files audited annual financial statements, unaudited interim financial statements, management’s discussion and analysis, proxy statements or information circulars and other information with the Canadian Securities Administrators on the System for Electronic Document Analysis and Retrieval, or SEDAR. The information concerning White Knight

contained in this prospectus, including Appendix A (Information Concerning White Knight) has been taken from White Knight’s annual report on Form 20-F for the fiscal year ended June 30, 2006 filed with the SEC on October 20, 2006 and its Management’s Discussion and Analysis and Interim Financial Statements for the quarter ended September 30, 2006, filed on SEDAR on November 14, 2006. The information contained in this prospectus about White Knight, including Appendix A (Information Concerning White Knight) and all reconciliations of White Knights’ financial information, which White Knight prepares in accordance with Canadian generally accepted accounting principles, or Canadian GAAP, to U.S. generally accepted accounting principles, or U.S. GAAP, and from Canadian dollars to U.S. dollars, included in the historical and pro forma financial information contained in this prospectus are based exclusively on information taken directly from White Knight’s public reports and securities filings or on information provided to us by White Knight, unless expressly noted otherwise. Although we have no reason to doubt the accuracy or completeness of the information relating to White Knight, we are not in a position to independently assess or verify this information, including White Knight’s financial statements. See the section entitled “Risk Factors — We have been unable to independently verify the reliability of information about White Knight, Nevada Pacific and Tone Resources contained in this prospectus” on page 22 of this prospectus.

FORWARD-LOOKING STATEMENTS

Some of the information included in this prospectus and certain other documents we filed or will file with the SEC (as well as information included in other documents accompanying this prospectus or included in other statements made by us, our representatives, and information about White Knight, Nevada Pacific Gold Ltd., or Nevada Pacific, and Tone Resources Limited, or Tone Resources) may contain forward-looking statements. Forward-looking statements do not relate strictly to historical or current facts, often will be phrased in the future-tense, and may include the words “may,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan” or other words or expressions of similar meaning. Forward-looking statements that relate to U.S. Gold or our business are based on our beliefs and expectations about future events, and include statements that reflect management’s plans, objectives, goals, expectations, anticipations and intentions with respect to our financial condition, results of operations, future performance and business, including statements relating to our business strategy and our current and future development plans.

Although we believe that the expectations reflected in any forward-looking statements are reasonable, any or all of the forward-looking statements in this prospectus or in documents accompanying this prospectus may prove to be incorrect. This may occur as a result of inaccurate assumptions or as a consequence of known or unknown risks and uncertainties. Many factors discussed in this prospectus and in documents accompanying this prospectus, some of which are beyond our control, will be important in determining U.S. Gold’s future performance following a combination, if any, of the businesses or assets of U.S. Gold and White Knight, Nevada Pacific and Tone Resources, which we refer to in this prospectus as the target companies. Consequently, actual results may differ materially from those predicted in or that might be anticipated from forward-looking statements. Therefore, you should not regard such forward-looking statements as a representation that the predictions or expectations reflected in the forward-looking statements will be achieved, and you should not place undue reliance on such forward-looking statements.

Uncertainties that could affect the accuracy of forward-looking statements, besides the specific risk factors identified in the section entitled “Risk Factors” beginning on page 20 of this prospectus, include:


	•	decisions of foreign countries and banks within those countries;

	•	technological changes in the mining industry;

	•	the level of demand for our products;

	•	changes in our business strategy;

	•	interpretation of drill hole results and the geology, grade and continuity of mineralization;

	•	the uncertainty of reserve estimates and timing of development expenditures;

	•	unexpected changes in business and economic conditions;

	•	changes in interest rates and currency exchange rates;


	•	timing and amount of production;

	•	changes in mining, processing and overhead costs;

	•	access and availability of materials, equipment, supplies, labor and supervision, power and water;

	•	results of current and future exploration activities;

	•	results of pending and future feasibility studies;

	•	local and community impacts and issues;

	•	accidents and labor disputes; and

	•	commodity price fluctuations.

We undertake no obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, other than to reflect a material change in the information previously disclosed, as required by applicable law. You should review our subsequent reports filed from time to time with the SEC on Forms 10-KSB, 10-QSB and 8-K, and any amendments thereto. As noted in the section entitled “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” beginning on page v of this prospectus, several of these reports are incorporated by reference into this prospectus.

REPORTING CURRENCIES AND FINANCIAL PRINCIPLES

All references to “$” or “dollars” in this document refer to United States dollars, unless otherwise indicated. All financial information contained in this prospectus is reported in U.S. dollars unless otherwise noted. References to Canadian dollars in this prospectus are indicated as “Cdn$”.

Our financial statements are prepared in accordance with U.S. GAAP. The target companies’ audited consolidated financial statements and the notes thereto are stated by each respective target company to have been prepared in accordance with Canadian GAAP. All reconciliations of the target companies’ financial data from Canadian GAAP to U.S. GAAP and, where applicable, from Canadian dollars to U.S. dollars included in the historical and pro forma financial information contained in this prospectus are based on information taken directly from the target companies’ public reports and filings or provided to us by the target companies unless expressly noted otherwise.

vii

SUMMARY

This summary highlights information more fully described elsewhere in this prospectus and may not contain all the information that is important to you. This summary is not intended to be a substitute for the information contained in this prospectus and is qualified in its entirety by the more detailed descriptions provided elsewhere in this prospectus and in the documents incorporated by reference, including the section “Risk Factors” beginning on page 20 of this prospectus and our consolidated pro forma financial statements and notes.

The Offerors

U.S. Gold

We are engaged in the exploration for gold and other precious metals. We hold a 100% interest in the Tonkin Springs property in Eureka County, Nevada, subject to paramount title in the United States. This property consists of approximately 44 square miles of unpatented lode mining claims and millsite claims located on the Battle Mountain-Eureka Trend, also known as the Cortez Trend, approximately 45 miles northwest of the town of Eureka in north-central Nevada. We are presently in the exploration stage at the Tonkin Springs property. We have not generated revenue from mining operations since 1990.

We were organized as a corporation under the laws of the State of Colorado on July 24, 1979 under the name Silver State Mining Corporation. On June 21, 1988, we changed our name to U.S. Gold Corporation.

Our principal executive offices are located at 2201 Kipling Street, Suite 100, Lakewood, Colorado, 80215 and our telephone number is (303) 238-1438. Our website is www.usgold.com. Information contained on the website is not incorporated by reference into this prospectus and you should not consider information contained on the website as part of this prospectus. Our common stock is listed on the Toronto Stock Exchange, or the TSX, under the symbol “UXG” and on the AMEX under the symbol “UXG.” We are subject to the reporting requirements of the Exchange Act and, as such, file or furnish reports and other information with the SEC from time to time.

In addition to this offer to purchase all of the outstanding common shares of White Knight, we expect to commence separate offers to purchase all of the outstanding common shares of each of Nevada Pacific and Tone Resources at the same time as the offer or as soon as practicable following, among other things, obtaining any necessary consents from the respective auditors of Nevada Pacific and Tone Resources and satisfaction of other regulatory requirements. Like White Knight, each of these companies conducts mineral exploration activities in the Cortez Trend in Nevada and has mineral exploration properties that are adjacent to or near our Tonkin Springs property. We believe the significant benefits to combining U.S. Gold, White Knight, Nevada Pacific and Tone Resources include:


	•	a larger land position within the Cortez Trend and a larger exploration program;

	•	a stronger cash position and reduced costs;

	•	enhanced trading liquidity and better market focus; and

	•	greater technical expertise.

Upon successful completion of the offers to purchase the outstanding common shares of White Knight, Nevada Pacific and Tone Resources, which we refer to in this prospectus as the strategic offers, our combined company would strive to become the premier exploration company in Nevada. However, White Knight shareholders should be aware that the successful completion of any or all of our offers to purchase all of the outstanding shares of Nevada Pacific and Tone Resources is not a condition of this offer. See the section entitled “Intentions of the Offerors — Strategic Rationale for the Offer” on page 59 of this prospectus.

Canadian Exchange Co.

Our wholly-owned subsidiary, US Gold Canadian Acquisition Corporation, or Canadian Exchange Co., is a corporation we incorporated under the Business Corporations Act (Alberta) solely for the purpose of making the strategic offers. Canadian Exchange Co. has no significant assets and has not engaged in any business or other activities to date.

In connection with this offer and the other strategic offers, Canadian Exchange Co. will issue its exchangeable shares in exchange for the validly tendered and not validly withdrawn common shares of each of White Knight, Nevada Pacific and Tone Resources. The exchangeable shares are being issued in connection with the offers to achieve intended tax efficiencies, as described in the sections entitled “Material Canadian Federal Income Tax Considerations” and “Material U.S. Federal Income Tax Considerations” on pages 65 and 75, respectively, of this prospectus. The exchangeable shares are exchangeable into shares of our common stock on a one-for-one basis and are intended to have, to the extent practicable, the same economic, voting and other rights of our common stock. Under the exchangeable/share provisions, the holders of the exchangeable shares will be entitled to annually elect one of the three directors of Canadian Exchange Co. See the section entitled “The Offer — Exchangeable Shares” on page 35 of this prospectus.

Canadian Exchange Co.’s executive office is located at 2900 Manulife Place, 10180-101 Street, Edmonton, Alberta, Canada T5J 3V5 and its telephone number is (780) 423-7100.

White Knight

White Knight is an exploration company active in finding and generating new mineral prospects. White Knight’s portfolio includes 18 properties, 15 of which are in Nevada’s Cortez Trend. White Knight was incorporated under the laws of British Columbia, Canada on December 18, 1986.

White Knight’s principal executive offices are located at 922, 510 West Hastings Street, Vancouver, British Columbia, Canada V6B 1LB. White Knight’s common shares are listed on the TSX-V, and it is subject to the reporting requirements of the Exchange Act, and as such, files or furnishes reports with the SEC.

The Offer

White Knight Common Shares

We are offering to purchase, upon the terms and subject to the conditions of the offer, all of the outstanding common shares of White Knight, including any common shares that may be issued after the date of the offer and prior to its expiry time. Each White Knight common share which is tendered in the offer and accepted for purchase will be exchanged for 0.35 of an exchangeable share of Canadian Exchange Co. The exchangeable shares will, under the circumstances described in this prospectus, be exchangeable for shares of common stock of U.S. Gold on a one-for-one basis.

Your participation in the offer and the receipt of the exchangeable shares may result in different tax consequences, depending upon facts specific to you. You should carefully review the description of the tax consequences of the proposed transactions under the sections entitled “Material Canadian Federal Income Tax Considerations” and “Material U.S. Federal Income Tax Considerations,” on pages 65 and 75, respectively, of this prospectus, and you are encouraged to seek independent tax advice with respect to your specific circumstances.

Warrants, Options or Other Securities

The offer is being made only for common shares of White Knight and is not being made for any warrants, options or other securities that may entitle the holder to acquire common shares of White Knight. Any holder of these securities who wishes to accept the offer must first exercise those securities and tender the common shares issued upon exercise in advance of the expiry time of the offer in accordance with the procedures described under the sections entitled “The Offer — Time for Acceptance” and “— Manner of Acceptance” on pages 45 and 47, respectively, of this prospectus. However, after completion of the offer, we may implement a subsequent acquisition transaction to acquire full ownership of White Knight, which we expect we would structure so that any White Knight warrants would be exchanged for warrants to purchase exchangeable shares of Canadian Exchange Co. and so that the White Knight stock option plan would be assumed or adopted by us and options to purchase White Knight common shares would entitle the option holders to purchase shares of our common stock, in each case with appropriate adjustments to the exercise price of any warrant or option. See the section entitled “The Offer — Other Terms — Subsequent Acquisition Transaction” on page 54 of this prospectus.

Fractional Shares

Fractional exchangeable shares will not be issued in the offer. Instead, the number of exchangeable shares to be issued to each tendering shareholder will be either rounded up (if the fractional interest is 0.5 or more) or down (if the fractional interest is less than 0.5) to the next whole number. For purposes of this rounding, all White Knight common shares deposited by a tendering shareholder will be aggregated.

Total Expected Issuance of U.S. Gold Shares

Based on information provided by White Knight as of February 1, 2007, the total number of White Knight common shares that are outstanding or underlying outstanding options or warrants is 64,379,972. Based on this number and the exchange ratio of 0.35 of an exchangeable share of Canadian Exchange Co., we expect to issue approximately 22,532,990 exchangeable shares of Canadian Exchange Co. in connection with the offer. The disclosure in this prospectus regarding the anticipated effects of the transactions on our voting power and our shareholders’ ownership percentage in us after giving effect to the proposed acquisition of White Knight and the other target companies and upon the exchange of the exchangeable shares for shares of our common stock is based on this expectation.

Background and Reason for the Issuance of the Exchangeable Shares

The exchangeable shares are being issued in connection with this offer in lieu of U.S. Gold common stock to enable, to the extent permissible and applicable, the White Knight shareholders to take advantage of a full or partial tax deferral (rollover) available under the Income Tax Act (Canada), as amended, or the Tax Act as described in the sections entitled “The Offer — Exchangeable Shares” on page 35 of this prospectus, “Material Canadian Federal Income Tax Considerations” on page 65 of this prospectus and “Material U.S. Federal Income Tax Considerations” on page 75 of this prospectus. The exchangeable shares, by virtue of the redemption and exchange rights attaching to them and the provisions of the Voting and Exchange Trust Agreement and the Support Agreement described below, are intended to provide the holders with the economic and voting rights that are, as nearly as practicable, equivalent to those of a share of common stock of U.S. Gold.

Conditions of the Offer

The offer is subject to a number of conditions, which are described below under the heading “The Offer — Conditions of the Offer” on page 43 of this prospectus and include that:

(i) at least the greater of (1) 662/3% of White Knight common shares deemed outstanding on a fully-diluted basis or (2) 80% of the issued and outstanding White Knight common shares shall have been validly deposited at the time the White Knight common shares are accepted for purchase under the offer;

(ii) White Knight shall not have entered into or effectuated any agreement or transaction with any person or entity having the effect of impairing our ability to acquire White Knight or otherwise diminishing our expected economic value of the acquisition of White Knight;

(iii) the additional shares of common stock of U.S. Gold issuable upon exchange of the exchangeable shares offered under this offer shall have been approved for listing on the TSX and AMEX, and the exchangeable shares shall have been approved for listing on the TSX;

(iv) the registration statement of which this prospectus is a part for the exchangeable shares and the shares of our common stock that may be issued upon the exchange of the exchangeable shares shall have become effective under the Securities Act, and no stop order suspending the effectiveness of the registration statement or a proceeding seeking a stop order shall have been issued nor shall there have been proceedings for that purpose initiated or threatened by the SEC;

(v) all necessary orders shall have been obtained from relevant Canadian securities regulatory authorities in respect of the exchangeable shares to be issued in the offer, the shares of our common stock that may be issued upon the exchange of any such exchangeable shares and the resale of the exchangeable shares or shares of our common stock;

(vi) our shareholders shall have approved prior to the expiry time (1) an amendment to our articles of incorporation to create a new class of our stock comprised of one share of preferred stock, designated Series A Special Voting Preferred Stock, no par value, to be issued in connection with the strategic offers; (2) the issuance of the exchangeable shares of Canadian Exchange Co., in connection with the strategic offers, and (3) the issuance of an equivalent number of shares of common stock of U.S. Gold upon the exchange of the exchangeable shares; and

(vii) all necessary approvals, consents, clearances or waivers have been obtained or received from any governmental regulatory agency, authority or commission in connection with the offer.

Time and Manner of Acceptance

The offer is open for acceptance, unless withdrawn or extended at our sole discretion, until 5:00 p.m. (Vancouver Time) on March 23, 2007, or the expiry time. We may extend or change the expiry time to any later time or times and date or dates as we may fix from time to time, as described under the heading “The Offer — Extension of the Expiry Time or Variation or Change of the Offer” on page 46 of this prospectus.

You may accept the offer by depositing the originally executed certificate or certificates representing White Knight common shares you desire to tender, together with a duly completed and signed letter of transmittal (printed on blue paper), at the offices of Kingsdale Shareholder Services Inc., which is acting as depositary, specified in the letter of transmittal at or before the expiry time of the offer. The offer will be deemed to be accepted only if the depositary has actually received these documents at or before the expiry time of the offer. If your shares are registered in the name of a broker, dealer, bank, trust company or other nominee you should request your nominee to effect the transaction. If your stock certificate for your White Knight common shares is not immediately available or has been lost, you may use the procedures for guaranteed delivery set forth in the notice of guaranteed delivery (printed on green paper). See the section entitled “The Offer — Manner of Acceptance” on page 47 of this prospectus.

Acceptance for Purchase of, and Payment for, Deposited White Knight Common Shares

If all conditions described in the section entitled “The Offer — Conditions of the Offer” on page 43 of this prospectus have been satisfied or waived by us, in which case the condition or conditions waived by us will be waived with respect to all White Knight shareholders, at the expiry time, all White Knight common shares that have been properly deposited and not withdrawn will be required, in accordance with applicable U.S. and Canadian law, to be accepted by us for purchase and paid for through the issuance of exchangeable shares promptly following the expiry time and pursuant to Canadian law, in any event, not later than 10 days after the expiry time. Canadian law also requires that the exchangeable shares be issued to all holders of White Knight common shares accepted for purchase within 3 business days of our accepting those shares for purchase. For the purposes of this prospectus, the term business day means, in the U.S., any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Denver, Colorado under applicable law, and means, in Canada, any day other than a Saturday, Sunday or statutory holiday in Toronto, Ontario. See the section entitled “The Offer — Acceptance for Purchase of, and Payment for, Deposited White Knight Common Shares” on page 48 of this prospectus.

Right to Withdraw

All deposits of White Knight common shares under the offer are irrevocable, unless withdrawn by a White Knight shareholder. Shareholders may withdraw any deposited common shares before the common shares are accepted by us, if we have not issued the exchangeable shares in consideration for these shares within three business days after having been accepted, and under certain other circumstances. See the section entitled “The Offer — Right to Withdraw” on page 51 of this prospectus.

Risk Factors

An investment in the exchangeable shares and the business combination with White Knight are subject to certain risks. See the section entitled “Risk Factors” beginning on page 20 of this prospectus.

Dissenters’ Rights

No dissenters’ rights are available in connection with the offer. However, if after completion of the offer we determine to acquire any remaining interests in White Knight by way of a plan of arrangement or other similar transaction, White Knight’s remaining shareholders may have the right to dissent and demand payment of the fair value of their common shares under Section 238 of the Business Corporations Act (British Columbia). If the statutory procedures are complied with, this right could lead to a judicial determination of the fair value required to be paid to such dissenting shareholders for their common shares. This judicially determined fair value of White Knight common shares could be more or less than the amount paid per White Knight common share in the subsequent acquisition transaction or in the offer. See the section entitled “The Offer — Other Terms — Dissenters’ Rights” on page 53 of this prospectus.

Purpose of the Offer

We are making the offer in order for us ultimately to acquire, directly or indirectly, all of the issued and outstanding White Knight common shares. If the conditions of the offer are satisfied or waived and we accept for purchase and pay for White Knight common shares validly tendered in the offer, we currently intend to acquire, directly or indirectly, any remaining outstanding White Knight common shares in accordance with applicable law by way of a subsequent acquisition transaction. See the section entitled “The Offer — Other Terms — Subsequent Acquisition Transaction” on page 54 of this prospectus.

Subsequent Acquisition Transaction

We or Canadian Exchange Co. intend to cause a special meeting of White Knight shareholders to be held following completion of the offer to consider a statutory plan of arrangement under which:

(i) all remaining outstanding White Knight common shares would be exchanged for exchangeable shares of Canadian Exchange Co. in order to acquire full ownership of White Knight;

(ii) warrants to purchase White Knight common shares would be exchangeable for warrants to purchase exchangeable shares of Canadian Exchange Co., with appropriate adjustments to the exercise prices of these warrants;

(iii) White Knight shareholders who did not deposit their common shares under the offer would be entitled to receive exchangeable shares in the same exchange ratio offered in the offer; and

(iv) the White Knight stock option plan would be assumed or adopted by U.S. Gold so that options under that plan would be exercisable for shares of U.S. Gold common stock with appropriate adjustments to the exercise prices of these options.

See the section entitled “The Offer — Other Terms — Subsequent Acquisition Transaction” on page 54 of this prospectus.

Plans for White Knight

Upon successful completion of the offer and any subsequent acquisition transaction, we intend to take appropriate actions to optimize and rationalize the combined entities’ assets, operations, management, personnel, general and administrative functions and corporate structure. If permitted by applicable law, subsequent to the completion of the offer and any subsequent acquisition transaction, if necessary, we intend to delist the White Knight common shares from the TSX-V and cause White Knight to cease to be a reporting issuer under the securities laws of all applicable jurisdictions.

Other Target Companies

Each of the other target companies is an exploration stage company based in Vancouver, British Columbia engaged in the acquisition and exploration of mineral properties primarily located on the major gold trends in the north-central region of Nevada.

Nevada Pacific. Nevada Pacific owns an exploratory property portfolio covering approximately 890 square miles of mineral rights in Mexico, including the Magistral Gold Mine, ten properties in Nevada and one in Utah. The Nevada property portfolio covers approximately 85 square miles, including portions of two significant gold producing regions: the Battle Mountain/Eureka Trend/Cortez Trend and the Carlin Trend. We intend to offer to purchase all of the outstanding shares of Nevada Pacific on the basis of 0.23 of an exchangeable share for each common share of Nevada Pacific. Nevada Pacific’s common shares are listed on the TSX-V under the symbol “NPG”

Tone Resources. Tone Resources is focused on gold and holds substantially all interests in eight projects (10 claim groups) in Elko, Eureka, Lander, and Pershing counties in Nevada. All of Tone Resources’ properties are located near infrastructure facilities of currently producing gold mines. We intend to offer to purchase all of the outstanding shares of Tone Resources on the basis of 0.26 of an exchangeable share for each common share of Tone Resources. Tone Resources’ common shares are listed on the TSX-V under the symbol “TNS-V” and quoted on the Pink Sheets under the symbol “TONRF.”

Audited financial statements and unaudited interim financial statements of Nevada Pacific and Tone Resources are included in Appendices C and D, respectively, of this prospectus.

Interests of Certain Related Parties in the Offer

As of the date of this prospectus, Robert R. McEwen, our Chairman and Chief Executive Officer, beneficially owns 9,552,427 White Knight common shares, which represents approximately 16% of the outstanding White Knight common shares as of February 1, 2007. Mr. McEwen also beneficially owns 25,000,000 and 5,000,000 common shares of Nevada Pacific and Tone Resources, respectively (assuming full exercise of all outstanding warrants), which represents approximately 30% and 22%, respectively, of the outstanding common shares of these companies based on information provided to us by these companies. As a shareholder of each target company and of U.S. Gold, Mr. McEwen may have interests that differ from the holders of White Knight common shares. See the section entitled “Relationships Between the Offerors and White Knight” on page 63 of this prospectus.

Certain Effects of the Strategic Offers

If all of the strategic offers are successfully completed and the subsequent acquisitions consummated to the extent necessary, the voting power of our existing shareholders will be diluted. It is expected that the former shareholders of White Knight, Nevada Pacific and Tone Resources will own, in the aggregate exchangeable shares entitling them to approximately 46% of the aggregate voting power of U.S. Gold (or approximately 44% on a fully-diluted basis). As a result of the strategic offers, we may experience a change in control, although it appears unlikely that will be the case upon issuance of the shares due to Mr. McEwen’s ownership in the target companies. See the section entitled “Relationships Between the Offerors and White Knight — Beneficial Ownership of and Trading in Securities of White Knight” on page 63 of this prospectus. If all of the strategic offers are successfully completed and the subsequent acquisitions consummated to the extent necessary, the former shareholders of White Knight, Nevada Pacific and Tone Resources other than Mr. McEwen will own, in the aggregate, exchangeable shares entitling them to approximately 38% of the aggregate voting power of U.S. Gold) (or approximately 35% on a fully-diluted basis).

Selected Historical Financial Data of U.S. Gold

The following are selected consolidated financial data for U.S. Gold for each of the years in the five-year period ended December 31, 2005 and for the nine months ended September 30, 2006 and 2005. The information with respect to each of the years in the five-year period ended December 31, 2005 has been derived from and should be read in conjunction with the audited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-KSB, as amended, for the fiscal years ended December 31, 2005 filed with the SEC on January 24, 2007 and our Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004 filed with the SEC on March 30, 2005. The information with respect to the nine-month periods ended September 30, 2006 and 2005 has been derived from and should be read in conjunction with our unaudited consolidated financial statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Quarterly Report on Form 10-QSB, as amended, for the quarter ended September 30, 2006, as filed with the SEC on January 24, 2007. The unaudited financial statement data includes, in our opinion, all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of our financial position and results of operations for these periods. Certain documents we filed with the SEC are incorporated by reference into this prospectus. See the sections entitled “The Offerors — U.S. Gold” on page 32 and “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” on page v of this prospectus. All of our historical financial data is presented in accordance with U.S. GAAP. Historical results are not indicative of the results to be expected in the future and results of interim periods are not necessarily indicative of results for the entire year.

This selected historical financial data should be read together with the selected unaudited pro forma consolidated financial information beginning on page 9 of this prospectus.

U.S. Gold Historical Financial Data


	Nine Months Ended						Fiscal Year Ended
	September 30,						December 31,
	2006			2005			2005			2004			2003			2002			2001
	($ in thousands except share data)

Operating data
Other income	$	1,884		$	1,038		$	1,052		$	39		$	636		$	56		$	560
Net loss from operations before cumulative-effect gain on accounting change	$	(63,985	)	$	(2,346	)	$	(2,991	)	$	(794	)	$	(1,027	)	$	(1,375	)	$	(136	)
Net loss	$	(63,985	)	$	(2,346	)	$	(2,991	)	$	(794	)	$	(623	)	$	(1,375	)	$	(136	)
Basic and diluted loss per share	$	(1.76	)	$	(0.10	)	$	(0.12	)	$	(0.04	)	$	(0.04	)	$	(0.09	)	$	(0.01	)
Weighted average shares		36,366,608			23,495,593			25,931,172			20,028,173			17,696,098			15,334,157			14,011,400
Balance sheet data
Cash, cash equivalents and short term investments	$	60,641		$	1,351		$	678		$	75		$	198		$	4		$	72
Inventories		0			0			0			0			0			0			0
Property, plant and equipment		593			14			53			104			8			15			25
Other assets		6,217			3,740			4,810			1,256			1,595			3,455			3,406
Total assets	$	67,451		$	5,105		$	5,541		$	1,435		$	1,801		$	3,474		$	3,503
Current liabilities	$	4,235		$	120		$	1,791		$	35		$	80		$	434		$	29
Long-term obligations		9			0			16			570			545			545			420
Other long-term liabilities and deferred gain		2,842			1,807			1,201			0			0			1,826			1,826
Shareholders’ equity		60,365			3,178			2,533			830			1,176			669			1,228
Total liabilities and shareholders’ equity	$	67,451		$	5,105		$	5,541		$	1,435		$	1,801		$	3,474		$	3,503

Selected Historical Financial Data of White Knight

The following selected historical financial data of White Knight is derived from White Knight’s publicly filed consolidated financial statements for each of the years in the five-year period ended June 30, 2006 and for the three months ended September 30, 2006 and 2005. This summary data should be read together with White Knight’s Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Appendix A hereto (Information Concerning White Knight) and White Knight’s financial statements and the accompanying notes included in Appendix B (Financial Statements of White Knight). White Knight’s publicly filed financial statements are, according to White Knight, prepared in accordance with Canadian GAAP, which differs from U.S. GAAP in certain respects and are presented in Canadian dollars, unless otherwise indicated. See the sections entitled “Reporting Currencies and Financial Principles” on page vii and “Differences Between Canadian (“CDN”) and United States (“US”) GAAP” contained in Appendix B (Financial Statements of White Knight). For purposes of this prospectus, we have provided selected historical financial data for the fiscal quarters ended September 30, 2006 and 2005 and the fiscal years ended June 30, 2006, 2005, 2004, 2003 and 2002 in Canadian GAAP, as well as a reconciliation to U.S. GAAP for the fiscal years ended June 30, 2006, 2005, and 2004. Historical results are not indicative of the results to be expected in the future and results of interim periods are not necessarily indicative of results for the entire year.

White Knight Historical Financial Data


(Cdn$ in thousands,	Fiscal Quarter Ended September 30,												Fiscal Year Ended June 30,
except per share data)	2006			2006			2005			2005			2006			2006			2005			2005			2004			2004			2003			2002
	Canadian			U.S. GAAP			Canadian			U.S. GAAP			Canadian			U.S. GAAP			Canadian			U.S. GAAP			Canadian			U.S. GAAP			Canadian			Canadian
	GAAP						GAAP						GAAP						GAAP						GAAP						GAAP			GAAP

Operating data
Interest income	$	129		$	129		$	29		$	29		$	442		$	442		$	262		$	262		$	98		$	98		$	8		$	24
Net loss		(180	)		(563	)		(302	)	$	(1,046	)		(3,307	)		(5,833	)		(1,063	)		(2,423	)		(1,664	)		(2,448	)		(358	)		(1,679	)
Basic and diluted loss per share	$	(0.003	)	$	(0.01	)	$	(0.005	)	$	(0.02	)	$	(0.06	)	$	(0.10	)	$	(0.02	)	$	(0.05	)	$	(0.04	)	$	(0.06	)	$	(0.01	)	$	(0.06	)
Balance sheet data
Cash, cash equivalents and short term investments	$	12,674		$	12,733		$	—		$	—		$	13,505		$	13,554		$	11,178		$	11,214		$	9,846		$	9,846		$	133		$	509
Inventories		0			0			—			—			0			0			0			0			0			0			0			0
Property, plant and equipment		1,062			1,062			—			—			931			931			139			139			86			86			7			9
Mineral properties and deferred exploration costs		7,069			779			—			—			6,664			767			3,965			617			2,487			534			1,611			1,367
Other assets		420			420			—			—			402			402			415			415			301			301			161			249

Total assets	$	21,225		$	14,994		$	—		$	—		$	21,502		$	15,654		$	15,697		$	12,385		$	12,720		$	10,767		$	1,912		$	2,134

Current liabilities	$	273		$	273		$	—		$	—		$	433		$	433		$	180		$	180		$	130		$	130		$	234		$	140
Long-term obligations		0			0			—			—			0			0			0			0			0			0			0			0
Other long-term liabilities		166			166			—			—			166			166			0			0			0			0			0			0
Shareholders’ equity		20,786			14,555			—			—			20,903			15,055			15,517			12,205			12,590			10,637			1,678			1,994

Total liabilities and shareholders’ equity	$	21,225		$	14,994		$	—		$	—		$	21,502		$	15,654		$	15,697		$	12,385		$	12,720		$	10,767		$	1,912		$	2,134

Summary Selected Unaudited Pro Forma Consolidated Financial Data for U.S. Gold and White Knight

The following summary selected unaudited pro forma consolidated financial data has been prepared to give effect to our proposed acquisition of White Knight as if it had been completed on January 1, 2005.

The selected unaudited pro forma consolidated financial data presented below are presented in accordance with U.S. GAAP and in U.S. dollars. Because White Knight has a different fiscal year end and interim period than U.S. Gold and its financial statements are prepared in accordance with Canadian GAAP in Canadian dollars, we have prepared the following unaudited pro forma financial data in U.S. dollars and in accordance with U.S. GAAP based on quarterly financial data, including reconciliations from Canadian GAAP to U.S. GAAP, provided to us by White Knight. The selected unaudited pro forma consolidated financial data presented below are for illustrative purposes only and are not necessarily indicative of the actual operating results or financial position that would have resulted if we and White Knight had combined at the beginning of the periods presented, nor is it necessarily indicative of any future operating results or financial position of U.S. Gold if combined with White Knight. To construct the pro forma financial information, we allocated the proposed purchase price of White Knight using our best estimates of fair value. These estimates are based on the most recently available information. To the extent there are significant changes to the business of White Knight, the assumptions and estimates reflected herein could change significantly. Accordingly, the purchase accounting adjustments reflected in the unaudited pro forma consolidated financial data below are preliminary and subject to change. In addition, the selected unaudited pro forma consolidated financial data presented below does not reflect any potential operating efficiencies of the combined entities. For additional information concerning the basis of presentation of the pro forma consolidated financial information, see the notes to the unaudited pro forma consolidated financial statements set forth in Appendix F (Unaudited Pro Forma Consolidated Financial Statements of U.S. Gold) to this prospectus.

We have not had complete access to the non-public books and records of White Knight. As a result, some of the historical financial information regarding White Knight used by us in the preparation of this summary has been derived from the publicly filed documents of White Knight. Although we have no reason to doubt the accuracy or completeness of White Knight’s publicly filed documents or of the financial data it has provided to us for purposes of preparing the following unaudited pro forma consolidated financial data, we are not in a position to independently assess or verify that information, including its financial statements. See the section entitled “Risk Factors — We have been unable to independently verify the reliability of information about White Knight, Nevada Pacific and Tone Resources contained in this prospectus” on page 22 of this prospectus. This summary data should be read together with the unaudited pro forma consolidated financial statements as at and for the nine months ended September 30, 2006 and for the year ended December 31, 2005 included in Appendix F (Unaudited Pro Forma Consolidated Financial Statements of U.S. Gold) and in Appendix G (Unaudited Pro Forma Consolidated Supplementary Financial Statements of U.S. Gold), which are incorporated into and form part of this prospectus.

Data for Canadian Exchange Co. has not been included because it had not yet been formed or did not conduct business during any of the periods discussed below.

Summary Selected Unaudited Pro Forma Consolidated Supplementary Financial Data for U.S. Gold and White Knight, Nevada Pacific and Tone Resources

The following summary selected unaudited pro forma consolidated supplementary financial data has been prepared to give effect to all of our proposed acquisitions of White Knight, Nevada Pacific and Tone Resources as if all of them had been completed on January 1, 2005.

The selected unaudited pro forma consolidated financial data presented below are presented in accordance with U.S. GAAP and in U.S. dollars and are constructed as a result of each of the target companies having different fiscal year ends than U.S. Gold. The selected unaudited pro forma consolidated financial data presented below are for illustrative purposes only and are not necessarily indicative of the actual operating results or financial position that would have resulted if we and any or all of the target companies had combined at the beginning of the periods presented, nor is it necessarily indicative of any future operating results or financial position of U.S. Gold if combined with one or more of the target companies. To construct the pro forma financial information, we allocated the proposed purchase price of each target company using our best estimates of fair value. These estimates are based on the most recently available information. To the extent there are significant changes to the businesses of any of the target companies, the assumptions and estimates reflected herein could change significantly. Accordingly, the purchase accounting adjustments reflected in the unaudited pro forma consolidated financial data below are preliminary and subject to change. In addition, the selected unaudited pro forma consolidated financial data presented below does not reflect any potential operating efficiencies resulting from the acquisitions. For additional information concerning the basis of presentation of the pro forma consolidated financial information, see the notes to the unaudited pro forma consolidated financial statements set forth in Appendix G (Unaudited Pro Forma Consolidated Supplementary Financial Statements of U.S. Gold) to this prospectus.

We have not had complete access to the non-public books and records of White Knight, Nevada Pacific and Tone Resources. As a result, some of the historical financial information regarding White Knight, Nevada Pacific and Tone Resources used by us in the preparation of this summary has been derived in part from the publicly filed documents of White Knight, Nevada Pacific and Tone Resources. In addition, because the target companies have different fiscal year ends than U.S. Gold, and their respective financial statements are prepared in accordance with Canadian GAAP and, with the exception of Nevada Pacific, in Canadian dollars, we have prepared the following unaudited pro forma financial data in U.S. dollars and in accordance with U.S. GAAP based on quarterly financial data, including reconciliations from Canadian GAAP to U.S. GAAP, provided to us by White Knight, Nevada Pacific and Tone Resources. Although we have no reason to doubt the accuracy or completeness of the publicly filed documents of White Knight, Nevada Pacific and Tone Resources or of the financial data they have provided to us for purposes of preparing the following unaudited pro forma consolidated financial data, we are not in position to independently assess or verify that information, including any financial statements. See the section entitled “Risk Factors — We have been unable to independently verify the reliability of information about White Knight, Nevada Pacific and Tone Resources contained in this prospectus” on page 22 of this prospectus.

This summary data should be read together with our unaudited pro forma consolidated supplementary financial statements as at December 31, 2005 and for the year then ended and as at September 30, 2006, included in Appendix G (Unaudited Pro Forma Consolidated Supplementary Financial Statements of U.S. Gold) which are incorporated into and form part of the prospectus.

Data for Canadian Exchange Co. has not been included because it had not yet been formed or did not conduct business during any of the periods discussed below.

Summary Selected Unaudited Pro Forma
Consolidated Supplementary Financial Data
for U.S. Gold and White Knight,
Nevada Pacific and Tone Resources


	Year Ended			Nine Months Ended
	December 31,			September 30,
U.S. GAAP	2005			2006
	($ in thousands except per share data)

Operating data
Mining revenue	$	8,881		$	3,696
Other income	$	1,514		$	2,252
Net loss from operations before cumulative-effect gain on accounting change	$	(10,967	)	$	(73,436	)
Net loss	$	(10,967	)	$	(73,436	)
Basic and diluted loss per share	$	(0.16	)	$	(0.93	)
Weighted average shares		68,134,005			78,569,441
Balance sheet data
Cash, cash equivalents and short term investments		—		$	76,768
Inventories		—			463
Property, plant and equipment		—			10,096
Mineral properties and deferred exploration costs		—			330,108
Other assets		—			7,230
Total assets		—		$	424,665
Current liabilities		—		$	7,583
Long-term obligations		—			9
Other long-term liabilities and deferred gain		—			77,196
Shareholders’ equity		—			339,877
Total liabilities and shareholders’ equity		—		$	424,665

Unaudited Historical and Pro Forma Comparative Per Share Information

The following tables summarize unaudited per share information for U.S. Gold and White Knight separately on a historical basis and on an equivalent unaudited pro forma consolidated basis to give effect to our acquisition of White Knight as if it had been completed on January 1, 2005. This information should be read in conjunction with:


	•	Our audited consolidated financial statements included in our Annual Report on Form 10-KSB, as amended, for the fiscal year ended December 31, 2005 and our unaudited consolidated interim financial statements included in our Quarterly Report on Form 10-QSB, as amended, for the quarter ended September 30, 2006;

	•	White Knight’s audited consolidated financial statements for the fiscal year ended June 30, 2006 included in Appendix B (Financial Statements of White Knight);

	•	Our unaudited pro forma consolidated financial statements as at December 31, 2005 and for the year then ended included in Appendix F (Unaudited Pro Forma Consolidated Financial Statements of U.S. Gold); and

	•	Our unaudited pro forma consolidated supplementary financial statements as at December 31, 2005 and September 30, 2006, and for the year and interim period then ended, respectively, included in Appendix G (Unaudited Pro Forma Consolidated Supplementary Financial Statements of U.S. Gold).

Each of the above is incorporated into and forms part of the prospectus. See the section entitled “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” on page v of this prospectus.

The pro forma information is presented for illustrative purposes only and is not necessarily indicative of the actual operating results or financial position that would have resulted if we and White Knight, or we and any or all of the target companies had combined at the beginning of the period presented, nor is it necessarily indicative of the future operating results or financial position of the combined company. The historical book value per share is computed by dividing total shareholders’ equity by the number of shares outstanding at the end of the period. The unaudited pro forma consolidated income per share is computed by dividing the unaudited pro forma consolidated income from continuing operations available to holders of common stock by the unaudited pro forma consolidated weighted average number of shares outstanding. The unaudited pro forma consolidated book value per share is computed by dividing total unaudited pro forma consolidated shareholders’ equity by the unaudited pro forma consolidated number of common stock outstanding at the end of the period. The historical per share information of U.S. Gold and White Knight was derived from our and White Knight’s respective historical annual financial statements and are constructed as a result of White Knight having a different fiscal year end and interim period than U.S. Gold.

We have not had complete access to the non-public books and records of White Knight. We have, however, obtained the information contained in or incorporated herein relating to White Knight from White Knight and from publicly available sources. Although we have no reason to doubt the accuracy or completeness of the public filings of White Knight, we are not in a position to independently assess or verify that information, including any financial statements. See the section entitled “Risk Factors — We have been unable to independently verify the reliability of information about White Knight, Nevada Pacific and Tone Resources contained in this prospectus” on page 22 of this prospectus.


	Nine Months Ended			Year Ended
	September 30,			December 31,
	2006			2005
	(U.S. GAAP)

U.S. Gold — Historical
Historical per common share:
Income per basic share	$	(1.76	)	$	(0.12	)
Income per diluted share	$	(1.76	)	$	(0.12	)
Dividends declared	$	0		$	0
Book value per share	$	1.21		$	0.08


	Three Months Ended			Year Ended
	September 30,			June 30,
	2006			2006
	(Canadian GAAP)

White Knight — Historical (Cdn$)
Historical per common share:
Income per basic share	$	(0.003	)	$	(0.06	)
Income per diluted share	$	(0.003	)	$	(0.06	)
Dividends declared	$	0		$	0
Book value per share	$	0.35		$	0.35


	Three Months Ended			Year Ended
	September 30,			June 30,
	2006			2006
	(U.S. GAAP)

White Knight — Historical (Cdn$)
Historical per common share:
Income per basic share	$	(0.01	)	$	(0.10	)
Income per diluted share	$	(0.01	)	$	(0.10	)
Dividends declared	$	0		$	0
Book value per share	$	0.25		$	0.25


	Nine Months Ended			Year Ended
	September 30,			December 31,
	2006			2005
	(U.S. GAAP)

*Unaudited Pro forma* Condensed Combined U.S. Gold and White Knight**
Unaudited pro forma condensed combined per common share of U.S. Gold:
Income per basic share	$	(1.18	)	$	(0.12	)
Income per diluted share	$	(1.18	)	$	(0.12	)
Dividends declared	$	0		$	0
Book value per share	$	2.71		$	—

Currency Exchange Rates

The following table sets forth the rate of exchange for one U.S. dollar expressed in Canadian dollars, for each period indicated: (i) the exchange rate at the end of the period; (ii) the average rate; and (iii) the high and low rates for each year. For the purposes of this section, rate of exchange means 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.


	Nine Months Ended
	September 30,				Year Ended December 31,
	(Cdn$)				(Cdn$)
	2006		2005		2005		2004		2003		2002		2001

High rate during year	$	—	$	—	$	1.2703	$	1.3970	$	1.5750	$	1.6128	$	1.5849
Low rate during year		—		—		1.1560		1.1775		1.2923		1.5108		1.4933
Rate at end of period		1.1151		1.1607		1.1656		1.2034		1.2923		1.5800		1.5925
Average rate for period		1.1324		1.2237		1.2083		1.2984		1.3916		1.5702		1.5519

On March 3, 2006, the last trading day before the announcement of our proposed business combination with White Knight, the exchange rate for one U.S. dollar expressed in Canadian dollars was Cdn$1.1352. On February 2, 2007, the most recent trading day practicable before the filing of this prospectus, the exchange rate for one U.S. dollar expressed in Canadian dollars was Cdn$1.1838. The table below sets forth the high and low exchange rate for one U.S. dollar expressed in Canadian dollars for each month during the past six months preceding the date of this offer.


	High		Low
	(Cdn$)

August 2006		1.1312		1.1078
September 2006		1.1272		1.1056
October 2006		1.1384		1.1154
November 2006		1.1474		1.1275
December 2006		1.1652		1.1415
January 2007		1.1824		1.1647
February 1, 2007 to February 2, 2007		1.1838		1.1756

Comparative Market Data

The White Knight common shares are currently traded on the TSX-V under the symbol “WKR-V.” Our common stock is listed on the TSX under the symbol “UXG” and the AMEX under the symbol “UXG”. The following table sets forth the closing prices of the White Knight common shares as reported on the TSX-V and shares of our common stock as reported on the AMEX, the TSX, the OTCBB and the TSX-V, as applicable, on (1) March 3, 2006, the last trading day preceding the public announcement of the proposed business combination with White Knight and (2) February 2, 2007, the most recent trading day practicable before the filing of this prospectus. Our common stock began trading on the TSX on August 30, 2006 and was quoted on the OTCBB until it began trading on the AMEX on December 11, 2006.

AMEX

TSX

OTCBB

TSX-V

March 3,

February 2,

March 3,

February 2,

March 3,

February 2,

March 3,

February 2,

Issuer

2006

2007

2006

2007

2006

2007

2006

2007

($)

(Cdn$)

($)

(Cdn$)

White Knight

—

1.79

1.93

U.S. Gold

—

4.98

—

5.89

5.65

—

Comparative Per Share Market Price and Dividend Information

The following table sets forth, for each of the calendar quarters ending on the dates indicated, the reported high and low sales prices per share, and the average daily trading volumes, reported by the TSX-V, the TSX, the OTCBB and the AMEX, as applicable. Neither we nor White Knight declared dividends on our respective shares during these periods.

Data for Canadian Exchange Co. has not been included because it had not yet been formed or did not conduct business during any of the periods discussed below. Our common stock began trading on the TSX on August 30, 2006 and was quoted on the OTCBB until it began trading on the AMEX on December 11, 2006.


	U.S. Gold						U.S. Gold						U.S. Gold						White Knight
	AMEX						OTCBB						TSX						TSX-V
					Avg.						Avg.						Avg.						Avg.
					Daily						Daily						Daily						Daily
	High		Low		Volume		High		Low		Volume		High		Low		Volume		High		Low		Volume
	($)						($)						(Cdn$)						(Cdn$)

2004
March 31		—		—		—		1.85		0.81		77,486		—		—		—		0.92		0.55		89,475
June 30		—		—		—		1.06		0.61		42,638		—		—		—		1.61		0.50		238,603
September 30		—		—		—		0.75		0.40		44,432		—		—		—		1.49		0.87		190,026
December 31		—		—		—		0.57		0.40		24,155		—		—		—		1.20		0.70		114,153
2005
March 31		—		—		—		0.44		0.37		44,061		—		—		—		0.93		0.60		74,462
June 30		—		—		—		0.60		0.30		24,751		—		—		—		0.92		0.55		28,696
September 30		—		—		—		2.82		0.35		304,298		—		—		—		1.80		0.85		319,662
December 31		—		—		—		3.96		1.94		243,627		—		—		—		2.10		1.31		158,204
2006
March 31		—		—		—		9.09		3.48		276,535		—		—		—		2.39		1.40		260,589
June 30		—		—		—		10.30		5.75		310,081		—		—		—		3.10		1.66		234,505
September 30		—		—		—		9.20		3.95		242,550		7.50		4.48		18,005		2.45		1.46		82,446
December 31		6.00		4.81		210,450		5.59		4.05		341,947		6.87		4.61		23,645		1.99		1.39		70,257
2007
Through February 2, 2007		5.25		4.31		191,609		—		—		—		6.76		5.11		23,346		1.94		1.30		38,304

Investment Considerations

We believe that the consideration offered for the White Knight common shares under the offer is fair. You are urged to consider the following factors in making your decision to accept the offer:

(i) the consideration offered represents a premium for White Knight shareholders of approximately 25% based on the closing prices of White Knight common shares on the TSX-V and the shares of common stock of

U.S. Gold on the OTCBB on March 3, 2006, the last trading day prior to the announcement of this offer, and a premium for White Knight shareholders of approximately 6.8% based on the closing prices of White Knight common shares on the TSX-V and the shares of common stock of U.S. Gold on the TSX on February 2, 2007, the most recent trading day practicable before the filing of this prospectus;

(ii) we believe that there are significant benefits to bringing together U.S. Gold with White Knight and with the two other target companies exploring in the Cortez Trend in Nevada;

(iii) the liquidity and trading price of the White Knight common shares may be adversely affected if we are not successful in acquiring 100% of the White Knight common shares; and

(iv) the White Knight common shares may fail to meet the criteria for continued listing on the TSX-V even if we are not successful in acquiring 100% of the outstanding White Knight common shares. Additional factors we urge you to consider when determining whether to accept the offer are set forth in the section entitled “Investment Considerations” on page 61 of this prospectus.

Income Tax Considerations

Material Canadian Federal Income Tax Considerations

The disposition of White Knight common shares (and ancillary rights as defined in the section entitled “Material Canadian Federal Income Tax Considerations — Receipt of Ancillary Rights” on page 66 of this prospectus) in the offer may be a taxable event to a Canadian resident White Knight shareholder. However, a Canadian resident White Knight shareholder who disposes of his or her White Knight common shares for consideration that includes exchangeable shares (and ancillary rights) and who makes a valid tax election with Canadian Exchange Co., and filed such election in the prescribed form and within the prescribed time may obtain a full or partial tax deferral (rollover) of any capital gains otherwise arising upon the disposition of those shares. A White Knight shareholder who is not a Canadian resident and for which the White Knight common shares is not “taxable Canadian property” will not be subject to tax under the Tax Act on the disposition of those shares.

The exchangeable shares may be “qualified investments” for Registered Retirement Savings Plans, Registered Retirement Income Funds, Deferred Profit Sharing Plans and Registered Education Savings Plans for Canadian income tax purposes provided they are listed on a “prescribed stock exchange” (which currently includes the TSX).

A more detailed description of the Canadian federal income tax consequences of the offer is set forth below under the heading “Material Canadian Federal Income Tax Considerations” on page 65 of this prospectus. White Knight’s Canadian resident shareholders should be aware that the Canadian federal income tax consequences of the offer may depend upon their own individual situations, and that participating in the offer may subject them to federal, provincial or foreign tax consequences that are not discussed in this prospectus. You are urged to consult your own tax advisor for a full understanding of the tax consequences of participating in the offer.

Material U.S. Federal Income Tax Considerations

The offer is structured with the intent to qualify as a tax-deferred exchange under Sections 368 or 351 of the U.S. Internal Revenue Code of 1986, as amended, referred to herein as the “Code,” provided that certain conditions and requirements are met. However, in its Form 20-F filed with the U.S. Securities and Exchange Commission on October 20, 2006, White Knight has stated that it believes that it has been and continues to be a “passive foreign investment company” or “PFIC” within the meaning of Section 1297 of the Code. We have not verified whether this is the case. If White Knight is a PFIC, a U.S. shareholder of White Knight who has not made certain elections under the PFIC rules will be subject to tax under a special tax regime applicable to PFICs on gain realized with respect to the exchange of such shareholder’s White Knight shares for exchangeable shares and will not be eligible for tax-deferred treatment. Moreover, there is no direct authority addressing the proper characterization of instruments similar to the exchangeable shares and the exchange of common stock for exchangeable shares for U.S. federal income tax purposes. As a result, there is uncertainty concerning the treatment of the exchange of White Knight common shares. No rulings from the U.S. Internal Revenue Service or opinions of counsel will be requested in connection with the offer on the U.S. tax consequences of the offer.

You should be aware that the U.S. federal income tax consequences of the offer may depend upon your own individual situation, including your situation with respect to the PFIC rules, and that participating in the offer may subject you to state, local or foreign tax consequences that are not discussed in this prospectus. You are urged to consult your own tax advisor for a full understanding of the tax consequences of participating in the offer. See the section entitled “Material U.S. Federal Income Tax Considerations — U.S. Federal Income Tax Consequences to U.S. Holders of White Knight Common Shares” on page 76 of this prospectus.

Comparison of Shareholder Rights

The governing documents and laws of the respective jurisdictions of incorporation of U.S. Gold and White Knight vary; therefore, holders of White Knight common shares who tender their shares in the offer will have different rights once they become our shareholders or holders of exchangeable shares. See the section entitled “Comparison of Shareholder Rights” on page 84 of this prospectus.

No White Knight Shareholder Vote Required

Because we are offering to purchase White Knight’s common shares directly from White Knight’s shareholders, there is no vote required of either White Knight’s board of directors or shareholders to complete this offer. A subsequent vote of White Knight’s board of directors and shareholders may be required for any subsequent acquisition transaction that is effected after the closing of the offer. At that time we would control the vote of White Knight’s shareholders necessary to effect any subsequent transaction requiring approval by White Knight’s shareholders. In that event, White Knight’s remaining shareholders would be entitled to dissenter’s rights as described under the section entitled “The Offer —Other Terms — Dissenters’ Rights” on page 53 of this prospectus.

Valuation Requirements for Insider Bids

The offer is an “insider bid” within the meaning of applicable Canadian securities legislation by virtue of Robert R. McEwen’s equity interests in both U.S. Gold and White Knight. As a result, a formal valuation of the White Knight common shares and of the exchangeable shares being offered in exchange for them under the offer is required in the absence of waivers or exemptions from the Canadian insider bid valuation requirements. Exemptions from the insider bid valuation requirement are contained in Ontario Securities Commission, or OSC Rule 61-501 (“Insider Bids, Issuer Bids, Business Combinations and Related Party Transactions”) and l’Agence nationale d’encadrement du secteur financier for the Province of Quebec, or AMF, Regulation Q-27 (“Protection of Minority Securityholders in the Course of Certain Transactions”) and may be relied upon if neither the offeror nor any joint actor with the offeror has, or has had within the preceding 12 months, any board or management representation in respect of the offeree issuer or has knowledge of any material information concerning the offeree issuer or its securities that has not been generally disclosed. Neither we nor any person acting jointly or in concert with us have had board or management representation at White Knight or have any knowledge of any material nonpublic information with respect to White Knight. Accordingly, in making the offer, we are relying upon the foregoing valuation exemptions. We have obtained waivers of the valuation requirements in each of the other Canadian provinces where a valuation would be otherwise required. See the section entitled “Valuation Requirements for Insider Bids” on page 92 of this prospectus.

Regulatory Matters

Our obligation to accept for purchase and pay for White Knight common shares tendered in the offer is conditioned upon obtaining all governmental or regulatory consents or approvals that U.S. Gold, in its sole discretion, views as necessary or desirable to enable us to consummate the offer, on terms and conditions satisfactory to us. See the section entitled “Regulatory Matters” on page 93 of this prospectus.

Accounting Treatment

If consummated, the transactions described in this prospectus will be accounted for as a purchase transaction, with U.S. Gold as the acquirer of White Knight. See the section entitled “Accounting Treatment” on page 94 of this prospectus.

RISK FACTORS

An investment in shares of our common stock or the exchangeable shares of Canadian Exchange Co. involves certain risks. You should consider the following discussion of risks in addition to the other information in this prospectus before depositing and exchanging your common shares of White Knight. In addition to historical information, the information in this prospectus contains “forward-looking” statements about U.S. Gold’s future business and performance, as described above in “Forward-Looking Statements.” Our actual future business, operating results, financial performance and the price of our common stock or the exchangeable shares of Canadian Exchange Co. may be very different from what we expect as of the date of this prospectus. The risks below address some of the specific risks and uncertainties relating to the offer, the subsequent acquisitions we have planned if all of the conditions set forth in the section entitled “Conditions of the Offer” are satisfied, the proposed integration of U.S. Gold and White Knight, and the receipt and ownership of shares of common stock of U.S. Gold or exchangeable shares of Canadian Exchange Co. You should also consider the risk factors set forth in U.S. Gold’s Annual Report on Form 10-KSB, as amended, for the fiscal year ended December 31, 2005, which is incorporated into and forms part of the prospectus. See the section entitled “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” on page v of this prospectus.

Business Combination Risks

Shareholders may receive securities with a market value lower than they expected.

If you tender your White Knight common shares and we accept those shares for purchase, you will receive 0.35 of an exchangeable share of Canadian Exchange Co. for each of your shares. The exchangeable shares of Canadian Exchange Co. will be exchangeable for shares of common stock of U.S. Gold on a one-for-one basis and are expected to be roughly equal in value to shares of U.S. Gold common stock. Based on the closing prices of White Knight common shares on the TSX-V and the shares of common stock of U.S. Gold on the OTCBB on March 3, 2006, the last trading day prior to the announcement of this offer, the value of the exchangeable shares of Canadian Exchange Co. being offered for your shares represented a premium of approximately 25%. Based on the closing prices of White Knight common shares on the TSX-V and the shares of common stock of U.S. Gold on the TSX on February 2, 2007, the most recent trading day practicable before the filing of this prospectus, the value of the exchangeable shares of Canadian Exchange Co. being offered for your shares represented a premium of approximately 6.8%. However, if the market price of U.S. Gold common stock declines before we accept your shares for purchase, the value of the consideration you will receive for your shares of White Knight will decline as well. The market price of our common stock may decline as a result of changes in, or market perceptions of changes in, the business, operations or prospects of U.S. Gold, market assessments of the likelihood we will be successful in completing the transactions described in this prospectus, regulatory considerations, general market and economic conditions and other factors over which we have no control.

If we are not successful in acquiring 100% of the common shares of White Knight, the liquidity and trading price of White Knight common shares not held by us may decline.

Our acquisition of any of the White Knight common shares will reduce the number of publicly-traded White Knight common shares and the number of White Knight shareholders. Depending on the number of White Knight shares that we successfully purchase in this offer, between the period that we accept the shares tendered under this offer for purchase and the time we complete the subsequent transactions that will make White Knight a wholly-owned subsidiary of U.S. Gold, the liquidity and market value of the White Knight shares that we do not own would likely decrease.

The exchange of your common shares in the offer could be taxable to U.S. holders of White Knight common shares.

We have structured our offer with the intent that the exchange of your White Knight common shares for exchangeable shares of Canadian Exchange Co. will qualify as a tax-deferred exchange under Sections 368 or 351 of the Code for U.S. federal income tax purposes. There is, however, no authority or guidance from the Internal Revenue Service addressing the particular structure of the transaction. In addition, based upon its public filings,

White Knight believes that it is a passive foreign investment company, referred to as a “PFIC,” under Section 1297 of the Code for U.S. federal income tax purposes. We have not, however, independently assessed or verified White Knight’s PFIC status. If White Knight is considered to be a PFIC, a U.S. shareholder of White Knight who has not made certain elections under the PFIC rules will be subject to tax on gain realized with respect to the exchange of such U.S. shareholder’s White Knight shares for exchangeable shares under a special tax regime applicable to PFICs and will not be eligible for tax-deferred treatment. You should be aware that the U.S. federal income tax consequences of the offer may depend upon your individual situation, including your situation with respect to the PFIC rules, and that participating in the offer may subject you to state, local or foreign tax consequences that are not discussed in this prospectus. We strongly urge you to consult your tax advisor for advice on the tax implications of the exchange of your shares of White Knight common shares for exchangeable shares of Canadian Exchange Co.

In the event we waive our right to withdraw or extend the offer where less than 80% of the issued and outstanding White Knight common shares are validly accepted for purchase or otherwise fails to obtain 80% of the issued and outstanding White Knight common shares for exchangeable shares, the offer will fail to qualify as a tax-deferred reorganization and the exchange may be taxable to U.S. holders of White Knight common shares.

The offer is subject to a number of closing conditions, which may be waived by us, including that at least the greater of (i) 662/3% of White Knight common shares deemed outstanding on a fully-diluted basis or (ii) 80% of the issued and outstanding White Knight common shares shall have been validly deposited at the time the White Knight common shares are accepted for purchase under the offer. One of the requirements that must be satisfied in order for an exchange of shares in the offer to qualify as a tax-deferred reorganization is that Canadian Exchange Co. must acquire ownership of at least 80% of White Knight shares solely for voting stock. If Canadian Exchange Co. accepts the shares tendered in the offer but obtains ownership of less than 80% of White Knight stock, the exchange of White Knight shares for exchangeable shares will not qualify as a tax-deferred reorganization for U.S. shareholders of White Knight and U.S. shareholders of White Knight shareholders may be required to recognize gain, if any, realized from the consummation of the offer.

If enough White Knight shareholders sell their shares to us, publicly available information about White Knight may decrease.

After our purchase of White Knight shares in connection with this offer, the number of White Knight shareholders may be significantly reduced. If the number of White Knight shareholders is sufficiently reduced, White Knight may no longer be required to comply with the public reporting requirements under applicable securities legislation in any country or province. If White Knight is no longer required to comply with public reporting requirements, the information you receive about White Knight will be reduced, which could impact your ability to make an investment decision regarding the White Knight shares.

White Knight shares may fail to meet the criteria for continued listing on the TSX-V even if we are unsuccessful in acquiring 100% of the outstanding White Knight shares.

White Knight is currently listed on the TSX-V. The rules and regulations of the TSX-V establish certain criteria that, if not met, could lead to the delisting of shares from the TSX-V. Among such criteria are the number of shareholders of the listed company, the number of the listed company’s shares that are publicly held and the aggregate market value of the listed company’s shares that are publicly held. Depending on the number of White Knight shareholders that deposit White Knight shares and the number of White Knight shares we acquire, it is possible that following the completion of this offer and prior to the time that a subsequent acquisition transaction makes White Knight a wholly-owned subsidiary of U.S. Gold, the White Knight shares would fail to meet the criteria for continued listing on the TSX-V. If this were to happen, White Knight shares could be delisted from the TSX-V and this could, in turn, adversely affect the market or result in a lack of an established market for those shares. We intend to cause White Knight to apply to delist the White Knight common shares from the TSX-V as soon as practicable after the successful completion of this offer and a subsequent acquisition transaction of White Knight.

We have been unable to independently verify the reliability of information about White Knight, Nevada Pacific and Tone Resources contained in this prospectus.

We have not had complete access to the non-public books and records of White Knight, Nevada Pacific or Tone Resources. As a result, all historical information regarding White Knight, Nevada Pacific and Tone Resources contained in this prospectus, including all historical financial information used in connection with the preparation of the pro forma financial information reflecting the pro forma effects of a combination of (i) U.S. Gold and White Knight and (ii) U.S. Gold and all of White Knight, Nevada Pacific and Tone Resources, has been derived from publicly-available documents and certain information the target companies have provided to us. We have no reason to doubt the accuracy or completeness of these publicly-available documents or other information. Nevertheless, there could be inaccuracies or material omissions in the publicly-available or other information about or relating to White Knight, Nevada Pacific or Tone Resources. If there are such inaccuracies or material omissions, this prospectus may also contain inaccuracies or material omissions, which could result in unanticipated liabilities or expenses for us, and may increase the cost of integrating the companies. This would likely adversely affect the operational plans of the combined company and its results of operations and financial condition.

After the consummation of the offer, White Knight would become a majority-owned subsidiary of U.S. Gold and our interests as a majority shareholder could differ from yours.

After the consummation of the offer, we expect to own a sufficient number of White Knight common shares so that we would have the power to elect the directors, appoint new management, approve certain actions requiring the approval of White Knight shareholders, including adopting certain amendments to White Knight’s organizational and governing documents and approving mergers or sales of White Knight’s assets. In particular, after the consummation of the offer we intend to acquire all of the White Knight common shares not deposited under the offer in a subsequent acquisition transaction, or, if a subsequent acquisition transaction is not available, to integrate White Knight and U.S. Gold by merger or other transaction whereby the operations of White Knight and U.S. Gold are combined. Our interests with respect to White Knight may differ from those of any remaining minority shareholders.

Change of control provisions in agreements triggered upon the acquisition of White Knight, Nevada Pacific or Tone Resources may lead to adverse business or financial consequences.

Any of White Knight, Nevada Pacific or Tone Resources may be a party to agreements that contain change of control provisions that may be triggered following our acquisition of the majority of the common shares of those companies. These change of control provisions, if triggered and not waived by any beneficiaries of those provisions, could result in termination of an agreement or in unanticipated expenses following our acquisition of shares of the relevant company and could adversely affect that company’s results of operations and financial condition. As mentioned above, we have not had complete access to the non-public books and records of White Knight, Nevada Pacific or Tone Resources and do not know whether there are any change of control agreements or provisions in the agreements of the target companies, or the magnitude of payments or expenses or other adverse consequences, if any.

We may not be successful in completing the strategic offers described in this prospectus.

We are unable to predict when, if ever, our acquisitions of White Knight, Tone Resources and Nevada Pacific will be completed. Further, management of one or more of the target companies may resist our efforts to complete those acquisitions. In addition, our current estimates of the value of these entities is based only on publicly available information, and we may determine through due diligence investigation of any or all of the target companies that acquiring one or more of them would be less advantageous than we currently believe. As a result of these or other factors, we may choose to terminate our acquisition efforts with, or be unable for other reasons to complete our acquisition of, one or more of the target companies. If we do not consummate the acquisition of one or more of those companies, the benefits of the acquisitions described in this prospectus may not be realized.

The integration of any target companies that we acquire will present significant challenges and may disrupt and adversely impact our business or may not occur as planned.

The offer for your White Knight common shares described in this prospectus has been made with the expectation that its successful completion will result in improved operations by taking advantage of the synergies of consolidation and enhanced growth opportunities of the combined company. These anticipated benefits will depend in part on whether U.S. Gold’s and White Knight’s operations can be integrated in an efficient and effective manner. These integration efforts will require the dedication of management resources, which will temporarily divert attention from the day-to-day business of the combined company. Most operational and strategic decisions, and certain staffing decisions, with respect to the combined company have not yet been made. These decisions and the integration of the two companies will present challenges to management, including the integration of systems and personnel of the two companies, and special risks, including possible unanticipated liabilities, unanticipated costs, including costs associated with complying with regulatory requirements we are not currently subject to, and the loss of key employees. The process of combining the organizations may cause an interruption of, or a loss of momentum in, the activities of any or all of the combined company’s business, which could have an adverse effect on the revenues and operating results of the combined company for an indeterminate period of time. The failure to successfully complete this integration process may prevent us from achieving the anticipated potential benefits of any such acquisition. If we fail to realize the anticipated benefits of any acquisition, the market value of our stock may be adversely affected.

Our shareholders may not approve the matters on which our offer is conditioned.

Our offer to acquire your shares is conditioned upon the approval by U.S. Gold shareholders, voting at a special shareholders’ meeting, of proposals relating to the offer. Among these proposals are the authorization and issuance of a new class of preferred stock of U.S. Gold and approval of the issuance of the stock of U.S. Gold that will be used as consideration for your shares. These proposals will require the affirmative vote of the holders of a majority of the shares of common stock of U.S. Gold voting at the meeting where a quorum is present. Our shareholders may not approve these proposals. If any of these proposals are not approved, we would not waive this condition to our offer and we would have no obligation to purchase your shares. Although we are unaware of any specific reason our shareholders would not approve these proposals, we cannot predict the outcome of the shareholder vote.

We will incur substantial costs in connection with the proposed acquisitions even if they are never completed.

We expect to incur acquisition-related expenses of approximately $11 million, consisting of investment banking, legal and accounting fees and financial printing and other related charges in connection with the proposed acquisitions. These amounts are preliminary estimates and the actual amounts may be higher or lower. Moreover, we are likely to incur additional expenses in future periods in connection with the integration of any acquired company’s business with our business. Some of these expenses will be incurred even if we do not complete the proposed acquisitions.

Completion of one or more of the acquisitions would result in the issuance of a significant amount of additional U.S. Gold common stock which may in turn depress the trading price of our stock.

While no formal agreement has been reached with regard to the acquisition of one or more of the target companies, completion of one or more of those acquisitions would result in the issuance of a significant amount of our common stock. If all of the offers were completed on the terms currently proposed, of which there is no assurance, Canadian Exchange Co. would issue up to 42,370,163 exchangeable shares in consideration for the currently outstanding shares of the target companies, or up to 49,065,769 exchangeable shares if currently outstanding options and warrants of the target companies are exercised and the underlying common shares tendered in accordance with the offer. If all of the exchangeable shares that may be issued in the offers are exchanged for our common stock, it would represent an increase in the outstanding shares of U.S. Gold common stock of approximately 85% of the common stock we presently have outstanding, or 98% if all outstanding options and warrants of the target companies are exercised. The issuance of such a significant amount of common stock could depress the trading price of our common stock and you may lose all or a part of your investment.

Operational Risks

We will require significant additional capital to continue our exploration activities, and, if warranted, to develop mining operations.

Upon completion of any of the acquisitions of White Knight, Nevada Pacific or Tone Resources, substantial expenditures will be required to establish proven and probable reserves through drilling and analysis, to develop metallurgical processes to extract metal or develop the mining and processing facilities and infrastructure at any of our newly-acquired properties or mine sites. We will be required to expend significant amounts for geological and geochemical analysis, assaying, and, if warranted, feasibility studies with regard to the results of our exploration. We may not benefit from these investments if we are unable to identify commercially exploitable mineralized material. If we are successful in identifying reserves, we will require significant additional capital to construct a mill and other facilities necessary to extract those reserves. Our ability to obtain necessary funding, in turn, depends upon a number of factors, including the state of the national and worldwide economy and the price of gold. We may not be successful in obtaining the required financing for these or other purposes on terms that are favorable to us or at all, in which case, our ability to continue operating would be adversely affected. Failure to obtain such additional financing could result in delay or indefinite postponement of further exploration and the possible, partial or total loss of our potential interest in certain properties.

The ongoing operations and past mining activities of the target companies are subject to environmental risks, which we will assume after our acquisition of those companies and which could expose us to significant liability and delay, suspension or termination of our operations.

All phases of the operations of the target companies are subject to federal, state and local environmental regulation. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste. Environmental legislation is evolving in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers, directors and employees. Future changes in environmental regulation, if any, may adversely affect our operations, make our operations prohibitively expensive, or prohibit them altogether. Environmental hazards may exist on the properties in which we may hold interests in the future, including the properties of the target companies, that are unknown to us at the present and that have been caused by us, one of the target companies, or previous owners or operators, or that may have occurred naturally. Under applicable federal and state environmental laws, prior property owners may be liable for remediating any damage that those owners may have caused. Mining properties that the target companies may have transferred may cause us to be liable for remediating any damage that those companies may have caused. The liability could include response costs for removing or remediating the release and damage to natural resources, including ground water, as well as the payment of fines and penalties.

We depend on a limited number of personnel and the loss of any of these individuals could adversely affect our business.

Our company is dependent on three persons, namely our Chairman and Chief Executive Officer, President and Chief Operating Officer and Vice President and Chief Financial Officer. Robert R. McEwen, our Chairman and Chief Executive Officer, is responsible for strategic direction and the oversight of our business. Ann S. Carpenter, our President and Chief Operating Officer, is responsible for company management and overseeing our exploration and regulatory compliance. William F. Pass, our Vice President and Chief Financial Officer, is responsible for our public reporting and administrative functions. We rely heavily on these individuals for the conduct of our business. The loss of any of our existing officers would significantly and adversely affect our business and our ability to realize the perceived benefits of the acquisitions of the target companies. In that event, we would be forced to identify and retain an individual to replace the departed officer. We may not be able to replace one or more of these individuals on terms acceptable to us. We have no life insurance on the life of any officer.

The nature of mineral exploration and production activities involves a high degree of risk and the possibility of uninsured losses that could materially and adversely affect our operations.

Exploration for minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of mineralization, and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Few properties that are explored are ultimately advanced to the stage of producing mines. Our current exploration efforts are, and any future development or mining operations we may elect to conduct will be, subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as, but not limited to:


	•	economically insufficient mineralized material;

	•	fluctuations in production costs that may make mining uneconomical;

	•	labor disputes;

	•	unanticipated variations in grade and other geologic problems;

	•	environmental hazards;

	•	water conditions;

	•	difficult surface or underground conditions;

	•	industrial accidents;

	•	metallurgical and other processing problems;

	•	mechanical and equipment performance problems;

	•	failure of pit walls or dams;

	•	unusual or unexpected rock formations;

	•	personal injury, fire, flooding, cave-ins and landslides; and

	•	decrease in reserves due to a lower gold price.

Any of these risks can materially and adversely affect, among other things, the development of properties, production quantities and rates, costs and expenditures and production commencement dates. We currently have no insurance to guard against any of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a writedown of our investment in these interests. All of these factors may result in losses in relation to amounts spent which are not recoverable.

We do not insure against all risks to which we may be subject in our planned operations.

While we currently maintain insurance to insure against general commercial liability claims, our insurance will not cover all of the potential risks associated with our operations. For example, we do not have insurance on the mill at our Tonkin Springs property and we do not have business interruption insurance. We may also be unable to obtain insurance to cover other risks at economically feasible premiums or at all. Insurance coverage may not continue to be available, or may not be adequate to cover liabilities. We might also become subject to liability for environmental, pollution or other hazards associated with mineral exploration and production which may not be insured against, which may exceed the limits of our insurance coverage or which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause us to incur significant costs that could materially adversely affect our financial condition and our ability to fund activities on our property. A significant loss could force us to reduce or terminate our operations.

We will be required to evaluate our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002 and any adverse results from such evaluation could result in a loss of investor confidence in our financial reports and have a material adverse effect on the price of our common stock.

Under Section 404 of the Sarbanes-Oxley Act of 2002, we expect that we will be required to furnish a report by our management on internal control over financial reporting for the fiscal year ending December 31, 2007. Such a report must contain, among other matters, an assessment of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control over financial reporting is effective. This assessment must include disclosure of any material weaknesses in our internal control over financial reporting identified by our management. This report must also contain a statement that our auditors have issued an attestation report on our management’s assessment of such internal control over financial reporting. While we believe our internal control over financial reporting is effective, we are still constructing the system and processing documentation and performing the evaluations needed to comply with Section 404, which is both costly and challenging. The completion of the acquisition transactions described in this prospectus and the subsequent integration of the target companies into our operations may make it more difficult for us to comply with Section 404. We may not be able to complete our evaluation, testing and required remediation, if any, in a timely fashion. If we are unable to assert that our internal control over financial reporting is effective, or if we disclose significant deficiencies or material weaknesses in our internal control over financial reporting, investors could lose confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on our stock price.

The laws of the State of Colorado and our Articles of Incorporation may protect our directors from certain types of lawsuits.

The laws of the State of Colorado provide that our directors will not be liable to us or our shareholders for monetary damages for all but certain types of conduct as directors of the company. Our articles of incorporation permit us to indemnify our directors and officers against all damages incurred in connection with our business to the fullest extent provided or allowed by law. The exculpation provisions may have the effect of preventing shareholders from recovering damages against our directors caused by their negligence, poor judgment or other circumstances. The indemnification provisions may require us to use our limited assets to defend our directors and officers against claims, including claims arising out of their negligence, poor judgment, or other circumstances.

Market Risks

A market for the exchangeable shares may not develop.

Because the shares of Canadian Exchange Co. may be exchanged, under the circumstances described in this prospectus, for shares of our common stock on a one-for-one basis, the economic value of those shares should be closely linked to the trading value of our common stock. Nevertheless, there can be no assurance that the exchangeable shares of Canadian Exchange Co. will be valued similarly to our common stock. If an active trading market in the exchangeable shares of Canadian Exchange Co. does not develop, or if after the exchangeable shares of Canadian Exchange Co. are listed on the TSX, the exchangeable shares do not continue to meet the listing requirements of the TSX, the market price of those shares may decline. Furthermore, although the exchangeable shares of Canadian Exchange Co. are exchangeable for our common stock, under the circumstances described in this prospectus, for an equivalent number of shares of common stock of U.S. Gold, the exchangeable shares of Canadian Exchange Co. have no trading history and will be less widely held than our common stock. This may cause those shares to trade at a lower market price, or to be less liquid, than either the White Knight common shares or our common stock.

Fluctuating gold prices could negatively impact our business plan.

The potential for profitability of our gold mining operations and the value of our mining property, currently and following completion of any of the proposed acquisitions of the target companies, are directly related to the market price of gold. The price of gold may also have a significant influence on the market price of our common stock. If we obtain positive drill results and progress our property to a point where a commercial production decision can be made, our decision to put a mine into production and to commit the funds necessary for that purpose must be made

long before any revenue from production would be received. A decrease in the price of gold at any time during future exploration and development may prevent our property from being economically mined or result in the writeoff of assets whose value is impaired as a result of lower gold prices. The price of gold is affected by numerous factors beyond our control, including inflation, fluctuation of the United States dollar and foreign currencies, global and regional demand, the purchase or sale of gold by central banks, and the political and economic conditions of major gold producing countries throughout the world.

During the last five years, the average annual market price of gold has ranged between $310 per ounce and $604 per ounce, as shown in the table below:

Average Annual Market Price of Gold


2002	2003		2004		2005		2006

$310	$	364	$	406	$	445	$	604

Although it may be possible for us in the future to protect against some price fluctuations by hedging if we identify commercially minable reserves on our mining property, the volatility of mineral prices represents a substantial risk, which no amount of planning or technical expertise can fully eliminate. In the event gold prices decline and remain low for prolonged periods of time, we might be unable to develop our property or produce any revenue.

Our stock price may be volatile and as a result you could lose all or part of your investment.

In addition to volatility associated with over the counter securities in general, the value of your investment could decline due to the impact of any of the following factors upon the market price of our common stock:


	•	changes in the worldwide price for gold;

	•	disappointing results from our exploration or development efforts;

	•	failure to meet our revenue or profit goals or operating budget;

	•	decline in demand for our common stock;

	•	downward revisions in securities analysts’ estimates or changes in general market conditions;

	•	technological innovations by competitors or in competing technologies;

	•	investor perception of our industry or our prospects; and

	•	general economic trends.

In addition, stock markets generally have experienced extreme price and volume fluctuations and the market prices of securities generally have been highly volatile. These fluctuations are often unrelated to operating performance of a company and may adversely affect the market price of our common stock. As a result, investors may be unable to resell their shares at a fair price.

Risks Relating to Our Business

The feasibility of mining our property has not been established, meaning that we have not completed exploration or other work necessary to determine if it is commercially feasible to develop the property.

We are currently an exploration stage company. We have no proven or probable reserves on our property, and neither does Tone Resources. A “reserve,” as defined by regulation of the SEC, is that part of a mineral deposit which could be economically and legally extracted or produced at the time of the reserve determination. A reserve requires a feasibility study demonstrating with reasonable certainty that the deposit can be economically extracted and produced. A “mineral reserve” as defined under Canadian securities laws is the economically mineable part of a measured or indicated mineral resource demonstrated by a preliminary feasibility study. We have not carried out any feasibility study with regard to all or a portion of our Tonkin Springs property. As a result, we currently have no reserves and there are no assurances that we will be able to prove that there are reserves or probable reserves on our properties or any of the properties we will acquire if the transactions described in this prospectus are completed.

The mineralized material identified in the Cortez Trend does not and may never have demonstrated economic viability. Substantial expenditures are required to establish reserves through drilling and there is no assurance that reserves will be established. The feasibility of mining in the Cortez Trend has not been, and may never be, established. Whether a mineral deposit can be commercially viable depends upon a number of factors, including the particular attributes of the deposit, including size, grade and proximity to infrastructure; metal prices, which can be highly variable; and government regulations, including environmental and reclamation obligations. If we are unable to establish some or all of our mineralized material as proven or probable reserves in sufficient quantities to justify commercial operations, we may not be able to raise sufficient capital to develop a mine, even if one is warranted. If we are unable to establish such reserves, the market value of our securities may decline, and you may lose some or all of your investment.

We are dependent upon production of gold or other precious metals from a single property, have incurred substantial losses since our inception in 1979, and may never be profitable.

Unless the offer for one or more of the target companies is successful, we are dependent on our one existing property. Since our inception in 1979, we have not been profitable. As of September 30, 2006, our accumulated deficit was approximately $102.5 million. To become profitable, we must identify additional mineralization and establish reserves at our mining property, and then either develop our property or locate and enter into agreements with third party operators. It could be years before we receive any revenues from gold production, if ever. We may suffer significant additional losses in the future and may never be profitable. We do not expect to receive revenue from operations in the foreseeable future, if at all. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

Historical production of gold at our Tonkin Springs property may not be indicative of the potential for future development or revenue.

Historical production of gold from our Tonkin Springs property came from relatively shallow deposits, and in very limited quantities for a very limited period of time. Although we intend to explore deeper zones in an effort to identify additional mineralized material, due to the uncertainties associated with exploration, including variations in geology and structure, there is no assurance that our efforts will be successful. Investors in our securities should not rely on our historical operations as an indication that we will ever place our mining property into commercial production again. We expect to incur losses unless and until such time as our property enters into commercial production and generates sufficient revenue to fund our continuing operations.

Our continuing reclamation obligations at the Tonkin Springs property could require significant additional expenditures.

We are responsible for the reclamation obligations related to disturbances located on the Tonkin Springs property. The current estimate of reclamation costs for existing disturbances on the property to the degree required by the Federal Bureau of Land Management (BLM) and Nevada Division of Environmental Protection is approximately $3.3 million. As required by applicable regulations, we currently have in place a cash bond in the amount of $3.1 million to secure the reclamation of the property and anticipate increasing that amount by approximately $376,000 upon approval of the revised reclamation plan filed in September and bonding associated with the property-wide exploration permit. Reclamation bond estimates are required to be updated every three years or prior to new disturbances taking place that are not already bonded. We updated the reclamation obligation during September 2006 as noted above. There is a risk that any cash bond, even if augmented upon update of the reclamation obligations, could be inadequate to cover the costs of reclamation which could subject us to additional costs for the actual reclamation obligations. The satisfaction of bonding requirements and continuing reclamation obligations will require a significant amount of capital. There is a risk that we will be unable to fund these additional bonding requirements, and further that the regulatory authorities may increase reclamation and bonding requirements to such a degree that it would not be commercially reasonable to continue exploration activities.

Title to mineral properties can be uncertain, and we are at risk of loss of ownership of our property.

Our ability to explore and operate our property depends on the validity of title to that property. The mineral properties making up the Tonkin Springs property and the property of the target companies consist of leases of unpatented mining claims and unpatented millsite claims. Unpatented mining claims provide only possessory title and their validity is often subject to contest by third parties or the federal government, which makes the validity of unpatented mining claims uncertain and generally more risky. These uncertainties relate to such things as the sufficiency of mineral discovery, proper posting and marking of boundaries, assessment work and possible conflicts with other claims not determinable from descriptions of record. Since a substantial portion of all mineral exploration, development and mining in the United States now occurs on unpatented mining claims, this uncertainty is inherent in the mining industry. We have not obtained a title opinion on our entire property, and do not intend to obtain title opinions on any of the properties of the target companies, with the attendant risk that title to some claims, particularly title to undeveloped property, may be defective. There may be valid challenges to the title to our property which, if successful, could impair development and/or operations.

We remain at risk that the mining claims may be forfeited either to the United States, or to rival private claimants due to failure to comply with statutory requirements as to location and maintenance of the claims or challenges to whether a discovery of a valuable mineral exists on every claim.

A significant portion of the lode claims comprising our Tonkin Springs property are subject to a lease in favor of a third party which may expire in 2009 and which provides for a 5% royalty on production.

A total of 269 of our mining and millsite claims are subject to this lease. The lease requires annual payments of $150,000 or 455 ounces of gold, whichever is greater, and payment of a royalty of 5% of the gross sales price of gold or silver from the property before deduction of any expenses from the gross sales price. This lease may expire January 1, 2009. In the event we are unable to extend the lease or purchase the claims from the owner, we may be forced to forfeit the underlying claims, which in turn may adversely affect our ability to explore and develop the property. If we are successful in identifying sufficient mineralization to warrant placing the property into production, we will be obligated to pay the leaseholder a royalty of 5% of the production. The payment of this royalty, together with other royalties payable to third parties in respect of certain claims, will reduce our potential revenue.

We cannot assure you that we will have an adequate supply of water to complete desired exploration or development of our mining property.

In accordance with the laws of the State of Nevada, we have obtained permits to drill the water wells that we currently use to service the Tonkin Springs property and we plan to obtain all required permits for drilling water wells to serve other property we may acquire in the future. However, the amount of water that we are entitled to use from those wells must be determined by the appropriate regulatory authorities. A final determination of these rights is dependent in part on our ability to demonstrate a beneficial use for the amount water that we intend to use. Unless we are successful in developing the property to a point where we can commence commercial production of gold or other precious metals, we may not be able to demonstrate such beneficial use. Accordingly, there is no assurance that we will have access to the amount of water needed to operate a mine at the property.

Estimates of mineralized material at our Tonkin Springs property are based on drill results from shallow deposits and are not necessarily indicative of the results we may achieve from drilling at greater depths.

Previous operators at the Tonkin Springs property were focused on producing gold from shallow deposits in an effort to achieve immediate revenue. Our proposed drilling program for 2007 targets mineralization at greater depths and at different locations on our property. Estimates of mineralization in shallow zones is not necessarily indicative of mineralization at greater depths. In addition, estimates of mineralization are based on limited samples and many assumptions, and are inherently imprecise. Our ability to identify and delineate additional mineralization depends on the results of our future drilling efforts and our ability to properly interpret those results. We may be unable to identify any additional mineralization or reserves.

Our industry is highly competitive, attractive mineral lands are scarce, and we may not be able to obtain quality properties.

We compete with many companies in the mining industry, including large, established mining companies with substantial capabilities, personnel and financial resources. There is a limited supply of desirable mineral lands available for claim-staking, lease or acquisition in the United States, and other areas where we may conduct exploration activities. We may be at a competitive disadvantage in acquiring mineral properties, since we compete with these individuals and companies, many of which have greater financial resources and larger technical staffs. From time to time, specific properties or areas which would otherwise be attractive to us for exploration or acquisition may be unavailable to us due to their previous acquisition by other companies or our lack of financial resources. Competition in the industry is not limited to the acquisition of mineral properties but also extends to the technical expertise to find, advance, and operate such properties; the labor to operate the properties; and the capital for the purpose of funding such properties. Many competitors not only explore for and mine precious metals, but conduct refining and marketing operations on a world-wide basis. Such competition may result in our company being unable not only to acquire desired properties, but to recruit or retain qualified employees or to acquire the capital necessary to fund our operation and advance our properties. Our inability to compete with other companies for these resources would have a material adverse effect on our results of operation and business.

Risks Related to Our Securities

The exercise of outstanding options and warrants and the future issuances of our common stock will dilute current shareholders and may reduce the market price of our common stock.

As of February 1, 2007, we have outstanding options and warrants to purchase a total of 11,268,000 shares of our common stock, which if completely exercised, would dilute existing shareholders’ ownership by approximately 23%. A significant portion of the outstanding options are exercisable at prices significantly below the current market price of our common stock as of February 1, 2007. If the market price of our stock remains at or above the exercise price, it is likely that these options will be exercised. Our board of directors has the authority to authorize the offer and sale of additional securities without the vote of or notice to existing shareholders. Based on the need for additional capital to fund expected growth, it is likely that we will issue additional securities to provide such capital and that such additional issuances may involve a significant number of shares. Issuance of additional securities underlying outstanding options as authorized by our board of directors in the future will dilute the percentage interest of existing shareholders and may reduce the market price of our common stock.

A small number of existing shareholders own a significant portion of our common stock, which could limit your ability to influence the outcome of any shareholder vote.

Our executive officers and directors, together with our largest non-executive shareholders, beneficially own approximately 49.2% of our common stock as of February 1, 2007. After the completion of the transactions described in this prospectus, we anticipate that our executive officers and directors, together with our largest non-executive shareholders, will beneficially own approximately 33% of our common stock. Under our articles of incorporation and the laws of the State of Colorado, the vote of a majority of the shares voting at a meeting at which a quorum is present is generally required to approve most shareholder action. As a result, these individuals and entities will be able to significantly influence the outcome of shareholder votes for the foreseeable future, including votes concerning the election of directors, amendments to our articles of incorporation or proposed mergers or other significant corporate transactions.

We have never paid a dividend on our common stock and we do not anticipate paying any in the foreseeable future.

We have not paid a dividend on our common stock to date, and we may not be in a position to pay dividends in the foreseeable future. Our ability to pay dividends will depend on our ability to successfully develop one or more properties and generate revenue from operations. Further, our initial earnings, if any, will likely be retained to finance our growth. Any future dividends will depend upon our earnings, our then-existing financial requirements and other factors, and will be at the discretion of our Board of Directors.

Governmental and Regulatory Risks

If we are unable to satisfy the compliance order issued with regard to our Tonkin Springs property, we may forfeit our mine permit.

In May 2005, the Nevada Division of Environmental Protection issued a notice of alleged violation relating to disturbances at a portion of the Tonkin Springs property where mining was formerly conducted under the mine permit. As a result of that notice, we are under a compliance order, which required us to submit and implement a final closure plan for the previous mining operation by November 15, 2006. In accordance therewith, we provided the Nevada Division of Environmental Protection with all requested documents related to the final closure plan and substantially completed work in accordance with the plan. We are continuing to work with the Nevada Division of Environmental Protection to finalize further minor improvements and installations at the site, after which we anticipate achieving final closure of this compliance order. Our failure or inability to complete closure of the compliance order could cause us to forfeit our existing mine permit and adversely affect our ability to obtain additional necessary mining-related permits. We continue to work with the state and federal regulators, but the ultimate resolution of this issue is not yet known.

We are subject to changes in the regulatory environment where we operate and may face additional regulatory requirements as a result of the acquisition of the target companies.

Our mining operations and exploration activities are subject to extensive regulation governing various matters, including licensing, production, taxes, water disposal, toxic substances, mine safety, development and permitting, exports and imports, occupational health and safety, and environmental protections. As a result of the proposed acquisition of the target companies, we may face additional regulatory requirements that we are not currently subject to. For example, Nevada Pacific conducts mining operations in Mexico and is subject to Mexican environmental laws and foreign investment regulations under the Law of Foreign Investment, and must comply with the terms of exploration and exploitation concessions granted by the Mexican government in connection with its mining operations. Continued compliance with the regulations currently applicable to us and compliance with the new regulations that we may become subject to as a result of the acquisition of the target companies are expected to increase our costs, including the costs of planning, designing, drilling, operating, developing, constructing, and closure and reclamation. In addition, these laws and regulations are subject to frequent change and reinterpretation. Amendments to current laws and regulations governing operations and activities of mining companies or more stringent implementation or interpretation of these laws and regulations could have a material adverse impact on us.

Our operations are subject to permitting requirements which could require us to delay, suspend or terminate our operations on our mining property.

Our operations, including our ongoing two-year exploration drilling program, require permits from the state and federal governments. We may be unable to obtain these permits in a timely manner, on reasonable terms, or at all. If we cannot obtain or maintain the necessary permits, or if there is a delay in receiving these permits, our timetable and business plan for exploration of the Tonkin Springs property will be adversely affected.

Legislation has been proposed that would significantly affect the mining industry.

Periodically, members of the U.S. Congress have introduced bills which would supplant or alter the provisions of the General Mining Law of 1872, which governs the unpatented claims that we control with respect to our Tonkin Springs property. One such amendment has become law and has imposed a moratorium on patenting of mining claims, which reduced the security of title provided by unpatented claims such as those on our Tonkin Springs property. If additional legislation is enacted, it could substantially increase the cost of holding unpatented mining claims by requiring payment of royalties, and could significantly impair our ability to develop mineral resources on unpatented mining claims. Such bills have proposed, among other things, to make permanent the patent moratorium, to impose a federal royalty on production from unpatented mining claims and to declare certain lands as unsuitable for mining. Although it is impossible to predict at this time what royalties may be imposed in the future, the imposition of such royalties could adversely affect the potential for development of such mining claims, and the economics of existing operating mines on federal unpatented mining claims. Passage of such legislation could adversely affect our business.

THE OFFERORS

U.S. Gold

U.S. Gold is engaged in the exploration for gold and other precious metals. We hold a 100% interest in the Tonkin Springs property in Eureka County, Nevada, subject to paramount title in the United States. This property consists of approximately 44 square miles of unpatented lode mining claims and millsite claims located on the Battle Mountain-Eureka Trend, also known as the Cortez Trend, approximately 45 miles northwest of the town of Eureka in north-central Nevada. We are presently in the exploration stage at the Tonkin Springs property. We have not generated revenue from mining operations since 1990.

U.S. Gold was organized under the laws of the State of Colorado on July 24, 1979 under the name Silver State Mining Corporation. On June 21, 1988, we changed our name to U.S. Gold Corporation.

In July 2005, Robert R. McEwen became our largest shareholder by purchasing 11,100,000 shares of our common stock, representing 33.3% of our outstanding shares before the financing discussed immediately below. In August 2005, he became our Chairman and Chief Executive Officer. In November 2005, at a meeting of our shareholders, nominees of Mr. McEwen were elected as a majority of our board of directors. At that meeting, our shareholders also approved an increase in our authorized capital from 35,000,000 shares of common stock to 250,000,000 shares.

On February 22, 2006, U.S. Gold completed a private placement of 16,700,000 subscription receipts, with gross proceeds to us of $75,150,000. As part of that private placement, Mr. McEwen bought 667,000 subscription receipts, including 667,000 shares of common stock and warrants to purchase 333,500 shares of our common stock. As of the date of this prospectus, Mr. McEwen owns 11,767,000 shares of our common stock plus the 333,500 warrants, representing 24.0% of our outstanding shares (assuming the exercise of Mr. McEwen’s warrants).

We intend to hold a special meeting of shareholders, to be held at the Warwick Hotel, 1776 Grant Street, Denver, Colorado 80203 at 2:00 p.m., local time, on March 15, 2007, at which U.S. Gold shareholders, as of February 9, 2007, the record date, will be asked to vote on matters necessary to enable us to acquire the target companies. An affirmative vote of a majority of the votes cast at the special meeting is required to approve the strategic offers. Abstentions and broker non-votes will have no effect on the outcome of any of the proposals voted at our special meeting. The number of shares of our common stock outstanding and entitled to vote at the special meeting is 50,058,755. Holders of our common stock do not have dissenters’ rights under Colorado law in connection with any of the matters to be acted on at the special meeting.

Information regarding the qualifications and compensation of our current directors and executive officers, such persons’ beneficial ownership of our securities and the existence of certain relationships and transactions between such individuals and us and our subsidiaries, can be found in our annual report on Form 10-KSB, as amended, for the fiscal year ended December 31, 2005, filed with the SEC on January 24, 2007, which is incorporated into and forms a part of this prospectus. See the section entitled “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” on page v of this prospectus. Financial and other information about U.S. Gold as of the end of the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006 can be found in our quarterly reports on Form 10-QSB filed with the SEC on May 22, 2006, August 24, 2006 and January 24, 2007, respectively, which are incorporated into and forms part of the prospectus. See the section entitled “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” on page v of this prospectus.

Our principal executive offices are located at 2201 Kipling Street, Suite 100, Lakewood, Colorado, U.S.A. 80215 and our telephone number is (303) 238-1438. Our website is www.usgold.com. Information contained on the website is not incorporated by reference into this prospectus, and you should not consider information contained on the website as part of this prospectus.

Description of Our Capital Stock

Our authorized capital consists of 250,000,000 shares of common stock, no par value per share. As of February 1, 2007, we had 50,058,755 shares of common stock issued and outstanding.

The following discussion summarizes the rights and privileges of our capital stock. This summary is not complete, and you should refer to our articles of incorporation, as amended, which have been filed or incorporated as an exhibit to our annual report on Form 10-KSB, as amended, for the fiscal year ended December 31, 2005, which is incorporated into and forms part of this prospectus.

The holders of our common stock are entitled to one vote for each share held of record on all matters submitted to stockholders, including the election of directors. Cumulative voting for directors is not permitted. Except as provided by special agreement, the holders of common stock are not entitled to any preemptive rights and the shares are not redeemable or convertible. All outstanding common stock is, and all common stock issuable upon exercise of warrants will be, when issued and paid for, fully paid and nonassessable. The number of authorized shares of common stock may be increased or decreased (but not below the number of shares then outstanding or otherwise reserved for issuance by us) by the affirmative vote of a majority of shares cast at a meeting of our security holders at which a quorum is present.

The holders of our common stock are entitled to dividends if, as and when declared by our board of directors from legally available funds. Upon any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our common stock are entitled to share, on a pro rata basis, all assets remaining after payment to creditors and prior to liquidation rights, if any, of any series of outstanding preferred stock.

Pending shareholder approval at our special meeting in connection with the strategic offers, our authorized share capital will consist of 250,000,000 shares of common stock, no par value, and one share of preferred stock, no par value, designated Series A Special Voting Preferred Stock. See the section entitled “The Offer — Exchangeable Shares — Voting and Exchange Trust Agreement” on page 40 of this prospectus.

Our articles of incorporation and bylaws do not include any provision that would delay, defer or prevent a change in control of our company. However, pursuant to the laws of the State of Colorado, certain significant transactions would require the affirmative vote of a majority of the shares eligible to vote at a meeting of shareholders, which requirement could result in delays to or greater cost associated with a change in control of the company.

Additional information regarding our business and operations, description of property, management’s discussion and analysis of financial condition and results of operations is included in our annual report on Form 10-KSB, as amended, for the fiscal year ended December 31, 2005, which is incorporated into and forms part of the prospectus; our quarterly reports on Form 10-QSB, as amended, for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006, which are incorporated into and form part of the prospectus; Appendix E (Unaudited Financial Statements of US Gold Canadian Acquisition Corporation); Appendix F (Unaudited Pro Forma Consolidated Financial Statements of U.S. Gold); Appendix G (Unaudited Pro Forma Consolidated Supplementary Financial Statements of U.S. Gold) and Appendix H (Rights, Privileges, Restrictions and Conditions Attaching to the Exchangeable Shares of US Gold Canadian Acquisition Corporation) are incorporated into and form part of this prospectus. See the section entitled “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” on page v of this prospectus.

Canadian Exchange Co.

US Gold Canadian Acquisition Corporation, or Canadian Exchange Co., is a corporation incorporated under the Business Corporations Act (Alberta) and is our wholly-owned subsidiary. We formed Canadian Exchange Co. solely for the purpose of making the strategic offers. It has no significant assets or capitalization and has not engaged in any business or other activities to date. In connection with the strategic offers, among other things, Canadian Exchange Co. will acquire the benefit of the Support Agreement between U.S. Gold and Alberta ULC (see the section entitled “The Offer — Other Terms — Subsequent Acquisition Transaction” on page 54 of this prospectus for a description of Alberta ULC); and Canadian Exchange Co., and, to the extent the strategic offers are completed, will acquire common shares of White Knight, Nevada Pacific and Tone Resources and incur liabilities in connection with the strategic offers. Canadian Exchange Co.’s registered office is located at 2900 Manulife Place, 10180-101 Street, Edmonton, Alberta, Canada T5J 3V5 and its telephone number is (780) 423-7100.

Robert R. McEwen, Ann S. Carpenter and William F. Pass are the current directors of Canadian Exchange Co. Each of Mr. McEwen, Ms. Carpenter and Mr. Pass has served as a director of Canadian Exchange Co. since Canadian Exchange Co.’s incorporation on April 18, 2006. The term of office of each director will expire not later than the close of the next annual meeting of shareholders of Canadian Exchange Co. In addition, Mr. McEwen currently serves as the Chairman and Chief Executive Officer, Ms. Carpenter currently serves as the President, and Mr. Pass currently serves as the Vice President, Secretary and Treasurer, of Canadian Exchange Co. Additional information regarding Mr. McEwen, Ms. Carpenter and Mr. Pass is included in U.S. Gold’s Annual Report on Form 10-KSB, as amended, for the fiscal year ended December 31, 2005, which is incorporated into and forms part of the prospectus. See the section entitled “Incorporation by Reference of Certain Documents and Information of U.S. Gold for U.S. Shareholders” on page v of this prospectus.

Additional information regarding Canadian Exchange Co. is included in Appendix E (Unaudited Financial Statements of US Gold Canadian Acquisition Corporation), which is incorporated into and forms part of this prospectus.

In addition to an unlimited number of common shares, Canadian Exchange Co. is authorized to issue the exchangeable shares, as described in the section entitled “The Offer — Exchangeable Shares — Description of Exchangeable Shares” on page 36 of this prospectus, having substantially the attributes set out in Appendix H (Rights, Privileges, Restrictions and Conditions Attaching to the exchangeable shares of US Gold Canadian Acquisition Corporation), which is incorporated into and forms part of this prospectus.

THE OFFER

Offer to Purchase

Common Shares

We hereby offer to purchase, upon the terms and subject to the conditions of the offer, all of the outstanding White Knight common shares, including any White Knight common shares that may be issued after the date of the offer and prior to the expiry time, on the basis of 0.35 of an exchangeable share of Canadian Exchange Co. for each White Knight common share. Each exchangeable share will, under the circumstances described herein, be exchangeable for shares of common stock of U.S. Gold on a one-for-one basis.

You are encouraged to consult your own advisors regarding the tax consequences of the proposed transactions. You should carefully review the description of the tax consequences of the proposed transactions under the sections entitled “Material Canadian Federal Income Tax Considerations” and “Material U.S. Federal Income Tax Considerations” on pages 65 and 75, respectively, of this prospectus and you are encouraged to seek independent tax advice with respect to your specific circumstances.

Warrants, Options or Other Securities

Our offer is being made only for White Knight common shares and is not being made for any warrants, options or other securities that may entitle the holder to acquire White Knight common shares. Any holder of such securities who wishes to accept the offer must exercise those securities and deposit White Knight common shares in accordance with the offer. Any such exercise must be sufficiently in advance of the expiry time to permit White Knight common shares acquired on the exercise of those securities to be tendered in the offer in accordance with the procedures described under the sections entitled “— Time for Acceptance” and “— Manner of Acceptance” on pages 45 and 47, respectively, of this prospectus. However, if, after completion of the offer, we implement a subsequent acquisition transaction, we intend to structure such transaction so that warrants would be exchanged for warrants to purchase exchangeable shares of Canadian Exchange Co. and the White Knight stock option plan would be assumed or adopted by U.S. Gold. See the section entitled “— Other Terms — Subsequent Acquisition Transaction” on page 54 of this prospectus.

Fractional Shares

Fractional exchangeable shares will not be issued in the offer. Instead, the number of exchangeable shares to be issued to each tendering shareholder will be either rounded up (if the fractional interest is 0.5 or more) or down (if the fractional interest is less than 0.5) to the next whole number. For rounding purposes, all White Knight common shares deposited by a shareholder will be aggregated.

Total Expected Issuance of U.S. Gold Shares

Exchangeable Shares

Background and Reason for the Issuance of Exchangeable Shares

exchange rights attaching to them and the provisions of the Voting and Exchange Trust Agreement, which will be entered into between U.S. Gold, Alberta ULC, Canadian Exchange Co. and a trustee to be determined, and the Support Agreement, which will be entered into between U.S. Gold, Alberta ULC, and Canadian Exchange Co., are intended to provide the holders thereof with the economic and voting rights that are, as nearly as practicable, equivalent to those of a share of common stock of U.S. Gold. See the section entitled “Material Canadian Federal Income Tax Considerations” on page 65 of this prospectus.

You should be aware that, in the other strategic offers, it is our intention that shareholders of Nevada Pacific and Tone Resources will also receive exchangeable shares in exchange for their shares in such companies.

Description of Exchangeable Shares

The exchangeable shares are exchangeable on a one-for-one basis at any time at the option of the holder of the exchangeable shares into shares of U.S. Gold common stock. The following is a summary description of the material provisions of the rights, privileges, restrictions and conditions attaching to the exchangeable shares and is qualified in its entirety by reference to the full text of the share provisions included in Appendix H (Rights, Privileges, Restrictions and Conditions Attaching to the Exchangeable Shares of US Gold Canadian Acquisition Corporation), which is incorporated into and forms part of this prospectus.

Retraction of Exchangeable Shares by Holders

Subject to the retraction call right described below, holders of exchangeable shares will be entitled at any time to retract (i.e., to require Canadian Exchange Co. to redeem) any or all exchangeable shares held by them and to receive the retraction price per exchangeable share to be satisfied by issuance of one share of common stock of U.S. Gold, plus the dividend amount, which for purposes of this prospectus we define as the full amount of all declared and unpaid dividends on the exchangeable shares and all dividends and distributions declared on a share of common stock of U.S. Gold that have not yet been declared on the exchangeable shares. Holders of exchangeable shares may effect a retraction by presenting to Canadian Exchange Co. or its transfer agent the certificate(s) representing the exchangeable shares the holder desires to have Canadian Exchange Co. redeem, together with such other documents and instruments as may be required under the Business Corporation Act (Alberta), the articles of Canadian Exchange Co. or by its transfer agent, and a duly executed retraction request specifying that the holder desires to have the number of retracted shares specified therein redeemed by Canadian Exchange Co.

Upon receipt by Canadian Exchange Co. of a retraction request, Canadian Exchange Co. will promptly provide notice of this request to us and Alberta ULC. Instead of Canadian Exchange Co. redeeming the retracted shares, and provided that the retraction request is not revoked by the holder in the manner described below, we or Alberta ULC will have the right to purchase all but not less than all of the shares covered by the retraction request, which we refer to as our retraction call right. Under the retraction call right, we or Alberta ULC, as the case may be, will purchase from the holder and the holder will sell to us or Alberta ULC, as the case may be, the retracted shares. The retraction price per share will be equal to the current market price of a share of our common stock, calculated as provided in the share provisions included in Appendix H and incorporated by reference in this prospectus as of the last business day prior to the retraction date (described below), which shall be satisfied by delivering to the holder one share of our common stock plus the dividend amount, if any. The retraction date means the fifth business day after the date on which the retraction request is received by Canadian Exchange Co. See the section entitled “— Call Rights” on page 38 of this prospectus. In the event that we or Alberta ULC do not exercise the retraction call right, and provided that the retraction request is not revoked by the holder in the manner described below, Canadian Exchange Co. will redeem the retracted shares on the retraction date for the retraction price.

A holder of retracted shares may withdraw its retraction request, by written notice to Canadian Exchange Co. before the close of business on the business day immediately preceding the retraction date, in which case the retraction request will be null and void and the revocable offer will be deemed to have been revoked.

If, as a result of solvency provisions of applicable law, Canadian Exchange Co. is not permitted to redeem all exchangeable shares tendered by a retracting holder, Canadian Exchange Co. will redeem up to the maximum permissible number of exchangeable shares tendered by the holder. We or Alberta ULC will be required to purchase any exchangeable shares not redeemed by Canadian Exchange Co. in exchange for shares of our common stock on

the retraction date under the optional exchange right described below. See the section entitled “— Voting and Exchange Trust Agreement — Optional Exchange Upon Canadian Exchange Co. Insolvency Event” on page 41 of this prospectus.

Distribution on Liquidation of Canadian Exchange Co.

In the event of the liquidation, dissolution or winding up of Canadian Exchange Co. or any other distribution of its assets among its shareholders for the purpose of winding up its affairs, holders of exchangeable shares shall be entitled, subject to applicable law, to receive from the assets of Canadian Exchange Co. a liquidation payment that will be satisfied by the issuance of one share of our common stock plus the dividend amount, if any for each exchangeable share. This liquidation amount will be paid to the holders of exchangeable shares before any distribution of assets of Canadian Exchange Co. is made to the holders of the common shares or any other shares of Canadian Exchange Co. ranking junior to the exchangeable shares, and is subject to the exercise by us or Alberta ULC of our or its liquidation call right described in the section entitled “— Liquidation Call Right” below.

Automatic Exchange Upon Liquidation of U.S. Gold

Under the Voting and Trust Agreement, in the event of our liquidation, all of the then outstanding exchangeable shares will be automatically exchanged for shares of our common stock. To effect an automatic exchange, we, or at our option, Alberta ULC, will purchase all of the exchangeable shares from the holders on the fifth business day prior to the effective date of a liquidation. The purchase price payable for each exchangeable share purchased in a liquidation of U.S. Gold will be satisfied by the issuance of one share of our common stock plus the dividend amount, if any. See the section entitled “— Voting and Exchange Trust Agreement — Automatic Exchange Right Upon U.S. Gold Liquidation Event” on page 42 of this prospectus.

Redemption of Exchangeable Shares by Canadian Exchange Co.

The redemption date for the exchangeable shares will be the earlier of: (i) the seventh anniversary of the date on which exchangeable shares are first issued; and (ii) any date established by the board of directors of Canadian Exchange Co. for the redemption of exchangeable shares at such time as there are fewer than 10% of the total number of exchangeable shares issued in connection with the strategic offers (other than exchangeable shares held by us or our or its subsidiaries and subject to necessary adjustments to the number of shares to reflect permitted changes to exchangeable shares) outstanding.

Notice of the redemption date will be sent to us and Alberta ULC at the same time as it is sent to the holders of exchangeable shares and, notwithstanding any proposed redemption of the exchangeable shares, each of us and Alberta ULC will have a redemption call right to purchase all, but not less than all, of the outstanding exchangeable shares on the redemption date. The redemption price per share will equal the current market price of a share of our common stock, calculated as provided in the share provisions included in Appendix H, on the last business day prior to such redemption, which shall be satisfied by delivering to the holder one share of our common stock plus the dividend amount, if any. See the section entitled “— Call Rights” below.

Unless the relevant Canadian tax legislation is amended, any Canadian tax deferral obtained by a shareholder who receives exchangeable shares under the offer will end on the exchange or redemption of exchangeable shares for shares of our common stock. Moreover, if our rights or the rights of Alberta ULC to acquire exchangeable shares from the holders of exchangeable shares, which we refer to as our or its call rights, are not exercised upon a redemption (including a retraction) of the exchangeable shares by Canadian Exchange Co., a holder of exchangeable shares may realize a dividend for Canadian tax purposes that may exceed the holder’s economic gain. A holder of exchangeable shares will be subject to different Canadian federal income tax consequences depending upon whether the call rights are exercised or whether the relevant exchangeable shares are redeemed by Canadian Exchange Co. under the share provisions if the call rights are not exercised. See the sections entitled “Risk Factors” and “Material Canadian Federal Income Tax Considerations” on pages 20 and 65, respectively, of this prospectus. Subject to applicable law, and provided that we and Alberta ULC have not exercised the redemption call right, Canadian Exchange Co. will redeem all of the outstanding exchangeable shares upon at least 60 days prior notice to the holders of the exchangeable shares.

Call Rights

In the circumstances described below, we and Alberta ULC will have certain overriding rights to acquire exchangeable shares from the holders. A holder of exchangeable shares will be subject to different Canadian federal income tax consequences depending upon whether the call rights are exercised or whether the relevant exchangeable shares are redeemed by Canadian Exchange Co. if the call rights are not exercised. See the section entitled “Material Canadian Federal Income Tax Considerations” on page 65 of this prospectus.

Retraction Call Right

Under the share provisions, each of we and Alberta ULC have an overriding retraction call right to acquire all but not less than all of the exchangeable shares that a holder of exchangeable shares requests Canadian Exchange Co. to redeem. Alberta ULC is only entitled to exercise its retraction call right with respect to those holders of exchangeable shares, if any, for which we have not exercised our retraction call right. The purchase price under the retraction call right is equal to the retraction call purchase price per share, which is the current market price of a share of our common stock, calculated as provided in the share provisions included in Appendix H, on the last business day prior to the retraction date. The purchase price will be satisfied by delivering to the holder one share of our common stock plus the dividend amount, if any.

At the time of a retraction request by a holder of exchangeable shares, Canadian Exchange Co. will promptly notify us and Alberta ULC and either we or Alberta ULC must then advise Canadian Exchange Co. within five business days if we choose to exercise the retraction call right. If we or Alberta ULC do not advise Canadian Exchange Co. within the five-business day period, Canadian Exchange Co. will notify the holder as soon as possible thereafter that neither of us will exercise the retraction call right. Unless the holder revokes his or her retraction request, on the retraction date the exchangeable shares that the holder has requested Canadian Exchange Co. to redeem will be acquired by us or Alberta ULC (assuming either we or Alberta ULC exercise the retraction call right) or redeemed by Canadian Exchange Co., as the case may be, in each case for the retraction call purchase price as described in the preceding paragraph.

Liquidation Call Right

Under the share provisions, each of we and Alberta ULC have an overriding liquidation call right, in the event of and notwithstanding a proposed liquidation, dissolution or winding up of Canadian Exchange Co., to acquire all but not less than all of the exchangeable shares then outstanding. Alberta ULC is only entitled to exercise its liquidation call right with respect to those holders of exchangeable shares, if any, for which we have not exercised our liquidation call right. The purchase price under the liquidation call right is equal to the liquidation call exercise price per share, which is the current market price of a share of our common stock, calculated as provided in the share provisions included in Appendix H, on the last business day prior to the effective date of such voluntary or involuntary liquidation, dissolution or winding up, or the liquidation date. The purchase price will be satisfied by delivering to the holder one share of our common stock plus the dividend amount, if any. Upon the exercise by us or Alberta ULC of the liquidation call right, the holders will be obligated to transfer their exchangeable shares to us or Alberta ULC, as the case may be. The acquisition by us or Alberta ULC of all of the outstanding exchangeable shares upon the exercise of the liquidation call right will occur on the effective date of the voluntary or involuntary liquidation, dissolution or winding up of Canadian Exchange Co.

To exercise the liquidation call right, we or Alberta ULC must notify Canadian Exchange Co.’s transfer agent in writing, as agent for the holders of the exchangeable shares, and Canadian Exchange Co. of our or Alberta ULC’s intention to exercise this right at least 55 days before the liquidation date in the case of a voluntary liquidation, dissolution or winding up of Canadian Exchange Co. and at least five business days before the liquidation date in the case of an involuntary liquidation, dissolution or winding up of Canadian Exchange Co. The transfer agent will notify the holders of exchangeable shares as to whether or not we or Alberta ULC have exercised the liquidation call right promptly after the expiry of the date by which the same may be exercised by us or Alberta ULC. If we or Alberta ULC exercise the liquidation call right on the liquidation date, we or Alberta ULC will purchase and the holders will sell all of the exchangeable shares for an amount equal to the liquidation call exercise price as described in the preceding paragraph.

Redemption Call Right

Under the share provisions, each of we and Alberta ULC have an overriding redemption call right, notwithstanding the proposed automatic redemption of the exchangeable shares by Canadian Exchange Co. in the share provisions, to acquire all but not less than all of the exchangeable shares then outstanding. Alberta ULC is only entitled to exercise its redemption call right with respect to those holders of exchangeable shares, if any, for which we have not exercised our redemption call right. The purchase price under the redemption call right is equal to the redemption call purchase price, which is the current market price of a share of our common stock, calculated as provided in the share provisions included in Appendix H, on the last business day prior to the redemption date. The purchase price will be satisfied by delivering to the holder one share of our common stock plus the dividend amount, if any. Upon the exercise by us or Alberta ULC of the redemption call right, the holders will be obligated to transfer their exchangeable shares to us or Alberta ULC, as the case may be.

To exercise the redemption call right, we or Alberta ULC must notify Canadian Exchange Co.’s transfer agent in writing, as agent for the holders of the exchangeable shares, and Canadian Exchange Co. of our or Alberta ULC’s intention to exercise this right at least 30 days before the redemption date. The transfer agent will notify the holders of exchangeable shares as to whether or not we or Alberta ULC exercise the redemption call right promptly after the date by which the same may be exercised by us or Alberta ULC. If we or Alberta ULC exercise the redemption call right on the redemption date, we or Alberta ULC will purchase and the holders will sell all of the exchangeable shares for an amount equal to the redemption call purchase price as described in the preceding paragraph.

Effect of Call Rights Exercise

If U.S. Gold or Alberta ULC exercise one or more of its call rights, shares of our common stock will be directly issued to holders of exchangeable shares and we or Alberta ULC, as the case may be, will become the holder of the exchangeable shares. We or Alberta ULC will not be entitled to exercise any voting rights attached to the exchangeable shares that are acquired from the holders. If we or Alberta ULC decline to exercise the call rights when applicable, we will be required, under the Support Agreement we will enter into with Alberta ULC and Canadian Exchange Co., to issue shares of our common stock to the holders of exchangeable shares. The Canadian tax consequences resulting from the exercise by us or Alberta ULC, as the case may be, of one or more of the call rights are discussed in the section entitled “Material Canadian Federal Income Tax Considerations” on page 65 of this prospectus.

Voting Rights

Under the Voting and Exchange Trust Agreement we will enter into with Alberta ULC, Canadian Exchange Co. and a trust company to be determined, holders of exchangeable shares will be entitled to receive notice of and attend any meeting of our shareholders and to vote at any meetings. See the section entitled “— Voting and Exchange Trust Agreement — Voting Rights in U.S. Gold” on page 41 of this prospectus.

The number of directors of Canadian Exchange Co. will be fixed at three and the exchangeable share provisions will entitle holders of exchangeable shares to annually elect one director. However, except as required by applicable law, or as provided in the rights, privileges, restrictions and conditions of the exchangeable shares, the holders of the exchangeable shares shall not otherwise be entitled as such to receive notice of or to attend any meeting of the shareholders of Canadian Exchange Co. or to vote at any meeting held for any other purpose than the annual election of directors.

Ranking

Holders of exchangeable shares will be entitled to a preference over holders of any other common shares of Canadian Exchange Co. and any other shares ranking junior to the exchangeable shares with respect to the payment of dividends and the distribution of assets in the event of the liquidation, dissolution or winding up of Canadian Exchange Co., whether voluntary or involuntary, or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs.

Dividends

Holders of exchangeable shares will be entitled to receive dividends equivalent to the dividends, if any, paid from time to time by us on shares of our common stock. The declaration date, record date and payment date for dividends on the exchangeable shares will be the same as that for any corresponding dividends on shares of our common stock.

Certain Restrictions

Except with the approval of the holders of the exchangeable shares, Canadian Exchange Co. will not be permitted to:


	•	pay any dividends on common shares or any other shares of Canadian Exchange Co. ranking junior to the exchangeable shares, other than stock dividends payable in common shares or any such other shares of Canadian Exchange Co. ranking junior to the exchangeable shares, as the case may be;

	•	redeem or purchase or make any capital distribution in respect of common shares or any other shares of Canadian Exchange Co. ranking junior to the exchangeable shares;

	•	redeem or purchase any other shares of Canadian Exchange Co. ranking equally with the exchangeable shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution or winding up of Canadian Exchange Co., whether voluntary or involuntary, or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs; or

	•	issue any shares of stock other than exchangeable shares and any other shares not ranking superior to the exchangeable shares,

unless, in the case of the first three bullet points above, all dividends on the outstanding exchangeable shares corresponding to dividends declared and paid to date on the shares of our common stock have been declared and paid on the exchangeable shares.

Amendment and Approval

Any approval required to be given by the holders of the exchangeable shares to add to, change or remove any right, privilege, restriction or condition attaching to the exchangeable shares or any other matter requiring the approval or consent of the holders of the exchangeable shares in accordance with applicable law shall be deemed to have been sufficiently given if it has been given in accordance with applicable law, subject to a minimum requirement that such approval be evidenced by a resolution passed by not less than 662/3% of the votes cast on such resolution at a meeting of holders of exchangeable shares duly called and held, excluding exchangeable shares beneficially owned by us or any of our subsidiaries.

Voting and Exchange Trust Agreement

The following is a summary description of the material provisions of the Voting and Exchange Trust Agreement between U.S. Gold, Alberta ULC, Canadian Exchange Co. and the voting and exchange trustee. This summary is qualified in its entirety by reference to the full text of the Voting and Exchange Trust Agreement, which is attached as Appendix I to this prospectus.

The purpose of the Voting and Exchange Trust Agreement will be to create a trust for the benefit of the registered holders from time to time of exchangeable shares (other than us or our subsidiaries). A voting and exchange trustee to be determined, will hold the one issued and outstanding share of U.S. Gold Series A Special Voting Preferred Stock in order to enable the voting and exchange trustee to exercise the voting rights attached thereto and will hold exchange rights in order to enable the voting and exchange trustee to exercise such rights, in each case as trustee for and on behalf of such registered holders.

Voting Rights in U.S. Gold

Under the Voting and Exchange Trust Agreement, we will issue to the voting and exchange trustee one share of Series A Special Voting Preferred Stock to be held of record by the voting and exchange trustee as trustee for and on behalf of, and for the use and benefit of, the registered holders from time to time of exchangeable shares (other than us or our subsidiaries) and in accordance with the provisions of the Voting and Exchange Trust Agreement. During the term of the Voting and Exchange Trust Agreement, and under the terms of the Support Agreement, we will not be permitted to issue any additional shares of Series A Special Voting Preferred Stock without the consent of the holders of exchangeable shares.

Under the Voting and Exchange Trust Agreement, the voting and exchange trustee will be entitled to all of the voting rights, including the right to vote in person or by proxy, attaching to the one share of Series A Special Voting Preferred Stock on all matters that may properly come before our shareholders at a meeting of shareholders. The share of Series A Special Voting Preferred Stock will have that number of votes, which may be cast by the voting and exchange trustee at any meeting at which our shareholders are entitled to vote, equal to the number of outstanding exchangeable shares (other than shares held by us or our subsidiaries).

Each holder of an exchangeable share (other than us or our subsidiaries) on the record date for any meeting at which our shareholders are entitled to vote will be entitled to instruct the voting and exchange trustee to exercise one of the votes attached to the share of Series A Special Voting Preferred Stock for that exchangeable share. The voting and exchange trustee will exercise each vote attached to the share of Series A Special Voting Preferred Stock only as directed by the relevant holder and, in the absence of instructions from a holder as to voting, the voting and exchange trustee will not have voting rights with respect to that exchangeable share. A holder of an exchangeable share may, upon instructing the voting and exchange trustee, obtain a proxy from the voting and exchange trustee entitling the holder to vote directly at the relevant meeting the votes attached to the share of Series A Special Voting Preferred Stock to which the holder is entitled.

The voting and exchange trustee will send to the holders of the exchangeable shares the notice of each meeting at which our shareholders are entitled to vote, together with the related meeting materials and a statement as to the manner in which the holder may instruct the voting and exchange trustee to exercise the votes attaching to the share of Series A Special Voting Preferred Stock, at the same time as we send the notice and materials to our shareholders. The voting and exchange trustee will also send to the holders of exchangeable shares copies of all information statements, interim and annual financial statements, reports and other materials we send to our shareholders at the same time we send those materials to our shareholders. We will endeavor to obtain copies of materials sent by third parties to our shareholders generally, including dissident proxy circulars and tender and exchange offer circulars, as soon as possible after those materials are first sent to our shareholders and to deliver those materials to the voting and exchange trustee, which will send those materials to holders of exchangeable shares.

All rights of a holder of exchangeable shares to exercise votes attached to the share of Series A Special Voting Preferred Stock will cease upon the exchange of that holder’s exchangeable shares for shares of our common stock.

Optional Exchange Upon Canadian Exchange Co. Insolvency Event

We and Alberta ULC will agree in the Voting and Exchange Trust Agreement that, upon the insolvency of Canadian Exchange Co., a holder of exchangeable shares will be entitled to instruct the voting and exchange trustee to exercise an exchange right with respect to any or all of the exchangeable shares held by the holder, thereby requiring us or Alberta ULC to purchase the exchangeable shares from the holder. The purchase price payable for each exchangeable share purchased upon the insolvency of Canadian Exchange Co. will be satisfied by the issuance of one share of our common stock plus an additional amount equivalent to the full amount of all declared and unpaid dividends, if any, on the exchangeable share and all dividends and distributions declared on a share of common stock that have not yet been declared on the exchangeable shares.

As soon as practicable following an event of insolvency of Canadian Exchange Co. or any event that may, with the passage of time or the giving of notice or both, result in the insolvency of Canadian Exchange Co., Canadian Exchange Co. and we will give written notice of the insolvency or other event to the voting and exchange trustee. As

soon as practicable after receiving the notice, the voting and exchange trustee will give notice to each holder of exchangeable shares of the event and will advise the holder of its rights with respect to the exchange right.

If, as a result of solvency provisions of applicable law, Canadian Exchange Co. is unable to redeem all of a holder’s exchangeable shares which the holder is entitled to have redeemed in accordance with the share provisions, the holder will be deemed to have exercised the optional exchange right with respect to the unredeemed exchangeable shares and we or Alberta ULC will be required to purchase those shares from the holder in the manner set forth above.

Automatic Exchange Right Upon U.S. Gold Liquidation Event

We will agree in the Voting and Exchange Trust Agreement that we will notify the voting and exchange trustee, upon the occurrence of either (a) a determination by our board of directors to institute voluntary liquidation, dissolution or winding up proceedings with respect to U.S. Gold or to affect any other distribution of our assets among our shareholders for the purpose of winding up our affairs, such notice to be given at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding up or other distribution, or (b) the earlier of (i) receipt by us of notice of, and (ii) we otherwise become aware of any threatened or instituted claim, suit, petition or other proceeding with respect to involuntary liquidation, dissolution or winding up or to effect any other distribution of our assets among our shareholders for the purpose of winding up our affairs.

Immediately following receipt by the voting and exchange trustee of notice of such an event or potential event of insolvency, the voting and exchange trustee will give notice to each holder of exchangeable shares of the event or potential event and will advise the holder of its rights with respect to the automatic exchange right.

On the fifth business day prior to the effective date of such event of insolvency, we will automatically exchange all of the then outstanding exchangeable shares (other than exchangeable shares held by us or our subsidiaries) for a purchase price per exchangeable share equal to one share of our common stock plus the dividend amount.

Support Agreement

The following is a summary description of the material provisions of the Support Agreement, to be entered into between U.S. Gold, Alberta ULC and Canadian Exchange Co., and is qualified in its entirety by reference to the full text of the Support Agreement, which is attached as Appendix J to this prospectus.

Under the Support Agreement, we will covenant that, so long as exchangeable shares not owned by us or our subsidiaries are outstanding, we will, among other things: (a) not declare or pay any dividend on the shares of our common stock unless (i) on the same day Canadian Exchange Co. declares or pays, as the case may be, an equivalent dividend on the exchangeable shares and (ii) Canadian Exchange Co. has sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of an equivalent dividend on the exchangeable shares; (b) advise Canadian Exchange Co. in advance of the declaration of any dividend on the shares of our common stock and take other actions reasonably necessary to ensure that the declaration date, record date and payment date for dividends on the exchangeable shares are the same as those for any corresponding dividends on the shares of our common stock; (c) ensure that the record date for any dividend declared on the shares of our common stock is not less than ten (10) business days after the declaration date of such dividend; and (d) take all actions and do all things reasonably necessary or desirable to enable and permit Canadian Exchange Co., in accordance with applicable law, to pay the liquidation amount, the retraction price or the redemption price to the holders of the exchangeable shares in the event of a liquidation, dissolution or winding up of Canadian Exchange Co., a retraction request by a holder of exchangeable shares or a redemption of exchangeable shares by Canadian Exchange Co., as the case may be.

The Support Agreement will also provide that, without the prior approval of Canadian Exchange Co. and the holders of exchangeable shares, we will not distribute additional shares of common stock of U.S. Gold or rights to subscribe therefor or other property or assets to all or substantially all holders of shares of our common stock, nor change any of the rights, privileges or other terms of our common stock, unless the same or an equivalent distribution on, or change to, the exchangeable shares (or in the rights of the holders thereof) is made simultaneously. In the event of any proposed tender offer, share exchange offer, issuer bid, take-over bid or similar

transaction affecting our common stock, we will use reasonable efforts to take all actions necessary or desirable to enable holders of exchangeable shares to participate in such transaction to the same extent and on an economically equivalent basis as the holders of our common stock.

The Support Agreement will also provide that, as long as any outstanding exchangeable shares are owned by any person or entity other than us or any of our subsidiaries, we will, unless approval to do otherwise is obtained from the holders of the exchangeable shares, remain the direct or indirect beneficial owner of all of the issued and outstanding common shares of Canadian Exchange Co. and all issued and outstanding voting shares of Alberta ULC.

With the exception of changes for the purpose of: (i) adding to the covenants of any or all of the parties; (ii) evidencing successors of U.S. Gold; (iii) making certain necessary amendments or; (iv) curing ambiguities or clerical errors (provided, in each case, that our board of directors and the boards of directors of each of Canadian Exchange Co. and Alberta ULC are of the opinion that such amendments are not prejudicial to the interests of the holders of the exchangeable shares), the Support Agreement may not be amended without the approval of the holders of the exchangeable shares.

Under the Support Agreement, each of us and Alberta ULC will not exercise, and will prevent their affiliates from exercising, any voting rights attached to the exchangeable shares owned by us or Alberta ULC or their affiliates on any matter considered at meetings of holders of exchangeable shares (including any approval sought from such holders in respect of matters arising under the Support Agreement).

Conditions of the Offer

Subject to applicable U.S. and Canadian law, we may withdraw the offer (in which event Canadian Exchange Co. shall not be required to accept for purchase and/or pay for any White Knight common shares tendered in the offer) or extend the period of time during which the offer is open (in which event we or Canadian Exchange Co. may postpone accepting for purchase and paying for any White Knight common shares tendered in the offer) unless all of the following conditions are satisfied as reasonably determined by us, or waived by us (in which event the condition or conditions waived by us will be waived with respect to all White Knight shareholders):

(a) there shall have been properly deposited and not withdrawn that number of White Knight common shares that constitutes at least the greater of (1) 662/3% of White Knight common shares deemed outstanding on a fully-diluted basis or (2) 80% of the White Knight common shares issued and outstanding on the date the shares are accepted for purchase;

(b) White Knight shall not have entered into or effectuated any agreement or transaction with any person or entity having the effect of impairing our ability to acquire White Knight or otherwise diminishing the expected economic value to us of the acquisition of White Knight including, but not limited to, any material issuance of securities of White Knight, transfer of assets, the declaration of any extraordinary dividend, the adoption of a shareholder rights plan or any other transaction not in the ordinary course of White Knight’s business;

(c) the additional shares of common stock of U.S. Gold issuable upon exchange of the exchangeable shares offered under this offer shall have been approved for listing on the TSX and AMEX and the exchangeable shares shall have been approved for listing on the TSX;

(d) the registration statement for the exchangeable shares to be issued in the offer and the shares of our common stock that may be issued upon the exchange of any exchangeable shares shall have become effective under the Securities Act and no stop order suspending the effectiveness of the registration statement or a proceeding seeking a stop order shall have been issued nor shall there have been proceedings for that purpose initiated or threatened by the SEC and U.S. Gold and Canadian Exchange Co. shall have received all necessary state securities law or blue sky authorizations;

(e) all necessary orders shall have been obtained from relevant Canadian securities regulatory authorities in respect of the exchangeable shares to be issued in the offer, the shares of our common stock that may be

issued upon the exchange of any such exchangeable shares and the resale of any exchangeable shares or shares of our common stock;

(f) U.S. Gold and Canadian Exchange Co. shall have received waivers relating to any change of control provisions in any note, bond, mortgage, indenture, license, lease, contract, agreement or other instrument or obligation to which White Knight or any of its subsidiaries is a party or by which any of them or any of their properties or assets may be bound, except such waivers the absence of which would not in the aggregate materially adversely affect U.S. Gold, White Knight and our and its respective subsidiaries;

(g) the holders of shares of our common stock, voting at a meeting of such holders, shall have approved the following prior to the expiry time:

(i) an amendment to our certificate of incorporation to create a new class of stock comprised of one share of preferred stock, designated Series A Special Voting Preferred Stock, no par value, to be issued in connection with the strategic offers; and

(ii) the issuance, in connection with the strategic offers, of the exchangeable shares, the U.S. Gold Series A Special Voting Preferred Stock providing holders of the exchangeable shares voting rights in U.S. Gold and the shares of our common stock issuable upon exchange of the exchangeable shares;

(h) the White Knight directors will have provided, in a form reasonably satisfactory to U.S. Gold and Canadian Exchange Co. (i) resignations and other documents reasonably necessary to effect an orderly transition of its board of directors contemporaneously with or promptly after Canadian Exchange Co. takes up and pays for the White Knight common shares deposited under the offer to purchase, including, if requested, resigning in favor of any nominees who may be specified by us and Canadian Exchange Co. and (ii) executed releases from each White Knight director releasing all claims as directors, other than existing rights to indemnification and insurance and customary directors fees and expenses for attendance at meetings of the board of directors;

(i) there shall not be in effect or threatened as of the expiry time, as it may be extended, any temporary restraining order, preliminary or permanent injunction or other order or decree issued by any court or agency of competent jurisdiction or other legal restraint or prohibition challenging the offer or preventing the completion of the offer or any of the other transactions described in this offer, and there shall be no statute, rule, regulation, order, injunction or decree enacted, entered, promulgated or enforced by any court, administrative agency or commission or other governmental authority or instrumentality which requires consent or approval or challenges, prohibits, restricts or makes illegal the completion of the offer or the subsequent acquisition transaction;

(j) there shall not be pending or threatened any suit, action or proceeding by any governmental entity:

(i) challenging the offer, seeking to restrain or prohibit the completion of the offer or seeking to obtain from us or White Knight or our respective subsidiaries any damages that are material to White Knight and its subsidiaries, on a consolidated basis, or us and our subsidiaries, on a consolidated basis;

(ii) seeking to prohibit or limit the ownership or operation by us or White Knight or any of our subsidiaries of any material portion of the business or assets of White Knight or us or any of our subsidiaries or to compel White Knight or us or any of our subsidiaries to dispose of or hold separate any material portion of the business or assets of us or White Knight or any of our subsidiaries as a result of the offer;

(iii) seeking to prohibit us from effectively controlling in any material respect the business or operations of White Knight; or

(iv) which otherwise is reasonably likely to have a material adverse effect on us or our subsidiaries, on a consolidated basis, or White Knight and its subsidiaries, on a consolidated basis;

(k) there shall be no change or threatened change in the business, properties, assets, liabilities, capitalization, shareholders’ equity, condition (financial or otherwise), operations, licenses or franchises, results of operations or prospects of White Knight or any of its subsidiaries, on a consolidated basis, that, in our

reasonable judgment, has or may have a material adverse effect on White Knight and its subsidiaries, on a consolidated basis, and we shall not have become aware of any fact that, in our reasonable judgment, has or may have a material adverse effect on White Knight and its subsidiaries or their business or prospects or the value to us of the common shares of White Knight;

(l) U.S. Gold and Canadian Exchange Co. shall have obtained or received all approvals, consents, clearances or waivers required to be obtained or received from any governmental regulatory agency, authority or commission in connection with the offer; and

(m) there shall not have occurred or been threatened:

(i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States or Canada;

(ii) any extraordinary or material adverse change in the financial markets or major stock exchange indices in the United States or Canada or in the market price of White Knight common shares;

(iii) any change in the general political, market, economic or financial conditions in the U.S. or Canada that could, in our reasonable judgment, have a material adverse effect upon the business, properties, assets, liabilities, capitalization, shareholders equity, condition (financial or otherwise), operations, licenses or franchises, results of operations or prospects of White Knight or any of its subsidiaries;

(iv) any material change in U.S. dollar or Canadian dollar exchange rates or a suspension of, or limitation on, the markets therefor;

(v) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or Canada;

(vi) any limitation (whether or not mandatory) by any government, domestic, foreign or supranational, or governmental entity on, or other event that, in our reasonable judgment, might affect the extension of credit by banks or other lending institutions;

(vii) a commencement of war or armed hostilities or other national or international calamity involving the U.S. or Canada; or

(viii) in the case of any of the foregoing existing at the time of the commencement of the offer, a material acceleration or worsening thereof.

The conditions listed above are for the exclusive benefit of us and Canadian Exchange Co., and we may assert them regardless of the circumstances giving rise to any of the conditions. Unless precluded from doing so by applicable law, we may, in our sole discretion, waive any of these conditions in whole or in part, in which case the condition or conditions waived by us will be waived with respect to all White Knight shareholders. Subject to any rights and remedies granted to White Knight shareholders under applicable U.S. and Canadian law, our reasonable determination as to whether any condition has been satisfied shall be final and binding on all parties.

The offerors reserve the right to terminate the offer on or prior to the expiry time if any condition to the offer remains unsatisfied or has not been waived or to comply with any applicable law.

Time for Acceptance

The offer is open for acceptance, unless withdrawn or extended at our sole discretion, until the expiry time, being 5:00 p.m. (Vancouver Time) on March 23, 2007, or such later time or times and date or dates as we may fix from time to time.

See the section entitled “Extension of the Expiry Time or Variation or Change of the Offer” immediately below.

Extension of the Expiry Time or Variation or Change of the Offer

The offer is open for acceptance until the expiry time, being 5:00 p.m. (Vancouver Time) on March 23, 2007, unless earlier withdrawn.

We reserve the right at any time and from time to time to extend the offer or to vary or change the terms of the offer by giving written notice or other communication (confirmed in writing) of such extension or variation to the depositary at its principal office in Toronto, and by causing the depositary to provide as soon as practicable thereafter a copy of such notice in the manner set forth in the section entitled “— Notices and Delivery” on page 51 of this prospectus to all White Knight shareholders. We will make a public announcement of the extension or variation as soon as possible after giving notice of an extension or variation to the depositary (and in the case of an extension of the offer, no later than 9:00 a.m. (Vancouver time) on the day following the expiry time) and provide a copy of the notice to the TSX, TSX-V and AMEX, as applicable. Any notice of extension or variation will be deemed to have been given and to be effective on the day it is delivered or otherwise communicated in writing to the depositary at its principal office in Toronto.

Where the terms of the offer are varied, the offer will not expire before 10 business days after the notice of such variation has been mailed to shareholders, unless otherwise permitted by applicable law.

If, before the expiration of all rights of withdrawal with respect to the offer, a material change occurs in the information contained in this prospectus, as amended from time to time, that would reasonably be expected to affect the decision of a White Knight shareholder to accept or reject the offer (other than a change that is not within the control of the offerors or their affiliates), the offerors will give written notice of such change to the depositary at its principal office in Toronto, and will cause the depositary to promptly provide a copy of such notice in the manner provided in the section entitled “— Notices and Delivery” on page 51 of this prospectus to all shareholders, if required by applicable law. As soon as practicable after giving notice of such a material change to the depositary, we will make a public announcement of the change in information and provide a copy of the notice thereof to the TSX, TSX-V and AMEX in accordance with the section entitled “— Notices and Delivery” on page 51 of this prospectus.

During any such extension or in the event of a material variation or change in information, all White Knight common shares previously deposited and not accepted for purchase or withdrawn will remain subject to the offer and may be accepted for purchase by us in accordance with the terms of the offer, subject to the withdrawal rights described in the section entitled “Right to Withdraw” below. An extension of the expiry time, a variation of the terms of the offer or a change in information does not constitute a waiver by any of the offerors of any rights described above in the section entitled “— Conditions of the Offer” on page 43 of this prospectus. If the consideration under the offer is increased, the increased consideration will be paid to all depositing shareholders whose White Knight common shares are accepted for purchase under the offer.

We will follow any extension, termination, variation, amendment or delay as promptly as practicable, with a public announcement. In the case of an extension, variation or amendment, any related announcement will be issued no later than 5:00 p.m. (Vancouver time), on the date on which the expiry time previously was to occur. Subject to applicable law and without limiting the manner in which the offerors may choose to make any public announcement, the offerors assume no obligation to publish, advertise or otherwise communicate any public announcement of this type other than in accordance with the section entitled “— Notices and Delivery” on page 51 of this prospectus.

Acceptance of the Offer by Certain Related Parties

To our knowledge, after reasonable inquiry, none of our directors or senior officers nor any associate of our directors or senior officers, nor any person or company holding more than 10 per cent of any class of our equity securities, nor any person or company acting jointly or in concert with us, propose to accept the offer, except Robert R. McEwen. On March 7, 2006, Mr. McEwen announced that, in his capacity as a holder of White Knight common shares, he intended to support the proposal of U.S. Gold to acquire each of White Knight, Coral Gold, Nevada Pacific and Tone Resources. As of the date of this prospectus Mr. McEwen beneficially owns 9,552,427 White Knight common shares, which, based on information provided by White Knight on February 1, 2007, represents approximately 16% of the outstanding White Knight common shares. See the sections entitled “Background to the

Offer” and “Relationships Between the Offerors and White Knight — Beneficial Ownership of and Trading in Securities of White Knight” on pages 57 and 63, respectively, of this prospectus.

Manner of Acceptance

Letter of acceptance and transmittal

You may accept the offer by delivering to Kingsdale Shareholder Services Inc., the depositary, at the office specified in the letter of acceptance and transmittal, so as to arrive there not later than the expiry time:


	•	the certificate(s) representing White Knight common shares you desire to tender; AND

	•	a letter of acceptance and transmittal (printed on BLUE paper) in the form accompanying the offer or a facsimile thereof, properly completed and duly executed as required by the instructions set out in the letter of acceptance and transmittal; AND

	•	any other document required by the instructions set forth in the letter of acceptance and transmittal.

Except as otherwise provided in the instructions set out in the letter of acceptance and transmittal or as may be permitted by the offerors, the signature on the letter of acceptance and transmittal must be guaranteed by an eligible institution. Eligible institution means a Canadian Schedule I chartered bank, a major trust company in Canada, a member of the Securities Transfer Agents Medallion Program (STAMP), a member of the Stock Exchanges Medallion Program (SEMP) or a member of the New York Exchange, Inc. Medallion Signature Program (MSP). If a letter of acceptance and transmittal is executed by a person other than the registered holder of White Knight common shares represented by the certificate(s) that are deposited, the certificate(s) must be endorsed or be accompanied by an appropriate share transfer power of attorney duly and properly completed by the registered holder, with the signature on the endorsement panel or share transfer power of attorney guaranteed by an eligible institution.

Alternatively, White Knight common shares may be deposited in compliance with the procedures set forth below for guaranteed delivery not later than the expiry time.

Procedure for Guaranteed Delivery

If you would like to deposit your White Knight common shares in the offer and the certificate(s) representing White Knight common shares are not immediately available or you cannot deliver the certificate(s) and all other required documents to the depositary at or prior to the expiry time, those White Knight common shares may nevertheless be deposited if all of the following conditions are met:


	•	the deposit is made by or through an eligible institution; AND

	•	a notice of guaranteed delivery (printed on GREEN paper) in the form accompanying the offer or a facsimile thereof, properly completed and duly executed, including a guarantee by an eligible institution in the form specified in the notice of guaranteed delivery, is received by the depositary at the office set out in the notice of guaranteed delivery, at or prior to the expiry time; AND

	•	the certificate(s) representing the deposited White Knight common shares in proper form for transfer together with a letter of acceptance and transmittal in the form accompanying the offer or a facsimile thereof, properly completed and duly executed, with any required signature guarantees and all other documents required by the letter of acceptance and transmittal, are received by the depositary at the office set out in the notice of guaranteed delivery at or prior to 5:00 p.m. (Vancouver time) on the third trading day on the TSX-V after the expiry time.

The notice of guaranteed delivery may be delivered by hand or courier, transmitted by facsimile or mailed to the depositary at the office set out in the notice of guaranteed delivery and must include a guarantee by an eligible institution in the form set out in the notice of guaranteed delivery.

General

In all cases, payment for White Knight common shares deposited and accepted for purchase by us will be made only after timely receipt by the depositary of the certificate(s) representing White Knight common shares, a letter of acceptance and transmittal or a facsimile thereof, properly completed and duly executed, with the signatures guaranteed, if required, covering those White Knight common shares in accordance with the instructions in the letter of acceptance and transmittal, and any other required documents.

The method of delivery of certificates representing White Knight common shares, the letter of acceptance and transmittal and all other required documents is at the option and risk of the person depositing them. The offerors recommend that all of these documents be delivered by hand to the depositary and a receipt obtained, or, if mailed, that registered mail, with return receipt requested, be used and that proper insurance be obtained.

If your White Knight common shares are registered in the name of a nominee you should contact your broker, investment dealer, bank, trust company or other nominee for assistance in depositing your White Knight common shares under the offer.

All questions as to the validity, form, eligibility (including timely receipt) and acceptance of any White Knight common shares tendered in the offer will be determined by us in our sole discretion. Depositing shareholders agree that this determination shall be final and binding. We reserve the absolute right to reject any and all deposits that we determine not to be in proper form or that may be unlawful to accept under the laws of any jurisdiction. We reserve the absolute right to waive any defects or irregularities in the deposit of any White Knight common shares. Neither we nor the depositary or any other person will have any duty to give notice of any defects or irregularities in any deposit, or any liability for failure to give this notice. Our interpretation of the terms and conditions of this prospectus, the letter of acceptance and transmittal and the notice of guaranteed delivery will be final and binding.

No fee or commission will be payable by White Knight shareholders who deliver their shares directly to the depositary or who utilize the facilities of a soliciting dealer to accept the offer.

The offerors reserve the right, in accordance with applicable law, to permit a White Knight shareholder to accept the offer in a manner other than as set out above.

Acceptance for Purchase of, and Payment for, Deposited White Knight Common Shares

If all conditions described in the section entitled “Conditions of the Offer” on page 43 of this prospectus have been satisfied or waived by us at the expiry time, all White Knight common shares that have been properly deposited and not withdrawn will be required, in accordance with applicable U.S. and Canadian law, to be accepted by us for purchase and paid for through the issuance of exchangeable shares promptly following the expiry time and pursuant to Canadian law, in any event, not later than 10 days after the expiry time. Canadian law also requires that the exchangeable shares be issued to all holders of White Knight common shares accepted for purchase within 3 business days of our accepting those shares for purchase.

Subject to applicable law, we expressly reserve the right to delay accepting for purchase and paying for any White Knight common shares. No White Knight common shares properly tendered in the offer will be accepted for purchase unless all White Knight common shares then properly tendered in the offer are accepted for purchase.

White Knight common shares properly deposited and not withdrawn in the offer will be deemed to have been accepted for purchase and accepted for payment if, as and when we give written notice or other communication confirmed in writing to the depositary at its principal office in Toronto to that effect.

Canadian Exchange Co. will pay for White Knight common shares properly tendered in the offer and not withdrawn by providing the depositary with certificates for exchangeable shares, as applicable, for transmittal to depositing shareholders. Under no circumstances will interest accrue or be paid to persons depositing White Knight common shares by any of us, Canadian Exchange Co. or the depositary, regardless of any delay in making payment for those shares.

Fractional shares will not be issued in the offer. Instead, the number of exchangeable shares to be issued to each shareholder will be rounded up (if the fractional interest is 0.5 or more) or down (if the fractional interest is less than 0.5) to the next whole number. For all rounding purposes, all White Knight common shares deposited by a shareholder will be aggregated.

The depositary will act as the agent of the shareholders who have properly deposited White Knight common shares under the offer for the purposes of receiving payment under the offer and transmitting that payment to those shareholders, and receipt of payment by the depositary will be deemed to constitute receipt of payment by those shareholders who have properly deposited White Knight common shares.

Settlement with each White Knight shareholder who has properly deposited White Knight common shares under the offer will be made by the depositary by forwarding a certificate representing the exchangeable shares, as payment for White Knight common shares accepted for purchase. Unless otherwise specified by the shareholder in the letter of acceptance and transmittal, share certificates will be issued in the name of the registered holder of White Knight common shares so deposited and forwarded by first class mail to the address specified in the letter of acceptance and transmittal. If no address is specified, share certificates will be sent to the address of the shareholder as shown on the register of shareholders maintained by or on behalf of White Knight. Share certificates mailed in accordance with this paragraph will be deemed to be delivered and payment will be deemed to be made at the time of mailing.

If the consideration payable in the offer is increased before the expiry time, the increased consideration will be paid for all White Knight common shares acquired in the offer, regardless of whether those shares were deposited before that increase in the consideration.

Power of Attorney

The execution of a letter of acceptance and transmittal by a shareholder irrevocably appoints Canadian Exchange Co. or its designees as the true and lawful agent, attorney and attorney in fact of that shareholder with respect to White Knight common shares deposited and purchased under the offer, and with respect to any and all stock dividends, securities, rights, warrants or other interests or distributions accrued, declared, paid, issued, transferred, made or distributed on or in respect of the purchased White Knight common shares on or after February 12, 2007. This appointment is effective from and after the date the purchased common shares are accepted for purchase and paid for under the offer, which we refer to as the effective date. This appointment affords Canadian Exchange Co. full power of substitution (such power of attorney being coupled with an interest being irrevocable), in the name and on behalf of the holder who deposited those White Knight common shares, to:


	•	register, record, transfer and enter the transfer of the purchased common shares and any other securities of White Knight on the books of White Knight;

	•	vote, execute and deliver any instruments of proxy, authorizations and consents in form and on terms satisfactory to Canadian Exchange Co. in respect of any purchased common shares and any or all other securities of White Knight, revoke any such instrument, authorization or consent given prior to or after the effective date, designate in any such instruments of proxy any person(s) as the proxy or the proxy nominee(s) of the shareholder in respect of those purchased common shares and those other securities for all purposes;

	•	execute, endorse and negotiate any cheques or other instruments representing any distribution payable to the holder; and

	•	exercise any and all other rights of a holder of purchased common shares and any other securities.

In addition, a White Knight shareholder who executes a letter of acceptance and transmittal agrees, from and after the date on which the purchased common shares are accepted for purchase and paid for under the offer:


	•	not to vote any of the purchased common shares or other securities at any meeting of holders of those securities:

	•	not to exercise any other rights or privileges attached to any of those securities; and


	•	to deliver to Canadian Exchange Co. any and all instruments of proxy, authorizations or consents received in respect of all those securities.

All prior proxies given by a holder of purchased common shares with respect to those purchased common shares and to those other securities shall be revoked at the date on which the purchased common shares are accepted for purchase and paid for under the offer and no subsequent proxies may be given by that holder with respect to those purchased common shares or other securities.

Depositing Shareholders’ Representations and Warranties

The deposit of White Knight common shares in the offer will create and constitute a binding agreement between the applicable shareholder and each of U.S. Gold and Canadian Exchange Co. upon the terms and subject to the conditions of the offer, including the shareholder’s representation and warranty that:


	•	such shareholder has full power and authority to deposit, sell, assign and transfer White Knight common shares (and any other securities) being deposited and has not sold, assigned or transferred or agreed to sell, assign or transfer any of such White Knight common shares (and other securities) to any other person;

	•	the shareholder owns White Knight common shares (and any other securities) being deposited within the meaning of applicable securities laws;

	•	the deposit of those White Knight common shares (and any other securities) complies with applicable securities laws; and

	•	when those White Knight common shares (and any other securities) are accepted for purchase and paid for under the offer, Canadian Exchange Co. will acquire good title thereto free and clear of all liens, restrictions, charges, encumbrances and claims.

Return of White Knight Common Shares

If any White Knight common shares tendered in the offer are not accepted for purchase in the offer, or certificates are submitted for more White Knight common shares than are properly deposited, certificates for those White Knight common shares that are not accepted for purchase (or were not properly deposited) will be returned to the depositing White Knight shareholder without expense to the shareholder as soon as practicable after the expiry time or withdrawal or termination of the offer by sending certificates representing White Knight common shares not purchased by first class mail in the name of and to the address specified by the shareholder in the letter of acceptance and transmittal or, if a name or address is not specified, in the name and to the address as shown on the share register maintained by or on behalf of White Knight.

Mail Service Interruption

Notwithstanding any other provisions of this offer, the letter of acceptance and transmittal and the notice of guaranteed delivery, share certificates and other relevant documents will not be mailed if we or Canadian Exchange Co. determine, in our reasonable discretion, that delivery by mail may be delayed by a disruption of mail service. White Knight shareholders entitled to share certificates and/or other relevant documents that are not mailed for this reason may take delivery thereof at the office of the depositary at which they deposited their White Knight common shares until such time as we have determined, in our reasonable discretion, that delivery by mail will no longer be delayed. Notwithstanding the section entitled “— Acceptance for Purchase of, and Payment for, Deposited White Knight Common Shares” on page 48 of this prospectus, but subject to the section entitled “— Notices and Delivery” on page 51 of this prospectus, share certificates and other relevant documents not mailed for this reason will, subject to applicable law, be conclusively deemed to have been delivered on the first day upon which they are available for delivery at the office of the depositary at which White Knight common shares were deposited. Notice of any such determination by U.S. Gold shall be given to holders of White Knight common shares in accordance with the section entitled “— Notices and Delivery” on page 51 of this prospectus.

Notices and Delivery

Except as otherwise provided in this offer, any notice that we or Canadian Exchange Co. or the depositary may provide, give or cause to be given under the offer will be deemed to have been properly given if mailed to the registered holders of White Knight common shares at their respective addresses appearing in the registers maintained in respect of such White Knight common shares and will be deemed to have been delivered and received on the mailing date. These provisions shall apply notwithstanding any accidental omission to provide or give notice to any one or more holders of White Knight common shares and notwithstanding interruption of mail service in Canada, the United States or elsewhere following mailing. In the event of any interruption of mail service, we intend to make reasonable efforts to disseminate the notice by other means, such as publication. Subject to the approval of applicable regulatory authorities, in the event of any interruption of mail service, any notice that we or Canadian Exchange Co. or the depositary may provide, give or cause to be given under the offer will be deemed to have been properly provided or given to or received by holders of White Knight common shares if: (i) it is given to the TSX-V for dissemination through their facilities; (ii) it is published once in the National Edition of The Globe and Mail or The National Post; or (iii) it is given to the Canada Newswire Service or Dow Jones Newswire.

Right to Withdraw

Except as indicated herein or as otherwise required by applicable law, deposits of White Knight common shares are irrevocable. White Knight common shares tendered in the offer may be withdrawn by or on behalf of the depositing shareholder (unless otherwise required or permitted by applicable law):

(a) at any time before White Knight common shares have been accepted for purchase by the offerors under the offer;

(b) if the White Knight common shares have not been paid for by us or Canadian Exchange Co. within three business days after having been accepted for purchase; or

(i) a notice of change relating to a change in the information contained in the offer, as amended from time to time, that would reasonably be expected to affect the decision of a White Knight shareholder to accept or reject the offer (other than a change that is not within the control of us, Canadian Exchange Co. or our affiliates, unless it is a change in a material fact relating to the shares of our common stock or the exchangeable shares), in the event that such change occurs at or before the expiry time or after the expiry time but before the expiry of all rights of withdrawal in respect of the offer; or

(ii) a notice of variation concerning a variation in the terms of the offer (other than a variation consisting solely of an increase in the consideration offered for White Knight common shares where the expiry time is not extended for more than 10 days);

is mailed, delivered, or otherwise properly communicated, but subject to abridgement of that period pursuant to such order or orders as may be granted by applicable courts or securities regulatory authorities and only if such deposited shares have not been accepted for purchase by the offerors at the date of the notice.

Notice of withdrawal of deposited White Knight common shares must:

(i) be made by a method that provides the depositary with a written or printed copy of such notice (which includes a facsimile);

(ii) be made by or on behalf of the depositing shareholder;

(iii) be signed by or on behalf of the shareholder who signed the letter of acceptance and transmittal that accompanied White Knight common shares being withdrawn;

(iv) specify the shareholder’s identity, the number of White Knight common shares to be withdrawn, the name of the registered shareholder of, and the certificate number shown on each certificate evidencing, White Knight common shares being withdrawn; and

(v) be actually received by the depositary within the applicable time specified above.

Any signature in the withdrawal notice must be guaranteed in the same manner as in the letter of acceptance and transmittal.

Withdrawals may not be rescinded. Any White Knight common shares withdrawn will be deemed not properly deposited for the purposes of the offer, but may be re-deposited at any time on or prior to the expiry time by following the applicable procedures described in the section entitled “— Manner of Acceptance” on page 47 of this prospectus.

In addition to the foregoing withdrawal rights, White Knight shareholders in certain provinces and territories of Canada are entitled to statutory rights of rescission in certain circumstances. See the section entitled “Offerees’ Statutory Rights” on page 96 of this prospectus.

Dividends and Distributions

If, on or after the date of the offer, White Knight should subdivide, consolidate or otherwise materially change any of its common shares or its capitalization or disclose that it has taken any such action, we may make such adjustments as we deem appropriate to reflect such subdivision, consolidation or other change in the purchase price and other terms of the offer including (without limitation) the type of securities offered to be purchased and the amounts payable therefor.

White Knight common shares acquired in the offer shall be acquired free and clear of all encumbrances, together with all rights and benefits arising therefrom including the right to any and all cash and stock dividends, securities, rights, warrants or other interests or distributions which may be accrued, declared, paid, issued, distributed, made or transferred on or in respect of such White Knight common shares and which are made payable or distributable to the holders of those White Knight common shares of record on a date on or after the date of the offer. If White Knight should declare or pay any cash or stock dividend or make any other distribution on, or issue any securities, rights, warrants or other interests or distributions in respect of, deposited White Knight common shares after the date of the offer, such dividend, distribution or rights will be received and held by the depositing White Knight shareholder for the account of Canadian Exchange Co., and:

(i) in the case of cash dividends, distributions or payments, the amount of the dividends, distributions or payments shall be received and held by the depositing shareholders for their own account, and to the extent that such dividends, distributions or payments do not exceed the value of the consideration per White Knight common share payable by us or Canadian Exchange Co. in the offer (as determined by us or Canadian Exchange Co.), the consideration will be reduced by that number of exchangeable shares having a value equal to the amount of such dividend, distribution or payment;

(ii) in the case of non-cash dividends, distributions, payments, rights or other interests, the whole of any such non-cash dividend, distribution, payment, right or other interest shall be delivered by depositing shareholders to the depositary for the account of us or Canadian Exchange Co., accompanied by appropriate documentation of transfer; and

(iii) in the case of any cash dividends, distributions or payments in an amount that exceeds the consideration per Common Share payable by us or Canadian Exchange Co. (as determined by us or Canadian Exchange Co.), the whole of any such cash dividend, distribution or payment shall be received and held by the depositing shareholders for the account of us or Canadian Exchange Co. and shall be required to be promptly remitted and transferred by the depositing shareholders to the depositary for the account of us or Canadian Exchange Co., accompanied by appropriate documentation of transfer.

Pending such remittance (in the case of (ii) and (iii) above), we or Canadian Exchange Co. will be entitled to all rights and privileges as owner of any such dividend, distribution, payment, right or other interest and may withhold all of the exchangeable shares, as applicable, otherwise issuable by us or Canadian Exchange Co. to the non-remitting shareholder in the offer or deduct from the number of exchangeable shares with a value equal to the amount or value equal to the amount or value of the dividend, distribution, payment right or other interest, as determined by us or Canadian Exchange Co. in our sole discretion.

Market Purchases

Neither we nor Canadian Exchange Co. will acquire beneficial ownership of White Knight common shares while the offer is outstanding, other than in the offer.

Other Terms

We reserve the right to transfer to one or more of our affiliates the right to purchase all or any portion of White Knight common shares tendered in the offer, but any such transfer will not relieve us or Canadian Exchange Co. of our and its obligations under the offer and will in no way prejudice the rights of persons depositing White Knight common shares to receive payment for White Knight common shares validly deposited and accepted for payment in the offer.

No broker, dealer or other person has been authorized to give any information or to make any representation or warranty on behalf of us or Canadian Exchange Co. or any of our affiliates in connection with the offer other than as contained in the offer, and, if any such information, representation or warranty is given or made, it must not be relied upon as having been authorized.

The provisions of this prospectus, together with the letter of acceptance and transmittal and the notice of guaranteed delivery accompanying this prospectus collectively comprise the terms and conditions of the offer.

We will determine in our reasonable discretion all questions relating to the interpretation of this prospectus, the letter of acceptance and transmittal and the notice of guaranteed delivery, the validity (including time of receipt) of any acceptance of the offer and any withdrawal of White Knight common shares, including, without limitation, the satisfaction or non-satisfaction of any condition, the validity, time and effect of any deposit of White Knight common shares or notice of withdrawal of White Knight common shares, and the due completion and execution of the letter of acceptance and transmittal. Subject to any legal recourse White Knight shareholders may have regarding the conditions to our offer, our reasonable determination of such matters, shall be final and binding for all purposes. We and Canadian Exchange Co. each reserve the right to waive any defect in acceptance with respect to any particular White Knight common share or any particular shareholder. There shall be no obligation on us, Canadian Exchange Co., the soliciting dealers or the depositary to give notice of any defects or irregularities in any acceptance or notice of withdrawal and no liability shall be incurred by any of them for failure to give any such notification.

This document does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful. The offer is not being made to, nor will deposits be accepted from or on behalf of, shareholders in any jurisdiction in which the making or acceptance of the offer would not be in compliance with the laws of any such jurisdiction. However, we and Canadian Exchange Co. may, in our and their sole discretion, take such action as we may deem necessary to extend the offer to White Knight shareholders in any such jurisdiction.

Dissenters’ Rights

No dissenters’ rights are available in connection with the offer. However, any subsequent acquisition transaction may result in shareholders having the right to dissent and demand payment of the fair value of their White Knight common shares under Section 238 of the BCBCA. If the statutory procedures are complied with, this right could lead to a judicial determination of the fair value required to be paid to such dissenting shareholders for their White Knight common shares. The fair value of White Knight common shares so determined could be more or less than the amount paid per common share in the subsequent acquisition transaction or the offer. See the section entitled “— Subsequent Acquisition Transaction” on page 54 of this prospectus.

Judicial Developments

Prior to the pronouncement of Canadian OSC Rule 61-501 (or its predecessor OSC Policy 9.1) and AMF Regulation Q-27, Canadian courts had, in a few instances, granted preliminary injunctions to prohibit transactions which constituted going private transactions or business combinations within the meaning of OSC Rule 61-501 and AMF Regulation Q-27. The offerors have been advised that more recent notices and judicial decisions indicate a

willingness to permit business combinations to proceed subject to compliance with requirements intended to ensure procedural and substantive fairness to the minority shareholders.

Shareholders should consult their legal advisors for a determination of their legal rights with respect to any transaction that may constitute a business combination or going private transaction.

Subsequent Acquisition Transaction

If Canadian Exchange Co. accepts for purchase and pays for White Knight common shares validly tendered in the offer, we or Canadian Exchange Co. intend to take any necessary or advisable actions, including causing a special meeting of White Knight shareholders to be called to consider a transaction that would enable us or an affiliate to acquire all White Knight common shares not acquired in the offer. We or Canadian Exchange Co. currently intend to cause a special meeting of White Knight shareholders to be called following the completion of the offer to consider a statutory plan of arrangement or similar transaction, which we refer to as a subsequent acquisition transaction, whereby: (i) White Knight warrants would be exchangeable for warrants to purchase exchangeable shares of Canadian Exchange Co. at the rate of 0.35 of an exchangeable share for each common share of White Knight that the warrant holders had the right to purchase; (ii) White Knight shareholders who did not deposit their White Knight common shares under the offer would receive exchangeable shares in the same exchange ratio offered in the offer; and (iii) the White Knight stock option plan would be assumed or adopted by us or Canadian Exchange Co. The timing and details of any subsequent acquisition transaction will depend on a number of factors, including the number of White Knight common shares acquired in the offer and the terms of White Knight’s warrant indentures and stock option plan, and there can be no assurance that any subsequent acquisition transaction will be proposed, or if proposed, effected.

A subsequent acquisition transaction described above may constitute a “business combination” or a “going private transaction” within the meaning of certain applicable Canadian securities legislation, including OSC Rule 61-501 and AMF Regulation Q-27. Under OSC Rule 61-501 and AMF Regulation Q-27, subject to certain exceptions, a subsequent acquisition transaction may constitute a “business combination” or a “going private transaction” if it would result in the interest of a holder or beneficial owner of White Knight common shares being terminated without such holder’s or beneficial owner’s consent, irrespective of the nature of the consideration provided in substitution therefor. We expect that any subsequent acquisition transaction relating to White Knight common shares will be a “business combination” or a “going private transaction” under OSC Rule 61-501 and AMF Regulation Q-27.

In certain circumstances, the provisions of OSC Rule 61-501 and AMF Regulation Q-27 may also deem certain types of subsequent acquisition transactions to be “related party transactions.” However, if the subsequent acquisition transaction is a “business combination” or a “going private transaction” carried out in accordance with OSC Rule 61-501 and AMF Regulation Q-27 or an exemption therefrom, the “related party transaction” provisions therein do not apply to such transaction. We intend to carry out any such subsequent acquisition transaction in accordance with OSC Rule 61-501 and AMF Regulation Q-27, or any successor provisions, or exemptions therefrom, such that the “related party transaction” provisions of OSC Rule 61-501 and AMF Regulation Q-27 will not apply to such subsequent acquisition transaction.

OSC Rule 61-501 and AMF Regulation Q-27 provide that unless exempted, a corporation proposing to carry out a business combination or a going private transaction is required to prepare a formal valuation of White Knight common shares (and, subject to certain exceptions, any non-cash consideration being offered therefor) and provide to the holders of White Knight common shares a summary of such valuation or the entire valuation. In connection therewith, we intend to rely on any exemption then available or to seek waivers pursuant to OSC Rule 61-501 and AMF Regulation Q-27 exempting us or White Knight or their affiliates, as appropriate, from the requirement to prepare a valuation in connection with any subsequent acquisition transaction. An exemption is available under OSC Rule 61-501 and AMF Regulation Q-27 for certain business combinations or going private transactions completed within 120 days after the expiry of a formal take-over bid where the consideration under such transaction is at least equal in value to and is in the same form as the consideration that tendering shareholders were entitled to receive in the take-over bid, provided that certain disclosure is given in the take-over bid disclosure documents. We currently intend that the consideration offered under any subsequent acquisition transaction proposed by us would

be equal in value to, and in the same form as, the consideration offered under the offer and that such subsequent acquisition transaction will be completed no later than 120 days after the expiry date and, accordingly, we expect to rely on these exemptions.

Depending on the nature and the terms of the subsequent acquisition transaction, the provisions of the BCBCA may require the approval of at least 662/3% of the votes cast by holders of the outstanding White Knight common shares at a meeting duly called and held for the purpose of approving a subsequent acquisition transaction. OSC Rule 61-501 and AMF Regulation Q-27 would in effect also require that, in addition to any other required securityholder approval, in order to complete a business combination or a going private transaction, the approval of a majority of the votes cast by “minority” holders of White Knight common shares must be obtained unless an exemption is available or discretionary relief is granted by the OSC and the AMF. In relation to any subsequent acquisition transaction, the “minority” holders will be, subject to any available exemption or discretionary relief granted by the OSC and the AMF, as required, all White Knight shareholders other than us, any “related party” of ours or any other “interested party” (within the meaning of OSC Rule 61-501 and AMF Regulation Q-27) including any of our directors or senior officers, affiliate or insiders or any of our directors or senior officers or any person acting jointly or in concert with any of the foregoing.

OSC Rule 61-501 and AMF Regulation Q-27 also provide that we may treat White Knight common shares acquired in the offer as “minority” shares and vote them, or consider them voted, in favor of a subsequent acquisition transaction that is a business combination or a going private transaction, provided that, among other things: (a) the business combination or going private transaction is completed not later than 120 days after the expiry date; (b) the consideration for each security in the subsequent acquisition transaction is at least equal in value to and in the same form as the consideration paid in the offer; and (c) the White Knight shareholder who tendered such White Knight common shares to the offer was not (i) acting jointly or in concert with us in respect of the offer, (ii) a direct or indirect party to any “connected transaction” (as defined in OSC Rule 61-501) to the offer, or (iii) entitled to receive, directly or indirectly, in connection with the offer, a “collateral benefit” (as defined in OSC Rule 61-501) or consideration per security that is not identical in amount and form to the entitlement of shareholders in Canada. We currently intend that the consideration offered under any subsequent acquisition transaction proposed by it would be equal in value to, and in the same form as, the consideration offered under the offer and that such subsequent acquisition transaction will be completed no later than 120 days after the expiry date and, accordingly, the offerors intend to cause White Knight common shares acquired in the offer to be voted in favor of such transaction and to be counted as part of any minority approval required in connection with any such transaction.

In addition, under OSC Rule 61-501 and AMF Regulation Q-27, if, following the offer, U.S. Gold and our affiliates are the registered holders of 90% or more of White Knight common shares at the time the business combination or going private transaction is initiated, the requirement for minority approval under OSC Rule 61-501 and AMF Regulation Q-27 would not apply to the transaction if an enforceable right to dissent and seek fair value or a substantially equivalent right is made available to the minority White Knight shareholders.

Any subsequent acquisition transaction may also result in White Knight shareholders having the right to dissent and demand payment of the fair value of their White Knight common shares under Section 238 of the BCBCA. If the statutory procedures are complied with, this right could lead to a judicial determination of the fair value required to be paid to such dissenting shareholders for their White Knight common shares. The fair value of White Knight common shares so determined could be more or less than the amount paid per White Knight common share in the subsequent acquisition transaction or the offer.

The tax consequences to a White Knight shareholder of a subsequent acquisition transaction may differ from the tax consequences to such White Knight shareholder of accepting the offer. See the section entitled “Material Canadian Federal Income Tax Considerations” on page 65 of this prospectus. Shareholders should consult their legal advisors for a determination of their legal rights with respect to a subsequent acquisition transaction if and when proposed.

The timing and details of any subsequent acquisition transaction involving White Knight will necessarily depend on a variety of factors, including the number of White Knight common shares acquired in the offer. Although we currently intend to propose a subsequent acquisition transaction on the same terms as the offer, it is possible that, as a result of the number of White Knight common shares acquired under the offer, delays in our

ability to effect such a transaction, information hereafter obtained by us, changes in general economic, industry, regulatory or market conditions or in the business of White Knight, or other currently unforeseen circumstances, such a transaction may not be so proposed or may be delayed or abandoned. We expressly reserve the right not to propose a subsequent acquisition transaction involving White Knight.

Rule 13e-3 under the Exchange Act is applicable to certain “going-private” transactions in the United States and may under certain circumstances be applicable to a subsequent acquisition transaction. We believe that Rule 13e-3 would not be applicable to a subsequent acquisition transaction unless the subsequent acquisition transaction is consummated more than one year after the termination of the offer. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning White Knight and certain information relating to the fairness of the subsequent acquisition transaction, and the consideration offered to minority shareholders be filed with the SEC and distributed to minority shareholders before the consummation of any such transaction.

The foregoing discussion of certain provisions of the Exchange Act is not a complete description of the Exchange Act or such provisions thereof and is qualified in its entirety by the reference to the Exchange Act.

If we are unable or decide not propose a subsequent acquisition transaction, or propose a subsequent acquisition transaction but cannot obtain any required approvals or exemptions promptly, we will evaluate other alternatives. These alternatives could include, to the extent permitted by applicable law, purchasing additional White Knight common shares in the open market, in privately negotiated transactions, in another take-over bid or exchange offer or otherwise, or from White Knight, or taking no actions to acquire additional White Knight common shares. Subject to applicable law, any additional purchases of White Knight common shares could be at a price greater than, equal to, or less than the price to be paid for White Knight common shares under the offer and could be for cash, securities and/or other consideration. Alternatively, we may take no action to acquire additional White Knight common shares, or may even sell or otherwise dispose of any or all White Knight common shares acquired in the offer, on terms and at prices then determined by us, which may vary from the price paid for the White Knight common shares. The failure to consummate the subsequent acquisition transaction could adversely affect the U.S. tax treatment of shareholders of White Knight who exchange their White Knight shares for exchangeable shares in the offer.

BACKGROUND TO THE OFFER

On June 28, 2005, Robert R. McEwen, prior to the time he became our Chairman and Chief Executive Officer, purchased 5,681,705 White Knight common shares representing a 10.5% ownership in White Knight. Mr. McEwen purchased such White Knight common shares in a private purchase from Goldcorp Inc. for an average purchase price of Cdn$0.81 per share.

On July 5, 2005, Mr. McEwen purchased 2,270,700 White Knight common shares representing a 4.2% ownership in White Knight. Following such purchase, Mr. McEwen held 7,952,427 White Knight common shares (or 14.7% of the outstanding White Knight common shares). Mr. McEwen purchased such White Knight common shares on the TSX-V for an average purchase price of Cdn$0.91 per Common Share.

In July, 2005, Mr. McEwen was given a tour of certain of the White Knight properties in Nevada by John M. Leask, the Chairman of White Knight, Gordon P. Leask, a director of White Knight, and certain members of White Knight management. During this tour, Mr. McEwen engaged in preliminary discussions with Messrs. Leask and Leask about consolidating the companies’ properties located along the Cortez Trend in Nevada.

On July 22, 2005, Mr. McEwen purchased 1,600,000 White Knight common shares representing a 2.9% ownership in White Knight. Following such purchase, Mr. McEwen held 9,552,427 White Knight common shares of White Knight (or 16.1% of the outstanding White Knight common shares as of the date of this prospectus). Mr. McEwen purchased such White Knight common shares on the TSX-V for an average purchase price of Cdn$1.26 per common share.

On August 11, 2005, Mr. McEwen, Ian Ball and Stefan Spears, each a consultant to U.S. Gold, met with Messrs. Leask and Leask and Brian Edgar, a director of White Knight, at our office in Toronto, Ontario. On November 16, 2005, Messrs. McEwen and Ball met with Mr. John M. Leask and William Rand, an advisor to White Knight and partner of Mr. Edgar, in Vancouver, British Columbia. In addition, during the summer and fall of 2005, Mr. McEwen and the representatives of White Knight engaged in several telephone conversations. During these meetings and telephone conversations, the representatives of each company continued these earlier discussions about consolidating the companies’ properties located along the Cortez Trend in Nevada.

On March 5, 2006, we announced that we intended to acquire in stock transactions, all of the outstanding White Knight common shares of White Knight, Nevada Pacific, Coral Gold and Tone Resources, each of which is exploring in the Cortez Trend in Nevada. These proposals were made in letters sent on March 5, 2006 by Mr. McEwen to the chief executive officers of each of the target companies. We announced that our proposal represented a premium of 25% to the closing stock prices of each company’s shares on March 3, 2006 and that our board of directors had formed a special committee to evaluate the terms of each of the transactions in recognition of, among other things, the equity interests of Mr. McEwen in each of the four companies.

On March 6, 2006, White Knight announced that management was evaluating our proposed offer.

On March 22, 2006, White Knight announced that the board of directors of White Knight had engaged Genuity Capital Markets to act as financial advisor, to provide a fairness opinion and to assist in responding to the offer.

On March 27, 2006, our special committee of the board retained Wellington West Capital Markets Inc. to provide its opinion as to the fairness of the offer, from a financial point of view, to our shareholders. Based upon and subject to the matters described in their fairness opinion, Wellington West Capital Markets Inc. concluded that, as at April 6, 2006, the offer was fair, from a financial point of view, to our shareholders.

During the week of April 24, 2006, there were a number of discussions among Genuity, GMP Securities L.P., our Canadian counsel and White Knight regarding, among other things, the proposed timing and structure of this offer and whether U.S. Gold would be prepared to enter into a support agreement with White Knight in relation to the offer. We responded through GMP that we would proceed with the offer as originally contemplated.

On May 1, 2006, we announced the commencement of the offer to purchase the common shares of White Knight. We also announced that it intended to make formal offers to the shareholders of Tone Resources, Coral Gold and Nevada Pacific based on the same per share exchange ratios announced by us on March 5, 2006 as soon as

practicable following the completion by each of the foregoing companies of formal valuations required under applicable law.

On May 16, 2006, White Knight announced that it had filed its directors’ circular with Canadian securities authorities in response to the offer and mailed the directors’ circular to holders of White Knight issued and outstanding common shares. At the time, the board of directors of White Knight made no recommendations to shareholders regarding the offer. White Knight stated that while its board of directors was generally supportive of the business proposition of consolidating the land positions within the Cortez Trend, aggressively pursuing exploration programs, the enhanced trading liquidity and the stronger cash position for White Knight, based on advice from its financial and legal advisors, the board of directors would reserve judgment until issues were resolved with respect to the timing of the offer, particularly with respect to the timing of receiving appropriate clearances from the SEC and the completion of satisfactory due diligence on U.S. Gold.

On June 5, 2006, we announced that, in view of certain United States securities regulatory requirements, we had terminated the offer to purchase White Knight common shares. We stated that we intended to commence the strategic offers by mailing new offer documents as soon as regulatory requirements could be satisfied, including the receipt of necessary information from each of the target companies.

During the months of August and September 2006, our management, with the assistance of our financial and legal advisors, obtained and analyzed certain publicly available information regarding White Knight to evaluate the proposed acquisition of White Knight. Management also worked with our financial and legal advisors to consider various structuring and transaction alternatives for the strategic offers.

On September 28, 2006, the law firm of Hogan & Hartson LLP, our United States special counsel, sent a written request to White Knight’s outside counsel to provide us and their advisors with certain due diligence materials, including financial statements for the most recent completed fiscal period, and requested that White Knight instruct their independent auditors to provide a consent to the inclusion of White Knight’s financial statements in this prospectus. To date we have received diligence materials in response to our requests and the required auditor’s consents.

On January 18, 2007, we announced our intention to commence the formal tender offers for each of Nevada Pacific, Tone Resources and White Knight following the satisfaction of certain regulatory requirements. At the same time, we announced that we have decided not to pursue U.S. Gold’s proposed offer for Coral Gold Resources Ltd., a company based in Vancouver, British Columbia which conducts mineral exploration activities in the Cortez Trend in Nevada, in view of certain regulatory requirements that would need to be satisfied by Coral Gold Resources prior to our commencement of a formal tender offer. This decision was based on management’s concern, after consultation with our advisors, that the possible undue delay and expense arising from the satisfaction of those regulatory requirements could jeopardize the strategic offers. In the future, we may, in our sole discretion, re-evaluate our intention to acquire Coral Gold Resources.

INTENTIONS OF THE OFFERORS

Strategic Rationale for the Offer

We are engaged in the exploration for gold and other precious metals. We hold a 100% interest in the Tonkin Springs gold property in Eureka County, Nevada, subject to paramount title in the United States. We have commenced an extensive two-year, property-wide, integrated exploration program at the Tonkin Springs gold property, focusing on evaluation of the structural and stratigraphic setting of the project. Our objectives are to expand the known mineralization and to discover mineralization in areas previously untested, targeting deeper mineralization. U.S. shareholders are cautioned that, although National Instrument 43-101 requires disclosure in Canada of measured, indicated and inferred mineral resources, the SEC does not recognize these classification categories for U.S. reporting purposes.

White Knight is an exploration company active in identifying and generating mineral prospects. White Knight has been exploring for Carlin-type gold deposits in Nevada since 1993. Its portfolio includes 18 properties (over 68,000 acres), 15 of which are located in the Cortez Trend. Five are joint ventures subject to earn-in agreements with the remainder 100% held by White Knight (with White Knight having a net ownership position of between 46,000 and 50,000 acres).

In addition to filing this prospectus, we expect to commence take-over bids for all of the outstanding common shares of Nevada Pacific and Tone Resources as soon as practicable following, among other things, obtaining any necessary consents from the respective auditors of Nevada Pacific and Tone Resources and satisfaction of other regulatory requirements. We have also filed registration statements to register the exchangeable shares, and shares of our common stock issuable upon exchange of the exchangeable shares, which we intend to issue to the holders of the other target companies in these separate strategic offers. Each of the other target companies is an exploration stage company engaged in the acquisition and exploration of mineral properties primarily located on the major gold trends in the north-central region of Nevada and has mineral exploration properties that are adjacent to or near our Tonkin Springs gold property.


	•	Nevada Pacific. Nevada Pacific owns an exploratory property portfolio covering approximately 890 square miles of mineral rights in Mexico, including the Magistral Gold Mine, ten properties in Nevada and one in Utah. The Nevada property portfolio covers approximately 85 square miles, including portions of two significant gold producing regions: the Battle Mountain/Eureka Trend/Cortez Trend and the Carlin Trend. We intend to offer to purchase all of the outstanding shares of Nevada Pacific on the basis of 0.23 of an exchangeable share for each common share of Nevada Pacific. Nevada Pacific’s common shares are listed on the TSX-V under the symbol “NPG.”

	•	Tone Resources. Tone Resources is focused on gold and holds substantially all interests in eight projects (10 claim groups) in Elko, Eureka, Lander, and Pershing counties in Nevada. All of Tone Resources’ properties are located near infrastructure facilities of currently producing gold mines. We intend to offer to purchase all of the outstanding shares of Tone Resources on the basis of 0.26 of an exchangeable share for each common share of Tone Resources. Tone Resources’ common shares are listed on the TSX-V under the symbol “TNS-V” and quoted on the Pink Sheets in the United States under the symbol “TONRF.”

If all of the strategic offers are successfully completed, the voting power of our shareholders will be diluted and it is expected that the shareholders of White Knight, Nevada Pacific and Tone Resources will own, in the aggregate, approximately 46% of the outstanding shares and voting power of U.S. Gold (or approximately 44% on a fully-diluted basis).

We believe that there are significant benefits to bringing together U.S. Gold, White Knight, Nevada Pacific and Tone Resources, including that the combined company will have:


	•	A larger land position within the Cortez Trend and a larger exploration program. We hold a 100% interest in the Tonkin Springs exploration gold property in Eureka County, Nevada, subject to paramount title in the United States. This property consists of approximately 44 square miles of unpatented lode mining claims and millsite claims located on the Battle Mountain-Eureka Trend, approximately 45 miles northwest of the town of Eureka, in north-central Nevada. Upon successful completion of the strategic offers, our land position


		would increase by approximately 240% to approximately 150 square miles. Over the next two years, we have planned 400,000 feet of exploration drilling on our Tonkin Springs exploration gold property at a cost of $30 million. If the strategic offers are successfully completed, we intend to aggressively explore the properties of White Knight, Nevada Pacific and Tone Resources over the next two years to coincide with our exploration program at our Tonkin Springs exploration gold property.


	•	A stronger cash position and reduced costs. On February 22, 2006, we completed a private placement of 16,700,000 subscription receipts, with gross proceeds to us of $75,150,000. Of the intermediate exploration companies currently exploring for gold in Nevada, we have one of the strongest cash positions. Successful completion of one or more of the strategic offers will also give us access to any additional cash resources of the companies acquired. Due to the strategic locations in Nevada of the assets of each of Nevada Pacific, Tone Resources and White Knight and the elimination of redundant fees and costs, we expect that U.S. Gold would realize lower total costs than if each company were to remain a separate entity.

	•	Enhanced trading liquidity and better market focus. U.S. Gold and Canadian Exchange Co. expect that the successful completion of the acquisition of the target companies would result in increased market capitalization and trading liquidity of the combined company, resulting in better market focus. Because of the increased market capitalization and liquidity of the combined company, we expect that the combined company will have greater access to equity and debt capital markets than U.S. Gold currently does, and greater appeal to institutional investors. It is a condition to the strategic offers that the exchangeable shares shall have been approved for listing on the TSX and we expect that our shares of common stock will continue to be to be traded on the TSX and AMEX. We expect that the enhanced access to the equity and debt capital markets resulting from the acquisition of the target companies would provide management of the combined company greater flexibility to execute its business plan under various financial market conditions.

	•	Additional technical expertise. We believe that one or more of Nevada Pacific, Tone Resources and White Knight has quality employees with good technical expertise. We hope to retain at least some of these key employees following the successful completion of the proposed acquisitions to assist in our business and operations going forward.

Upon successful completion of the strategic offers, the combined company would strive to become the premier exploration company in Nevada. However, you should be aware that the successful completion of any or all of our offers to purchase all of the outstanding shares of Nevada Pacific and Tone Resources is not a condition of the offer.

Purpose of the Offer

We are making the offer to acquire, directly or indirectly, all of the outstanding White Knight common shares. If the conditions of the offer are satisfied or waived and we accept for purchase and pay for White Knight common shares validly tendered in the offer, we currently intend to acquire, directly or indirectly, all of the outstanding White Knight common shares in accordance with applicable law by way of a subsequent acquisition transaction. See the section entitled “The Offer — Other Terms — Subsequent Acquisition Transaction” on page 54 of this prospectus.

Plans for White Knight

If permitted by applicable law, subsequent to the completion of the offer and, if necessary, any subsequent acquisition transaction, we intend to delist White Knight common shares from the TSX-V and cause White Knight to cease to be a reporting issuer under the securities laws of the applicable jurisdictions.

INVESTMENT CONSIDERATIONS

We believe that the consideration offered for White Knight common shares under the offer is fair. You are urged to consider the following factors in making your decision to accept the offer.

The consideration offered under the offer provides a significant premium for White Knight’s shareholders.

We are offering to purchase, upon the terms and subject to the conditions of the offer, all of the outstanding White Knight common shares, including any White Knight common shares that may be issued after the date of the offer and prior to the expiry time, on the basis of 0.35 of an exchangeable share for each White Knight common share. The exchangeable shares will, under the circumstances described in this prospectus, be exchangeable for shares of our common stock on a one-for-one basis. Based on the closing prices of White Knight common shares on the TSX-V and the shares of our common stock on the OTCBB on March 3, 2006, the last trading day prior to the announcement of U.S. Gold’s proposed business combination with White Knight, this exchange ratio represented a premium of approximately 25% to shareholders over the trading price prior to the announcement of the offer. Based on the closing prices of White Knight common shares on the TSX-V and the shares of common stock of U.S. Gold on the TSX on February 2, 2007, the most recent trading day practicable before the filing of this prospectus, this exchange ratio represented a premium of approximately 6.8% to White Knight shareholders.

We believe that there are significant benefits to bringing together U.S. Gold with three other companies exploring in the Cortez Trend.

In addition to this prospectus, we expect to commence take-over bids for all of the outstanding common shares of Nevada Pacific and Tone Resources as soon as practicable following, among other things, obtaining any necessary consents from the respective auditors of Nevada Pacific and Tone Resources and satisfaction of other regulatory requirements. Like White Knight, each of these companies is exploring in the Cortez Trend in Nevada and has mineral exploration properties that are adjacent to or near U.S. Gold’s Tonkin Springs gold property. See the section entitled “Intentions of the Offerors — Strategic Rationale for the Offer” on page 59 of this prospectus. We believe that there are significant benefits to bringing together U.S. Gold, White Knight, Nevada Pacific and Tone Resources, including that the combined company will have:


	•	a larger land position within the Cortez Trend and a larger exploration program;

	•	a stronger cash position and reduced costs;

	•	enhanced trading liquidity and better market focus; and

	•	greater technical expertise.

The liquidity and trading price of White Knight’s common shares may be adversely affected if we are not successful in acquiring 100% of White Knight’s common shares.

Our acquisition of any White Knight common shares under the offer will reduce the number of White Knight common shares that might otherwise trade publicly, as well as the number of shareholders. Depending on the number of shareholders depositing and the number of White Knight common shares acquired by us under the offer, following the completion of the offer and prior to any subsequent acquisition transaction, the liquidity and market value of the remaining White Knight common shares held by the public would likely be adversely affected. After the purchase of White Knight common shares under the offer, it may be possible for White Knight to take steps towards the elimination of any applicable public reporting requirements under applicable securities legislation in any province in which it has an insignificant number of shareholders.

The White Knight common shares may fail to meet the criteria for continued listing on the TSX-V even if the offerors are not successful in acquiring 100% of White Knight common shares.

The rules and regulations of the TSX-V establish certain criteria that, if not met, could lead to the delisting of White Knight common shares from the TSX-V. Among such criteria are the number of White Knight shareholders, the number of White Knight common shares publicly held and the aggregate market value of White Knight common shares publicly held. Depending on the number of White Knight shareholders depositing White Knight common shares and the number of White Knight common shares acquired by us under the offer, it is possible that, following the completion of the offer and prior to any subsequent acquisition transaction, White Knight common shares would fail to meet the criteria for continued listing on the TSX-V. If this were to happen, White Knight common shares could be delisted and this could, in turn, adversely affect the market or result in a lack of an established market for such shares. We intend to cause White Knight to apply to delist White Knight common shares from the TSX-V as soon as practicable after the successful completion of the offer and any subsequent acquisition transaction.

RELATIONSHIPS BETWEEN THE OFFERORS AND WHITE KNIGHT

Beneficial Ownership of and Trading in Securities of White Knight

As of the date hereof, Robert R. McEwen, our Chairman and Chief Executive Officer, beneficially owns 9,552,427 White Knight common shares, which represents approximately 16% of the outstanding White Knight common shares as of February 1, 2007. Other than such securities, no securities of White Knight, are owned beneficially, directly or indirectly, nor is control or direction exercised over any securities of White Knight, by our directors or executive officers or, to the knowledge of such directors and executive officers after reasonable inquiry, by any of our associates or affiliates, by any associate of our directors or executive officers or by any person or company owning, directly or indirectly, more than 10% of any class of our securities. No person is acting jointly or in concert with us and Canadian Exchange Co. with respect to the offer.

Except for the purchases by Mr. McEwen of White Knight common shares described in the section entitled “Background to the Offer” on page 57 of this prospectus, no securities of White Knight have been purchased or sold during the 12-month period preceding the date of the offer by the offerors or the offerors’ directors or executive officers or, to the knowledge of such directors and executive officers after reasonable inquiry, by any of the offerors’ associates or affiliates, by any associate of the offerors’ directors or executive officers or by any person or company owning, directly or indirectly, more than 10% of any class of securities of the offerors.

Commitments to Acquire Securities of White Knight

Except in connection with the offer, neither of us, Canadian Exchange Co. nor any of our directors or executive officers, nor to the knowledge of our directors and executive officers after reasonable inquiry, any of our associates or affiliates, any associate of any of our directors or executive officers or any person or company owning, directly or indirectly, more than 10% of any class of our securities has entered into any commitments to acquire any equity securities of White Knight.

Transaction-Related Expenses

U.S. Gold has agreed to pay the transaction-related fees and expenses incurred by each of the target companies in relation to the proposed acquisitions. As of February 2, 2007, U.S. Gold has reimbursed the target companies for the following transaction-related fees and expenses: Nevada Pacific, $220,211, Tone Resources, $117,082, and White Knight, $52,712.

Arrangements, Agreements or Understandings

Except as described in this prospectus or in the attached appendices or documents, neither we nor, to the best of our knowledge, any of our directors, executive officers or other affiliates have any contract, arrangement, understanding or relationship with any other person with respect to any securities of White Knight, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as described in the offer, there have been no contacts, negotiations or transactions between us or, to the best of our knowledge, any of our directors, executive officers or other affiliates on the one hand, and White Knight or its affiliates, on the other hand, relating to any merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. Neither we, nor, to the best of our knowledge, any of the our directors, executive officers or other affiliates has had any transaction with White Knight or any of its executive officers, directors or affiliates that would require disclosure under the rules and regulations of the SEC applicable to the offer.

There are no arrangements or agreements made or proposed to be made between us and any of the directors or executive officers of White Knight and no payments or other benefits are proposed to be made or given by us to such directors or executive officers as compensation for loss of office or as compensation for remaining in or retiring from office if the offer is consummated.

MATERIAL CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Fraser Milner Casgrain LLP, Canadian counsel to U.S. Gold and Canadian Exchange Co., the following is, at the date hereof, a summary of the material Canadian federal income tax considerations applicable to shareholders who dispose of their White Knight common shares in the offer and who, for purposes of the Tax Act and at all relevant times, hold their White Knight common shares and will hold any exchangeable shares and shares of common shares of U.S. Gold as capital property and deal at arm’s length with, and are not affiliated with, U.S. Gold, Canadian Exchange Co., Alberta ULC and White Knight.

The White Knight common shares, the exchangeable shares and the shares of common stock of U.S. Gold will be considered to be capital property to a holder thereof provided such securities are not held in the course of carrying on a business of buying and selling securities and such securities are not acquired in a transaction considered to be an adventure in the nature of trade. A Canadian resident holder of White Knight common shares or exchangeable shares may in certain circumstances make an irrevocable election under subsection 39(4) of the Tax Act to have his or her White Knight common shares and exchangeable shares and every other “Canadian security” (as defined in the Tax Act) owned by such holder in the taxation year of election and in all subsequent taxation years deemed to be capital property. Where a shareholder makes an election under section 85 of the Tax Act in respect of the disposition of White Knight common shares, as described below, the exchangeable shares received in exchange will not be Canadian securities for this purpose.

This summary is not applicable to a shareholder: (i) that is a “financial institution” (as defined in the Tax Act for purposes of the mark-to-market rules); (ii) an interest in which is a “tax shelter investment” (as defined in the Tax Act); or (iii) with respect to whom U.S. Gold is or will be a “foreign affiliate” within the meaning of the Tax Act.

This summary is based on the facts set out in this prospectus, the current provisions of the Tax Act, the regulations thereunder and counsel’s understanding of the current published administrative policies and assessment practices of the Canada Revenue Agency, or the CRA. This summary also takes into account all proposed amendments to the Tax Act and the regulations thereunder publicly announced by or on behalf of the Minister of Finance (Canada) before the date of the offer (“Tax Proposals”). There can be no assurance that any such Tax Proposals will be implemented in their current form or at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and, except as mentioned above, does not otherwise take into account or anticipate changes in the law, whether by judicial, governmental or legislative action or decision, or changes in the administrative policies or assessment practices of the CRA, nor does it take into account provincial, territorial or foreign income tax legislation or considerations, which may differ from the Canadian federal income tax considerations described herein.

THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSTRUED AS, LEGAL OR TAX ADVICE TO ANY PARTICULAR SHAREHOLDER. ACCORDINGLY, SHAREHOLDERS ARE ENCOURAGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX CONSEQUENCES OF DISPOSING OF THEIR COMMON SHARES IN THE OFFER AND ACQUIRING, HOLDING AND DISPOSING OF EXCHANGEABLE SHARES AND SHARES OF COMMON STOCK OF U.S. GOLD, HAVING REGARD TO THEIR PARTICULAR CIRCUMSTANCES.

For the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of exchangeable shares or shares of common stock of U.S. Gold, including dividends, adjusted cost base and proceeds of disposition, must be converted into Canadian dollars using the Canadian/U.S. dollar exchange rate prevailing at the time such amounts arise.

Shareholders Resident in Canada

The following portion of this summary is applicable to a shareholder who, for the purposes of the Tax Act and any applicable income tax treaty or convention, is or is deemed to be a Canadian resident at all relevant times.

Receipt of Ancillary Rights

A shareholder who receives exchangeable shares on a disposition of White Knight common shares in the offer will also be entitled to certain rights and benefits, referred to herein as ancillary rights, under the Voting and Exchange Trust Agreement, as discussed in the section entitled “The Offer — Exchangeable Shares — Voting and Exchange Trust Agreement” on page 40 of this prospectus. A shareholder will be required to account for the ancillary rights in determining the proceeds of disposition of such holder’s White Knight common shares and the cost of the exchangeable shares received in the offer. U.S. Gold is of the view that the ancillary rights have a nominal fair market value given the other rights and benefits that shareholders will have upon completion of the offer including, without limitation, the right to exchange their exchangeable shares for shares of common shares of U.S. Gold on a one-for-one basis. Any such determination of value is not binding upon the CRA. Counsel expresses no opinion as to the appropriateness or accuracy of this valuation. A reference to exchangeable shares will be deemed to include a reference to ancillary rights, where applicable.

Grant of Call Rights

U.S. Gold is of the view that the liquidation call right, the redemption call right and the retraction call right, as discussed in the section entitled “The Offer — Exchangeable Shares — Description of Exchangeable Shares — Call Rights” on page 38 of this prospectus, have a nominal fair market value and that accordingly, no amount should be allocated to the call rights. Any such determination of value is not binding upon the CRA. Counsel expresses no opinion as to the appropriateness or accuracy of this valuation. Provided that the valuation with respect to such call rights is correct, the granting of the call rights will not result in any material adverse income tax consequences to a shareholder. However, should the CRA challenge this valuation and ultimately succeed in establishing that the call rights have a fair market value in excess of a nominal amount, a shareholder receiving exchangeable shares in the offer will realize a capital gain in an amount equal to the fair market value of the call rights. See the section entitled “Taxation of Capital Gains or Capital Losses” below.

Exchange of White Knight Common Shares for Exchangeable Shares

No Election Transaction. Subsection 85.1(1) of the Tax Act provides that where a taxpayer exchanges shares, or the exchanged shares, of any particular class of the capital stock of a taxable Canadian corporation for shares of another taxable Canadian corporation or the purchaser corporation, and receives no consideration for the transfer of the exchanged shares other than shares of the purchaser corporation, the taxpayer is deemed to dispose of the exchanged shares for an amount equal to the adjusted cost base of the exchanged shares to the taxpayer immediately before the exchange and to acquire the shares of the purchaser corporation at a cost then equal to the adjusted cost base to the taxpayer of the exchanged shares immediately before the exchange. Subsection 85.1(1) does not apply if the taxpayer elects in the taxpayer’s return of income for the year in which the exchange occurs to recognize any gain or loss on the exchange or if the taxpayer makes a joint tax election pursuant to subsection 85(1) or (2) with respect to the exchanged shares. If section 85.1(1) applies to the exchange by a shareholder of White Knight common shares for exchangeable shares, the shareholder would dispose of White Knight common shares for an amount equal to its adjusted cost base of White Knight common shares immediately before the exchange and receive exchangeable shares with a cost to the shareholder equal to the adjusted cost base of White Knight common shares immediately before the exchange. If the ancillary rights represent consideration to the shareholders for the disposition of White Knight common shares, section 85.1 would not apply to the exchange by a shareholder of White Knight common shares for exchangeable shares. Shareholders are advised to consult their tax advisors as to whether subsection 85.1 may apply to an exchange by them of their White Knight common shares and whether they should make an election pursuant to subsection 85(1) or (2) as described below under “Section 85 Election.”

If subsection 85.1(1) does not apply to a shareholder, a shareholder who exchanges White Knight common shares for exchangeable shares will be considered to have disposed of such White Knight common shares for proceeds of disposition equal to the fair market value of the exchangeable shares (including the value of the ancillary rights) acquired by such shareholder on the exchange, unless such shareholder makes a joint tax election under subsection 85(1) or 85(2) of the Tax Act. As a result, such shareholder will realize a capital gain (or capital loss) to the extent that such proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of such White Knight common shares. See the section entitled “Taxation of Capital

Gains or Capital Losses” below. The cost to a holder of exchangeable shares acquired on the exchange will be equal to the fair market value thereof at the time of acquisition.

Election Transaction. A shareholder who exchanges White Knight common shares for exchangeable shares may make a joint tax election with Canadian Exchange Co. pursuant to subsection 85(1) of the Tax Act (or, in the case of a shareholder who is a partnership, pursuant to subsection 85(2) of the Tax Act). Such election may result in the full or partial deferral of capital gains otherwise arising on the exchange of White Knight common shares as described under “Non-Rollover Transaction.” Provided that, on the effective date, the adjusted cost base of such shareholder’s White Knight common shares equals or exceeds the fair market value of the ancillary rights acquired by such shareholder on the exchange, that shareholder may elect so as to not realize a capital gain for the purposes of the Tax Act on the exchange. The elected amount (as defined herein) will be determined by each shareholder who makes such a joint tax election, subject to the limitations under the Tax Act described below under “Section 85 Election.”

Section 85 Election

Canadian Exchange Co. will make a joint tax election under subsection 85(1) or subsection 85(2), as applicable, of the Tax Act (and the corresponding provisions of any applicable provincial tax legislation) with a shareholder who receives exchangeable shares on the exchange of White Knight common shares and at the amount elected by the shareholder, subject to the limitations under the Tax Act. The joint tax election allows a shareholder to elect an amount which, subject to the limitations under the Tax Act described below, will be treated for the purposes of the Tax Act as the shareholder’s proceeds of disposition of his or her White Knight common shares. Canadian Exchange Co. agrees only to execute any properly completed election forms and to forward such election forms by mail (within 30 days after the receipt thereof by Canadian Exchange Co.) to the applicable tax authorities with a copy to the shareholder. With the exception of the execution and filing of the election by Canadian Exchange Co., compliance with the requirements to ensure the validity of a joint tax election will be the sole responsibility of the shareholder making the election. Accordingly, neither Canadian Exchange Co. nor the depositary will be responsible or liable for taxes, interest, penalties, damages or expenses resulting from the failure by anyone to properly complete any election within the time prescribed and in the form prescribed under the Tax Act (or the corresponding provisions of any applicable provincial legislation).

The relevant Canadian federal tax election form is CRA Form T2057 (or, in the event that White Knight common shares are held as partnership property, CRA Form T2058). For shareholders required to file in Québec, Québec Form TP-518V (or, in the event that White Knight common shares are held as partnership property, Québec Form TP-529V) will also be required. A tax election package, consisting of the relevant tax election forms, a tax election filing authorization letter, and a letter of instructions, may be obtained from the depositary. A shareholder interested in making a joint tax election should so indicate on the letter of acceptance and transmittal in the space provided therein and a tax election package will be sent to such shareholder.

In order to make a joint tax election, a shareholder must provide to the depository, at the address set forth on the back page hereof, on behalf of Canadian Exchange Co., two signed copies of the necessary election forms on or before the day which is 90 days after the effective date, duly completed with the details of the number of White Knight common shares transferred and the applicable elected amount for the purposes of the election. Certain Canadian provincial jurisdictions may require that a separate joint tax election be filed for provincial income tax purposes. Canadian Exchange Co. will also make a Canadian provincial joint tax election with a shareholder under the provision of any relevant Canadian provincial income tax legislation with similar effect to subsection 85(1) or subsection 85(2) of the Tax Act (and, if requested, an election pursuant to sections 518 or 529 of the Taxation Act (Quebec) or analogous provincial tax legislation). Shareholders are encouraged to consult their own tax advisors to determine whether separate election forms must be filed with any Canadian provincial taxing authority. It will be the responsibility of each shareholder who wishes to make such a joint tax election to obtain the necessary Canadian provincial election forms and to submit such forms to the depositary for execution and filing by Canadian Exchange Co.

Where White Knight common shares are held in joint ownership and two or more of the co-owners wish to elect, one of the co-owners designated for such purpose should file the designation and a copy of the CRA

Form T2057 (and where applicable, the corresponding Québec form) for each co-owner, along with a list of all co-owners electing, which list should contain each co-owner’s percentage of ownership, the address and Canadian social insurance number or tax account number of each co-owner. Where White Knight common shares are held as partnership property, a partner validly designated by the partnership may file one copy of the CRA Form T2058 on behalf of all members of the partnership (and where applicable, the corresponding form in duplicate with the Québec taxation authorities). Such CRA Form T2058 (and Québec form, if applicable) must be accompanied by a letter signed by each partner authorizing the designated partner to complete and file the form, and a list containing the name, address, social insurance number or tax account number of each partner.

Where a joint tax election is made, pursuant to the limitations imposed by the Tax Act, the elected amount may not be:


	•	less than the fair market value of the ancillary rights received on a disposition of White Knight common shares in the offer;

	•	less than the lesser of: (a) the adjusted cost base to the shareholder of the shareholder’s White Knight common shares disposed of pursuant the offer, and (b) the fair market value of White Knight common shares; and

	•	greater than the fair market value of White Knight common shares so disposed of,

in each case, determined immediately before the time of the disposition. The amount elected by a shareholder in accordance with the foregoing limitations is referred to herein as the elected amount.

Elected amounts which do not comply with the foregoing limitations will be automatically adjusted pursuant to the provisions of the Tax Act.

Where a shareholder and Canadian Exchange Co. make a Canadian joint tax election, the Canadian tax treatment to the shareholder will be as follows:


	•	the shareholder will be deemed to have disposed of White Knight common shares for proceeds of disposition equal to the elected amount;

	•	if the proceeds of disposition of White Knight common shares are equal to the aggregate of the adjusted cost base of the shareholder’s White Knight common shares, determined immediately before the time of the disposition, and any reasonable costs of disposition, no capital gain or capital loss will be realized by the shareholder;

	•	to the extent that the proceeds of disposition of White Knight common shares exceed (or are less than) the aggregate of the adjusted cost base to the shareholder of his or her White Knight common shares, determined immediately before the time of the disposition, and any reasonable costs of disposition, a capital gain (or capital loss) will be realized by the shareholder; and

	•	the cost to a shareholder of the exchangeable shares received in exchange for White Knight common shares will be equal to the amount by which the elected amount exceeds the fair market value of the ancillary rights received on the disposition of White Knight common shares in the offer.

In order for the CRA (and, where applicable, the Ministère du Revenu du Québec) to accept a joint tax election without a late filing penalty being paid by the shareholder, the election must be received by such revenue authorities on or before the day that is the earliest of the days on or before which either Canadian Exchange Co. or the shareholder is required to file an income tax return for the taxation year in which the exchange occurs. Canadian Exchange Co.’s taxation year is scheduled to end on December 31. Thus, the tax election will, in the case of a shareholder who is an individual (other than a trust), generally have to be received by the revenue authorities by April 30, 2008 (being generally the last day for filing a tax return for the individual’s 2007 taxation year). Shareholders, other than individuals, are encouraged to consult their own advisors as soon as possible respecting the deadlines applicable to their own particular circumstances. However, regardless of such deadline, the tax election forms of a shareholder must be received by the depositary, as indicated above, no later than the 90th day after the effective date. If, for whatever reason, the current taxation year of Canadian Exchange Co. were to terminate before December 31, 2007, the joint tax election may have to be filed earlier to avoid late filing penalties. In such

event, Canadian Exchange Co. has agreed to notify forthwith, through the depositary, every shareholder who received exchangeable shares on the exchange of their White Knight common shares of such change.

Any shareholder who does not ensure that the depositary has received a duly completed election form on or before the 90th day after the effective date, will not be able to benefit from the joint tax election. Accordingly, all shareholders who wish to enter into a joint tax election with Canadian Exchange Co. should give their immediate attention to this matter. The instructions for requesting a tax election package are set out in the letter of acceptance and transmittal. Shareholders are referred to Information Circular 76-19R3 and Interpretation Bulletin IT-291R3 issued by the CRA for further information respecting the joint tax election. Joint tax election forms are also available from the CRA and provincial tax authorities. Shareholders wishing to make the joint tax election are encouraged to consult their own tax advisors. The comments herein with respect to such elections are provided for general assistance only. The law in this area is complex and contains numerous technical requirements.

As discussed above, shareholders will be required to account for the ancillary rights in determining the proceeds of disposition of such shareholder’s White Knight common shares and the cost of the exchangeable shares received in the offer. U.S. Gold is of the view that the ancillary rights have a nominal fair market value given the other rights and benefits that shareholders also have upon completion of the offer including, without limitation, the right to exchange their exchangeable shares for shares of common stock of U.S. Gold on a one-for-one basis. Any such determination of value is not binding upon the CRA. Counsel expresses no opinion as to the appropriateness or accuracy of this valuation. A reference to exchangeable shares will be deemed to include a reference to ancillary rights, where applicable.

Exchangeable Shares/Shares of Common Stock of U.S. Gold

Dividends on Exchangeable Shares

Dividends received or deemed to be received on exchangeable shares by a shareholder who is an individual (including most trusts) will be included in computing the individual’s income for the taxation year in which such dividends are received and will be subject to the gross-up and dividend tax credit rules generally applicable to taxable dividends received from taxable Canadian corporations.

The Tax Proposals contain legislation to enhance the federal gross-up and tax credit for “eligible dividends” paid after 2005 and received by individuals resident in Canada. If the draft legislation becomes law in its present form, dividends received or deemed to be received on the exchangeable shares by a holder may qualify for the enhanced gross-up and dividend tax credit.

A shareholder that is a corporation will be required to include in computing its income for a taxation year any dividends received on the exchangeable shares and will generally be entitled to deduct such dividends in computing its taxable income.

A shareholder that is a “private corporation” as defined in the Tax Act or any other corporation resident in Canada and controlled or deemed to be controlled by or for the benefit of an individual (other than a trust) or a related group of individuals (other than trusts) may be liable to pay a refundable tax under Part IV of the Tax Act equal to 331/3% of dividends received or deemed to be received on the exchangeable shares to the extent that such dividends are deductible in computing the holder’s taxable income.

The exchangeable shares will be “taxable preferred shares” and “short-term preferred shares” for purposes of the Tax Act. Accordingly, Canadian Exchange Co. will be subject to a tax under Part VI.1 of the Tax Act equal to 662/3% (to be reduced to 50% under the Tax Proposals retroactively effective to dividends paid by a corporation in its 2003 and subsequent taxation years) of all dividends paid or deemed to be paid on the exchangeable shares. Canadian Exchange Co. will also be entitled to deduct 9/4 (to be increased to 3 times under the Tax Proposal retroactively effective to dividends paid by a corporation in its 2003 and subsequent taxation years) of any Part VI.1 tax payable in computing its taxable income. Dividends received or deemed to be received on the exchangeable shares will not be subject to the 10% tax under Part IV.1 of the Tax Act.

Dividends on Shares of Common Stock of U.S. Gold

Dividends received on shares of common stock of U.S. Gold will be included in a shareholder’s income for the purposes of the Tax Act. Such dividends received by a shareholder who is an individual will not be subject to the gross-up and dividend tax credit rules in the Tax Act. A shareholder that is a corporation will not be entitled to deduct the amount of such dividends in computing its taxable income. A shareholder that is a “Canadian-controlled private corporation” as defined in the Tax Act may be liable to pay an additional refundable tax of 62/3% on its “aggregate investment income” for the year which will include such dividends. Subject to the detailed rules in the Tax Act, a shareholder may be entitled to a foreign tax credit or deduction for any United States non-resident withholding tax paid on dividends received on shares of common stock of U.S. Gold.

Redemption or Exchange of Exchangeable Shares

On the redemption (including a retraction) of an exchangeable share by Canadian Exchange Co., the shareholder will be deemed to have received a dividend equal to the amount, if any, by which the redemption proceeds (being the fair market value at that time of the share of common stock of U.S. Gold plus the accrued and unpaid dividends, if any, received by the shareholder on the redemption) exceeds the paid-up capital for purposes of the Tax Act of the exchangeable share at the time of the redemption. A shareholder will be subject to tax on the amount of any such deemed dividend in the manner described above under the heading “Dividends on Exchangeable Shares.” On the redemption, the shareholder will also be considered to have disposed of the exchangeable share for proceeds of disposition equal to the redemption proceeds less the amount of such deemed dividend, and will realize a capital gain (or a capital loss) equal to the amount by which such proceeds of disposition, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of the exchangeable share to the shareholder. See the section entitled “Taxation of Capital Gains or Capital Losses” below. In some circumstances, the amount of any such deemed dividend received by a shareholder that is a corporation on the redemption of an exchangeable share may be treated as proceeds of disposition and not as a dividend.

Where an exchangeable share is exchanged with U.S. Gold or Alberta ULC for a share of common stock of U.S. Gold, the shareholder will realize a capital gain (or a capital loss) to the extent the proceeds of disposition of the exchangeable share, net of any reasonable costs of disposition, exceed (or are less than) the shareholder’s adjusted cost base of the exchangeable share. For this purpose, the proceeds of disposition will be the aggregate of the fair market value, at the time of the exchange, of the shares of common stock of U.S. Gold received on the exchange and any accrued and unpaid dividends received by the shareholder as part of the exchange consideration. See the section entitled “Taxation of Capital Gains or Capital Losses” below.

Because of the existence of the call rights and certain rights provided in the Voting and Exchange Trust Agreement, a holder of exchangeable shares cannot control whether such a holder will receive shares of common stock of U.S. Gold by way of redemption of the exchangeable shares by Canadian Exchange Co. or by way of a purchase of the exchangeable shares by U.S. Gold or Alberta ULC. If the call rights are not exercised on redemption or retraction of the exchangeable shares, a holder of exchangeable shares may realize a dividend for Canadian tax purposes that may exceed the holder’s economic gain.

As described above, the Canadian federal income tax consequences of a redemption by Canadian Exchange Co. differ from those of a purchase by U.S. Gold or Alberta ULC.

Acquisition and Disposition of Shares of Common Stock of U.S. Gold

The cost of the shares of common stock of U.S. Gold received on the retraction, redemption, exchange or purchase of exchangeable shares will be equal to the fair market value of such shares of common stock of U.S. Gold at that time and will be averaged with the adjusted cost base of all other shares of common stock of U.S. Gold held by the shareholder as capital property at that time for the purposes of determining the adjusted cost base of such shares of common stock of U.S. Gold.

A disposition or deemed disposition of shares of common stock of U.S. Gold by a shareholder will result in a capital gain (or capital loss) to the extent that the proceeds of disposition, net of any reasonable costs of disposition,

exceed (or are less than) the shareholder’s adjusted cost base of such shares of common stock of U.S. Gold. See the section entitled “Taxation of Capital Gains or Capital Losses” below.

Taxation of Capital Gains or Capital Losses

A shareholder will be required to include one-half of the amount of any capital gain (a “taxable capital gain”) in income, and will generally be required to deduct one-half of the amount of any capital loss (an “allowable capital loss”) against taxable capital gains realized by the shareholder in the year of disposition. Allowable capital losses not deducted in the taxation year in which they are realized may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any subsequent taxation year against taxable capital gains realized in such years, to the extent and under the circumstances specified in the Tax Act.

A shareholder that is a “Canadian-controlled private corporation,” as defined in the Tax Act, may be liable to pay an additional refundable tax of 62/3% on its “aggregate investment income” for the year which will include an amount in respect of taxable capital gains.

If the holder of exchangeable shares is a corporation, the amount of any capital loss arising from a disposition or deemed disposition of such shares may be reduced by the amount of any dividends, including deemed dividends, which have been previously received on such shares to the extent and under the circumstances specified in the Tax Act. Similar rules may apply where the corporation is a member of a partnership or beneficiary of a trust that owns exchangeable shares or where the trust or partnership of which a corporation is beneficiary or a member is a member of a partnership or beneficiary of a trust that owns exchangeable shares. Shareholders to whom these rules may be relevant should consult their own tax advisors.

Alternative Minimum Tax

Individuals and certain trusts that receive or are deemed to receive taxable dividends on exchangeable shares, or realize a capital gain on the disposition or deemed disposition of White Knight common shares, the exchangeable shares or shares of common stock of U.S. Gold, may realize an increase in their liability for alternative minimum tax under the Tax Act.

Qualified Investments

The exchangeable shares issued in the offer, will be “qualified investments” under the Tax Act for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit sharing plans or registered education savings plans, or deferred plans, as defined in the Tax Act, provided the exchangeable shares are listed on a “prescribed stock exchange” (which currently includes the TSX).

The ancillary rights will not be qualified investments under the Tax Act for such deferred plans. However, U.S. Gold is of the view that the ancillary rights have a nominal fair market value. Counsel expresses no opinion as to the appropriateness or the accuracy of this valuation. Any determination of value is not binding on the CRA. Where plans acquire property that is not a qualified investment, the plans are required to pay tax on the income and capital gains in respect of such property in accordance with the Tax Act. In addition, where a non-qualified investment is acquired by a trust governed by a registered retirement savings plan or a registered retirement income fund, the fair market value of the non-qualified investment at the time of acquisition will be included in the income of the annuitant under the plan. Where a non-qualified investment is acquired by a trust governed by a deferred profit sharing plan, the trust will be liable for a tax equal to the fair market value of the investment at the time the investment is acquired. The registration of a registered education savings plan becomes revocable if it acquires a non-qualified investment and, accordingly, exchangeable shares (by reason of the attached ancillary rights) are not suitable investments for trusts governed by registered education savings plans.

The shares of common stock of U.S. Gold issued in the offer, will be qualified investments under the Tax Act for Plans, provided such shares are listed on a “prescribed stock exchange” (which currently includes the TSX and AMEX).

Foreign Property Information Reporting

A holder of exchangeable shares or shares of common stock of U.S. Gold who is a “specified Canadian entity” for a taxation year or a fiscal period and whose total cost amount of “specified foreign property,” including such exchangeable shares or shares of common stock of U.S. Gold, at any time in the year or fiscal period exceeds Cdn$100,000 will be required to file an information return for the year or period disclosing prescribed information.

Subject to certain exceptions, a taxpayer resident in Canada in the year will be a specified Canadian entity. Holders are encouraged to consult their tax advisors as to whether they must comply with these rules.

Foreign Investment Entity Status

The Tax Proposals contain draft legislation relating to the income tax treatment of investments by Canadian residents in non-resident entities that constitute “foreign investment entities” (“FIEs”) (the “FIE Tax Proposals”). The FIE Tax Proposals, as currently drafted, would apply to require a shareholder that holds a “participating interest” (that is not an “exempt interest”) in a non-resident entity that is an FIE at the entity’s taxation year-end to take into account in computing the shareholder’s income for the shareholder’s taxation year that includes such taxation year-end: (i) an amount based on a prescribed rate of return on the “designated cost” of such participating interest held by a shareholder at the end of each month ending in the holder’s taxation year at which time the participating interest is held by the shareholder; (ii) in certain limited circumstances, any gains and losses accrued on such participating interest for the year; or (iii) in certain limited circumstances, a shareholder’s proportionate share of the FIE’s income (or loss) for the year calculated using Canadian tax rules. For the purposes of the FIE Tax Proposals, exchangeable shares and shares of common stock of U.S. Gold will constitute participating interests in U.S. Gold.

U.S. Gold will not be an FIE at the end of its taxation year provided that, at that time, the “carrying value” of all of U.S. Gold’s “investment property” is not greater than one-half of the “carrying value” of all its property. The determination of whether or not U.S. Gold is an FIE must be made on an annual basis at the end of each taxation year-end of U.S. Gold.

Even if U.S. Gold were an FIE at the end of one of its taxation years, an exchangeable share or a share of common stock of U.S. Gold, respectively, may be an exempt interest provided that throughout the period that such a security is held by a holder during such taxation year of U.S. Gold: (i) U.S. Gold is resident in the United States for the purposes of the Tax Act; (ii) the exchangeable share or the share of common stock of U.S. Gold (as applicable) is listed on a “prescribed stock exchange”; and (iii) the exchangeable share or the share of common stock of U.S. Gold (as applicable) constitutes an “arm’s length interest” (as defined for the purposes of the FIE Tax Proposals). It is expected that the exchangeable shares and the shares of common stock of U.S. Gold will be “arm’s length interests” of a particular shareholder thereof for the purposes of the FIE Tax Proposals provided that such shareholder (together with entities and individuals with whom the holder does not deal at arm’s length) does not hold, in the aggregate, more than 10% of the exchangeable shares or 10% of the shares of common stock of U.S. Gold, as applicable, based on the fair market value of such securities. In addition, an exchangeable share or share of common stock of U.S. Gold will only constitute an exempt interest at the end of U.S. Gold’s taxation year if, at that time, it is reasonable to conclude that the shareholder has no “tax avoidance motive” in respect of such exchangeable share or share of common stock of U.S. Gold. For this purpose, the shareholder will be regarded as having a tax avoidance motive only if it is reasonable to conclude that the main reasons for acquiring or holding such exchangeable shares or shares of common stock of U.S. Gold include directly or indirectly benefiting principally from income, profits, gains or increases in value in respect of investment property and from the deferral or reduction of tax that would have been payable on such income, profits or gains. Shareholders are encouraged to consult their own tax advisors regarding the determination of whether or not they have such a tax avoidance motive. The determination of whether exchangeable shares or shares of common stock of U.S. Gold constitute an exempt interest must be made on an annual basis at the end of the taxation year of U.S. Gold and no assurances can be given that the exchangeable shares or shares of common stock of U.S. Gold will constitute an exempt interest at any subsequent taxation year-end of U.S. Gold.

Economic Statement of October 18, 2000

In the Economic Statement released on October 18, 2000 (the “Economic Statement”), the Minister of Finance (Canada) announced a proposal to formulate and introduce a rule to permit shares of a Canadian corporation held by a Canadian resident to be exchanged for shares of a foreign corporation on a tax-deferred basis. This statement included no details of the circumstances in which such tax-deferred share-for-share exchanges could occur but rather indicated that these rules would be developed in consultation with the private sector. The Economic Statement indicated that any such rules would not be effective before the public release of draft legislation including such rules. The Canadian Federal Budget of February 18, 2003, reiterated the statements made in the Economic Statement and indicated that draft legislative proposals would be released in the near future for public review and comment.

The Canadian Federal Budget of March 23, 2004 (the “2004 Budget”) indicated that it is intended that detailed proposals will be released for public comment within months after the release of the 2004 Budget. The 2004 Budget also indicated that the proposals are expected to be in the form of draft legislation and there has been no indication as to an effective date for the proposals.

It is not known whether the draft legislation containing the proposed amendments described above will be released in time to affect a subsequent exchange of exchangeable shares for shares of common stock of U.S. Gold, and it is therefore possible that such exchange of exchangeable shares may be achieved on a tax-deferred basis. In any case, until such rules are developed and released, it is not possible to state whether those rules would apply to a shareholder who exchanges exchangeable shares for shares of common stock of U.S. Gold. Shareholders are encouraged to consult their own tax advisors once the draft legislation is released, if at all, to determine how the draft legislation might apply to the holder’s particular circumstances.

Subsequent Acquisition Transaction

U.S. Gold and Canadian Exchange Co. currently intend to effect a subsequent acquisition transaction in the form of a statutory plan of arrangement or similar transaction as described above under the caption “The Offer — Subsequent Acquisition Transaction.” The tax treatment of any subsequent acquisition transaction to a shareholder will depend upon the exact manner in which the subsequent acquisition transaction is carried out. A shareholder who disposes of White Knight common shares in accordance with a subsequent acquisition transaction in the form of a statutory plan of arrangement or similar transaction as described above under the heading “The Offer — Subsequent Acquisition Transaction”, will realize the same income tax consequences as a shareholder who tenders White Knight common shares pursuant to the offer. However, if a subsequent transaction is carried out in an alternative manner, the tax treatment to a shareholder may be materially less favourable than would apply if the shareholder tendered White Knight common shares to the Offer. Shareholders are encouraged to consult their own tax advisors for advice with respect to the income tax consequences to them of having their White Knight common shares acquired in a subsequent acquisition transaction.

Upon the subsequent acquisition transaction described under the caption “The Offer — Subsequent Acquisition Transaction”, holders of warrants will receive warrants to purchase exchangeable shares of Canadian Exchange Co. on a taxable basis.

The White Knight stock option plan will be replaced on a tax-deferred basis with a stock option plan of U.S. Gold.

Under the current administrative practice of the CRA, each shareholder who exercises a right of dissent on any subsequent transaction should be considered to have disposed of their White Knight common shares for proceeds equal to the amount received by the shareholder, other than interest awarded by the court (if any). Because of uncertainties under the relevant legislation as to whether such amounts paid to a dissenting shareholder would be treated entirely as proceeds of disposition, or in part as the payment of a deemed dividend, dissenting shareholders to a subsequent transaction are encouraged to consult with their own tax advisors in this regard.

Shareholders Not Resident in Canada

The following portion of the summary is applicable to holders of White Knight common shares who, for purposes of the Tax Act or any applicable income tax treaty or convention, have not been and will not be resident or deemed to be resident in Canada at any time while they have held White Knight common shares or will hold exchangeable shares and/or shares of common stock of U.S. Gold and who do not use or hold or are not deemed to use or hold such White Knight common shares, exchangeable shares and/or shares of common stock of U.S. Gold in carrying on a business in Canada, or a non-resident shareholder. Special rules, which are not discussed in this summary, may apply to a non-resident that is an insurer carrying on business in Canada and elsewhere.

Disposition of White Knight Common Shares or Exchangeable Shares

A non-resident shareholder will not be subject to capital gains tax under the Tax Act on the disposition of White Knight common shares in the offer or a disposition of exchangeable shares unless White Knight common shares or exchangeable shares, as the case may be, constitute “taxable Canadian property” of the shareholder for purposes of the Tax Act and the shareholder is not entitled to relief under an applicable income tax treaty or convention.

Generally, White Knight common shares or the exchangeable shares, as the case may be, will not be taxable Canadian property at a particular time provided that such shares are listed on a “prescribed stock exchange” (which currently includes the TSX and AMEX), and the shareholder, alone or together with persons with whom such shareholder does not deal at arm’s length, has not owned 25% or more of the issued shares of any class or series of shares in the capital of White Knight or Canadian Exchange Co., as the case may be, at any time during the five year period immediately preceding the particular time.

A non-resident shareholder whose White Knight common shares constitute taxable Canadian property may be eligible to make a joint tax election with Canadian Exchange Co. See the section entitled “Shareholders Resident in Canada — Section 85 Election”. Non-resident shareholders whose White Knight common shares or exchangeable shares constitute taxable Canadian property should consult their own tax advisors with respect to the Canadian tax consequences, including the effects thereon of the provisions of any income tax treaty or convention, of disposing of such shares.

Dividends On Exchangeable Shares

Dividends paid or deemed to be paid to a non-resident shareholder on exchangeable shares (including on a redemption of such shares by Canadian Exchange Co.) will be subject to Canadian withholding tax at the rate of 25% unless the rate is reduced under the provisions of an applicable income tax treaty or convention. See the section entitled “Shareholders Resident in Canada — Redemption or Exchange of Exchangeable Shares”. For example, under the Canada-United States tax treaty, the withholding tax rate is generally reduced to 15% in respect of a dividend paid to a person who is the beneficial owner thereof and who is resident in the United States for purposes of the Canada-United States tax treaty.

MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS

It is the opinion of Hogan & Hartson LLP, special counsel to U.S. Gold and Canadian Exchange Co., that the material U.S. federal income tax consequences to shareholders who exchange their White Knight common shares for exchangeable shares in the offer are as described in the following summary, subject to the assumptions, caveats and conditions set forth in the summary. This summary is included for general information purposes only and does not purport to be a complete technical analysis or listing of all potential U.S. tax consequences that may be relevant to holders of White Knight common shares. It is not intended to be, nor should it be construed as being, legal or tax advice. For this reason, holders of White Knight common shares should consult their own tax advisors concerning the tax consequences of the proposed transaction. Further, this summary does not address any tax consequences arising under the income or other tax laws of any state, local or foreign jurisdiction or any tax treaties.

This discussion is based upon the provisions of the Code, the related Treasury regulations, administrative interpretations and court decisions, in each case as in effect or available as of the date of the offer, all of which are subject to change, possibly with retroactive effect. Any such change could affect the accuracy of the statements and the conclusions discussed below and the tax consequences of the proposed transaction.

This discussion applies only to persons that hold their White Knight common shares, and will hold their exchangeable shares, as capital assets within the meaning of section 1221 of the Code, and assumes (without verification by the offerors) that White Knight is not, and has not been, a “controlled foreign corporation” for U.S. federal income tax purposes and that White Knight has never been treated as a U.S. domestic corporation pursuant to Section 897(i) of the Code. If White Knight is a controlled foreign corporation or was a controlled foreign corporation during the period that U.S. holders (defined below) have held their White Knight common shares, special U.S. tax rules not discussed herein may substantially affect the tax consequences of the proposed transaction to U.S. holders. If White Knight is treated as a U.S. domestic corporation pursuant to Section 897(i) of the Code, the U.S. tax consequence of the proposed transaction to non-U.S. holders may differ from those described below. This summary does not address all aspects of U.S. federal income taxation that may be relevant to holders of White Knight common shares in light of their particular circumstances or that may be applicable to them if they are subject to special treatment under the U.S. federal income tax laws. Specifically, this summary does not address tax consequences that may apply to a holder of White Knight common shares that is:


	•	a financial institution, thrift, insurance company or mutual fund;

	•	a tax-exempt organization;

	•	an S corporation, an entity taxable as a partnership for U.S. federal income tax purposes or other pass-through entity or an owner thereof;

	•	a dealer in stocks and securities or foreign currencies or a trader or an investor in White Knight common shares who elects the mark-to-market method of accounting for such stock;

	•	a shareholder who received White Knight common shares from the exercise of employee stock options, stock purchase plans or otherwise as compensation, or from a tax-qualified retirement plan, individual retirement account or other qualified savings account;

	•	a U.S. holder (defined below) that has a functional currency other than the U.S. dollar;

	•	an expatriate or former long-term resident of the United States;

	•	a shareholder that owns (or is deemed to own) shares representing 10% or more of the voting power of White Knight;

	•	a shareholder that, immediately following completion of the acquisition of White Knight by U.S. Gold (through Canadian Exchange Co.), will own (or be deemed to own) exchangeable shares representing 5% or more of the total voting power or value of all shares of Canadian Exchange Co. stock; or

	•	a shareholder who holds White Knight common shares as part of a hedge against currency risk, straddle or a constructive sale or conversion transaction, or other risk reduction or integrated investment transaction.

U.S. Federal Income Tax Consequences to U.S. Holders of White Knight Common Shares

For purposes of this summary, the term “U.S. holder” means a beneficial owner of White Knight common shares who is (i) an individual who is a citizen of the United States or who is resident in the United States for U.S. federal income tax purposes; (ii) a corporation or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state thereof or the District of Columbia; (iii) a trust, if either (A) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (B) the trust has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person; or (iv) an estate that is subject to U.S. federal income tax on its income regardless of its source.

An entity that is classified as a partnership for U.S. federal income tax purposes is neither a U.S. holder nor a non-U.S. holder. The U.S. federal income tax treatment of a partnership and its partners depends upon a variety of factors not specifically addressed herein, including the activities of the partnership and the partners. Holders of White Knight common shares that are partnerships for U.S. federal income tax purposes, and partners in any such partnership, should consult their tax advisors concerning the U.S. federal income tax consequences of the exchange of White Knight common shares in the offer and of owning and disposing of exchangeable shares or shares of common stock of U.S. Gold.

In its Form 20-F filed with the U.S. Securities and Exchange Commission on October 20, 2006, White Knight has stated that it believes that it has been and continues to be a “passive foreign investment company” or “PFIC” within the meaning of Section 1297 of the Code. We have not verified whether this is the case. The PFIC rules are highly complex, and the U.S. federal income tax consequences to a U.S. holder of White Knight common shares of the exchange of White Knight shares for exchangeable shares of Canadian Exchange Co. will vary substantially depending upon whether White Knight is a PFIC and whether the holder has made certain elections potentially available to a holder of White Knight shares under the PFIC rules. Each U.S. holder of White Knight shares is therefore strongly urged to consult with such holder’s tax advisor regarding the consequences to such holder of the application of the PFIC rules, taking into account such holder’s particular situation. See the discussion of the consequences of PFIC status under the heading “U.S. Federal Income Tax Consequences Arising from the Exchange by a U.S. Holder of White Knight Common Shares for Exchangeable Shares and Ancillary Rights” below.

U.S. Federal Income Tax Characterization of the Exchangeable Shares

There is no direct authority addressing the proper characterization and treatment of instruments with characteristics similar to the exchangeable shares and the ancillary rights for U.S. federal income tax purposes. Because the exchangeable shares are exchangeable into shares of U.S. Gold common stock, have dividend rights based on the dividends paid with respect to U.S. Gold common stock, and have the benefit of voting rights similar to the voting rights attributable to the shares of common stock of U.S. Gold, there is a significant chance that, for U.S. federal income purposes, the U.S. Internal Revenue Service, or the IRS, or the United States courts may treat the exchangeable shares as shares of U.S. Gold rather than as shares of Canadian Exchange Co. In the absence of specifically applicable authority and in view of the voting and other rights that holders of exchangeable shares have with respect to Canadian Exchange Co., the offerors intend to take the position that the exchangeable shares constitute stock of Canadian Exchange Co., and not stock of U.S. Gold, for U.S. federal income tax purposes. However, this characterization is not binding on the IRS, and the IRS or the courts could treat the exchangeable shares as shares of U.S. Gold. The offerors have not requested, nor do they intend to request, an opinion from United States legal counsel or a ruling from the IRS regarding the U.S. federal income tax classification of the exchangeable shares.

U.S. Federal Income Tax Characterization of the Exchange by a U.S. Holder of White Knight Common Shares for Exchangeable Shares and Ancillary Rights

This summary assumes that, as contemplated, (i) the offer will be consummated by Canadian Exchange Co., (ii) pursuant to the offer, Canadian Exchange Co. will obtain at least 80 percent of the shares of the single class of outstanding stock of White Knight, (iii) the sole consideration received by the shareholders of White Knight for

their shares of White Knight stock (in the offer or in any other transaction that may be integrated with the offer for U.S. federal income tax purposes) will be voting exchangeable shares of Canadian Exchange Co., (iv) White Knight will thereafter be a corporate subsidiary of Canadian Exchange Co., and (v) U.S. Gold will acquire additional shares of common stock of Canadian Exchange Co. for cash in conjunction with the consummation of the offer.

The offer will be effected under the applicable provisions of Canadian law, which differ from analogous provisions of United States law. Whether the offer will qualify as a generally tax deferred transaction under Section 368(a) of the Code (a “reorganization”) or under Section 351 of the Code will depend on the resolution of numerous factual issues, some of which will not be known until the effective time of consummation of the offer. There is no United States legal authority dealing with the tax consequences of a transaction identical to the offer, nor is there authority addressing the nature and status of securities like the exchangeable shares, and we have not requested, nor do we intend to request, an opinion from United States legal counsel or a ruling from the IRS regarding the tax characterization or consequences of the offer.

Based on current authority and the foregoing assumptions and subject to the discussion below: (i) if the exchangeable shares are regarded for U.S. federal income tax purposes as shares of common stock of U.S. Gold, the offer should, more likely than not, qualify as a reorganization for United States federal income tax purposes pursuant to Section 368(a) of the Code; and (ii) if the exchangeable shares are regarded instead as shares of stock of Canadian Exchange Co. and provided that the ancillary rights are not regarded as property rights that are separate and distinct from the exchangeable shares, the offer should, more likely than not, qualify as a reorganization. If the ancillary rights are treated as property rights that are separate from the exchangeable shares, the offer will not qualify as a reorganization pursuant to Section 368(a) of the Code, but exchanges pursuant to the offer are intended to qualify, in conjunction with the contemporaneous exchanges of exchangeable shares for shares in Nevada Pacific and Tone Resources and the acquisition of additional common shares of Canadian Exchange Co. by U.S. Gold, as tax-deferred transactions pursuant to Section 351 of the Code. We believe that the ancillary rights should not be regarded as property rights that are separate and distinct from the exchangeable shares because, among other things, they are central to the definition of the economic and voting rights of the exchangeable shares and are not transferable apart from the exchangeable shares, but no assurances can be given that the IRS or the courts will agree with this position.

One of the requirements that must be satisfied in order for an exchange of shares in the offer to qualify as a reorganization is that Canadian Exchange Co. must acquire ownership of at least 80 percent of White Knight shares solely for voting stock. Under the terms of the offer, Canadian Exchange Co. has the right to accept White Knight shares tendered in the offer even if it does not thereby obtain 80 percent or greater ownership of White Knight stock. If Canadian Exchange Co. accepts the shares tendered in the offer but fails for any reason to obtain ownership of at least 80 percent of White Knight stock, the exchange of White Knight shares for exchangeable shares will not qualify as a reorganization. Furthermore, the transaction will also fail to qualify as a reorganization if Canadian Exchange Co. or U.S. Gold provide any consideration other than voting exchangeable shares of Canadian Exchange Co. to the shareholders of White Knight in exchange for any of their White Knight common shares (in the offer or in any other transaction that may be integrated with the offer for U.S. federal income tax purposes).

U.S. Federal Income Tax Consequences Arising from the Exchange by a U.S. Holder of White Knight Common Shares for Exchangeable Shares and Ancillary Rights

Subject to the discussion of the PFIC rules below, if the offer qualifies as part of a reorganization, the following United States federal income tax consequences will result to U.S. holders, provided that the ancillary rights are not regarded as property rights that are separate and distinct from the exchangeable shares: (a) no gain or loss will be recognized by a U.S. holder that exchanges White Knight common shares for exchangeable shares in the offer; (b) the tax basis of a U.S. holder in the exchangeable shares acquired in exchange for White Knight common shares in the offer will be equal to such U.S. holder’s adjusted tax basis in White Knight common shares exchanged; and (c) the holding period of a U.S. holder for the exchangeable shares acquired in exchange for White Knight common shares in the offer will include such U.S. holder’s holding period for White Knight common shares exchanged. As discussed above, it is possible that the IRS may take the position that the ancillary rights constitute property rights that are separate and distinct from the exchangeable shares. In that case, the offer would not qualify as a

reorganization under Section 368(a) of the Code, but the exchange of White Knight shares for exchangeable shares is intended to qualify as a transfer coming within Section 351 of the Code if the exchangeable shares are regarded as shares of Canadian Exchange Co. stock. If so, then, subject to the discussion of the PFIC rules below, the tax consequences of the offer for a U.S. Holder will be the same as those just described for a reorganization, except that the U.S. Holder would be required to recognize gain (calculated as described in the immediately following paragraph), if any, realized from the consummation of the offer up to the fair market value of the ancillary rights. The tax basis of such U.S. holder in the exchangeable shares would in that case be equal to such U.S. holder’s adjusted tax basis in the White Knight common shares exchanged plus the amount of gain recognized minus the fair market value of the ancillary rights received.

Subject to the discussion of the PFIC rules below, if the offer qualifies neither as a reorganization under Section 368(a) nor as a transfer coming within Section 351, a U.S. holder who exchanges White Knight shares for exchangeable shares will recognize gain or loss for U.S. federal income tax purposes equal to the difference between (1) the fair market value of the exchangeable shares and ancillary rights such holder receives, and (2) such holder’s adjusted tax basis for the White Knight shares exchanged. Such gain or loss will generally be capital gain or loss, and will be long-term capital gain or loss if the U.S. holder’s holding period for the White Knight shares is more than one year as of the date of the exchange. In the case of a non-corporate holder of White Knight shares, long-term capital gain will generally be taxed at a maximum U.S. federal income tax rate of 15%. The deductibility of capital losses is subject to limitations.

As mentioned above, in its Form 20-F recently filed with the U.S. Securities and Exchange Commission, White Knight has stated that it believes that it has been and continues to be a PFIC within the meaning of Section 1297 of the Code. If so, the consequences to U.S. holders of White Knight common shares of exchanges in the offer will differ very significantly from those described above. The PFIC rules are extremely complex, and each U.S. Holder of White Knight shares is strongly urged to consult with his or her tax advisor regarding the substantial effect such rules may have on the tax consequences to such U.S. Holder of an exchange of White Knight shares for exchangeable shares in the offer and regarding certain tax elections that may be available to such U.S. Holder pursuant to the PFIC rules.

If White Knight is or has been a PFIC, the PFIC provisions of the Code will generally override the rules described in the preceding paragraphs regarding the tax treatment of reorganizations under Section 368(a), transfers under Section 351 and taxable transactions. Briefly, under the PFIC rules, when a U.S. holder of White Knight shares exchanges those shares for exchangeable shares, any gain realized by the holder on such exchange (measured by the excess, if any, of the fair market value of the exchangeable shares and ancillary rights received by the holder over the holder’s adjusted tax basis for his or her White Knight shares) is allocated ratably to each day of such holder’s holding period for such shares. The portion of the gain allocable to the year in which the exchange occurs is taxed as ordinary income, not as capital gain. Tax is calculated with respect to the portions of the gain allocated to each of the prior years of the shareholder’s holding period by multiplying the portion allocable to each prior year by the highest tax rate applicable to ordinary income in effect for such prior year. In addition, interest is charged with respect to the tax attributable to the gain allocated to such prior years. Thus, a U.S. holder who exchanges White Knight shares will generally be subject to an amount of tax equal to the sum of (i) the tax on the gain allocable to the year in which the exchange occurs, (ii) the tax on the gain allocable to each of the prior years of his holding period, and (iii) an interest charge with respect to such prior year tax amounts. These same rules would apply if the U.S. holder of White Knight shares sold those shares for cash.

As mentioned above, the provisions of Sections 368(a) and 351 of the Code that provide for tax-deferred treatment of certain share-for-share exchanges do not generally apply in the case of dispositions of shares of PFICs. Proposed U.S. Treasury Regulations provide for two exceptions to this general rule for certain specified types of dispositions of PFIC shares, but the offer does not appear to come within these exceptions.

The PFIC rules provide for certain tax elections that may be utilized by a U.S. holder who wishes to rid his or her shares of the “PFIC taint” so that these special, generally adverse PFIC tax rules will not be applicable with respect to sales or exchanges of those shares. The rules governing the availability and consequences of these PFIC elections are complex. Each U.S. holder of White Knight shares is strongly urged to consult with his or

her tax advisor regarding the availability and consequences of the PFIC elections in light of such holder’s specific circumstances.

As discussed above, there are a number of areas of uncertainty regarding the U.S. federal income tax treatment of exchanges in the offer. Each U.S. holder is urged to consult with his or her own tax advisor regarding these matters.

U.S. Federal Income Tax Consequences Arising from Holding the Exchangeable Shares.

Receipt of Distributions

As discussed above, the offerors intend to take the position that the exchangeable shares are shares of Canadian Exchange Co., and not shares of U.S. Gold. Distributions, if any, paid with respect to the exchangeable shares out of Canadian Exchange Co.’s current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be taxable as dividend income to U.S. holders. Dividends paid with respect to the exchangeable shares are expected to qualify for the lower tax rates applicable to net capital gains. To the extent that the amount of any distribution exceeds Canadian Exchange Co.’s current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital to the extent of the U.S. holder’s tax basis, and any excess will be treated as capital gain. Subject to certain conditions and limitations, Canadian income tax withheld on dividends with respect to the exchangeable shares generally may be deducted in determining a U.S. holder’s federal taxable income or credited against a U.S. holder’s federal income tax liability.

As also discussed earlier, the IRS may take the view that the exchangeable shares should be treated as shares of U.S. Gold for U.S. federal income tax purposes. In that case, the determination of whether and to what extent a distribution is taxable as a dividend would be made by reference to the current and accumulated earnings and profits of U.S. Gold, rather than Canadian Exchange Co. Furthermore, the classification of the exchangeable shares as shares of U.S. Gold rather than Canadian Exchange Co. may affect adversely the calculation of the amount of Canadian withholding tax that may be credited against a U.S. holder’s federal income tax liability.

Dispositions of Exchangeable Shares

Generally, a U.S. holder will recognize gain or loss on any sale, exchange or other disposition of the exchangeable shares. The amount of gain or loss recognized will equal the difference between the holder’s adjusted tax basis in the exchangeable shares and the amount realized from the sale, exchange or other disposition, unless the disposition transaction qualifies for non-recognition treatment. Gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period is more than one year. In the case of U.S. holders who are individuals, trusts or estates, any such long-term capital gain may be taxed at preferential rates. The deductibility of losses may be subject to limitations.

If a U.S. holder exchanges exchangeable shares for common shares of U.S. Gold, the U.S. income tax consequences of that exchange will depend upon whether the exchangeable shares are classified as shares of Canadian Exchange Co. or as shares of U.S. Gold for U.S. federal income tax purposes. If they are regarded as shares of Canadian Exchange Co., the exchange will be a taxable transaction, with the tax consequences described in the immediately preceding paragraph. If, on the other hand, the exchangeable shares are regarded as shares of U.S. Gold, the exchange of exchangeable shares for common stock of U.S. Gold should not be taxable.

Certain Passive Foreign Investment Company Considerations

If Canadian Exchange Co. were treated as a “passive foreign investment company” for U.S. federal income tax purposes, this could have potentially adverse U.S. tax consequences to U.S. holders who dispose of or receive distributions with respect to exchangeable shares, which consequences may be different from the consequences discussed above under “U.S. Federal Income Tax Consequences Arising from Holding the Exchangeable Shares — Receipt of Distributions” and under “U.S. Federal Income Tax Consequences Arising from Holding the Exchangeable Shares — Dispositions of Exchangeable Shares.” U.S. holders should consult their own tax advisors with respect to the potential application of the rules governing passive foreign investment companies. The offerors do not

intend or expect Canadian Exchange Co. to be a “passive foreign investment company” as defined in Section 1297(a) of the Code, but no assurances can be given in this regard.

U.S. Federal Income Tax Consequences Arising from Holding the Shares of Common Stock of U.S. Gold

Receipt of Distributions

Distributions, if any, paid with respect to shares of common stock of U.S. Gold out of U.S. Gold’s current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be taxable as dividend income to U.S. holders. In the case of U.S. holders who are individuals, trusts or estates, any such dividend income will be subject to tax at the same preferential rates as net capital gains if the applicable requirements are satisfied. To the extent that the amount of any distribution exceeds U.S. Gold’s current and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital to the extent of the U.S. holder’s tax basis, and any excess will be treated as capital gain.

Dispositions of Shares of Common Stock of U.S. Gold

Generally, a U.S. holder will recognize gain or loss on any sale, exchange or other disposition of the shares of common stock of U.S. Gold equal to the difference between the U.S. holder’s adjusted tax basis in the shares of common stock of U.S. Gold and the amount realized from the sale, exchange or other disposition. Gain or loss will be long-term capital gain or loss if the U.S. holder’s holding period is more than one year. In the case of U.S. holders who are individuals, trusts or estates, any such long-term capital gain may be taxed at preferential rates. The deductibility of losses may be subject to limitations.

U.S. Federal Income Tax Consequences to Non-U.S. Holders of White Knight Common Shares

For purposes of this summary, the term non-U.S. holder means a beneficial owner of White Knight common shares that is not treated as a partnership for U.S. federal income tax purposes, and that is not a U.S. holder. (See the discussion of partnerships under the section entitled “U.S. Federal Income Tax Consequences to U.S. Holders of White Knight Common Shares,” above.)

As stated previously, this summary does not address the U.S. federal income tax consequences to shareholders that are subject to special rules. It also does not apply to a non-U.S. holder that is affected by the provisions of an income tax treaty to which the United States is a party, and does not address currency exchange issues. Any non-U.S. holder that may be subject to any of these tax rules is urged to consult his or her own tax advisor to determine the tax consequences to him or her of the exchange in the offer.

U.S. Federal Income Tax Consequences Arising from the Exchange of White Knight Common Shares for Exchangeable Shares and from the Exchange of Exchangeable Shares for Shares of Common Stock of U.S. Gold

Generally, subject to the discussion below, a non-U.S. holder will not be subject to U.S. federal income tax on the income or gain (if any) realized on the exchange of White Knight common shares for exchangeable shares and ancillary rights, or upon the exchange of exchangeable shares for shares of common stock of U.S. Gold, unless:


	•	the income or gain is effectively connected with the conduct by the non-U.S. holder of a trade or business, or, if a tax treaty applies, attributable to a permanent establishment maintained by the non-U.S. holder, in the United States; or

	•	the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met, unless an applicable income tax treaty provides otherwise.

As noted above, if the exchangeable shares are regarded as shares of U.S. Gold for U.S. federal income tax purposes, the exchange of exchangeable shares for shares of common stock of U.S. Gold should not be taxable in any event.

U.S. Federal Income Tax Consequences Arising from Holding the Exchangeable Shares and Shares of Common Stock of U.S. Gold.

Receipt of Distributions on Exchangeable Shares

Assuming, as discussed above under “U.S. Federal Income Tax Consequences to U.S. Holders of White Knight Common Shares — U.S. Federal Income Tax Characterization of the Exchangeable Shares,” that the exchangeable shares are treated as shares of Canadian Exchange Co. for U.S. federal income tax purposes, rather than shares of common stock of U.S. Gold, dividends received by a non-U.S. holder with respect to the exchangeable shares should not be subject to U.S. withholding tax. However, a non-U.S. holder will be taxed in the United States on the receipt of dividends from Canadian Exchange Co. in the same manner as a U.S. holder if the non-U.S. holder has an office or other fixed place of business within the United States to which the dividends are attributable and the dividends are either derived in the active conduct of a banking, financing or similar business within the United States or received by a corporation the principal business of which is trading stock or securities for its account (unless otherwise provided in an applicable treaty).

Receipt of Distributions on Shares of Common Stock of U.S. Gold

Dividends received by a non-U.S. holder with respect to shares of common stock of U.S. Gold (and with respect to exchangeable shares if they are treated for U.S. tax purposes as shares of U.S. Gold) could be subject to U.S. withholding tax at a rate of 30%. The withholding tax rate could be reduced by an applicable income tax treaty in effect between the United States and the non-U.S. holder’s country of residence. For example, the withholding rate under the Canada-United States tax treaty on dividends paid by a U.S. corporation to residents of Canada is generally 15%. In addition, (a) a non-U.S. holder will be taxed in the same manner as a U.S. holder on dividends paid that are effectively connected with the non-U.S. holder’s conduct of a trade or business in the United States (unless otherwise provided in an applicable treaty) and will not be subject to the U.S. withholding tax provided that the non-U.S. holder provides the proper certification, and (b) a corporate non-U.S. holder may also be subject to an additional branch profits tax at a 30% rate (or such lower rate as may be specified in an applicable income tax treaty) on dividend income that is effectively connected with a U.S. trade or business.

Dispositions of Shares of Common Stock of U.S. Gold or Exchangeable Shares

Subject to the rules discussed below, a non-U.S. holder will not be subject to U.S. federal income tax on gain (if any) realized on the sale or exchange of exchangeable shares or on the sale or exchange of shares of common stock of U.S. Gold, unless:


	•	the gain is effectively connected with the conduct by the non-U.S. holder of a trade or business, or, if a tax treaty applies, attributable to a permanent establishment maintained by the non-U.S. holder, in the United States; or

	•	such non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met, unless an applicable income tax treaty provides otherwise; or

In addition, under the Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”), if U.S. Gold is treated as a “U.S. Real Property Holding Corporation” (“USRPHC”) and the requirements set forth below are satisfied, then gain or loss recognized by a non-U.S. holder on the sale or exchange of exchangeable shares or shares of common stock of U.S. Gold will be subject to regular U.S. federal income tax, as if such gain or loss were effectively connected with the conduct of a U.S. trade or business by the holder. U.S. Gold will be treated as a USRPHC if at any time during the shorter of (x) the five-year period ending on the date of the sale or exchange of exchangeable shares or shares of common stock of U.S. Gold (as the case may be) or (y) the period during which a holder held exchangeable shares or shares of common stock of U.S. Gold, the fair market value of U.S. Gold’s United States real property interests equals or exceeds 50% of the sum of the fair market values of all of its interests in real property and all of its other assets used or held for use in a trade or business (as defined in applicable regulations). It is anticipated that U.S. Gold will be a USRPHC after consummation of the proposed transaction.

If U.S. Gold is treated as a USRPHC after the consummation of the proposed transaction, gain or loss from the sale or exchange of exchangeable shares or shares of common stock of U.S. Gold will be subject to tax under FIRPTA in the following circumstances:


	•	In the case of a non-U.S. holder who owns only shares of common stock of U.S. Gold (actually and constructively), the shares of common stock of U.S. Gold are treated as “regularly traded on an established securities market” and the non-U.S. holder holds more than 5% of the total fair market value of the shares of common stock of U.S. Gold outstanding (on a non-diluted basis) at the relevant determination time;

	•	In the case of a non-U.S. holder who owns only exchangeable shares (actually and constructively, other than shares of common stock of U.S. Gold constructively owned by reason of ownership of exchangeable shares), either:


	•	The exchangeable shares are treated as “regularly traded on an established securities market” and such non-U.S. holder holds more than 5% of the total fair market value of the exchangeable shares outstanding at the relevant determination time, or

	•	The exchangeable shares are not treated as “regularly traded on an established securities market,” but the shares of common stock of U.S. Gold are “regularly traded on an established securities market,” and such non-U.S. holder holds exchangeable shares with a fair market value on the relevant date of determination greater than 5% of the total fair market value of the shares of common stock of U.S. Gold outstanding (on a non-diluted basis) on such date;


	•	In the case of a non-US holder who actually or constructively owns shares of common stock of U.S. Gold or exchangeable shares, such shares and exchangeable shares are not treated as “regularly traded on an established securities market.”

The offerors expect that the shares of common stock of U.S. Gold will be traded on the AMEX and the TSX, and that the exchangeable shares will be traded on the TSX. AMEX and the TSX should each be considered an “established securities market” for FIRPTA purposes. The shares of common stock of U.S. Gold trading on the AMEX generally will be considered to be “regularly traded” on AMEX for FIRPTA purposes for any calendar quarter during which they are regularly quoted by brokers or dealers making a market in such shares within the meaning of applicable Treasury regulations.

If income from the sale or exchange of exchangeable shares or shares of common stock of U.S. Gold is subject to tax based on FIRPTA, the transferee of such shares may be required to deduct and withhold a tax equal to 10 percent of the amount realized on the disposition, unless certain exceptions apply. Any tax withheld may be credited against the U.S. federal income tax owed by the non-U.S. holder for the year in which the sale or exchange occurs.

The foregoing summary of the possible application of FIRPTA rules to non-U.S. holders is only a summary of certain material aspects of these rules. If at any time the exchangeable shares are traded on an established securities market located in the United States, different rules, not described herein, may apply. Because the U.S. federal income tax consequences to a non-U.S. holder under FIRPTA may be significant and are complex and subject to uncertainty, non-U.S. holders are urged to discuss those consequences with their tax advisors.

Backup Withholding and Information Reporting

Information returns may be filed with the U.S. Internal Revenue Service in connection with payments on the shares of common stock of U.S. Gold or exchangeable shares and the proceeds from a sale or other disposition of such stock. Holders of shares of common stock of U.S. Gold or exchangeable shares may be subject to U.S. backup withholding tax on these payments if they fail to provide their taxpayer identification numbers to the paying agent and comply with certification procedures or otherwise establish an exemption from backup withholding. The amount of any backup withholding from a payment will be allowed as a credit against the holder’s U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is timely furnished to the U.S. Internal Revenue Service.

COMPARISON OF SHAREHOLDER RIGHTS

Comparison of Rights of Holders of U.S. Gold Common Stock and White Knight Common Shares

U.S. Gold is a corporation organized in the United States and the rights of our shareholders are governed by the Colorado Business Corporation Act, or the Colorado Act, and our articles of incorporation, as amended, and bylaws. White Knight is a corporation organized in the Province of British Columbia and the rights of its shareholders are governed by the Business Corporations Act (British Columbia), referred to as the BCBCA, and other laws of Canada, and White Knight’s articles and notice of articles. Following the consummation of the offer, the subsequent acquisition transaction, and the exchange of the exchangeable shares, White Knight’s shareholders will become our shareholders and, as such, their rights will be governed by the Colorado Act and our articles of incorporation and bylaws.

The following is a summary of the material differences between the rights of holders of White Knight shares and the rights of holders of our shares. This summary is not a complete comparison of rights that may be of interest, and you should therefore read the full text of the respective corporate charters, articles and bylaws, as applicable, of White Knight and U.S. Gold.


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights

Authorized Capital Stock	White Knight’s authorized capital share structure is an unlimited number of common shares without par value.	Following shareholder approval at our special meeting in connection with the strategic offers, our authorized capital stock will be 250,000,001 shares consisting of 250,000,000 shares of common stock, no par value, and one share of preferred stock, no par value, designated Series A Special Voting Preferred Stock.

Dividends	Dividends may be declared at the discretion of White Knight’s board, subject to the rights of any shareholder holding shares with special rights to dividends. Dividends may be paid in cash, property or shares of capital stock.	Our articles of incorporation provide that, and pursuant to the Colorado Act, our board may declare dividends. Dividends may be paid in cash, in property or in shares of capital stock.

Size of the Board	The BCBCA provides that a public corporation must have at least three directors. White Knight’s articles provide that the number of first directors (those directors set forth in White Knight’s notice of articles) is set at 5. The size of the board may be increased or decreased by the shareholders from time to time by ordinary resolution. If any director retires and no new director is elected, the size of the board is set at the number of directors who are actually in office.	Our bylaws provide that there shall be seven directors and the board may increase or decrease, to not less than three, the number of directors by resolution.

Removal and Retirement of Directors	Under the BCBCA, a director may be removed before the expiration of his or her term by a special resolution. White Knight’s articles provide that the shareholders may by special resolution remove any director and by ordinary resolution appoint another person to fill the vacancy. If the shareholders do not elect or appoint a director to fill the vacancy simultaneously with the removal of a	Under our bylaws, at a meeting called for the purpose of removing directors, shareholders may, remove the entire board or any lesser number of directors, with or without cause by a majority vote of the shares entitled to vote at an election of directors.


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights

	director, the remaining directors or shareholders may elect or appoint a director to fill the vacancy.

Directors’ Term	Under White Knight’s articles, at each annual general meeting, shareholders entitled to vote at the annual general meeting must elect the entire board. If White Knight does not hold an annual general meeting, the directors appointed at the last annual general meeting shall continue in office until a director’s successor is elected or appointed or the date on which a director otherwise no longer holds office under the BCBCA or White Knight’s articles.	Our bylaws, as amended, provide that each director elected shall hold office until such director’s successor is elected and qualified.

Filling Vacancies on the Board	Under the BCBCA and White Knight’s articles, the directors may appoint a person as a director either to fill a vacancy on the board or as an addition to the board. The number of additional directors so appointed, however, cannot at any time exceed one-third of the number of first directors or one-third of the number of current directors who were elected or appointed pursuant to the articles. Any additional director shall hold office until the next annual general meeting, but shall be eligible for re-election at such meeting. Under White Knight’s articles, if there are fewer directors in office than the number set in the articles as a quorum of directors (a majority of current directors or as set by the board), the board may only act to appoint directors up to the number set in the articles as a quorum of directors or may call a shareholder meeting to fill those vacancies. If White Knight has no directors or fewer directors in office than the number set in White Knight’s articles as a quorum of directors, shareholders may elect or appoint directors to fill vacancies.	Our bylaws provide that any vacancy occurring in our board may be filled by the affirmative vote of a majority of our remaining directors, even if less than a quorum. A director elected to fill a vacancy shall be elected for the unexpired term of such director’s predecessor in office, and shall hold such office until his successor is duly elected and shall qualify. If a directorship is to be filled by reason of an increase in the number of directors, either a majority of the directors then in office or a majority of shareholders, may elect the successor. The director so chosen shall hold office until the next annual meeting and until such director’s successor has been elected and shall qualify.

Required Vote for Certain Transactions	Under the BCBCA, certain extraordinary corporate actions, such as continuances, certain amalgamations, sales, leases or other dispositions of all, or substantially all of, the property of a corporation (other than in the ordinary course of business), liquidations, dissolutions and certain arrangements, are required to be approved by special resolution of the shareholders. For White Knight, a special resolution means a resolution passed at a general	To effect a merger or share exchange under the Colorado Act, a corporation’s board must approve and adopt a plan of merger or plan of share exchange and recommend such plan to the shareholders. Such plan must be adopted by a majority of the shareholders of the corporation entitled to vote thereon unless the articles of incorporation require a greater vote. Under the Colorado Act, a corporation may sell, lease, exchange or otherwise dispose of all, or substantially all, of its


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights

	meeting by a majority of at least two- thirds of the votes cast on the resolution. In certain cases, an action that prejudices or interferes with a right or special right attached to issued shares of a class or series of shares must be approved separately by the holders of the class or series of shares being affected.	property other than in the regular course of business on the terms and conditions and for the consideration determined by the board, if the board proposes and a majority of the shareholders entitled to vote approve the transaction. Our articles of incorporation and bylaws do not require a greater vote.

Calling a Meeting of Shareholders	Under White Knight’s articles, the directors have the power at any time to call special meetings of shareholders. Under the BCBCA, the holders of not less than 5% of the issued shares of a corporation that carry the right to vote at a general meeting may requisition that the directors call a meeting of shareholders. Upon meeting the technical requirements set out in the BCBCA, the directors must call a meeting of shareholders to be held not more than four months after receiving the requisition. If the directors do not call such meeting within 21 days after receiving the requisition, the requisitioning shareholders or any of them holding in aggregate not less than 2.5% of the issued shares of the corporation that carry the right to vote at general meetings may call the meeting.	Our bylaws provide that a special meeting of shareholders may be called at any time by the president, by a majority of the board or upon written demand by shareholders holding 10% or more of all the votes entitled to be cast on any issue proposed to be considered at the meeting.

Quorum of Shareholders	White Knight’s articles provide that a quorum for the transaction of business at any general meeting of shareholders is two shareholders or proxyholders representing two shareholders, or one shareholder and a proxyholder representing another shareholder, in both cases personally present at the commencement of the meeting and holding or representing by proxy in the aggregate not less than 5% of the issued shares of a class of shares the holders of which are entitled to attend and vote at such meeting. If White Knight only has one shareholder, a quorum is one person, who is, or who represents by proxy, that shareholder.	Our articles of incorporation provide that the holders of one-third of our stock entitled to vote at the meeting, present in person or represented by proxy, constitutes a quorum at any meeting of our shareholders.

	If within one half hour from the time appointed for a general meeting a quorum is not present, the general meeting, if convened by requisition of the shareholders, shall be dissolved. In any other case the meeting shall stand adjourned to the same day in the next week at the same time and place. If at such adjourned meeting a quorum is not present within one half


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights

	hour from the time appointed, the person or persons present and being or representing by proxy, a shareholder or shareholders entitled to attend and vote at the meeting shall constitute a quorum.

Notice of Meeting of Shareholders	Under the BCBCA, notices of the date, time and place of a general meeting of shareholders must be sent not less than 21 days nor more than two months before the meeting to each director and to each shareholder entitled to attend the meeting. Under White Knight’s articles, the notice for a shareholder meeting for which special business will be conducted must state the nature of the special business to be discussed or approved. If a document is being considered by shareholders, that document must be attached to the notice.	The Colorado Act and our bylaws provide that, whenever shareholders are required or permitted to take any action at a meeting, a written notice of the meeting stating, among other things, the place, date and time of the meeting must be given not less than ten nor more than 60 days before the date of the meeting to each stockholder entitled to vote at the meeting. Moreover, if the number of our authorized shares is to be increased, at least 30 days written notice of the shareholder meeting must be given.

Record Date for Notice of Meetings of Shareholders	The BCBCA and White Knight’s articles provide that the directors may fix in advance a date as the record date for the determination of shareholders entitled to receive notice of and vote at a meeting of shareholders, but such record date shall not precede the meeting date (i) by more than two months or (ii) four months in the case of a meeting requisitioned by shareholders. If White Knight is a public company, the record date shall not be less than 21 days prior to the meeting date. If White Knight is not a public company, the record date shall not be less than 10 days prior to the meeting date. If no record date is fixed, the record date for the determination of shareholders entitled to receive notice of a meeting of shareholders shall be at 5:00 p.m. on the day immediately preceding the day on which the notice is given or, if no notice is given, the beginning of the meeting.	Under the Act and our bylaws, our board may fix in advance a date as the record date, provided that such date is not less than 10 days nor more than 50 days prior to the meeting. If our board does not fix the record date, the record date shall be 30 days prior to the shareholder meeting.

Dissenters’ or Appraisal Rights	The BCBCA provides that shareholders of a corporation are entitled to exercise dissent rights in respect of certain matters and to be paid the fair value of their shares in connection therewith. The dissent right is applicable where the corporation resolves to: • alter its articles to alter the restrictions on the powers of the corporation or on the business it its permitted to carry on;	The Colorado Act provides that a holder of shares of any class or series has the right, in certain circumstances, to dissent and obtain fair value of his or her shares. The Colorado Act grants these dissenters’ rights in the case of mergers or consolidations and certain sales or transfers of assets or a purchase of assets for stock. No dissenters’ rights are available for shares of any class or series that is listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities
	• approve certain amalgamations;


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights

	• approve an arrangement, where the terms of the arrangement permit dissent;	Dealers, Inc. or held of record by more than 2,000 shareholders, unless the agreement of merger or consolidation requires the holders to accept for their shares anything other than:
	• sell, lease or otherwise dispose of all or substantially all of its undertaking; or • continue the corporation into another jurisdiction.	• shares of stock of the surviving corporation; • shares of stock of another corporation that are either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 shareholders;
		• cash in lieu of fractional shares of the stock described in the two preceding bullets; or
		• any combination of the above.
		In addition, dissenters’ rights are not available to holders of shares of the surviving corporation if the merger did not require the vote of the shareholders of the surviving corporation.

Indemnification of Directors and Officers	Under the BCBCA, a corporation may indemnify an individual who is or was a director or officer of the corporation. However, indemnification is prohibited if: • such eligible party did not act honestly and in good faith with a view to the best interests of such corporation (or the other entity, as the case may be); and • in the case of a proceeding other than a civil proceeding, such eligible party did not have reasonable grounds for believing that such person’s conduct was lawful. The BCBCA allows for the corporation to pay the expenses actually and reasonably incurred by the eligible party, provided that, the corporation receives from such eligible party an undertaking to repay the amounts advanced if it is ultimately determined that such payment is prohibited.	Our bylaws provide that we shall indemnify any person who is made or threatened to be made a party to any threatened, pending or completed action or suit or proceeding by reason of the fact that such person is or was a director, officer, employee or agent of U.S. Gold or is or was serving at our request as a director, officer, employee or agent of another entity against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner he or she reasonably believed to be in the best interests of U.S. Gold; but no indemnification shall be made by us in respect of any claim, issue, or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of his or her duty to U.S. Gold unless and only to the extent that the court determines upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses which the court deems proper. Such

	Despite the foregoing, on application of a corporation or eligible party, a court may:

	• order a corporation to indemnify an eligible party in respect of an eligible proceeding;


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights

	• order a corporation to pay some or all of the expenses incurred by an eligible party in an eligible proceeding; • order enforcement of or any payment under an indemnification agreement; • order the corporation to pay some or all of the expenses actually and reasonably incurred by a person in obtaining the order of the court; and/or • make any other order the court considers appropriate. White Knight’s articles require White Knight to indemnify directors of White Knight, former directors of White Knight or alternate directors of White Knight and their heirs and legal personal representative against all judgments, penalties, fines or amounts paid in settlement to which that person is or may be liable, and White Knight must pay the expenses actually and reasonably incurred by that person after the final disposition of any legal proceeding or investigative action, whether current, threatened, pending or completed, for which the director, former director or alternate director of White Knight has been made a party or is found liable. White Knight’s articles also provide that White Knight may indemnify any other person. The failure of a director, alternate director or officer of White Knight to comply with the BCA or the articles will not invalidate any indemnity that person is entitled to under the articles.	indemnification is authorized and conditioned upon a determination of a majority of our disinterested directors, or if no such quorum is available, by independent legal counsel in a written opinion, that the indemnification of such person is proper in the circumstances because such person has met the standard of conduct. Our bylaws also provide that to the extent a director, officer, employee or agent of U.S. Gold has been successful on the merits in defense of any action, suit or proceeding referred to above or defense of any claim, issue or matter, he or she shall be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with such defense. In addition, the Colorado Act and our bylaws allows for the advance payment of expenses of an officer or director who is indemnified prior to the final disposition of an action, provided that, in the case of a current director or officer, such person undertakes to repay any such amount advanced if it is later determined that such person is not entitled to indemnification with regard to the action for which the expenses were advanced. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

Director Liability	Under the BCBCA, directors of a corporation who vote for or consent to a resolution that authorizes the corporation to do any of the following are jointly and severally liable to restore to the corporation any amount paid or distributed as a result and not otherwise recovered by the corporation: • carry on its business or exercise any power that it is restricted by its articles from carrying on or exercising;	Our articles of incorporation provide that directors shall not be personally liable to U.S. Gold or our shareholders for monetary damages for breach of fiduciary duty, except as prohibited by the Colorado Act, as follows: • for any breach of the director’s duty of loyalty to U.S. Gold or its shareholders;
	• pay a commission or allow a discount contrary to the provisions of the BCBCA;	• for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
		• for unlawful dividends under the Colorado Act; or


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights


	• pay a dividend or acquire or redeem any of its shares where there are reasonable grounds for believing that the corporation is insolvent or the payment of the dividend or the acquisition or redemption would render the corporation insolvent; or	• for any transaction from which the director derived an improper personal benefit.
	• indemnify a person in contravention of the BCBCA.
	A director is not liable for the foregoing if the director relied, in good faith, on:

	• financial statements of the corporation represented to the director by an officer of the corporation or in a written report of the auditor of the corporation to fairly reflect the financial position of the corporation;
	• a written report of a lawyer, accountant, engineer, appraiser or other person whose profession lends credibility to a statement made by that person;
	• a statement of fact represented to the director by an officer of the corporation to be correct; or
	• any record, information or representation that the court considers provides reasonable grounds for the actions of the director, whether or not that record was forged, fraudulently made or inaccurate.
	Furthermore, a director is not liable if the director did not know and could not reasonably have known that the act done by the director or authorized by the resolution voted for or consented to by the director was contrary to the BCBCA.

Interested Shareholder Transactions	The rules or policies of certain Canadian securities regulatory authorities, including Ontario Securities Commission, or OSC, Rule 61-501 and Policy Statement Q-27 of the Commission des values moblieres du Quebec, or AMF Regulation Q-27, contain requirements in connection with ‘‘related party transactions.” A related party transaction means, generally, any transaction by which an issuer, directly or indirectly, completes one or more specified transactions with a related party including purchasing or disposing of an asset, issuing securities and assuming liabilities. A ‘‘related party” is defined in OSC Rule 61-501 and AMF Regulation


	White Knight Shareholder Rights	U.S. Gold Shareholder Rights

	Q-27 and includes directors and senior officers of the issuer and holders of voting securities carrying more than 10% of the voting rights attaching to all issued and outstanding voting securities or of a sufficient number of any securities of the issuer to materially affect control of the issuer.

	OSC Rule 61-501 and AMF Regulation Q-27 require more detailed disclosure in the proxy material sent to securityholders in connection with a related party transaction, and, subject to certain exceptions, the preparation of a formal valuation with respect to the subject matter of the related party transaction and any non cash consideration offered in connection therewith, and the inclusion of a summary of the valuation or the entire valuation in the proxy material. OSC Rule 61-501 and AMF Regulation Q-27 also require that, subject to certain exceptions, an issuer shall not engage in a related party transaction unless approval of the disinterested shareholders of the issuer or the related party transaction has been obtained.

	The Colorado Act and our articles of incorporation and bylaws do not prevent us from engaging in a transaction with an interested shareholder.

Transactions with Directors and Officers	Under the BCBCA, subject to certain exceptions, a director or senior officer of a corporation holds a ‘‘disclosable interest” in a contract or transaction if: (i) the contract is material to the corporation; (ii) the corporation has entered, or proposes to enter, into the contract or transaction; and (iii) the director or senior officer has a direct or indirect material interest in the contract or transaction. Subject to certain exceptions under the BCBCA and unless the court orders otherwise, a director or senior officer of a corporation is liable to account to the corporation for any profit that accrues to the director or senior officer under or as a result of a contract or transaction in which the director or senior officer holds a disclosable interest. The exemptions from the requirement to account to the corporation for any profit include where the disclosable interest is disclosed to the directors of the corporation and the directors approve of the contract or transaction with any	Under the Colorado Act and our articles of incorporation, contracts and transactions between us and one or more of our directors and officers, or between us and any other entity in which one or more of our directors or officers are directors or officers or have a financial interest may be void or voidable unless: (i) the material facts of the director’s or officer’s relationship or interest are disclosed or known to the board or committee and the board or committee authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, (ii) the material facts of the director’s or officer’s relationship or interest are disclosed or known to the shareholders and the contract or transaction is approved in good faith by a vote of the shareholders, or (iii) the contract or transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board, a committee or the shareholders.


		White Knight Shareholder Rights		U.S. Gold Shareholder Rights

		directors that hold a disclosable interest abstaining or the contract is approved by a special resolution of the shareholders. If all directors have a disclosable interest in a contract or transaction, any or all of those directors may vote on a directors’ resolution to approve the contract or transaction. Directors with a disclosable interest may be counted in the quorum at the directors’ meeting to approve the contract or transaction whether or not such directors vote at the directors’ meeting. White Knight’s articles also provide that a director or senior officer who holds any office or possesses any property interest that conflicts materially with his or her duties or interests as a director or senior officer must disclose the nature of such conflict to the board.		Our articles of incorporation provide that the officers, directors and other members of our management shall be subject to the doctrine of ‘corporate opportunities’ only insofar as it applies to business opportunities in which U.S. Gold has expressed an interest as determined from time to time by the board as evidenced by resolutions appearing in our minutes. Once such areas of interest are delineated, all such business opportunities within such area of interest which come to the attention of the officers, directors, and other members of our management shall be disclosed promptly to U.S. Gold and made available to us. Our board may reject any business opportunity presented to it and thereafter any officer, director or other member of management may avail himself or herself of such opportunity. Until such time as U.S. Gold, through our board, has designated an area of interest, our officers, directors and other member of management shall be free to engage in such areas of interest on their own.

				In addition, we adopted a corporate opportunity policy that defines the business opportunities in which we have an interest and prohibits our officers and directors from taking advantage of those opportunities without the approval of a majority of the disinterested directors or a committee of our board appointed for that purpose.

VALUATION REQUIREMENTS FOR INSIDER BIDS

The offer is an “insider bid” within the meaning of applicable provincial securities legislation by virtue of Robert R. McEwen’s equity interests in both U.S. Gold and White Knight. As a result, a formal valuation of White Knight common shares and of the consideration being offered in exchange for them under the offer is required in the absence of waivers or exemptions. Exemptions from the insider bid valuation requirement are contained in Canadian OSC Rule 61-501 and AMF Regulation Q-27 and may be relied upon if neither the offeror nor any joint actor with the offeror has, or has had within the preceding 12 months, any board or management representation in respect of the offeree issuer or has knowledge of any material information concerning the offeree issuer or its securities that has not been generally disclosed. Neither we nor any person acting jointly or in concert with us have had board or management representation at White Knight or have any such knowledge with respect to White Knight. Accordingly, in making the offer, we are relying upon the foregoing valuation exemptions. We have obtained waivers of the valuation requirements from the securities regulators of each of the other provinces where a valuation would be otherwise required.

PRIOR VALUATIONS

U.S. Gold and our directors and senior officers, after reasonable inquiry, are not aware of any prior valuations, as defined in applicable provincial legislation relating to insider bids, of White Knight or of its material assets or securities within the 24-month period preceding the date of the offer.

EXPENSES OF THE OFFER

We estimate the total amount of the fees and expenses related to the strategic offers will be approximately $11 million.

REGULATORY MATTERS

Our obligation to accept for purchase and pay for White Knight common shares tendered in the offer is conditional upon, among other things, obtaining all governmental or regulatory consents or approvals that U.S. Gold, in our sole discretion, views as necessary or desirable to enable us to consummate the offer, on terms and conditions satisfactory to us. See the section entitled “The Offer — Conditions of the Offer” on page 43 of this prospectus.

Competition Act (Canada)

Our acquisition of White Knight common shares in the offer is not a transaction which requires pre-merger notification to the Commissioner of Competition appointed under Part IX of the Competition Act (Canada), or the Commissioner. Whether or not a pre-merger filing is required, however, the Commissioner may apply to the Competition Tribunal, a special-purpose quasi-judicial tribunal empowered to deal with certain matters under the Competition Act (Canada), to seek relief in respect of merger transactions (including share acquisitions) and, if the Competition Tribunal finds that a merger is likely to prevent or lessen competition substantially, it may order that the merger not proceed or, in the event that the merger has been completed, order its dissolution or the disposition of some of the assets or shares involved. Proceedings under the merger provisions of the Competition Act (Canada) may be instituted by the Commissioner for a period of three years after a merger transaction has been substantially completed. We are not aware of any grounds upon which such proceedings could be taken.

Investment Canada Act

The acquisition of White Knight common shares by us in to the offer is not a transaction which is subject to governmental review or notification pursuant to the Investment Canada Act (Canada).

Hart-Scott-Rodino Act

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the rules promulgated thereunder by the United States Federal Trade Commission, or the FTC, certain transactions, including certain tender offers, may not be consummated unless notification has been given and certain information has been furnished to the FTC and the Antitrust Division of the United States Department of Justice and certain waiting period requirements have been satisfied. We have determined that the offer is not subject to the notification and reporting requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

Filings Under Other Jurisdictions

We have determined that aside from the Canadian requirement described herein, filings under foreign jurisdictions are not required.

Canadian Securities Regulatory Matters

The distribution of the shares of our common stock and exchangeable shares under the offer is being made pursuant to statutory exemptions from the prospectus qualification and dealer registration requirements under applicable Canadian securities laws.

Although the resale of shares of common stock of U.S. Gold and exchangeable shares issued under the offer is subject to restrictions under the securities laws of certain Canadian jurisdictions, shareholders in such jurisdictions generally will be able to rely on statutory exemptions from such restrictions.

United States Securities Regulatory Matters

We have filed a registration statement with the SEC on Form S-4 registering the issuance of shares of common stock of U.S. Gold and exchangeable shares to be offered in connection with the offer. One of the conditions of the offer is that such registration statement has become and remains effective until the expiry time. See the section entitled “The Offer — Conditions of the Offer” on page 43 of this prospectus.

ACCOUNTING TREATMENT

If consummated, the transaction described in this prospectus will be accounted for as a purchase transaction, with U.S. Gold as the acquirer of White Knight. The offer is being made only for White Knight’s common shares and is not being made for any warrants, options or other securities that may entitle the holder to acquire common shares of White Knight. After completion of the offer, we may implement a statutory plan of arrangement or similar transaction to acquire full ownership of White Knight. We expect we would structure a subsequent acquisition transaction so that warrants to purchase White Knight common shares would be exchanged for warrants to purchase exchangeable shares of Canadian Exchange Co. and U.S. Gold would assume or adopt the White Knight stock option plan so that options under that plan would be exercisable for shares of common stock of U.S. Gold. As a result, for purposes of preparing the financial statements attached as Appendix F (Unaudited Pro Forma Consolidated Financial Statements of U.S. Gold) and Appendix G (Unaudited Pro Forma Consolidated Supplementary Financial Statements of U.S. Gold), the options to be issued by U.S. Gold and the warrants to purchase exchangeable shares of Canadian Exchange Co have been included as part of the purchase price consideration based on the outstanding warrants and options, as disclosed in the most recent publicly available financial statements of each of White Knight, Nevada Pacific and Tone Resources.

DEPOSITARY

We have engaged Kingsdale Shareholder Services Inc. to act as depositary for the receipt of certificates in respect of White Knight common shares and related letters of acceptance and transmittal and notices of guaranteed delivery tendered in the offer and for the payment for White Knight common shares purchased by us under the offer. The depositary will receive reasonable and customary compensation from us for its services relating to the offer and will be reimbursed for certain out-of-pocket expenses. We have also agreed to indemnify the depositary against certain liabilities and expenses in connection with the offer, including certain liabilities under the securities laws of Canada.

Questions and requests for assistance concerning the offer should be made directly to the depositary.

DEALER MANAGER AND SOLICITING DEALER GROUP; INFORMATION AGENT

United States

We have retained Georgeson Securities Corporation, or Georgeson Securities, as our dealer manager in the United States in connection with the offer. Georgeson Securities will receive customary compensation for their services in connection with the transactions contemplated by the offer, including a base fee of $50,000 plus a fee of $0.00333 per White Knight common share for each such common share held by White Knight shareholders resident in the United States that are deposited and accepted for purchase by us under the offer. In addition, Georgeson Securities will be reimbursed for out-of-pocket expenses, including reasonable expenses of counsel and other advisors. We have agreed to indemnify Georgeson Securities and its affiliates against various liabilities and expenses in connection with its services in connection with the transactions contemplated by the offer, including various liabilities and expenses under securities laws. Prior to the strategic offers, we had no past business relationship with Georgeson Securities.

We have retained Georgeson Inc. to act as information agent in the United States in connection with the offer. Georgeson Inc. will receive reasonable and customary compensation from us for services in connection with the

offer, will be reimbursed for certain out-of-pocket expenses and will be indemnified against certain liabilities, including liabilities under securities laws and expenses incurred in connection therewith.

White Knight shareholders resident in the United States should contact Georgeson Inc. or their broker or dealer for assistance in accepting the offer and in depositing White Knight common shares with the depositary, Kingsdale Shareholder Services Inc.

Canada and Countries Outside of the United States

We have retained GMP Securities L.P. as our international dealer manager in Canada and other countries outside of the United States in connection with the offer and to provide various financial advisory services to U.S. Gold in connection with the offer. GMP Securities will receive customary compensation for their services in connection with the transactions contemplated by the offer and will be reimbursed for out-of-pocket expenses, including reasonable expenses of counsel and other advisors. We have agreed to indemnify GMP Securities and its affiliates against various liabilities and expenses in connection with its services in connection with the transactions contemplated by the offer, including various liabilities and expenses under securities laws. From time to time, GMP Securities and its affiliates may actively trade the debt and equity securities of U.S. Gold and White Knight for their own account or for the accounts of customers and, accordingly, may hold a long or short position in those securities. GMP Securities has in the past performed various investment banking and financial advisory services for us for which it has received customary compensation.

GMP Securities has the right to form an international soliciting dealer group comprised of members of the Investment Dealers Association of Canada to solicit acceptances of the offer from persons who are not resident in the United States. Each member of the international soliciting dealer group, including GMP Securities, is referred to herein as an international soliciting dealer. We have agreed to pay each international soliciting dealer a fee of $0.01 for each common share held by White Knight shareholders who are not resident in the United States that are deposited and accepted for purchase by us under the offer. The aggregate amount payable to any international soliciting dealer with respect to any single depositing holder of White Knight common shares will be not less than $25.00 nor more than $1,500.00, provided that such holder deposits no less than 1,000 White Knight common shares. If White Knight common shares deposited and registered in a single name are beneficially owned by more than one beneficial owner, the minimum and maximum amounts will be applied separately in respect of each such beneficial owner. We may require each international soliciting dealer to furnish evidence of such beneficial ownership satisfactory to us at the time of deposit.

We have retained Kingsdale Shareholder Services Inc. to act as international information agent in connection with the offer. Kingsdale Shareholder Services will receive reasonable and customary compensation from us for services in connection with the offer, will be reimbursed for certain out-of-pocket expenses and will be indemnified against certain liabilities, including liabilities under securities laws and expenses incurred in connection therewith.

White Knight shareholders resident outside of the United States should contact Kingsdale Shareholder Services, GMP Securities, or a broker or dealer for assistance in accepting the offer and in depositing White Knight common shares with Kingsdale Shareholder Services.

Other than as set forth above, we will not pay any fees or commissions to any broker, dealer or other person for soliciting deposits of White Knight common shares in the offer. We will reimburse brokers, dealers, commercial banks and trust companies and other nominees, upon request, for customary clerical and mailing expenses incurred by them in forwarding offering materials to their customers.

OFFEREES’ STATUTORY RIGHTS

Securities legislation in certain of the provinces and territories of Canada provides holders of White Knight common shares with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, if there is misrepresentation in a circular or a notice that is required to be delivered to such shareholders. However, such rights must be exercised within prescribed time limits. Holders of White Knight common shares should refer to the applicable provisions of the securities legislation of their province or territory for particulars of those rights or consult with a lawyer.

DIRECTORS’ APPROVAL

The contents of this prospectus have been approved, and the sending thereof to the shareholders has been authorized, by the board of directors of each of U.S. Gold and Canadian Exchange Co.

EXPERTS

Technical Reports

Certain scientific and technical information contained in Appendix A (Information Concerning White Knight) relating to White Knight’s Gold Pick Property is based on a report prepared by Mine Development Associates.

Independent Registered Accounting Firm

The consolidated financial statements of U.S. Gold Corporation as and for the years ended December 31, 2005, 2004 and 2003, the unaudited balance sheet of US Gold Canadian Acquisition Corporation as of September 30, 2006, incorporated by reference or appearing elsewhere herein, have been included in reliance upon the reports of Stark Winter Schenkein Co., LLP, independent registered accounting firm, upon the authority of said firm as experts in accounting and auditing.

The consolidated financial statements of White Knight included in this prospectus have been audited by Davidson & Company LLP, independent registered chartered accountants, as stated in its report appearing in Appendix B, and are included in reliance upon the report of such firm given upon its authority as experts in accounting and auditing.

LEGAL MATTERS

Matters of Canadian law, including the legality of the exchangeable shares offered hereby, will be passed upon on behalf of the offerors by, and the opinion contained in the section entitled “Material Canadian Federal Income Tax Considerations” on page 65 of this prospectus has been provided by, Fraser Milner Casgrain LLP. The legality of the common stock of U.S. Gold offered hereby will be passed upon on behalf of the offerors by Dufford & Brown, P.C. The opinions contained in the section entitled “Material U.S. Federal Income Tax Considerations” on page 75 of this prospectus have been provided by Hogan & Hartson LLP.

APPENDIX A

INFORMATION CONCERNING WHITE KNIGHT

In addition to the information filed by White Knight with the SEC under the Exchange Act, White Knight files audited annual financial statements, unaudited interim financial statements, management’s discussion and analysis, proxy statements or information circulars and other information with the SEDAR. The information concerning White Knight contained in this Appendix A has been taken from White Knight’s annual report on Form 20-F, for the fiscal year ended June 30, 2006, filed on October 20, 2006 and its Management’s Discussion and Analysis and Interim Financial Statements for the quarter ended September 30, 2006, filed on November 14, 2006. Although we have no reason to doubt the accuracy or completeness of the information relating to White Knight, we are not in a position to independently assess or verify this information, including White Knight’s financial statements. See the section entitled “Risk Factors — We have been unable to independently verify the reliability of information about White Knight, Nevada Pacific and Tone Resources contained in this prospectus” on page 22 of this prospectus.

The terms mineral reserve, proven mineral reserve and probable mineral reserve under Canadian standards are different than the definitions adopted by the SEC and applicable to U.S. companies filing reports with the SEC. Further, the terms mineral resource, measured mineral resource, indicated mineral resource and inferred mineral resource are recognized and required to be reported by Canadian regulations, but the SEC does not recognize these terms. As a result, the information contained in this Appendix A relating to mineral reserves and mineral resources may not be comparable to similar information publicly reported by U.S. companies. See the section entitled “Appendix A — Terms Relating to Mineral Reserves and Resources” on page A-39 of this Appendix A.

Some terms used in this Appendix A may be unfamiliar to you. We have provided a Glossary beginning on page A-37 for your reference.

Overview

The legal and commercial name of White Knight is White Knight Resources Ltd. White Knight is active in the mineral exploration sector. From 1986 to 1993, White Knight explored various properties in British Columbia and the Northwest Territories, Canada. In 1993, White Knight began to acquire gold exploration properties in Nevada and has focused solely on exploration of properties in Nevada since that time.

White Knight is a British Columbia-based mineral resource exploration company, engaged, through its subsidiaries, in the acquisition and exploration of precious metals properties, primarily gold. All of White Knight’s mineral exploration operations are located in the State of Nevada, United States, where White Knight’s operations have been based since 1993. White Knight continues to explore for projects to acquire in Nevada.

White Knight has been exploring for Carlin-type gold deposits in Nevada since 1993. White Knight has continued to follow its exploration plan whereby targets have been generated on a number of its 100% owned properties. During the 2006 exploration season, significant drill production difficulties have been encountered by White Knight. Drill availability is at an all time low and in an effort to alleviate this obstacle, White Knight is in the process of building its own drill rig. It is anticipated that this rig will be available in the near future.

To date, White Knight has had no revenue from its operations, nor is it dependent upon any patents, licenses or manufacturing processes. White Knight’s operations are dependent upon mineral exploration and mining rights and claims as well as the terms of option and/or joint venture agreements on those properties. White Knight currently holds interests in 18 properties in Nevada.

The exploration operations of White Knight are subject to regulation by several government agencies at the Federal, State, and local levels. White Knight believes that it is in compliance with all current regulatory requirements and does not anticipate any significant changes to these regulations which will have a material effect on White Knight’s operations.

A-1

Authorized and Outstanding Share Capital of White Knight

White Knight is authorized to issue an unlimited number of common shares without par value. Based on information provided to U.S. Gold by White Knight as of February 1, 2007, there were:


	•	59,434,972 White Knight common shares issued and outstanding;

	•	4,945,000 White Knight common shares issuable upon exercise of outstanding options; and

	•	0 White Knight common shares issuable upon exercise of outstanding warrants.

White Knight shareholders are entitled to receive notice of and attend any meetings of shareholders and to one vote per common share at all such meetings. Shareholders are entitled to receive such dividends as White Knight’s board of directors may declare from time to time, according to the number of shares held and subject to the rights, privileges, restrictions and conditions attaching to any other class of shares of White Knight. As of February 1, 2007, White Knight had approximately 65 record holders of its common shares.

Dividends and Dividend Policy

Based on publicly-available information, White Knight has never declared any dividends on White Knight common shares. Further, White Knight has not publicly stated that it has the intention to pay dividends in the future.

History and Development of White Knight

White Knight’s registered office is located at Suite 3350, 1055 Dunsmuir Street, Vancouver, British Columbia, Canada V7X 1L2 and its principal office is located at 922, 510 West Hastings Street, Vancouver, British Columbia, Canada V6B 1L8. White Knight is a reporting issuer in the Provinces of British Columbia and Alberta and files its continuous disclosure documents with the securities regulatory authorities in those provinces. These documents are available without charge at www.sedar.com.

White Knight was incorporated under The Company Act of British Columbia on December 18, 1986. White Knight’s articles were amended on January 31, 1995 to increase the authorized share capital from 10,000,000 White Knight common shares to 100,000,000 common shares without par value. White Knight completed a mandatory transition to the Business Corporations Act (British Columbia), or the BCBCA, on December 21, 2005. On March 29, 2004, the British Columbia legislature enacted the BCBCA and repealed the former act, which previously governed White Knight. The BCBCA removed many of the restrictions contained in the former act, including restrictions on the residency of directors, the place of annual general meetings and limits on authorized share capital. The BCBCA also uses new forms and terminology. Under the BCBCA, every company incorporated, amalgamated or continued under the former act must complete a mandatory transition rollover. Under the BCBCA, the directors of White Knight were permitted to approve and complete this mandatory transition rollover, effective June 20, 2005. At an annual general meeting held on November 26, 2005, White Knight’s shareholders approved, by a three-quarter majority vote, the removal of pre-existing restrictions based on the former act and no longer required under the BCBCA. At this meeting shareholders also approved amendments to White Knight’s Notice of Articles and authorized share capital. In addition, the shareholders approved new articles to bring White Knight’s charter documents into line with the incorporated BCBCA, altered the authorized capital of White Knight from 100,000,000 common shares without par value to an unlimited number of common shares without par value. The changes were effected under a new Notice of Articles on December 21, 2005.

During the three month period ended September 30, 2006, no stock options were granted, exercised or terminated and no warrants were exercised.

During the year ended June 30, 2006, White Knight received Cdn$6,175,733 from the exercise of 4,940,586 warrants. During the 2006 fiscal year, White Knight wrote off Cdn$143,783 and invested cash of Cdn$288,777 in mineral property interests and deferred exploration costs of Cdn$2,413,657. See the section entitled “White Knight’s Mineral Properties” on page A-3 of this Appendix A.

A-2

During the year ended June 30, 2006, White Knight issued Cdn$6,345,433 in capital stock: 40,000 shares were issued for mineral property interests at a deemed value of Cdn$72,000; 315,000 shares were issued on the exercise of stock options for net proceeds of Cdn$169,700; and 4,940,586 shares were issued pursuant to the exercise of warrants for net proceeds of Cdn$6,175,733.

There are ongoing drilling programs on the Cottonwood, Celt, Squaw Creek, New Pass and Patty properties. White Knight anticipates spending $2,000,000 or more during 2006 on further exploration of its properties.

White Knight’s Organizational Structure

White Knight has three subsidiaries:


	•	CUN Minerals, Inc., incorporated in Nevada, 100% directly owned by White Knight.

	•	White Knight Gold (U.S.) Inc., incorporated in Delaware, 100% directly owned by White Knight.

	•	Quito Gold Corporation, incorporated in Nevada, 100% directly owned by White Knight.

White Knight’s Mineral Properties

The following is a description of White Knight’s properties and the nature of White Knight’s interests in such properties. This section, entitled “White Knight’s Mineral Properties” was reviewed and the contents have been verified by White Knight’s Qualified Person, John M. Leask, P.Eng. The Qualified Persons for the Gold Pick Property analysis are Neil Prenn, Registered Professional Mining Engineer, and Peter Ronning, Professional Engineer, each of Mine Development Associates.

The Patty Property (formerly Indian Ranch)

The Patty Property, formerly known as the Indian Ranch property is located in Eureka County, Nevada and consists of 544 unpatented mining claims totaling 10,008 acres. White Knight owns a 30% undivided interest in the Patty Property. Chapleau Resources Ltd. owns a 10% undivided interest and Placer Dome U.S. Inc. owns a 60% undivided interest in the Patty Property. The Patty Property is without known mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

A-3

Acquisition of Patty Property

White Knight entered into an option agreement dated February 10, 1994 with the Damele family on the Patty Property. The agreement was subsequently amended through five separate amendments with the Damele family. Under the agreement and its amendments, White Knight earned a 100% leasehold interest in the Patty Property by issuing to the Damele family 100,000 common shares and an annual work commitment of 5,000 feet of drilling. The drill commitment was waived for the year ended February 10, 1996 in consideration of a $15,000 cash payment. Additionally, the original net smelter royalty held by the Damele family was amended for consideration of a $15,000 cash payment. Currently, the Damele family retains a 6% net smelter royalty, but White Knight may reduce the net smelter royalty to 3% in consideration of a $500,000 payment. White Knight’s lease on the Patty Property extends through February 10, 2014 or for so long thereafter as exploration, development or mining activity is being conducted on a continuous annual basis. White Knight has met all the required terms under the agreement to date.

Under an agreement with Chapleau Resources Ltd. dated May 26, 1997 and amended June 18, 2001, White Knight granted Chapleau the right to earn an interest in the Patty Property by making payments to White Knight totaling $400,000 and incurring exploration expenditures of $1,500,000. On June 25, 2001, Chapleau vested a 25% interest, thus reducing White Knight’s interest to 75%.

Under an agreement dated March 26, 2003 between White Knight, Chapleau and Placer Dome U.S. Inc., White Knight granted Placer Dome the right to earn an initial 60% interest in the Patty Property by paying $55,000 and incurring a minimum of $2,000,000 in work expenditures over a four-year period under the following schedule:


Expenditure	Minimum Work
Due Date	Expenditures ($)

March 25, 2004		100,000
March 25, 2005		300,000
March 25, 2006		600,000
March 25, 2007		1,000,000

Total		2,000,000

In August 2006, Placer Dome vested its 60% interest in the Patty Property and declined to elect to earn an extra 15% by financing a feasibility study. As a result of Placer Dome vesting its 60% interest, the interests of White Knight and Chapleau were reduced to 30% and 10%, respectively.

Location of and Access to Patty Property

The Patty Property lies 10 miles southeast of the Gold Acres-Cortez Window, and is located 17 air miles southeast of the Pipeline/South Pipeline gold mines and 38 air miles northwest of Eureka, Nevada. Access is via Nevada State Highway 278 south from Carlin for 48 miles, west on the JD Ranch Road for 41/2 miles, south for 12 miles to the Tonkin Ranch site, and then northwest for 5 miles. The south and central portions of the Patty Property can be traversed by unimproved dirt roads, and new roads are planned to provide drilling access to the north.

Regional and Property Geology of Patty Property

The Patty Property is located on the Cortez Trend. Lower-plate Paleozoic sediments underlies shallow volcanic and alluvial cover on much of the central and eastern portions of the Patty Property. Lower-plate carbonate rocks are not exposed at the surface, but drilling and mapping thus far indicate that about 10 square miles of the Patty Property is underlain by lower plate Paleozoic carbonate rocks of the Roberts Mountains Formation, Rabbit Hill Limestone, Nevada Group, or underlying dolomites of the Hanson Creek Formation. This covered window of Lower Plate rocks is present in the form of several uplifted or hoisted blocks. Roberts Mountains Formation rocks occur in the window and have been intersected in drill holes within 35 feet of the surface. Hydrothermal alteration is present over large areas of the property, and thick (up to 600 feet or more) zones of intense alteration in the form of silicification, decalcification or sanding, and argillization are present, as well as amorphous carbon or fine-grained sulfides. Anomalous gold and associated hydrothermal alteration is present across Patty in both Upper and Lower Plate rocks.

A-4

Previous Exploration History of Patty Property

Prior to White Knight’s acquisition of its interest in the Patty Property, Northern Dynasty Exploration Ltd. explored it in 1987. Northern Dynasty prepared a preliminary geologic map and drilled 4 holes totaling 1,130 feet. Hycroft Resources and Development Corporation then acquired the property and drilled 90 additional holes from 1988 to 1990 to an average depth of 114 feet. After White Knight acquired the Patty Property in 1994, exploration was conducted by Delta Gold Mining Corp. under an earn-in joint venture agreement on a combined land package comprised of the Patty Property and the Imperial property. Delta Gold completed an induced polarization survey, a CSAMT survey, and drilled 10 holes to an average depth of 501 feet. This drilling resulted in the discovery of an 80 foot wide zone of gold mineralization averaging 0.012 oz/ton gold. Delta Gold also intersected a higher-grade zone of 10 feet averaging 0.22 oz/ton gold. Delta Gold subsequently terminated the agreement. Under the Chapleau option agreement, 20 holes were drilled during 1997, 12 holes were drilled in 1998, four holes were drilled in 1999, and 11 holes were drilled in 2000 for a total of 45,100 feet in 47 holes. During 1999, a detailed gravity survey and a soil sampling grid program were also completed. Exploration expenditures under the Chapleau agreement totaled $1,500,000.

In 2001, Kennecott Exploration Company entered an option agreement with White Knight and Chapleau. Kennecott drilled 11 reverse circulation holes which intersected low-grade gold mineralization three miles south of the previously identified gold zones. Kennecott expended $531,100 before terminating the agreement.

During the 2005 field season, Placer Dome completed reverse circulation, or RC, drilling in three holes comprising 6,000 feet. As part of this campaign, Hole PIR 05-10 intersected a broad zone of Carlin-type mineralization grading 0.009 oz/ton Au over a thickness of 335 feet which included 30 feet grading 0.046 oz/ton Au.

Several holes angled off the same drill pad also intersected significant gold at what is interpreted to be the same host sequence. Highlights of the program occurred in drill hole PIR05-12 which was drilled at an angle of 70 ° and an azimuth of 350 ° from PIR05-10 and returned the following intervals: 0.023 oz/ton gold from 1370 feet to 1460 feet (90 feet) including 15 feet grading 0.057 oz/ton gold from 1380 feet to 1395 feet. Drill holes PIR05-11, PIR05-13, PIR05-14 and PIR05-15 were all drilled off the drill pad set-up for PIR05-10 and were lost above the target section. Drill hole PIR05-16 also intersected anomalous gold in what is projected as a down faulted block to the south of PIR05-10.

Current and Planned Exploration of Patty Property

During September 2006, Placer Dome commenced drilling. The planned program comprises 6,000 feet of reverse circulation drilling in 3 to 4 holes. Results from recent drilling provide the incentive for this drill program. Drill hole data from drilling executed between November 2005 and January 2006 show that a thick zone of gold mineralization is hosted within the Roberts Mountains Formation. Structural trends crossing this host will be tested with this drill program. Previously released drill hole PIR05-10 reported an intercept of 30 feet grading .046 oz/ton gold within a broad zone of low grade gold mineralization in the Roberts Mountains unit. Several holes angled off the same drill pad also intersected significant gold at what is interpreted to be the same host sequence. Highlights of the program occurred in drill hole PIR05-12 which was drilled at an angle of 700 and an azimuth of 3500 from PIR05-10 and returned the following intervals: 0.023 oz/ton gold from 1370 feet to 1460 feet (90 feet) including 15 feet grading 0.057 oz/ton gold from 1380 feet to 1395 feet. Drill holes PIR05-11, PIR05-13, PIR05-14 and PIR05-15 were all drilled off the drill pad set-up for PIR05-10 and were lost above the target section. Drill hole PIR05-16 also intersected anomalous gold in what is projected as a down faulted block to the south of PIR05-10. The assay interval from 2,620 feet to 2,720 feet returned .006 oz/ton gold over 100 feet with a high of .016 oz/ton gold over 5 feet.

A-5

Slaven Canyon Property

The Slaven Canyon Property is located in Lander County, Nevada, and totals 6,599 acres. White Knight has a 100% interest in 258 unpatented mining claims comprising 5,174 acres of the Slaven Canyon Property and has a lease on the remaining 1,425 acres, which are subject to net smelter royalties. The Slaven Canyon Property is without known mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Slaven Canyon Property

Since September 2001, White Knight has staked 258 unpatented mining claims comprising 5,174 acres. Since fiscal 2003, White Knight has signed lease agreements on 1,425 acres adjacent to White Knight’s staked claims. The leases called for the payment of approximately $32,430 on signing and escalating lease payments thereafter. The owners retain net smelter returns ranging from one-half of one percent to three and one-half percent with a buy down to one percent for $1,500,000. Annual holding costs for the property are estimated to be $81,885 for 2007, which includes $47,438 for the lease payments and $34,447 in federal and county fees.

Location of and Access to Slaven Canyon Property

The Slaven Canyon Property is located in the Northern Shoshone Range, Lander County, Nevada, approximately 14 miles southeast of Battle Mountain. The Slaven Canyon Property is traversed by numerous unimproved dirt roads traveling south from Battle Mountain.

Regional and Property Geology of Slaven Canyon Property

Rock units on the Slaven Canyon Property are dominated by chert, siltstone and limestone of the Ordovician Vinini Formation and Devonian Slaven Chert, both units of the Upper Plate Roberts Mountains Allochthon. These units are overlain on the east by Miocene basalt of the Northern Nevada Rift. Major northeast trending faults cut through the area and are believed to be a regional control to the localization of gold mineralization. The main zone

A-6

of gold mineralization on the property measures about 2,400 feet east-west by 300 to 500 feet north-south. Select drill intercepts include:


Drill Hole	From (feet)		To (feet)		Interval (feet)		Gold (ounces per ton)

SC 9257		255		320		65		0.055
SC 9202		110		145		35		0.096
SC 9203		55		115		60		0.052
SC 9210		30		130		100		0.049
SC 55		105		145		40		0.050
SC 30		100		145		45		0.063
SC 27		185		210		25		0.083

Mineralization is open on the east and west end and to some degree down dip. A second area of gold mineralization occurs on the northern portion of the claims. The primary exploration target is a Carlin-type gold deposit in lower plate carbonate rocks or in carbonate units of the upper plate. Select drill hole intercepts from here include:


Drill Hole	From (feet)		To (feet)		Interval (feet)		Gold (ounces per ton)

SC 9014		60		85		25		0.066
SC 9239		50		75		25		0.054
SC 9213		20		30		10		0.063

The zone of mineralization is a shallow, mostly oxide, shallowly dipping tabular body hosted in upper plate siliclastic rocks. Gold mineralization is probably controlled by a shallow angle thrust fault. Alteration is dominantly argillization and sanding. Most holes in the vicinity of the main zone are between 200 feet to 300 feet deep with the deepest being 700 feet.

Previous Exploration History of Slaven Canyon Property

After the discovery of gold-bearing breccia outcrops, Resource Associates of Alaska staked claims at Slaven Canyon in 1984. Resource Associates conducted geologic mapping, rock and soil sampling, and trenching from 1984 to 1987. Nerco Exploration Company acquired Resource Associates in 1988 and Alta Gold Company joint-ventured the claims with Nerco later that year. Alta Gold began an aggressive drilling program and completed 59 shallow holes in 1988. An additional eight holes were drilled in 1989. Cyanide-shake metallurgical tests were conducted in 1990, followed by the drilling of 17 holes in 1991. Uranerz Exploration and Mining Limited leased the property in 1991 and completed a 57-hole drilling program in 1992. Bottle-roll tests were completed in 1993 after which a resource estimate was completed. Cameco acquired Uranerz in 1994 and terminated the lease. Cyprus Minerals Corp. leased the claims from Alta Gold later that year and drilled nine holes in the northwest part of the property before terminating the lease in 1995. Following Cyprus’ withdrawal, Alta Gold retained the claims from 1996 through 1999 but performed no further work on the Slaven Canyon Property. Alta Gold filed for bankruptcy in 2000 and relinquished the claims shortly thereafter.

Current and Future Exploration of Slaven Canyon Property

Work on the Slaven Canyon Property over recent seasons included 24 shallow reverse circulation holes and one deep core hole (DDH SL21). White Knight drilled the Slaven Canyon Property with two exploration objectives: 1) to establish the existence of, and depth to, lower-plate limestone host rocks, and 2) to establish a better understanding of the structural controls for the upper-plate hosted mineralization. Drill hole SL21, drilled to a final depth of 2,583 ft, encountered several thrust fault sequences. Deep in the hole, a 100 ft-thick, highly sheared micritic limestone was encountered, which was interpreted to be a piece of lower-plate, based on lithology. Diamond drill hole SL25 was completed 3 months later and reached a total depth of 3,088 ft. This hole was drilled through the known upper-plate resource and confirmed the grade and disseminated nature of gold mineralization, intersecting 50 ft @ 0.092 opt Au including 5 ft @ 0.380 opt Au. The hole also drilled the same thrusted and repeated sequences observed in DDH SL21. However, the hole, which included some limestone interbeds similar to the limestone

A-7

drilled in DDH SL21, remained in upper-plate rocks to the total depth drilled. White Knight believes that the shallow drilling at the Slaven Canyon Property (less than 1,000 ft) established strong exploration potential for a structurally controlled deposit of significant size in upper-plate host rocks, principally in quartzites which have yielded strong gold values both in drill holes and in surface samples (e.g. continuous chip samples of 25 feet @ 0.22 oz/ton Au in a roadcut).

It is White Knight’s intention to further explore the Slaven Canyon Property when a drill rig becomes available.

Celt Property

White Knight’s 100% owned Celt Property is located in Eureka County, Nevada, and consists of 608 unpatented mining claims totaling 12,569 acres. Teck Cominco American Incorporated has an option to earn an initial 51% interest in the Celt Property. The Celt Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Celt Property

White Knight has staked 608 unpatented mining claims located on Bureau of Land Management land since September 2003. In October 2004, White Knight entered into a property acquisition agreement with Teck whereby Teck was granted the option to earn an initial 51% interest in the Celt Property. The terms of the agreement provide for exploration expenditures of $4,000,000 and cash payments of $750,000 which must be incurred and paid to White Knight’s U.S. subsidiary in annual increments prior to December 31, 2008. Teck has completed a firm commitment to incur $500,000 in exploration expenditures by December 31, 2005. Upon Teck vesting its 51% interest, Teck and White Knight will form a joint venture to further develop the Celt Property. When the joint venture completes the earlier of $8.0 million in expenditures or a preliminary feasibility study, Teck will have a one-time option to elect to earn an additional 9% interest by funding and completing a feasibility study. Upon Teck earning its additional interest and the approval of a production plan, White Knight will have the option to request that Teck arrange financing for White Knight’s share of the capital costs required to develop the property. If White Knight exercises this option Teck shall commit to use its best efforts to arrange or provide project debt financing for not less than 60% of projected capital costs on a limited recourse basis after technical completion. If project costs exceed the amount available for debt financing and the parties elect nonetheless to put the property into production then at White Knight’s election Teck shall also arrange or provide White Knight’s share of equity financing on a loan basis at LIBOR plus 4%. During the earn-in period, Teck is responsible for all property holding costs.

A-8

Location of and Access to Celt Property

The Celt Property lies along the southern portion of the Cortez Trend. It is situated along the western edge of the Roberts Mountains. Access is by a network of all-weather roads.

Regional and Property Geology of Celt Property

The Celt Property lies over the Ordovician Vinini Formation which is dominantly chert and shale, but includes some limestone and greenstone units. The Celt Property follows more than four miles of strike length of a north-northwest trending fault zone where anomalous gold and pathfinder elements occur. The claims were staked to cover the gravel-covered area to the west of the fault.

Previous Exploration History of Celt Property

Gold was discovered in jasperoids along the eastern edge of the Celt Property in 1972 which led to prospecting and the staking of blocks of claims between 1972 and 1978. After the discovery of the nearby Gold Bar deposit in 1984, Atlas Precious Metals staked the entire area, but the property was not drilled. Cordex Syndicate leased Atlas’ claims in the area in 1994. Cordex conducted geologic mapping and grid rock and soil sampling, and drilled one exploration hole of less than 600 feet along the range front of the property before dropping the claims.

During the 2005 field season, Teck executed gravity and induced polarization surveys that defined a 7 kilometre long zone interpreted as the faulted western edge of a lower-plate horst block. Outcrops of dolomitized limestone along the zone are confirmation of shallowly buried lower-plate lithologies. Teck collected twenty-six representative rock chip samples of altered outcrops. Five of the samples (20% of samples collected) were mineralized as follows: 0.180 oz/ton Au, 0.142 oz/ton Au, 0.067 oz/ton Au, 0.008 oz/ton Au. Teck’s follow-up 2005 reverse circulation drilling program tested a geophysical/geological series of targets in the central portion of the property. Lower-plate carbonate host rocks were encountered at relatively shallow depths under a veneer of upper-plate siliclastics in 5 of 8 drill holes. Significant path finder elements, as well as anomalous gold, were encountered.

Current and Planned Exploration

In October 2006, Teck commenced a 6-10 hole, 8,000 foot reverse circulation drill program on the Celt Property. Management believes that the several mile-long gold soil/rock anomaly located along the west Roberts Mountains range front may be related to a gold system focused along horst bounding structures extending to the west of the 2005 drilling. The 2006 drilling campaign is designed to test this model.

A-9

Cottonwood Property

The Cottonwood Property is located in Eureka County, Nevada, and consists of 113 unpatented mining claims totaling 2,178 acres. White Knight currently has a 100% interest in 107 unpatented mining claims and has an option to purchase 100% interest in the other 6 unpatented mining claims. The Cottonwood Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Cottonwood Property

White Knight has staked 107 unpatented mining claims in the Cottonwood Property since October 2001. Under an agreement dated February 1, 2002, White Knight has leased from Gregory McN. French 6 adjacent unpatented mining claims known as the Jam Claims. Under the agreement, White Knight is required make cash payments and issue common shares to Mr. French under the following schedule:

Cash Option

Common Share

Payment Due Date

Payments ($)

Issuances

Initial Payment

1,000 (paid

)

None

February 1, 2003

1,000 (paid

)

20,000 (issued)

February 1, 2004

2,000 (paid

)

20,000 (issued)

February 1, 2005

2,000 (paid

)

20,000 (issued)

February 1, 2006

3,000 (paid

)

20,000 (issued)

February 1, 2007 and each year thereafter

5,000

None

Mr. French also retains a net smelter royalty on the Jam Claims which varies by ounces produced and the price of gold. On production greater than 50,000 ounces but less than 150,000 ounces, the net smelter royalty is 4%. For production of less than 50,000 ounces and greater than 150,000 ounces, the net smelter royalty varies from between 1% to 2%, depending upon the price of gold. Mr. French also retains a 1.5% net smelter royalty on minerals other than gold. White Knight has the option to acquire the net smelter royalty and purchase the Jam Claims from Mr. French for $50,000 at any time before the 10th anniversary date of the lease.

Annual holding costs for the Cottonwood Property are estimated to be $15,085 for 2007 in federal and county fees.

A-10

Location of and Access to Cottonwood Property

The Cottonwood Property is located at the headwaters of Cottonwood Creek in the central Roberts Mountains, approximately 30 miles northwest of the town of Eureka, Nevada. Access is by a network of improved all-weather roads.

Regional and Property Geology of Cottonwood Property

The Cottonwood Property lies on the Cortez Trend and encompasses a major north-northwest trending window-bounding fault where it is intersected by a west-northwest trending belt of mineralization which crosses the Roberts Mountains. The fault places a block of thick Ordovician Vinini Formation on the west in juxtaposition with Lower Plate Devonian carbonates on the east. Gold bearing jasperoid is developed on the southeast extension of this window bounding fault.

The Cottonwood Property contains the Pot Canyon mineralized zone, the French Trail and South French Trail mineralized zones, and the Wall mineralized zone. The Pot Canyon zone is still open for expansion in two directions. Significant intercepts from previous drilling at Pot Canyon include:


Drill Hole	From (feet)		To (feet)		Interval (feet)		Gold (ounces per ton)

114-29		55		135		80		0.047
114-34		60		165		105		0.021
114-36		145		205		60		0.044

At the South French Trail zone, about 3,000 feet north of Gold Canyon, Atlas intersected gold mineralization grading 0.015 opt gold to 0.044 opt gold over widths of 10 feet to 20 feet in five holes. Follow-up drilling was not conducted. At the Wall prospect south of Pot Canyon, Barrick intersected 30 feet of 0.048 opt gold in a window-bounding fault and did no follow-up drilling.

The target is a large Carlin-type deposit hosted in Devonian carbonate rocks along or east of the major window-bounding fault. The convergence of the window-bounding fault, the Roberts Mountains thrust fault, the east-west anticlinal axis, and the west-northwest-trending belt of gold mineralization produces an ideal exploration setting. Expansion of the Pot Canyon resource and South French Trail mineralization are also targets.

Previous Exploration History of Cottonwood Property

Barite occurrences in the area were prospected in the late 1970’s and in 1980, N.L. Baroid Division of N.L. Industries, Inc. located claims for barite in the central Cottonwood area. Prospecting during the gold boom of the early 1980’s led to claim groups being located by Chevron Resources Company in 1980 and by Mapco Minerals Corporation/Nerco in 1983 in the northern and southern parts of the Cottonwood area respectively. Chevron’s claims lapsed in 1983 and were restaked by Nerco. American Copper and Nickel Company and Phelps Dodge later leased and explored the claims staked by N.L. Baroid and Nerco. N.L. Baroid discovered the Pot Canyon gold zone in 1985. The property was acquired by Phelps Dodge in 1986 who continued to explore the property through 1990 until Atlas acquired their holdings in 1991. Atlas acquired the Nerco claims in 1990. The French Trail and South French Trail mineralized zones were drilled by Atlas in 1993.

Cordex leased the northern part of the Cottonwood area in 1995 and drilled a few holes. In 1997, Barrick leased most of Atlas’ claims in the area. Barrick drilled eight fairly deep holes in 1998 and intersected gold mineralization at the Wall prospect. Atlas’ claims were leased by Vengold (now American Bonanza) in 1999 after Barrick terminated its lease but conducted no work before relinquishing the property.

Drilling on the Cottonwood Property by previous operators identified several gold zones, but little follow-up work was ever conducted. The Pot Canyon deposit remains open in two directions, and gold mineralization discovered by drilling the South French Trail and Wall prospect were never followed-up.

In 2005, White Knight completed five shallow holes on the Cottonwood Property at the southern end of the target area where a hole drilled by Barrick Gold in the late 1990’s was reported to have significant gold in favorable host rocks. These follow-up drill holes around the Barrick hole failed to intersect significant gold mineralization in this area.

A-11

Current and Planned Exploration

During October 2006, White Knight commenced a four to eight hole, 5,000 to 10,000 ft drill campaign. This project covers a major window-bounding fault (Wall Fault) which places upper-plate rocks in direct contact with lower-plate Devonian limestones. The geologic similarities between the Wall Fault and the major ore forming Post Fault of the Carlin Trend are numerous. The 2006 effort will focus north of the 2005 drilling along the Wall Fault and the subparallel Wall Anticline, in the Pot Canyon and French Trail deposit areas where significant gold mineralization has been drilled and remains open for expansion.

Fye Canyon Property

The Fye Canyon Property is located in Eureka County, Nevada and comprises 345 unpatented mining claims on 6,320 acres. White Knight currently has a 100% interest, although Teck is holding an option to earn an initial 51% interest. The Fye Canyon Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Fye Canyon Property

White Knight staked 231 unpatented mining claims after acquiring 114 unpatented mining claims upon the execution of a mining lease agreement. Under the terms of the agreement, White Knight must pay annual advance royalty payments starting at $5,000 upon execution, and increasing by $5,000 per year to a maximum of $50,000 per year. White Knight must expend a minimum of $20,000 on exploration work on the property per year. The vendor retains a 2% net smelter royalty payable on production up to $1,000,000 after which it is reduced to 1% to a maximum of $5,000,000.

In October 2004, White Knight and Teck entered into an agreement which granted Teck an option to earn an initial 51% interest in the property by making cash payments to White Knight totaling $750,000 and incurring exploration expenditures of $4,000,000 in annual increments prior to December 31, 2008. Upon Teck earning a 51% interest in the property, Teck and White Knight will form a joint-venture on the Fye Canyon Property. When the joint-venture completes the earlier of $8.0 million in expenditures or a preliminary feasibility study, Teck will have the one-time option to elect to earn an additional 9% interest (for 60% total) in the property by funding and completing a feasibility study. Upon Teck earning its additional interest and the approval of a production plan, White Knight will have the option to request that Teck arrange financing for White Knight’s share of the capital costs required to develop the Fye Canyon Property. If White Knight exercises this option Teck shall commit to use

A-12

its best efforts to arrange or provide project debt financing for not less than 60% of projected capital costs on a limited recourse basis after technical completion. If project costs exceed the amount available for debt financing and the parties elect nonetheless to put the property into production then at White Knight’s election Teck shall also arrange or provide White Knight’s share of equity financing on a subordinate loan basis with an interest rate of the London Interbank Offered Rate, or LIBOR, plus 4%.

During the earn-in period, Teck is responsible for all property holding costs.

Location of and Access to Fye Canyon Property

The Fye Canyon Property lies on the Cortez Trend and is adjacent to White Knight’s Pat Canyon Property to the north. Access is by a series of all-weather and dirt roads.

Regional and Property Geology of Fye Canyon Property

The Fye Canyon Property lies along the southern projection of the north-northwest by south-southeast-trending Cortez fault zone, just south of a major northeast-trending cross-structure which bounds the northern edge of Simpson Park Mountains. The claims cover 31/2 miles of strike length of this splayed north-northwest fault system. Upper-plate Ordovician Vinini Formation crops out in the eastern part of the block and is overlain by scabs of felsic Tertiary volcanics and thin Quaternary alluvium in the central area with thicker gravels in the west part. Intermediate Tertiary volcanics cover the southernmost part of the claim block. The claim block lies along the projection of lower plate carbonate rocks in the Cortez window to the northwest and the Tonkin window to the southeast. On the property, hematite and barite veined cherts and siltstones of the Vinini Formation are highly anomalous in both mercury and arsenic.

Previous Exploration History of Fye Canyon Property

A number of companies explored portions of the Fye Canyon claims in the 1980’s and 1990’s. ECM Inc./Noranda Inc. staked the Gap claims in 1985; ECM/Noranda drilled 4 shallow (less than 500 ft) holes in 1988; Kennecott drilled 4 holes (500 ft) in 1991; Rio Algom Ltd. leased the claims and drilled 1 hole in 1992; Lac Minerals Ltd. drilled one deep hole (1100 ft) in the northeast corner of the property in 1995; Placer drilled one hole in 1996; and Aquaterre Mineral Development Ltd. drilled 2 shallow holes from one pad in 1999. These holes targeted shallow mineralization based on geochemical anomalies in outcropping upper plate rocks and holes terminated in Vinini Formation.

During the 2005 exploration season, Teck undertook additional gravity surveys and drilled four reverse circulation holes to test certain structural and lithological targets generated by the geophysical program. Anomalous gold chemistry was encountered in hole F04-04.

Current and Future Exploration

Subsequent to September 30, 2006, Teck requested and received permission from White Knight to amend their exploration expenditure commitment under the agreement dated October 20, 2004. In consideration of White Knight granting an extension from December 31, 2006 to March 31, 2007, Teck will guarantee the $1,250,000 aggregate expenditure commitment now due by March 31, 2007. Teck has an option to earn an initial 51% interest in the property by incurring exploration expenditures, and making cash payments in annual increments prior to December 31, 2008.

A-13

Gold Pick Property

White Knight’s 100% owned Gold Pick Property is located in Eureka County, Nevada, and consists of 27 unpatented mining claims for 601 acres and patented mining claims for 193 acres for a total of 794 acres. The Gold Pick Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Gold Pick Property

White Knight acquired the unpatented mining claims and patented mining claims by staking and application since June 2002. Annual holding costs for the property are estimated to be $3,604 for 2007 in federal and county fees.

Location of and Access to Gold Pick Property

The Gold Pick Property is located on the Cortez Trend in the southern Roberts Mountains approximately 30 miles northwest of the town of Eureka, Nevada. Access is by all-weather county-maintained roads to the past producing Gold Bar Mine approximately six miles southwest of the property and then along the Gold Bar haul road to the Gold Pick Property.

Regional and Property Geology of Gold Pick Property

The Gold Pick Property is underlain by an east-dipping sequence of Devonian carbonate rocks, comprising the Lone Mountain Dolomite overlain by the McColley Canyon Formation and Denay Formation. Located on the Gold Pick Property is the past producing Gold Pick Mine, which contains two gold deposits, the Gold Pick East and Gold Pick West. Also on the Gold Pick Property is a portion of the formerly producing Gold Ridge gold deposit. All of the known deposits lie along a subtle east-west anticline, which crosses the Roberts Mountains and provides a regional control to gold mineralization. Northeast and northwest-trending faults cut the section in the vicinity of the deposits and provide deposit-scale controls to gold mineralization.

The main Gold Pick East deposit has a footprint of approximately 1,100 feet east-west by 1,200 feet north-south. The deposit is typically 50 feet to 100 feet thick, but can be up to 300 feet thick adjacent to controlling structures. The southwest extension of the Gold Pick East deposit measures about 1,200 feet in a west-southwest

A-14

direction and ranges from 75 feet to 200 feet in width. Within this structurally controlled zone are at least two pods of high-grade mineralization which include the following drill intercepts:


Drill Hole	From (feet)		To (feet)		Interval (feet)		Gold (ounces per ton)

33-578		230		265		35		0.215
33-570		280		310		30		0.209
33-5		270		275		5		0.371
33-321		290		330		40		0.264
33-719		250		310		60		0.209

Higher-grade pods of gold mineralization also occur within the main Gold Pick East deposit and include a drill intercept of 10 feet at 1.20 oz/ton gold beneath the southwest corner of the pit.

The Gold Pick West deposit measures about 700 feet north-south by 700-800 feet east-west. The deposit contains at least two pods of +0.20 oz/ton gold mineralization. A third higher-grade pod lies to the east of the main deposit. The Gold Pick mine consists of two separate open pits: Gold Pick East and Gold Pick West. Atlas Precious Metals considered mining the high-grade mineralization in the southwest extension of Gold Pick East by underground mining methods. In the late stages of mining, an exploration adit was driven to better define reserves in the north wall of the pit and to define underground reserves in the southwest extension. However, the drift never reached the southwest zone, and no underground reserves were delineated.

The Gold Pick East and West deposits have been tested with a total of 877 drill holes. Despite the intensity of drilling, potential to expand resources remains. The southwest extension zone is open to the southwest, where it is cut off by a single fence of three drill holes. Beyond that, only a handful of widely spaced (approx. 300 foot) holes were drilled. The zone could easily continue beyond the limits of drilling. A fairly high-grade drill intercept (5 ft @ 0.202 oz/ton gold) near the west end of the drilling suggests that the high-grade core of the zone may extend further to the southwest along the structure. The vast majority of drill holes have been vertical, which could easily miss high-grade mineralization along high-angle structures. There is potential to expand the high-grade portions of the deposit by drilling angle holes, especially in the area of higher-grade mineralized pods such as the southwest extension zone. Drilling is also wide-spaced to the northeast of the Gold Pick East open pit, and good potential remains to expand resources in this direction as well.

The following disclosure was provided by Mine Development Associates, or MDA, of Reno, Nevada. In April 2006, a technical report was filed on the Gold Pick and Gold Ridge deposits, which verified an in-place indicated resource of 7,874,000 tons grading 0.041 oz/ton Au. During 1994, Donald Tschabrun, a consulting geologist working for Atlas, estimated resources for the deposits (Tschabrun Estimate) which were audited by Mine Reserve Associates. The technical report submitted by MDA completed work required to bring the Tschabrun Estimate in compliance with 43-101 regulations. The deposits are drilled on a nominal 50 ft spacing. The Tschabrun Estimate was completed by first outlining mineralized areas on cross sections spaced at 50 ft intervals and then transferred the mineralized outlines to plan view benches on 10 ft intervals. Grades were interpolated into 25 x 25 x 10 ft blocks by inverse distance weighting methods. MDA concluded that the Tschabrun Estimate is equivalent to Indicated Resources. Atlas drill holes used to calculate the Tschabrun Estimate total more than 1200 reverse circulation holes and seven core holes. The following table summarizes the audited in-place indicated resource (after the Tschabrun Estimate):

Cautionary Note to U.S. Investors concerning estimates of Measured and Indicated Resources. This section uses the terms “measured” and “indicated resources.” We advise U.S. investors that while those terms are recognized and required by Canadian regulations, the U.S. Securities and Exchange Commission does not recognize them.

U.S. investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.

A-15

Table of In-Place Indicated Resource


			Gold Pick Deposit				Gold Ridge North Deposit						Totals
	Cutoff Grade		Tons		Grade		Tons		Grade		Tons		Grade
Mineralization Type	Oz Au/t		000’s		Oz Au/t		000’s		Oz Au/t		000’s		Oz Au/t
Oxide		0.01		4,738		0.039		1,108		0.034		5,846		0.038
Carbonaceous		0.01		1,954		0.049		74		0.037		2,028		0.049
Totals		0.01		6,692		0.042		1,182		0.034		7,874		0.041

Details of the audit and additional technical information on the Gold Pick Property are contained in a 43-101 Technical Report completed by MDA which can be viewed at www.sedar.com. The Qualified Persons commissioned by MDA were Neil Prenn, Registered Professional Mining Engineer, and Peter Ronning, Professional Engineer, who conducted the site visit.

Previous Exploration History of Gold Pick Property

After the discovery of the Gold Bar gold deposit in 1984, Atlas began systematic exploration of the Roberts Mountains. Gold-mineralized jasperoid was discovered in the Gold Ridge and Gold Pick areas in 1986. Atlas drilled discovery holes in the Gold Ridge deposit in 1986 and the Gold Pick deposit in 1987. Open-pit mining of the Gold Ridge deposit commenced in 1991. Approximately 96,000 ounces of gold were produced from the Gold Ridge deposit until mining ceased in 1992. The Gold Pick deposit was mined between 1992 and 1994, with production totaling approximately 48,000 ounces of gold. Vengold Inc. (now American Bonanza) leased the Atlas claim block in 1999. American Bonanza dropped the claims in the Gold Pick and Gold Ridge areas in September 2001.

Current and Future Exploration Plans of Gold Pick Property

White Knight drilled a total of 18 reverse-circulation holes (11,700 ft) at the Gold Pick Property in August and September of 2005. The results of the exploration campaign demonstrated grade continuity in extensions of both the southwest feeder structure (30 ft @ 0.062 oz/ton Au, 25 ft @ 0.083 oz/ton Au) and the northwest feeder structure (25 ft @ 0.143 oz/ton Au with 10 ft @ 0.226 oz/ton Au), indicating the potential to significantly increase the dimensions of the gold deposit. In addition, the successful extension of the feeder zones away from the pit area into un-drilled terrain opens up the potential for discovery of a new gold deposit. Geologic mapping in the Roberts Mountains District in 2005 led to a recognition of local karsting within the lower-plate host rocks in the area. The karsting presents strong exploration targets as a number of Carlin type deposits in the Carlin trend are related to solution collapse (karst) features. Further work will be required to establish the geologic timing of this karsting and its relevance to gold deposition. The drill program at the Gold Pick Property was encouraging and a follow-up program is planned for late 2006.

A-16

McClusky Pass Property

White Knight’s 100% owned McClusky Pass Property consists of 243 unpatented mining claims totaling 5,175 acres located in Eureka County, Nevada. The McClusky Pass Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of McClusky Pass Property

White Knight acquired the McClusky Pass Property by staking in September, 2003. Annual holding costs for the property are estimated to be $32,440 for 2007 in federal and county fees.

Location of and Access to McClusky Pass Property

The McClusky Pass Property is located in Eureka County near the intersection of the Roberts and Simpson Park Mountains, approximately 30 miles northwest of Eureka, Nevada. Access is by way of a series of improved all-weather roads.

Regional and Property Geology of McClusky Pass Property

The McClusky Pass Property is located immediately south of the convergence of the north-northeast trending Simpson Park Mountains and the northwest-trending Roberts Mountains. The two mountain ranges intersect along a major northwest-trending fault. This fault zone is postulated to be a major regional control of gold mineralization within the Cortez Trend.

The McClusky Pass Property is centered on the intersection of this northwest fault zone with a major northeast-trending cross-structure. The northeast-trending structural zone is characterized by a broad northeast-trending magnetic low, interpreted to reflect a zone of magnetic destruction. The zone is also manifest as a northeast-trending gravel-covered embayment into the range. The project area is nearly completely covered by Quaternary and Tertiary gravels which fill the northwest arm of Kobeh Valley. Intermediate-composition Tertiary volcanics crop out in the north central and northeast parts of the property. Thickness of the gravel deposits is unknown but regional gravity data suggests that the basin becomes shallower to the north towards McClusky Pass. Tertiary volcanic rocks in the northeast portion of the property are bleached and argillized, suggesting the possible presence of a hydrothermal system.

A-17

Previous Exploration History of McClusky Pass Property

Sections of the McClusky Pass Property were explored by different exploration companies between 1984 and 1995. Atlas staked claims covering the eastern portion of the current property in 1984 as part of its larger Gold Bar claim block. Atlas focused its exploration efforts on areas with outcrop and thus conducted little work in the area of the property, although a few shallow (200 feet or less) holes may have been drilled. In 1988, ECM staked claims over the western portion of the McClusky area immediately to the west of Atlas’ claims. ECM drilled four or five shallow (500 feet deep) holes in the north central part of the claim block, east of McClusky Pass in 1990. ECM dropped its claims and the area was staked by MBM Consultants in 1994. Battle Mountain Exploration Company leased the claims and drilled an unknown number of holes in the north central portion of the claim block in 1995. All previous claims lapsed and White Knight staked the property in September 2003.

Current and Future Exploration of McClusky Pass Property

White Knight commenced a drill program at the McClusky Pass Property in September 2005. One diamond drill hole was completed to a depth of 1,191 ft on the northern portion of the project with only anomalous gold encountered. A reverse circulation hole was attempted, but was lost at 775 ft, about 200 ft short of the target. The holes were drilled approximately 1,000 ft apart to test a geophysically interpreted uplifted block. Anomalous gold and pathfinder elements, as well as intrusive dykes and strong dolomitization, were encountered in the southern most reverse-circulation drill hole. Both holes encountered chert and siltstones with minor limestone interbeds which are interpreted to be part of the Upper-plate. The depth to lower-plate on the project is not known at this time. Additional work will be performed on the McClusky Pass Property in late 2006 to generate new drill targets.

New Pass Property

The New Pass Property consists of 107 unpatented mining claims totaling 2,232 acres located near the town of Austin in Churchill County, Nevada. White Knight currently has a 100% interest subject to an option agreement with Bonaventure Enterprises Inc. who can earn an initial 50% interest in the New Pass Property. The New Pass Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of New Pass Property

In March 1998, White Knight acquired a 100% interest in the New Pass Property from Quest USA Resources Inc. for $165,000 cash. Quest maintained a 2.75% net smelter royalty which White Knight purchased in March 2000, in exchange for 100,000 White Knight common shares.

A-18

In September 2004, White Knight entered into an option agreement with Consolidated Odyssey Exploration Inc., whereupon Odyssey may earn an initial 50% interest in the New Pass Property. To earn a 50% interest, Odyssey must make cash payments to White Knight of $500,000, issue 500,000 of its common shares and provide $2,000,000 in exploration expenditures, all over a four-year period. Upon earning a 50% interest in the property, Odyssey may earn an additional 10% interest in the property by financing the completion of a feasibility study. Subsequently, Odyssey assigned all rights under the option agreement to Bonaventure. During the earn-in period, Bonaventure is responsible for all property holding costs.

Location of and Access to New Pass Property

The New Pass Property is located along the Austin-Lovelock mineral belt in the New Pass Mining District, 27 miles west of Austin, Nevada. Access is from Austin on US Highway 50 for 34 miles, north on the Edwards Valley Road for 5 miles, and east-southeast for 21/2 miles on an unimproved road to the center of the property.

Regional and Property Geology of New Pass Property

Gold mineralization on the New Pass Property is hosted in silty and carbonaceous limestones of the Triassic Lower Augusta Mountain Formation. This unit consists of thin to medium bedded, carbonaceous limestone with interbeds of platy, calcareous siltstone, fine-grained sandstone, and bioclastic turbidites. Impermeable, massive, cliff-forming limestones of the upper Augusta Mountain sequence cap these rocks.

Previous Exploration History of New Pass Property

Gold was discovered on the New Pass Property in 1980 by Dekalb Mining Ltd. which was conducting follow-up work to a stream sediment survey. Dekalb transferred ownership of the claims to Northern Illinois Coal, Oil and Resources Mineral Ventures in 1982. Northern Illinois Coal explored the New Pass Property from 1982 through 1992, and drilled a total of 165 holes. Consolidated Ramrod Gold (USA), Inc. acquired the New Pass Property in 1993. In 1995, Santa Fe Pacific Gold Corporation completed 11 holes on the property under an exploration agreement with Ramrod. Ramrod was later reorganized and renamed Quest which sold the property to White Knight in 1998. During 1998, White Knight completed 1:6000 scale mapping, collected 250 rock chip samples, prepared geochemical overlays for all surface rock chip data, constructed 100-foot cross sections via an Interdex mining software program, and estimated geologic resources on the main jasperoid.

Current and Future Exploration of New Pass Property

During 2005, Bonaventure completed 28 drill holes totaling 9,140 ft of drilling. The results from this campaign, which include 75 ft @ 0.057 oz/ton Au with 10 ft @ 0.307 oz/ton Au and 30 ft @ 0.095 oz/ton Au, confirm the exploration potential for the project. Bonaventure has commenced its 2006 drill effort which will involve further step out as well as infill drilling of the 2005 program. Bonaventure has commenced its Phase 2 angle drilling in the northern portion of the project drill grid using a reverse circulation rig. The program includes 9,000-10,000 feet of new drilling in 20-25 holes to expand the current resource. Hole depths will be 250 feet to 650 feet deep. Drilling of the untested portion of the current drill grid as well as up-dip and down-dip offsets from previous drilling will be completed. The Phase 2 drilling program will occur over a strike length of approximately 3,200 feet. The angle hole program will also test volcanic rocks above previous drilling that have not been assayed and explore possible high grade feeder faults below the deposit. The drilling program is expected to last until the end of the year. Bonaventure has an option to earn an initial 50% interest in the property by incurring exploration expenditures, issuing shares and making option payments over a 4-year period.

Squaw Creek Property

The Squaw Creek Property is located on the northern portion of the Carlin Trend, 42 miles north of the town of Battle Mountain in Elko County, Nevada. The property consists of 151 unpatented mining claims totaling 3,040 acres. White Knight currently has a 100% interest, subject to an agreement with Bonaventure who can

A-19

earn an initial 50% interest. The Squaw Creek Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Squaw Creek Property

White Knight acquired the Squaw Creek Property by staking during 1996. In September 2004, White Knight entered into an option agreement with Odyssey whereupon Odyssey may earn an initial 50% interest by making cash payments to White Knight of $500,000, issue 500,000 of its common shares and provide $2,000,000 in exploration expenditures, all over a four-year period. Odyssey may earn an additional 10% interest in the Squaw Creek Property by financing the completion of a feasibility study. Subsequently, Odyssey assigned all its rights under the option agreement to Bonaventure. During the earn-in period, Bonaventure is responsible for all property holding costs.

Location of and Access to Squaw Creek Property

The Squaw Creek Property lies between the Midas and Ivanhoe mining districts on the northern portion of the Carlin Trend. Access to the property is achieved from the towns of Battle Mountain, Elko, or Winnemucca, Nevada via highway and maintained all-weather roads. Unimproved dirt roads provide access along the pediment on the northern part of the Squaw Creek Property.

Regional and Property Geology of Squaw Creek Property

The Squaw Creek Property is located directly on the Carlin Trend, and strongly anomalous gold mineralization associated with pyrite has been intersected in drill holes in an area more than 3 miles long and 1 mile wide. Additional weakly anomalous gold has been discovered within virtually all drill holes over a much larger area. The anomalous gold occurs within silicified and brecciated zones often more than 100 feet thick in the sedimentary rocks of the Upper Plate or in the overlying Miocene age volcanics. Zones of gold mineralization are also hosted within silty dolomitic sediments of unknown age and of unknown stratigraphic position. These silty dolomitic sediments may be part of the Rodeo Creek Formation and possibly indicate the presence of nearby auriferous Lower Plate sediments.

A-20

Exploration History of Squaw Creek Property

During the 1970’s, the US Steel Company explored the Ivanhoe District and by 1984 had defined a gold reserve on the adjacent Ivanhoe Property. A series of companies explored the Ivanhoe project which was expanded to cover the current Squaw Creek Property. Touchstone Resources explored the Squaw Creek Property by surface mapping, and drilled at least 4 holes. Newmont Mining Corporation and Cornucopia Resources Ltd. explored the Squaw Creek Property from 1992 until 1995, drilling a total of 12 holes in the Sheep Corral Mine area before dropping the outer claims, including the Squaw Creek Property. White Knight drilled three holes in 1998, 14 holes in 1999, and 10 holes in 2000 funded by Chapleau which terminated its option in August 2000 after incurring exploration expenditures totaling $1,024,135.

Current and Future Exploration of Squaw Creek Property

Bonaventure commenced a three hole drilling program in October 2006. The holes are pre-collared using a reverse circulation rig to penetrate post-mineral rocks and completed using a core rig. Holes SC-0601 and 0602 are a fence of holes designed to drill across a large interpreted fault zone indicated in a CSAMT geophysical survey completed in 2005.

White Knight’s Other Properties

South Cabin Creek Property

White Knight’s 100% owned South Cabin Creek Property is located in Eureka County, Nevada, and consists of 84 unpatented mining claims totaling approximately 1,735 acres. The South Cabin Creek Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of South Cabin Creek Property

White Knight acquired the claims that make up the South Cabin Creek Property by way of staking in October 2001. Annual holding costs for the property are estimated to be $11,214 for 2007 in federal and county fees.

Location of and Access to South Cabin Creek Property

The South Cabin Creek Property is located approximately three-quarters of a mile east of the past-producing Gold Pick Mine, approximately 30 miles northwest of the town of Eureka, Nevada. Access is via county maintained roads and then along all-weather dirt roads.

A-21

Regional and Property Geology of South Cabin Creek Property

The South Cabin Creek Property lies along the Cortez Trend. The claims are underlain by an east-dipping fault-repeated section of Silurian Lone Mountain Dolomite overlain by Devonian McColley Canyon Formation and Denay Formation. The claims lie near the Devonian dolomite line, a major facies boundary controlled by regional Paleozoic-age structure along the continental margin.

The South Cabin Creek Property covers a small portion of the Cabin Creek deposit, the South Cabin Creek mineralized zone, and potential extensions of the Cabin Creek mineralizing structure. The Cabin Creek deposit is an oxide gold deposit hosted in the Bartine member of the McColley Canyon Formation. Drill intercepts in the southernmost portion of the deposit on White Knight’s claims include:


Drill Hole	From (feet)		To (feet)		Interval (feet)		Gold (ounces per ton)

92-41		75		145		70		0.058
SS-26		80		165		85		0.060
SS-19		70		160		90		0.057
SS-27		30		155		125		0.037
92-53		100		200		100		0.035

Mineralization in the Cabin Creek deposit consists of two ore pods aligned in a northwest-southeast direction. The trend of gold mineralization and the favourable host rock unit project onto White Knight’s claims to the southeast of the Cabin Creek deposit. The northeast-trending high-grade feeder structure of the deposit also projects on to the northeast part of White Knight’s claims.

Widely spaced drilling in the area south of the Cabin Creek deposit by Atlas discovered the South Cabin Creek gold zone. Anomalous drill intercepts at the South Cabin Creek mineralized zone include:


Drill Hole	From (feet)		To (feet)		Interval (feet)		Gold (ounces per ton)

SS-51		200		220		20		0.019
101-1		5		30		25		0.014
SS-10		290		300		10		0.038
PDSS-27		315		355		30		0.012

Exploration targets on the South Cabin Creek Property include shallow small to moderate pods of mineralization in the South Cabin Creek zone, high-grade mineralization along the projection of the high-grade feeder structure, and potentially large Carlin-type deposits concealed beneath gravel and volcanic cover along the major north-northwest-trending fault zone (main controlling structure) to the east of the Cabin Creek deposit.

Previous Exploration History of South Cabin Creek Property

The area containing the South Cabin Creek Property was explored by a number of companies from 1982 to 1992. Exxon Coal and Minerals Company geologists first discovered gold-bearing jasperoid rocks in the Cabin Creek area in 1982, and drilled the first mineralized holes on the property. After Exxon relinquished the claims, Nerco staked claims which include the current property in 1982. American Copper and Nickel Company leased the property and drilled the discovery hole at Cabin Creek oxide gold deposit adjacent to White Knight’s current property, which was later further defined by Phelps Dodge Corporation and Atlas. Atlas also drilled holes to the south and discovered the South Cabin Creek mineralization. From 1997 to 1998, Barrick Gold Corporation leased the claims but conducted no work. American Bonanza Gold Mining Corporation (now American Bonanza Gold) leased the claims in 1999, but conducted no work before relinquishing the claims in September 2001.

Current and Planned Exploration of South Cabin Creek Property

Due to the location and extension of a portion of the Cabin Creek oxide deposit onto White Knight’s property, exploration targets include potential high-grade mineralization along the projection of the high-grade feeder structure, shallow small to moderate pods of mineralization in the South Cabin Creek zone, and possible Carlin-type

A-22

deposits concealed beneath gravel and volcanic cover along the major north-northwest trending fault zone (main controlling structure) to the east of the Cabin Creek deposit.

White Knight is currently seeking a joint-venture partner to fund and conduct exploration on the South Cabin Creek Property.

Gold Bar Horst Property

White Knight’s 100% owned Gold Bar Horst Property is located in Eureka County, Nevada, and consists of 183 unpatented mining claims totaling 3,652 acres. The Gold Bar Horst Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Gold Bar Horst Property

White Knight acquired the 183 unpatented mining claims by way of staking since September 2001. Annual holding costs for the property are estimated to be $24,430 for 2007 in federal and county fees.

Location of and Access to Gold Bar Horst Property

The Gold Bar Horst Property is located in Eureka County on the southwest flank of the Roberts Mountains, approximately 30 miles northwest of Eureka, Nevada. Access is by way of a series of improved all weather roads.

Regional and Property Geology of Gold Bar Horst Property

The claims were staked to cover the projection of a northwest-trending horst of Lower Plate Devonian Carbonates. The claims are in two noncontiguous blocks, covering the northern and southern projections of the horst beyond the immediate past producing Gold Bar Mine. The depth to bedrock under Quarternary gravels, as indicated by CSAMT surveys, gravity surveys and drilling varies from less than 500 feet to greater than 1,000 feet. Mineralization is controlled by a north-northwest-trending fault and structural intersections with northeast-trending cross faults.

Previous Exploration History of Gold Bar Horst Property

Atlas discovered gold-anomalous jasperoid along the southwest flank of the Roberts Mountains in 1983 and drilled 16 shallow exploration holes, one of which intersected thin gold mineralization. In 1984 Atlas discovered the

A-23

Gold Bar deposit, which lies between the 2 current portions of White Knight’s property. Atlas mined the Gold Bar deposit beginning in 1987 before exhausting the economic reserves in 1994. Atlas negotiated a series of joint-venture agreements with other mining companies between 1994 and 1999 for further exploration of the project which includes the claims encompassed by White Knight’s current property boundaries. Homestake Mining Company entered into a joint venture in 1994 for exploration of the pediment area south and southeast of the Gold Bar mine. Homestake conducted CSAMT surveys and drilled 17 exploration holes on the area south of Gold Bar in 1995 and 1996. The joint venture was terminated in 1996. Barrick joint-ventured all of Atlas’ holdings in the Roberts Mountains, exclusive of the mine areas, in 1997. Barrick drilled a series of widely-spaced holes in the Millsite area and drilled seven deep holes to the north before terminating the joint venture in 1999. Vengold (now American Bonanza) leased all of Atlas’ holdings in the Roberts Mountains later in 1999. When American Bonanza reduced the size of its claim holdings in 2001 to concentrate on the claims around the past producing Gold Bar mine, White Knight staked the two noncontiguous claim groups bordering the remaining claims at Gold Bar on the north and south which currently comprise the Gold Bar Horst Property.

Current and Planned Exploration of Gold Bar Horst Property

Future exploration is expected to target possible Carlin-style gold mineralization beneath the gravel cover. North-northwest to northwest-trending horst-bounding faults and crosscutting northeast-trending faults are possible feeder structures. The master feeder fault has not been tested. The majority of previous drilling on the Gold Bar Horst Property is less than 350 feet deep and did not encounter bedrock. One deeper drill hole located on the property encountered a mineralized jasperoid which returned minor gold values from a depth of 1,160 feet to 1,255 feet. This mineralization may be peripheral to other gold mineralization.

White Knight also initiated a nine hole reverse circulation drill program on the southern portion of the property in June 2006. The objective of the program was to determine the areal extent of lower-plate lithologies, explorable within reasonable target depths. In addition, structural edges of the horsted domain were targeted in attempts to extend the Gold Bar “proper” mineralized system.

The Phase I drilling program was completed during the period ending September 30, 2006. The drill program tested a “blind” gravel-covered pediment target and was designed to establish depth to lower-plate bedrock previously interpreted by a gravity geophysical survey performed by White Knight in 2005. Of the proposed 9 drill holes, 6 were drilled but only 4 were completed to the target depth. Technical difficulties, including equipment failure and caving overburden, prevented the completion of the remaining two holes. Lower-plate limestones were encountered as shallow as 390 feet. Anomalous arsenic and trace gold were encountered in all three of the holes for which assays have been received. White Knight now interprets that favourable host lithologies are explorable at reasonable depths over an area measuring 3,500 ft × 7,000 ft on the southern Gold Bar Horst Property. Alteration and gold-arsenic anomalies encountered in the 2006 drilling indicate that the gold-mineralizing system continues southward from Gold Bar. White Knight is currently evaluating the 2006 drill data with emphasis on generating targets for further drilling.

Hunter Property

The Hunter Property is located in Eureka County, Nevada, and consists of 48 unpatented mining claims totaling 1,116 acres. White Knight has a 100% interest in 46 claims, and has a lease agreement and an option to purchase a 100% interest in the other two claims which make up the property. The Hunter Property is without known economic mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

A-24

Acquisition of Hunter Property

White Knight acquired 46 unpatented mining claims of the Hunter Property through staking in September 2001. In February 2002, White Knight signed a lease agreement with Gregory McN. French on two adjacent unpatented mining claims known as the HNT Claims. Under the terms of the lease agreement, White Knight is required to make lease payments and issue common shares to Mr. French under the following schedule:


	Cash Option			Common Share
Payment Due Date	Payments ($)			Issuances

Initial Payment		2,000(paid	)		20,000(issued)
February 1, 2003		2,000(paid	)		20,000(issued)
February 1, 2004		3,000(paid	)		20,000(issued)
February 1, 2005		3,000(paid	)		20,000(issued)
February 1, 2006		4,000(paid	)		20,000(issued)
February 1, 2007 and each year thereafter		7,000			None

Mr. French also retains a net smelter royalty on the HNT claims which varies from between one to two percent, depending upon the price of gold. Mr. French retains a 1.5% net smelter royalty on minerals other than gold. White Knight has the option to acquire the net smelter royalty and purchase the HNT Claims from Mr. French for $75,000 at any time before the 10th anniversary date of the lease.

Annual holding costs for the property are estimated to be $6,408 for 2007 in federal and county fees.

Location of and Access to Hunter Property

The Hunter Property is located on the Cortez Trend and lies approximately three miles southeast of the Gold Pick Mine. Access is via Highway 50, then approximately 13 miles along county maintained gravel road and 11/2 miles along unimproved dirt road.

Regional and Property Geology of Hunter Property

The Hunter Property encompasses an easterly dipping fault-repeated section of Silurian Lone Mountain Dolomite overlain by Devonian McColley Canyon Formation, Bay State Dolomite and Devils Gate Limestone. Miocene basalts and minor rhyolite overlay and/or are faulted against the Paleozoic section along both the western

A-25

and eastern parts of the claims. The western portion of the Hunter Property is covered by pediment gravels, which masks the Paleozoic and Tertiary rocks.

Previous Exploration History of Hunter Property

Gold-bearing jasperoids were discovered in the Hunter area in 1983 and Mapco (now Nerco) staked claims over the prospective ground. The claims were leased to American Copper and Nickel Company in 1985. American Copper and Nickel Company conducted geological mapping, rock-chip and soil sampling, geophysical surveys, and drilled 39 shallow holes between 1985 and 1987.

Nerco conducted additional geologic and geochemical work and drilled seven holes in 1988-1989. Phelps Dodge acquired the Nerco claims in 1989 and conducted more mapping and collected additional rock-chip samples as well as drilling 21 exploration holes in 1990. Atlas acquired the Nerco claims in 1991 and conducted additional drilling in 1993. American Barrick leased all of Atlas’ claims in 1997, including those at Hunter, but performed no work on the property before terminating its lease in 1998. Vengold (now American Bonanza) then leased the Atlas land holdings in 1999 but also performed no work on the property before abandoning the claims in September 2001.

Current and Planned Exploration of Hunter Property

During the 2006 field season White Knight completed 800 feet of drilling in three holes. White Knight is currently awaiting drill results.

Pat Canyon Property

The wholly owned Pat Canyon Property is located in Eureka County, Nevada and consists of 178 unpatented mining claims totaling 3,582 acres. The Pat Canyon Property is without known mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Pat Canyon Property

White Knight acquired the Pat Canyon Property by staking in November 2003. Annual holding costs for the property are estimated to be $23,763 for 2007 in federal and county fees.

A-26

Location of and Access to Pat Canyon Property

The Pat Canyon Property lies on the Cortez Trend and is adjacent to White Knight’s Fye Canyon Property to the south. Access is by a series of all-weather and dirt roads.

Regional and Property Geology of Pat Canyon Property

The Pat Canyon Property lies along the southern projection of the north-northwest-south-southeast-trending Cortez fault zone just south of a major northeast-trending cross-structure which bounds the northern edge of Simpson Park Mountains. The property covers three and one-half miles of strike length of this splayed north northwest fault system. Upper-plate Ordovician Vinini Formation crops out in the eastern part of the block and is overlaid by scabs of felsic Tertiary volcanics and thin Quaternary alluvium in the central area with thicker gravels in the west part. Intermediate Tertiary volcanics cover the southernmost part of the claim block. The claim block lies along the projection of lower plate carbonate rocks in the Cortez window to the northwest and the Tonkin window to the southeast.

Current and Future Exploration of Pat Canyon Property

White Knight is seeking a joint venture partner to further explore the Pat Canyon Property.

Tonkin Summit Property

The Tonkin Summit Property is located in Eureka County, Nevada, adjacent to White Knight’s McClusky Pass Property to the East. The 100% owned property consists of 186 unpatented mining claims totaling 3,826 acres. The Tonkin Summit Property is without known mineral reserves and is at the exploration stage. White Knight’s current efforts are exploratory in nature.

Acquisition of Tonkin Summit Property

White Knight acquired the Tonkin Summit Property by staking in the spring 2004. Annual holding costs are estimated to be $24,831 for 2007 in federal and county fees.

A-27

Location of and Access to Tonkin Summit Property

The Tonkin Summit Property is located on the Cortez Trend at the northwest end of the Roberts Mountains approximately 30 miles northwest of Eureka, Nevada. Access is by way of a series of improved all weather roads.

Regional and Property Geology of Tonkin Summit Property

The claims are underlain by upper plate Ordovician Vinini Formation (chert, siltstone with some limestone beds) with minor Tertiary volcanic and Quaternary gravel cover in the northwest corners. Lower-plate carbonate rocks are projected to underlie Vinini Formation at relatively shallow depths.

Current and Planned Exploration of Tonkin Summit Property

The target is a Carlin-type disseminated gold deposit hosted in lower plate carbonate units beneath the Roberts Mountains thrust fault, alternatively similar bodies in limestone units of lower Ordovician Vinini Formation. The depth to lower plate is unknown as the property is unexplored below a 200 to 600 foot depth. Lower plate Devonian limestones crop out within 2,000 feet of the east side of the claim block. Scattered anomalous gold, arsenic, antimony and mercury in rock chips and soils are on trend from two mineralized northeast trending faults on an adjacent property. White Knight is seeking a joint venture partner to further explore the Tonkin Summit Property.

Miscellaneous

Since 2004, White Knight has acquired, by staking, a 100% interest in four additional Nevada mineral exploration properties comprised of unpatented mining claims located on the Cortez Trend in Eureka County and one additional mineral exploration property located on the Getchell Trend in Humboldt County. The combined acreage of these properties totals approximately 9,300 acres. The cumulative annual holding cost for these properties is estimated to be $64,480 for 2007 in federal and county fees. These properties are without known mineral reserves and are at the exploration stage. White Knight’s current efforts are exploratory in nature.

Sampling and Analysis

The sampling method used by White Knight field personnel varies with the purpose of the sample. Geologists doing initial reconnaissance or prospecting may collect selected grab samples from new discoveries. Such samples would be intended only to determine if minerals of interest are present, not to estimate grades for any volume of material.

For more systematic sampling, outcrops are cleaned off and in some cases shallow hand trenches are dug. Continuous chip samples are collected over intervals selected by a company geologist. The manner of sampling is recorded in field notes and is entered into the digital database of surface samples.

Core from drilling programs is photographed and logged on the project site by contract geologists under the supervision of White Knight’s project manager. Core is split by a contract geotechnician in Eureka, Nevada. Split core is bagged, sealed and shipped directly to assay labs in Elko, Nevada for sample preparation, and then to Sparks, Nevada for analysis. All samples are analyzed for gold and silver by fire-assay technique.

White Knight employs a quality control program consisting of re-assaying of both mineralized (0.010 ounce per ton of gold) and randomly selected coarse reject samples, insertion of coarse standard samples and assaying of both random and mineralized duplicate drilling samples through an umpire laboratory. Drill-cuttings samples are bagged, sealed and shipped directly to an assay laboratory in Elko, Nevada for sample preparation, then to Sparks, Nevada for analysis. All samples are analyzed for gold and silver by fire-assay technique.

Legal Proceedings

White Knight is not and has not been, since July 1, 2005, a party to any material legal or arbitration proceeding, nor is any material governmental proceeding involving White Knight pending or known to be contemplated.

A-28

Exchange Controls

Other than as provided in the Investment Canada Act, as amended, there are currently no limitations imposed by Canadian laws, decrees or regulations that restrict the import or export of capital, including foreign exchange controls, or that affect the remittance of dividends to non-resident holders of White Knight’s securities. However, any such remittances of dividends paid to United States residents are subject to withholding tax at a rate equal to a maximum of 15% of the amount paid.

Management of White Knight considers that the following summarizes the material features of the Investment Act, in its present form, pertinent to a non-resident of Canada who proposes to acquire common shares of White Knight. However, provisions of the Investment Act are complex and any non-Canadian contemplating an investment to acquire control of White Knight should consult professional advisors as to whether and how the Investment Act might apply.

The Investment Act regulates the acquisition of control of a Canadian business by a non-Canadian, as defined under the Investment Act. Under the Investment Act, an acquisition of control is considered to be the acquisition of the majority of a company’s common shares. However, if a non-Canadian acquires more than one-third but less than a majority of White Knight’s voting shares, there is a presumed acquisition of control, unless it can be established that White Knight is not in fact controlled by the acquirer. All acquisitions of control of a Canadian business are notifiable, which requires that a notification form be submitted to Investment Canada within thirty days after the implementation of the investment, unless the investment is reviewable. If the investment is reviewable, the investment may not be implemented until the Minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada.

An investment is reviewable if there is an acquisition of a Canadian business and the asset value of the Canadian business being acquired equals or exceeds the following thresholds:

(a) for non-WTO investors (as defined below), the threshold is Cdn$5 million for a direct acquisition and over Cdn$50 million for an indirect acquisition; the Cdn$5 million threshold will apply however for an indirect acquisition if the asset value of the Canadian business being acquired exceeds 50% of the asset value of the global transaction;

(b) except as specified in paragraph (c) below, a threshold is calculated annually for reviewable direct acquisitions by or from WTO investors. The threshold for 2006 is Cdn$265 million. Indirect acquisitions by or from WTO investors are not reviewable.

(i) engages in the production of uranium and owns an interest in a producing uranium property in Canada;

(ii) provides any financial service;

(iii) provides any transportation service; or

(iv) is a cultural business.

Notwithstanding the above, any investment which is usually only notifiable, including the establishment of a new Canadian business, and which falls within a specific business activity listed in the Regulations to Respecting Investment in Canada, may be reviewed if an Order-in-Council directing a review if made and a notice is sent to the investor within 21 days following the receipt of a certified complete notification.

“WTO investor” as defined in the Investment Act includes: an individual, other than a Canadian, who is a national of a member of the World Trade Organization, or a WTO Member, or who has the right of permanent residence in relation to that WTO Member; a government or government agency of a WTO investor-controlled corporation; corporation or limited partnership; or trust that is neither WTO-investor controlled or Canadian controlled of which two-thirds of its board of directors, general partners or trustees, as the case may be, are any combination of Canadians and WTO investors.

A-29

Certain types of transactions are exempt from application of the Investment Act including, among the transactions, acquisitions of control of White Knight:

(a) by the acquisition of voting shares or other voting interests by any person in the ordinary course of that person’s business as a trader or dealer in securities;

(b) in connection with the realization of security granted for a loan or other financial assistance and not for any purpose related to the Investment Act;

(c) for the purpose of facilitating its financing and not for any purpose related to the Investment Act on the condition that the acquirer divest itself of control within two years after control was acquired or within such longer period as is approved by the Minister; and

(d) by reason of an amalgamation, merger, consolidation or corporate reorganization following which the ultimate direct or indirect control in fact of White Knight through the ownership of voting interests remains unchanged.

Except as provided in the Investment Act, there are currently no limitations specific to the right of non-resident Canadians to hold or vote the common shares of White Knight under Canadian law or White Knight’s charter documents.

Taxation

For a discussion of the material Canadian federal income tax consequences applicable to shareholders holding or disposing of their common shares, and the exchangeable shares and shares of common shares of U.S. Gold, see the sections entitled “Material Canadian Federal Income Tax Considerations” and “Material U.S. Federal Income Tax Considerations” on pages 65 and 75, respectively, of this prospectus.

A-30

SELECTED FINANCIAL DATA OF WHITE KNIGHT

The selected financial data of White Knight for the years ended June 30, 2006, 2005, 2004, 2003 and 2002 were derived from the consolidated financial statements of White Knight that were audited by Davidson & Company LLP, Chartered Accountants. The selected financial data of White Knight for the three months ended September 30, 2006 and 2005 were derived from the unaudited consolidated financial statements of White Knight. The selected financial data should be read in conjunction with the consolidated financial statements contained in Appendix B (Financial Statements of White Knight) and other financial information included elsewhere in this Appendix A.

White Knight has not declared any dividends on its common shares since incorporation and does not anticipate that it will do so in the foreseeable future. The present policy of White Knight is to retain any future earnings for use in its operations and the expansion of its business.

The following table is derived from the consolidated financial statements of White Knight, which have been prepared in accordance with generally accepted accounting principles in Canada, or Canadian GAAP, which for White Knight’s financial reporting conforms in all material respects for the years presented with generally accepted accounting principles in the U.S., or U.S. GAAP, except as disclosed in Note 16 to the consolidated financial statements. See Appendix B (Financial Statements of White Knight). In this Appendix A, unless otherwise specified, all dollar amounts are expressed in United States dollars ($).


	Three Months Ended September 30						Year Ended June 30
	2006			2005			2006			2005			2004			2003			2002
	(Cdn$)

Interest income (in thousands)	$	129		$	29		$	442		$	262		$	98		$	8		$	24
Net Loss (in thousands)		(180	)		(302	)		(3,307	)		(1,063	)		(1,664	)		(357	)		(1,679	)
Net Loss Per Share	$	(0.003	)	$	(0.005	)		(0.06	)		(0.02	)		(0.04	)		(0.01	)		(0.06	)
Dividends Per Share		0			0			0			0			0			0			0
Weighted Avg. Shares (in thousands of shares)		59,385			57,658			58,855			53,091			39,038			28,958			26,578


	As at September 30				As at June 30
	2006		2005		2006		2005		2004		2003			2002
	(In thousands of Cdn$)

Working Capital		12,582		16,253		13,239		11,216		9,805		(87	)		384
Mineral Property Interests		2,809		2,671		2,800		2,456		1,754		1,105			959
Deferred Exploration Costs		4,260		2,134		3,864		1,509		733		506			408
Long-Term Debt		0		0		0		0		0		0			0
Shareholders’ Equity		20,786		21,481		20,902		15,517		12,590		1,678			1,994
Total Assets		21,225		21,790		21,502		15,697		12,720		1,912			2,134

Had the consolidated financial statements of White Knight been prepared in accordance with U.S. GAAP, certain selected financial data would have been reported as follows:


	Three Months Ended September 30						Year Ended June 30
	2006			2005			2006			2005			2004			2003			2002
	(In thousands of Cdn$)

Loss Per Share		(0.02	)		(0.02	)		(0.10	)		(0.05	)		(0.06	)		(0.02	)		(0.03	)
Shareholders’ Equity (in thousands)		14,555			20,737			15,054			12,205			10,637			66			627


	As at September 30				As at June 30
	2006		2005		2006		2005		2004		2003		2002
	(In thousands of Cdn$)

Mineral Property Interests		779		645		767		616		534		0		0
Deferred Exploration Costs		0		0		0		0		0		0		0
Total Assets		14,994		17,663		15,654		12,385		10,767		300		767

A-31

OPERATING AND FINANCIAL REVIEW AND PROSPECTS OF WHITE KNIGHT

Overview

White Knight’s consolidated financial statements are stated in Cdn$ and are prepared in accordance with Canadian GAAP, the application of which for White Knight’s financial reporting, conforms in all material respects for the years presented with U.S. GAAP, except as disclosed in Note 16 to the consolidated financial statements. The value of the US$ in relationship to the Cdn$ was $1.00 = Cdn$1.115 as of September 30, 2006.

White Knight has since inception financed its activities through the distribution of equity capital. While White Knight has sufficient resources to meet its obligations for the foreseeable future at its current level of activity, it is anticipated that additional funds by equity issuance will be required in the future, as all of White Knight’s properties are at the exploration stage. The timing of such offerings is dependent upon the success of White Knight’s exploration programs as well as the general economic climate.

Results of Operations

For the Three Months Ended September 30, 2006 vs. the Three Months Ended September 30, 2005

White Knight’s loss for the quarter ended September 30, 2006 totaled Cdn$180,446, a loss of Cdn$0.003 per share, as compared to a loss of Cdn$302,057 (Cdn$0.005 loss per share) for the quarter ended September 30, 2005. Write-off of preliminary exploration costs of Cdn$19,966 (total write-off for the three months ended September 30, 2005 was Cdn$38,712) coupled with a stock-based compensation charge of Cdn$63,668 (Cdn$26,766 of stock-based compensation costs for the three months ended September 30, 2005) and general & administrative expenses contributed to the current quarter’s net loss.

General and administrative expenses for the quarter ended September 30, 2006 totaled Cdn$226,489, excluding the stock-based compensation expense (September 30, 2005 — Cdn$257,940). Other expenses which affect the loss fluctuate from quarter to quarter and consist of unrealized recovery on temporary investments, interest income and gain or loss on foreign exchange, which do not occur on a regular basis.

White Knight’s cash and temporary investments decreased by Cdn$831,404 during the quarter ended September 30, 2006, from Cdn$13,505,584 as at June 30, 2006 to Cdn$12,674,180 as at September 30, 2006. Cash resources used in operations totaled Cdn$136,161 and in investing activities, Cdn$746,348 (Cdn$479,890 cash used in acquisition of mineral property costs and deferred exploration costs).

Year Ended June 30, 2006 vs. Year Ended June 30, 2005

During the year ended June 30, 2006 White Knight received Cdn$6,175,733 from the exercise of 4,940,586 warrants.

The loss for the year ended June 30, 2006 was Cdn$3,307,465, or Cdn$0.06 per share, compared to a loss of Cdn$1,063,474, or Cdn$0.02 per share, in the prior year. The increased loss was due to higher expenses of Cdn$3,572,966 in 2006 compared to Cdn$1,100,746 in 2005, with the largest increase occurring in stock-based compensation, which totaled Cdn$2,275,298 compared to Cdn$148,543 in 2005. Other significant changes in expenses occurred in audit fees which rose to Cdn$116,362 from Cdn$48,696 as well as wages and benefits which rose to Cdn$130,998 from Cdn$79,918 due to a higher level of corporate activity. Consulting increased to Cdn$123,809 from Cdn$116,588 in 2005, and travel and entertainment rose to Cdn$108,044 in 2006 from Cdn$69,132 in 2005 as management and consultants visited and reviewed existing properties in Nevada as well as travel related to investor relations. Investor relations and shareholder information rose to Cdn$175,427 in 2006 from Cdn$123,189 in 2005 as White Knight continued its effort to better inform shareholders and the investment community about White Knight’s activities.

White Knight also recorded the write-off of deferred exploration costs of Cdn$143,783 in 2006 compared to Cdn$194,598 in 2005. These write-offs are related to general exploration of properties in Nevada. White Knight also recorded a loss on foreign exchange of Cdn$11,574 in 2006 compared to a loss of Cdn$60,377 in 2005 due to favorable changes in the Canadian/US dollar exchange rate, a partial recovery of Cdn$2,749 of the unrealized loss on temporary investments reported in 2004 compared to Cdn$31,404 in 2005 as well as a loss on disposal of

A-32

temporary investments of Cdn$23,927 (Cdn$0 in 2005). These expenses were offset by an increase in interest income of Cdn$442,036 in 2006 versus Cdn$261,600 in 2005, with the increase due to higher cash balances in the current period.

Year Ended June 30, 2005 vs. Year Ended June 30, 2004

During the year ended June 30, 2005, White Knight acquired two additional mineral exploration properties on the Cortez Trend. White Knight also completed a private placement of its common shares, which provided net proceeds of Cdn$2,370,000.

In 2005, White Knight had a loss of Cdn$1,063,474 or Cdn$0.02 per share as the result of interest on short-term investments of Cdn$261,600, a loss on foreign exchange of Cdn$60,377, a partial recovery of Cdn$31,404 of the unrealized loss on temporary investments reported in 2004, a loss on disposal of equipment of Cdn$757, a stock-based compensation charge of Cdn$148,543 and costs of Cdn$952,203 before write-offs.

In 2004, White Knight had a loss of Cdn$1,664,257 or Cdn$0.04 per share as a result of short-term investment interest of Cdn$97,920, a loss on foreign exchange of Cdn$9,299, an unrealized loss on temporary investments of Cdn$42,999, a stock-based compensation charge of Cdn$840,005 and costs of Cdn$628,325 before write-offs.

During the 2005 fiscal year, Cdn$194,598 of preliminary exploration costs was written-off compared to Cdn$241,549 in 2004. The increase in administrative costs from Cdn$628,325 at June 30, 2004 to Cdn$952,203 at June 30, 2005 was a result of an increase in consulting fees, audit fees, investor relations and shareholder information costs, management fees, rent, amortization, office costs, telephone and travel expenses, reflecting the costs associated with White Knight’s new Reno office as well as the general increase in exploration activities in Nevada.

Liquidity and Capital Resources

White Knight’s working capital as at September 30, 2006 was Cdn$12,582,391 as compared to Cdn$16,252,995 as at September 30, 2005. Cash and temporary investments decreased by Cdn$3,619,849 from Cdn$16,294,029 as at September 30, 2005 to Cdn$12,674,180 as at September 30, 2006. Cash used by operating activities during the period ended September 30, 2006 was Cdn$136,161 (2005 — Cdn$541,699).

For the 2007 fiscal year, White Knight has budgeted $2,000,000 for its anticipated exploration activities. Property costs, including land holding leases and fees, are estimated to total $600,000, and administrative costs are estimated at approximately $600,000. Therefore, White Knight estimates it has sufficient capital resources for all planned expenditures through fiscal 2007 and beyond.

Year Ended June 30, 2006

White Knight had working capital of Cdn$13,238,927 as at June 30, 2006 compared to Cdn$11,216,455 as at June 30, 2005. During the year ended June 30, 2006 operating activities used cash of Cdn$605,920. Loss for the year of Cdn$3,307,465 was reduced by items not affecting cash including write-off of deferred exploration costs of Cdn$143,783 and a stock-based compensation charge of Cdn$2,275,298. Changes in non-cash working capital items included an increase in accounts payable and accrued liabilities of Cdn$75,709, a decrease in receivables of Cdn$58,674, and an increase in amounts due to related parties of Cdn$100,248.

Investing activities provided cash of Cdn$5,375,913, including the reclassification of temporary investments to cash of Cdn$8,806,566 offset by Cdn$288,777 in acquisition of mineral property interests, Cdn$2,413,657 in deferred exploration costs and acquisition of equipment in the amount of Cdn$696,458.

Financing activities provided cash of Cdn$6,345,433, resulting from the issuance of 4,940,586 common shares pursuant to the exercise of warrants (proceeds of Cdn$6,175,733) and 315,000 common shares pursuant to the exercise of stock options (proceeds of Cdn$169,700). White Knight also issued 40,000 common shares for mineral property acquisitions at a deemed value of Cdn$72,000.

During the year ended June 30, 2006, White Knight’s cash position inclusive of temporary investments increased by Cdn$2,327,682.

A-33

Year Ended June 30, 2005

Operating activities for the year ended June 30, 2005 used cash of Cdn$954,361, with the loss for the year of Cdn$1,063,474 reduced by items not affecting cash including stock-based compensation of Cdn$148,543 and write-off of deferred exploration costs of Cdn$194,598. Changes in non-cash working capital items included increases in accounts receivable of Cdn$103,457 and prepaid expenses of Cdn$26,214, and decreases in accounts payable and accrued liabilities of Cdn$51,640, and amounts due to related parties of Cdn$52,616.

Investing activities used cash of Cdn$4,972,207. The largest component was the acquisition of temporary investments of Cdn$3,413,215 as White Knight invested in highly liquid short-term bonds. Acquisition of mineral property interests used cash of Cdn$673,373, and deferred exploration costs used cash of Cdn$816,648. Acquisition of equipment used cash of Cdn$86,486.

Financing activities provided cash of Cdn$3,813,500, with the entire amount provided by the issuance of capital stock. During the year, White Knight issued a total of 4,060,000 common shares: 1,500,000 common shares were issued pursuant to a private placement for proceeds of Cdn$2,370,000; 40,000 shares were issued for mineral property interests at a deemed value of Cdn$28,400; 230,000 shares were issued on the exercise of stock options for net proceeds of Cdn$120,125; and 2,290,000 shares were issued pursuant to the exercise of warrants for net proceeds of Cdn$1,421,304.

During the year White Knight’s cash position decreased by Cdn$2,113,068.

Year Ended June 30, 2004

Operating activities for the year ended June 30, 2004 used cash of Cdn$741,247, with the loss for the year of Cdn$1,664,257 reduced by items not affecting cash including stock-based compensation of Cdn$840,005 and write-off of deferred exploration costs of Cdn$241,549. Changes in non-cash working capital items included an increase in accounts receivable of Cdn$70,608, an increase in accounts payable and accrued liabilities of Cdn$12,714, and a decrease in amounts due to related parties of Cdn$153,168.

Investing activities used cash of Cdn$8,702,270. The largest component was the acquisition of temporary investments of Cdn$7,493,823. Acquisition of mineral property interests used cash of Cdn$611,213, and deferred exploration costs used cash of Cdn$442,661. Acquisition of equipment used cash of Cdn$89,321 and reclamation bonds were posted which used cash of Cdn$65,252.

Financing activities provided cash of Cdn$11,705,658, with the entire amount provided by the issuance of capital stock. During the year, White Knight issued a total of 20,870,734 common shares: 12,486,926 common shares were issued pursuant to private placements for gross proceeds of Cdn$9,599,998; 40,000 shares were issued for mineral property interests at a deemed value of Cdn$31,200; 2,134,500 shares were issued for the exercise of stock options for proceeds of Cdn$268,310; 6,084,308 shares were issued pursuant to the exercise of warrants for net proceeds of Cdn$2,377,872; and 125,000 common shares were issued for a finder’s fee.

During the year White Knight’s cash position increased by Cdn$2,262,141.

U.S. GAAP Reconciliation with Canadian GAAP

Under Canadian GAAP, mineral properties, including exploration, development and acquisition costs, are carried at cost and written down if the properties are abandoned, sold or if management decides not to pursue the properties. Under U.S. GAAP, all expenditures relating to mineral interests prior to the completion of a definitive feasibility study, which establishes proven and probable reserves, other than certain capitalized costs related to the acquisition of mineral property interests, must be expensed as incurred. Once a final feasibility study has been completed, additional costs incurred to bring a mine into production are capitalized as development costs.

Under U.S. GAAP, Statements of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation”, requires companies to establish a fair market value based method of accounting for stock-based compensation plans. White Knight has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of White Knight’s stock at the date of

A-34

grant over the option price. Effective July 1, 2003, White Knight elected to follow the fair value method of accounting for stock-based compensation.

New accounting and disclosure standards were introduced under Canadian GAAP for the fiscal year ending June 30, 2003. Accordingly, there were no differences between Canadian GAAP and United States GAAP for the years ended June 30, 2006, 2005 and 2004 or the quarters ended September 30, 2006 and 2005 other than those disclosed in the financial statements.

The reader is advised to consult White Knight’s audited annual consolidated financial statements for the year ended June 30, 2006, particularly Note 16, in Appendix B (Financial Statements of White Knight), for quantification of the differences.

Canadian GAAP Conflict in Accounting for Mineral Property Interests and Deferred Exploration Costs

In March 2000, the Accounting Standards Board of the Canadian Institute of Chartered Accountants, or CICA, issued Accounting Guideline No. 11 “Enterprises in the Development Stage,” or AcG 11. AcG 11 addresses three distinct issues: i) the capitalization of costs/expenditures; ii) impairment; and iii) disclosure. Prior to its issuance, development stage entities were exempt from following certain aspects of Canadian GAAP. AcG 11 requires that all companies account for transactions based on the underlying characteristics of the transaction rather than the maturity of the enterprise. In addition, AcG 11 requires specific disclosure of information by development stage companies and is effective no later than fiscal periods beginning on or after April 1, 2000, which in the case of White Knight, is the year ended June 30, 2001.

In March 2002, the Emerging Issues Committee, or EIC, of the CICA issued EIC-126 “Accounting by Mining Enterprises for Exploration Costs,” or EIC-126, which interprets how AcG 11 affects mining companies with respect to the deferral of exploration costs. EIC-126 refers to CICA Handbook Section 3061 “Property, Plant and Equipment,” or HB 3061, paragraph .21, which states that for a mineral property interest, the cost of the asset includes exploration costs if the enterprise considers that such costs have the characteristics of property, plant and equipment.

EIC-126 then states that a mining enterprise that has not established mineral reserves objectively, and therefore does not have a basis for preparing a projection of the estimated cash flow from the mineral property interest, is not precluded from considering the exploration costs to have the characteristics of property, plant and equipment. EIC-126 also sets forth the EIC’s consensus that a mining enterprise in the development stage is not required to consider the conditions in AcG 11 regarding impairment in determining whether exploration costs may be initially capitalized. With respect to impairment of capitalized exploration costs, EIC-126 sets forth the EIC’s consensus that a mining enterprise in the development stage that has not established mineral reserves objectively, and, therefore, does not have a basis for preparing a projection of the estimated cash flow from the property, is not obliged to conclude that capitalized costs have been impaired. However, such an enterprise should consider the conditions set forth in AcG 11 and HB 3061 in determining whether a subsequent write-down of capitalized exploration costs related to mineral property interest is required.

As disclosed above, White Knight considers that its mineral property interests and deferred exploration costs have the characteristics of property, plant and equipment, and, accordingly, White Knight has chosen to classify its mineral property interests and deferred exploration costs as tangible assets in accordance with its interpretation of Canadian GAAP.

Although White Knight believes its accounting policy is appropriate and consistent with Canadian GAAP, there is an alternative interpretation of Canadian GAAP that would consider them to be intangible assets as a result of the issuance of CICA Handbook Section 1581 “Business Combinations,” or HB 1581, and CICA Handbook Section 3062 “Goodwill and Other Intangible Assets,” or HB 3062.

This alternative interpretation under HB 1581 and HB 3062 would provide for the capitalization of a contract based mining asset as an intangible asset at its fair value at the time it was acquired, either as an individual asset purchase or as part of a business combination. For exploration stage mineral property interests and deferred exploration costs such as those owned by White Knight, the excess of the carrying value over the residual value of the intangible assets would be amortized on a straight-line basis over the period in which White Knight expected to

A-35

complete its exploration process or convert, develop or further explore the underlying properties. For White Knight, a reasonable estimate of this amortization period would be 5 years.

Consult White Knight’s audited annual consolidated financial statements for the year ended June 30, 2006 for the differences if White Knight had chosen to account for these costs as intangible assets under HB 1581 and HB 3062 effective July 1, 2001.

Variation in Operating Results

White Knight derives interest income on its cash and temporary investments, which depend on White Knight’s ability to raise funds.

Periodically, White Knight’s management through the exploration process, reviews results both internally and externally through the use of mining related professionals. The decision to abandon, reduce or expand exploration efforts is based upon many factors including general and specific assessments of mineral deposits, the likelihood of increasing or decreasing those deposits, land costs, estimates of future mineral prices, potential extraction methods and costs, the likelihood of positive or negative changes to the environment, permitting, taxation, labor and capital costs. There cannot be a pre-determined hold period for any property as geological or economic circumstances render each property unique.

Research and Development

White Knight conducts no research and development activities, nor is it dependent upon any patents or licenses.

Trend Information

White Knight knows of no trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on White Knight’s operations or financial condition.

Off-Balance Sheet Arrangements

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

Tabular Disclosure of Contractual Obligations

White Knight has an interest in various exploration-stage mineral properties located in the State of Nevada. Certain of the underlying claims are leased from third-parties and have lease payments due. Other claims are unpatented mining claims on land owned by the Bureau of Land Management, or BLM, and have annual lease fees payable. All claims have Nevada county taxes due annually which vary by county.

Based upon its current and anticipated future claim holdings, White Knight estimates its land holding costs for the next three fiscal years to be the following:

Annual Estimated Property Holding Costs


Type of Cost	2007		2008		2009

Leases	$	79,438	$	85,379	$	90,469
BLM Fees	$	444,750	$	444,750	$	444,750
County Fees	$	30,243	$	30,243	$	30,243

White Knight also maintains reclamation bonds for exploration work on certain of its properties. These bonds are held by or in trust for the responsible government body who oversees White Knight’s exploration work. When exploration, development or mining activities cease on that property, White Knight is responsible for restoring the property as provided by law. If White Knight either does not, or is not able, to comply with the required restoration, the reclamation bond will be used to provide funds for the required restoration work. However, if White Knight

A-36

completes the required restoration and the applicable government body is satisfied all requirements have been met, the reclamation bond for that property will be returned to White Knight.

The following is a list of White Knight’s reclamation bonds outstanding as of June 30, 2006.

Current

Government Body

$ Amount

Cdn$ Amount

Property

Status

Holding the Bond

of Bond

Cottonwood

Exploration

Nevada Division of Minerals

30,885

—

Gold Bar Horst

Exploration

Nevada Division of Minerals

7,586

—

Gold Pick

Exploration

Nevada Division of Minerals

8,698

—

Hunter

Exploration

Nevada Division of Minerals

2,613

—

Patty (Indian Ranch)

Exploration

BLM

77,600

—

McClusky Pass

Exploration

BLM, Nevada Division of Minerals

2,114

—

New Pass

Exploration

BLM

5,982

—

Slaven Canyon

Exploration

BLM

12,997

Unallocated Nevada

Exploration

BLM

53,421

—

Quito

Dropped

US Forest Service

5,000

—

Lookout

Dropped

B.C. Minister of Finance

—

3,500

MGM

Dropped

B.C. Minister of Finance

—

2,000

DISCLOSURES ABOUT WHITE KNIGHT’S MARKET RISK

White Knight’s mineral property interests are all currently at the exploration stage and White Knight’s operations are limited to exploring those properties. Therefore, White Knight’s believes its market risks are minimal. White Knight does, however, have future property payments due in U.S. dollars, which we refer to herein as “$”. As a Canadian company, White Knight’s cash balances are kept in both Canadian and U.S. dollar funds. Therefore, White Knight is exposed to some exchange rate risk. White Knight considers the amount of risk to be manageable and does not currently, nor is it likely in the foreseeable future, to conduct hedging to reduce its exchange rate risk. A hypothetical 10% increase in the value of one Canadian dollar expressed in U.S. dollars as at June 30, 2006 would have caused a $404,000 increase in White Knight’s net assets as at June 30, 2006, and an equivalent decrease in the value of one Canadian dollar would have caused a $367,000 decrease in White Knight’s net assets as at June 30, 2006.

Glossary

The following glossary and metric equivalents have been taken from White Knight’s annual report on Form 20-F for the fiscal year ended June 30, 2006, filed with the SEC on October 20, 2006. These definitions should be read in conjunction with this Appendix, and do not apply to other sections of this prospectus.


Adit		A horizontal or nearly horizontal tunnel made for exploration or mining with one opening.

Alluvial		Material deposited by the action of running water.

Alteration		Any change in the mineral composition of a rock brought about by physical or chemical means.

Argillization		Alteration of the rock which produces clay minerals.

Audiomagnetotelluric		Geophysical technique which measures variations in the earth’s own electromagnetic field.

Au		Gold.

Barite		Barium sulphate.

A-37


Basalt		A general term for dark-colored mafic igneous rocks, commonly extrusive but locally intrusive.

Bioclastic Turbidites		Submarine debris flows.

Breccia		A rock in which angular fragments are surrounded by a mass of fine-grained matrix.

Carbonate		A sediment formed by the organic or inorganic precipitation from aqueous solution of carbonates of calcium, magnesium, or iron; e.g., limestone and dolomite.

Chert		A hard, dense, sedimentary rock, consisting primarily of cryptocrystaline quartz.

CSAMT		Controlled Source Audio Magnetotelluric — geophysical method which measures the decay of an induced electromagnetic field.

Devonian		Geologic era 360 million years to 410 million years.

Dolomite		A carbonate sedimentary rock consisting of carbonate and magnesium. Often associated with and interbedded with limestone.

Embayment		Indentation in the profile of a coastline.

Facies		Environment in which a certain sedimentary rock unit is deposited.

Felsic		Intrusive or volcanic rock with a high silica content.

g/t		Grams per metric tonne.

Greenstone		Metamorphosed intermediate to basic volcanics.

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

Horst		A relatively uplifted rock unit or block that is bounded by faults on its long sides.

Hydrothermal		The products or the actions of heated waters in a rock mass such as a mineral deposit precipitating from a hot solution.

Induced Polarization		Geophysical exploration method which measures decay of an induced charge.

Jasperoid		A dense, usually gray, siliceous rock which contains quartz instead of limestone or dolomite.

Karsting		The development of large open spaces (caves) by the process of solution collapse. This usually takes place in limestones or other calcium carbonate rich rocks.

Lower-plate		Generally refers to the eastern assemblage of northeastern Nevada.

Magnetotelluric Survey		An electromagnetic survey in which natural electric and magnetic fields are measured.

Miocene		Geologic era 23.7 Million years to 6.2 million years.

Micritic		Fine-grained carbonate rock.

Opt		Ounces per ton.

Paleozoic		Geologic era 570 million years to 245 million years.

Pod		A roughly cylindrically-shaped body of ore that decreases at the ends.

A-38


Quarternary		The period of Earth’s history from about 2 million years ago to the present; also, the rocks and deposits of that age.

Rhyolite		A group of extrusive igneous rocks, typically porphyritic and commonly exhibiting flow texture, with phenocrysts of quartz and alkali feldspar in a glassy to cryptocrystalline groundmass; also, any rock in that group; the extrusive equivalent of granite.

Sediments		Solid fragmental material that originates from weathering of rocks and is transported or deposited by air, water, or ice, or that accumulates by other natural agents, such as chemical precipitation from solution or secretion by organisms, and that forms in layers on the Earth’s surface at ordinary temperatures in a loose, unconsolidated form; e.g., sand, gravel, silt, mud, alluvium.

Siliclastic		Sedimentary rock with a high silica content.

Siltstone		An indurated silt having the texture and composition of shale but lacking its fine lamination or fissility; a massive mudstone in which the silt predominates over clay.

Tertiary		Geologic era 57 million years to recent.

Upper-plate		Generally refers to the western assemblage of northeastern Nevada.

Terms Relating to Mineral Reserves and Resources

The following terms used in this Appendix are Canadian mining terms defined in accordance with National Instrument 43-101 under the guidelines set out in Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Mineral Reserves Definitions and Guidelines. The definitions of the terms mineral reserve, proven mineral reserve and probable mineral reserve under CIM standards are different than the definitions adopted by the SEC and applicable to U.S. companies filing reports with the SEC. It is the view of the SEC’s staff that:


	•	A final or bankable feasibility study is required to meet the requirements to designate reserves.

	•	A historic three year average price must be used in any reserve or cash flow analysis to designate reserves.

	•	To qualify as a reserve, the primary environmental analysis should be submitted to governmental authorities.

In addition, while the terms mineral resource, measured mineral resource, indicated mineral resource, and inferred mineral resource are recognized and required to be reported by Canadian regulations, the SEC does not recognize these terms. Information contained in this Appendix concerning descriptions of mineralization, resources and reserves may not be comparable to similar information publicly reported by U.S. companies. Resources classified as indicated mineral resource and inferred mineral resource have an uncertain existence and uncertain as to their economic and legal feasibility. You should not assume that any part or all of an inferred resource exists, or is economically mineable.


Mineral Reserve		The economically mineable part of a measured or indicated mineral resource demonstrated by a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A mineral reserve includes diluting materials and allowances for losses that might occur when the material is mined.

Proven Mineral Reserve		The economically mineable part of a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining processing, metallurgical, economic, and

A-39


		other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

Probable Mineral Reserve		The economically mineable part of an indicated, and in some circumstances, a measured mineral resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

Mineral Resource		A concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted form specific geological evidence and knowledge.

Measured Mineral Resource		That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough to confirm both geological and grade continuity.

Indicated Mineral Resource		That part of a mineral resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

Inferred Mineral Resource		That part of a mineral resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes.

Preliminary Feasibility Study		A comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has determined, and includes a financial analysis based on reasonable assumptions of technical, engineering, legal, operating, and economic factors and evaluation of other relevant factors which are sufficient for a qualified person, acting reasonably, to determine if all or part of the mineral resource may be classified as a mineral reserve.

A-40

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of

White Knight Resources Ltd.

We have audited the consolidated balance sheets of White Knight Resources Ltd. as at June 30, 2006 and 2005 and the consolidated statements of operations, shareholders’ equity and cash flows for the years ended June 30, 2006, 2005 and 2004 and the cumulative amounts from inception on December 18, 1986 to June 30, 2006. 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 with 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 June 30, 2006 and 2005 and the results of its operations and its cash flows for the years ended June 30, 2006, 2005 and 2004 and the cumulative amounts from inception on December 18, 1986 to June 30, 2006 in accordance with Canadian generally accepted accounting principles.

/s/ DAVIDSON & COMPANY LLP

Chartered Accountants

Vancouver, Canada

August 22, 2006

COMMENTS BY AUDITORS FOR U.S. READERS ON CANADA
-U.S. REPORTING DIFFERENCE

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) to identify circumstances when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 1 to the financial statements. Our report to the shareholders dated August 22, 2006 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions in the auditors’ report when these are adequately disclosed in the financial statements.

/s/ DAVIDSON & COMPANY LLP

Chartered Accountants

Vancouver, Canada

August 22, 2006

A Member of SC INTERNATIONAL

1200 — 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, BC, Canada, V7Y 1G6

Telephone (604) 687-0947 Fax (604) 687-6172

B-2

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS


	As at June 30
	2006			2005
	(Expressed in Canadian Dollars)

ASSETS
Current
Cash	$	11,397,885		$	282,459
Temporary investments (Note 3)		2,107,699			10,895,443
Receivables (net of allowance — $NIL; 2005 — $NIL)		117,490			176,164
Prepaid expenses		49,370			41,974

Total current assets		13,672,444			11,396,040
Mineral property interests (Note 4)		2,799,619			2,456,147
Deferred exploration costs (Note 5)		3,864,359			1,508,878
Equipment (Note 6)		930,853			139,118
Restricted reclamation bonds (Note 12)		234,783			196,692

Total assets	$	21,502,058		$	15,696,875


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current
Accounts payable and accrued liabilities	$	315,515		$	161,831
Due to related parties (Note 7)		118,002			17,754

Total current liabilities		433,517			179,585
Asset retirement obligation (Note 8)		165,985

Total Liabilities		599,502			179,585

Shareholders’ equity
Capital stock (Note 9)
Authorized: unlimited common shares without par value
Issued and outstanding 59,384,972 (2005 — 54,089,386)		33,630,385			26,844,701
Contributed surplus		3,153,572			1,246,525
Deficit accumulated during the exploration stage		(15,881,401	)		(12,573,936	)

Total shareholders’ equity		20,902,556			15,517,290

Total liabilities and shareholders’ equity	$	21,502,058		$	15,696,875

Nature and continuance of operations (Note 1)
Commitments (Note 14)

On behalf of the Board:

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

B-3

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended June 30
	Cumulative
	Amounts from
	Inception on
	December 18, 1986
	to June 30, 2006			2006			2005			2004
	(Expressed in Canadian Dollars)

ADMINISTRATION COSTS
Amortization	$	220,145		$	34,051		$	30,546		$	13,893
Audit		255,423			116,362			48,696			10,950
Bank charges and interest		26,349			7,464			5,762			1,520
Consulting		1,283,627			123,809			116,588			82,540
Consulting — stock-based compensation (Note 9)		3,263,846			2,275,298			148,543			840,005
Investor relations and shareholder information		665,974			175,427			123,189			52,889
Legal		641,631			120,155			26,958			23,196
Management fees — related party (Note 7)		1,437,910			264,000			264,000			210,000
Office and miscellaneous		753,670			96,089			85,068			56,201
Rent		338,199			56,497			54,873			28,300
Telephone		204,215			21,183			16,444			8,898
Transfer agent and listing fees		305,597			43,589			31,029			55,506
Travel and entertainment		505,337			108,044			69,132			52,569
Wages and benefits		831,071			130,998			79,918			31,863

Loss before other items		(10,732,994	)		(3,572,966	)		(1,100,746	)		(1,468,330	)

OTHER ITEMS
Write-off of deferred exploration costs (Note 5)		(3,560,589	)		(143,783	)		(194,598	)		(241,549	)
Interest income		1,295,734			442,036			261,600			97,920
Option payments received (net)		633,519
Write-off of mineral property interests		(3,814,257	)
Gain (loss) on foreign exchange		125,574			(11,574	)		(60,377	)		(9,299	)
Gain (loss) on disposal of temporary investments		166,591			(23,927	)
Unrealized recovery (loss) on temporary investments (Note 3)		(8,846	)		2,749			31,404			(42,999	)
Gain (loss) on disposal of equipment		13,867						(757	)

		(5,148,407	)		265,501			37,272			(195,927	)

Loss for the period	$	(15,881,401	)	$	(3,307,465	)	$	(1,063,474	)	$	(1,664,257	)

Basic and diluted loss per common share				$	(0.06	)	$	(0.02	)	$	(0.04	)

Weighted average number of common shares outstanding					58,855,176			53,091,304			39,038,472

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

B-4

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY


									Deficit
									Accumulated
									During the
	Number of							Contributed	Exploration
	Shares		Price		Amount			Surplus	Stage			Total
	(Expressed in Canadian Dollars)

Balance, June 30, 1986			$		$			$	$			$
Shares issued for:
Incorporation		1
Initial offering		201,200		0.13		26,300							26,300
Loss for the period										(17,325	)		(17,325	)

Balance, June 30, 1987		201,201				26,300				(17,325	)		8,975
Shares issued for:
Initial offering		1,176,400		0.12		138,100							138,100
Loss for the year										(49,793	)		(49,793	)

Balance, June 30, 1988		1,377,601				164,400				(67,118	)		97,282
Loss for the year										(44,166	)		(44,166	)

Balance, June 30, 1989		1,377,601				164,400				(111,284	)		53,116
Shares issued for:
Mineral property interests		150,000		0.46		68,499							68,499
Exercise of stock options		332,680		0.40		133,072							133,072
Private placement		350,000		0.40		140,000							140,000
Private placement		250,000		0.50		125,000							125,000
Flow-through private placement		279,905		0.54		150,100							150,100
Exercise of agent’s warrants		105,000		0.40		42,000							42,000
Private placement expenses						(30,000	)						(30,000	)
Loss for the year										(282,410	)		(282,410	)

Balance, June 30, 1990		2,845,186				793,071				(393,694	)		399,377
Shares issued for:
Exercise of stock options		50,000		0.90		45,000							45,000
Exercise of stock options		262,250		0.28		73,430							73,430
Private placement		600,000		0.15		90,000							90,000
Private placement		263,158		0.95		250,000							250,000
Flow-through private placement		286,666		0.15		43,000							43,000
Loss for the year										(119,275	)		(119,275	)

Balance, June 30, 1991		4,307,260			$	1,294,501		$	$	(512,969	)	$	781,532

B-5

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY — (Continued)

Deficit

Accumulated

During the

Number of
Contributed
Exploration

Shares Price Amount Surplus Stage Total

(Expressed in Canadian Dollars)

Balance, June 30, 1991 4,307,260 $ $ 1,294,501 $ $ (512,969 ) $ 781,532

Shares issued for:

Mineral property interests
100,000 0.29 29,000 29,000

Exercise of stock options
245,000 0.15 36,750 36,750

Debt settlement
114,308 0.53 60,869 60,869

Private placement
55,555 0.18 10,000 10,000

Finder’s fee
9,000 0.33 2,970 2,970

Private placement
300,000 0.33 99,000 99,000

Private placement
122,222 0.45 55,000 55,000

Exercise of warrants
460,000 0.20 92,000 92,000

Exercise of warrants
75,000 0.33 24,750 24,750

Loss for the year (164,398 ) (164,398 )

Balance, June 30, 1992 5,788,345 1,704,840 (677,367 ) 1,027,473

Shares issued for:

Mineral property interests
250,000 0.20 50,000 50,000

Exercise of stock options
189,999 0.15 28,500 28,500

Exercise of stock options
395,000 0.20 79,000 79,000

Private placement
500,000 0.40 200,000 200,000

Private placement
20,000 0.45 9,000 9,000

Private placement
28,000 0.50 14,000 14,000

Loss for the year (115,290 ) (115,290 )

Balance, June 30, 1993 7,171,344 2,085,340 (792,657 ) 1,292,683

Shares issued for:

Mineral property interests
190,000 0.24 46,000 46,000

Exercise of stock options
15,000 0.15 2,250 2,250

Exercise of stock options
132,000 0.21 27,720 27,720

Private placement
600,000 0.15 90,000 90,000

Private placement
300,000 0.23 67,500 67,500

Loss for the year (1,051,873 ) (1,051,873 )

Balance, June 30, 1994 8,408,344 2,318,810 (1,844,530 ) 474,280

B-6

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY — (Continued)

Deficit

Accumulated

During the

Number of
Contributed
Exploration

Shares Price Amount Surplus Stage Total

(Expressed in Canadian Dollars)

Shares issued for:

Mineral property interests
70,000 $ 0.17 $ 11,900 $ $ $ 11,900

Loss for the year (84,711 ) (84,711 )

Balance, June 30, 1995 8,478,344 2,330,710 (1,929,241 ) 401,469

Balance, June 30, 1995 8,478,344 2,330,710 (1,929,241 ) 401,469

Shares issued for:

Mineral property interests
130,000 0.50 65,000 65,000

Exercise of stock options
4,000 0.62 2,480 2,480

Exercise of stock options
580,000 0.22 127,600 127,600

Exercise of stock options
265,000 0.30 79,500 79,500

Private placement
650,000 0.30 195,000 195,000

Private placement
1,800,000 0.15 270,000 270,000

Private placement
500,000 0.46 230,000 230,000

Private placement
2,000,000 0.68 1,360,000 1,360,000

Exercise of warrants
10,000 0.30 3,000 3,000

Exercise of warrants
600,000 0.17 102,000 102,000

Exercise of warrants
300,000 0.26 78,000 78,000

Loss for the year (288,538 ) (288,538 )

Balance, June 30, 1996 15,317,344 4,843,290 (2,217,779 ) 2,625,511

Shares issued for:

Exercise of stock options
205,000 0.78 159,900 159,900

Exercise of stock options
9,500 0.62 5,890 5,890

Private placement
100,000 1.40 140,000 140,000

Private placement
3,600,000 1.00 3,600,000 3,600,000

Exercise of warrants
470,000 0.30 141,000 141,000

Exercise of warrants
225,000 0.15 33,750 33,750

Exercise of warrants
500,000 0.46 230,000 230,000

Loss for the year (477,124 ) (477,124 )

Balance, June 30, 1997 20,426,844 9,153,830 (2,694,903 ) 6,458,927

Shares issued for:

Mineral property interests
70,000 1.32 92,700 92,700

Exercise of warrants
1,575,000 0.17 267,750 267,750

Loss for the year (1,063,932 ) (1,063,932 )

Balance, June 30, 1998 22,071,844 9,514,280 (3,758,835 ) 5,755,445

B-7

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY — (Continued)

Deficit

Accumulated

During the

Number of
Contributed
Exploration

Shares Price Amount Surplus Stage Total

(Expressed in Canadian Dollars)

Shares issued for:

Private placement
3,708,132 $ 0.38 $ 1,409,090 $ $ $ 1,409,090

Mineral property interests
70,000 0.41 28,500 28,500

Management bonus
500,000 0.30 150,000 150,000

Loss for the year (2,173,417 ) (2,173,417 )

Balance, June 30, 1999 26,349,976 11,101,870 (5,932,252 ) 5,169,618

Balance, June 30, 1999 26,349,976 11,101,870 (5,932,252 ) 5,169,618

Shares issued for:

Mineral property interests
170,000 0.27 46,300 46,300

Loss for the year (1,234,438 ) (1,234,438 )

Balance, June 30, 2000 26,519,976 11,148,170 (7,166,690 ) 3,981,480

Loss for the year (642,586 ) (642,586 )

Balance, June 30, 2001 26,519,976 11,148,170 (7,809,276 ) 3,338,894

Shares issued for:

Mineral property interests
20,000 0.20 4,000 4,000

Exercise of stock options
300,000 0.10 30,000 30,000

Private placement
1,764,706 0.17 300,000 300,000

Finder’s fee
176,470

Loss for the year (1,679,183 ) (1,679,183 )

Balance, June 30, 2002 28,781,152 11,482,170 (9,488,459 ) 1,993,711

Shares issued for:

Mineral property interests
40,000 0.20 8,000 8,000

Exercise of stock options
337,500 0.10 33,750 33,750

Loss for the year (357,746 ) (357,746 )

Balance, June 30, 2003 29,158,652 11,523,920 (9,846,205 ) 1,677,715

B-8

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY — (Continued)

Deficit

Accumulated

During the

Number of
Contributed
Exploration

Shares Price Amount Surplus Stage Total

(Expressed in Canadian Dollars)

Shares issued for:

Mineral property interests
40,000 $ 0.78 $ 31,200 $ $ $ 31,200

Exercise of stock options
1,712,500 0.10 171,250 171,250

Exercise of stock options
422,000 0.23 97,060 97,060

Private placement
2,500,000 0.40 1,000,000 1,000,000

Finder’s fee
125,000

Private placement
7,764,704 0.85 6,599,998 6,599,998

Private placement
2,222,222 0.90 2,000,000 2,000,000

Exercise of warrants
3,708,132 0.44 1,631,578 1,631,578

Exercise of warrants
1,941,176 0.25 485,294 485,294

Exercise of warrants
435,000 0.60 261,000 261,000

Private placement expenses (896,428 ) 355,906 (540,522 )

Stock-based compensation 840,005 840,005

Loss for the year (1,664,257 ) (1,664,257 )

Balance, June 30, 2004 50,029,386 22,904,872 1,195,911 (11,510,462 ) 12,590,321

Balance, June 30, 2004 50,029,386 22,904,872 1,195,911 (11,510,462 ) 12,590,321

Shares issued for:

Mineral property interests
40,000 0.71 28,400 28,400

Exercise of stock options (Note 9)
230,000 0.30 120,125 120,125

Exercise of warrants (Note 9)
1,965,000 0.60 1,179,000 1,179,000

Exercise of broker’s warrants (Note 9)
325,000 0.60 242,304 242,304

Private placement
1,500,000 1.58 2,370,000 2,370,000

Stock-based compensation 148,543 148,543

Less: Fair market value of stock options and broker’s warrants exercised
(97,929 ) (97,929 )

Loss for the year (1,063,474 ) (1,063,474 )

Balance, June 30, 2005 54,089,386 26,844,701 1,246,525 (12,573,936 ) 15,517,290

B-9

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year Ended June 30
	Cumulative
	Amounts from
	Inception on
	December 18,
	1986 to
	June 30,
	2006			2006			2005			2004
	(Expressed in Canadian Dollars)

CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period	$	(15,881,401	)	$	(3,307,465	)	$	(1,063,474	)	$	(1,664,257	)
Items not affecting cash:
Amortization		220,145			34,051			30,546			13,893
Write-off of mineral property interests		3,814,257
Write-off of deferred exploration costs		3,560,589			143,783			194,598			241,549
Loss (gain) on disposal of equipment		(13,867	)					757
Stock-based compensation		3,263,846			2,275,298			148,543			840,005
Unrealized loss (recovery) on temporary investments		8,846			(2,749	)		(31,404	)		42,999
Loss (gain) on disposal of investments		(166,591	)		23,927
Shares issued for management bonus		150,000
Changes in non-cash working capital items:
Decrease (increase) in receivables		(117,490	)		58,674			(103,457	)		(70,608	)
Increase in prepaid expenses		(49,370	)		(7,396	)		(26,214	)		(4,374	)
Increase (decrease) in accounts payable and accrued liabilities		298,409			75,709			(51,640	)		12,714
Increase (decrease) in due to related parties		118,002			100,248			(52,616	)		(153,168	)

Net cash used in operating activities		(4,794,625	)		(605,920	)		(957,361	)		(741,247	)

CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of capital stock		32,724,773			6,345,433			3,813,500			11,705,658

Net cash provided by financing activities		32,724,773			6,345,433			3,813,500			11,705,658

CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of mineral property interests		(6,046,712	)		(288,777	)		(673,373	)		(611,213	)
Deferred exploration costs		(7,339,341	)		(2,413,657	)		(816,648	)		(442,661	)
Restricted reclamation bond refunded (posted)		(228,453	)		(31,761	)		15,547			(65,252	)
Acquisition (disposal) of temporary investments (net)		(1,909,954	)		8,806,566			(3,413,215	)		(7,493,823	)
Proceeds from disposal of equipment		58,141						1,968
Acquisition of equipment		(1,065,944	)		(696,458	)		(86,486	)		(89,321	)

Net cash provided by (used in) investing activities		(16,532,263	)		5,375,913			(4,972,207	)		(8,702,270	)

Increase (decrease) in cash during the period		11,397,885			11,115,426			(2,113,068	)		2,262,141
Cash, beginning of period					282,459			2,395,527			133,386

Cash, end of period	$	11,397,885		$	11,397,885		$	282,459		$	2,395,527

Supplemental disclosures with respect to cash flows (Note 13)

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

B-11

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in Canadian Dollars)

JUNE 30, 2006


1.	NATURE AND CONTINUANCE OF OPERATIONS

White Knight Resources Ltd. (the “Company”) is a Canadian company incorporated in British Columbia. The Company is primarily engaged in the acquisition and exploration of mineral property interests.

At the date of these consolidated financial statements, the Company has not been able to identify a known body of commercial grade ore on any of its mineral property interests. The ability of the Company to realize the costs it has incurred to date on these mineral property interests is dependent upon the Company being able to lever its property interests and cash, by way of exploration activities and option/joint ventures, into assets of greater value or to identify a commercial ore body, to finance its exploration costs and to resolve any environmental, regulatory or other constraints which may hinder the successful development of the mineral property interest. To date, the Company has not earned revenues and is considered to be in the exploration stage.

These consolidated financial statements have been prepared assuming the Company will continue on a going concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing through alliances with financial, exploration and mining entities, or other business and financial transactions which would assure continuation of the Company’s operations and exploration programs. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing. The Company has sufficient resources to meet its obligations for the foreseeable future at its current level of activity.

There can be no assurance that the Company will be able to continue to raise funds in which case the Company may be unable to meet its obligations. Should the Company be unable to realize on its assets and discharge its liabilities in the normal course of business, the net realizable value of its assets may be materially less than the amounts recorded on the consolidated balance sheets.

All amounts are in Canadian dollars unless otherwise stated.


	2006			2005

Working capital	$	13,238,927		$	11,216,455
Deficit		(15,881,401	)		(12,573,936	)


2.	SIGNIFICANT ACCOUNTING POLICIES

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”). The significant accounting policies adopted by the Company are as follows:

Use of estimates

The preparation of financial statements in accordance with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the year. Actual results could differ from these estimates.

B-12

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Principles of consolidation

These consolidated financial statements include the accounts of the Company and the following subsidiaries, all of which are 100% owned:

White Knight Gold (U.S.) Inc.
CUN Minerals Inc.
Quito Gold Corp.

All material inter-company transactions have been eliminated upon consolidation.

Cash

Cash consists of cash on hand and highly liquid investments with original maturities of three months or less. At June 30, 2006 and 2005, cash consisted of cash and guaranteed investment certificates held in financial institutions.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash. The Company places its cash with high quality financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts. The Company believes that credit risk associated with cash is remote.

Temporary investments

Temporary investments are recorded at the lower of cost or market on an aggregate basis. For temporary investments in which unrealized losses had been recognized in a previous year, any subsequent recoveries in market value are recorded up to original cost. This occurred during fiscal 2006 and 2005.

Mineral property interests and deferred exploration costs

The Company records mineral property interests, which consist of the right to explore for mineral deposits, at cost. The Company records deferred exploration costs, which consist of costs attributable to the exploration of mineral property interests, at cost. All direct and indirect costs relating to the acquisition and exploration of these mineral property interests are capitalized on the basis of specific claim blocks until the mineral property interests to which they relate are placed into production, the mineral property interests are disposed of through sale or where management has determined there to be an impairment. If a mineral property interest is abandoned, the mineral property interest and deferred exploration costs will be written off to operations in the period of abandonment.

On an ongoing basis, the capitalized costs are reviewed on a property-by-property basis to consider if there is any impairment on the subject mineral property interest. Management’s determination for impairment is based on: i) whether the Company’s exploration programs on the mineral property interests have significantly changed, such that previously identified resource targets are no longer being pursued; ii) whether exploration results to date are promising and whether additional exploration work is being planned in the foreseeable future or iii) whether remaining lease terms are insufficient to conduct necessary studies or exploration work. As at June 30, 2006 and 2005, management believes that no impairment relating to the mineral property interests and deferred exploration costs was required.

The recorded cost of mineral property interests and deferred exploration costs is based on cash paid and the assigned value of share consideration issued for mineral property interest acquisitions and exploration costs incurred. The recorded amount may not reflect recoverable value as this will be dependent on future development programs, the nature of the mineral deposit, commodity prices, adequate funding and the ability of the Company to bring its projects into production.

B-13

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Canadian GAAP Conflict in Accounting for Mineral Property Interests and Deferred Exploration Costs

In March 2000, the Accounting Standards Board of the Canadian Institute of Chartered Accountants (“CICA”) issued Accounting Guideline No. 11 “Enterprises in the Development Stage” (“AcG 11”). AcG 11 addresses three distinct issues: i) the capitalization of costs/expenditures; ii) impairment; and iii) disclosure. Prior to its issuance, development stage entities were exempt from following certain aspects of Canadian GAAP. AcG 11 requires that all companies account for transactions based on the underlying characteristics of the transaction rather than the maturity of the enterprise. In addition, AcG 11 requires specific disclosure of information by development stage companies.

In March 2002, the Emerging Issues Committee (“EIC”) of the CICA issued EIC-126 “Accounting by Mining Enterprises for Exploration Costs” (“EIC-126”) which interprets how AcG 11 affects mining companies with respect to the deferral of exploration costs. EIC-126 refers to CICA Handbook Section 3061 “Property, Plant and Equipment” (“HB 3061”), paragraph .21, which states that for a mineral property interest, the cost of the asset includes exploration costs if the enterprise considers that such costs have the characteristics of property, plant and equipment.

As disclosed above, the Company considers that its mineral property interests and deferred exploration costs have the characteristics of property, plant and equipment, and, accordingly, the Company has chosen to classify its mineral property interests and deferred exploration costs as tangible assets in accordance with its interpretation of Canadian GAAP.

Although the Company believes its accounting policy is appropriate and consistent with Canadian GAAP, there is an alternative interpretation of Canadian GAAP that would consider them to be intangible assets as a result of the issuance of CICA Handbook Section 1581 “Business Combinations” (“HB 1581”) and CICA Handbook Section 3062 “Goodwill and Other Intangible Assets” (“HB 3062”).

This alternative interpretation under HB 1581 and HB 3062 would provide for the capitalization of a contract based mining asset as an intangible asset at its fair value at the time it was acquired, either as an individual asset purchase or as part of a business combination. For exploration stage mineral property interests and deferred exploration costs such as those owned by the Company, the excess of the carrying value over the residual value of the intangible assets would be amortized on a straight-line basis over the period in which the Company expected to complete its exploration process or convert, develop or further explore the underlying properties. For the Company, a reasonable estimate of this amortization period would be 5 years.

In September, 2004, the CICA amended the guidance in HB 3062 to remove the example of mineral rights as this reference may have implied that mineral rights are necessarily an intangible asset. This amendment confirmed the Company’s current method of accounting for mineral property interests. Unless alternative guidance is provided, the Company expects to continue accounting for these assets as tangible assets.

B-14

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Asset retirement obligations

Effective July 1, 2004, the Company recognizes the fair value of a liability for an asset retirement obligation in the year in which it is incurred when a reasonable estimate of fair value can be made. The carrying amount of the related long-lived asset is increased by the same amount as the liability. Changes in the liability for an asset retirement obligation due to the passage of time will be measured by applying an interest method of allocation. The amount will be recognized as an increase in the liability and an accretion expense in the statement of operations. Changes resulting from revisions to the timing or the amount of the original estimate of undiscounted cash flows are recognized as an increase or a decrease in the carrying amount of the liability for an asset retirement obligation and the cost of the related long-lived asset.

Impairment of long-lived assets and long-lived assets to be disposed of

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.

Risk management

The Company’s largest non-monetary assets are its mineral property interests in the United States of America. The Company could accordingly be at risk for foreign currency fluctuations and developing legal and political environments.

The Company does not maintain significant cash or other monetary assets or liabilities in the United States.

The Company relies on local consultants for the management of its exploration activities and for legal and accounting matters.

Equipment and amortization

Equipment is recorded at cost and amortization is calculated at the following rates per annum using the declining-balance method:


Vehicles and technical equipment	30	%
Office equipment	20	%

Foreign currency translation

The Company’s subsidiaries are integrated foreign operations and its operating results are translated into Canadian dollar equivalents using the temporal method. Monetary items are translated at the exchange rate in effect at the balance sheet date; non-monetary items are translated at historical exchange rates. Income and expense items are translated at the average exchange rate for the period. Translation gains and losses are reflected in loss for the year.

Stock-based compensation

The Company has an employee stock option plan. The Company recognizes an expense arising from stock options granted to both employees and non-employees using the fair value method. The fair value of option grants is generally established at the date of grant using the Black Scholes option pricing model and the compensation amount, equal to the option’s fair value, is then recognized over the options vesting periods.

B-15

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Future income taxes

Future income taxes are recorded using the asset and liability method. Under the asset and liability method, future tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Future tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment or enactment occurs. To the extent that the Company does not consider it more likely than not that a future tax asset will be recovered, it provides a valuation allowance against the excess.

Loss per share

The Company uses the treasury stock method to compute the dilutive effect of options, warrants and similar instruments. Under this method, the dilutive effect on earnings per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments. It assumes that the proceeds would be used to purchase common shares at the average market price during the year. The weighted average number of common shares outstanding at June 30, 2006 of 58,855,176 (2005 — 53,091,304; 2004 — 39,038,472) does not include the 1,500,000 (2005 — 9,808,233; 2004 — 11,964,899) warrants outstanding and the 5,120,000 (2005 — 3,385,000; 2004 — 3,665,000) stock options outstanding.

Basic loss per share is calculated using the weighted-average number of shares outstanding during the year.

Comprehensive income (loss)

SFAS No. 130 “Reporting Comprehensive Income” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at June 30, 2006, the Company has no items that represent comprehensive loss, and therefore has not included a schedule of comprehensive loss in the financial statements.

Comparative figures

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


3.	TEMPORARY INVESTMENTS

Temporary investments consist of highly liquid bonds with a carrying value at June 30, 2006 of $2,107,699 and a fair value of $2,155,981. The recovery reported in the consolidated financial statements of $2,749 (2005 — $31,404) related to temporary investments is a partial recovery of the unrealized loss on temporary investments reported in fiscal 2004 of $42,999.

B-16

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Balance at
Balance at

June 30,
June 30,

2003 Additions Recovery 2004

Nevada Properties

Benmark
$ $ 24,922 $ $ 24,922

Celt
106,057 106,057

Cottonwood
30,692 27,324 58,016

Fye Canyon
119,889 119,889

Gold Bar Horst
61,700 20,843 82,543

Gold Pick
8,202 2,609 10,811

Goldstone
19,846 19,846

Hunter
36,203 26,627 62,830

McClusky Pass
400 55,794 56,194

New Pass
387,381 15,600 402,981

Pat Canyon
34,965 34,965

Patty (formerly Indian Ranch)
108,402 108,402

Slaven Canyon
54,177 109,137 163,314

South Cabin Creek
13,052 4,374 17,426

Squaw Creek
404,550 22,013 426,563

Tonkin Summit
59,615 59,615

Total Nevada Properties
$ 1,104,759 $ 649,615 $ $ 1,754,374

Title to mineral property interests involves certain inherent risks due to the difficulties of determining the validity of certain claims as well as the potential for problems arising from the frequently ambiguous conveyancing history characteristic of many mineral claims. The Company has investigated title to all of its mineral property interests and, to the best of its knowledge, expects title to all of its interests to be in good standing. The mineral property interests in which the Company has committed to earn an interest are located in the United States and the Company is therefore relying on advice by legal counsel who are basing such advice on the laws of the United States.

Celt, Eureka County, Nevada

In fiscal 2004, the Company acquired the property by staking. During the 2005 fiscal year, the Company entered into a Financing and Acquisition Agreement with Teck Cominco American Incorporated (“TCAI”) whereby TCAI was granted the option to earn an initial 51% interest in the property. The terms of the agreement provide for exploration expenditures of US$4,000,000 and cash payments of US$750,000 (US$50,000 paid) which must be incurred and paid to the Company’s U.S. subsidiary in annual increments prior to December 31, 2008. TCAI has made a firm commitment to incur US$500,000 in exploration expenditures by December 31, 2005 (completed). Upon TCAI vesting its 51% interest, TCAI and the Company will form a joint venture to further develop the property. When the joint venture completes the earlier of US$8.0 million in expenditures or a preliminary feasibility study, TCAI will have a one-time option to elect to earn an additional 9% interest in the property by funding and completing a feasibility study. Upon TCAI earning its additional interest and the approval of a production plan, the Company will have the option to request that TCAI arrange financing for the Company’s share of the capital costs required to develop the property. If the Company exercises this option TCAI shall commit to use its best efforts to arrange or provide project debt financing for not less than 60% of projected capital costs on a limited recourse basis after technical completion. If project costs exceed the amount available for debt financing and the parties elect nonetheless to put the property into production then at the Company’s election TCAI shall also

B-19

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

arrange or provide the Company’s share of equity financing on a subordinate loan basis at LIBOR plus 4%. The property is comprised of 608 claims.

Cottonwood, Eureka County, Nevada

In fiscal 2002, the Company staked 56 claims and executed a mining lease agreement to acquire six adjacent claims. Under the terms of the agreement, the Company has made lease payments totalling US$9,000 and has issued 80,000 common shares of the Company at a value of $69,800. The Company is required to make further annual lease payments of US$5,000. The Company has staked an additional 57 claims in the surrounding area.

Fye Canyon, Eureka County, Nevada

In fiscal 2004, the Company executed a mining lease agreement to acquire 114 claims (the “Underlying Fye Agreement”). Under the terms of the agreement, the Company has made an initial lease payment of US$5,000 which will increase by US$5,000 per year to a maximum of US$50,000 per year. The underlying royalty retained by the owner is 2% of net smelter returns up to a maximum of US$1,000,000 after which it is reduced to 1% of net smelter returns to a maximum of US$5,000,000. During the 2005 fiscal year, the Company entered into a Financing and Acquisition Agreement with TCAI whereby TCAI was granted the option to earn an initial 51% interest in the property. The terms of the agreement provide for exploration expenditures of US$4,000,000, cash payments of US$750,000 (US$50,000 paid) which must be incurred and paid to the Company’s U.S. subsidiary in annual increments prior to December 31, 2008, and the assumption of all obligations under the Underlying Fye Agreement. TCAI completed a firm commitment to incur US$500,000 in exploration expenditures by December 31, 2005. Upon TCAI vesting its 51% interest, TCAI and the Company will form a joint venture to further develop the property. When the joint venture completes the earlier of US$8.0 million in expenditures or a preliminary feasibility study, TCAI will have a one-time option to elect to earn an additional 9% interest in the property by funding and completing a feasibility study. Upon TCAI earning its additional interest and the approval of a production plan, the Company will have the option to request that TCAI arrange financing for the Company’s share of the capital costs required to develop the property. If the Company exercises this option TCAI shall commit to use its best efforts to arrange or provide project debt financing for not less than 60% of projected capital costs on a limited recourse basis after technical completion. If project costs exceed the amount available for debt financing and the parties elect nonetheless to put the property into production then at the Company’s election TCAI shall also arrange or provide the Company’s share of equity financing on a subordinate loan basis at LIBOR plus 4%. An additional 231 claims have been staked in the area of interest.

Hunter, Eureka County, Nevada

In fiscal 2002, the Company staked 46 claims and executed a mining lease agreement to acquire two adjacent claims. Under the terms of the agreement, the Company has made lease payments totalling US$14,000 and issued 100,000 common shares of the Company at a value of $73,800. The Company is required to make further annual lease payments of US$7,000.

Patty (formerly Indian Ranch), Eureka County, Nevada

In fiscal 1994, the Company entered into a lease agreement for a 100% interest in 48 claims by issuing 100,000 common shares of the Company. The agreement is subject to a 6% net smelter return royalty payable to the lessee. The agreement was amended during a prior year whereby the Company secured the ability to buy down the 6% net smelter return royalty to 3% by making a payment of US$500,000 and extending the lease term to 2014. The Company holds an additional 496 claims within the area of interest.

B-20

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In fiscal 1997, the Company entered into an option agreement with Chapleau Resources Ltd. (“Chapleau”). Pursuant to the terms of the agreement and the subsequent amendment, Chapleau was vested a 40% undivided interest in the property in 2001.

In fiscal 2001, the Company and Chapleau entered into an option agreement with Kennecott Exploration Company (“Kennecott”) whereby Kennecott could earn a 60% interest in the property by making certain option payments and incurring certain exploration expenditures. After paying the Company certain option payments, Kennecott terminated the agreement in November 2001. Upon termination of the Kennecott agreement, Chapleau’s interest in the property was reduced to a 25% undivided interest, leaving the Company with a 75% undivided interest in the property.

In fiscal 2003, the Company and Chapleau entered into an option-joint venture agreement with Placer Dome U.S. Inc. (“PDUS”). Under the terms of the agreement, PDUS may earn a 60% interest in the property by incurring minimum work expenditures of US$2.0 million over a four year period and reimbursing the companies for their 2002 claim filing costs. During fiscal 2005, PDUS provided notice that it had completed the work expenditure requirement and was exercising its right to vest its 60% ownership. The Company now owns an undivided 30% interest.

New Pass, Churchill County, Nevada

In fiscal 1998, the Company purchased a 100% interest in the property from Quest USA Resources Inc. by making payments totalling US$165,000, subject to a 2.75% net smelter return royalty. In fiscal 2000, the Company purchased the 2.75% net smelter return royalty by issuing 100,000 common shares of its capital stock to the vendor. In fiscal 2005, the Company granted Consolidated Odyssey Exploration Inc. (“ODE”) an option to earn an initial 50% interest in the property. The Company paid a finders fee of $10,000 with respect to the ODE agreement. In February 2005, ODE assigned all of its rights under the agreement to Bonaventure Enterprises Inc. (“Bonaventure”). Under the terms of the agreement, Bonaventure must incur US$2,000,000 in exploration expenditures, issue 500,000 shares and make option payments totalling US$500,000 over a 4-year period (US$125,000 and 200,000 shares valued at $44,617 received). Upon vesting a 50% interest, Bonaventure may elect to earn an additional 10% interest by financing the completion of a feasibility study. The property is comprised of 107 claims.

Slaven Canyon, Lander County, Nevada

In fiscal 2002, the Company acquired 51 claims by staking. In fiscal 2003, the Company acquired 17 claims by staking and acquired an additional 642 acres of land contiguous to the Company’s claims by executing three lease agreements which provide for escalating lease payments. In fiscal 2004, the Company acquired an additional 190 claims by staking and acquired an additional 350 acres of land contiguous to the Company’s claims by executing seven lease agreements which provide for cash payments totalling US$7,400 on signing and escalating lease payments thereafter. The underlying royalty retained by the owners ranges from 1/2% of net smelter returns to 31/2% of net smelter returns with a buy-down provision allowing the Company to reduce the underlying royalty to a 2% net smelter return by paying US$1,500,000. In July, 2005, the Company acquired an additional 320 acres of land contiguous to the Company’s claims by executing a lease agreement which provides for a cash payment of US$7,619 and re-imbursement of fees of US$15,000 upon signing (both payments made), and escalating lease payments thereafter. The underlying royalty retained by the owner is 2.75%.

Squaw Creek, Elko County, Nevada

Since 1996, the Company has held a 100% interest in 151 claims located in Elko County which were acquired by staking. During the 2005 fiscal year, the Company granted ODE an option to earn an initial 50% interest in the property. The Company paid a finders fee of $10,000 with respect to the ODE agreement. In February 2005, ODE assigned all of its rights under the agreement to Bonaventure. Under the terms of the agreement, Bonaventure must

B-21

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

incur US$2,000,000 in exploration expenditures, issue 500,000 shares and make option payments totaling US$500,000 over a 4-year period (US$125,000 and 200,000 shares at a value of $44,617 received). Upon vesting a 50% interest, Bonaventure may elect to earn an additional 10% interest by financing the completion of a feasibility study.

Other Nevada Properties

In fiscal 2002, the Company acquired a 100% interest by staking the South Cabin Creek and Gold Bar Horst properties. In fiscal 2003, the Company acquired a 100% interest in the Gold Pick property by staking. In fiscal 2004, the Company acquired the McClusky Pass, Pat Canyon, Tonkin Summit, Benmark, and Goldstone properties. During the 2005 fiscal year, the Company acquired the Ian and Knolls properties.


5.	DEFERRED EXPLORATION COSTS


	Balance at						Balance at
	June 30,						June 30,
By Type of Cost	2005			Additions			2006

Assays	$	713,694		$	170,016		$	883,710
Consulting		2,875,000			573,571			3,448,571
Drafting and report preparation		431,177			12,385			443,562
Drilling		3,103,814			1,474,859			4,578,673
Field operations		847,547			151,922			999,469
Reclamation		191,795			176,375			368,170
Recording		80,079						80,079
Supervision		374,039			17,668			391,707
Surveys		740,154			70,595			810,749
Trenching and site preparation		397,332			75,376			472,708
Recovery		(4,998,875	)		(223,503	)		(5,222,378	)
Write-off		(3,246,878	)		(143,783	)		(3,390,661	)

Total	$	1,508,878		$	2,355,481		$	3,864,359

B-22

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Balance at
Balance at

June 30,
June 30,

By Type of Cost
2004 Additions 2005

Assays
$ 681,131 $ 32,563 $ 713,694

Consulting
2,577,377 297,623 2,875,000

Drafting and report preparation
416,202 14,975 431,177

Drilling
2,753,845 349,969 3,103,814

Field operations
771,641 75,906 847,547

Reclamation
179,489 12,306 191,795

Recording
80,079 80,079

Supervision
356,723 17,316 374,039

Surveys
497,305 242,849 740,154

Trenching and site preparation
368,921 28,411 397,332

Recovery
(4,897,361 ) (101,514 ) (4,998,875 )

Write-off
(3,052,280 ) (194,598 ) (3,246,878 )

Total
$ 733,072 $ 775,806 $ 1,508,878


	Balance at						Balance at
	June 30,						June 30,
By Type of Cost	2003			Additions			2004

Assays	$	680,604		$	527		$	681,131
Consulting		2,342,159			235,218			2,577,377
Drafting and report preparation		393,336			22,866			416,202
Drilling		2,753,845						2,753,845
Field operations		739,812			31,829			771,641
Reclamation		178,609			880			179,489
Recording		80,079						80,079
Supervision		356,177			546			356,723
Surveys		320,921			176,384			497,305
Trenching and site preparation		368,921						368,921
Recovery		(4,897,361	)					(4,897,361	)
Write-off		(2,810,731	)		(241,549	)		(3,052,280	)

Total	$	506,371		$	226,701		$	733,072

B-23

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Balance at
Balance at

June 30,
June 30,

By Property
2003 Additions Write-offs 2004

Nevada Properties

Benmark
$ $ 2,091 $ $ 2,091

Celt
24,295 24,295

Cottonwood
30,807 30,807

Fye Canyon
31,495 31,495

Gold Bar Horst
40,975 40,975

Gold Pick
47,939 12,994 60,933

Goldstone
2,920 2,920

Hunter
23,028 23,028

McClusky Pass
7,266 14,240 21,506

New Pass
229,959 7,287 237,246

Pat Canyon
13,007 13,007

Patty (formerly Indian Ranch)
10,099 2,296 12,395

Slaven Canyon
88,532 110,989 199,521

South Cabin Creek
26,322 26,322

Squaw Creek
1,444 783 2,227

Tonkin Summit
4,304 4,304

General exploration
241,549 (241,549 )

Total Nevada Properties
$ 506,371 $ 468,250 $ (241,549 ) $ 733,072


6.	EQUIPMENT


	2006						2005
			Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value

Vehicles	$	93,552	$	40,476	$	53,076	$	76,745	$	24,156	$	52,589
Technical equipment		847,526		20,602		826,924		41,041		14,221		26,820
Office equipment		79,378		28,525		50,853		76,884		17,175		59,709

	$	1,020,456	$	89,603	$	930,853	$	194,670	$	55,552	$	139,118


7.	RELATED PARTY TRANSACTIONS

During the year ended June 30, 2006, the Company entered into the following transactions with related parties:

a) Paid or accrued $264,000 (2005 — $264,000; 2004 — $210,000) in management fees to directors and officers of the Company and to companies controlled by directors of the Company.

b) Paid or accrued $127,504 (2005 — $111,223; 2004 — $115,879) in consulting fees to directors and officers of the Company and to companies controlled by directors of the Company, of which $111,636 (2005 — $111,223; 2004 — $115,879) is included in or written-off to deferred exploration costs.

c) Paid or accrued $117,770 (2005 — $8,815; 2004 — $NIL) in administrative fees to officers and a company controlled by a director of the Company.

B-26

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

At June 30, 2006, there is $118,002 (2005 — $17,754) payable to directors and officers of the Company and to companies controlled by directors of the Company. The amounts are unsecured and non-interest bearing.

The Company entered into consulting agreements with directors and officers of the Company and to companies controlled by directors of the Company. The annual consulting fee commitments are as follows:


2007	$	324,000
2008		162,000

	$	486,000

The amounts charged to the Company for the services provided have been determined by negotiation among the parties and are covered by signed agreements. These transactions were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties.


8.	ASSET RETIREMENT OBLIGATION

The following table presents the aggregate carrying amount of the obligation associated with the retirement of the properties:


	2006		2005

Asset retirement obligation	$	165,985	$

The undiscounted amount of cash flows, required over the estimated reserve life of the underlying assets, to settle the obligation, adjusted for inflation, is estimated at $196,768 (2005 — $NIL). The obligation was calculated using a credit-adjusted risk free discount rate of 4% and an inflation rate of 4.1%. It is expected that this obligation will be funded from general Company resources at the time the costs are incurred with the majority of costs expected to occur when the properties are disposed of.


9.	CAPITAL STOCK

Share issuances

During the 2006 fiscal year the Company had no share issuances other than those issued for mineral property interests, exercise of warrants and stock options.

During the 2005 fiscal year the Company completed a private placement of 1,500,000 units at $1.58, each unit consisting of one common share and one non-transferable share purchase warrant, each warrant entitling the holder to purchase an additional share at $2.50 for one year.

During the 2004 fiscal year the Company completed three private placements:

a) 2,500,000 units at $0.40, each unit consisting of one common share and one non-transferable share purchase warrant, each warrant entitling the holder to purchase an additional share at $0.60 for two years (435,000 warrants exercised during the year) with an additional provision that if the closing price of the Company’s shares exceeds $0.95 for a period of more than 20 business days, the warrants must be exercised within two weeks of notice (triggered subsequent to year end). A finder’s fee of 125,000 units were issued as well as finder’s warrants valued at $47,304 entitling the holder to acquire 200,000 shares of the Company at a price of $0.60 for one year; subject to the same additional provision as for the places (triggered subsequent to year end);

b) 7,764,704 units at $0.85, each unit consisting of one common share and one non-transferable share purchase warrant, each warrant entitling the holder to purchase an additional share at $1.25 for 18 months.

B-27

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Brokers’ warrants valued at $239,567 were issued entitling the holder to acquire 543,529 shares of the Company at a price of $1.25, exercisable for 18 months; and

c) 2,222,222 units at $0.90, each unit consisting of one common share and one-half non-transferable share purchase warrant, each one warrant entitling the holder to purchase an additional share at $1.25 for one year. Brokers’ warrants valued at $69,035 were issued entitling the holder to acquire 155,555 shares of the Company at a price of $1.25, exercisable for 1 year.

d) Share issuance costs related to private placements during the year totalled $540,522.

Stock options

Under the Company’s stock option plan effective November 4, 2002 and amended December 12, 2003, the Company may grant options for up to 7,072,935 common shares to directors, employees and consultants at exercise prices to be determined by the market value on the date of grant. Vesting of options is made at the discretion of the Board of Directors at the time the options are granted with the exception of options granted in relation to investor relations. Options granted to consultants engaged in investor relations activities vest no earlier than as to one-quarter upon the grant date and a further one-quarter after each of the following three three-month periods. The options can be granted for a maximum term of 10 years.

At June 30, 2006, the following incentive stock options were outstanding:


Number		Exercise
of Options		Price		Expiry Date

	755,500	$	0.23	January 23, 2008
	2,074,500		0.41	September 23, 2008
	150,000		0.75	March 1, 2009
	50,000		0.85	March 21, 2010
	40,000		0.67	April 6, 2010
	50,000		1.50	October 19, 2010
	2,000,000		1.91	January 10, 2011

	5,120,000

B-28

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock option transactions and the number of stock options outstanding are summarized as follows:


				Weighted
				Average
	Number			Exercise
	of Options			Price

Balance, June 30, 2003		3,075,000		$	0.15
Options granted		2,724,500			0.51
Options exercised		(2,134,500	)		0.13

Balance, June 30, 2004		3,665,000			0.43
Options granted		150,000			0.73
Options expired/cancelled		(200,000	)		1.25
Options exercised		(230,000	)		0.30

Balance, June 30, 2005		3,385,000			0.41
Options granted		2,050,000			1.90
Options exercised		(315,000	)		0.54

Balance, June 30, 2006		5,120,000		$	1.00

Number of options currently exercisable		4,920,000		$	0.96

Weighted average fair value of options granted during the year		2004		$	0.39
		2005			0.56
		2006			1.16

Stock-based compensation

The following assumptions were used in the Black-Scholes valuation of stock options and warrants granted during the years presented:


	2006	2005	2004

Weighted average risk-free interest rate	3.9%	3.7%	4.2%
Expected life of options and warrants	5 years	5 years	1 year-5 years
Weighted average annualized volatility	71%	101%	118%
Dividend	0.00%	0.00%	0.00%

B-29

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Warrants

Warrant transactions are summarized as follows:


	Number			Exercise
	of Warrants			Price		Expiry Date

Balance, June 30, 2003		5,649,308
Warrants exercised		(3,708,132	)	$	0.44		November 18, 2003
Warrants exercised		(1,941,176	)		0.25		June 27, 2004
Warrants granted		200,000			0.60		October 24, 2004
Warrants granted		2,625,000			0.60		August 3, 2004
Warrants exercised		(435,000	)		0.60		August 3, 2004
Warrants granted		7,719,998			1.25		July 29, 2005
Warrants granted		588,235			1.25		August 3, 2005
Warrants granted		1,266,666			1.25		June 25, 2005

Balance, June 30, 2004		11,964,899
Warrants exercised		(2,290,000	)		0.60		August 3, 2004
Warrants expired		(100,000	)		0.60		August 3, 2004
Warrants expired		(1,266,666	)		1.25		June 25, 2005
Warrants granted		1,500,000			2.50		December 20, 2006

Balance, June 30, 2005		9,808,233
Warrants exercised		(4,352,351	)		1.25		July 29, 2005
Warrants exercised		(588,235	)		1.25		August 3, 2005
Warrants expired		(3,367,647	)		1.25		July 29, 2005

Balance, June 30, 2006		1,500,000

The number of warrants outstanding at June 30, 2006 is summarized as follows:


Number		Exercise
of Warrants		Price		Expiry Date

	1,500,000	$	2.50	December 20, 2006


10.	INCOME TAXES

A reconciliation of income tax recovery at statutory rates with the reported income tax recovery is as follows:


	2006			2005			2004

Loss before income tax recovery	$	(3,307,465	)	$	(1,063,474	)	$	(1,664,257	)

Expected income tax recovery	$	(1,227,731	)	$	(378,597	)	$	(618,241	)
Non-deductible expenses		1,144,086			14,884			315,842
Differences in foreign tax rates		13,135			32,371			1,810
Tax loss benefit not recognized for book purposes		70,510			331,342			300,589

Actual income tax recovery	$	NIL		$	NIL		$	NIL

B-30

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The significant components of the Company’s future tax assets are as follows:


	2006			2005			2004

Net operating loss carry forwards	$	2,413,320		$	2,338,680		$	2,517,008
Mineral properties and other assets		681,280			590,427			618,517
Share issuance costs		80,257			117,590			158,213

		3,174,857			3,046,697			3,293,738
Less: valuation allowances		(3,174,857	)		(3,046,697	)		(3,293,738	)

Net future tax assets	$	NIL		$	NIL		$	NIL

The Company has non-capital losses of approximately $6,853,000 which may be carried forward and applied against taxable income in future years. These losses, if unutilized, will begin to expire in 2007. Subject to certain restrictions, the Company has further resource development and exploration expenditures totalling approximately $1,709,000 available to reduce taxable income of future years. Future tax benefits which may arise as a result of these non-capital losses and resource deductions have not been recognized in these financial statements and have been offset by a valuation allowance.


11.	SEGMENTED INFORMATION

The Company’s one reportable operating segment is the exploration and development of mineral properties. Geographic information is as follows:


					Mineral
					Property
					Interests and
					Deferred
	Total				Exploration		Other
	Assets		Equipment		Costs		Assets

June 30, 2006
Canada	$	13,637,654	$	24,639	$		$	13,613,015
United States		7,864,404		906,214		6,663,978		294,212

	$	21,502,058	$	930,853	$	6,663,978	$	13,907,227

June 30, 2005
Canada	$	11,377,473	$	30,799	$		$	11,346,674
United States		4,319,402		108,319		3,965,025		246,058

	$	15,696,875	$	139,118	$	3,965,025	$	11,592,732


	2006		2005		2004

Loss before other items:
Canada	$	3,338,256	$	893,992	$	1,366,939
United States		234,710		206,754		101,391

	$	3,572,966	$	1,100,746	$	1,468,330


12.	RESTRICTED RECLAMATION BONDS

The Company has secure funds in place with the United States government, a Canadian bank and a United States bank as security for reclamation bonds on its mineral properties. These restricted reclamation

B-31

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

bonds were required by the local jurisdictions at the time exploration activities commenced on the properties and do not represent an asset retirement obligation (Note 2). Interest on the certificates of deposit with Canadian and United States banks is paid on a periodic basis to the Company.


13.	SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

Significant non-cash transactions during the years ended June 30, 2006, June 30, 2005 and June 30, 2004 include the Company issuing 40,000 common shares each year at a value in the current year of $72,000 (2005 — $28,400; 2004 — $31,200) for the acquisition of mineral property interests. In the year ended June 30, 2004, the Company issued 125,000 units as a finder’s fee related to a private placement. Included in accounts payable are $93,378 (2005 — $153,756) relating to deferred exploration costs, $129,328 (2005 — $NIL) relating to equipment, $6,330 (2005 — $NIL) relating to restricted reclamation bonds and $2,695 (2005 — $NIL) relating to mineral property interests.


14.	COMMITMENTS

The Company has entered into lease agreements for its premises in Canada and the United States. The annual lease commitments are as follows:


2007	$	38,295
2008		22,500

	$	60,795


15.	FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash, temporary investments, receivables, restricted reclamation bonds, accounts payable and accrued liabilities, and due to related parties. It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from its financial instruments. The fair values of these financial instruments approximate their carrying values, unless otherwise noted.

The Company has its cash primarily in one commercial bank in Vancouver, British Columbia, Canada and one commercial bank in Reno, Nevada, United States.


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

These financial statements have been prepared in accordance with Canadian GAAP. Material variations in the accounting principles, practices and methods used in preparing these financial statements from principles, practices and methods accepted in the United States (“United States GAAP”) are described and quantified below.

B-32

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The impact of the differences between Canadian GAAP and United States GAAP on the consolidated balance sheets would be as follows:


	2006							2005
	Balance,					Balance,		Balance,					Balance,
	Canadian					United States		Canadian					United States
	GAAP		Adjustments			GAAP		GAAP		Adjustments			GAAP

Temporary investments	$	2,107,699	$	48,282		$	2,155,981	$	10,895,443	$	36,224		$	10,931,667
Other current assets		11,564,745					11,564,745		500,597					500,597
Mineral property interests		2,799,619		(2,032,127	)		767,492		2,456,147		(1,839,607	)		616,540
Deferred exploration costs		3,864,359		(3,864,359	)				1,508,878		(1,508,878	)
Equipment		930,853					930,853		139,118					139,118
Restricted reclamation bonds		234,783					234,783		196,692					196,692

	$	21,502,058	$	(5,848,204	)	$	15,653,854	$	15,696,875	$	(3,312,261	)	$	12,384,614

Current liabilities	$	433,517	$			$	433,517	$	179,585	$			$	179,585
Asset retirement obligation		165,985					165,985
Shareholders’ equity		20,902,556		(5,848,204	)		15,054,352		15,517,290		(3,312,261	)		12,205,029

	$	21,502,058	$	(5,848,204	)	$	15,653,854	$	15,696,875	$	(3,312,261	)	$	12,384,614

The impact of the differences between Canadian GAAP and United States GAAP on the consolidated statements of operations would be as follows:


	Cumulative
	Amounts from
	Inception on
	December 18, 1986
	to June 30, 2006			2006			2005			2004

Loss for the period, Canadian GAAP	$	(15,881,401	)	$	(3,307,465	)	$	(1,063,474	)	$	(1,664,257	)
Adjustments:
Mineral property interests		(2,032,127	)		(192,520	)		(619,497	)		(556,945	)
Deferred exploration costs		(3,864,359	)		(2,355,481	)		(775,806	)		(226,701	)
Increase in temporary investments		48,282			22,634			36,224

Loss for the period, United States GAAP	$	(21,729,605	)	$	(5,832,832	)	$	(2,422,553	)	$	(2,447,903	)

Basic and diluted loss per share, United States GAAP				$	(0.10	)	$	(0.05	)	$	(0.06	)

Weighted average number of common shares outstanding, United States GAAP					58,855,176			53,091,304			39,038,472

B-33

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The impact of the differences between Canadian GAAP and United States GAAP on the consolidated statements of cash flows would be as follows:


	Cumulative Amounts
	from Inception on
	December 18, 1986
	to June 30, 2006			2006			2005			2004

Cash flows used in operating activities, Canadian GAAP	$	(4,794,625	)	$	(605,920	)	$	(954,361	)	$	(741,247	)
Acquisition of mineral property interests		(5,449,802	)		(209,852	)		(619,497	)		(556,945	)
Deferred exploration costs		(7,339,941	)		(2,413,657	)		(816,648	)		(442,661	)
Acquisition (disposal) of temporary investments (net)		(1,909,954	)		8,806,566			(3,413,215	)		(7,493,823	)

Cash flows provided by (used in) operating activities, United States GAAP		(19,494,322	)		5,577,137			(5,803,721	)		(9,234,676	)

Cash flows provided by financing activities, Canadian GAAP and United States GAAP		32,724,773			6,345,433			3,813,500			11,705,658

Cash flows provided by (used in) investing activities, Canadian GAAP		(16,532,263	)		5,375,913			(4,972,207	)		(8,702,270	)
Acquisition of mineral property interests		5,449,802			209,852			619,497			556,945
Deferred exploration costs		7,339,941			2,413,657			816,648			442,661
Acquisition (disposal) of temporary investments (net)		1,909,954			(8,806,566	)		3,413,215			7,493,823

Cash flows used in investing activities, United States GAAP		(1,832,566	)		(807,144	)		(122,847	)		(208,841	)

Increase (decrease) in cash during the period		11,397,885			11,115,426			(2,113,068	)		2,262,141
Cash, beginning of period					282,459			2,395,527			133,386

Cash, end of period	$	11,397,885		$	11,397,885		$	282,459		$	2,395,527

Mineral property interests and deferred exploration costs

In accordance with EITF 04-02, the Company classifies the costs of acquiring its mineral interests as tangible assets resulting in no difference between Canadian and United States GAAP.

Under United States GAAP exploration costs on mineral properties and related annual maintenance costs paid primarily to government agencies, other than acquisition costs consisting mainly of obligations under mining leases with third parties, prior to the establishment of proven or probable reserves are expensed as incurred. Under Canadian GAAP these costs may be deferred. Accordingly, for United States GAAP purposes, these exploration and related maintenance costs on mineral properties have been written off.

B-34

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Under United States GAAP, the Company performs evaluations of its investment in mineral properties to assess the recoverability and the residual value of its investments in these assets. All mineral properties are reviewed for impairment whenever events or circumstances change which indicates the carrying amount of an asset may not be recoverable, utilizing established guidelines based on undiscounted future net cash flows from the asset or upon the determination that certain exploration properties do not have sufficient potential for economic mineralization.

Asset retirement obligations

The Company adopted new accounting and disclosure standards under Canadian GAAP (Note 2) since the 2005 fiscal year. Accordingly there were no differences between Canadian GAAP and United States GAAP as at June 30, 2006 and 2005.

Under Canadian GAAP, the Company was not required to record asset retirement obligations as at June 30, 2005. The Company determined there were no asset retirement obligations as at June 30, 2005.

Temporary Investments

Under Canadian GAAP, temporary investments are carried at the lower of aggregate cost or current market value, with any unrealized gain or loss included in the statement of operations. Long-term investments are carried on the cost or equity basis and are only written down when there is evidence of a decline in value that is other than temporary.

Under United States GAAP, SFAS 115 requires that certain debt and equity investments must be classified into available-for-sale or trading securities and stated at fair market values. Any unrealized holding gains or losses are reported as a separate component of shareholders’ equity until realized for available-for-sale securities, and included in earnings for trading securities. For United States GAAP purposes, the Company’s investment in debt securities have been classified as trading securities. Under SFAS 115, for the 2004 fiscal year there was no difference under Canadian GAAP or United States GAAP as these debt securities have been written down to their fair market value, with an unrealized loss of $42,999 included in the consolidated statement of operations. For the 2006 fiscal year, an excess holding gain of $48,282 (2005 — $36,224) would be recognized under United States GAAP.

New accounting pronouncements

In May 2005, the Financial Accounting Standards Board (FASB) issued SFAS No. 154, “Accounting Changes and Error Corrections — A Replacement of APB Opinion No. 20 and SFAS No. 3”. SFAS 154 changes the requirements for the accounting for and reporting of a change in accounting principle and applies to all voluntary changes in accounting principle. It also applies to changes required by an accounting pronouncement in the unusual instance that the pronouncement does not include specific transition provisions. SFAS 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. The provisions of SFAS No. 154 are effective for accounting changes and correction of errors made in fiscal years beginning after December 15, 2005. The adoption of this standard is not expected to have a material effect on the Company’s results of operations or financial position.

The FASB has also issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instruments” and SFAS No. 156 “Accounting for Servicing of Financial Assets”, but they will not have any relationship to the operations of the Company. Therefore a description and its impact for each on the Company’s operations and financial position have not been disclosed.

The adoption of these new pronouncements is not expected to have a material effect on the Company’s consolidated financial position or results of operations.

B-35

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

CONSOLIDATED BALANCE SHEETS

Unaudited — prepared by management


	September 30,			June 30,
	2006			2006
	(Expressed in Canadian Dollars)

ASSETS
Current
Cash	$	10,515,376		$	11,397,885
Temporary investments		2,158,804			2,107,699
Receivables (net of allowance — $Nil; June 30, 2006 — $NIL)		133,333			117,490
Prepaid expenses		48,111			49,370

Total Current Assets		12,855,624			13,672,444
Mineral property interests (Note 3)		2,809,295			2,799,619
Deferred exploration costs (Note 4)		4,259,830			3,864,359
Restricted reclamation bonds (Note 8)		238,081			234,783
Equipment		1,062,166			930,853

Total Assets	$	21,224,996		$	21,502,058


LIABILITIES
Current
Accounts payable and accrued liabilities	$	172,704		$	315,515
Due to related parties (Note 6)		100,529			118,002

Total current liabilities		273,233			433,517
Asset retirement obligation		165,985			165,985

Total Liabilities		439,218			599,502



SHAREHOLDERS’ EQUITY
Capital stock (Note 5)
Authorized: unlimited common shares without par value
Issued and outstanding 59,384,972 (June 30/06 — 59,384,972)		33,630,385			33,630,385
Contributed surplus		3,217,240			3,153,572
Deficit accumulated during the exploration stage		(16,061,847	)		(15,881,401	)

Total Shareholders’ Equity		20,785,778			20,902,556

Total liabilities and shareholders’ equity	$	21,224,996		$	21,502,058


Approved by the Board:

Director:		Director:

/s/ John M. Leask John M. Leask, P.Eng		/s/ Megan Cameron-Jones Megan Cameron-Jones

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

B-37

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited — prepared by management

For the period ended September 30


	Cumulative
	Amounts from
	Inception on
	December 18, 1986			2006						2005
	to			Quarter			Year			Quarter			Year
	September 30, 2006			to Date			to Date			to Date			to Date
	(Expressed in Canadian Dollars)

EXPENSES
Amortization	$	228,500		$	8,355		$	8,355		$	8,657		$	8,657
Audit		285,423			30,000			30,000
Bank charges & interest		26,649			300			300			1,863			1,863
Consulting		1,311,525			27,898			27,898			30,995			30,995
Consulting — stock-based compensation		3,327,514			63,668			63,668			26,766			26,766
Investor relations & shareholder info		688,476			22,502			22,502			29,616			29,616
Legal		644,541			2,910			2,910			8,962			8,962
Management fees		1,503,910			66,000			66,000			66,000			66,000
Office & miscellaneous		769,764			16,094			16,094			26,999			26,999
Rent		352,068			13,869			13,869			13,394			13,394
Telephone		209,047			4,832			4,832			5,896			5,896
Transfer agent & listing fees		307,267			1,670			1,670			4,630			4,630
Travel & entertainment		517,216			11,879			11,879			38,384			38,384
Wages & benefits		851,251			20,180			20,180			22,544			22,544

LOSS BEFORE UNDER-NOTED ITEMS		(11,023,151	)		(290,157	)		(290,157	)		(284,706	)		(284,706	)
Interest income		1,424,929			129,195			129,195			28,877			28,877
Gain (loss) on foreign exchange		127,506			1,932			1,932			(21,434	)		(21,434	)
Option payments received (net)		633,519									13,617			13,617
Gain on disposal of equipment		13,867
Unrealized recovery (loss) on temporary investments		(10,296	)		(1,450	)		(1,450	)		301			301
Gain on disposal of temporary investments		166,591
Write-off of deferred exploration costs		(3,580,555	)		(19,966	)		(19,966	)		(38,712	)		(38,712	)
Write-off of mineral property interests		(3,814,257	)

LOSS FOR THE PERIOD	$	(16,061,847	)	$	(180,446	)	$	(180,446	)	$	(302,057	)	$	(302,057	)
Loss per common share				$	(0.003	)	$	(0.003	)	$	(0.005	)	$	(0.005	)
Weighted average number of common shares outstanding					59,384,972			59,384,972			57,658,497			57,658,497

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

B-38

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited — prepared by management

For the period ended September 30 — Canadian Funds


	Cumulative
	Amounts from
	Inception on
	December 18,			2006						2005
	1986 to			Quarter			Year			Quarter			Year
	September 30, 2006			to Date			to Date			to Date			to Date
	(Expressed in Canadian Dollars)

Cash Flows from Operating Activities
Loss for the period	$	(16,061,847	)	$	(180,446	)	$	(180,446	)	$	(302,057	)	$	(302,057	)
Items not affecting cash:
Amortization		228,500			8,355			8,355			8,657			8,657
Write-off of deferred exploration costs		3,580,555			19,966			19,966			38,712			38,712
Write-off of mineral property interests		3,814,257
Stock-based compensation		3,327,514			63,668			63,668			26,766			26,766
Gain on disposal of equipment		(13,867	)
Unrealized (recovery) loss on temporary investments		10,296			1,450			1,450
Loss (gain) on disposal of investments		(166,591	)
Shares issued for management bonus		150,000
Changes in non-cash working capital
Decrease (increase) in prepaid exp.		(48,111	)		1,259			1,259			17,581			17,581
Increase in receivables		(133,333	)		(15,843	)		(15,843	)		(264,958	)		(264,958	)
Increase (decrease) in accounts payable & accr. liabilities		359,287			(17,097	)		(17,097	)		(158,753	)		(158,753	)
Increase (decrease) in due to related parties		100,529			(17,473	)		(17,473	)		92,353			92,353

Net cash used in operating activities		(4,852,811	)		(136,161	)		(136,161	)		(541,699	)		(541,699	)
Cash Flows from Financing Activities
Issuance of capital stock		32,724,773									6,238,933			6,238,933

Net cash provided by financing activities		32,724,773									6,238,933			6,238,933
Cash Flows from Investing Activities
Acquisition of mineral property interests		(6,083,105	)		(33,698	)		(33,698	)		(148,344	)		(148,344	)
Deferred exploration costs		(7,725,155	)		(446,192	)		(446,192	)		(402,276	)		(402,276	)
Restricted reclamation bond posted		(244,411	)		(9,628	)		(9,628	)		(12,224	)		(12,224	)
Acquisition of temporary investments (net)		(1,922,509	)		(12,555	)		(12,555	)		(4,660,392	)		(4,660,392	)
Proceeds from disposal of equipment		58,141
Acquisition of equipment		(1,439,547	)		(244,275	)		(244,275	)		(18,263	)		(18,263	)

Net cash used in investing activities		(17,356,586	)		(746,348	)		(746,348	)		(5,241,499	)		(5,241,499	)

Increase (decrease) in cash during the period		10,515,376			(882,509	)		(882,509	)		455,735			455,735
Cash, beginning of period					11,397,885			11,397,885			282,459			282,459

Cash, end of period	$	10,515,376		$	10,515,376		$	10,515,376		$	738,194		$	738,194

Supplemental disclosures with respect to cash flows (Note 9)

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

B-40

WHITE KNIGHT RESOURCES LTD.
(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unaudited — prepared by management

(Expressed in Canadian Dollars)

For the period ended September 30, 2006


1.	NATURE AND CONTINUANCE OF OPERATIONS

White Knight Resources Ltd. (the “Company”) is a Canadian company incorporated in British Columbia. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises”. The Company is primarily engaged in the acquisition and exploration of mineral property interests.

The ability of the Company to realize the costs it has incurred to date on its mineral property interests is dependent upon the Company being able to lever its property interests and cash, by way of exploration activities and option/joint ventures, into assets of greater value or to identify ore bodies, to finance its exploration costs and to resolve any environmental, regulatory or other constraints which may hinder the successful development of the mineral property interest. To date, the Company has not earned revenues and is considered to be in the exploration stage.

These consolidated financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Management is actively targeting sources of additional financing through alliances with financial, exploration and mining entities, or other business and financial transactions which would assure continuation of the Company’s operations and exploration programs. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing. The Company has sufficient resources to meet its obligations for the foreseeable future at its current level of activity.

All amounts are in Canadian dollars unless otherwise stated.


	September 30,			June 30,
	2006			2006

Working capital	$	12,582,391		$	13,238,927
Deficit		(16,061,847	)		(15,881,401	)


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for audited financial statements. In the opinion of management, all adjustments (consisting of normal and recurring accruals) considered necessary for fair presentation have been included. Operating results for the three month period ended September 30, 2006 are not necessarily indicative of the results that may be expected for the year ended June 30, 2007.

The interim consolidated financial statements have been prepared by management in accordance with the accounting policies described in the Company’s annual consolidated financial statements for the year ended June 30, 2006. For further information, refer to the consolidated financial statements and footnotes thereto included for the year ended June 30, 2006.

B-41

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Asset retirement obligations

Stock-based compensation

Comparative figures

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


3.	MINERAL PROPERTY INTERESTS


	Balance at							Balance at
	June 30, 2006		Additions		Recovery			September 30, 2006

Nevada Properties
Benmark	$	81,118	$	14,022	$			$	95,140
Celt		284,919							284,919
Cottonwood		160,214		15,844					176,058
Fye Canyon		173,825		1,503					175,328
Gold Bar Horst		149,237		25,659					174,896
Gold Pick		24,556		3,786					28,342
Goldstone		32,309		8,694					41,003
Hunter		136,891		6,730					143,621
Ian		31,317		7,852					39,169
Knolls		86,102		25,239					111,341
McClusky Pass		134,460		34,073					168,533
New Pass		419,732		15,003		(111,069	)		323,666
Pat Canyon		108,797		24,958					133,755
Patty		108,402							108,402
Slaven Canyon		365,427		47,822					413,249
South Cabin Creek		47,389		11,778					59,167
Squaw Creek		270,261		21,172		(181,388	)		110,045
Tonkin Summit		129,663		26,080					155,743
Other		55,000		11,918					66,918

Total Nevada Properties	$	2,799,619	$	302,133	$	(292,457	)	$	2,809,295

B-42

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Nevada Properties

New Pass Project

In fiscal 2005, the Company entered into an option agreement with Bonaventure Enterprises Inc. (“Bonaventure”) whereby Bonaventure may earn a 50% interest in the property by incurring exploration expenditures of US$2,000,000, issuing 500,000 shares and making cash payments of US$500,000 over a 4-year period (US$125,000 and 100,000 shares received during the period). Upon vesting, Bonaventure may elect to earn an additional 10% interest by financing the completion of a feasibility study.

Squaw Creek Project

In fiscal 2005, the Company entered into an option agreement with Bonaventure whereby Bonaventure may earn a 50% interest in the property by incurring exploration expenditures of US$2,000,000, issuing 500,000 shares and making cash payments of US$500,000 over a 4-year period (US$125,000 and 100,000 shares received during the period). Upon vesting, Bonaventure may elect to earn an additional 10% interest by financing the completion of a feasibility study.


4.	DEFERRED EXPLORATION COSTS


	Balance at						Balance at
	June 30,						September 30,
By Type of Cost	2006			Additions			2006

Assays	$	883,710		$	22,286		$	905,996
Consulting		3,448,571			116,739			3,565,310
Drafting and report preparation		443,562			764			444,326
Drilling		4,578,673			277,352			4,856,025
Field operations		999,469			39,657			1,039,126
Reclamation		368,170			2,260			370,430
Recording		80,079						80,079
Supervision		391,707			3,787			395,494
Surveys		810,749			12,261			823,010
Trenching and site preparation		472,708			4,480			477,188
Recovery		(5,222,378	)		(64,149	)		(5,286,527	)
Write-off		(3,390,661	)		(19,966	)		(3,410,627	)

Total	$	3,864,359		$	395,471		$	4,259,830

B-43

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Balance at
Balance at

June 30,
September 30,

By Property
2006 Additions Recoveries Write-offs 2006

Nevada Properties

Benmark
$ 32,131 $ $ $ $ 32,131

Celt
17,505 17,505

Cottonwood
457,248 51,942 509,190

Fye Canyon
20,811 917 21,728

Gold Bar Horst
147,447 320,728 468,175

Gold Pick
464,861 10,936 475,797

Goldstone
3,864 20,425 24,289

Hunter
34,186 38,996 73,182

Ian
625 4,137 4,762

Knolls
21,359 21,359

McClusky Pass
529,164 4,226 533,390

New Pass
64,149 (64,149 )

Pat Canyon
22,846 22,846

Patty
116,710 1,373 118,083

Slaven Canyon
1,806,259 5,940 1,812,199

South Cabin Creek
38,645 38,645

Tonkin Summit
86,549 86,549

General exploration
19,966 (19,966 )

Total Nevada Properties
$ 3,864,359 $ 479,586 $ (64,149 ) $ (19,966 ) $ 4,259,830


5.	CAPITAL STOCK

Authorized: unlimited common shares without par value.

Share Issuances

There were no shares issued during the period.

Warrants

At September 30, 2006, the following warrants were outstanding:


Number		Exercise
of Warrants		Price		Expiry Date

	1,500,000	$	2.50	December 20, 2006

Stock options

B-44

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

relations. Options granted to consultants engaged in investor relations activities must vest no earlier than as to one-quarter upon the grant date and as to a further one-quarter after each of the following three four-month periods.

At September 30, 2006, the following incentive stock options were outstanding:


Number	Exercise
of Shares	Price		Expiry Date

755,500	$	0.23	January 23, 2008
2,074,500		0.41	September 23, 2008
150,000		0.75	March 1, 2009
50,000		0.85	March 21, 2010
40,000		0.67	April 6, 2010
50,000		1.50	October 19, 2010
2,000,000		1.91	January 10, 2011

5,120,000

Stock option transactions and the number of stock options outstanding are summarized as follows:


			Weighted
			Average
	Number		Exercise
	of Options		Price

Balance, June 30, 2006		5,120,000	$	1.00
Balance, September 30, 2006		5,120,000		1.00

Number of options currently exercisable		5,007,500	$	0.98


6.	RELATED PARTY TRANSACTIONS

During the year to date, the Company paid management fees in the amount of $66,000 (2005 — $66,000) to directors and officers of the Company and companies controlled by directors.

During the year to date, the Company paid consulting fees in the amount of $26,921 (2005 — $28,840) to directors and officers of the Company and companies controlled by directors. Of that amount, $26,921 (2005 — $28,840) is included or written off to deferred exploration costs.

During the year to date, the Company paid administrative consulting fees in the amount of $34,009 (2005 — $27,678) to officers and directors of the Company and a company controlled by a director.

Amounts payable to related parties at September 30, 2006 aggregated $100,529 (June 30, 2006 — $118,002). The fair value for amounts due to related parties is not determinable since there are no stated terms of repayment.

The amounts charged to the Company for the services provided have been determined by negotiation among the parties and are covered by signed agreements. These transactions are in the normal course of operations and are measured at the exchange amount, which is the amount of consideration established and agreed to by the related parties.

B-45

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

7. SEGMENTED INFORMATION

The Company’s one reportable segment is the exploration and development of mineral properties. Geographical information is as follows:


					Mineral
					Property
					Interests and
					Deferred
	Total				Exploration		Other
	Assets		Equipment		Costs		Assets

September 30, 2006
Canada	$	12,818,078	$	23,092	$		$	12,794,986
United States		8,406,918		1,039,074		7,069,125		298,719

	$	21,224,996	$	1,062,166	$	7,069,125	$	13,093,705

June 30, 2006
Canada	$	13,637,654	$	24,639	$		$	13,613,015
United States		7,864,404		906,214		6,663,978		294,212

	$	21,502,058	$	930,853	$	6,663,978	$	13,907,227


	2006				2005
	Quarter		Year		Quarter		Year
	to Date		to Date		to Date		to Date

Loss before other items:
Canada	$	247,138	$	247,138	$	237,383	$	237,383
United States		43,019		43,019		47,323		47,323

	$	290,157	$	290,157	$	284,706	$	284,706


8.	RESTRICTED RECLAMATION BONDS

The Company has secure funds in place with the United States government, a Canadian bank and a United States bank as security for restricted reclamation bonds on its mineral properties. These restricted reclamation bonds were required by the local jurisdictions at the time exploration activities commenced on the properties and do not represent an asset retirement obligation (Note 2). Interest on the certificates of deposit with Canadian and United States banks is paid on a periodic basis to the Company.


9.	SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS

Significant non-cash transactions during the period (2005 — $Nil) include the acquisition of 200,000 common shares of Bonaventure Enterprises Inc. (assigned a value of $0.20 per share) as per the terms of option agreements (Note 3). Included in accounts payable are $81,296 (2005 — $171,136) related to deferred exploration costs, $24,721 (2005 — $Nil) related to acquisition of equipment and $Nil (2005 — $25,047) related to reclamation bonds. Included in accounts receivable are $Nil (2005 — $109,979) related to deferred exploration costs and $Nil (2005 — $87,202) related to acquisition of mineral property interests.

B-46

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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

The impact of the differences between Canadian GAAP and United States GAAP on the consolidated balance sheets would be as follows:


	September 30, 2006							June 30, 2006
	Balance,					Balance,		Balance,					Balance,
	Canadian					United States		Canadian					United States
	GAAP		Adjustments			GAAP		GAAP		Adjustments			GAAP

Temporary investments	$	2,158,804	$	58,762		$	2,217,566	$	2,107,699	$	48,282		$	2,155,981
Other current assets		10,696,820					10,696,820		11,564,745					11,564,745
Mineral property interests		2,809,295		(2,030,156	)		779,139		2,799,619		(2,032,127	)		767,492
Deferred exploration costs		4,259,830		(4,259,830	)				3,864,359		(3,864,359	)
Equipment		1,062,166					1,062,166		930,853					930,853
Restricted reclamation bonds		238,081					238,081		234,783					234,783

	$	21,224,996	$	(6,231,224	)	$	14,993,772	$	21,502,058	$	(5,848,204	)	$	15,653,854

Current liabilities	$	273,233	$			$	273,233	$	433,517	$			$	433,517
Asset retirement obligation		165,985					165,985		165,985					165,985
Shareholders’ equity		20,785,778		(6,231,224	)		14,554,554		20,902,556		(5,848,204	)		15,054,352

	$	21,224,996	$	(6,231,224	)	$	14,993,772	$	21,502,058	$	(5,848,204	)	$	15,653,854

B-47

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The impact of the differences between Canadian GAAP and United States GAAP on the consolidated statements of cash flows would be as follows:


	Cumulative
	Amounts from
	Inception on			Three Month			Three Month
	December 18, 1986 to			Period Ended			Period Ended
	September 30, 2006			September 30, 2006			September 30, 2005

Cash flows used in operating activities, Canadian GAAP	$	(4,852,811	)	$	(136,161	)	$	(541,699	)
Acquisition of mineral property interests		(5,474,566	)		(19,356	)		(119,672	)
Deferred exploration costs		(7,725,155	)		(446,192	)		(402,276	)
Disposal (acquisition) of temporary investments		(1,922,509	)		(12,555	)		(4,660,392	)

Cash flows used in operating activities, United States GAAP		(19,975,041	)		(614,264	)		(5,724,039	)
Cash flows provided by financing activities, Canadian GAAP and United States GAAP		32,724,773						6,238,933
Cash flows used in investing activities, Canadian GAAP		(17,356,586	)		(746,348	)		(5,241,499	)
Acquisition of mineral property interests		5,474,566			19,356			119,672
Deferred exploration costs		7,725,155			446,192			402,276
Acquisition of temporary investments		1,922,509			12,555			4,660,392

Cash flows used in investing activities, United States GAAP		(2,234,356	)		(268,245	)		(59,159	)

Increase (decrease) in cash during the period		10,515,376			(882,509	)		455,735
Cash, beginning of period					11,397,885			282,459

Cash, end of period	$	10,515,376		$	10,515,376		$	738,194

Mineral property interests and deferred exploration costs

In accordance with EITF 04-02, the Company classifies the costs of acquiring its mineral interests as tangible assets resulting in no difference between Canadian and U.S. GAAP. Under U.S. GAAP exploration costs on mineral properties, other than acquisition costs, prior to the establishment of proven or probable reserves are expensed as incurred. Under Canadian GAAP these costs may be deferred.

Under US GAAP, the Company performs evaluations of its investment in mineral properties to assess the recoverability and the residual value of its investments in these assets. All mineral properties are reviewed for impairment whenever events or circumstances change which indicates the carrying amount of an asset may not be recoverable, utilizing established guidelines based on undiscounted future net cash flows from the asset or upon the determination that certain exploration properties do not have sufficient potential for economic mineralization.

B-49

WHITE KNIGHT RESOURCES LTD.

(An Exploration Stage Company)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Asset retirement obligations

Under Canadian GAAP, the Company was not required to record asset retirement obligations as at September 30, 2005. The Company determined there were no asset retirement obligations as at September 30, 2005.

Temporary Investments

Under United States GAAP, SFAS 115 requires that certain debt and equity investments must be classified into available-for-sale or trading securities and stated at fair market values. Any unrealized holding gains or losses are reported as a separate component of shareholders’ equity until realized for available-for-sale securities, and included in earnings for trading securities. For United States GAAP purposes, the Company’s investment in debt securities Canadian GAAP or United States GAAP as these debt securities have been written down to their fair market value, with an unrealized loss of $1,450 included in the consolidated statement of operations. For the period ending September 30, 2006, an excess holding gain of $58,762 (June, 2006 — $48,282) would be recognized under United States GAAP.

New accounting pronouncements

The FASB has also issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instruments” and SFAS No. 156 “Accounting for Servicing of Financial Assets”, but they will not have any relationship to the operations of the Company. Therefore a description and its impact for each on the Company’s operations and financial position have not been disclosed.

The adoption of these new pronouncements is not expected to have a material effect on the Company’s consolidated financial position or results of operations.

B-50

MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements and the information contained in the management discussion and analysis have been prepared by the management of the Company. The financial statements have been prepared in accordance with Canadian generally accepted accounting principles and reconciled to United States generally accepted accounting principles as set out in note 17 and, where appropriate, reflect management’s best estimates based on currently available information. A system of internal accounting control is maintained to provide reasonable assurance that financial information is accurate and reliable.

The Company’s independent auditors, PricewaterhouseCoopers LLP, who have been appointed by the shareholders, conduct an audit in accordance with generally accepted auditing standards in Canada to allow them to express an opinion on the financial statements.

The Audit Committee of the Board of Directors meets periodically with management and the independent auditors to review the scope and results of the annual audit, and to review the financial statements and related reporting matters prior to submission to the Board.


/s/ David Hottman		/s/ W.R. (Bill) Franklin
David Hottman,		W. R. (Bill) Franklin,
President & Chief Executive Officer		Chief Financial Officer
September 28, 2006		September 28, 2006

C-2

Auditors’ Report

To the Directors of

Nevada Pacific Gold Ltd.

We have audited the consolidated balance sheets of Nevada Pacific Gold Ltd. (the “Company”) as at June 30, 2006 and 2005 and the consolidated statements of operations, deficit, cash flows and mineral property expenditures for each of the three years ended June 30, 2006. 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 of America). 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 June 30, 2006 and 2005 and the results of its operations and its cash flows for each of the three years ended June 30, 2006 in accordance with Canadian generally accepted accounting principles.

/s/ PricewaterhouseCoopers LLP

Chartered Accountants

Vancouver, British Columbia

September 28, 2006

Comments by the Auditors for U.S. Readers on Canadian-U.S. Reporting Conflict

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by significant conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in note 1 to the consolidated financial statements. Reporting standards for auditors in the United States also require the addition of an explanatory paragraph when there is a change in accounting principle that has a material affect on the comparability of the Company’s financial statements, such as the change in accounting for stock based compensation described in note 2 to the financial statements. Our report to the directors dated September 28, 2006 is expressed in accordance with Canadian reporting standards which do not permit a reference to such events and conditions and such changes in accounting policy in the auditors’ report when these are adequately disclosed in the financial statements.

/s/ PricewaterhouseCoopers LLP

Chartered Accountants

Vancouver, British Columbia

September 28, 2006

C-3

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED BALANCE SHEETS

As at June 30^th


	2006			2005
	(Expressed in US Dollars)

ASSETS
Current assets
Cash and cash equivalents	$	3,659,738		$	957,251
Accounts receivable		180,697			273,165
Product inventory and stockpiled ore (Note 4)		109,074			4,112,633
Supplies inventory		285,152			414,366
Prepaid expenses		239,424			223,372

		4,474,085			5,980,787
Property, plant and equipment (Note 5)		13,306,314			13,388,954
Mineral properties (Note 6)		4,661,805			3,106,357
Reclamation bonds		96,363			93,228

	$	22,538,567		$	22,569,326


LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	1,194,495		$	1,783,277

		1,194,495			1,783,277
Other liabilities		112,397			175,217
Asset retirement obligation (Note 7)		1,684,812			1,567,267

		1,797,209			1,742,484

SHAREHOLDERS’ EQUITY
Share capital (Note 8)		30,955,143			25,920,223
Contributed capital (Note 9)		1,490,594			1,001,674
Deficit		(12,898,874	)		(7,878,332	)

		19,546,863			19,043,565

	$	22,538,567		$	22,569,326

Nature of operations and Going Concern (Note 1)
Commitments (Note 15)
Subsequent Events (Note 18)

Approved by the Board:


/s/ Michael Beley		/s/ Gary Nordin

Michael Beley,		Gary Nordin,
Director		Director

See accompanying notes to consolidated financial statements

C-4

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the years ended June 30^th


	2006			2005			2004
	(Expressed in US Dollars)

GOLD SALES	$	6,649,300		$	5,175,235		$	—

COST OF SALES		7,903,654			3,347,153			—
DEPRECIATION AND DEPLETION		734,618			727,815			—
ROYALTIES		381,572			262,197			—

		9,019,844			4,337,165			—

EARNINGS (LOSS) FROM MINING OPERATIONS		(2,370,544	)		838,070			—

EXPENSES AND OTHER INCOME
General and administrative		1,944,511			2,084,400			1,538,190
Interest and financing costs		—			22,378			1,159
Stock-based compensation		611,572			559,963			39,120
Foreign exchange losses		36,904			115,796			117,226
Other income		(57,349	)		(37,942	)		(89,433	)

		2,535,638			2,744,595			1,606,262

LOSS BEFORE THE UNDERNOTED ITEMS		4,906,182			1,906,525			1,606,262

Write-down of mineral properties		114,360			630,332			330,285
Gain on disposal of mining equipment		—			(155,199	)		—
								—

LOSS FOR THE YEAR	$	5,020,542		$	2,381,658		$	1,936,547

Basic and diluted loss per share	$	0.08		$	0.05		$	0.06

Weighted average number of shares outstanding		60,304,369			51,295,350			30,305,758

See accompanying notes to consolidated financial statements

C-5

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the years ended June 30^th


	2006			2005			2004
	(Expressed in US Dollars)

CASH PROVIDED BY (USED FOR) OPERATIONS
Loss for the period	$	(5,020,542	)	$	(2,381,658	)	$	(1,936,547	)
Items not affecting cash
Depreciation, depletion & amortization		758,435			750,867			15,978
Accretion of asset retirement obligation		117,545			44,540			—
Stock based compensation		611,572			559,963			39,120
Write-off of mineral properties		114,360			630,332			330,285
Gain on disposal of mining equipment		—			(155,199	)		—
Severance expense		(27,820	)		61,106			—

		(3,446,450	)		(490,049	)		(1,551,164	)
Changes in non-cash working capital items (Note 12)		2,970,312			(4,357,410	)		720,590

		(476,138	)		(4,847,459	)		(830,574	)

INVESTING ACTIVITIES
Property, plant and equipment		(25,700	)		(3,987,643	)		(1,889,409	)
Proceeds from disposal of equipment		—			200,199			—
Acquisition of Pangea Resources Inc (Note 3)		—			—			(4,323,753	)
Reclamation bonds		(3,135	)		(45,256	)		(47,972	)
Expenditures on mineral properties, net of recoveries		(1,704,808	)		(1,321,555	)		(1,223,327	)

		(1,733,643	)		(5,154,255	)		(7,484,461	)

FINANCING ACTIVITIES
Common shares issued:
On private placements		4,541,507			10,262,635			7,871,295
On warrant conversion		93,952			591,200			920,243
On option exercise		369,826			200,020			343,933
Share issue costs and finder’s fees		(93,017	)		(692,741	)		(310,303	)

		4,912,268			10,361,114			8,825,168

INCREASE IN CASH AND CASH EQUIVALENTS		2,702,487			359,400			510,133
CASH AND CASH EQUIVALENTS, Beginning of year		957,251			597,851			87,718

CASH AND CASH EQUIVALENTS, End of year	$	3,659,738		$	957,251		$	597,851

Supplementary information on non-cash transactions
Shares issued and applied to notes payable (Note 3)	$	—		$	500,000		$	—
Warrants issued to Underwriter (Note 9)	$	—		$	131,020		$	—

See accompanying notes to consolidated financial statements

C-7

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED STATEMENTS OF MINERAL PROPERTY EXPENDITURES

For the years ended June 30^th


				South													Other
	Limousine			Carlin											Timber		Nevada			Mexican
	Butte			Project			Keystone			BMX			Cornerstone		Creek		Properties			Properties		Total
	(Expressed in US Dollars)

Total as at June 30, 2003	$	473,912		$	756,611		$	117,277		$	11,215		$	—	$	40,061	$	88,016		$	—	$	1,487,092
Exploration salaries & wages		45,833			2,927			26,025			9,728			1,612		2,255		87,527			18,871		194,778
Land holding costs		45,900			7,864			52,434			97,306			10,049		37,547		82,836			86,398		420,334
Surveying		—			—			9,480			3,689			—		4,461		18,413			11,572		47,615
Environmental		225			—			14			2,847			—		—		16,430			—		19,516
Geology		3,952			190			2,119			34,949			23		677		135,474			35,035		212,419
Surface geochemistry		1,564			—			643			16,906			—		3,354		3,290			9,506		35,263
Geophysics		—			—			15,835			2,000			—		6,000		48,100			—		71,935
Road work & trenching		3,788			—			—			3,653			—		—		5,668			—		13,109
Drilling		153,386			—			—			126,218			—		—		264,776			—		544,380
Other		3,995			—			1,176			6,422			—		403		13,523			6,763		32,282

Total expenditures		258,643			10,981			107,726			303,718			11,684		54,697		676,037			168,145		1,591,631
Cost recoveries		—			—			—			(293,304	)		—		—		—			—		(293,304	)
Property write-offs		—			(245,196	)		—			—			—		—		(85,089	)		—		(330,285	)

Total as at June 30, 2004		732,555			522,396			225,003			21,629			11,684		94,758		678,964			168,145		2,455,134
Exploration salaries & wages		10,650			—			14,734			2,855			40,824		14,825		155,136			23,964		262,988
Land holding costs		56,678			9,616			68,312			74,662			32,772		37,704		84,217			57,077		421,038
Surveying		—			—			4,028			6,145			11,638		7		23,980			6,728		52,526
Environmental		—			—			—			—			4		8		8,398			—		8,410
Geology		22			—			497			3,450			5,148		2,353		14,181			53,607		79,258
Surface geochemistry		—			—			4,446			—			27,893		—		11,666			81,382		125,387
Geophysics		—			—			—			—			—		3,350		52,550			57,736		113,636
Road work & trenching		—			—			—			—			—		—		23,169			61,627		84,796
Drilling		1,020			—			5,460			—			22		—		148,140			150,621		305,263
Other		—			—			—			—			—		—		—			40,100		40,100

Total expenditures		68,370			9,616			97,477			87,112			118,301		58,247		521,437			532,842		1,493,402
Cost recoveries		(56,500	)		—			(78,720	)		(76,627	)		—		—		—			—		(211,847	)
Property write-offs		—			—			—			—			—		—		(630,332	)		—		(630,332	)

Total as at June 30, 2005		744,425			532,012			243,760			32,114			129,985		153,005		570,069			700,987		3,106,357
Exploration salaries & wages		2,960			—			17,782			15,505			53,181		18,132		93,121			107,129		307,810
Land holding costs		—			9,639			20			80,587			43,009		48,151		58,234			207,803		447,443
Surveying		—			—			—			—			991		6,716		4,966			1,726		14,399
Geology		—			—			—			1,226			212		666		1,453			43,381		46,938
Surface geochemistry		—			—			—			—			2,199		—		3,962			55,230		61,391
Geophysics		—			—			—			—			—		5,300		18,950			5,524		29,774
Road work & trenching		—			—			—			9,110			31,880		7,200		222			21,207		69,619
Drilling		—			—			91,724			71,202			248,629		236,916		36,541			—		685,012
Other		—			—			—			—			—		—		—			19,042		19,042

Total expenditures		2,960			9,639			109,526			177,630			380,101		323,081		217,449			461,042		1,681,428
Cost recoveries		—			—			(11,620	)		—			—		—		—			—		(11,620	)
Property write-offs		—			(23	)		—			—			—		—		(114,337	)		—		(114,360	)

Total as at June 30, 2006	$	747,385		$	541,628		$	341,666		$	209,744		$	510,086	$	476,086	$	673,181		$	1,162,029	$	4,661,805

See accompanying notes to consolidated financial statements

C-8

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the years ended June 30^th 2006 and 2005
(expressed in US Dollars)


1.	Nature of Operations and Going Concern

Nevada Pacific Gold Ltd. (“the Company”) was incorporated under the laws of the Province of British Columbia. Its principal business activities consist of the production of gold and silver in Mexico and exploring for and developing gold and silver properties in Mexico and the western United States, primarily Nevada.

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes the realization of assets and discharge of liabilities in the normal course of business. The Company has recorded losses from operations since its inception. The Company’s ability to continue as a going concern is dependent upon the ability of the Company to obtain additional financing to develop its mineral properties, the future performance of the Magistral Gold Mine, which is currently in a leach only phase, the existence of economically recoverable reserves, and upon its ability to attain profitable operations. Management continues to seek additional financing necessary to permit the Company to continue operations. There can be no assurance that management will be successful in all these activities. Because of this uncertainty, there is substantial doubt about the ability of the Company to continue as a going concern. These consolidated financial statements do not give effect to any adjustments that would be necessary should the Company not be able to continue as a going concern. Such adjustments could be material.


2.	Significant Accounting Policies

Basis of presentation and principles of consolidation

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“CDN GAAP”). The significant differences between those principles and those that would be applied under U.S. generally accepted accounting principles (“US GAAP”) are disclosed in Note 17.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Nevada Pacific Gold (US), Inc., Pangea Resources Inc. and Compania Minera Pangea, S.A. de C.V. All inter-company transactions and balances have been eliminated.

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 amounts reported in these consolidated financial statements. Significant estimates by management include the carrying value of property, plant and equipment, useful lives of such assets, reserves and resources, the asset retirement provision, future income tax valuation allowance, inventory valuation and stock-based compensation valuation assumptions. These estimates are reviewed and adjusted regularly to ensure that they are reasonable. The estimates may vary from actual results.

Property, plant and equipment

(a) Plant and equipment

Plant and equipment are depreciated over the estimated lives of the assets on a unit-of-production or straight-line basis as appropriate. Amortization of property, plant and equipment at the Magistral Gold Mine commenced upon commercial production on a unit-of-production basis.

(b) Mineral properties and deferred costs

The acquisition cost of mineral properties and related exploration and development costs, as well as directly attributable general and administrative support costs and salaries, are deferred. When a mineral property is sold,

C-9

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

abandoned, or deemed not to contain economic reserves, all costs are written-off. The amounts shown for mineral properties represent costs to date and do not necessarily reflect present or future values.

Deferred costs include operating costs, net of revenues, prior to the commencement of commercial production of the Magistral Gold Mine. Deferred costs are, upon commencement of commercial production, amortized over the estimated life of the ore body to which they relate, on a unit-of-production basis, or are written off if the property is abandoned or written down if there is considered to be a permanent impairment in value.

Asset retirement obligations

Effective July 1, 2004, the Company adopted CICA Handbook Section 3110 “Asset Retirement Obligations”. The accounting standard applies to future asset retirement requirements and requires that the fair value of liabilities for asset retirement obligations are recorded in the period in which they occur. The liability is accreted over time through periodic charges to earnings. The asset retirement cost is capitalized as part of the carrying value of the asset and is amortized over the useful life of the asset.

Cash and cash equivalents

The Company considers cash and cash equivalents to be cash on deposit and highly liquid short-term interest bearing securities with maturities at the date of purchase of three months or less. Interest earned is recognized immediately in operations.

Inventories

Inventories include gold ore, stockpiled ore and supplies inventories. Gold poured, in transit and at refineries, is recorded at the lower of cost and net realizable value, stockpiled ore is valued at the lower of cost and net realizable value and includes amortization, depreciation and depletion and supplies inventory is carried at the lower of cost and replacement cost.

Revenue recognition

Revenue from the sale of metals is recognized in the accounts upon delivery of the product to the customer when title transfers and the rights and obligations of ownership pass to the buyer. Revenue from the sale of metals may be subject to adjustment upon final settlement of estimated metal prices, weights and assays.

Foreign currency translation

The Company and its subsidiaries are considered to be integrated foreign operations. Their financial statements and transaction amounts denominated in foreign currencies are translated into U.S. dollars as follows:


	•	monetary items are translated at the rate of exchange in effect at the balance sheet date,

	•	non-monetary items are translated at the historical exchange rates,

	•	revenue and expense items are translated at the average rate for the period, except for items for which amortization is charged, and

	•	foreign currency translation gains and losses are included in operations.

Income taxes

The Company follows the liability method of accounting for income taxes. Using this method, income tax liabilities and assets are recognized for the estimated tax consequences attributable to differences between the amounts reported in the financial statements of the Company and their respective tax bases, using substantively enacted income tax rates. The effect of a change in income tax rates on future tax liabilities and assets is recognized

C-10

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

in income in the period in which the change occurs. A future income tax asset is recorded when the probability of the realization is more likely than not.

Stock based compensation

Effective July 1, 2004, the Company adopted provisions of CICA Handbook Section 3870 on “Stock-Based Compensation and Other Stock-Based Payments”. The Company is required to employ the fair value method of accounting for all stock based awards. The Company has applied the new provisions retroactively, without restatement. The Company recorded a cumulative increase to deficit and a corresponding increase to contributed capital of $287,376 on July 1, 2004 with respect to stock options granted during the years ended June 30, 2003 and 2004.

Loss per share

Loss per share is calculated using the weighted-average number of shares outstanding during the year. The Company follows the “treasury stock” method in its calculation of diluted earnings per share.

Variable interest entities

Effective January 1, 2005, the Company has adopted CICA Accounting Guideline 15, “Consolidation of Variable Interest Entities” (AcG-15). The new standard provides guidance on the application of consolidation principles to certain entities that are subject to control on a basis other than ownership of voting rights. The adoption of this guideline did not have any impact on the consolidated financial statements of the Company.


3.	Acquisition of Pangea Resources Inc.

On February 2, 2004, the Company acquired all of the outstanding shares of Pangea Resources Inc. (“Pangea”) whereby the Company acquired 100% of the Magistral Gold Mine and related assets beneficially owned by Compania Minera Pangea S.A. de C.V. (“Minera Pangea”) in Mexico, a wholly owned subsidiary of Pangea. Under the purchase agreement, the Company acquired Pangea for $4,000,000 cash and 2,000,000 common shares of the Company with an estimated fair value of $1.00 CDN per share with a further $3,000,000 note payable due on or before August 2, 2004. A general security agreement was put in place on the assets of the Company. The Company incurred acquisition costs of $370,699. The acquisition has been accounted for using the purchase method.

During the year ended June 30, 2005 the Company’s $3,000,000 note payable was settled by the payment of $2,522,116, including $22,116 in accrued interest, and the issuance of 669,485 shares of the Company, valued at $500,000. All security granted by the Company has been returned to the Company.

Management does not consider that the Magistral Gold Mine was operating at commercial levels at the time the mine was acquired. Prior to commercial production, effective January 1, 2005, pre-production expenditures, net of revenue, were capitalized to property. Included in the liabilities assumed on the purchase is an estimated tax liability for the Magistral Gold Mine of $600,000, which is included in accounts payable and accrued liabilities. There is a degree of uncertainty associated with the measurement of this estimated Mexican tax liability. This amount may change as a result of the resolution of certain Mexican tax issues arising from the acquisition.


4.	Product inventory and stockpiled ore


	June 30		June 30
	2006		2005

Stockpiled ore	$	—	$	3,788,972
Gold ore		109,074		323,661

	$	109,074	$	4,112,633

C-11

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

5. Property, plant and equipment


	June 30			June 30			June 30
	2006			2005			2004

Magistral Gold Mine
Plant and equipment	$	2,760,526		$	2,760,526		$	1,841,972
Property and deferred costs		10,245,081			10,240,243			7,172,689
Asset retirement obligation asset		1,477,593			1,477,593			1,477,593
Accumulated amortization and depletion		(1,220,546	)		(1,136,023	)		—

		13,262,654			13,342,339			10,492,254

Other equipment		136,776			115,914			114,245
Accumulated amortization		(93,116	)		(69,299	)		(46,247	)

		43,660			46,615			67,998

	$	13,306,314		$	13,388,954		$	10,560,252


6.	Mineral Properties

Limousine Butte

The Limousine Butte property is located northwest of Ely, Nevada in White Pine County, and was staked by the Company such that the Company controls the mineral rights to the property. The property is subject to a sliding scale net smelter return royalty of 1.5% to 2.5% on all production from the property, with an advance payment of $1,000,000 to be made at the commencement of commercial production and to be credited against future royalty payments.

On September 7, 2004, the Company signed a binding letter agreement with Placer Dome U.S. Inc. (“Placer Dome”), a wholly owned subsidiary of Placer Dome Inc., whereby Placer Dome had the right to earn a 60% interest in the Company’s Limousine Butte project by spending $4,000,000 on exploration over a five-year period. On April 26, 2006 the Company received notification from Placer Dome of its election to terminate the letter agreement. All rights to the properties and all exploration data relating to the properties have been returned to the Company.

South Carlin Project

The Company’s principal interest in the South Carlin project is the Woodruff Creek property. The Woodruff Creek property is located within Elko County, Nevada. In January 2001, the Company completed its acquisition of a 100% interest in the property from Kennecott Exploration Company (“Kennecott”) by incurring over $500,000 in exploration expenditures over a four-year period and by paying $50,000 to Kennecott. Kennecott retains an uncapped 1% net smelter return royalty on the project.

Keystone

The Company acquired the Keystone project in Nevada through staking and the purchase of two patented claims in 1999 and expanded the property in 2002 through the staking of 109 unpatented mining claims.

On September 7, 2004, the Company signed a binding letter agreement with Placer Dome, whereby Placer Dome had the right to earn a 60% interest in the Company’s Keystone project by spending $5,000,000 on exploration over a five-year period. On April 26, 2006 the Company received notification from Placer Dome of its election to terminate the letter agreement. All rights to the properties and all exploration data relating to the properties have been returned to the Company.

C-12

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

BMX

During the year ended June 30, 2003, the Company acquired mineral rights to the Battle Mountain (BMX) project. The project has been staked by the Company, through the location of unpatented Federal lode mining claims and is 100% owned by the Company.

On November 27, 2002, the Company signed a binding letter of agreement with Placer Dome whereby Placer Dome had the right to earn a 60% interest in the BMX project by paying the Company $200,000 on signing and expending $4,000,000 on exploration on the project over a five-year period. On October 21, 2005, the Company received notification from Placer Dome of its election to terminate the letter agreement. All rights to the properties and all exploration data relating to the properties have been returned to the Company.

Bluebird Gold Property

The Bluebird property lies within the area of interest of the Company’s BMX project. On April 30, 2003, the Company signed a 10-year mining lease agreement with exploration rights with the owner of the Bluebird property. The lease is renewable in 5-year increments with the owner retaining a 3% net smelter return. The property is located at the northern end of the Battle Mountain Trend, Lander County, Nevada and consists of 10 unpatented mining claims. The Company can purchase 1.5% of the net smelter return at any time for $500,000 per percentage point. Advanced annual royalties are payable to the owners of $10,000 per year for the first nine years and $25,000 per year for subsequent years.

Cornerstone (Pat Canyon)

In May 2004, the Company signed a 10-year renewable mining lease agreement to acquire the exploration rights to the Cornerstone property, which is located less than three miles east of the Company’s Keystone project in Eureka County, Nevada and consists of 106 mineral claims. The owners retain a 3-4% sliding scale gross production royalty and advanced royalties payable to the owners were $10,000 on signing of the lease. This amount increases annually to a maximum of $50,000 per year over the term of the lease.


7.	Asset retirement obligation


	2006		2005		2004

Asset retirement obligation — beginning of year	$	1,567,267	$	1,477,593	$	—
Obligations incurred during the year		—		—		1,477,593
Accretion expense		117,545		89,674		—

Asset retirement obligation — end of year	$	1,684,812	$	1,567,267	$	1,477,593

The Company’s asset retirement obligation arises from it obligations for site reclamation and remediation in connection with the Magistral Gold Mine. Under Mexican regulations no deposits are required to secure these obligations.

The total undiscounted asset retirement obligation is $2,332,864, which is expected to be expended in 2013. In determining the carrying value of the asset retirement obligation, the Company has assumed a credit-adjusted risk-free rate of 7.5% and an inflation rate of 2.75%.

C-13

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Share capital

Authorized

Unlimited Preferred Shares without par value, with rights to be determined upon issue Unlimited Common Shares without par value


Issued and Outstanding	Number of Shares		Amount

Balance as at June 30, 2003		20,142,503	$	4,857,823
Private Placements		13,821,352		7,849,847
On acquisition of Pangea Resources Inc.		2,000,000		1,491,333
On exercise of warrants		2,394,998		920,243
On exercise of options		775,000		343,933
Finder’s fee		80,000		21,448
Share issue costs		—		(310,303	)

Balance as at June 30, 2004		39,213,853	$	15,174,324
Private Placements		5,533,655		4,091,285
Underwritten offering		7,586,712		6,171,350
Issued for payment on note payable		669,485		500,000
On exercise of warrants		1,723,801		591,200
On exercise of options		715,000		200,020
Fair value of options exercised		—		15,805
Finder’s fee		—		(681,734	)
Share issue costs		—		(142,027	)

Balance as at June 30, 2005		55,442,506	$	25,920,223
Private Placement — (i)		12,500,000		4,431,286
Private Placement — (ii)		200,000		110,221
On exercise of warrants		89,515		93,952
On exercise of options		740,000		369,826
Fair value of options exercised		—		122,652
Share issue costs		—		(93,017	)

Balance as at June 30, 2006		68,972,021	$	30,955,143


(i)		On December 9, 2005, the Company announced that it had entered into an agreement with Mr. Robert McEwen to issue 12,500,000 units at a price of $0.40 CDN per unit for aggregate proceeds of $5,000,000 CDN. Each unit consisted of one common share and one common share purchase warrant with each warrant exercisable to acquire one common share of the Company at an exercise price of $0.50 CDN for a term of two years. As a result of the private placement, Mr. McEwen holds approximately 18.2% of the outstanding shares of the Company and, in event of the exercise of all the warrants, Mr. McEwen will hold approximately 30.8% of the outstanding common shares of the Company. In accordance with the rules of the TSX Venture Exchange, as this constitutes a “change in control”, the placement closed in two tranches. The first tranche, consisting of 6,921,213 units was completed on December 14, 2005. The second tranche for the balance of the units was conditional upon receiving shareholder approval. The Company called an extraordinary general meeting of the shareholders on January 23, 2006 and the shareholders approved the transaction, which was completed on May 11, 2006. The shares and warrants comprising the units and the shares underlying such warrants are subject to a four-month hold period. No finder’s fees are payable on this placement.

C-14

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(ii) On January 13, 2006, the Company issued 200,000 units to an officer of the Company. Each unit was issued at a price of $0.64 CDN for gross proceeds of $128,000 CDN. Each unit is comprised of one common share of the Company and one share purchase warrant with each purchase warrant entitling the holder to purchase one common share of the Company at $0.80 CDN until January 13, 2008. The shares and warrants comprising the units and the shares underlying such warrants are subject to a four-month hold period. No finder’s fees were paid on this issue.

Stock options

The Company has a stock option plan (the “Stock Option Plan”) which provides for equity participation in the Company by its directors, officers, employees and consultants through the acquisition of common shares pursuant to the grant of options to purchase common shares. The maximum aggregate number of common shares to be reserved and authorized, to be issued pursuant to options granted under the Stock Option Plan is 5,496,000 common shares.

The exercise price for options granted under the Stock Option Plan is determined by committee upon grant provided the price is not less than the closing trading price on the day immediately preceding the date of grant, less any discounts permitted by the TSX Venture Exchange or such other stock exchange on which the common shares are listed. Options granted under the Stock Option Plan are subject to a minimum one year vesting schedule whereby 25% of each option will vest on each of the three month anniversaries of the date of grant, up to and including the end of the first year after such grant, or such other more restrictive vesting schedule as the administrator of the Stock Option Plan may determine. Options are non-assignable and are exercisable for a period of up to five years from the date the option is granted, or up to ten years from the date of grant if permitted by applicable stock exchanges, subject to earlier termination after certain events such as the optionee’s cessation of service to the Company or death.

The Company accounts for its grants in accordance with the fair value method of accounting for stock-based compensation. For the year ended June 30, 2006, the Company recognized $611,572 in stock based compensation for employees, directors and consultants. For the year ended June 30, 2005, the company recognized $559,963 in stock based compensation for employees, directors and consultants. For the year ended June 30, 2004, the company recognized $39,120 in stock based compensation for consultants. As permitted by Canadian generally accepted accounting principles, the Company did not use the fair value method of accounting for stock options granted to employees and directors for the year ended June 30, 2004. Had the Company followed the fair value method of accounting, the Company would have recorded a compensation expense of $278,002 in respect of its employee and director stock options.

Pro forma earnings for 2004 determined under the fair value method of accounting for stock options are as follows:


	2004

Loss for the year as reported	$	1,936,547
Stock option expense		278,002

Pro forma net loss	$	2,214,549

Loss per share — basic and diluted
As reported	$	0.06
Pro forma	$	0.07

C-15

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The fair value of the options granted has been calculated using the Black-Scholes option-pricing model, based on the following assumptions:


	2006	2005	2004

Risk free interest rate	3.4 to 4%	4%	4%
Expected life	1 to 3 years	1 to 3 years	3 years
Expected volatility	55% to 77%	55% to 77 %	85% to 97%
Dividend yield rate	nil	nil	nil

Option-pricing models require the input of highly subjective assumptions regarding the expected volatility and expected life. Changes in assumptions can materially affect the fair value estimate, and therefore, the existing models do not necessarily provide a reliable measure of the fair value of the Company’s stock options at the date of grant.

A summary of changes to stock options during the period are as follows:


	June 30, 2006					June 30, 2005					June 30, 2004
				Weighted-					Weighted-					Weighted-
	Number			Average		Number			Average		Number			Average
	of Shares			Exercise Price		of Shares			Exercise Price		of Shares			Exercise Price

Outstanding at beginning of year		3,328,500		$	0.86 CDN		2,965,000		$	0.69 CDN		1,925,000		$	0.43 CDN
Granted(i) (ii) (iii)		1,712,500		$	1.05 CDN		1,223,500		$	1.00 CDN		1,825,000		$	0.91 CDN
Exercised		(740,000	)	$	0.57 CDN		(715,000	)	$	0.34 CDN		(775,000	)	$	0.58 CDN
Forfeited		(461,000	)	$	0.94 CDN		(145,000	)	$	1.01 CDN		(10,000	)	$	0.61 CDN

Outstanding at end of the year		3,840,000		$	0.99 CDN		3,328,500		$	0.86 CDN		2,965,000		$	0.69 CDN

Options exercisable at the end of the year		2,263,750		$	0.95 CDN		1,782,125		$	0.74 CDN		1,355,000		$	0.38 CDN


(i)		On August 30, 2005 the Company granted to consultants 50,000 stock options with an exercise price of $0.80 CDN. These options have a term of one year and vest in equal amounts every three months for 1 year. The fair value of these options was estimated at approximately $0.16 per option at grant date.

(ii)		On March 2, 2006 the Company granted to directors, employees and consultants 1,462,500 stock options with an exercise price of $0.99 CDN. These options have a term of ten years and vest in equal amounts every three months for 1 year. The fair value of these options was estimated at approximately $0.45 per option at grant date.

(iii)		On June 1, 2006 the Company granted to a director 200,000 stock options with an exercise price of $1.54 CDN. These options have a term of ten years and vest in equal amounts every three months for 1 year. The fair value of these options was estimated at approximately $0.66 per option at grant date.

Stock options outstanding as at June 30, 2006 are as follows:

Weighted-

Number

Average

Outstanding

Life Remaining

Exercise Price

Range of Exercise Prices ($)

at June 30, 2006

(Years)

($)

0.53 - 1.00 CDN

3,095,000

7.59

0.90 CDN

1.01 - 1.54 CDN

745,000

8.28

1.36 CDN

Total

3,840,000

7.72

0.99 CDN

C-16

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Warrants

A summary of changes to warrants during the period are as follows:


	June 30, 2006					June 30, 2005					June 30, 2004
				Weighted-					Weighted-					Weighted-
	Number			Average		Number			Average		Number			Average
	of Warrants			Exercise Price		of Warrants			Exercise Price		of Warrants			Exercise Price

Outstanding at beginning of the year		6,420,841		$	1.19 CDN		5,255,676		$	1.05 CDN		699,998		$	0.65 CDN
Granted		12,700,000		$	0.50 CDN		6,420,841		$	1.19 CDN		6,950,676		$	0.91 CDN
Exercised		(89,515	)	$	1.20 CDN		(1,723,801	)	$	0.45 CDN		(2,394,998	)	$	0.51 CDN
Expired		(4,324,426	)	$	1.18 CDN		(3,531,875	)	$	1.35 CDN		—			—

Outstanding at end of the year		14,706,900		$	0.60 CDN		6,420,841		$	1.19 CDN		5,255,676		$	1.05 CDN

Share purchase warrants outstanding at June 30, 2006 were as follows:


Number		Exercise Price	Expiry Date

	1,874,400	$1.20 CDN	August 17, 2006 (iv)
	132,500	$1.20 CDN	September 22, 2006 (iv)
	6,921,213	$0.50 CDN	December 14, 2007
	200,000	$0.80 CDN	January 13, 2008
	5,578,787	$0.50 CDN	May 11, 2008

	14,706,900


(iv)		On August 9, 2005 these warrants were extended by an additional twelve months. The original expiry date for the 1,936,900 warrants was August 17, 2005 and for the 159,515 was September 22, 2005. (See note 18)


9.	Contributed capital


	2006			2005			2004

Contributed capital — beginning of year	$	1,001,674		$	39,120		$	—
Retained earning adjustment (See Note 2)		—			287,376			—
Fair value of share purchase options vesting during year		611,572			559,963			39,120
Fair value of underwriter’s warrants issued during year		—			131,020			—
Fair value of share purchase options exercised during year		(122,652	)		(15,805	)		—

Contributed capital — end of year	$	1,490,594		$	1,001,674		$	39,120


10.	Related party transactions

Payments to related parties were made in the normal course of operations and were valued at fair value as determined by management. Amounts due to or from related parties are unsecured, non-interest bearing and due on demand.

During the year ended June 30, 2006, a total of $149,730 (2005 — $129,055, 2004 — $129,952) was charged for fees by a legal firm of which the Company’s corporate secretary is a partner. At June 30, 2006, $17,352 (2005 — $5,112, 2004 — $32,345) was owing to this legal firm.

C-17

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

was charged by the Company for rent and common office costs. At June 30, 2006, $Nil (2005 — $4,425, 2004 — $13,804) was receivable from this company.


11.	Financial Instruments

The Company’s consolidated financial instruments include cash and cash equivalents, accounts receivable, reclamation bonds and accounts payable. The fair values of these financial instruments approximate their carrying values due to their relatively short periods to maturity.


12.	Supplemental cash flow information


	2006			2005			2004

Changes in non-cash working capital
Accounts receivable	$	92,468		$	238,376		$	90,069
Product inventory and stockpiled ore		3,353,464			(1,452,205	)		(139,417	)
Supplies inventory		129,214			(218,344	)		(21,709	)
Prepaid expenses		(16,052	)		2,655			(184,570	)
Accounts payable and accrued liabilities		(588,782	)		(427,892	)		976,217
Note payable		—			(2,500,000	)		—

	$	2,970,312		$	(4,357,410	)	$	720,590


13.	Segmented information

The Company has reportable segments in three geographic areas: gold mining operations and exploration in Mexico, exploration and development in the United States and corporate in Canada. Gold mining operations consist of the Magistral Gold Mine in Mexico, acquired on February 2, 2004, which commenced commercial production on January 1, 2005.

C-18

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Gold Mining

Corporate
Exploration
& Exploration

(Canada) (U. S.) (Mexico) Total

($) ($) ($) ($)

Property, plant and equipment

June 30, 2006
29,610 14,050 13,262,654 13,306,314

June 30, 2005
38,590 8,025 13,342,339 13,388,954

June 30, 2004
56,203 11,795 10,492,254 10,560,252

Property, plant and equipment: expenditures

June 30, 2006
9,492 11,370 4,838 25,700

June 30, 2005
769 900 3,985,974 3,987,643

June 30, 2004
61,125 11,458 10,492,254 10,564,837

Mineral Properties

June 30, 2006
— 3,499,776 1,162,029 4,661,805

June 30, 2005
— 2,405,370 700,987 3,106,357

June 30, 2004
— 2,286,989 168,145 2,455,134

Mineral Properties: expenditures

June 30, 2006
— 1,243,766 461,042 1,704,808

June 30, 2005
— 788,713 532,842 1,321,555

June 30, 2004
— 1,055,182 168,145 1,223,327

Net income (loss) for the year ended

June 30, 2006
(2,327,532 ) (314,215 ) (2,378,795 ) (5,020,542 )

June 30, 2005
(2,529,225 ) (834,873 ) 982,440 (2,381,658 )

June 30, 2004
(1,475,170 ) (461,377 ) — (1,936,547 )

Gold revenues for the year ended

June 30, 2006
— — 6,649,300 6,649,300

June 30, 2005
— — 5,175,235 5,175,235

June 30, 2004
— — — —

Depreciation, depletion and amortization for the year ended

June 30, 2006
18,472 5,345 734,618 758,435

June 30, 2005
18,382 4,670 1,136,023 1,159,075

June 30, 2004
12,633 3,345 — 15,978

C-19

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

14. Income Taxes

A reconciliation of income taxes at statutory rates with the reported taxes is as follows:


	2006			2005			2004

Loss before income taxes	$	(5,020,542	)	$	(2,381,658	)	$	(1,936,547	)
Canadian federal and provincial income tax rates		34.12	%		35.62	%		37.62	%

Expected income taxes (recovery)		(1,713,009	)		(848,347	)		(728,529	)
Non-deductible (deductible) expenses for tax purposes		571,904			291,156			20,438
Foreign exchange		(32,940	)		109,249			84,417
Foreign income subject to different tax rates		6,880			(50,656	)		(12,099	)
Valuation allowance		1,167,165			498,598			635,773

Income tax expense	$	—		$	—		$	—

Future income taxes arise from temporary difference in the recognition of income and expenses for financial reporting and tax purposes. The significant components of the future income tax assets and liabilities are as follows.


	2006			2005			2004

Future income tax assets
Tax losses	$	8,344,447		$	6,763,379		$	4,550,213
Mineral property expenditures		240,561			176,871			149,388
Other temporary differences		474,112			243,850			65,372

Future income tax assets before valuation allowance		8,922,607			7,184,100			4,764,973
Less: valuation allowance		(8,922,607	)		(7,184,100	)		(4,764,973	)

Net future income tax assets	$	—		$	—		$	—

The Company has estimated tax losses available for Canadian income tax purposes of approximately $7,551447, which expire between 2007 and 2026, $6,310,330 for U.S. tax purposes that expire between 2012 and 2021 and $13,065,607 for Mexican tax purposes that expire between 2006 and 2015.


15.	Commitments

The Company has obligations under operating leases for its corporate offices. Future minimum lease payments for non-cancellable leases with initial or remaining lease terms in excess on one year at June 30, 2006 for the fiscal years ended June 30 are:

2007 — $101,822
2008 — $67,881

The Magistral Gold Mine production is subject to a net smelter return royalty of 1% for the first 30,000 ounces of gold, 3.5% on the next 350,000 ounces of gold and 1% thereafter. The Company is currently paying net smelter royalties at 3.5%. As at June 30, 2006 the life of mine production is not anticipated to exceed 380,000 ounces.


16.	Environmental

The Company’s mining and exploration activities are subject to various federal, provincial and state laws and regulations governing the protection of the environment. These laws and regulations are continually changing and generally becoming more restrictive. The Company conducts its operations so as to protect public health and the environment and believes its operations are materially in compliance with all applicable laws and regulations. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations. The

C-20

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

ultimate amount of reclamation and other future site restoration costs to be incurred for existing mining interests is uncertain.


17.	Differences Between Canadian and United States Generally Accepted Accounting Principles

The Company prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles (“CDN GAAP”) which differ in certain respects from those principles that the Company would have followed had its consolidated financial statements been prepared in accordance with United States generally accepted accounting principles (“US GAAP”).

Applying US GAAP, the consolidated balance sheet at June 30, 2006 would be as follows:


	Balance						Balance
	CDN GAAP			Adjustments			U.S. GAAP

ASSETS
Current assets
Cash and cash equivalents	$	3,659,738		$			$	3,659,738
Accounts receivable		180,697						180,697
Product inventory and stockpiled ore		109,074						109,074
Supplies inventory		285,152						285,152
Prepaid expenses		239,424						239,424

		4,474,085			—			4,474,085
Property, plant and equipment[a]		13,306,314			(4,657,846	)		8,648,468
Mineral properties[a]		4,661,805			(4,661,805	)		—
Reclamation bonds		96,363						96,363

	$	22,538,567		$	(9,319,651	)	$	13,218,916


LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	1,194,495		$			$	1,194,495

		1,194,495						1,194,495

Other liabilities		112,397						112,397
Asset retirement obligation		1,684,812						1,684,812

		1,797,209			—			1,797,209

SHAREHOLDERS’ EQUITY
Share Capital		30,955,143						30,955,143
Contributed capital[b]		1,490,594			(287,376	)		1,203,218
Deficit[a][b]		(12,898,874	)		(9,032,275	)		(21,931,149	)

		19,546,863			(9,319,651	)		10,227,212

	$	22,538,567		$	(9,319,651	)	$	13,218,916

C-21

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Applying US GAAP, the consolidated balance sheet at June 30, 2005 would be as follows:


	Balance						Balance
	CDN GAAP			Adjustments			U.S. GAAP

ASSETS
Current assets
Cash and cash equivalents	$	957,251		$			$	957,251
Accounts receivable		273,165						273,165
Product inventory and stockpiled ore[a]		4,112,633			(154,743	)		3,957,890
Supplies inventory		414,366						414,366
Prepaid expenses		223,372						223,372

		5,980,787			(154,743	)		5,826,044
Property, plant and equipment[a]		13,388,954			(4,684,518	)		8,704,436
Mineral properties[a]		3,106,357			(3,106,357	)		—
Reclamation bonds		93,228						93,228

	$	22,569,326		$	(7,945,618	)	$	14,623,708


LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	1,783,277		$			$	1,783,277

		1,783,277			—			1,783,277

Other liabilities		175,217						175,217
Asset retirement obligation		1,567,267						1,567,267

		1,742,484			—			1,742,484

SHAREHOLDERS’ EQUITY
Share Capital		25,920,223						25,920,223
Contributed capital[b]		1,001,674			(287,376	)		714,298
Deficit[a][b]		(7,878,332	)		(7,658,242	)		(15,536,574	)

		19,043,565			(7,945,618	)		11,097,947

	$	22,569,326		$	(7,945,618	)	$	14,623,708

C-22

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s net loss for the year ended June 30, 2006 is summarized below:


	CDN						US
	GAAP			Adjustments			GAAP

GOLD SALES[a]	$	6,649,300		$	—		$	6,649,300

COST OF SALES[a]		7,903,654			55,251			7,958,905
DEPRECIATION AND DEPLETION[a]		734,618			(236,666	)		497,952
ROYALTIES[a]		381,572			—			381,572

		9,019,844			(181,415	)		8,838,429

LOSS FROM MINING OPERATIONS		(2,370,544	)		(181,415	)		(2,189,129	)

EXPENSES AND OTHER INCOME
General and administrative		1,944,511						1,944,511
Interest and financing costs		—						—
Stock-based compensation		611,572						611,572
Foreign exchange losses		36,904						36,904
Other income		(57,349	)					(57,349	)
Write-down of mineral properties[a]		114,360			(114,360	)		—
Exploration cost[a]		—			1,669,808			1,669,808
		2,649,998			1,555,448			4,205,446

LOSS FOR THE YEAR	$	5,020,542		$	1,374,033		$	6,394,575

Basic and diluted loss per share	$	0.08					$	0.11
Weighted average number of common shares outstanding		60,304,369						60,304,369

C-23

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s net loss for the year ended June 30, 2005 is summarized below:


	CDN						US
	GAAP			Adjustments			GAAP

GOLD SALES[a]	$	5,175,235		$	2,915,992		$	8,091,227

COST OF SALES[a]		3,347,153			6,582,479			9,929,632
DEPRECIATION AND DEPLETION [a]		727,815			149,657			877,472
ROYALTIES[a]		262,197			264,729			526,926

GAIN ON DISPOSAL OF MINING EQUIPMENT		—			(155,199	)		(155,199	)

EARNINGS (LOSS) FROM MINING OPERATIONS		838,070			(3,925,674	)		(3,087,604	)

EXPENSES AND OTHER INCOME
General and administrative		2,084,400						2,084,400
Interest and financing costs		22,378						22,378
Stock-based compensation		559,963						559,963
Foreign exchange losses		115,796						115,796
Other income		(37,942	)					(37,942	)
Write-down of mineral properties[a]		630,332			(630,332	)		—
Exploration cost[a]		—			1,281,555			1,281,555
Gain on disposal of mining equipment		(155,199	)		155,199

		3,219,728			806,422			4,206,150

LOSS FOR THE YEAR	$	2,381,658		$	4,732,096		$	7,113,754

Basic and diluted loss per share	$	0.05					$	0.14
Weighted average number of common shares outstanding		51,295,350						51,295,350

C-24

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s net loss for the year ended June 30, 2004 is summarized below.


	CDN						US
	GAAP			Adjustments			GAAP

GOLD SALES[a]	$	—		$	2,654,492		$	2,654,492

COST OF SALES[a]		—			3,145,048			3,145,048
DEPRECIATION AND DEPLETION[a]		—			202,809			202,809
ROYALTIES[a]		—			65,023			65,023

		—			3,412,880			3,412,880

LOSS FROM MINING OPERATIONS		—			(758,388	)		(758,388	)

EXPENSES AND OTHER INCOME
General and administrative		1,538,190						1,538,190
Interest and financing costs		1,159						1,159
Stock-based compensation		39,120						39,120
Foreign exchange losses		117,226						117,226
Other income		(89,433	)					(89,433	)
Write-down of mineral properties[a]		330,285			(330,285	)		—
Exploration cost[a]		—			1,298,327			1,298,327

		1,936,547			968,042			2,904,589

LOSS FOR THE YEAR	$	1,936,547		$	1,726,430		$	3,662,977

Basic and diluted loss per share	$	0.06					$	0.12
Weighted average number of common shares outstanding		30,305,758						30,305,758

C-25

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s cash flow for the year ended June 30, 2006 is summarized below.


	CDN						US
	GAAP			Adjustments			GAAP

CASH PROVIDED BY (USED FOR) OPERATIONS
Loss for the period[a]	$	(5,020,542	)	$	(1,374,033	)	$	(6,394,575	)
Items not affecting cash
Depreciation, depletion & amortization[a]		758,435			(236,666	)		521,769
Accretion of asset retirement obligation[a]		117,545						117,545
Stock based compensation		611,572						611,572
Write-off of mineral properties[a]		114,360			(149,360	)		(35,000	)
Severance expenses		(27,820	)					(27,820	)
Changes in non-cash working capital items[a]		2,970,312			55,251			3,025,563

		(476,138	)		(1,704,808	)		(2,180,946	)

INVESTING ACTIVITIES
Property, plant and equipment[a]		(25,700	)		—			(25,700	)
Proceeds from disposal of equipment		—						—
Reclamation deposits		(3,135	)					(3,135	)
Expenditures on mineral properties, net of recoveries[a]		(1,704,808	)		1,704,808			—

		(1,733,643	)		1,704,808			(28,835	)

FINANCING ACTIVITIES
Common shares issued:
On private placements		4,541,507						4,541,507
On warrant conversion		93,952						93,952
On option exercise		369,826						369,826
Share issue costs and finder’s fees		(93,017	)					(93,017	)

		4,912,268			—			4,912,268

INCREASE IN CASH AND CASH EQUIVALENTS		2,702,487			—			2,702,487

CASH AND CASH EQUIVALENTS, beginning of year		957,251						957,251
CASH AND CASH EQUIVALENTS, end of year	$	3,659,738		$	—		$	3,659,738

C-26

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s cash flow for the year ended June 30, 2005 is summarized below.


	CDN						US
	GAAP			Adjustments			GAAP

CASH PROVIDED BY (USED FOR) OPERATIONS
Loss for the period[a]	$	(2,381,658	)	$	(4,732,096	)	$	(7,113,754	)
Items not affecting cash
Depreciation, depletion & amortization[a]		750,867			149,657			900,524
Accretion of asset retirement obligation[a]		44,540			45,134			89,674
Stock based compensation		559,963						559,963
Write-off of mineral properties[a]		630,332			(670,332	)		(40,000	)
Gain on disposal of property, plant & equipment		(155,199	)					(155,199	)
Severance expenses		61,106						61,106
Changes in non-cash working capital items[a]		(4,357,410	)		872,580			(3,484,830	)

		(4,847,459	)		(4,335,057	)		(9,182,516	)

INVESTING ACTIVITIES
Property, plant and equipment[a]		(3,987,643	)		3,013,502			(974,141	)
Proceeds from disposal of equipment		200,199						200,199
Reclamation deposits		(45,256	)					(45,256	)
Expenditures on mineral properties, net of recoveries[a]		(1,321,555	)		1,321,555			—

		(5,154,255	)		4,335,057			(819,198	)

FINANCING ACTIVITIES
Common shares issued:
On private placements		10,262,635						10,262,635
On warrant conversion		591,200						591,200
On option exercise		200,020						200,020
Share issue costs and finder’s fees		(692,741	)					(692,741	)

		10,361,114			—			10,361,114

INCREASE IN CASH AND CASH EQUIVALENTS		359,400			—			359,400

CASH AND CASH EQUIVALENTS, beginning of year		597,851						597,851
CASH AND CASH EQUIVALENTS, end of year	$	957,251		$	—		$	957,251

C-27

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s cash flow for the year ended June 30, 2004 is summarized below.


	CDN						US
	GAAP			Adjustments			GAAP

CASH PROVIDED BY (USED FOR) OPERATIONS
Loss for the period[a]	$	(1,936,547	)	$	(1,726,430	)	$	(3,662,977	)
Items not affecting cash
Depreciation, depletion & amortization[a]		15,978			202,809			218,787
Stock based compensation		39,120						39,120
Write-off of mineral properties[a]		330,285			(255,285	)		75,000
Severance expenses[a]					17,478			17,478
Changes in non-cash working capital items[a]		720,590			(964,479	)		(243,889	)

		(830,574	)		(2,725,907	)		(3,556,481	)

INVESTING ACTIVITIES
Property, plant and equipment[a]		(1,889,409	)		1,502,580			(386,829	)
Acquisition of Pangea Resources Inc.		(4,323,753	)					(4,323,753	)
Reclamation deposits		(47,972	)					(47,972	)
Expenditures on mineral properties, net of recoveries[a]		(1,223,327	)		1,223,327			—

		(7,484,461	)		2,725,907			(4,758,554	)

FINANCING ACTIVITIES
Common shares issued:
On private placements		7,871,295						7,871,295
On warrant conversion		920,243						920,243
On option exercise		343,933						343,933
Share issue costs and finder’s fees		(310,303	)					(310,303	)

		8,825,168			—			8,825,168

INCREASE IN CASH AND CASH EQUIVALENTS		510,133			—			510,133

CASH AND CASH EQUIVALENTS, beginning of year		87,718						87,718
CASH AND CASH EQUIVALENTS, end of year	$	597,851		$	—		$	597,851

[a] Property, plant and equipment/Mineral properties

(i) Under US GAAP, mineral properties and exploration costs related to mineral properties for which commercial feasibility has not yet been established are expensed as incurred. Under CDN GAAP, exploration expenditures may be capitalized as incurred.

(ii) For mineral properties where commercial feasibility has been established, under US GAAP, start-up costs are expensed as incurred in accordance with AICPA Statement of Position 98-5, Reporting on the Cost of Start-up Activities.

Under CDN GAAP, these start-up costs are deferred and amortized over the estimated life of the property following the commencement of the commercial production, or written off if the property is sold, allowed to lapse,

C-28

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

abandoned or impaired. Under CDN GAAP, deferred start-up costs include operating costs, net of revenue, prior to the commencement of commercial production.

Under CDN GAAP the Magistral Gold Mine began commercial production on January 1, 2005 and therefore from acquisition on February 2, 2004 to January 1, 2005 all operating costs, net of revenue for the Magistral Gold Mine were deferred to property, plant and equipment.

Accordingly, gold sales, cost of sales, depreciation and depletion and royalties are included in the loss for the year for US GAAP and were deferred to property plant and equipment for CDN GAAP.

The differences in the amounts deferred to pad inventory and property, plant and equipment are cumulative and affect the opening balances for each period following June 30, 2004.

[b] Stock based compensation

Under US GAAP, accounting for stock-based compensation plan is recognized and measured in accordance with FASB Statement No 123, Accounting for Stock-based Compensation (SFAS 123). The statement recommends companies to follow a fair market value based method of accounting for stock-based compensation plan. SFAS 123 also allows companies to continue to measure compensation cost using intrinsic value based method of accounting prescribed by APB Opinion No. 25, Accounting for stock Issued to Employees. Under the fair value based method, compensation cost is measured at the grant date based on value of the award and recognized over the service period, which is usually the vesting period. Under the intrinsic method, cost of stock options is measured as the excess, if any, of the quoted market price of the Company’s stock at the date of grant over the option price.

Under CDN GAAP, CICA 3870, Stock-Based Compensation and Other Stock — Based Payments, recommends companies to adopt the fair valued base method of accounting for all stock-based compensation. The section permitted companies to continue to measure stock-based compensation using intrinsic value method of accounting but requires pro-forma disclosure of earnings and earnings per share as if the fair value method had been adopted.

Effective July 1, 2004, the Company adopted the fair value method of accounting for stock-based compensation in accordance with CICA 3870. This change in accounting policy was applied retroactively without restatement of prior years’ financial statements. The Company recorded a cumulative increase of $287,376 to opening deficit and contributed capital.

For US GAAP purposes, the Company has chosen to adopt the fair value based method on a modified prospective basis from July 1, 2004 as permitted by SFAS 148, Accounting for Stock-Based Compensation — Transition and Disclosure, an amendment of SFAS 123. The balance sheet difference between US GAAP and CDN GAAP occurs as a result of the modified prospective adoption of the fair value method under SFAS 148.

[c] Comprehensive Income

Under US GAAP, comprehensive income is recognized and measured in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 130 Reporting Comprehensive Income. Comprehensive income includes all changes in equity other than those resulting from investment by owners and distributions to owners. Comprehensive income includes two components, net income and other comprehensive income. Other comprehensive income includes amounts that are recorded as an element of shareholders’ equity but are excluded from net income as these transactions or events are attributable to changes from non-owner sources. These items include holding gains and losses on certain investments, gains and losses on certain derivative instruments and foreign exchange gains and losses related to self-sustaining foreign operations (cumulative translation adjustment). A standard for comprehensive income and other comprehensive income is not yet effective under Canadian GAAP. Under US GAAP comprehensive income is equal to net income for the Company for the years presented.

C-29

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

[d] Recent accounting pronouncements

In June 2005, the AcSB issued CICA 3831, Non-monetary Transactions, replacing the former CICA 3830. This statement will be effective for fiscal periods beginning after January 1, 2006. Earlier application is permitted for non-monetary asset exchanges executed in periods beginning on or after July 1, 2005. Retroactive application is prohibited. The new Canadian standard is, in all material respects, consistent with the related US standard.

In April 2005, the AcSB issued CICA 1530, Comprehensive Income, which introduces new rules for reporting and display of comprehensive income. Comprehensive income, which is currently reported under US GAAP, is the change in shareholders’ equity of an enterprise during a reporting period from transactions and other events and circumstances from non-owner sources. It includes all changes in equity during a period except those resulting from investment by owners and distributions to owners. These items include holding gains and losses on certain investments, gain and losses on certain derivative instruments and foreign currency gains and losses related to self — sustaining foreign operations (cumulative translation adjustment). CICA 1530 is effective for fiscal years beginning on or after October 1, 2006.

In April 2005, the AcSB issued CICA 3865, Hedges, which is applicable when a company chooses to designate a hedging relationship for accounting purposes. It builds on the existing Accounting Guideline AcG-13, Hedging Relationships, and Section 1650 Foreign Currency Translation, by specifying how hedge accounting is applied and what disclosures are necessary when it is applied.

In April 2005, the CICA issued Handbook Sections 3855, Financial Instruments — Recognition and Measurement. This standard prescribes when a financial asset, financial liability, or non-financial derivative is to be recognized on the balance sheet and whether fair value or cost-based measures are used. It also specifies how financial instrument gains and losses are to be presented.

On March 30, 2005, the FASB ratified the Emerging Issues Task Force (EITF) consensus in Issue 04-06 that post-production stripping costs are a component of mineral inventory costs subject to provisions of AICPA Accounting Research Bulletin No. 43, Restatement and Revision of Accounting Research Bulletins, Chapter 4, Inventory Pricing (ARB43). In the mining industry, the costs of removing overburden and waste materials to access mineral deposits are referred to as “stripping costs”. It is the accounting for costs incurred during the production stage of the mine, or the post-production stripping costs, that are addressed in Issue 04-06. Based upon this consensus, post production stripping costs should be considered costs of extracted minerals under a full absorption costing system and recognized as a component of inventory to be recognized in costs of sales in the same period as the revenue from the sale of the inventory. Additionally, capitalization of such costs would be appropriate only to the extent inventory exists at the end of the reporting period. The guidance in this consensus will be effective for financial statements issued for fiscal years beginning after December 15, 2005 with early adoption permitted. The consensus can be adopted either prospectively through a cumulative effect adjustment through opening retained earning or retrospectively by restating prior periods. On March 2, 2005, AcSB issued EIC 160, which addresses the accounting treatment of stripping costs. EIC 160 is applicable to fiscal years beginning on or after July 1, 2006. The Company has not determined the method of adoption or the impact of EITF 04-06 or EIC 160, if any, on the Company’s financial position or results from operation. The Company currently has no deferred stripping costs.

On June 1, 2005, the FASB issued SFAS No. 154, Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements. SFAS 154 requires retrospective application to prior periods’ financial statements of a change in accounting principles unless it is impracticable to do so. This is a change from the existing practice that requires most accounting changes to be accounted for by including in net income in the period of the change the cumulative effect of changing to the new accounting principle. SFAS 154 will be effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005.

C-30

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a decision whether to file or not file a return in a particular jurisdiction). Under the Interpretation, the financial statements will reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. The Interpretation also revises disclosure requirements and introduces a prescriptive, annual, tabular roll-forward of the unrecognized tax benefits. It is effective for fiscal years beginning after December 15, 2006.


18.	Subsequent Events

Subsequent to June 30, 2006, there were 1,418,150 warrants exercised at $1.20 CDN for gross proceeds of $1,701,780 CDN and 175,000 stock options exercised at an average price of $0.64 CDN for gross proceeds of $111,500 CDN.

C-31

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED BALANCE SHEETS


	September 30,			June 30,
	2006			2006
	(Expressed in US Dollars)
	(Unaudited)

ASSETS
Current assets
Cash and cash equivalents	$	3,544,851		$	3,659,738
Accounts receivable		208,377			180,697
Product inventory (Note 3)		204,217			109,074
Supplies inventory		259,138			285,152
Prepaid expenses		281,892			239,424

		4,498,475			4,474,085
Property, plant and equipment (Note 4)		13,205,317			13,306,314
Mineral properties		5,508,007			4,661,805
Reclamation bonds		96,363			96,363

	$	23,308,162		$	22,538,567



LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	1,013,414		$	1,194,495

		1,013,414			1,194,495
Other liabilities		109,350			112,397
Asset retirement obligation (Note 5)		1,631,090			1,684,812

		1,740,440			1,797,209


SHAREHOLDERS’ EQUITY

Share capital (Note 6)		32,619,378			30,955,143
Contributed surplus		1,581,739			1,490,594
Deficit		(13,646,809	)		(12,898,874	)

		20,554,308			19,546,863

	$	23,308,162		$	22,538,567

Nature of operations and Going Concern (Note 1)
Commitments (Note 9)

Approved by the Board:



/s/ Michael Beley		/s/ Gary Nordin

Michael Beley,		Gary Nordin,
Director		Director

See accompanying notes to consolidated financial statements

C-33

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended September 30th


	2006			2005
	(Expressed in US Dollars)
	(Unaudited)

GOLD SALES	$	752,590		$	2,185,513

COST OF SALES		742,400			2,913,885
DEPRECIATION AND DEPLETION		11,572			290,984
ROYALTIES		46,723			121,329

		800,695			3,326,198

LOSS FROM MINING OPERATIONS		48,105			1,140,685

EXPENSES AND OTHER INCOME
General and administrative		550,271			367,703
Stock-based compensation		134,564			55,440
Foreign exchange (gain) loss		398			(6,471	)
Other income		(36,131	)		(870	)

		649,102			415,802

LOSS BEFORE THE UNDERNOTED ITEMS		697,207			1,556,487
Write-down of mineral properties		50,728			40,457

LOSS FOR THE PERIOD	$	747,935		$	1,596,944

Basic and diluted loss per share	$	0.01		$	0.03

Weighted average number of shares outstanding		69,777,263			55,471,673

CONSOLIDATED STATEMENTS OF DEFICIT
For the three months ended September 30^th


	2006		2005
	(Expressed in US Dollars)
	Unaudited

DEFICIT, Beginning of the period	$	12,898,874	$	7,878,332
Loss for the period		747,935		1,596,944

DEFICIT, End of the period	$	13,646,809	$	9,475,276

See accompanying notes to consolidated financial statements

C-34

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended September 30th


	2006			2005
	(Expressed in US Dollars)
	(Unaudited)

CASH PROVIDED BY (USED FOR) OPERATIONS
Loss for the period	$	(747,935	)	$	(1,596,944	)
Items not affecting cash Depreciation, depletion & amortization		17,255			296,394
Accretion of asset retirement obligation		30,020			29,386
Stock based compensation		134,564			55,440
Write-down of mineral properties		50,728			40,457
Severance expense		(3,047	)		14,910

		(518,415	)		(1,160,357	)
Changes in non-cash working capital items (Note 8)		(418,763	)		1,004,603

		(937,178	)		(155,754	)

INVESTING ACTIVITIES
Property, plant and equipment		—			(3,945	)
Expenditures on mineral properties, net of recoveries		(798,525	)		(591,168	)

		(798,525	)		(595,113	)

FINANCING ACTIVITIES
Common shares issued:
On warrant conversion		1,521,768			—
On option exercise		99,635			53,550
Shares subscribed		—			99,157
Share issue costs and finder’s fees		(587	)		(2,730	)

		1,620,816			149,977

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(114,887	)		(600,890	)
CASH AND CASH EQUIVALENTS, Beginning of the year		3,659,738			957,251

CASH AND CASH EQUIVALENTS, End of the period	$	3,544,851		$	356,361

See accompanying notes to consolidated financial statements

C-35

NEVADA PACIFIC GOLD LTD.

CONSOLIDATED STATEMENTS OF MINERAL PROPERTY EXPENDITURES

As at June 30, 2006 and September 30, 2006


			South													Other
	Limousine		Carlin											Timber		Nevada			Mexican
	Butte		Project			Keystone			BMX			Cornerstone		Creek		Properties			Properties		Total
	(Expressed in US Dollars)
	(Unaudited)

Total as at June 30, 2005	$	744,425	$	532,012		$	243,760		$	32,114		$	129,985	$	153,005	$	570,069		$	700,987	$	3,106,357


Exploration salaries & wages		2,960		—			17,782			15,505			53,181		18,132		93,121			107,129		307,810

Land holding costs		—		9,639			20			80,587			43,009		48,151		58,234			207,803		447,443

Surveying		—		—			—			—			991		6,716		4,966			1,726		14,399

Geology		—		—			—			1,226			212		666		1,453			43,381		46,938

Surface geochemistry		—		—			—			—			2,199		—		3,962			55,230		61,391

Geophysics		—		—			—			—			—		5,300		18,950			5,524		29,774

Road work & trenching		—		—			—			9,110			31,880		7,200		222			21,207		69,619

Drilling		—		—			91,724			71,202			248,629		236,916		36,541			—		685,012

Other		—		—			—			—			—		—		—			19,042		19,042


Total expenditures		2,960		9,639			109,526			177,630			380,101		323,081		217,449			461,042		1,681,428

Cost recoveries		—		—			(11,620	)		—			—		—		—			—		(11,620	)

Property write-offs		—		(23	)		—			—			—		—		(114,337	)		—		(114,360	)


Total as at June 30, 2006		747,385		541,628			341,666			209,744			510,086		476,086		673,181			1,162,029		4,661,805

Exploration salaries & wages		—		—			2,067			146			3,822		—		18,266			87,510		111,811

Land holding costs		129,632		9,616			49,552			64,712			20,830		41,523		58,900			214,596		589,361

Surveying		—		—			—			—			—		—		—			—		—

Geology		—		—			107			—			—		—		528			210		845

Surface geochemistry		—		—			—			—			207		—		—			54,989		55,196

Geophysics		—		—			—			—			—		—		—			—		—

Road work & trenching		—		—			—			—			—		—		—			42,306		42,306

Drilling		—		—			—			7,935			14,421		—		—			73,583		95,939

Other		—		—			—			—			—		—		—			1,472		1,472


Total expenditures		129,632		9,616			51,726			72,793			39,280		41,523		77,694			474,666		896,930

Property write-offs		—		—			—			(24,580	)		—		—		(26,148	)		—		(50,728	)


Total as at Sept. 30, 2006	$	877,017	$	551,244		$	393,392		$	257,957		$	549,366	$	517,609	$	724,727		$	1,636,695	$	5,508,007

See accompanying notes to consolidated financial statements

C-36

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended September 30th 2006
(Unaudited — expressed in US Dollars unless otherwise noted)


1.	Nature of Operations and Going Concern

These consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern, which assumes the realization of assets and discharge of liabilities in the normal course of business. The Company has recorded losses from operations since its inception. The Company’s ability to continue as a going concern is dependent upon the ability of the Company to obtain additional financing to develop its mineral properties, the future performance of the Magistral Gold Mine, which is currently in care and maintenance, the existence of economically recoverable reserves, and upon its ability to attain profitable operations. Management continues to seek additional financing necessary to permit the Company to continue operations. There can be no assurance that management will be successful in all these activities. Because of this uncertainty, there is substantial doubt about the ability of the Company to continue as a going concern. These consolidated financial statements do not give effect to any adjustments that would be necessary should the Company not be able to continue as a going concern. Such adjustments could be material.


2.	Significant Accounting Policies

Basis of presentation and principles of consolidation

These interim consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“CDN GAAP”). The significant differences between those principles and those that would be applied under U.S. generally accepted accounting principles (“US GAAP”) are disclosed in Note 11. These interim consolidated financial statements do not include in all respects the annual disclosure requirements of generally accepted accounting principles and should be read in conjunction with the most recent annual consolidated financial statements.

These interim consolidated financial statements follow the same accounting policies and methods of application as the most recent annual consolidated financial statements of the Company.

The interim consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Nevada Pacific Gold (US), Inc., Pangea Resources Inc. and Compania Minera Pangea, S.A. de C.V. All inter-company transactions and balances have been eliminated.


3.	Product inventory


	September 30		June 30
	2006		2006

Gold ore	$	204,217	$	109,074

C-37

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

4. Property, plant and equipment


	September 30			June 30
	2006			2006

Magistral Gold Mine
Plant and equipment	$	2,760,526		$	2,760,526
Property and deferred costs		10,245,081			10,245,081
Asset retirement obligation asset		1,393,851			1,477,593
Accumulated amortization and depletion		(1,232,118	)		(1,220,546	)

		13,167,340			13,262,654

Other equipment		136,776			136,776
Accumulated amortization		(98,799	)		(93,116	)

		37,977			43,660

	$	13,205,317		$	13,306,314


5.	Asset retirement obligation


	September 30,			June 30,
	2006			2006

Asset retirement obligation — beginning of year	$	1,684,812		$	1,567,267
Obligations incurred during the period		—			—
Accretion expense		30,020			117,545
Revisions in estimated cash flows		(83,742	)		—

Asset retirement obligation — end of period	$	1,631,090		$	1,684,812

The total undiscounted asset retirement obligation is $2,561,919, which is expected to be expended in 2013. In determining the carrying value of the asset retirement obligation, the Company has assumed a credit-adjusted risk-free rate of 7.5% and an inflation rate of 3.33%.

C-38

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6. Share capital

Authorized

Unlimited Preferred Shares without par value, with rights to be determined upon issue Unlimited Common Shares without par value


	Number
Issued and outstanding	of Shares		Amount

Balance as at June 30, 2005		55,442,506	$	25,920,223
Private Placement		12,500,000		4,431,286
Private Placement		200,000		110,221
On exercise of warrants		89,515		93,952
On exercise of options		740,000		369,826
Fair value of options exercised		—		122,652
Share issue costs		—		(93,017	)

Balance as at June 30, 2006		68,972,021		30,955,143
On exercise of warrants		1,418,150		1,521,768
On exercise of options		175,000		99,635
Fair value of options exercised		—		43,419
Share issue costs		—		(587	)

Balance as at September 30, 2006		70,565,171	$	32,619,378

Stock options

The Company has a stock option plan as described in the most recent annual financial statements of the Company. The Company accounts for its grants in accordance with the fair value method of accounting for stock-based compensation.

A summary of changes to stock options during the period are as follows:


	Three Months Ended					Year Ended
	September 30, 2006					June 30, 2006
				Weighted-					Weighted-
	Number			Average		Number			Average
	of Shares			Exercise Price		of Shares			Exercise Price

Outstanding at beginning of period		3,840,000		$	0.99 CDN		3,328,500		$	0.86 CDN
Granted		—					1,712,500		$	1.05 CDN
Exercised		(175,000	)	$	0.64 CDN		(740,000	)	$	0.57 CDN
Forfeited		(585,000	)	$	1.04 CDN		(461,000	)	$	0.94 CDN

Outstanding at end of the period		3,080,000		$	1.01 CDN		3,840,000		$	0.99 CDN

Options exercisable at the end of the period		2,159,375		$	0.97 CDN		2,263,750		$	0.95 CDN

C-39

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock options outstanding as at September 30, 2006 are as follows:

Weighted-Average

Number Outstanding

Life Remaining

Exercise Price

Range of Exercise Prices ($)

at September 30, 2006

(Years)

($)

0.53 - 1.00 CDN

2,445,000

7.40

0.91 CDN

1.01 - 1.54 CDN

635,000

8.14

1.39 CDN

Total

3,080,000

7.56

1.01 CDN

Warrants

A summary of changes to warrants during the period are as follows:


	Three Months Ended					Year Ended
	September 30, 2006					June 30, 2006
				Weighted-					Weighted-
	Number			Average		Number			Average
	of Warrants			Exercise Price		of Warrants			Exercise Price

Outstanding at beginning of year		14,706,900		$	0.60 CDN		6,420,841		$	1.19 CDN
Granted		—					12,700,000		$	0.50 CDN
Exercised		(1,418,150	)	$	1.20 CDN		(89,515	)	$	1.20 CDN
Expired		(588,750	)	$	1.20 CDN		(4,324,426	)	$	1.18 CDN

Outstanding at end of the period		12,700,000		$	0.50 CDN		14,706,900		$	0.60 CDN

Share purchase warrants outstanding at September 30, 2006 were as follows:


Number		Exercise Price		Expiry Date

	6,921,213	$	0.50 CDN	December 14, 2007
	200,000	$	0.80 CDN	January 13, 2008
	5,578,787	$	0.50 CDN	May 11, 2008

	12,700,000


7.	Related party transactions

During the three months ended September 30, 2006, a total of $23,738 (2005 — $9,708) was charged for fees by a legal firm of which the Company’s corporate secretary is a partner. At September 30, 2006, $4,248 (June 30, 2006 — $17,352) was owing to this legal firm.

In May, 1999, the Company became the leaseholder of the head office premises. During the year ended June 30, 2001, the Company entered into a separate sub-lease agreement with Portal Resources Ltd. of which the Company’s Chairman is a director. During the three months ended September 30, 2006, a total of $29,008 (2005 — $12,663) was charged by the Company for rent and common office costs. At September 30, 2006, $21,526 (June 30, 2006 — $Nil) was receivable from this company.

C-40

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

8. Supplemental cash flow information


	For the Three Months Ended
	September 30,
	2006			2005

Changes in non-cash working capital
Accounts receivable	$	(27,680	)	$	116,617
Product inventory and stockpiled ore		(95,143	)		1,037,989
Supplies inventory		26,014			109,953
Prepaid expenses		(42,468	)		30,593
Accounts payable and accrued liabilities		(279,486	)		(290,549	)

	$	(418,763	)	$	1,004,603


9.	Commitments

The Company has obligations under operating leases for its corporate offices. Future minimum lease payments for non-cancellable leases with initial or remaining lease terms in excess of one year at September 30, 2006 for the fiscal years ended June 30 are:


2007 — $	76,366			2008 — $	67,881

The Magistral Gold Mine production is subject to a net smelter return royalty of 1% for the first 30,000 ounces of gold, 3.5% on the next 350,000 ounces of gold and 1% thereafter. The Company is currently paying net smelter royalties at 3.5%. As at September 30, 2006 the life of mine production is not anticipated to exceed 380,000 ounces.

C-41

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

10. Segmented information


							Gold Mining
	Corporate			Exploration			& Exploration
	(Canada)			(U. S.)			(Mexico)			Total
	($)			($)			($)			($)

Property, plant and equipment
September 30, 2006		25,298			12,679			13,167,340			13,205,317
June 30, 2006		29,610			14,050			13,262,654			13,306,314
Property, plant and equipment: expenditures For the three months ended
September 30, 2006		—			—			—			—
September 30, 2005		3,945			—			—			3,945
Mineral Properties
September 30, 2006		—			3,871,312			1,636,695			5,508,007
June 30, 2006		—			3,499,776			1,162,029			4,661,805
Mineral Properties: expenditures for the three months ended
September 30, 2006		—			422,264			474,666			896,930
September 30, 2005		—			566,261			24,907			591,168
Net income (loss) for the three months ended
September 30, 2006		(603,076	)		(96,754	)		(48,105	)		(747,935	)
September 30, 2005		(369,350	)		(86,909	)		(1,140,685	)		(1,596,944	)
Gold revenues for the three months ended
September 30, 2006		—			—			752,590			752,590
September 30, 2005		—			—			2,185,513			2,185,513
Depreciation, depletion and amortization for the three months ended
September 30, 2006		4,312			1,371			11,572			17,255
September 30, 2005		4,445			965			290,984			296,394

C-42

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

11. Differences Between Canadian and United States Generally Accepted Accounting Principles

The Company prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles (“CDN GAAP”) which differ in certain significant respects from those principles that the Company would have followed had its consolidated financial statements been prepared in accordance with United States generally accepted accounting principles (“US GAAP”).

Applying US GAAP, the consolidated balance sheet at September 30, 2006 would be as follows:


	Balance						Balance
	CDN GAAP			Adjustments			U.S. GAAP

ASSETS
Current assets
Cash and cash equivalents	$	3,544,851		$			$	3,544,851
Accounts receivable		208,377						208,377
Product inventory and stockpiled ore		204,217						204,217
Supplies inventory		259,138						259,138
Prepaid expenses		281,892						281,892

		4,498,475			—			4,498,475
Property, plant and equipment[a]		13,205,317			(4,657,846	)		8,547,471
Mineral properties[a]		5,508,007			(5,508,007	)		—
Reclamation bonds		96,363						96,363

	$	23,308,162		$	(10,165,853	)	$	13,142,309



LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	1,013,414		$			$	1,013,414

		1,013,414						1,013,414

Other liabilities		109,350						109,350
Asset retirement obligation		1,631,090						1,631,090

		1,740,440			—			1,740,440



SHAREHOLDERS’ EQUITY
Share Capital		32,619,378						32,619,378
Contributed surplus[b]		1,581,739			(225,535	)		1,356,204
Deficit[a][b]		(13,646,809	)		(9,940,318	)		(23,587,127	)

		20,554,308			(10,165,853	)		10,388,455

	$	23,308,162		$	(10,165,853	)	$	13,142,309

C-43

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Applying US GAAP, the consolidated balance sheet at June 30, 2006 would be as follows:


	Balance						Balance
	CDN GAAP			Adjustments			U.S. GAAP

ASSETS
Current assets
Cash and cash equivalents	$	3,659,738		$			$	3,659,738
Accounts receivable		180,697						180,697
Product inventory and stockpiled ore		109,074						109,074
Supplies inventory		285,152						285,152
Prepaid expenses		239,424						239,424

		4,474,085			—			4,474,085
Property, plant and equipment[a]		13,306,314			(4,657,846	)		8,648,468
Mineral properties[a]		4,661,805			(4,661,805	)		—
Reclamation bonds		96,363						96,363

	$	22,538,567		$	(9,319,651	)	$	13,218,916



LIABILITIES
Current liabilities
Accounts payable and accrued liabilities	$	1,194,495		$			$	1,194,495

		1,194,495						1,194,495

Other liabilities		112,397						112,397
Asset retirement obligation		1,684,812						1,684,812

		1,797,209			—			1,797,209

SHAREHOLDERS’ EQUITY
Share Capital		30,955,143						30,955,143
Contributed surplus[b]		1,490,594			(287,376	)		1,203,218
Deficit[a][b]		(12,898,874	)		(9,032,275	)		(21,931,149	)

		19,546,863			(9,319,651	)		10,227,212

	$	22,538,567		$	(9,319,651	)	$	13,218,916

C-44

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s net loss for the three months ended September 30, 2005 is summarized below:


	CDN					US
	GAAP		Adjustments			GAAP

GOLD SALES[a]	$	2,185,513	$	—		$	2,185,513

COST OF SALES[a]		2,913,885		(150,546	)		2,763,339
DEPRECIATION AND DEPLETION[a]		290,984		(93,725	)		197,259
ROYALTIES[a]		121,329		—			121,329

		3,326,198		(244,271	)		3,081,927

LOSS FROM MINING OPERATIONS		1,140,685		(244,271	)		896,414

EXPENSES AND OTHER INCOME
General and administrative				367,703			367,703
Stock-based compensation				55,440			55,440
Foreign exchange (gain) loss				(6,471	)		(6,471	)
Other income				(870	)		(870	)
Write-down of mineral properties[a]		40,457		(40,457	)		—
Exploration cost[a]		—		581,168			581,168

		456,259		540,711			996,970

LOSS FOR THE PERIOD	$	1,596,944	$	296,440		$	1,893,384

Basic and diluted loss per share	$	0.03				$	0.03
Weighted average number of common shares outstanding		55,471,673					55,471,673

C-46

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s cash flow for the three months ended September 30, 2006 is summarized below.


	CDN						US
	GAAP			Adjustments			GAAP

CASH PROVIDED BY (USED FOR) OPERATIONS
Loss for the period[a]	$	(747,935	)	$	(908,043	)	$	(1,655,978	)
Items not affecting cash
Depreciation, depletion & amortization[a]		17,255			—			17,255
Accretion of asset retirement obligation[a]		30,020						30,020
Stock based compensation		134,564			61,841			196,405
Write-down of mineral properties[a]		50,728			(50,728	)		—
Severance expenses		(3,047	)					(3,047	)
Changes in non-cash working capital items[a]		(418,763	)		98,405			(418,763	)

		(937,178	)		(798,525	)		(1,735,703	)

INVESTING ACTIVITIES
Expenditures on mineral properties, net of recoveries[a]		(798,525	)		798,525			—

		(798,525	)		798,525			—

FINANCING ACTIVITIES
Common shares issued:
On warrant conversion		1,521,768						1,521,768
On option exercise		99,635						99,635
Share issue costs and finder’s fees		(587	)					(587	)

		1,620,816			—			1,620,816

DECREASE IN CASH AND CASH EQUIVALENTS		(114,887	)		—			(114,887	)

CASH AND CASH EQUIVALENTS, beginning of period		3,659,738						3,659,738
CASH AND CASH EQUIVALENTS, end of period	$	3,544,851		$	—		$	3,544,851

C-47

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The effect of measurement differences between CDN GAAP and US GAAP on the Company’s cash flow for the three months ended September 30, 2005 is summarized below.


	CDN						US
	GAAP			Adjustments			GAAP

CASH PROVIDED BY (USED FOR) OPERATIONS
Loss for the period[a]	$	(1,596,944	)	$	(296,440	)	$	(1,893,384	)
Items not affecting cash Depreciation, depletion & amortization[a]		296,394			(93,725	)		202,669
Accretion of asset retirement obligation[a]		29,386			—			29,386
Stock based compensation		55,440						55,440
Write-down of mineral properties[a]		40,457			(50,457	)		(10,000	)
Severance expenses		14,910						14,910
Changes in non-cash working capital items[a]		1,004,603			(150,546	)		854,057

		(155,754	)		(591,168	)		(746,922	)

INVESTING ACTIVITIES
Property, plant and equipment[a]		(3,945	)		—			(3,945	)
Expenditures on mineral properties, net of recoveries[a]		(591,168	)		591,168			—

		(595,113	)		591,168			(3,945	)

FINANCING ACTIVITIES
Common shares issued:
On option exercise		53,550						53,550
Shares subscribed		99,157						99,157
Share issue costs and finder’s fees		(2,730	)					(2,730	)

		149,977			—			149,977

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(600,890	)		—			(600,890	)

CASH AND CASH EQUIVALENTS, beginning of period		957,251						957,251
CASH AND CASH EQUIVALENTS, end of period	$	356,361		$	—		$	356,361

[a] Property, plant and equipment/Mineral properties

C-48

NEVADA PACIFIC GOLD LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

abandoned or impaired. Under CDN GAAP, deferred start-up costs include operating costs, net of revenue, prior to the commencement of commercial production.

Accordingly, gold sales, cost of sales, depreciation and depletion and royalties, prior to January 1, 2005, are included in the loss for the year for US GAAP and were deferred to property plant and equipment for CDN GAAP.

The differences in the amounts deferred to pad inventory and property, plant and equipment are cumulative and affect the opening balances for each period following June 30, 2004.

[b] Stock based compensation

Under CDN GAAP, CICA 3870, Stock-Based Compensation and Other Stock — Based Payments, requires companies to adopt the fair valued base method of accounting for all stock-based compensation.

Effective July 1, 2005, under US GAAP, the Company adopted SFAS No. 123 (revised 2004), “Share-Based Payments” (“SFAS 123R”), which is a revision to SFAS 123 “Accounting for Stock-Based Compensation”. One of the SFAS 123R requirements is that forfeitures of unvested instruments such as stock options be estimated at the grant date to determine the total compensation to be recognized. Under CDN GAAP, the Company accounts for forfeitures only as they occur. This results in an increase of $61,841 for the three months ended September 30, 2006 between the financial statements prepared under US GAAP compared to those prepared under CDN GAAP.

[c] Comprehensive Income

Under US GAAP, comprehensive income is recognized and measured in accordance with Financial Accounting Standards Board (“FASB”) Statement No. 130 Reporting Comprehensive Income. Comprehensive income includes all changes in equity other than those resulting from investment by owners and distributions to owners. Comprehensive income includes two components, net income and other comprehensive income. Other comprehensive income includes amounts that are recorded as an element of shareholders’ equity but are excluded from net income as these transactions or events are attributable to changes from non-owner sources. These items include holding gains and losses on certain investments, gains and losses on certain derivative instruments and foreign exchange gains and losses related to self-sustaining foreign operations (cumulative translation adjustment). A standard for comprehensive income and other comprehensive income is not yet effective under CDN GAAP. Under US GAAP comprehensive income is equal to net income for the Company for the years presented.

[d] Recent accounting pronouncements

In July 2006, the Financial Accounting Standards Board (“FASB”) released FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, and interpretation of FASB Statement No. 108 (FIN 48). FIN 48 prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its

C-49


A Partnership Of Incorporated Professionals	Amisano Hanson

Chartered Accountants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Directors,

Tone Resources Limited

(An Exploration Stage Company)

We have audited the consolidated balance sheets of Tone Resources Limited as at August 31, 2006 and 2005 and the consolidated statements of loss, cash flows and stockholders’ equity for the three years then ended and for the period October 31, 2001 (Date of Inception) to August 31, 2006. These consolidated 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.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at August 31, 2006 and 2005 and the results of its operations and its cash flows for the three years then ended and for the period October 31, 2001 (Date of Inception) to August 31, 2006 in accordance with Canadian generally accepted accounting principles.


Vancouver, Canada							*/s/ AMISANO HANSON*
November 8, 2006 except as to Note 9(f) which is as of November 24, 2006							Chartered Accountants

COMMENTS BY AUDITOR FOR US READERS ON CANADA — US REPORTING CONFLICT

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when there is substantial doubt about a company’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a going concern which assumes the realization of assets and discharge of liabilities in the normal course of business. As discussed in Note 1 to the financial statements, the Company has losses from operations and the recoverability of amounts shown for mineral property costs is dependent upon whether the properties contain reserves that are economically recoverable, which raises substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our report to the shareholders dated November 8, 2006, is expressed in accordance with Canadian reporting standards which do not permit a reference to such uncertainty in the auditors’ report when the uncertainty is adequately disclosed in the financial statements.


Vancouver, Canada							*/s/ AMISANO HANSON*
November 8, 2006 except as to Note 9(f) which is as of November 24, 2006							Chartered Accountants


750 WEST PENDER STREET, SUITE 604	TELEPHONE:	604-689-0188
VANCOUVER CANADA	FACSIMILE:	604-689-9773
V6C 2T7	E-MAIL:	amishan@telus.net

D-2

TONE RESOURCES LIMITED
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF LOSS
for the years ended August 31, 2006, 2005 and 2004
and for the period October 31, 2001 (Date of Inception) to August 31, 2006


										October 31,
										2001 (Date of
										Inception) to
										August 31,
	2006			2005			2004			2006
	(Stated in Canadian Dollars)

General and administrative expenses
Accounting and audit fees — Note 6	$	170,242		$	35,808		$	62,012		$	332,025
Advertising and promotion		68,935			32,937			28,174			143,537
Consulting fees		75,000			—			—			82,747
Filing fees		20,802			16,769			29,450			75,785
Finance fees		—			10,000			—			10,000
Investor relations		93,500			68,000			79,435			254,435
Legal fees — Note 6		203,420			59,192			179,391			491,900
Management fees — Note 6		154,900			151,581			181,036			742,382
Office and miscellaneous		9,575			13,334			14,971			58,992
Rent — Note 6		15,000			15,000			15,000			67,665
Stock-based compensation — Note 6		149,312			282,409			368,313			807,972
Secretarial — Note 6		11,060			11,389			13,462			49,206
Telephone		13,055			13,679			16,046			61,736
Transfer agent fees		14,067			8,213			6,912			33,428
Travel		84,728			37,865			82,241			270,109

Loss before other items		(1,083,596	)		(756,176	)		(1,076,443	)		(3,481,919	)
Other items
Foreign exchange loss		(7,591	)		(17,389	)		(7,440	)		(37,041	)
Interest income		7,450			535			1,203			12,833
Write-off of mineral property costs — Note 4		—			(82,769	)		—			(82,769	)

Net loss for the period	$	(1,083,737	)	$	(855,799	)	$	(1,082,680	)	$	(3,588,896	)

Basic and diluted loss per share	$	(0.06	)	$	(0.06	)	$	(0.09	)

Weighted average number of shares outstanding		16,977,183			13,168,002			11,478,821

See accompanying notes

D-4

TONE RESOURCES LIMITED
(An Exploration Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended August 31, 2006, 2005 and 2004
and for the period October 31, 2001 (Date of Inception) to August 31, 2006


										October 31,
										2001 (Date of
										Inception) to
										August 31,
	2006			2005			2004			2006
	(Stated in Canadian Dollars)

Operating Activities
Net loss for the period	$	(1,083,737	)	$	(855,799	)	$	(1,082,680	)	$	(3,588,896	)
Add items not affecting cash:
Stock-based compensation		149,312			282,409			368,313			807,972
Write-off of mineral property costs					82,769			—			82,769
Changes in non-cash working capital accounts:
GST recoverable		(5,901	)		(3,797	)		11,305			(12,409	)
Prepaid expenses and advances		(4,258	)		13,162			2,275			(6,816	)
Accounts payable		4,368			71,921			(43,132	)		106,173
Due to related parties		(32,372	)		65,819			5,617			44,832

		(972,588	)		(343,516	)		(738,302	)		(2,566,375	)

Financing Activities
Share subscriptions		7,500			—			—			7,500
Common shares issued		2,410,964			220,015			1,280,135			5,197,471

		2,418,464			220,015			1,280,135			5,204,971

Investing Activities
Increase (decrease) in reclamation bonds		1,246			3,281			(2,900	)		(33,338	)
Mineral property costs		(204,778	)		(247,471	)		(455,870	)		(1,357,845	)

		(203,532	)		(244,190	)		(458,770	)		(1,391,183	)

Increase (decrease) in cash during the period		1,242,344			(367,691	)		83,063			1,247,413
Cash and cash equivalents, beginning of the period		5,069			372,760			289,697			—

Cash and cash equivalents, end of the period	$	1,247,413		$	5,069		$	372,760		$	1,247,413

Supplemental disclosure of cash flow information
Cash paid for:
Interest	$	—		$	—		$	—

Income taxes	$	—		$	—		$	—

Cash and cash equivalents are comprised of:
Cash	$	541,050		$	5,069		$	372,760
Term Deposits		706,363			—			—
	$	1,247,413		$	5,069		$	372,060

Non-cash Transactions — Note 7

See accompanying notes

D-5

TONE RESOURCES LIMITED
(An Exploration Stage Company)
for the period October 31, 2001 (Date of Inception) to August 31, 2006

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY


			Number of					Special			Share		Contributed
			Common Shares		Amount			Warrants			Subscriptions		Surplus			Deficit			Total
			(Stated in Canadian Dollars)

Balance, October 31, 2001				—	$	—		$	—		$	—	$	—		$	—		$	—
For cash:
Issuance of founders shares	— at $0	.0001		5,000,000		500			—			—		—			—			500
Issuance of special warrants	— at $0	.15		—		—			446,611			—		—			—			446,611
Net loss for the period				—		—			—			—		—			(128,982	)		(128,982	)

Balance, August 31, 2002				5,000,000		500			446,611			—		—			(128,982	)		318,129
For cash:
Initial public offering	— at $0	.50		1,532,700		766,350			—			—		—			—			766,350
Issuance of special warrants	— at $0	.15		—		—			31,426			—		—			—			31,426
	— at $0	.50		—		—			231,347			—		—			—			231,347
Less: share issue costs — Note 6				—		(189,877	)		—			—		—			—			(189,877	)
Conversion of special warrants				3,649,606		709,384			(709,384	)		—		—			—			—
Stock-based compensation				—		—			—			—		7,938			—			7,938
Net loss for the year				—		—			—			—		—			(437,698	)		(437,698	)

Balance, August 31, 2003				10,182,306		1,286,357			—			—		7,938			(566,680	)		727,615
For cash:
Pursuant to private placements	— at $0	.47		1,081,670		508,385			—			—		—			—			508,385
	— at $0	.50		1,543,500		771,750			—			—		—			—			771,750
Stock-based compensation				—		—			—			—		368,313			—			368,313
Net loss for the year				—		—			—			—		—			(1,082,680	)		(1,082,680	)

Balance, August 31, 2004				12,807,476		2,566,492			—			—		376,251			(1,649,360	)		1,293,383
For cash:
Pursuant to private placements	— at $0	.40		175,412		70,165			—			—		—			—			70,165
	— at $0	.40		250,000		100,000			—			—		—			—			100,000
Pursuant to exercise of options	— at $0	.30		67,500		20,250			—			—		—			—			20,250
	— at $0	.50		59,200		29,600			—			—		—			—			29,600
Shares for debt	— at $0	.45		110,986		49,944			—			—		—			—			49,944
Mineral property costs	— at $0	.45		120,000		54,000			—			—		—			—			54,000
Stock-based compensation				—		—			—			—		282,409			—			282,409
Stock based compensation charge on stock options exercised				—		36,811			—			—		(36,811	)		—			—
Net loss for the year				—		—			—			—		—			(855,799	)		(855,799	)

Balance, August 31, 2005				13,590,574		2,927,262			—			—		621,849			(2,505,159	)		1,043,952
For cash:
Pursuant to private placements	— at $0	.20		3,300,000		660,000			—			—		—			—			660,000
Pursuant to exercise of options	— at $0	.20		60,000		12,000			—			—		—			—			12,000
	— at $0	.30		309,499		92,850			—			—		—			—			92,850
	— at $0	.35		25,000		8,750			—			—		—			—			8,750
	— at $0	.40		115,000		46,000			—			—		—			—			46,000
	— at $0	.50		705,800		352,900			—			—		—			—			352,900
Pursuant to exercise of warrants	— at $0	.25		165,000		41,250			—			—		—			—			41,250
	— at $0	.50		158,341		79,170			—			—		—			—			79,170
	— at $0	.60		171,531		102,919			—			—		—			—			102,919
	— at $0	.75		1,353,500		1,015,125			—			—		—			—			1,015,125
Share subscriptions				—		—			—			7,500		—			—			7,500
Stock-based compensation				—		—			—			—		149,312			—			149,312
Stock based compensation charge on stock options exercised				—		345,669			—			—		(345,669	)		—			—
Net loss for the year				—		—			—			—		—			(1,083,737	)		(1,083,737	)

Balance, August 31, 2006				19,954,245	$	5,683,895		$	—		$	7,500	$	425,492		$	(3,588,896	)	$	2,527,991

See accompanying notes

D-6

Schedule 1

TONE RESOURCES LIMITED
(An Exploration Stage Company)

CONSOLIDATED SCHEDULE OF MINERAL PROPERTY COSTS
for the years ended August 31, 2006 and 2005


	South		Roberts								Battle		Gold		Big Antelope
	Keystone		Creek		Kobeh		Kent Springs		Red Ridge		Mountain		Bar North		Springs
	(Eureka)		(Eureka)		(Eureka)		(Pershing)		(Elko)		(Lander)		(Eureka)		(Lander)		Total
	(Stated in Canadian Dollars)

Property acquisition and maintenance costs
Balance, August 31, 2005	$	29,215	$	60,894	$	140,824	$	8,759	$	93,787	$	61,818	$	17,089	$	12,956	$	425,342
Claims maintenance — Note 6		5,031		9,703		23,898		1,796		35,473		13,478		3,414		4,313		97,106

Balance, August 31, 2006		34,246		70,597		164,722		10,555		129,260		75,296		20,503		17,269		522,448

Deferred exploration costs
Balance, August 31, 2005		13,766		88,848		191,259		125		260,624		130,286		13,209		839		698,956
Assaying		—		—		4,461		—		—		—		6,555		374		11,390
Consulting fees		—		—		—		—		853		—		—		—		853
Drilling		—		—		27,217		—		—		—		60,532		—		87,749
Field costs		—		—		1,576		—		—		—		6,104		—		7,680

Balance, August 31, 2006		13,766		88,848		224,513		125		261,477		130,286		86,400		839		806,628

Total	$	48,012	$	159,445	$	389,235	$	10,680	$	390,737	$	205,582	$	106,903	$	18,482	$	1,329,076

See accompanying notes

D-7

Schedule 1

TONE RESOURCES LIMITED
(An Exploration Stage Company)

CONSOLIDATED SCHEDULE OF MINERAL PROPERTY COSTS
for the years ended August 31, 2006 and 2005


															Big		Crescent
	South		Roberts				Kent				Battle		Gold Bar		Antelope		Valley
	Keystone		Creek		Kobeh		Springs		Red Ridge		Mountain		North		Springs		North
	(Eureka)		(Eureka)		(Eureka)		(Pershing)		(Elko)		(Lander)		(Eureka)		(Lander)		(Eureka)			Total
	(Stated in Canadian Dollars)

Property acquisition and maintenance costs
Balance, August 31, 2004	$	25,522	$	53,772	$	123,284	$	7,440	$	54,226	$	51,927	$	14,583	$	6,385	$	—		$	337,139
Cash		—		—		—		—		4,243		—		—		—		—			4,243
Common shares — Note 6		—		—		—		—		—		—		—		—		54,000			54,000
Claims maintenance — Note 6		3,693		7,122		17,540		1,319		39,561		9,891		2,506		6,571		28,769			116,972

Balance, August 31, 2005		29,215		60,894		140,824		8,759		98,030		61,818		17,089		12,956		82,769			512,354

Deferred exploration costs
Balance, August 31, 2004		13,766		88,848		191,259		125		143,538		130,286		525		110		—			568,457
Assaying		—		—		—		—		17,062		—		4,884		—		—			21,946
Consulting fees		—		—		—		—		—		—		5,754		—		—			5,754
Drilling		—		—		—		—		87,196		—		—		—		—			87,196
Field costs		—		—		—		—		4,760		—		2,046		729		—			7,535
Reclamation		—		—		—		—		8,068		—		—		—		—			8,068

Balance, August 31, 2005		13,766		88,848		191,259		125		260,624		130,286		13,209		839		—			698,956

Write-off mineral property — Note 4		—		—		—		—		—		—		—		—		(82,769	)		(82,769	)

Total	$	42,981	$	149,742	$	332,083	$	8,884	$	354,411	$	192,104	$	30,298	$	13,795	$	—		$	1,124,298

See accompanying notes

D-8

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

August 31, 2006 and 2005

(Stated in Canadian Dollars)


Note 1	Nature and Continuance of Operations

The Company was incorporated on October 31, 2001 in the Yukon Territory. On March 1, 2005, the Company was continued to British Columbia from the Yukon Territory. The Company’s business is the exploration and development of its mineral properties located in Nevada, USA. The Company’s shares are publicly listed on the TSX Venture Exchange.

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which assume that the Company will realize its assets and discharge its liabilities in the normal course of business. At August 31, 2006, the Company has not yet achieved profitable operations and has accumulated losses of $3,588,896 since incorporation. No assurances can be given that the Company will be able to continue as a going concern. Its ability to continue as a going concern is dependent upon its ability to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue its operations and therefore be required to realize its assets and discharge its liabilities in other than its the normal course of operations and at amounts different from those reflected in the financial statements. The Company has historically satisfied its capital needs primarily by issuing equity securities. Management plans to continue to provide for its capital needs during the year ended August 31, 2007 by the issuance of common stock.

The recoverability of amounts shown for mineral property costs is dependent upon the discovery of economically recoverable reserves and the ability to obtain the necessary financing to complete their exploration and development.


Note 2	Significant Accounting Policies

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) in Canada and are stated in Canadian dollars. Except as disclosed in Note 11, these financial statements conform in all material respects with GAAP in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgement. Actual results may differ from these estimates.

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

a) Principles of Consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned United States subsidiary, Tone Resources (US) Inc., which was incorporated on June 27, 2002 in the State of Nevada. All inter-company transactions and balances have been eliminated.

b) Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid short-term deposits held at Canadian banks.

c) Mineral Property Costs and Depletion

Property Acquisition Costs

Acquisitions of mineral properties are initially recorded at cost. Producing resource properties are depleted over their estimated useful lives based upon a method relating recoverable resource reserves to production. Non-producing resource properties that the Company abandons interest in are written off in the year of abandonment.

D-9

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Deferred Exploration Costs

The Company capitalizes all exploration expenses that result in the acquisition and retention of mineral properties or an interest therein. The accumulated costs including applicable exploration expenses relative to non-productive resource properties that the Company abandons interest in are written off. Otherwise, the exploration expenses are depleted over the estimated useful lives of the producing resource properties on a method relating recoverable reserves to production.

The Company is in the process of exploring and developing its mineral properties and has not yet determined the amount of reserves available. Management reviews the carrying values of mineral properties on a periodic basis and will recognize impairment in value based upon current exploration results, the prospect of further work being carried out by the Company, the assessment of future probability of profitable revenues from the property or from the sale of the property. Write-downs due to impairment in value are charged to operations. Amounts shown for properties represent costs incurred net of write-downs and recoveries, and are not intended to represent present or future values.

d) Environmental Costs

Environmental expenditures that relate to current operations are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and which do not contribute to current or future revenue generation are expensed. Liabilities are recorded when environmental assessments and/or remedial efforts are probable, and the cost can be reasonably estimated. Generally, the timing of these accruals coincides with the earlier of completion of a feasibility study or the Company’s commitment to a plan of action based on the then known facts.

e) Financial Instruments

The carrying values of cash, accounts payable and due to related parties approximate fair value because of the short-term maturity of those instruments. It is management’s opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

The Company’s mineral exploration activities are located in the United States of America and expenditures are in U.S. dollars. Consequently some assets and liabilities are exposed to foreign currency fluctuations. As at August 31, 2006, cash of US$234,068 (2005: US$2,089), reclamation bonds of US$30,078 (2005: US$29,133), accounts payable of US$3,270 (2005: US$13,008) and due to related parties of US$10,000 (2005: US$11,435) are included in these consolidated financial statements.

f) Foreign Currency Translation

Monetary assets and liabilities denominated in a foreign currency are translated into Canadian dollars at exchange rates prevailing at the balance sheet date and non-monetary assets and liabilities are translated at exchange rates prevailing at the transaction dates. Foreign currency denominated revenues and expenses are translated at exchange rates prevailing at the transaction dates. Gains or losses arising from the translations are recognized in the current year.

g) Basic and Diluted Loss Per Share

Basic loss per share is computed by dividing the loss for the year by the weighted average number of common shares outstanding during the year. Diluted loss per share reflect the dilution that would occur if potentially dilutive securities were exercised or converted to common shares. The dilutive effect of options and warrants and their equivalent is computed by application of the treasury stock method and the effect of convertible securities by the “if converted” method. Fully diluted amounts are not presented when the effect of the computations are anti-dilutive due to the losses incurred. Accordingly, there is no difference in the amounts presented for basic and diluted loss per share.

D-10

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

h) Income Taxes

The Company accounts for income taxes by the asset and liability method. 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 in the current year for temporary differences between the tax and accounting basis of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are more likely than not to be realized.

i) Stock-based Compensation

The Company has a stock-based compensation plan (Note 5). During the year ended August 31, 2004, the Company adopted CICA Handbook Section 3870 — “Stock-based Compensation and Other Stock-based Payments”. This change in accounting policy had been applied prospectively with no restatement of prior periods presented for the statements of loss and cash flows.

Under this standard, the Company must account for compensation expense based on the fair value of options granted under its stock-based compensation plan. Costs attributable to stock options granted to directors, employees or consultants are measured at fair value at the grant date, and expensed when vested with a corresponding increase to contributed surplus. Upon exercise of stock options, consideration paid by the option holder, together with the amount previously recognized in contributed surplus, is recorded as an increase to share capital.

Previously, the Company accounted for stock-based compensation using the settlement method. No compensation expense was recorded in the financial statements for stock options granted to directors and employees as the options had no intrinsic value at the date of grant. Consideration paid on the exercise of stock options was credited to share capital.


Note 3	Reclamation Bonds

The Company has certificates of deposit that earn interest at approximately 1% per annum. These deposits represent restricted cash as they are pledged as security to the Bureau of Land Management and are only released to the Company after the Company meets inspection requirements. Reclamation costs are added to mineral property costs as incurred.


Note 4	Mineral Property Costs — Note 6

The Company holds 410 mining claims in Nevada, USA. The properties are located in Eureka, Pershing, Elko and Lander counties and are subject to royalties of 1% to 4% of net smelter returns. Certain of the royalties are payable to a company with a director in common.

D-11

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

In addition, the Company holds leased mineral rights located in Elko county, Nevada. Lease payments are due as follows for the years ended:


Red Ridge

August 31, 2003	US$ 12,000	(paid)
August 31, 2004	12,000	(paid)
August 31, 2005	12,000	(paid)
August 31, 2006	20,000	(paid)
August 31, 2007	20,000	(paid $10,000 subsequently)
August 31, 2008	30,000
August 31, 2009	40,000
August 31, 2010	50,000
August 31, 2011	60,000
August 31, 2012	70,000
August 31, 2013	80,000
August 31, 2014	90,000
August 31, 2015 and each year thereafter	100,000

On March 9, 2004, the Company entered into an agreement with Teck Cominco. The agreement grants Teck Cominco the option to earn interests of between 51% and 75% in any two of the Company’s properties located in Nevada. Teck Cominco has a first right of refusal on the Red Ridge property. Upon the Company completing expenditures totalling $1,000,000 on a designated property, Teck Cominco may earn its interest in that property by completing expenditures totalling $3,000,000, preparing feasibility studies and arranging financing for development of the property.

Crescent Valley North

By an agreement dated October 19, 2004, the Company entered into a mining lease with a company with a common director to acquire 76 mining claims known as the Crescent Valley North claims located in Nevada in exchange for 120,000 common shares of the Company (issued) and lease payments.

During the year ended August 31, 2005, after issuing the above-noted shares and paying US$12,000 in lease payments, the Company abandoned its interest in these claims and wrote-off related mineral property costs in the amount of $82,769.


Note 5	Share Capital — Notes 6 and 9

a) Authorized:

An unlimited number of common shares without par value

b) Escrow:

At August 31, 2006, there were no common shares held in escrow. At August 31, 2005 there were 1,542,000 common shares held in escrow. These shares were released from escrow on the following dates:


November 16, 2005			771,000
May 16, 2006			771,000

			1,542,000

D-12

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

c) Commitments:

i) Stock-based Compensation Plan

Stock options are granted with an exercise price equal to the market price of the Company’s stock on the date of the grant. Pursuant to the stock-based compensation plan, options may not be granted at an exercise price of less than $0.10 per share. Stock options have a maximum term of five years. The Company’s options vest 25% on the date of the grant with the remaining 75% vesting over the next 18 months at a rate of 12.5% per quarter based on the original amount granted.

A summary of the status of the Company’s stock option plan as of August 31, 2006 and 2005 and the changes during the years then ended is presented below:


	2006					2005
				Weighted					Weighted
				Average					Average
	Number			Exercise		Number			Exercise
	of Shares			Price		of Shares			Price

Options outstanding, beginning of year		2,673,032		$	0.50		1,850,000		$	0.50
Granted		150,000		$	0.25		1,099,732		$	0.41
Exercised		(1,215,300	)	$	0.42		(126,700	)	$	0.39
Cancelled		(45,500	)	$	0.47		(150,000	)	$	0.50

Options outstanding, end of year		1,562,232		$	0.48		2,673,032		$	0.50

Options exercisable, end of year		1,475,732		$	0.48		2,115,291		$	0.50

The following stock options were outstanding as at August 31, 2006:


		Exercise		Expiry
Number		Price		Date

	1,104,000	$	0.50	May 16, 2008
	50,000	$	0.50	June 09, 2008
	12,500	$	0.50	July 21, 2008
	100,000	$	0.50	November 14, 2008
	12,000	$	0.30	September 2, 2009
	122,732	$	0.50	February 1, 2010
	96,000	$	0.40	July 26, 2010
	40,000	$	0.20	November 18, 2010
	25,000	$	0.35	December 2, 2010

	1,562,232

At August 31, 2006, 86,500 of the above outstanding options were not yet vested with the optionees. These options will vest with the optionees over the period from September 2, 2006 to June 2, 2007.

Non-cash compensation charges totalling $149,312 (2005: $282,409) (2004: $368,313) associated with vested options granted to directors, employees and consultants were recognized in the consolidated financial statements of the

D-13

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company. These compensation charges have been determined under the fair value method using the Black-Scholes option pricing model with the following assumptions:


	Years ended August 31,
	2006			2005			2004

Expected dividend yield		0.0	%		0.0	%		0.0	%
Expected volatility		94.9	%		99.2	%		90.0	%
Risk-free interest rate		2.0	%		2.0	%		2.0	%
Expected term in years		5 years			5 years			5 years

The weighted average fair value at the date of grant of the stock options granted was as follows:


	Years ended August 31,
	2006		2005		2004

Weighted average fair value	$	0.18	$	0.29	$	0.32
Total options granted		150,000		1,099,732		550,000
Total fair value of options granted	$	27,000	$	314,972	$	178,500

ii) Share Purchase Warrants

At August 31, 2006, there were 3,186,175 share purchase warrants outstanding entitling the holders thereof the right to purchase one common share for each warrant held as follows:


		Exercise
Number		Price	Expiry Date

	10,000	$0.75	July 5, 2006 (Note 9(b))
	41,175	$0.80	November 26, 2006 (Note 9(f))
	2,405,000	$0.25	December 19, 2007
	730,000	$0.25	March 3, 2008

	3,186,175

D-14

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 6 Related Party Transactions — Notes 4, 5 and 9

The Company incurred the following charges from directors and officers of the Company, a company with a director in common with the Company and the daughter of a director of the Company for the years ended August 31, 2006, 2005 and 2004 and for the period October 31, 2001 (Date of Inception) to August 31, 2006:


							October 31,
							2001 (Date of
							Inception) to
							August 31,
	2006		2005		2004		2006

Accounting fees	$	98,157	$	13,725	$	—	$	111,882
Legal fees		70,003		30,209		41,945		148,510
Management fees		154,900		151,581		181,036		742,382
Mineral property acquisition costs
— common shares		—		54,000		—		54,000
— claims maintenance		—		15,717		—		102,964
Rent		15,000		15,000		15,000		67,665
Share issue costs		—		—		—		74,275
Stock-based compensation		110,162		197,763		286,813		594,738
Secretarial		11,060		11,389		13,462		49,056

	$	459,282	$	489,384	$	538,256	$	1,945,472

These charges were measured by the exchange amount, which is the amount agreed upon by the transacting parties.

Amounts due to related parties are due to directors and officers of the Company and represent advances and unpaid fees and expenses. These amounts are unsecured, non-interest bearing and have no specific terms of repayment.

During the year ended August 31, 2005, the Company issued 151,700 common shares for cash proceeds of $59,850 and 120,000 common shares for mineral property acquisition costs of $54,000 to directors of the Company and to a company with a director in common with the Company.

During the year ended August 31, 2006, the Company issued 3,639,583 common shares for cash proceeds of $987,791 to directors and officers of the Company.


Note 7	Non-cash Transactions

Investing and financing activities that do not have a direct impact on current cash flows are excluded from the statements of cash flows. During the year ended August 31, 2005, the Company issued 120,000 common shares at $0.45 totalling $54,000 as a property acquisition cost pursuant to a mining lease. In addition, the Company issued 110,986 common shares at $0.45 to settle a debt of $49,944. These transactions have been excluded from the statements of cash flows.

D-15

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Note 8 Income Taxes

Significant components of the Company’s future tax assets and liabilities, after applying enacted corporate income tax rates, are as follows:


	2006			2005

Future income tax assets
Tax losses carried forward	$	1,365,779		$	1,022,523
Less: valuation allowance		(1,365,779	)		(1,022,523	)

	$	—		$	—

The Company recorded a valuation allowance against its future income tax assets based on the extent to which it is more likely-than-not that sufficient taxable income will not be realized during the carry forward periods to utilize all the future tax assets.

At August 31, 2006, the Company and its subsidiary have accumulated losses totalling $4,008,322, which may be carried forward to reduce future years income for federal and state income tax purposes. These losses, the potential benefit of which have not been recognized in these financial statements, expire as follows:


			United States
	Canada		of America		Total

2009	$	100,542	$	—	$	100,542
2010		377,116		—		377,116
2011		661,076		—		661,076
2015		432,271		—		432,271
2016		886,833		—		886,833
2022		—		96,061		96,061
2023		—		352,776		352,776
2024		—		487,178		487,178
2025		—		363,623		363,623
2026		—		250,846		250,846

	$	2,457,838	$	1,550,484	$	4,008,322


Note 9	Subsequent Events

a) On September 11, 2006, the Company issued 100,000 common shares at $0.25 per share for proceeds of $25,000 pursuant to the exercise of share purchase warrants outstanding at August 31, 2006.

b) On October 23, 2006, the Company issued 10,000 common shares at $0.75 per share for proceeds of $7,500 pursuant to the exercise of share purchase warrants outstanding at August 31, 2006. These proceeds were received prior to August 31, 2006.

c) On October 23, 2006, the Company issued 18,750 common shares at $0.35 per share to a director of the Company for proceeds of $6,563 pursuant to the exercise of share purchase options outstanding at August 31, 2006.

d) On October 31, 2006, the Company issued 15,000 common shares at $0.50 per share for proceeds of $7,500 pursuant to the exercise of share purchase options outstanding at August 31, 2006.

e) On October 31, 2006, the Company issued 10,000 common shares at $0.25 per share for proceeds of $2,500 pursuant to the exercise of share purchase warrants outstanding at August 31, 2006.

D-16

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

f) On November 24, 2006, the Company issued 41,175 common shares at $0.80 per share for proceeds of $32,940 pursuant to the exercise of share purchase warrants outstanding at August 31, 2006.


Note 10	Offer to Purchase

On March 5, 2006, the Company received an offer from US Gold Corporation to acquire 100% of the issued securities of the Company. Shareholders of the Company will receive .26 of a share of US Gold Corporation for each share of the Company. The proposed offer is subject to shareholder and regulatory approval.


Note 11	Differences Between Canadian and United States Accounting Principles

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in Canada which differ in certain respects with those principles and practices that the Company would have followed had its financial statements been prepared in accordance with accounting principles and practices generally accepted in the United States.

The Company’s accounting principles generally accepted in Canada differ from accounting principles generally accepted in the United States as follows:

a) Mineral Property Costs and Deferred Exploration Costs

Under accounting principles generally accepted in Canada (“Canadian GAAP”) mineral property acquisition and exploration costs may be deferred and amortized to the extent they meet certain criteria. Under accounting principles generally accepted in the United States (“US GAAP”) mineral property acquisition and exploration costs must be expensed as incurred. Therefore an additional expense is required under US GAAP.

D-17

TONE RESOURCES LIMITED
(An Exploration Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

b) The impact of the above on the consolidated financial statements is as follows:


	2006			2005			2004

Net Loss and Loss Per Share
Net loss for the year per Canadian GAAP	$	(1,083,737	)	$	(855,799	)	$	(1,082,680	)
Write-off of mineral property costs		—			82,769			—
Mineral property costs		(204,778	)		(301,471	)		(455,870	)

Net loss for the year per US GAAP	$	(1,288,515	)	$	(1,074,501	)	$	(1,538,550	)

Basic and diluted loss per share per US GAAP	$	(0.08	)	$	(0.08	)	$	(0.13	)

Total Assets and Liabilities
Total assets per Canadian GAAP	$	2,629,051		$	1,173,017
Mineral property costs		(1,329,076	)		(1,124,298	)

Total assets per US GAAP	$	1,299,975		$	48,719

Total liabilities per Canadian and US GAAP	$	101,061		$	129,065

Stockholders’ Equity
Deficit, end of the year, per Canadian GAAP	$	(3,588,896	)	$	(2,505,159	)
Mineral property costs		(1,329,076	)		(1,124,298	)

Deficit, end of the year, per US GAAP		(4,917,972	)		(3,629,457	)
Capital stock per Canadian and US GAAP		5,683,894			2,927,262
Share subscriptions per Canadian and US GAAP		7,500			—
Contributed surplus per Canadian and US GAAP		425,492			621,849

Stockholders’ equity (deficiency) per US GAAP	$	1,198,914		$	(80,346	)

Statements of Cash Flows
Operating Activities per Canadian GAAP	$	(972,588	)	$	(343,516	)	$	(738,302	)
Mineral property costs		(204,778	)		(247,471	)		(455,870	)

Operating Activities per US GAAP	$	(1,177,366	)	$	(590,987	)	$	(1,194,172	)

Financing Activities per Canadian and US GAAP	$	2,418,463		$	220,015		$	1,280,135

Investing Activities per Canadian GAAP	$	(203,532	)	$	(244,190	)	$	(458,770	)
Mineral property costs		204,778			247,471			455,870

Investing Activities per US GAAP	$	1,246		$	3,281		$	(2,900	)


Note 12	Comparative Figures

Certain comparative figures as at August 31, 2005 and for the years ended August 31, 2005 and 2004 have been reclassified to conform with the financial statement presentation adopted for the year ended August 31, 2006.

D-18

Schedule of Mineral Property Costs — Unaudited

TONE RESOURCES LIMITED

Three months ended November 30, 2006


															Big
	South		Roberts				Kent		Red		Battle		Gold Bar		Antelope
	Keystone		Creek		Kobeh		Springs		Ridge		Mountain		North		Springs		November 30
	(Eureka)		(Eureka)		(Eureka)		(Pershing)		(Elko)		(Lander)		(Eureka)		(Lander)		2006

Property Acquisition and Maintenance Costs
Balance, August 31, 2006	$	34,246	$	70,597	$	164,722	$	10,555	$	129,260	$	75,296	$	20,503	$	17,269	$	522,448
Additions		—		—		—		—		—		—		—		—		—
Claims maintenance		—		—		—		—		11,264		—		—		—		11,264

Balance, November 30, 2006		34,246		70,597		164,722		10,555		140,524		75,296		20,503		17,269		533,712
Deferred Exploration Costs
Balance, August 31, 2006		13,766		88,848		224,513		125		261,477		130,286		86,400		1,213		806,628
Assaying		—		—		—		—		—		—		—		—		—
Consulting fees		—		—		—		—		—		—		—		—		—
Drilling		—		—		—		—		—		—		—		—		—
Field costs		—		—		—		—		236		—		—		—		236
Mapping		—		—		—		—		—		—		—		—		—
Reclamation		—		—		—		—		471		—		—		—		471

Balance, November 30, 2006		13,766		88,848		224,513		125		262,184		130,286		86,400		1,213		807,335

TOTAL	$	48,012	$	159,445	$	389,235	$	10,680	$	402,708	$	205,582	$	106,903	$	18,482	$	1,341,047

D-24

Notes to Interim Consolidated Financial Statements — Unaudited
TONE RESOURCES LIMITED

November 30, 2006

Note 1 — Nature and Continuance of Operations

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern which assume that the company will realize its assets and discharge its liabilities in the normal course of business. The company has accumulated losses of $3,786,668 since incorporation. No assurances can be given that the company will be able to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the company to generate profitable operations in the future and, or, to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the company be unable to continue its operations. Management plans to continue to provide for its capital needs by the issuance of common stock; the company is also seeking one or more potential joint venture partners to develop and explore its existing mining properties.

Note 2 — Interim Reporting

While the information presented in the accompanying interim financial statements for the three months ended November 30, 2006, and the three months ended November 30, 2005, is unaudited, it includes all adjustments which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. All adjustments are of a normal recurring nature. Management suggests that these interim financial statements be read in conjunction with the company’s audited August 31, 2006, financial statements. These financial statements follow the same accounting policies and the methods of their application as the company’s audited August 31, 2006, annual financial statements.

Note 3 — Mineral Property Costs

The company holds 410 mining claims in Nevada, USA. The properties are located in Eureka, Pershing, Elko and Lander counties and are subject to royalties of 1% to 4% of net smelter returns. Certain of the royalties are payable to a company with a director in common.

During the period to November 30, 2006, the company incurred the following mineral property costs:


	Three Months		Year		Year		Year		Period
	Ended		Ended		Ended		Ended		to
	November 30,		August 31,		August 31,		August 31,		August 31,
	2006		2006		2005		2004		2003		Total
					Net

Acquisition costs	$	—	$	—	$	4,243	$	27,913	$	94,684	$	126,840
Claims maintenance		11,264		97,106		83,960		96,718		88,599		377,647
Consulting fees		—		853		5,754		7,507		20,454		34,568
Drilling		—		87,749		87,196		224,653		123,841		523,439
Field supplies and other		236		7,680		7,535		18,784		18,440		52,675
Assaying		—		11,390		21,946		59,771		58,196		151,303
Mapping		—		—		—		—		11,773		11,773
Reclamation expenses		471		—		8,068		9,521		16,493		34,553
Title opinion		—		—		—		11,003		17,246		28,249

TOTAL	$	11,971	$	204,778	$	218,702	$	455,870	$	449,726	$	1,341,047

The amount reported for mineral property costs is not intended to reflect present or future values.

The company leases two full sections of its Red Ridge property at current lease payments of USD $20,000 per year increasing to USD $50,000 per year in 2011.

D-25

Notes to Interim Consolidated Financial Statements — Unaudited
TONE RESOURCES LIMITED — (Continued)

On March 9, 2004, the company entered into an agreement with Teck Cominco American Incorporated. The agreement grants Teck Cominco the option to earn interests of up to 75% in any two of the company’s current properties. Teck Cominco may earn the interest by completing expenditure requirements totalling $3,000,000 and preparing feasibility reports. Teck Cominco has a first right of refusal on the Red Ridge property.

Note 4 — Related Party Transactions

During the three months ended November 30, 2006, the company paid management fees to Messrs. Baxter ($19,500) and Mathewson ($2,253) who are shareholders, directors and officers. In addition, $3,750 was paid to Mr. Baxter for rent and $2,279 to his daughter for secretarial services.

Mineral properties were acquired from KM Exploration Ltd., a company is which Mr. Mathewson was a principal. The transfer prices were based upon the vendor’s actual staking costs. Mr. Mathewson, a company in which Mr. Mathewson is a principal, and two other shareholders of the company, retain an aggregate one to four per cent net smelter return royalty over the company’s mineral claims.

Note 5 — Share Capital

(a) During the three months ended November 30, 2006, the company issued 194,925 shares for total consideration of $82,002 from the exercise of share purchase warrants and incentive options.

Subsequent to the balance sheet date the company issued 315,000 common shares for consideration of $78,750.

(b) Stock options

Effective October 15, 2002, the company established an incentive stock option plan and granted options for directors, employees and consultants. The Plan provides for the granting of up to 3,282,826 options which qualify for treatment as incentive stock options or non-statutory stock options and entitles directors, employees and consultants to purchase common shares of the company. Options granted are subject to approval of the Board of Directors or the Stock Option Committee.

The options vest 25 per cent upon TSX Venture Exchange approval and 12.5 percent each quarter thereafter; and immediately become exercisable once vested. The options have a maximum term of five years from the grant date.


	Options Outstanding
				Weighted
	Number of			Average
	Common Shares			Exercise Price
	Issuable			$

Balance, August 31, 2006		1,562,232			0.48
Options granted		—			—
Options exercised		(33,750	)		0.42

Balance, November 30, 2006		1,528,482			0.48

D-26

Notes to Interim Consolidated Financial Statements — Unaudited
TONE RESOURCES LIMITED — (Continued)

Stock options outstanding at November 30, 2006, expire as follows.


		Exercise		Expiry
Number		Price		Date

	1,104,000	$	0.50		May 16, 2008
	50,000		0.50		June 9, 2008
	12,500		0.50		July 21, 2008
	100,000		0.50		November 14, 2008
	12,000		0.30		September 2, 2009
	107,732		0.50		February 1, 2010
	96,000		0.40		July 26, 2010
	40,000		0.20		November 15, 2005
	6,250		0.35		December 2, 2005

	1,528,482

Non-cash compensation charges totalling $10,480 (2005 — $42,872) associated with vested options granted to directors, employees and consultants was recognized in the financial statements of the company. A compensation charge associated with vested options granted to directors and employees in the amount of $288,750 for the year ended August 31, 2004, was not recognized in the financial statements, but was included in the pro forma amounts which were disclosed. These compensation charges have been determined under the fair value method using the Black-Scholes option pricing model.

At November 30, 2006, there were 3,025,000 share purchase warrants outstanding entitling the holders thereof the right to purchase one common share for each warrant held as follows:


		Exercise		Expiry
Number		Price		Date

	2,295,000	$	0.25		December 19, 2007
	730,000		0.25		March 3, 2008

	3,025,000

Subsequent to the balance sheet date 315,000 shares were issued on the exercise of $0.25 share purchase warrants.

Note 6 — Private Placement and Takeover Bid

During December, 2005, and March, 2006, Mr. Robert McEwen (chairman of U.S. Gold Corporation) acquired 2.5 million units of Tone Resources Limited, each unit consisting of one common share and one warrant exercisable to acquire an additional common share at a price of $0.25 per share for twenty-four months. Assuming the exercise of all warrants, Mr. McEwen will hold approximately 25 per cent of the outstanding shares of the company.

On March 5, 2006, U.S. Gold Corporation announced that it proposed to acquire all of the issued shares of Tone Resources Limited and three other companies. Mr. McEwen has said that he will support the proposal to acquire these companies. The proposed offer is subject to shareholder and regulatory approval.


Note 7	Differences Between Canadian and United States Accounting Principles

D-27

Notes to Interim Consolidated Financial Statements — Unaudited
TONE RESOURCES LIMITED — (Continued)

followed had its financial statements been prepared in accordance with accounting principles and practices generally accepted in the United States.

The Company’s accounting principles generally accepted in Canada differ from accounting principles generally accepted in the United States as follows:

a) Mineral Property Costs and Deferred Exploration Costs

b) The impact of the above on the consolidated financial statements is as follows:


Net Loss and Loss Per Share
Net loss for the period per Canadian GAAP	$	(197,772	)	$	(134,926	)
Mineral property costs		(11,972	)		(13,282	)

Net loss for the period per US GAAP	$	(209,744	)	$	(148,208	)

Basic and diluted loss per share per US GAAP	$	(0.01	)	$	(0.01	)


Total Assets and Liabilities

Total assets per Canadian GAAP	$	2,492,698		$	2,629,052
Mineral property costs		(1,341,047	)		(1,329,076	)

Total assets per US GAAP	$	1,151,651		$	1,299,976

Total liabilities per Canadian and US GAAP	$	77,496		$	101,061


Stockholders’ Equity

Deficit, end of the year, per Canadian GAAP	$	(3,786,668	)	$	(3,588,896	)
Mineral property costs		(1,341,047	)		(1,329,076	)

Deficit, end of the year, per US GAAP		(5,127,715	)		(4,917,972	)
Capital stock per Canadian and US GAAP		5,775,722			5,683,894
Share subscriptions per Canadian and US GAAP		—			7,500
Contributed surplus per Canadian and US GAAP		426,148			425,492

Stockholders’ equity per US GAAP	$	1,074,155		$	1,198,914

D-28

U.S. Gold Corporation

Unaudited Pro Forma Consolidated Balance Sheet

September 30, 2006


	As Reported																	Pro Forma
				White Knight							White Knight							Consolidated
	U.S. Gold			Resources Ltd.			US GAAP				Resources Ltd.			Transaction				U.S. Gold
	Corporation			(Cdn GAAP)			Adjustments			Notes	(US GAAP)			Adjustments			Notes	Corporation
	(Expressed in United States dollars unless otherwise stated)

ASSETS
Current
Cash and cash equivalents	$	60,641,189		$	9,463,838						$	9,463,838						$	70,105,027
Temporary investments		—			1,942,924		$	52,886		2(i)		1,995,810							1,995,810
Accounts receivable		51,369			120,000							120,000							171,369
Other current assets — prepaid expenses		52,359			43,300							43,300							95,659

Total current assets		60,744,917			11,570,062			52,886				11,622,948							72,367,865

Property and equipment, net		592,690			955,949							955,949							1,548,639
Mineral property interests		—			2,528,366			(1,827,140	)	2(ii)		701,226							701,226
Deferred exploration costs		—			3,833,847			(3,833,847	)	2(ii)		—							—
Acquired mineral property interests		—			—							—		$	152,953,289		3&4(a)		152,953,289
Restrictive time deposits for reclamation bonding		3,102,696			214,273							214,273							3,316,969
Long-lived asset — asset retirement		2,231,036			—							—							2,231,036
Other assets:
Inactive milling equipment		777,819			—							—							777,819
Other assets		2,125			—							—							2,125

Total other assets		779,944			—			—				—							779,944

TOTAL ASSETS	$	67,451,283		$	19,102,497		$	(5,608,101	)		$	13,494,396		$	152,953,289			$	233,898,968


LIABILITIES
Current
Accounts payable and accrued liabilities	$	3,850,333		$	155,434						$	155,434		$	939,630		3&4(b)	$	4,945,397
Installment purchase contracts		24,177			—							—							24,177
Due to related parties		—			90,476							90,476							90,476
Retirement obligation (reclamation activities)		360,054			—							—							360,054

Total current liabilities		4,234,564			245,910							245,910			939,630				5,420,104

Installment purchase contracts, long-term		9,260			—							—							9,260
Retirement obligation		2,769,673			149,387							149,387							2,919,060
Future income tax liability		—			—							—			33,646,748		3&4(c)		33,646,748
Other permit obligations		72,511			—							—							72,511

Total liabilities		7,086,008			395,297							395,297			34,586,378				42,067,683


SHAREHOLDERS’ EQUITY
Capital stock		162,620,797			28,926,147							28,926,147			(28,926,147	)	4(d)		285,250,763
															122,629,966		3
Options and warrants		—			—							—			8,836,044		3		8,836,044
Other equity accounts		—			3,654,370							3,654,370			(3,654,370	)	4(d)		—
Deficit		(102,255,522	)		(13,873,317	)	$	(5,608,101	)	2(iii)		(19,481,418	)		19,481,418		4(d)		(102,255,522	)

Total shareholders’ equity		60,365,275			18,707,200			(5,608,101	)			13,099,099			118,366,911				191,831,285

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	67,451,283		$	19,102,497		$	(5,608,101	)		$	13,494,396		$	152,953,289			$	233,898,968

See accompanying notes to unaudited pro forma consolidated financial statements.

F-2

U.S. Gold Corporation

Unaudited Pro Forma Consolidated Statement of Operations

For the nine months ended September 30, 2006


	As Reported													Pro Forma
				White Knight							White Knight			Consolidated
	U.S. Gold			Resources Ltd.			US GAAP				Resources Ltd.			U.S. Gold
	Corporation			(Cdn GAAP)			Adjustments			Notes	(US GAAP)			Corporation
	(Expressed in United States dollars unless otherwise stated)

OTHER INCOME (EXPENSES)
Interest and other items	$	1,884,025		$	303,755		$	25,450		2(i)	$	329,205		$	2,213,230
Gain (loss) on foreign exchange		—			(12,168	)						(12,168	)		(12,168	)

Total other income		1,884,025			291,587			25,450				317,037			2,201,062

COSTS AND EXPENSES
General and administrative		2,751,570			2,819,871							2,819,871			5,571,441
Proposed acquisitions		4,348,190			—							—			4,348,190
Property holding costs		1,626,488			—							—			1,626,488
Exploration costs		4,375,095			91,246			857,221		2(ii)		948,467			5,323,562
Interest		5,880			3,959							3,959			9,839
Stock option expense		840,857			—							—			840,857
Accretion of asset retirement obligation		206,051			—							—			206,051
Change in value of derivatives		51,680,304			—							—			51,680,304
Write-off (recovery) of mineral property costs		—			—			(14,780	)	2(ii)		(14,780	)		(14,780	)
Depreciation		35,012			22,169							22,169			57,181

Total costs and expenses		65,869,447			2,937,245			842,441				3,779,686			69,649,133

Loss before income taxes		(63,985,422	)		(2,645,658	)		(816,991	)			(3,462,649	)		(67,448,071	)
Provision for income taxes		—			—			—				—			—

NET LOSS	$	(63,985,422	)	$	(2,645,658	)	$	(816,991	)		$	(3,462,649	)	$	(67,448,071	)

Basic and diluted net loss per share (Note 6)	$	(1.76	)											$	(1.18	)

Weighted average number of shares outstanding — basic and diluted (Note 6)		36,366,608													57,151,348

See accompanying notes to unaudited pro forma consolidated financial statements.

F-3

U.S. Gold Corporation

Unaudited Pro Forma Consolidated Statement of Operations

For the twelve months ended December 31, 2005


	As Reported													Pro Forma
				White Knight							White Knight			Consolidated
	U.S. Gold			Resources Ltd.			US GAAP				Resources Ltd.			U.S. Gold
	Corporation			(Cdn GAAP)			Adjustments			Notes	(US GAAP)			Corporation
	(Expressed in United States dollars unless otherwise stated)

OTHER INCOME (EXPENSES)
Earnest money forfeited	$	200,000												$	200,000
Interest and other items		32,032		$	294,563		$	51,599		2(i)	$	346,162			378,194
Management fee		330,000			—							—			330,000
Realized gain from disposition of shares		520,428			—							—			520,428
Gain (loss) on sale of assets		(29,982	)		—							—			(29,982	)
Gain (loss) on foreign exchange		—			1,634							1,634			1,634

Total other income		1,052,478			296,197			51,599				347,796			1,400,274

COSTS AND EXPENSES
General and administrative		2,745,418			983,064							983,064			3,728,482
Write-off of purchase price receivable		182,748			—							—			182,748
Property holding costs		761,081			—							—			761,081
Equity share of subsidiary loss		58,888			—							—			58,888
Realization reserve — stock		168,960			—							—			168,960
Interest		3,011			5,016							5,016			8,027
Accretion of asset retirement obligation		110,243			—							—			110,243
Exploration costs		—			107,296			1,692,739		2(ii)		1,800,035			1,800,035
Write-off of mineral property costs		—			—			189,718		2(ii)		189,718			189,718
Depreciation		12,850			27,329							27,329			40,179

Total costs and expenses		4,043,199			1,122,705			1,882,457				3,005,162			7,048,361

Loss before income taxes		(2,990,721	)		(826,508	)		(1,830,858	)			(2,657,366	)		(5,648,087	)
Provision for income taxes		—			—			—				—			—

NET LOSS	$	(2,990,721	)	$	(826,508	)	$	(1,830,858	)		$	(2,657,366	)	$	(5,648,087	)

Basic and diluted net loss per share (Note 6)	$	(0.12	)											$	(0.12	)

Weighted average number of shares outstanding — basic and diluted (Note 6)		25,931,172													46,715,912

See accompanying notes to unaudited pro forma consolidated financial statements.

F-4

U.S. GOLD CORPORATION

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in United States dollars unless otherwise stated)
September 30, 2006 and December 31, 2005
(Unaudited)


1.	Basis of presentation

On March 5, 2006 U.S. Gold Corporation (“U.S. Gold” or the “Company”) announced that it intends to acquire, in stock transactions, all of the outstanding common shares of White Knight Resources Ltd., Nevada Pacific Gold Ltd., Coral Gold Resources Ltd. and Tone Resources Limited. This proposal was made in letters sent on the same day by Mr. Robert R. McEwen, Chairman and Chief Executive Officer of U.S. Gold, to the chief executive officers of each of the subject companies. On January 18, 2007, the Company issued a press release announcing its decision not to pursue the proposal to acquire all of the outstanding shares of Coral Gold Resources Ltd.

These unaudited pro forma consolidated financial statements have been prepared to give effect to the Company’s acquisition of White Knight (the “Acquisition”). These unaudited pro forma consolidated financial statements have been prepared on the basis that each shareholder will receive shares of common stock of U.S. Gold in exchange for their White Knight common shares. The combined effects of the proposed transactions with each of the three companies have been presented separately under “Unaudited Pro Forma Consolidated Supplementary Financial Statements,” included elsewhere in this document. Each of these acquisitions is not conditional on the other two and the Company may or may not be successful in acquiring all of the target companies.

These unaudited pro forma consolidated financial statements have been compiled from and include:

(a) An unaudited pro forma consolidated balance sheet combining the unaudited balance sheet of U.S. Gold as at September 30, 2006 with the unaudited balance sheet of White Knight as at September 30, 2006, giving effect to the transaction as if it occurred on September 30, 2006.

(b) An unaudited pro forma consolidated statement of operations combining the audited statement of operations of the Company for the year ended December 31, 2005 with the unaudited constructed statement of operations of White Knight for the twelve months ended December 31, 2005, giving effect to the transaction as if it occurred on January 1, 2005. White Knight’s statement of operations for the twelve months ended December 31, 2005 has been constructed by adding together (a) the results for the six months ended June 30, 2005 (derived from White Knight’s audited financial statements for the year ended June 30, 2005 and the unaudited interim results for the six months ended December 31, 2004) and (b) the unaudited interim results for the six months ended December 31, 2005.

(c) An unaudited pro forma consolidated statement of operations combining the unaudited statement of operations of the Company for the nine months ended September 30, 2006 with the unaudited constructed statement of operations of White Knight for the nine months ended September 30, 2006 (derived from White Knight’s audited financial statements for the year ended June 30, 2006, the unaudited interim results for the three months ended September 30, 2006 and the unaudited interim results for the six months ended December 31, 2005), giving effect to the transaction as if it occurred on January 1, 2005.

The unaudited pro forma consolidated balance sheet and statements of operations have been presented on the above basis to ensure that the unaudited pro forma consolidated financial statements reflect the acquired business financial statements for a period that is no more than 93 days from U.S. Gold’s year-end, as required pursuant to pro forma presentation requirements contained in the securities rules.

The unaudited pro forma consolidated financial statements have been compiled using the significant accounting policies as set out in the audited financial statements of U.S. Gold for the year ended December 31, 2005 which are included elsewhere in this document. The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company and White Knight described above.

F-5

U.S. GOLD CORPORATION

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Management of U.S. Gold has consolidated certain line items from White Knight’s financial statements in an attempt to conform to the presentation of the Company’s financial statements. It is management’s opinion that these unaudited pro forma consolidated financial statements include all adjustments necessary for the fair presentation of the transactions described in Note 3 in accordance with United States generally accepted accounting principles.

White Knight prepares its financial statements in accordance with Canadian GAAP and in Canadian dollars. These financial statements have been translated to United States GAAP, as more fully described in note 2. The conversion from Canadian dollars to U.S. dollars has been reflected at the rates described in the following table.


As at September 30, 2006			0.90
Average for the nine months ended September 30, 2006			0.88
Average for the twelve months ended December 31, 2005			0.83

For restatement in U.S. dollars, the Company followed the method suggested by the Emerging Issues Committee (“EIC”) in release number EIC-130 which conforms in all material respects with Statement of Financial Accounting Standards No. 52 Foreign Currency Translation. The consensus of the EIC was that financial statements for all prior years should be translated using the current rate method.

The unaudited pro forma consolidated financial statements are not intended to reflect the results of operations or the financial position of the Company which would have actually resulted had the proposed transactions been effected on the dates indicated. Further, the unaudited pro forma financial information is not necessarily indicative of the results of operations that may be obtained in the future. The pro forma adjustments and allocations of the purchase price for White Knight are based in part on estimates of the fair value of the assets acquired and liabilities assumed. The final purchase price allocation will be completed after asset and liability valuations are finalized. The final valuation will be based on the actual net tangible and intangible assets of White Knight that exist as of the date of the completion of the acquisition. Any final adjustments may change the allocation of purchase price which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma consolidated financial statements. In addition, the impact of integration activities, the timing of completion of the acquisition and other changes in White Knight’s net tangible and intangible assets prior to the completion of the acquisition, which have not been incorporated into these unaudited pro forma consolidated financial statements, could cause material differences in the information presented.


2.	Reconciliation to United States Generally Accepted Accounting Principles

(i) Temporary investments

The effects of the foregoing differences are summarized as follows:

Pro forma balance sheet at September 30, 2006

The US GAAP statement reflects $1,995,810 balance of temporary investments ($1,942,924 under Canadian GAAP).

F-6

U.S. GOLD CORPORATION

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Pro forma statements of operations

The US GAAP statements reflect changes in the fair value of temporary investments amounting to $25,450 and $51,599 for the nine months ended September 30, 2006 and twelve months ended December 31, 2005 respectively.

(ii) Mineral property interests and deferred exploration costs

In accordance with EITF 04-02, the Company classifies the cost of acquiring its mineral interests as tangible assets resulting in no difference between Canadian and United States GAAP. Under United States GAAP exploration costs on mineral properties, other than acquisition costs, prior to the establishment of proven or probable reserves are expensed as incurred. Under Canadian GAAP these costs may be deferred.

The effects of the foregoing differences are summarized as follows:

Pro forma balance sheet at September 30, 2006

The US GAAP statement reflects $701,226 balance for Mineral Property Interests ($2,528,366 under Canadian GAAP) and nil balance for Deferred Exploration Costs ($3,833,847 under Canadian GAAP).

Pro forma statements of operations

Under US GAAP, Mining and Exploration Expenditures amount to $842,441 ($857,221 for Deferred Exploration Costs less $14,780 for Mineral Property Interests) for the nine months ended September 30, 2006 and $1,882,457 ($1,692,739 for Deferred Exploration Costs and $189,718 for Mineral Property Interests) for the twelve months ended December 31, 2005 respectively. These expenditures are capitalized for Canadian GAAP purposes but are expensed under US GAAP.

(iii) Deficit

The US GAAP pro forma balance sheet at September 30, 2006 reflects increase in deficit of $5,608,101 due to changes in the fair value of temporary investments and the write-off of deferred mining and exploration expenses described above.


3.	Business acquisitions

The business combination will be accounted for as a purchase transaction, with U.S. Gold as the acquirer of White Knight.

In consideration for the acquisition of White Knight, the Company will issue 0.35 shares of U.S. Gold common stock for each outstanding common share of White Knight totaling approximately 20,784,740 common shares to shareholders of White Knight, representing approximately $122.6 million total value based on the closing price of U.S. Gold’s common stock. For accounting purposes, the measurement of the purchase consideration in the unaudited pro forma consolidated financial statement information is based on the market prices of U.S. Gold common shares over a 2-day period before and after the announcement date and is estimated at $5.90 per each U.S. Gold share.

F-7

U.S. GOLD CORPORATION

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Each White Knight warrant or stock option which gives the holder the right to acquire shares in the common stock of White Knight when presented for execution will be exchanged for a warrant or stock option which will give the holder the right to acquire shares in the common stock of U.S. Gold on the same basis as the exchange of White Knight common shares for U.S. Gold common shares. The initial exchange will not include the White Knight options and warrants. However, they have been included as part of the purchase price consideration as U.S. Gold intends to acquire these in a subsequent transaction. These options and warrants have been included in the purchase consideration at their fair value of approximately $8.8 million based on the Black-Scholes pricing model.

The principal assumptions used in applying the Black-Scholes option pricing model were as follows:


Risk-free interest rate		5%
Dividend yield		N/A
Volatility factor		102%
Expected life — options		3 years
Remaining period to expiry date — warrants (weighted average)		3 months

The value of the purchase consideration for accounting purposes may differ from the amount assumed in the unaudited pro forma consolidated financial statement information due to any future changes in the negotiation process.

After reflecting the pro forma purchase adjustments, the excess of the purchase consideration over the adjusted book values of White Knight’s assets and liabilities has been allocated in full to Acquired Mineral Property Interests. Upon consummation of the proposed acquisition of White Knight, the fair value of all identifiable assets and liabilities acquired will be determined. On completion of valuations, with a corresponding adjustment to the historic carrying amounts of property, plant and equipment, or on recording of any finite life intangible assets on acquisition, these adjustments will impact the measurement of amortization recorded in consolidated income statements of U.S. Gold for periods after the date of acquisition. Typically, any increase in the values assigned by U.S. Gold to White Knight’s capital assets would result in increased amortization charges. The fair value of the net assets of White Knight to be acquired will ultimately be determined after the closing of the transaction. Therefore, it is likely that the fair values of assets and liabilities acquired will vary from those shown below and the differences may be material. The preliminary purchase price allocation is subject to change and is summarized as follows:


Purchase price:
Shares issued on acquisition	$	122,629,966
Options		8,300,544
Warrants		535,500
Acquisition costs (estimated)		939,630

	$	132,405,640

F-8

U.S. GOLD CORPORATION

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Net assets acquired:

Cash and cash equivalents
$ 9,463,838

Temporary investments
1,995,810

Accounts receivable
120,000

Other current assets — prepaid expenses
43,300

Property and equipment, net
955,949

Mineral property interests
701,226

Restrictive time deposits for reclamation bonding
214,273

Accounts payable and accrued liabilities
(155,434 )

Due to related parties
(90,476 )

Retirement obligation
(149,387 )

Future income tax liability
(33,646,748 )

Acquired mineral property interests
152,953,289

$ 132,405,640


4.	Pro forma assumptions and adjustments

The unaudited pro forma consolidated financial statements incorporate the following pro forma assumptions:

(a) The purchase price for the Acquisition has been allocated to the acquired assets and liabilities on a proforma basis as described in Note 3.

(b) Transaction costs have been estimated to be $939,630.

(c) Future income taxes have been taken into consideration in connection with the purchase price allocation where assumed fair values are not the same as the carry forward book values.

(d) Represents elimination of acquired business capital stock, equity accounts and accumulated deficit.


5.	Pro forma share capital

Pro forma share capital as at September 30, 2006 has been determined as follows:


	Number of
	shares		Amount

Issued common shares of U.S. Gold		49,996,755	$	162,620,797
Shares issued for acquisition of White Knight		20,784,740		122,629,966

Pro forma balance		70,781,495	$	285,250,763

F-9

U.S. GOLD CORPORATION

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

6. Pro forma loss per share

Pro forma basic loss per share for the nine months ended September 30, 2006 and the year ended December 31, 2005 have been calculated based on actual weighted average number of U.S. Gold common shares outstanding for the respective periods and the assumed number of U.S. Gold common shares issued to White Knight shareholders being effective on January 1, 2006 and January 1, 2005 respectively.


	Nine Months
	Ended			Year Ended
	September 30,			December 31,
	2006			2005
	(Shares or US dollars)

Actual weighted average number of U.S. Gold common shares outstanding		36,366,608			25,931,172
Assumed number of U.S. Gold common shares issued to White Knight shareholders		20,784,740			20,784,740

Pro forma weighted average number of U.S. Gold common shares outstanding		57,151,348			46,715,912

Pro forma net loss	$	(67,448,071	)	$	(5,648,087	)
Pro forma adjusted basic loss per share	$	(1.18	)	$	(0.12	)

F-10

U.S. Gold Corporation

Unaudited Pro Forma Consolidated Supplementary Balance Sheet

September 30, 2006


													Pro Forma
				U.S. GAAP									Consolidated								Pro Forma
	As Reported			White Knight						Tone			(before								Consolidated
	U.S. Gold			Resources			Nevada Pacific			Resources			transaction			Transaction					U.S. Gold
	Corporation			Ltd.			Gold Ltd.			Limited			adjustments)			Adjustments			Notes		Corporation
	(Expressed in United States dollars unless otherwise stated)

ASSETS
Current
Cash and cash equivalents	$	60,641,189		$	9,463,838		$	3,544,851		$	1,122,672		$	74,772,550							$	74,772,550
Temporary investments		—			1,995,810			—			—			1,995,810								1,995,810
Accounts receivable		51,369			120,000			208,377			11,168			390,914								390,914
Product inventory and stockpiled ore		—			—			204,217			—			204,217								204,217
Supplies inventory		—			—			259,138			—			259,138								259,138
Other current assets — prepaid expenses		52,359			43,300			281,892			6,134			383,685								383,685

Total current assets		60,744,917			11,622,948			4,498,475			1,139,974			78,006,314								78,006,314

Property and equipment, net		592,690			955,949			8,547,471			—			10,096,110								10,096,110
Mineral property interests		—			701,226			—			—			701,226								701,226
Acquired mineral property interests		—			—			—			—			—		$	329,407,164			3&4		329,407,164
Restrictive time deposits for reclamation bonding		3,102,696			214,273			96,363			30,004			3,443,336								3,443,336
Long-lived asset — asset retirement		2,231,036			—			—			—			2,231,036								2,231,036
Other assets:
Inactive milling equipment		777,819			—			—			—			777,819								777,819
Other assets		2,125			—			—			—			2,125								2,125

Total other assets		779,944			—			—			—			779,944			—					779,944

TOTAL ASSETS	$	67,451,283		$	13,494,396		$	13,142,309		$	1,169,978		$	95,257,966		$	329,407,164				$	424,665,130


LIABILITIES
Current
Accounts payable and accrued liabilities	$	3,850,333		$	155,434		$	1,013,414		$	50,606			5,069,787		$	1,998,573			4	$	7,068,360
Installment purchase contracts		24,177			—			—			—			24,177								24,177
Due to related parties		—			90,476			—			40,349			130,825								130,825
Advances payable		—			—			—			—			—								—
Retirement obligation (reclamation activities)		360,054			—			—			—			360,054								360,054

Total current liabilities		4,234,564			245,910			1,013,414			90,955			5,584,843			1,998,573					7,583,416

Installment purchase contracts, long-term		9,260			—			—			—			9,260								9,260
Retirement obligation		2,769,673			149,387			1,631,090			—			4,550,150								4,550,150
Future income tax liability		—			—			—			—			—			72,463,168			4		72,463,168
Other permit obligations		72,511			—			—			—			72,511								72,511
Other liabilities		—			—			109,350			—			109,350								109,350

Total liabilities		7,086,008			395,297			2,753,854			90,955			10,326,114			74,461,741					84,787,855


SHAREHOLDERS’ EQUITY
Capital stock		162,620,797			28,926,147			32,619,378			4,913,218			229,079,540			(66,458,743	)		4		411,617,512
																	248,996,715			3
Options and warrants		—			—			—			—			—			30,515,285			3		30,515,285
Other equity accounts		—			3,654,370			1,356,204			440,999			5,451,573			(5,451,573	)		4		—
Deficit		(102,255,522	)		(19,481,418	)		(23,587,127	)		(4,275,194	)		(149,599,261	)		47,343,739			4		(102,255,522	)

Total shareholders’ equity		60,365,275			13,099,099			10,388,455			1,079,023			84,931,852			254,945,423					339,877,275

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	67,451,283		$	13,494,396		$	13,142,309		$	1,169,978		$	95,257,966		$	329,407,164				$	424,665,130

See accompanying notes to unaudited pro forma consolidated supplementary financial statements.

G-2

U.S. Gold Corporation

Unaudited Pro Forma Consolidated Supplementary Statement of Operations

For the nine months ended September 30, 2006


				U.S. GAAP											Pro Forma
	As Reported			White Knight						Tone					Consolidated
	U.S. Gold			Resources			Nevada Pacific			Resources					U.S. Gold
	Corporation			Ltd.			Gold Ltd.			Limited			Note		Corporation
	(Expressed in United States dollars unless otherwise stated)

SALES							$	3,695,957							$	3,695,957

COST OF SALES								4,089,611								4,089,611
DEPRECIATION AND DEPLETION								187,369								187,369
ROYALTIES								217,749								217,749

								4,494,729								4,494,729

EARNINGS (LOSS) FROM MINING OPERATIONS								(798,772	)							(798,772	)
OTHER INCOME (EXPENSES)
Interest and other items	$	1,884,025		$	329,205			87,457		$	6,556					2,307,243
Gain (loss) on foreign exchange		—			(12,168	)		(37,552	)		(5,936	)				(55,656	)

Total other income		1,884,025			317,037			49,905			620					2,251,587

COSTS AND EXPENSES
General and administrative		2,751,570			2,819,871			2,390,047			835,573					8,797,061
Proposed acquisitions		4,348,190			—			—			—					4,348,190
Property holding costs		1,626,488			—			—			—					1,626,488
Exploration costs		4,375,095			948,467			1,845,430			168,516					7,337,508
Interest		5,880			3,959			—			—					9,839
Stock option expense		840,857			—			—			—					840,857
Accretion of asset retirement obligation		206,051			—			—			—					206,051
Change in value of derivatives		51,680,304			—			—			—					51,680,304
Write-off of mineral property costs		—			(14,780	)		—			—					(14,780	)
Depreciation		35,012			22,169			—			—					57,181

Total costs and expenses		65,869,447			3,779,686			4,235,477			1,004,089					74,888,699

Loss before income taxes		(63,985,422	)		(3,462,649	)		(4,984,344	)		(1,003,469	)				(73,435,884	)
Provision for income taxes		—			—			—			—					—

NET LOSS	$	(63,985,422	)	$	(3,462,649	)	$	(4,984,344	)	$	(1,003,469	)			$	(73,435,884	)

Basic and diluted net loss per share (Note 6)	$	(1.76	)											6	$	(0.93	)

Weighted average number of shares outstanding — basic and diluted (Note 6)		36,366,608														78,569,441

See accompanying notes to unaudited pro forma consolidated supplementary financial statements.

G-3

U.S. Gold Corporation

Unaudited Pro Forma Consolidated Supplementary Statement of Operations

For the twelve months ended December 31, 2005


				U.S. GAAP											Pro Forma
	As Reported			White Knight						Tone					Consolidated
	U.S. Gold			Resources			Nevada Pacific			Resources					U.S. Gold
	Corporation			Ltd.			Gold Ltd.			Limited			Note		Corporation
	(Expressed in United States dollars unless otherwise stated)

SALES							$	8,881,168							$	8,881,168

COST OF SALES								8,420,437								8,420,437
DEPRECIATION AND DEPLETION								804,215								804,215
ROYALTIES								472,743								472,743

								9,697,395								9,697,395

EARNINGS (LOSS) FROM MINING OPERATIONS								(816,227	)							(816,227	)

OTHER INCOME (EXPENSES)
Earnest money forfeited	$	200,000						—								200,000
Interest and other items		32,032		$	346,162			27,205		$	439					405,838
Management fee		330,000			—			—			—					330,000
Realized gain from disposition of shares		520,428			—			—			—					520,428
Gain (loss) on sale of assets		(29,982	)		—			155,199			—					125,217
Gain (loss) on foreign exchange		—			1,634			(67,043	)		(1,723	)				(67,132	)

Total other income		1,052,478			347,796			115,361			(1,284	)				1,514,351

COSTS AND EXPENSES
General and administrative		2,745,418			983,064			2,272,941			608,059					6,609,482
Write-off of purchase price receivable		182,748			—			—			—					182,748
Property holding costs		761,081			—			—			—					761,081
Equity share of subsidiary loss		58,888			—			—			—					58,888
Realization reserve — stock		168,960			—			—			—					168,960
Interest		3,011			5,016			246			—					8,273
Accretion of asset retirement obligation		110,243			—			—			—					110,243
Exploration costs		—			1,800,035			1,642,479			93,206					3,535,720
Write-off of mineral property costs		—			189,718			—			—					189,718
Depreciation		12,850			27,329			—			—					40,179

Total costs and expenses		4,043,199			3,005,162			3,915,666			701,265					11,665,292

Loss before income taxes		(2,990,721	)		(2,657,366	)		(4,616,532	)		(702,549	)				(10,967,168	)
Provision for income taxes		—			—			—			—					—

NET LOSS	$	(2,990,721	)	$	(2,657,366	)	$	(4,616,532	)	$	(702,549	)			$	(10,967,168	)

Basic and diluted net loss per share (Note 6)	$	(0.12	)											6	$	(0.16	)

Weighted average number of shares outstanding — basic and diluted (Note 6)		25,931,172														68,134,005

See accompanying notes to unaudited pro forma consolidated supplementary financial statements.

G-4

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED SUPPLEMENTARY
FINANCIAL STATEMENTS
(Expressed in United States dollars unless otherwise stated)
September 30, 2006 and December 31, 2005
(Unaudited)


1.	Basis of presentation

On March 5, 2006 U.S. Gold Corporation (“U.S. Gold” or the “Company”) announced that it intends to acquire, in stock transactions, all of the outstanding common shares of White Knight Resources Ltd. (“White Knight”), Nevada Pacific Gold Ltd. (“Nevada Pacific”) and Tone Resources Limited (“Tone Resources”) (together, the “Target Companies” or “Targets”). This proposal was made in letters sent on the same day by Mr. Robert R. McEwen, Chairman and Chief Executive Officer of U.S. Gold, to the chief executive officers of each of the subject companies.

The combined effects of the proposed transactions with each of the Target Companies have been presented in these Unaudited Pro Forma Consolidated Supplementary Financial Statements. The unaudited pro forma consolidated financial statements giving effect to the Company’s acquisition of each of Nevada Pacific, Tone Resources and White Knight have been presented separately in the document. These unaudited pro forma consolidated supplementary financial statements have been prepared on the basis that each shareholder of the target Companies will receive shares of common stock of U.S. Gold Corporation in exchange for their Target Companies common shares.

These unaudited pro forma consolidated supplementary financial statements have been compiled from and include:

(a) An unaudited pro forma consolidated supplementary balance sheet combining the unaudited balance sheet of U.S. Gold as at September 30, 2006 with the unaudited consolidated balance sheet of Nevada Pacific as at September 30, 2006, the audited consolidated balance sheet of Tone Resources as at August 31, 2006 and the unaudited consolidated balance sheet of White Knight as at September 30, 2006, giving effect to the transactions as if they occurred on September 30, 2006.

(b) An unaudited pro forma consolidated supplementary statement of operations combining the audited statement of operations of the Company for the year ended December 31, 2005 with unaudited constructed statement of operations of Nevada Pacific for the twelve months ended December 31, 2005, the unaudited constructed statement of operations of Tone Resources for the twelve months ended November 30, 2005 and the unaudited constructed statement of operations of White Knight for the twelve months ended December 31, 2005, giving effect to the transactions as if they occurred on January 1, 2005.

(c) An unaudited pro forma consolidated statement of operations combining the unaudited statement of operations of the Company for the nine months ended September 30, 2006 with unaudited constructed statement of operations of Nevada Pacific for the nine months ended September 30, 2006, the unaudited constructed statement of operations of Tone Resources for the nine months ended August 31, 2006 and the unaudited constructed statement of operations of White Knight for the nine months ended September 30, 2006, giving effect to the transactions as if they occurred on January 1, 2005.

The unaudited pro forma consolidated supplementary balance sheet and statements of operations have been presented on the above basis to ensure that the unaudited pro forma consolidated supplementary financial statements reflect the acquired business financial statements for a period that is no more than 93 days from U.S. Gold’s year-end, as required pursuant to pro forma presentation requirements contained in the securities rules.

The unaudited pro forma consolidated supplementary financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company and the financial statements of the Target Companies. Management of U.S. Gold has consolidated certain line items from the Target Companies financial statements in an attempt to conform to presentation of the Company’s financial statements, and also to conform the Target’s accounting policies to United States generally accepted accounting principles.

G-5

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED SUPPLEMENTARY
FINANCIAL STATEMENTS — (Continued)

It is management’s opinion that these unaudited pro forma consolidated supplementary financial statements include all adjustments necessary for the fair presentation of the transactions described in Note 3 in accordance with United States generally accepted accounting principles.

The unaudited pro forma consolidated supplementary financial statements are not intended to reflect the results of operations or the financial position of the Company which would have actually resulted had the proposed transactions been effected on the dates indicated. Further, the unaudited pro forma consolidated supplementary financial information is not necessarily indicative of the results of operations that may be obtained in the future. The pro forma adjustments and allocations of the purchase price for the Target Companies are based in part on estimates of the fair value of the assets acquired and liabilities assumed. The final purchase price allocation will be completed after asset and liability valuations are finalized. The final valuation will be based on the actual net tangible and intangible assets of the Target Companies that exist as of the date of the completion of the acquisition. Any final adjustments may change the allocation of purchase price which could affect the fair value assigned to the assets and liabilities and could result in a change to the unaudited pro forma consolidated supplementary financial statements. In addition, the impact of integration activities, the timing of completion of the acquisitions and other changes in the Target Companies net tangible and intangible assets prior to the completion of the acquisitions, which have not been incorporated in these unaudited pro forma consolidated supplementary financial statements, could cause material differences in the information presented.


2.	Summary of significant accounting policies

The unaudited pro forma consolidated supplementary financial statements have been compiled using the significant accounting policies as set out in the audited financial statements of U.S. Gold for the year ended December 31, 2005 which are incorporated by reference into this prospectus.


3.	Business acquisitions

The business combination will be accounted for as a purchase transaction, with U.S. Gold as the acquirer of the Target Companies.

In consideration for the acquisition of Nevada Pacific, the Company will issue 0.23 shares of U.S. Gold common stock for each outstanding common share of Nevada Pacific totaling approximately 16,229,989 common shares to shareholders of Nevada Pacific, representing approximately US$95.8 million. In addition, the options and warrants to be issued by U.S. Gold will amount to approximately $15.5 million.

In consideration for the acquisition of Tone Resources the Company will issue 0.26 shares of U.S. Gold common stock for each outstanding common share of Tone Resources totaling approximately 5,188,104 common shares to shareholders of Tone Resources, representing approximately US$30.6 million. In addition, the options and warrants to be issued by U.S. Gold will amount to approximately $6.2 million.

The measurement of the purchase consideration in the unaudited pro forma consolidated supplementary financial statement information is based on the market prices of U.S. Gold common shares over a 2-day period before and after the announcement date. The value of the purchase consideration for accounting purposes may differ from the amount assumed in the unaudited pro forma consolidated supplementary financial statement information due to any future changes in the negotiation process.

Each Target warrant or stock option which gives the holder the right to acquire shares in the common stock of the Target when presented for execution will be exchanged for a warrant or stock option which will give the holder the right to acquire shares in the common stock of U.S. Gold on the same basis as the exchange of the Target

G-6

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED SUPPLEMENTARY
FINANCIAL STATEMENTS — (Continued)

common shares for U.S. Gold common shares. The initial exchange will not include the Target options and warrants. However, they have been included as part of the purchase price consideration as U.S. Gold intends to acquire these in a subsequent transaction. These options and warrants have been included in the purchase consideration at their fair value of approximately $30.5 million based on the Black-Scholes pricing model.

The principal assumptions used in applying the Black-Scholes option pricing model were as follows:


Risk-free interest rate		5%
Dividend yield		N/A
Volatility factor		102%
Expected life — options		2-3 years
Remaining periods to expiration dates — warrants (weighted average)		3-17 months

After reflecting the pro forma purchase adjustments, the excess of the purchase consideration over the adjusted book values of the Targets’ assets and liabilities has been allocated in full to Acquired Mineral Property Interests. Upon consummation of the proposed acquisitions of the Targets, the fair value of all identifiable assets and liabilities acquired will be determined. On completion of valuations, with a corresponding adjustment to the historic carrying amounts of property, plant and equipment, or on recording of any finite life intangible assets on acquisition, these adjustments will impact the measurement of amortization recorded in consolidated income statements of U.S. Gold for periods after the date of acquisition. Typically, any increase in the values assigned by U.S. Gold to the Targets’ capital assets would result in increased amortization charges. The fair value of the net assets of the Targets to be acquired will ultimately be determined after the closing of the transaction. Therefore, it is likely that the fair values of assets and liabilities acquired will vary from the preliminary purchase allocation and the differences may be material.


4.	Pro forma assumptions and adjustments

The unaudited pro forma consolidated supplementary financial statements incorporate the following pro forma assumptions:

(a) After reflecting the pro forma purchase adjustments, the excess of the purchase consideration over the adjusted book values of the Targets’ assets and liabilities has been allocated in full to Acquired Mineral Property Interests, together with the related future income tax liability.

(b) Transaction costs have been estimated to be approximately $2 million.

A breakdown of the transaction related adjustments has been provided in the following table:


	White Knight			Nevada Pacific			Tone Resources
	Resources Ltd.			Gold Ltd.			Limited			Total

Acquired mineral property interests	$	152,953,289		$	130,340,465		$	46,113,410		$	329,407,164

Accounts payable and accrued liabilities	$	939,630		$	795,221		$	263,722		$	1,998,573
Future income tax liability		33,646,748			28,672,367			10,144,053			72,463,168
Capital stock reversal		(28,926,147	)		(32,619,378	)		(4,913,218	)		(66,458,743	)
USG shares issued		122,629,966			95,756,935			30,609,814			248,996,715
Options and warrants issued		8,836,044			15,504,397			6,174,844			30,515,285
Other equity accounts reversal		(3,654,370	)		(1,356,204	)		(440,999	)		(5,451,573	)
Deficit reversal		19,481,418			23,587,127			4,275,194			47,343,739

	$	152,953,289		$	130,340,465		$	46,113,410		$	329,407,164

G-7

NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED SUPPLEMENTARY
FINANCIAL STATEMENTS — (Continued)

5. Pro forma share capital

Supplementary pro forma share capital as at September 30, 2006 has been compiled as follows:


	Number of
	Shares		Amount

Issued common shares of U.S. Gold		49,996,755	$	162,620,797
Shares issued for acquisitions of Targets		42,202,833		248,996,715

Pro forma balance		92,199,588	$	411,617,512


6.	Pro forma loss per share

Supplementary pro forma basic loss per share for the nine months ended September 30, 2006 and the year ended December 31, 2005 have been calculated based on actual weighted average number of U.S. Gold common shares outstanding for the respective periods and the assumed number of U.S. Gold common shares issued to the Target shareholders being effective on January 1, 2006 and January 1, 2005, respectively.


	Nine Months Ended			Year Ended
	September 30,			December 31,
	2006			2005
	(Shares or US dollars)

Actual weighted average number of U.S. Gold common shares outstanding		36,366,608			25,931,172
Assumed number of U.S. Gold common shares issued to Targets		42,202,833			42,202,833

Pro forma weighted average number of U.S. Gold common shares outstanding		78,569,441			68,134,005

Pro forma net loss	$	(73,435,884	)	$	(10,967,168	)
Pro forma adjusted basic loss per share	$	(0.93	)	$	(0.16	)

G-8

APPENDIX H

RIGHTS, PRIVILEGES, RESTRICTIONS AND CONDITIONS ATTACHING TO THE
EXCHANGEABLE SHARES OF US GOLD CANADIAN ACQUISITION CORPORATION

Exchangeable Shares

The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares are as follows:

ARTICLE 1

INTERPRETATION


1.1	Definitions

For the purposes of these share provisions, unless something in the subject matter or context is inconsistent therewith:

“ABCA” means the Business Corporations Act (Alberta), as amended from time to time.

“AMEX” means the American Stock Exchange.

“Alberta ULC” means US Gold Alberta ULC, an unlimited liability corporation existing and governed by the laws of the Province of Alberta.

“Board of Directors” means the board of directors of the Corporation.

“Business Day” means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or Denver, Colorado under applicable law.

“Canadian Dollar Equivalent” means in respect of an amount expressed in a currency other than Canadian dollars (the “Foreign Currency Amount”) at any date the product obtained by multiplying:

(a) the Foreign Currency Amount; by

(b) the noon spot exchange rate on such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on such date for such foreign currency expressed in Canadian dollars as may be deemed by the Board of Directors to be appropriate for such purpose.

“Common Shares” means the common shares in the capital of the Corporation.

“Corporation” means US Gold Canadian Acquisition Corporation a company incorporated under the Business Corporations Act (Alberta).

“Current Market Price” means, in respect of a share of US Gold Common Stock on any date, the Canadian Dollar Equivalent of the average closing sales price (computed and rounded to the third decimal point) on the TSX or the AMEX during a period of 20 consecutive trading days ending not more than five trading days prior to such date or, if the shares of US Gold Common Stock are not then listed on the TSX or the AMEX, on such other stock exchange or automated quotation system on which the shares of US Gold Common Stock are listed or quoted, as the case may be, as may be selected by the Board of Directors for such purpose; provided, however, that if in the opinion of the Board of Directors the public distribution or trading activity of shares of US Gold Common stock during such period is inadequate to create a market that reflects the fair market value of a share of US Gold Common Stock, then the Current Market Price of a share of US Gold Common Stock shall be determined by the Board of Directors based upon the advice of such qualified independent financial advisors as the Board of Director may deem to be appropriate, and provided further that any such selection, opinion or determination by the Board of Directors shall be conclusive and binding.

“Dividend Amount” means an amount equal to the full amount of all dividends and distributions declared and unpaid on each Exchangeable Share and all dividends and distributions declared on a share of US Gold Common

H-1

Stock that have not been declared on each Exchangeable Share in accordance with Section 3.1, in each case with a record date prior to the effective date of the purchase, redemption or other acquisition of such Exchangeable Share pursuant to ARTICLE 5, ARTICLE 6 or ARTICLE 7.

“Exchangeable Shares” means the exchangeable shares in the capital of the Corporation, having the rights, privileges, restrictions and conditions set forth in these Share Provisions.

“LCR Exercising Party” has the meaning set out in Section 5.2(1).

“Liquidation Amount” has the meaning ascribed thereto Section 5.1(1).

“Liquidation Call Purchase Price” has the meaning set out in Section 5.2(1).

“Liquidation Call Right” has the meaning ascribed thereto in Section 5.2(1).

“Liquidation Date” has the meaning ascribed thereto in Section 5.1(1).

“Person” includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, governmental entity, syndicate or other entity, whether or not having legal status.

“RCR Exercising Party” has the meaning set out in Section 6.2(1).

“Redemption Call Purchase Price” has the meaning set out in Section 7.2(1).

“Redemption Call Right” has the meaning ascribed thereto in Section 7.2(1).

“Redemption CR Exercising Party” has the meaning set out in Section 7.2(1).

“Redemption Date” means the earlier of (i) the seventh anniversary of the date on which Exchangeable Shares are first issued; and (ii) the date established by the Board of Directors for the redemption by the Corporation of all but not less than all of the outstanding Exchangeable Shares on which there are outstanding fewer than that number of Exchangeable Shares equal to 10% of the total number of Exchangeable Shares issued in connection with the offers to purchase all of the outstanding common shares of Nevada Pacific Gold Ltd., Tone Resources Limited and White Knight Resources Ltd. outstanding (other than Exchangeable Shares held by US Gold or its Subsidiaries), and as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision, combination or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares.

“Redemption Price” has the meaning ascribed thereto in Section 7.1(1).

“Retracted Shares” has the meaning ascribed thereto in Section 6.1(1).

“Retraction Call Purchase Price” has the meaning set out in Section 6.2(1).

“Retraction Call Right” has the meaning ascribed thereto in Section 6.2(1).

“Retraction Date” has the meaning ascribed thereto in Section 6.1(1).

“Retraction Price” has the meaning ascribed thereto in Section 6.1(1).

“Retraction Request” has the meaning ascribed thereto in Section 6.1(1).

“Share Provisions” means the rights, privileges, restrictions and conditions set out herein.

“Subsidiary” means, when used with reference to US Gold, any corporation more than 50% of the outstanding stock of which is owned, directly or indirectly, by US Gold, by one or more other Subsidiaries of US Gold, or by US Gold and one or more other Subsidiaries of US Gold.

“Support Agreement” means a support agreement to be entered into prior to the issuance by the Corporation of any Exchangeable Shares among US Gold, Alberta ULC and the Corporation, the purpose of which will be for

H-2

US Gold (for itself and on behalf of Alberta ULC) and the Corporation to covenant to do all things reasonably necessary and desirable to enable and permit the Corporation or Alberta ULC to perform its obligations hereunder.

“Transfer Agent” means any Person as may from time to time be appointed by the Corporation as the registrar and transfer agent for the Exchangeable Shares.

“Trustee” means the trustee chosen by US Gold to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada or any Province thereof and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement.

“TSX” means the Toronto Stock Exchange.

“US Gold Call Notice” has the meaning ascribed thereto in Section 6.2(2).

“US Gold Common Stock” means the shares of common stock of US Gold, no par value, having voting rights of one vote per share, and any other securities into which such shares may be changed or for which such shares may be exchanged (whether or not US Gold shall be the issuer of such securities) or any other consideration which may be received by the holders of such shares pursuant to a recapitalization, reconstruction, reorganization or reclassification of, or amalgamation, merger, liquidation or similar transaction affecting, such shares.

“US Gold Dividend Declaration Date” means the date on which the board of directors of US Gold declares any dividend or other distribution on the shares of US Gold Common Stock.

“US Gold” means U.S. Gold Corporation, a corporation existing under the laws of Colorado.

“Voting and Exchange Trust Agreement” means the agreement to be entered into prior to the issuance by the Corporation of any Exchangeable Shares made between US Gold, Alberta ULC, the Corporation and the Trustee, the purpose of which will be to create a trust for the benefit of the registered holders of Exchangeable Shares that will enable the Trustee to exercise voting rights on behalf of the holders of Exchangeable Shares similar to those of holders of US Gold Common Stock.


1.2	Sections and Headings

The division of these Share Provisions into articles and sections and the insertion of headings are for reference purposes only and shall not affect the interpretation of these Share Provisions. Unless otherwise indicated, any reference in these Share Provisions to an article or section refers to the specified article or section of these Share Provisions.


1.3	Number Gender and Persons

In these Share Provisions, unless the context otherwise requires, words importing the singular number include the plural and vice versa, words importing any gender include all genders and words importing persons include individuals, corporations, partnerships, companies, associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities of any kind.


1.4	Payments

All payments to be made hereunder shall be made without interest and less any tax required by Canadian law to be deducted and withheld.


1.5	Currency

In these Share Provisions, unless stated otherwise, all dollar amounts are in Canadian dollars.

H-3

ARTICLE 2

RANKING OF EXCHANGEABLE SHARES


2.1	Ranking

The Exchangeable Shares shall be entitled to a preference over the Common Shares, and any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends as and to the extent provided in ARTICLE 3 and with respect to the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs as and to the extent provided in ARTICLE 5.

ARTICLE 3

DIVIDENDS


3.1	Dividends

A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each US Gold Dividend Declaration Date, declare a dividend on each Exchangeable Share:

(a) in the case of a cash dividend or distribution declared on the shares of US Gold Common Stock, in an amount in cash for each Exchangeable Share equal to the Canadian Dollar Equivalent of the cash dividend or distribution declared on each share of US Gold Common Stock on the US Gold Dividend Declaration Date;

(b) in the case of a stock dividend or distribution declared on the shares of US Gold Common Stock to be paid in shares of US Gold Common Stock, by the issue or transfer by the Corporation of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of shares of US Gold Common Stock to be paid on each share of US Gold Common Stock; or

(c) in the case of a dividend or distribution declared on the shares of US Gold Common Stock in property other than cash or shares of US Gold Common Stock, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent to (to be determined by the Board of Directors as contemplated by Section 3.5 hereof) the type and amount of property declared as a dividend or distribution on each share of US Gold Common Stock.

Such dividends shall be paid out of the assets of the Corporation properly applicable to the payment of dividends, or out of authorized but unissued shares or other securities of the Corporation, as applicable. The holders of Exchangeable Shares shall not be entitled to any dividends other than or in excess of the dividends referred to in this Section 3.1.


3.2	Payment of Dividends

Cheques of the Corporation payable at par at any branch of the bankers of the Corporation shall be issued in respect of any cash dividends or distributions contemplated by Section 3.1(a) hereof and the sending of such cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Certificates registered in the name of the registered holder of Exchangeable Shares shall be issued or transferred in respect of any stock dividends or other distributions contemplated by Section 3.1(b) hereof and the sending of such a certificate to each holder of an Exchangeable Share shall satisfy the stock dividend or other distribution represented thereby. Such other type and amount of property in respect of any dividends or distributions contemplated by Section 3.1(c) hereof shall be issued, distributed or transferred by the Corporation in such manner as it shall determine and the issuance, distribution or transfer thereof by the Corporation to each holder of an Exchangeable Share shall satisfy the dividend or other distribution represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against the Corporation any dividend that is represented by a cheque that has not been duly presented to the Corporation’s bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable.

H-4


3.3	Record and Payment Dates

The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend or distribution declared on the Exchangeable Shares under Section 3.1 hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend or distribution declared on the shares of US Gold Common Stock.


3.4	Partial Payment

If on any payment date for any dividends or distributions declared on the Exchangeable Shares under Section 3.1 hereof the dividends or distributions are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which the Corporation shall have sufficient moneys or other assets properly applicable to the payment of such dividends or distributions.


3.5	Economic Equivalence

For the purposes of Section 3.1 hereof, the Board of Directors shall determine, acting in good faith and in its sole discretion (with the assistance of such reputable and qualified independent financial advisors and/or other experts as the board may require), economic equivalence and each such determination shall be conclusive and binding on the Corporation and its shareholders. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors:

(a) in the case of any stock dividend or other distribution payable in shares of US Gold Common Stock, the number of such shares issued in proportion to the number of shares of US Gold Common Stock previously outstanding;

(b) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock), the relationship between the exercise price of each such right, option or warrant and the Current Market Price of a share of US Gold Common Stock;

(c) in the case of the issuance or distribution of any other form of property (including, without limitation, any shares or securities of US Gold of any class other than US Gold Common Stock, any rights, options or warrants other than those referred to in Section 3.5(b), any evidences of indebtedness of US Gold or any assets of US Gold), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding share of US Gold Common Stock and the Current Market Price of a share of US Gold Common Stock;

(d) in the case of any subdivision, redivision or change of the then outstanding shares of US Gold Common Stock into a greater number of shares of US Gold Common Stock or the reduction, combination, consolidation or change of the then outstanding shares of US Gold Common Stock into a lesser number of shares of US Gold Common Stock or any amalgamation, merger, reorganization or other transaction affecting the US Gold Common Stock, the effect thereof upon the then outstanding shares of US Gold Common Stock; and

(e) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of shares of US Gold Common Stock as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares).

H-5

ARTICLE 4

CERTAIN RESTRICTIONS


4.1	Certain Restrictions

(1) Except as provided in Section 4.1(2), so long as any of the Exchangeable Shares are outstanding, the Corporation shall not at any time without, but may at any time with, the approval of the holders of the Exchangeable Shares given as specified in Section 9.2 hereof:

(a) pay any dividends on the Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to the payment of dividends, other than stock dividends payable in Common Shares or in any such other shares ranking junior to the Exchangeable Shares, as the case may be;

(b) redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares with respect to the distribution of the assets in the event of the liquidation, dissolution or winding up of the Corporation;

(c) redeem or purchase any other shares of the Corporation ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary, or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs; or

(d) issue any shares other than (i) Exchangeable Shares, (ii) Common Shares, and (iii) any other shares not ranking superior to the Exchangeable Shares.

(2) The restrictions in Sections 4.1(1)(a), 4.1(1)(b) and 4.1(1)(c) hereof shall not apply if all dividends and distributions on the outstanding Exchangeable Shares corresponding to dividends and distributions declared and paid to date on the shares of US Gold Common Stock shall have been declared and paid in full on the Exchangeable Shares.

ARTICLE 5

LIQUIDATION


5.1	Participation Upon Liquidation, Dissolution or Winding Up of the Corporation

(1) Subject to applicable law and the due exercise by US Gold or Alberta ULC of a Liquidation Call Right, in the event of the liquidation, dissolution or winding up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, a holder of Exchangeable Shares shall be entitled to receive from the assets of the Corporation in respect of each Exchangeable Share held by such holder on the effective date of such liquidation, dissolution or winding up or other distribution (the “Liquidation Date”), before any distribution of any part of the assets of the Corporation among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the last Business Day prior to the Liquidation Date, which shall be satisfied in full by the Corporation causing to be delivered to such holder one share of US Gold Common Stock, plus (b) the Dividend Amount, if any (collectively, the “Liquidation Amount”).

(2) In the case of a distribution on Exchangeable Shares under this Section 5.1 and provided the Liquidation Call Right has not been exercised, on or promptly after the Liquidation Date, the Corporation shall cause to be delivered to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the ABCA and the Articles of the Corporation and such additional documents and instruments as the Transfer Agent and the Corporation may reasonably require, at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of the Exchangeable Shares. Payment of the aggregate Liquidation Amount for such Exchangeable Shares shall be made by causing to be delivered to each

H-6

holder, at the address of the holder recorded in the securities register of the Corporation for the Exchangeable Shares or by holding for pick-up by the holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of Exchangeable Shares, certificates representing the aggregate number of shares of US Gold Common Stock deliverable by the Corporation to such holder (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim) and a cheque of the Corporation payable at par at any branch of the bankers of the Corporation in payment of the Dividend Amount, if any, payable to such holder, without interest (less any amounts withheld on account of tax required to be deducted and withheld therefrom). On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Liquidation Amount, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Liquidation Amount has been paid in the manner hereinbefore provided. The Corporation shall have the right at any time after the Liquidation Date to transfer or cause to be issued or transferred, and deposited in a custodial account with any chartered bank or trust company in Canada named in such notice, the Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof, such Liquidation Amount to be held by such bank or trust company as trustee for and on behalf of, and for the use and benefit of, such holders. Upon such deposit being made, the rights of a holder of Exchangeable Shares after such deposit shall be limited to receiving its proportionate part of the Liquidation Amount for such Exchangeable Shares so deposited, without interest, and when received by such bank or trust company, all dividends and other distributions with respect to the shares of US Gold Common Stock to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such shares of US Gold Common Stock to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. Upon such payment or deposit of the total Liquidation Amount (less any amounts withheld on account of tax required to be deducted and withheld therefrom), the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be holders of the US Gold Common Stock delivered to them or the custodian on their behalf.

(3) After the Corporation has satisfied its obligations to pay the holders of the Exchangeable Shares the total Liquidation Amount pursuant to this Section 5.1, such holders shall not be entitled to share in any further distribution of the assets of the Corporation.


5.2	Liquidation Call Rights

(1) Subject to the limitations set forth in Section 5.2(2), including that Alberta ULC shall only be entitled to exercise its Liquidation Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which US Gold has not exercised its Liquidation Call Right, US Gold and Alberta ULC shall each have the overriding right (a “Liquidation Call Right”), in the event of and notwithstanding the proposed liquidation, dissolution or winding up of the Corporation pursuant to Section 5.1 hereof, to purchase from all but not less than all of the holders of Exchangeable Shares on the Liquidation Date (other than US Gold and its Subsidiaries) all but not less than all of the Exchangeable Shares held by each such holder on payment by whichever of US Gold or Alberta ULC is exercising such right (the “LCR Exercising Party”) of an amount per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the last Business Day prior to the Liquidation Date, which shall be satisfied in full by delivery to such holder of one share of US Gold Common Stock, plus (b) the Dividend Amount, if any (collectively, the “Liquidation Call Purchase Price”). In the event of the exercise of a Liquidation Call Right, each holder of Exchangeable Shares (other than Alberta ULC and its Subsidiaries) shall be obligated to sell all the Exchangeable Shares held by such holder to the LCR Exercising Party on the Liquidation Date on payment by the LCR Exercising Party to the holder of the Liquidation Call Purchase Price for each such share and the Corporation shall have no obligation to pay any Liquidation Amount to the holders of such shares so purchased by the LCR Exercising Party.

H-7

(2) Alberta ULC shall only be entitled to exercise its Liquidation Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which US Gold has not exercised its Liquidation Call Right. In order to exercise its Liquidation Call Right, an LCR Exercising Party must notify in writing the Transfer Agent, as agent for the holders of Exchangeable Shares, the Trustee and the Corporation of its intention to exercise such right at least 55 days before the Liquidation Date in the case of a voluntary liquidation, dissolution or winding up of the Corporation and at least five Business Days before the Liquidation Date in the case of an involuntary liquidation, dissolution or winding up of the Corporation. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not a Liquidation Call Right has been exercised (such notice to specify the LCR Exercising Party) forthwith after the expiry of the date by which the same may be exercised, such form of notice to be provided by US Gold to the Transfer Agent. If an LCR Exercising Party exercises its Liquidation Call Right in accordance with this Section 5.2, all obligations of the Corporation under Section 5.1 shall terminate and on the Liquidation Date such LCR Exercising Party will purchase and the holders of Exchangeable Shares (other than US Gold and its Subsidiaries) will sell all of their Exchangeable Shares then outstanding for a price per share equal to the Liquidation Call Purchase Price.

(3) For the purposes of completing a purchase of the Exchangeable Shares pursuant to the exercise of a Liquidation Call Right, the LCR Exercising Party shall deposit with the Transfer Agent, on or before the Liquidation Date, certificates representing the total number of shares of US Gold Common Stock deliverable by the LCR Exercising Party (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim) in payment of the total Liquidation Call Purchase Price and a cheque in the amount of the remaining portion, if any, of the total Liquidation Call Purchase Price and any interest allowed on such deposit shall belong to the LCR Exercising Party. Provided that the total Liquidation Call Purchase Price has been so deposited with the Transfer Agent, on and after the Liquidation Date the rights of each holder of Exchangeable Shares (other than US Gold and its Subsidiaries) will be limited to receiving such holder’s proportionate part of the total Liquidation Call Purchase Price payable by the LCR Exercising Party, without interest, and when received by the Transfer Agent, all dividends and other distributions with respect to the shares of US Gold Common Stock to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such shares of US Gold Common Stock to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the following provisions. Upon surrender to the Transfer Agent of a certificate representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the ABCA and such additional documents and instruments as the Transfer Agent and the Corporation may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of the LCR Exercising Party shall deliver to such holder, a certificate representing the shares of US Gold Common Stock to which such holder is entitled and a cheque in payment of the Dividend Amount, if any, without interest (less any amounts withheld on account of tax required to be deducted and withheld therefrom). If neither US Gold nor Alberta ULC exercises its Liquidation Call Right in the manner described above, on the Liquidation Date the holders of Exchangeable Shares shall be entitled to receive in exchange therefor the Liquidation Amount otherwise payable by the Corporation in connection with the liquidation, dissolution or winding up of the Corporation pursuant to Section 5.1 hereof.

ARTICLE 6

RETRACTION AT OPTION OF HOLDER


6.1	Retraction at Option of Holder

(1) Subject to applicable law and the due exercise by either US Gold or Alberta ULC of a Retraction Call Right, a holder of Exchangeable Shares shall be entitled at any time to require the Corporation to redeem, on the fifth Business Day after the date on which the Retraction Request is received by the Corporation (the “Retraction Date”), any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the last Business Day prior to the Retraction Date, which shall be satisfied in full by the Corporation causing to be delivered to such holder one share of US Gold

H-8

Common Stock, plus (b) the Dividend Amount, if any (collectively, the “Retraction Price”). The holder must give notice of a requirement to redeem by presenting and surrendering at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of Exchangeable Shares the certificate representing the Exchangeable Shares that the holder desires to have the Corporation redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the ABCA and such additional documents and instruments as the Transfer Agent and the Corporation may reasonably require, together with a duly executed statement (the “Retraction Request”) in the form of Schedule A hereto or in such other form as may be acceptable to the Corporation specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate (the “Retracted Shares”) redeemed by the Corporation.

(2) In the case of a redemption of Exchangeable Shares under this Section 6.1, upon receipt by the Corporation or the Transfer Agent in the manner specified in Section 6.1(1) hereof of a certificate representing the number of Exchangeable Shares which the holder desires to have the Corporation redeem, together with a Retraction Request, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.1(5) and that neither US Gold or Alberta ULC has exercised a Retraction Call Right, the Corporation shall redeem the Retracted Shares effective at the close of business on the Retraction Date. On the Retraction Date, the Corporation shall deliver or cause to be delivered to the relevant holder, at the address of the holder recorded in the securities register of the Corporation for the Exchangeable Shares or at the address specified in the holder’s Retraction Request or by holding for pick-up by the holder at the registered office of the Corporation or at any office of the Transfer Agent, as may be specified by the Corporation by notice to the holders of Exchangeable Shares, a certificate representing the number of shares of US Gold Common Stock to which such holder is entitled (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim) registered in the name of the holder or in such other name as the holder may request in payment of the Retraction Price and a cheque of the Corporation payable at par at any branch of the bankers of the Corporation in payment of the remaining portion, if any, of the aggregate Retraction Price to which such holder is entitled (less any amounts withheld on account of tax required to be deducted and withheld therefrom) and such delivery of such certificate and cheque by or on behalf of the Corporation by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Price to the extent that the same is represented by such share certificates and cheque, unless such cheque is not paid on due presentation. If only a part of the Exchangeable Shares represented by any certificate is redeemed, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of the Corporation.

(3) On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive its proportionate part of the total Retraction Price, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the aggregate Retraction Price payable to such holder shall not be made, in which case the rights of such holder shall remain unaffected until such aggregate Retraction Price has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of such aggregate Retraction Price has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by the Corporation shall thereafter be considered and deemed for all purposes to be a holder of the shares of US Gold Common Stock delivered to such holder.

(4) Notwithstanding any other provision of this Section 6.1, the Corporation shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law. If the Corporation believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and neither US Gold nor Alberta ULC shall have exercised its Retraction Call Right with respect to the Retracted Shares, the Corporation shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder at least two Business Days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by the Corporation. In any case in which the redemption by the Corporation of Retracted Shares would be

H-9

contrary to solvency requirements or other provisions of applicable law and more than one holder has delivered a Retraction Request, the Corporation shall redeem Retracted Shares in accordance with Section 6.1(2) on a pro rata basis and shall issue to each such holder of Retracted Shares a new certificate, at the expense of the Corporation, representing the Retracted Shares not redeemed by the Corporation pursuant to Section 6.1(2) hereof. If the Retraction Request is not revoked by the holder in the manner specified in Section 6.1(5) and neither US Gold nor Alberta ULC shall have exercised its Retraction Call Right in respect of any such Retracted Shares, an Insolvency Event (as defined in the Voting and Exchange Trust Agreement) shall, to the extent it has not theretofore occurred, be deemed thereupon to have occurred and the holder of any such Retracted Shares not redeemed by the Corporation pursuant to Section 6.1(2) as a result of solvency requirements or other provisions of applicable law shall be deemed by giving the Retraction Request to have exercised its Exchange Right (as defined in the Voting and Exchange Trust Agreement) so as to require US Gold or, at the option of US Gold, Alberta ULC to purchase the unredeemed Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by US Gold or, at the option of US Gold, Alberta ULC to such holder of the Retraction Price, all as more specifically provided in the Voting and Exchange Trust Agreement.

(5) A holder of Retracted Shares may, by notice in writing given by the holder to the Corporation before the close of business on the Business Day immediately preceding the Retraction Date, withdraw its Retraction Request in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to US Gold or Alberta ULC shall be deemed to have been revoked.

(6) Notwithstanding any other provision of this ARTICLE 6, if:

(a) exercise of the rights of the holders of the Exchangeable Shares, or any of them, to require the Corporation to redeem any Exchangeable Shares pursuant to this ARTICLE 6 on any Retraction Date would require listing particulars or any similar document to be issued in order to obtain the approval of AMEX or TSX to the listing and trading (subject to official notice of issuance) of, the shares of US Gold Common Stock that would be required to be delivered to such holders of Exchangeable Shares in connection with the exercise of such rights; and

(b) as a result of (a) above, it would not be practicable (notwithstanding the reasonable endeavours of US Gold) to obtain such approvals in time to enable all or any of such shares of US Gold Common Stock to be admitted to listing and trading by AMEX or TSX (subject to official notice of issuance) when so delivered, that Retraction Date shall, notwithstanding any other date specified or otherwise deemed to be specified in any relevant Retraction Request, be deemed for all purposes to be the earlier of (i) the second business day immediately following the date the approvals referred to in Section 6.1(6)(a) are obtained, and (ii) the date which is 30 Business Days after the date on which the relevant Retraction Request is received by the Corporation, and references in these share provisions to such Retraction Date shall be construed accordingly.


6.2	Retraction Call Rights

(1) In the event that a holder of Exchangeable Shares delivers a Retraction Request pursuant to Section 6.1 and subject to the limitations set forth in Section 6.2(2), including that Alberta ULC shall only be entitled to exercise its Retraction Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which US Gold has not exercised its Retraction Call Right, US Gold and Alberta ULC shall each have the overriding right (a “Retraction Call Right”), notwithstanding the proposed redemption of the Exchangeable Shares by the Corporation pursuant to Section 6.1 hereof, to purchase from such holder on the Retraction Date all but not less than all of the Retracted Shares held by such holder on payment by whichever of US Gold or Alberta ULC is exercising such right (the “RCR Exercising Party”) of an amount per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the last Business Day prior to the Retraction Date, which shall be satisfied in full by the RCR Exercising Party causing to be delivered to such holder one share of US Gold Common Stock, plus (b) the Dividend Amount, if any (the “Retraction Call Purchase Price”). In the event of the exercise of a Retraction Call Right, a holder of Exchangeable Shares who has delivered a Retraction Request shall be obligated to sell all the Retracted Shares to the RCR Exercising Party on the Retraction Date on payment by the RCR Exercising Party of an amount per share equal to the Retraction Call Purchase Price for each such share.

H-10

(2) Upon receipt by the Corporation of a Retraction Request, the Corporation shall promptly notify US Gold and Alberta ULC thereof. Alberta ULC shall only be entitled to exercise its Retraction Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which US Gold has not exercised its Retraction Call Right. In order to exercise its Retraction Call Right, the RCR Exercising Party must notify the Corporation in writing of its determination to do so (a “US Gold Call Notice”) within five Business Days of notification to such RCR Exercising Party by the Corporation of the receipt by the Corporation of the Retraction Request. If either US Gold or Alberta ULC does not so notify the Corporation within such five Business Day period, the Corporation shall notify the holder as soon as possible thereafter that neither will exercise the Retraction Call Right. If either US Gold or Alberta ULC delivers a US Gold Call Notice within such five Business Day period and duly exercises its Retraction Call Right in accordance with this Section 6.2, the obligation of the Corporation to redeem the Retracted Shares shall terminate and, provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.1(5), the RCR Exercising Party shall purchase from such holder and such holder shall sell to the RCR Exercising Party on the Retraction Date the Retracted Shares for the Retraction Call Purchase Price. Provided that the aggregate Retraction Call Purchase Price has been so deposited with the Transfer Agent as provided in Section 6.2(3), the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by the Corporation of such Retracted Shares shall take place on the Retraction Date. In the event that neither US Gold nor Alberta ULC delivers a US Gold Call Notice within such five Business Day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6.1(5), the Corporation shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in Section 6.1.

(3) For the purpose of completing a purchase of Exchangeable Shares pursuant to the exercise of a Retraction Call Right, the RCR Exercising Party shall deliver or cause to be delivered to the relevant holder, at the address of the holder recorded in the securities register of the Corporation for the Exchangeable Shares or at the address specified in the holder’s Retraction Request or by holding for pick-up by the holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation by notice to the holders of Exchangeable Shares, a certificate representing the number of shares of US Gold Common Stock to which such holder is entitled (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim) registered in the name of the holder or in such other name as the holder may request in payment of the Retraction Call Purchase Price and a cheque of the RCR Exercising Party payable at par and in Canadian dollars at any branch of the bankers of US Gold, Alberta ULC or of the Corporation in Canada in payment of the remaining portion, if any, of such aggregate Retraction Call Purchase Price (less any amounts withheld on account of tax required to be deducted and withheld therefrom) and such delivery of such certificate and cheque on behalf of the RCR Exercising Party by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Call Purchase Price to the extent that the same is represented by such share certificates and cheque, unless such cheque is not paid on due presentation.

(4) On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive its proportionate part of the total Retraction Call Purchase Price unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the aggregate Retraction Call Purchase Price payable to such holder shall not be made, in which case the rights of such holder shall remain unaffected until such aggregate Retraction Call Purchase Price has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of such aggregate Retraction Call Purchase Price has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so purchased by the RCR Exercising Party shall thereafter be considered and deemed for all purposes to be a holder of the shares of US Gold Common Stock delivered to such holder.

H-11

ARTICLE 7

REDEMPTION BY THE CORPORATION


7.1	Redemption by the Corporation

(1) Subject to applicable law and the due exercise by either US Gold or Alberta ULC of a Redemption Call Right, the Corporation shall on the Redemption Date redeem all of the then outstanding Exchangeable Shares for an amount per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the last Business Day prior to such Redemption Date, which shall be satisfied in full by the Corporation causing to be delivered one share of US Gold Common Stock, plus (b) the Dividend Amount, if any (collectively, the “Redemption Price”).

(2) In any case of a redemption of Exchangeable Shares under this Section 7.1, the Corporation shall, at least 60 days before the Redemption Date, send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by the Corporation or the purchase by US Gold or Alberta ULC under its Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder (other than US Gold and its Subsidiaries in the case of a purchase by US Gold or Alberta ULC). Such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, such Redemption Date and, if applicable, particulars of the Redemption Call Right.

(3) On or after the Redemption Date and subject to the exercise by US Gold or Alberta ULC of a Redemption Call Right, the Corporation shall cause to be delivered to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share upon presentation and surrender at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in such notice of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the ABCA and such additional documents and instruments as the Transfer Agent and the Corporation may reasonably require. Payment of the aggregate Redemption Price for Exchangeable Shares held by a holder shall be made by delivery to such holder, at the address of such holder recorded in the securities register of the Corporation or by holding for pick-up by the holder at the registered office of the Corporation or at any office of the Transfer Agent as may be specified by the Corporation in such notice, of a certificate representing the aggregate number of shares of US Gold Common Stock deliverable by the Corporation to such holder (which shares shall be duly issued as fully paid and non- assessable and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim) and a cheque of the Corporation payable at par at any branch of the bankers of the Corporation in respect of the remaining portion, if any, of such aggregate Redemption Price (less any amounts withheld on account of tax required to be deducted and withheld therefrom). On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall not be entitled to exercise any of the rights of holders in respect thereof, other than the right to receive their proportionate part of the total Redemption Price, unless payment of the aggregate Redemption Price deliverable to a holder for Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holder shall remain unaffected until the aggregate Redemption Price deliverable to such holder has been paid in the manner hereinbefore provided.

(4) The Corporation shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to deposit or cause to be deposited the total Redemption Price of the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, in a custodial account with any chartered bank or trust company in Canada named in such notice and any interest allowed on such deposit shall belong to the Corporation. Provided that such total Redemption Price has been so deposited prior to the Redemption Date, on and after the Redemption Date, the Exchangeable Shares shall be redeemed and the Rights of the holders thereof after the Redemption Date shall be limited to receiving their proportionate part of the total Redemption Price for such Exchangeable Shares so deposited, against presentation and surrender of the said certificates held by them, respectively, in accordance with the foregoing provisions. Upon such payment or deposit of the total Redemption Price, the holders of the Exchangeable Shares shall thereafter be considered and deemed for all purposes to be holders of the shares of US Gold Common Stock delivered to them.

H-12


7.2	Redemption Call Rights

(1) Subject to the limitations set forth in Section 7.2(2), including that Alberta ULC shall only be entitled to exercise its Redemption Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which US Gold has not exercised its Redemption Call Right, US Gold and Alberta ULC shall each have the overriding right (a “Redemption Call Right”), notwithstanding the proposed redemption of the Exchangeable Shares by the Corporation pursuant to Section 7.1 hereof, to purchase from all but not less than all of the holders of Exchangeable Shares (other than US Gold and its Subsidiaries) on the last Business Day prior to the Redemption Date in respect of which the Redemption Call Right is exercised all but not less than all of the Exchangeable Shares held by each such holder on payment by whichever of US Gold or Alberta ULC is exercising such right (the “Redemption CR Exercising Party”) of an amount per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the last Business Day prior to such Redemption Date, which shall be satisfied in full by causing to be delivered to such holder one share of US Gold Common Stock plus (b) the Dividend Amount, if any (collectively, the “Redemption Call Purchase Price”). In the event of the exercise of a Redemption Call Right, each holder of Exchangeable Shares (other than US Gold and its Subsidiaries) shall be obligated to sell all the Exchangeable Shares held by such holder to the Redemption CR Exercising Party on the last Business Day prior to such Redemption Date on payment by the Redemption CR Exercising Party to such holder of the Redemption Call Purchase Price for each such share.

(2) Alberta ULC shall only be entitled to exercise its Redemption Call Right with respect to those holders of Exchangeable Shares, if any, in respect of which US Gold has not exercised its Redemption Call Right. In order to exercise its Redemption Call Right, a Redemption CR Exercising Party must notify in writing the Transfer Agent, as agent for the holders of Exchangeable Shares and the Corporation of its intention to exercise such right at least 30 days before the Redemption Date. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not a Redemption Call Right has been exercised (such notice to specify the Redemption CR Exercising Party) forthwith after the expiry of the date by which the same may be exercised, such form of notice to be provided by US Gold to the Transfer Agent. If a Redemption CR Exercising Party duly exercises its Redemption Call Right in accordance with this Section 7.2, the right of the Corporation to redeem any Exchangeable Shares pursuant to Section 7.1 on the Redemption Date shall terminate at such time and on the last Business Day prior to such Redemption Date such Redemption CR Exercising Party will purchase and the holders of Exchangeable Shares (other than US Gold and its Subsidiaries) will sell all of their Exchangeable Shares then outstanding for a price per share equal to the Redemption Call Purchase Price.

(3) For the purposes of completing a purchase of the Exchangeable Shares pursuant to the exercise of a Redemption Call Right, the Redemption CR Exercising Party shall deposit with the Transfer Agent, on or before the last Business Day prior to the Redemption Date, certificates representing the total number of shares of US Gold Common Stock deliverable by the Redemption CR Exercising Party (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim) in payment of the total Redemption Call Purchase Price and a cheque in the amount of the remaining portion, if any, of the total Redemption Call Purchase Price, without interest (less any amounts withheld on account of tax required to be deducted and withheld therefrom) and any interest allowed on such deposit shall belong to the Redemption CR Exercising Party. Provided that the total Redemption Call Purchase Price has been so deposited with the Transfer Agent, on and after the last Business Day prior to the Redemption Date the rights of each holder of Exchangeable Shares (other than US Gold and its Subsidiaries) will be limited to receiving such holder’s proportionate part of the total Redemption Call Purchase Price payable by the Redemption CR Exercising Party upon presentation and surrender by such holder of certificates representing the Exchangeable Shares held by such holder in accordance with the following provisions and such holder shall on and after the last Business Day prior to such Redemption Date be considered and deemed for all purposes to be the holder of the shares of US Gold Common Stock delivered to such holder. Upon surrender to the Transfer Agent of a certificate representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the ABCA and such additional documents and instruments as the Transfer Agent and the Corporation may reasonably require, the holder of such surrendered certificate shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of the Redemption CR Exercising Party shall deliver to such holder, a certificate representing the shares of US Gold Common Stock to which such holder is entitled and a cheque in payment of the remaining

H-13

portion, if any, of the holder’s proportionate part of the total Redemption Call Purchase Price, without interest (less any amounts withheld on account of tax required to be deducted and withheld therefrom). If neither US Gold nor Alberta ULC exercises the Redemption Call Right in the manner described above, on the Redemption Date a holder of Exchangeable Shares shall be entitled to receive in exchange therefor the Redemption Price otherwise payable by the Corporation in connection with the redemption of the Exchangeable Shares pursuant to Section 7.1 hereof.

ARTICLE 8

VOTING RIGHTS


8.1	Voting Rights

Except as required by applicable law and by the provisions of Sections 8.2, 9.1, 10.1 and 11.2 hereof, the holders of the Exchangeable Shares shall not be entitled as such to receive notice of or to attend any meeting of the shareholders of the Corporation or to vote at any such meeting.


8.2	Election or Appointment of Single Director

With respect to the rights of the shareholders to elect or appoint directors as outlined in the ABCA, the rights attaching to the Exchangeable Shares provided by these Share Provisions shall give the holders of the Exchangeable Shares the limited right to vote (and each holder thereof shall be entitled to one (1) vote per share in person or by proxy) on the election or appointment of one (1) out of the three (3) directors of the Corporation, and, for clarification, the holders of the Exchangeable Shares shall have no right to vote on the election or appointment of the remaining two (2) directors of the Corporation, which is a right attaching to the Common Shares.

ARTICLE 9

AMENDMENT AND APPROVAL


9.1	Amendment

The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed only with the approval of the holders of the Exchangeable Shares given as hereinafter specified.


9.2	Approval

Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law, subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 10% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided that such approval must be given also by the affirmative vote of holders of more than two-thirds of the Exchangeable Shares represented in person or by proxy at the meeting excluding Exchangeable Shares beneficially owned by US Gold or any of its Subsidiaries. If at any such meeting the holders of at least 10% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five days thereafter and to such time and place as may be designated by the Chairman of such meeting. At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting excluding Exchangeable Shares beneficially owned by US Gold or any of its Subsidiaries shall constitute the approval or consent of the holders of the Exchangeable Shares.

H-14

ARTICLE 10

RECIPROCAL CHANGES, ETC. IN RESPECT OF US GOLD COMMON STOCK


10.1	Reciprocal Changes

(1) Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that US Gold will not, except as provided in the Support Agreement, without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 hereof:

(a) issue or distribute shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire US Gold Common Stock) to the holders of all or substantially all of the then outstanding shares of US Gold Common Stock, by way of stock dividend or other distribution, other than an issue of shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire US Gold Common Stock) to holders of shares of US Gold Common Stock who exercise an option to receive dividends in shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire US Gold Common Stock) in lieu of receiving cash dividends;

(b) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding shares of US Gold Common Stock entitling them to subscribe for or to purchase shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock); or

(c) issue or distribute to the holders of all or substantially all of the then outstanding shares of US Gold Common Stock:

(i) shares or securities (including evidence of indebtedness) of US Gold of any class other than US Gold Common Stock (other than shares convertible into or exchangeable for or carrying rights to acquire US Gold Common Stock);

(ii) rights, options or warrants other than those referred to in Section 10.1(1)(b) above; or

(iii) assets of US Gold,

unless the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets is issued or distributed simultaneously to holders of the Exchangeable Shares.

(2) Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that US Gold will not, except as provided in the Support Agreement, without the prior approval of the Corporation and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 hereof:

(a) subdivide, redivide or change the then outstanding US Gold Common Stock into a greater number of shares of US Gold Common Stock;

(b) reduce, combine, consolidate or change the then outstanding shares of US Gold Common Stock into a lesser number of shares of US Gold Common Stock; or

(c) reclassify or otherwise change the shares of US Gold Common Stock or effect an amalgamation, merger, reorganization or other transaction affecting the US Gold Common Stock,

unless the same or an economically equivalent change shall simultaneously be made to, or in, the rights of the holders of the Exchangeable Shares.

The Support Agreement further provides, in part, that the aforesaid provisions of the Support Agreement shall not be changed without the approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 hereof.

H-15

ARTICLE 11

ACTIONS BY THE CORPORATION UNDER SUPPORT AGREEMENT


11.1	Actions by the Corporation

The Corporation will take all such actions and do all such things as shall be necessary or advisable to perform and comply with and to facilitate performance and compliance by US Gold and Alberta ULC with all provisions of the Support Agreement applicable to US Gold, Alberta ULC and the Corporation, respectively, in accordance with the terms thereof including, without limitation, taking all such actions and doing all such things as shall be necessary or advisable to enforce to the fullest extent possible for the direct benefit of the Corporation all rights and benefits in favour of the Corporation under or pursuant to such agreement.


11.2	Changes to Support Agreement

The Corporation shall not agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 hereof other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of:

(a) adding to the covenants of the other parties to such agreement for the protection of the Corporation or the holders of the Exchangeable Shares;

(b) making such provisions or modifications not inconsistent with such agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such provisions and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or

(c) making such changes in or corrections to such agreement which, on the advice of counsel to the Corporation, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such provisions and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares.

ARTICLE 12

LEGEND; CALL RIGHTS; WITHHOLDING RIGHTS


12.1	Legend

The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement and the Voting and Exchange Trust Agreement (including, but not limited to the provisions with respect to the call rights, voting rights and exchange rights thereunder).


12.2	Call Rights

Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, in each case, in favour of US Gold and Alberta ULC, and the overriding nature thereof in connection with the liquidation, dissolution or winding-up of the Corporation or any other distribution of the assets of the Corporation among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of US Gold or Alberta ULC, as the case may be, as herein provided.

H-16


12.3	Withholding Rights

US Gold, Alberta ULC, the Corporation and the Transfer Agent shall be entitled to deduct and withhold from any consideration otherwise payable under to any holder of Exchangeable Shares such amounts as US Gold, Alberta ULC, the Corporation or the Transfer Agent is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada) or United States tax laws or any provision of provincial, state, federal, local or foreign tax law, in each case as amended or succeeded. The Transfer Agent may act and rely on the advice of counsel with respect to such matters. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the Exchangeable Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, US Gold, Alberta ULC, the Corporation and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to US Gold, Alberta ULC, the Corporation or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and US Gold, Alberta ULC, the Corporation or the Transfer Agent shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale.

ARTICLE 13

NOTICES


13.1	Notices

Subject to applicable law, any notice, request or other communication to be given to the Corporation by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by telecopy or by delivery to the registered office of the Corporation and addressed to the attention of the Secretary of the Corporation. Any such notice, request or other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by the Corporation.


13.2	Certificates

Any presentation and surrender by a holder of Exchangeable Shares to the Corporation or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution or winding-up of the Corporation or the retraction or redemption of Exchangeable Shares shall be made by registered mail (postage prepaid) or by delivery to the registered office of the Corporation or to such office of the Transfer Agent as may be specified by the Corporation, in each case, addressed to the attention of the Secretary of the Corporation. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by the Corporation or the Transfer Agent, as the case may be. Any such presentation and surrender of certificates made by registered mail (postage prepaid) shall be at the sole risk of the holder mailing the same.


13.3	Notices to Shareholders

Subject to applicable law, any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of the Corporation shall be in writing and shall be valid and effective if given by mail (postage prepaid) or by delivery to the address of the holder recorded in the resister of shareholders of the Corporation or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the fifth Business Day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares, or any defect in such notice, shall not invalidate or otherwise alter or affect any action or proceeding to be taken by the Corporation pursuant thereto.

In the event of any interruption of mail service immediately prior to a scheduled mailing or in the period following a mailing during which delivery normally would be expected to occur, the Corporation will make

H-17

reasonable efforts to disseminate any notice by other means, such as publication. Except as otherwise required or permitted by law, if post offices in Canada or the United States are not open for the deposit of mail, any notice which the Corporation or the Transfer Agent may give or cause to be given will be deemed to have been properly given and to have been received by holders of Exchangeable Shares if (i) it is given to the TSX for dissemination or (ii) it is published once in the National Edition of The Globe and Mail and in the daily newspapers of general circulation in each of the French and English languages in the City of Montreal, provided that if the National Edition of The Globe and Mail is not being generally circulated, publication thereof will be made in any other daily newspaper of general circulation published in the City of Toronto.

Notwithstanding any other provisions of these share provisions, notices, other communications and deliveries need not be mailed if the Corporation determines that delivery thereof by mail may be delayed. Persons entitled to any deliveries (including certificates and cheques) which are not mailed for the foregoing reason may take delivery thereof at the office of the Transfer Agent to which the deliveries were made, upon application to the Transfer Agent, until such time as the Corporation has determined that delivery by mail will no longer be delayed. The Corporation will provide notice of any such determination not to mail made hereunder as soon as reasonably practicable after the making of such determination and in accordance with this Section 13.3. Such deliveries in such circumstances will constitute delivery to the persons entitled thereto.

H-18

SCHEDULE A

RETRACTION REQUEST

To: U.S. Gold Corporation, US Gold Alberta ULC and US Gold Canadian Acquisition

Corporation, c/o the Trustee

This notice is given pursuant to ARTICLE 6 of the provisions (the “Share Provisions”) attaching to the share(s) represented by this certificate and all capitalized words and expressions used in this notice that are defined in the Share Provisions have the meanings ascribed to such words and expressions in such Share Provisions.

The undersigned hereby notifies the Corporation that, subject to the Retraction Call Right referred to below, the undersigned desires to have the Corporation redeem in accordance with ARTICLE 6 of the Share Provisions:

o all share(s) represented by this certificate; or

o share(s) only represented by this certificate.

The undersigned acknowledges the Retraction Call Right of US Gold and Alberta ULC to purchase all but not less than all the Retracted Shares from the undersigned and that this notice is and shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to US Gold or Alberta ULC in accordance with the Retraction Call Right on the Retraction Date for the Retraction Call Purchase Price and on the other terms and conditions set out in Section 6.2 of the Share Provisions. If neither US Gold or Alberta ULC determines to exercise its Retraction Call Right, the Corporation will notify the undersigned of such fact as soon as possible. This Retraction Request, and this offer to sell the Retracted Shares to US Gold or Alberta ULC, may be revoked and withdrawn by the undersigned only by notice in writing given to the Corporation at any time before the close of business on the Business Day immediately preceding the Retraction Date.

The undersigned acknowledges that if, as a result of solvency provisions of applicable law, the Corporation is unable to redeem all Retracted Shares and provided that neither US Gold nor Alberta ULC has exercised the Retraction Call Right with respect to the Retracted Shares, the undersigned will be deemed to have exercised the Exchange Right (as defined in the Voting and Exchange Trust Agreement) so as to require US Gold or, at the option of US Gold, Alberta ULC to purchase the unredeemed Retracted Shares.

The undersigned hereby represents and warrants to the Corporation, US Gold and Alberta ULC that the undersigned has good title to, and owns, the share(s) represented by this certificate to be acquired by the Corporation, US Gold or Alberta ULC, as the case may be, free and clear of all liens, claims, encumbrances, security interests and adverse claims.



(Date)	(Signature of Shareholder)	(Guarantee of Signature)


o	Please check box if the securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the shareholder at the principal transfer office of the Transfer Agent in Toronto, failing which such securities and any cheque will be mailed to the last address of the shareholder as it appears on the register.

NOTE:

This panel must be completed and this certificate, together with such additional documents as the Transfer Agent and the Corporation may require, must be deposited with the Transfer Agent at its principal transfer office in Toronto. The securities and any cheque resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to respectively, the name of the shareholder as it appears on the register of the Corporation and the securities and cheque resulting from such retraction or purchase will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed, all exigible transfer taxes are paid and the signature of the registered holder is guaranteed by a Canadian chartered bank or trust company, member of a recognized stock exchange in Canada or a member of the Securities Transfer Association Medallion (STAMP) Program.

Date:

H-19

APPENDIX I

FORM OF VOTING AND EXCHANGE TRUST AGREEMENT

AGREEMENT made as of , 2007, among U.S. Gold Corporation (“US Gold”), a corporation existing under the laws of Colorado, US Gold Alberta ULC (“Alberta ULC”), an unlimited liability corporation existing under the laws of Alberta, US Gold Canadian Acquisition Corporation (“Canadian Exchange Co.”), a corporation existing under the laws of Alberta, and , a trust company incorporated under the laws of Canada (hereinafter referred to as “Trustee”).

RECITALS:

WHEREAS US Gold, together with Canadian Exchange Co., has offered, each by way of a public take-over bid, to acquire all of the outstanding common shares of each of White Knight Resources Ltd., Nevada Pacific Gold Ltd. and Tone Resources Ltd. in consideration for exchangeable shares (“Exchangeable Shares”) of Canadian Exchange Co.;

AND WHEREAS holders of Exchangeable Shares will be entitled to require Canadian Exchange Co. to redeem such Exchangeable Shares and upon such redemption each Exchangeable Share shall be exchanged for one share of common stock of US Gold (“US Gold Common Stock”);

AND WHEREAS the parties desire to make appropriate provision and to establish a procedure whereby (i) voting rights in US Gold shall be exercisable by Beneficiaries (as hereinafter defined) from time to time by and through the Trustee, which will hold legal title to the Special Voting Share (as hereinafter defined) to which voting rights attach for the benefit of Beneficiaries, and (ii) the rights to require US Gold or, at the option of US Gold, Alberta ULC, to purchase Exchangeable Shares from the Beneficiaries shall be exercisable by Beneficiaries from time to time of Exchangeable Shares by and through the Trustee, which will hold legal title to such rights for the benefit of the Beneficiaries;

AND WHEREAS these recitals and any statements of fact in this agreement are made by US Gold, Alberta ULC and Canadian Exchange Co. and not by the Trustee;

NOW THEREFORE, in consideration of the respective covenants and agreements provided in this agreement and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties agree as follows:

ARTICLE 1

DEFINITIONS AND INTERPRETATION


1.1	Definitions

In this agreement, each initially capitalized term and the terms used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the “Share Provisions”) attaching to the Exchangeable Shares as set out in the articles of Canadian Exchange Co. and the following terms shall have the following meanings:

“Automatic Exchange Right” has the meaning ascribed thereto in Section 5.11(2).

“Beneficiaries” mean the registered holders from time to time of Exchangeable Shares, other than US Gold and its Subsidiaries.

“Beneficiary Votes” has the meaning ascribed thereto in Section 4.2.

“Exchange Right” has the meaning ascribed thereto in Section 5.1.

“including” means “including without limitation” and “includes” means “includes without limitation”.

“Indemnified Parties” has the meaning ascribed thereto in Section 8.1.

I-1

“Insolvency Event” means (i) the institution by Canadian Exchange Co. of any proceeding to be adjudicated a bankrupt or insolvent or to be dissolved or wound up, or the consent of Canadian Exchange Co. to the institution of bankruptcy, insolvency, dissolution or winding-up proceedings against it, or (ii) the filing by Canadian Exchange Co. of a petition, answer or consent seeking dissolution or winding-up under any bankruptcy, insolvency or analogous laws, including, without limitation, the Companies Creditors’ Arrangement Act (Canada) and the Bankruptcy and Insolvency Act (Canada), and the failure by Canadian Exchange Co. within 15 days of becoming aware thereof, or the consent by Canadian Exchange Co. to the filing of any such petition or to the appointment of a receiver, or (iii) the making by Canadian Exchange Co. of a general assignment for the benefit of creditors, or the admission in writing by Canadian Exchange Co. of its inability to pay its debts generally as they become due, or (iv) Canadian Exchange Co. not being permitted, pursuant to solvency requirements of applicable law, to redeem any Retracted Shares pursuant to Section 6.1(4) of the Share Provisions specified in a retraction request delivered to Canadian Exchange Co. in accordance with Article 6 of the Share Provisions.

“List” has the meaning ascribed thereto in Section 4.6.

“Officer’s Certificate” means, with respect to US Gold, Alberta ULC or Canadian Exchange Co., as the case may be, a certificate signed by any one of the Chairman of the Board, the President, any Vice-President or any other senior officer of US Gold, Alberta ULC or Canadian Exchange Co., as the case may be.

“Retracted Shares” has the meaning ascribed thereto in Section 5.7.

“Special Voting Share” means the one share of special voting preference stock with no par value, issued by US Gold to and deposited with the Trustee, which entitles the holder of record to a number of votes at meetings of holders of US Gold Common Stock equal to the number of Exchangeable Shares outstanding from time to time that are held by Beneficiaries.

“Trust” means the trust created by this agreement.

“Trust Estate” means the Special Voting Share, any other securities, the Exchange Right and any money or other rights or assets that may be held by the Trustee from time to time pursuant to this agreement.

“Trustee” means <> and, subject to the provisions of Article 9, includes any successor trustee.

“US Gold Consent” has the meaning ascribed thereto in Section 4.2.

“US Gold Liquidation Event” has the meaning ascribed thereto in Section 5.11(1).

“US Gold Liquidation Event Effective Date” has the meaning ascribed thereto in Section 5.11(3).

“US Gold Meeting” has the meaning ascribed thereto in Section 4.2.

“Voting Rights” means the voting rights attached to the Special Voting Share.


1.2	Interpretation Not Affected by Headings, etc.

The division of this agreement into articles and sections and the insertion of headings are for reference purposes only and shall not affect the interpretation of this agreement. Unless otherwise indicated, any reference in this agreement to an “Article” or “Section” refers to the specified Article or Section of this agreement.


1.3	Number, Gender, etc.

In this agreement, unless the context otherwise requires words importing the singular number include the plural and vice versa. Words importing any gender shall include all genders and words importing persons include individuals, corporations, partnerships, companies, associations, trusts, unincorporated organizations, governmental bodies and other legal or business entities of any kind.

I-2


1.4	Date for any Action

If any date on which any action is required to be taken under this agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day.


1.5	Payments

All payments to be made hereunder will be made without interest and less any tax required by Canadian law to be deducted and withheld.

ARTICLE 2

TRUST


2.1	Establishment of Trust

The purpose of this agreement is to create the Trust for the benefit of the Beneficiaries, as herein provided. The Trustee will hold the Special Voting Share in order to enable the Trustee to exercise the Voting Rights and will hold the Exchange Right in order to enable the Trustee to exercise such right and will hold the other rights granted in or resulting from the Trustee being a party to this agreement in order to enable the Trustee to exercise or enforce such rights, in each case as trustee for and on behalf of the Beneficiaries as provided in this agreement.

ARTICLE 3

SPECIAL VOTING SHARE


3.1	Issue and Ownership of the Special Voting Share

Simultaneously with the execution and delivery of this agreement, US Gold will issue to and deposit with the Trustee the Special Voting Share to be hereafter held of record by the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries and in accordance with the provisions of this agreement. US Gold hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the issuance of the Special Voting Share by US Gold to the Trustee. During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Special Voting Share and shall be entitled to exercise all of the rights and powers of an owner with respect to the Special Voting Share provided that the Trustee shall: (a) hold the Special Voting Share and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and (b) except as specifically authorized by this agreement, have no power or authority to sell, transfer, vote or otherwise deal in or with the Special Voting Share and the Special Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this agreement.


3.2	Legended Share Certificates

Canadian Exchange Co. will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of their right to instruct the Trustee with respect to the exercise of the Voting Rights in respect of the Exchangeable Shares of the Beneficiaries.


3.3	Safe Keeping of Certificate

The certificate representing the Special Voting Share shall at all times be held in safe keeping by the Trustee or its agent.

I-3

ARTICLE 4

EXERCISE OF VOTING RIGHTS


4.1	Voting Rights

The Trustee, as the holder of record of the Special Voting Share, shall be entitled to all of the Voting Rights, including the right to consent to or vote in person or by proxy the Special Voting Share, on any matter, question, proposal or proposition whatsoever that may properly come before the stockholders of US Gold at a US Gold Meeting or in connection with a US Gold Consent. The Voting Rights shall be and remain vested in and exercised by the Trustee. Subject to Section 6.15 hereof, the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Article 4 from Beneficiaries entitled to instruct the Trustee as to the voting thereof at the time at which the US Gold Consent is sought or the US Gold Meeting is held. To the extent that no instructions are received from a Beneficiary with respect to the Voting Rights to which such Beneficiary is entitled, the Trustee shall not exercise or permit the exercise of such Voting Rights.


4.2	Number of Votes

With respect to all meetings of stockholders of US Gold at which holders of shares of US Gold Common Stock are entitled to vote (each, a “US Gold Meeting”) and with respect to all written consents sought from the holders of shares of US Gold Common Stock (a “US Gold Consent”), each Beneficiary shall be entitled to instruct the Trustee to cast and exercise, in the manner instructed, one vote for each Exchangeable Share owned of record by such Beneficiary on the record date established by US Gold or by applicable law for such US Gold Meeting or US Gold Consent, as the case may be (the “Beneficiary Votes”), in respect of each matter, question, proposal or proposition to be voted on at such US Gold Meeting or to be consented to in connection with such US Gold Consent.


4.3	Mailings to Shareholders

(1) With respect to each US Gold Meeting and US Gold Consent, the Trustee will mail or cause to be mailed (or otherwise communicate in the same manner as US Gold utilizes in communications to holders of US Gold Common Stock, subject to the Trustee being advised in writing of such manner and provided that such manner of communications is reasonably available to the Trustee) to each of the Beneficiaries named in the List at the Beneficiaries’ respective addresses as set forth in the List, on the same day as the initial mailing or notice (or other communication) with respect thereto is given by US Gold to its stockholders:

(a) a copy of such notice, together with any related materials, including any circular or information statement or listing particulars, to be provided to shareholders of US Gold but excluding proxies to vote US Gold Common Stock;

(b) a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such US Gold Meeting or US Gold Consent, as the case may be, or, pursuant and subject to Section 4.7, to attend such US Gold Meeting and to exercise personally the Beneficiary Votes thereat;

(c) a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give:

(i) a proxy to such Beneficiary or his, her or its designee to exercise personally such holder’s Beneficiary Votes; or

(ii) a proxy to a designated agent or other representative of the management of US Gold to exercise such Beneficiary Votes;

(d) a statement that if no such instructions are received from the Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled will not be exercised;

(e) a form of direction whereby the Beneficiary may so direct and instruct the Trustee as contemplated herein; and

I-4

(f) a statement of (i) the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of a US Gold Meeting shall not be later than the close of business on the second Business Day prior to such meeting, and (ii) the method for revoking or amending such instructions.

(2) The materials referred to in this Section 4.3 are to be provided to the Trustee by US Gold, and the materials referred to in Sections 4.3(1)(c), 4.3(1)(e) and 4.3(1)(f) shall (if reasonably practicable to do so) be subject to reasonable comment by the Trustee in a timely manner; provided, however, that the Trustee shall have no obligation to review such materials. Subject to the foregoing, US Gold shall ensure that the materials to be provided to the Trustee are provided in sufficient time to permit the Trustee to comment as aforesaid and to send all materials to each Beneficiary at the same time as such materials are first sent to holders of US Gold Common Stock. US Gold agrees not to communicate with holders of US Gold Common Stock with respect to the materials referred to in this Section 4.3 otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries.

(3) For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any US Gold Meeting or US Gold Consent, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by US Gold or by applicable law for purposes of determining stockholders entitled to vote at such US Gold Meeting or to give written consent in connection with such US Gold Consent. US Gold will notify the Trustee of any decision of the board of directors of US Gold with respect to the calling of any US Gold Meeting or the seeking of any US Gold Consent and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this Section 4.3.


4.4	Copies of Shareholder Information

US Gold will deliver to the Trustee copies of all proxy materials (including notices of US Gold Meetings but excluding proxies to vote US Gold Common Stock), information statements, reports (including all interim and annual financial statements) and other written communications that, in each case, are to be distributed by US Gold from time to time to holders of US Gold Common Stock in sufficient quantities and in sufficient time so as to enable the Trustee to send or cause to be sent those materials to each Beneficiary at the same time as such materials are first sent to holders of US Gold Common Stock. The Trustee will mail or otherwise send, or cause to be mailed or otherwise sent, to each Beneficiary, at the expense of US Gold, copies of all such materials (and all materials specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by US Gold) received by the Trustee from US Gold contemporaneously with the sending of such materials to holders of US Gold Common Stock. The Trustee will also make available for inspection by any Beneficiary at the Trustee’s principal office in Toronto, Ontario all proxy materials, information statements, reports and other written communications that are:

(a) received by the Trustee as the registered holder of the Special Voting Share and made available by US Gold generally to the holders of US Gold Common Stock; or

(b) specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by US Gold.


4.5	Other Materials

Immediately after receipt by US Gold or stockholders of US Gold of any material sent or given by or on behalf of a third party to holders of US Gold Common Stock generally, including, without limitation, dissident proxy and information circulars (and related information and material) and take-over bid and securities exchange take-over bid circulars (and related information and material), US Gold shall use its reasonable efforts to obtain and deliver to the Trustee copies thereof in sufficient quantities so as to enable the Trustee to forward or cause to be forwarded such material (unless the same has been provided directly to Beneficiaries by such third party) to each Beneficiary as soon as possible thereafter. As soon as reasonably practicable after receipt thereof, the Trustee will mail or otherwise send, or cause to be mailed or otherwise sent, to each Beneficiary, at the expense of US Gold, copies of all such materials received by the Trustee from US Gold. The Trustee will also make available for inspection by any Beneficiary at the Trustee’s principal office in Toronto, Ontario copies of all such materials.

I-5


4.6	List of Persons Entitled To Vote

Canadian Exchange Co. shall, (a) prior to each annual, general and special US Gold Meeting or the seeking of any US Gold Consent and (b) forthwith upon each request made at any time by the Trustee in writing, prepare or cause to be prepared a list (a “List”) of the names and addresses of the Beneficiaries arranged in alphabetical order and showing the number of Exchangeable Shares held of record by each such Beneficiary, in each case at the close of business on the date specified by the Trustee in such request or, in the case of a List prepared in connection with a US Gold Meeting or a US Gold Consent, at the close of business on the record date established by US Gold or pursuant to applicable law for determining the holders of US Gold Common Stock entitled to receive notice of and/or to vote at such US Gold Meeting or to give consent in connection with a US Gold Consent. Each such List shall be delivered to the Trustee promptly after receipt by Canadian Exchange Co. of such request or the record date for such meeting or seeking of consent, as the case may be, and, in any event, within sufficient time as to enable the Trustee to perform its obligations under this agreement. US Gold agrees to give Canadian Exchange Co. written notice (with a copy to the Trustee) of the calling of any US Gold Meeting or the seeking of any US Gold Consent, together with the record date therefor, sufficiently prior to the date of the calling of such meeting or seeking such consent so as to enable Canadian Exchange Co. to perform its obligations under this Section 4.6.


4.7	Entitlement To Direct Votes

Any Beneficiary named in a List prepared in connection with any US Gold Meeting or any US Gold Consent will be entitled (a) to instruct the Trustee in the manner described in Section 4.3 hereof with respect to the exercise of the Beneficiary Votes to which such Beneficiary is entitled or (b) to attend such meeting and personally to exercise thereat (or to exercise with respect to any written consent), as the proxy of the Trustee, the Beneficiary Votes to which such Beneficiary is entitled or (c) to appoint a third party as the proxy of the Trustee to attend such meeting and exercise thereat the Beneficiary’s voting rights to which such Beneficiary is entitled except, in each case, to the extent that such Beneficiary has transferred the ownership of any Exchangeable Shares in respect of which such Beneficiary is entitled to Beneficiary Votes after the close of business on the record date for such meeting or seeking of consent.


4.8	Voting By Trustee and Attendance of Trustee Representative at Meeting

(1) In connection with each US Gold Meeting and US Gold Consent, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to Section 4.3 hereof, the Beneficiary Votes as to which such Beneficiary is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice sent or caused to be sent by the Trustee to the Beneficiary pursuant to Section 4.3.

(2) The Trustee shall cause such representatives who are empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights enabling a Beneficiary to attend each US Gold Meeting. Upon submission by a Beneficiary (or its designee) named in the List prepared in connection with the relevant meeting of identification satisfactory to the Trustee’s representative, and at the Beneficiary’s request, such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder to direct the vote, if such Beneficiary either (i) has not previously given the Trustee instructions pursuant to Section 4.3 in respect of such meeting or (ii) submits to such representative written revocation of any such previous instructions. At such meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes shall have the same rights in respect of such Beneficiary Votes as the Trustee to speak at the meeting in respect of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition.


4.9	Distribution of Written Materials

Any written materials distributed by the Trustee to the Beneficiaries pursuant to this agreement shall be sent by mail (or otherwise communicated in the same manner as US Gold utilizes in communications to holders of US Gold

I-6

Common Stock subject to the Trustee being advised in writing of such manner and provided such manner of communications is reasonably available to the Trustee) to each Beneficiary at its address as shown on the register of holders of Exchangeable Shares maintained by the registrar of the Exchangeable Shares. Canadian Exchange Co. shall provide or cause to be provided to the Trustee for purposes of communication, on a timely basis and without charge or other expense:

(a) a current List; and

(b) upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this agreement.


4.10	Termination of Voting Rights

Except as otherwise provided in the Share Provisions, all of the rights of a Beneficiary with respect to the Beneficiary Votes exercisable in respect of the Exchangeable Shares held by such Beneficiary, including the right to instruct the Trustee as to the voting of or to vote personally such Beneficiary Votes, shall be deemed to be surrendered by the Beneficiary to US Gold or Alberta ULC, as the case may be, and such Beneficiary Votes and the Voting Rights represented thereby shall cease immediately upon the delivery by such holder to the Trustee of the certificates representing such Exchangeable Shares in connection with the exercise by the Beneficiary of the Exchange Right or the occurrence of the automatic exchange of Exchangeable Shares for US Gold Common Stock, as specified in Article 5 hereof, or upon the retraction or redemption of Exchangeable Shares pursuant to Article 6 or Article 7 of the Share Provisions, or upon the effective date of the liquidation, dissolution or winding-up of Canadian Exchange Co. or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs pursuant to Article 5 of the Share Provisions, or upon the purchase of Exchangeable Shares from the holder thereof by US Gold or Alberta ULC pursuant to the exercise by US Gold or Alberta ULC of the Retraction Call Right, the Redemption Call Right or the Liquidation Call Right (unless US Gold shall not have delivered the requisite US Gold Common Stock and cheque, if any, delivered in exchange therefor to the Trustee pending delivery to the Beneficiaries).

ARTICLE 5

EXCHANGE RIGHT, AUTOMATIC EXCHANGE RIGHT AND US GOLD SUPPORT


5.1	Grant and Ownership of the Automatic Exchange Right and the Exchange Right

US Gold, and Alberta ULC, in the case of the Exchange Right, hereby grant to the Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries: (i) the Automatic Exchange Right, and (ii) the right (the “Exchange Right”), upon the occurrence and during the continuance of an Insolvency Event, to require US Gold or Alberta ULC to purchase from each or any Beneficiary all or any part of the Exchangeable Shares held by the Beneficiary, all in accordance with the provisions of this agreement. US Gold hereby acknowledges receipt from the Trustee, as trustee for and on behalf of the Beneficiaries, of good and valuable consideration (and the adequacy thereof) for the grant of the Automatic Exchange Right and the Exchange Right by US Gold to the Trustee. Alberta ULC hereby acknowledges receipt from the Trustee, as trustee for and on behalf of the Beneficiaries, of good and valuable consideration (and the adequacy thereof) for the grant of the Exchange Right by Alberta ULC to the Trustee. During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Automatic Exchange Right and the Exchange Right and shall be entitled to exercise all of the rights and powers of an owner with respect to the Automatic Exchange Right and the Exchange Right, provided that the Trustee shall:

(a) hold the Automatic Exchange Right and the Exchange Right and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and

(b) except as specifically authorized by this agreement, have no power or authority to exercise or otherwise deal in or with the Automatic Exchange Right and the Exchange Right, and the Trustee shall not exercise such right for any purpose other than the purposes for which this Trust is created pursuant to this agreement.

I-7


5.2	Legended Share Certificates

Canadian Exchange Co. will cause each certificate representing Exchangeable Shares to bear an appropriate legend notifying the Beneficiaries of the Automatic Exchange Right, the Exchange Right and of their right to instruct the Trustee with respect to the exercise of the Exchange Right in respect of the Exchangeable Shares held by a Beneficiary.


5.3	Exercise of Exchange Right

The Exchange Right shall be and remain vested in and exercisable by the Trustee. Subject to Section 6.15 hereof, the Trustee shall exercise the Exchange Right only on the basis of instructions received pursuant to this Article 5 from Beneficiaries entitled to instruct the Trustee as to the exercise thereof. To the extent that no instructions are received from a Beneficiary with respect to the Exchange Right, the Trustee shall not exercise or permit the exercise of the Exchange Right.


5.4	Purchase Price

The purchase price payable by US Gold or Alberta ULC for each Exchangeable Share to be purchased by US Gold or Alberta ULC under the Exchange Right shall be an amount per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the last Business Day prior to the day of closing of the purchase and sale of such Exchangeable Share under the Exchange Right, which shall be satisfied in full by causing to be delivered to such holder one share of US Gold Common Stock, plus (b) the Dividend Amount, if any. The purchase price for each such Exchangeable Share so purchased may be satisfied only by US Gold or Alberta ULC delivering or causing to be delivered to the Trustee, on behalf of the relevant Beneficiary, one share of US Gold Common Stock and a cheque for the balance, if any, of the purchase price without interest (less any amount required to be withheld under the Income Tax Act (Canada) or United States tax laws, or any provision of any federal, provincial, state, local or foreign tax laws).


5.5	Exercise Instructions

Subject to the terms and conditions herein set forth, a Beneficiary shall be entitled, upon the occurrence and during the continuance of an Insolvency Event, to instruct the Trustee to exercise the Exchange Right with respect to all or any part of the Exchangeable Shares registered in the name of such Beneficiary on the books of Canadian Exchange Co. To cause the exercise of the Exchange Right by the Trustee, the Beneficiary shall deliver to the Trustee, in person or by certified or registered mail, at its principal office in Toronto, Ontario or at such other places in Canada as the Trustee may from time to time designate by written notice to the Beneficiaries, the certificates representing the Exchangeable Shares which such Beneficiary desires US Gold or Alberta ULC to purchase, duly endorsed in blank, and accompanied by such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the Business Corporations Act (Alberta), other applicable laws, if any, and the by-laws of Canadian Exchange Co. and such additional documents and instruments as the Trustee or Canadian Exchange Co. may reasonably require together with (a) a duly completed form of notice of exercise of the Exchange Right, contained on the reverse of or attached to the Exchangeable Share certificates, stating (i) that the Beneficiary thereby instructs the Trustee to exercise the Exchange Right so as to require US Gold or Alberta ULC to purchase from the Beneficiary the number of Exchangeable Shares specified therein, (ii) that such Beneficiary has good title to and owns all such Exchangeable Shares to be acquired by US Gold or Alberta ULC free and clear of all liens, claims and encumbrances, (iii) the names in which the certificates representing US Gold Common Stock issuable in connection with the exercise of the Exchange Right are to be issued and (iv) the names and addresses of the persons to whom such new certificates should be delivered and (b) payment (or evidence satisfactory to the Trustee, Canadian Exchange Co. and US Gold of payment) of the taxes (if any) payable as contemplated by Section 5.8 of this agreement. If only a portion of the Exchangeable Shares represented by any certificate delivered to the Trustee are to be purchased by US Gold or Alberta ULC under the Exchange Right, a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of Canadian Exchange Co.

I-8


5.6	Delivery of US Gold Common Stock; Effect of Exercise

Promptly after receipt of the certificates representing the Exchangeable Shares that a Beneficiary desires US Gold or Alberta ULC to purchase under the Exchange Right (together with such documents and instruments of transfer and a duly completed form of notice of exercise of the Exchange Right) duly endorsed for transfer to US Gold or Alberta ULC, the Trustee shall notify US Gold, Alberta ULC and Canadian Exchange Co. of its receipt of the same, which notice to US Gold, Alberta ULC and Canadian Exchange Co. shall constitute exercise of the Exchange Right by the Trustee on behalf of the holder of such Exchangeable Shares, and US Gold or Alberta ULC shall immediately thereafter deliver to the Trustee, for delivery to the Beneficiary of such Exchangeable Shares (or to such other persons, if any, properly designated by such Beneficiary), a certificate for the number of shares of US Gold Common Stock deliverable in connection with such exercise of the Exchange Right (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance, security interest or adverse claim) and a cheque for the balance, if any, of the purchase price therefor; provided, however, that no such delivery shall be made unless and until the Beneficiary requesting the same shall have paid (or provided evidence satisfactory to the Trustee, Canadian Exchange Co., Alberta ULC and US Gold of the payment of) the taxes (if any) payable as contemplated by Section 5.8 of this agreement. Immediately upon the giving of notice by the Trustee to US Gold, Alberta ULC and Canadian Exchange Co. of the exercise of the Exchange Right, as provided in this Section 5.6, the closing of the transaction of purchase and sale contemplated by the Exchange Right shall be deemed to have occurred, and the Beneficiary of such Exchangeable Shares shall be deemed to have transferred to US Gold (or, at US Gold’s option, to Alberta ULC) all of its right, title and interest in and to such Exchangeable Shares and the related interest in the Trust Estate and shall not be entitled to exercise any of the rights of a holder in respect thereof, other than the right to receive its proportionate part of the total purchase price therefor, unless the requisite number of shares of US Gold Common Stock (together with a cheque for the balance, if any, of the total purchase price therefor) is not delivered by US Gold or Alberta ULC to the Trustee, for delivery to such Beneficiary (or to such other persons, if any, properly designated by such Beneficiary), within five Business Days of the date of the giving of such notice by the Trustee, in which case the rights of the Beneficiary shall remain unaffected until such shares of US Gold Common Stock are so delivered and any such cheque is so delivered and paid. Concurrently with the closing of the transaction of purchase and sale contemplated by the Exchange Right, such Beneficiary shall be considered and deemed for all purposes to be the holder of the shares of US Gold Common Stock delivered to it pursuant to the Exchange Right. Notwithstanding the foregoing until the requisite number of shares of Common Stock of US Gold and the cheque for the balance, if any, of the total purchase price therefore, is delivered to a Beneficiary, the Beneficiary shall be deemed to still be a holder of the sold Exchangeable Shares for purposes of voting rights with respect thereto under this agreement.


5.7	Exercise of Exchange Right Subsequent to Retraction

In the event that a Beneficiary has exercised its retraction right under Article 6 of the Share Provisions to require Canadian Exchange Co. to redeem any or all of the Exchangeable Shares held by the Beneficiary (the “Retracted Shares”) and is notified by Canadian Exchange Co. pursuant to Section 6.1(4) of the Share Provisions that Canadian Exchange Co. will not be permitted as a result of solvency requirements of applicable law to redeem all such Retracted Shares, subject to receipt by the Trustee of written notice to that effect from Canadian Exchange Co. and provided that neither US Gold nor Alberta ULC shall have exercised its Retraction Call Right with respect to the Retracted Shares and that the Beneficiary shall not have revoked the retraction request delivered by the Beneficiary to Canadian Exchange Co. pursuant to Section 6.1(5) of the Share Provisions, the retraction request will constitute and will be deemed to constitute notice from the Beneficiary to the Trustee instructing the Trustee to exercise the Exchange Right with respect to those Retracted Shares that Canadian Exchange Co. is unable to redeem. In any such event, Canadian Exchange Co. hereby agrees with the Trustee and in favour of the Beneficiary immediately to notify the Trustee of such prohibition against Canadian Exchange Co. redeeming all of the Retracted Shares and immediately to forward or cause to be forwarded to the Trustee all relevant materials delivered by the Beneficiary to Canadian Exchange Co. or to the Transfer Agent (including without limitation a copy of the retraction request delivered pursuant to Section 6.1(1) of the Share Provisions) in connection with such proposed redemption of the Retracted Shares and the Trustee will thereupon exercise the Exchange Right with respect to the Retracted Shares that Canadian Exchange Co. is not permitted to redeem and will require US Gold or, at US Gold’s option, Alberta ULC, to purchase such shares in accordance with the provisions of this Article 5.

I-9


5.8	Stamp or Other Transfer Taxes

Upon any sale of Exchangeable Shares to US Gold or Alberta ULC pursuant to the Exchange Right or the Automatic Exchange Right, the share certificate or certificates representing US Gold Common Stock to be delivered in connection with the payment of the total purchase price therefor shall be issued in the name of the Beneficiary of the Exchangeable Shares so sold or in such names as such Beneficiary may otherwise direct in writing without charge to the holder of the Exchangeable Shares so sold, provided, however, that such Beneficiary (a) shall pay (and none of US Gold, Alberta ULC, Canadian Exchange Co. or the Trustee shall be required to pay) any documentary, stamp, transfer or other similar taxes that may be payable in respect of any transfer involved in the issuance or delivery of such shares to a person other than such Beneficiary or (b) shall have established to the satisfaction of the Trustee, US Gold, Alberta ULC and Canadian Exchange Co. that such taxes, if any, have been paid.


5.9	Notice of Insolvency Event

Immediately upon the occurrence of an Insolvency Event or any event that with the giving of notice or the passage of time or both would be an Insolvency Event, Canadian Exchange Co. and US Gold shall give written notice thereof to the Trustee. As soon as practicable after receiving notice from Canadian Exchange Co. or US Gold or from any other person of the occurrence of an Insolvency Event, the Trustee will mail to each Beneficiary, at the expense of US Gold, a notice of such Insolvency Event in the form provided by US Gold, which notice shall contain a brief statement of the right of the Beneficiaries with respect to the Exchange Right.


5.10	Call Rights

The Liquidation Call Right, the Redemption Call Right, the Retraction Call Right, the Automatic Exchange Right and the Exchange Right are hereby agreed, acknowledged, consented to and confirmed, and it is agreed and acknowledged that such rights are granted as part of the consideration for the obligations of US Gold under this agreement.


5.11	Automatic Exchange Right

(1) US Gold shall give the Trustee written notice of each of the following events (each a “US Gold Liquidation Event”) at the time set forth below:

(a) in the event of any determination by the board of directors of US Gold to institute voluntary liquidation, dissolution or winding up proceedings with respect to US Gold or to effect any other distribution of assets of US Gold among its stockholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding up or other distribution; and

(b) immediately, upon the earlier of (i) receipt by US Gold of notice of and (ii) US Gold otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceeding with respect to the involuntary liquidation, dissolution or winding up of US Gold or to effect any other distribution of assets of US Gold among its stockholders for the purpose of winding up its affairs.

(2) Immediately following receipt by the Trustee from US Gold of notice of any US Gold Liquidation Event contemplated by Section 5.11(1)(a) or 5.11(1)(b), the Trustee will give notice thereof to the Beneficiaries. Such notice shall be provided by US Gold to the Trustee and shall include a brief description of the automatic exchange of Exchangeable Shares for shares of US Gold Common Stock provided for in Section 5.11(4) below (the “Automatic Exchange Right”).

(3) In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of US Gold Common Stock in the distribution of assets of US Gold in connection with a US Gold Liquidation Event, immediately prior to the effective date (the “US Gold Liquidation Event Effective Date”) of a US Gold Liquidation Event all of the then outstanding Exchangeable Shares (other than Exchangeable Shares held by US Gold or its Subsidiaries) shall be automatically exchanged for shares of US Gold Common Stock. To effect such automatic exchange, US Gold shall purchase each Exchangeable Share outstanding on the immediately prior to the US Gold Liquidation Event Effective Date and held by a Beneficiary, and each such Beneficiary shall sell the

I-10

Exchangeable Shares held by it at such time, for a purchase price per share equal to (a) the Current Market Price of a share of US Gold Common Stock on the immediately prior to the US Gold Liquidation Event Effective Date, which shall be satisfied in full by US Gold delivering to such holder one share of US Gold Common Stock, plus (b) the Dividend Amount, if any.

(4) On the immediately prior to the US Gold Liquidation Event Effective Date, the closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for US Gold Common Stock shall be deemed to have occurred, and each Beneficiary shall be deemed to have transferred to US Gold all of such Beneficiary’s right, title and interest in and to such Exchangeable Shares and shall cease to be a holder of such Exchangeable Shares and US Gold shall deliver or cause to be delivered to the Trustee, for delivery to such holders, the certificates for the number of shares of US Gold Common Stock deliverable upon the automatic exchange of Exchangeable Shares for US Gold Common Stock (which shares shall be duly issued as fully paid and non-assessable and shall be free and clear of any lien, claim or encumbrance, security interest or adverse claim) and a cheque for the balance, if any, of the total purchase price for such Exchangeable Shares and any interest on such deposit shall belong to US Gold. Concurrently with each such Beneficiary ceasing to be a holder of Exchangeable Shares, such Beneficiary shall be considered and deemed for all purposes to be the holder of the shares of US Gold Common Stock delivered to it, or to the Trustee on its behalf, pursuant to the automatic exchange of Exchangeable Shares for shares of US Gold Common Stock and the certificates held by such Beneficiary previously representing the Exchangeable Shares exchanged by such Beneficiary with US Gold pursuant to such automatic exchange shall thereafter be deemed to represent the shares of US Gold Common Stock delivered to such Beneficiary by US Gold pursuant to such automatic exchange. Upon the request of any Beneficiary and the surrender by such Beneficiary of Exchangeable Share certificates deemed to represent shares of US Gold Common Stock, duly endorsed in blank and accompanied by such instruments of transfer as US Gold may reasonably require, the Trustee shall deliver or cause to be delivered to such Beneficiary certificates representing the shares of US Gold Common Stock of which such Beneficiary is the holder and a cheque in payment of the remaining portion, if any, of the purchase price (less any amount required to be withheld under the Income Tax Act (Canada) or United States tax laws, or any provision of any federal, provincial, state, local or foreign tax laws). Notwithstanding the foregoing until each Beneficiary is actually entered on the register of holders of US Gold Common Stock, such Beneficiary shall be deemed to still be a holder of the transferred Exchangeable Shares for purposes of all voting rights with respect thereto under this agreement.


5.12	US Gold Common Stock

The obligations of US Gold to issue shares of US Gold Common Stock pursuant to the Automatic Exchange Right or the Exchange Right are subject to all applicable laws and regulatory or stock exchange requirements.


5.13	Withholding Rights

US Gold, Alberta ULC, Canadian Exchange Co. and the Trustee shall be entitled to deduct and withhold from any consideration otherwise payable under this agreement to any holder of Exchangeable Shares or US Gold Common Stock such amounts as US Gold, Alberta ULC, Canadian Exchange Co. or the Trustee is required to deduct and withhold with respect to such payment under the Income Tax Act (Canada) or United States tax laws or any provision of provincial, state, local or foreign tax law, in each case as amended or succeeded. The Trustee may act and rely on the advice of counsel with respect to such matters. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes as having been paid to the holder of the shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing authority. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, US Gold, Alberta ULC, Canadian Exchange Co. and the Trustee are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to US Gold, Alberta ULC, Canadian Exchange Co. or the Trustee, as the case may be, to enable it to comply with such deduction or withholding requirement and US Gold, Alberta ULC, Canadian Exchange Co. or the Trustee shall notify the holder thereof and remit to such holder any unapplied balance of the net proceeds of such sale.

I-11

ARTICLE 6

CONCERNING THE TRUSTEE


6.1	Powers and Duties of the Trustee

(1) The rights, powers, duties and authorities of the Trustee under this agreement, in its capacity as trustee of the Trust, shall include: (a) receipt and deposit of the Special Voting Share from US Gold as trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement;

(a) granting proxies and distributing materials to Beneficiaries as provided in this agreement;

(b) voting the Beneficiary Votes in accordance with the provisions of this agreement;

(c) receiving the grant of the Exchange Right and the Automatic Exchange Right from US Gold and, in the case of the Exchange Right, Alberta ULC, as trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement;

(d) exercising the Exchange Right and enforcing the benefit of the Automatic Exchange Right, in each case in accordance with the provisions of this agreement, and in connection therewith receiving from Beneficiaries any requisite documents and distributing to such Beneficiaries shares of US Gold Common Stock and cheques, if any, to which such Beneficiaries are entitled pursuant to the exercise of the Exchange Right or the Automatic Exchange Right, as the case may be;

(e) holding title to the Trust Estate;

(f) investing any moneys forming, from time to time, a part of the Trust Estate as provided in this agreement;

(g) taking action at the direction of a Beneficiary or Beneficiaries to enforce the obligations of US Gold, Alberta ULC and Canadian Exchange Co. under this agreement and under the Share Provisions; and

(h) taking such other actions and doing such other things as are specifically provided in this agreement.

(2) In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is granted) such incidental and additional rights, powers and authority not in conflict with any of the provisions of this agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust. Any exercise of duties or of discretionary rights, powers and authorities by the Trustee shall be final, conclusive and binding upon all persons. For greater certainty, the Trustee shall have only those duties as set out specifically in this agreement.

(3) The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.

(4) The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall be specifically required to do so under the terms hereof; nor shall the Trustee be required to take any notice of, or to do or to take any act, action or proceeding as a result of any default or breach of any provision hereunder, unless and until notified in writing of such default, which notice shall distinctly specify the default or breach desired to be brought to the attention of the Trustee, and in the absence of such notice the Trustee may for all purposes of this agreement conclusively assume that no default or breach has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein.


6.2	No Conflict of Interest

The Trustee represents to US Gold, Alberta ULC and Canadian Exchange Co. that at the date of execution and delivery of this agreement there exists no material conflict of interest in the role of the Trustee as a fiduciary hereunder and the role of the Trustee in any other capacity. The Trustee shall, within 90 days after it becomes aware that such material conflict of interest exists, either eliminate such material conflict of interest or resign in the manner

I-12

and with the effect specified in Article 9. If, notwithstanding the foregoing provisions of this Section 6.2, the Trustee has such a material conflict of interest, the validity and enforceability of this agreement shall not be affected in any manner whatsoever by reason only of the existence of such material conflict of interest. If the Trustee contravenes the foregoing provisions of this Section 6.2, any interested party may apply to the Superior Court of Justice (Ontario) for an order that the Trustee be replaced as trustee hereunder.


6.3	Dealings With Transfer Agents, Registrars, Etc.

(1) Each of US Gold, Alberta ULC and Canadian Exchange Co. irrevocably authorizes the Trustee, from time to time, to:

(a) consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and US Gold Common Stock; and

(b) requisition, from time to time, from any such registrar or transfer agent any information readily available from the records maintained by it, which the Trustee may reasonably require for the discharge of its duties and responsibilities under this agreement.

(2) Each of US Gold and Alberta ULC covenant that it will supply the Trustee or the Transfer Agent, as the case may be, in a timely manner with duly executed share certificates for the purpose of completing the exercise from time to time of all rights to acquire US Gold Common Stock hereunder, under the Share Provisions and under any other security or commitment given to the Beneficiaries pursuant thereto, in each case pursuant to the provisions hereof or of the Share Provisions or otherwise.


6.4	Books and Records

The Trustee shall keep available for inspection by US Gold, Alberta ULC and Canadian Exchange Co. at the Trustee’s principal office in Toronto, Ontario correct and complete books and records of account relating to the Trustee’s actions under this agreement, including, without limitation, all information relating to mailings and instructions to and from Beneficiaries and all transactions pursuant to the Voting Rights and the Exchange Right, for the term of this agreement. On or before February 15, 2008, and on or before February 15 in every year thereafter, so long as the Special Voting Share is registered in the name of the Trustee, the Trustee shall transmit to US Gold, Alberta ULC and Canadian Exchange Co. a brief report, dated as of the preceding December 31st, with respect to:

(a) the property and funds comprising the Trust Estate as of that date;

(b) the number of exercises of the Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance and delivery by US Gold or Alberta ULC of shares of US Gold Common Stock in connection with the Exchange Right, during the calendar year ended on such December 31st; and

(c) all other actions taken by the Trustee in the performance of its duties under this agreement that it had not previously reported.


6.5	Income Tax Returns and Reports

The Trustee shall, to the extent necessary and as advised by counsel, prepare and file, or cause to be prepared and filed, on behalf of the Trust appropriate United States and Canadian income tax returns and any other returns or reports as may be required by applicable law or pursuant to the rules and regulations of any securities exchange or other trading system through which the Exchangeable Shares are traded. In connection therewith, the Trustee may obtain the advice and assistance of such experts or advisors as the Trustee considers necessary or advisable. US Gold shall retain qualified experts or advisors for the purpose of providing such tax advice or assistance.


6.6	Indemnification Prior To Certain Actions By Trustee

(1) The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable funding, security and indemnity against the costs, expenses and liabilities which may be incurred by the

I-13

Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such funding, security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the Special Voting Share pursuant to Article 4, subject to Section 6.15 and with respect to the Exchange Right pursuant to Article 5, subject to Section 6.15, and with respect to the Automatic Exchange Right pursuant to Article 5.

(2) None of the provisions contained in this agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid.


6.7	Action of Beneficiaries

No Beneficiary shall have the right to institute any action, suit or proceeding or to exercise any other remedy authorized by this agreement for the purpose of enforcing any of its rights or for the execution of any trust or power hereunder unless the Beneficiary has requested the Trustee to take or institute such action, suit or proceeding and furnished the Trustee with the funding, security and indemnity referred to in Section 6.6 and the Trustee shall have failed to act within a reasonable time thereafter. In such case, but not otherwise, the Beneficiary shall be entitled to take proceedings in any court of competent jurisdiction such as the Trustee might have taken; it being understood and intended that no one or more Beneficiaries shall have any right in any manner whatsoever to affect, disturb or prejudice the rights hereby created by any such action, or to enforce any right hereunder, including, without limitation, under the Voting Rights, the Exchange Right or the Automatic Exchange Right, except subject to the conditions and in the manner herein provided, and that all powers and trusts hereunder shall be exercised and all proceedings at law shall be instituted, had and maintained by the Trustee, except only as herein provided, and in any event for the equal benefit of all Beneficiaries.


6.8	Reliance By Trustee Upon Declarations

The Trustee shall not be considered to be in contravention of any of its rights, powers, duties and authorities hereunder if, when required, it acts and relies in good faith upon lists (including any Lists), notices, statutory declarations, certificates, (including share certificate and officers certificates), opinions or reports or other papers or documents furnished pursuant to the provisions hereof or required by the Trustee to be furnished to it in the exercise of its rights, powers, duties and authorities hereunder if such lists (including any Lists), notices, statutory declarations, certificates, opinions or reports comply with the provisions of Section 6.9, if applicable, and with any other applicable provisions of this agreement.


6.9	Evidence and Authority To Trustee

(1) US Gold, Alberta ULC and/or Canadian Exchange Co. shall furnish to the Trustee evidence of compliance with the conditions provided for in this agreement relating to any action or step required or permitted to be taken by US Gold, Alberta ULC and/or Canadian Exchange Co. or the Trustee under this agreement or as a result of any obligation imposed under this agreement, including, without limitation, in respect of the Voting Rights or the Exchange Right and the taking of any other action to be taken by the Trustee at the request of or on the application of US Gold, Alberta ULC and/or Canadian Exchange Co. forthwith if and when:

(a) such evidence is required by any other section of this agreement to be furnished to the Trustee in accordance with the terms of this Section 6.9; or

(b) the Trustee, in the exercise of its rights, powers, duties and authorities under this agreement, gives US Gold, Alberta ULC and/or Canadian Exchange Co. written notice requiring it to furnish such evidence in relation to any particular action or obligation or matter specified in such notice.

(2) Such evidence shall consist of an Officer’s Certificate of US Gold, Alberta ULC and/or Canadian Exchange Co. or a statutory declaration or a certificate made by persons entitled to sign an Officer’s Certificate stating that any such condition has been complied with in accordance with the terms of this agreement.

(3) Whenever such evidence relates to a matter other than the Voting Rights or the Exchange Right or the Automatic Exchange Right and except as otherwise specifically provided herein, such evidence may consist of a

I-14

report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert or any other person whose qualifications give authority to a statement made by such person, provided that if such report or opinion is furnished by a director, officer or employee of US Gold, Alberta ULC and/or Canadian Exchange Co. it shall be in the form of an Officer’s Certificate or a statutory declaration.

(4) Each statutory declaration, Officer’s Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this agreement shall include a statement by the person giving the evidence:

(a) declaring that such person has read and understands the provisions of this agreement relating to the condition in question;

(b) describing the nature and scope of the examination or investigation upon which such person based the statutory declaration, certificate, statement or opinion; and

(c) declaring that such person has made such examination or investigation as such person believes is necessary to enable them to make the statements or give the opinions contained or expressed therein.


6.10	Experts, Advisers and Agents

The Trustee may:

(a) in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert, whether retained by the Trustee or by US Gold, Alberta ULC and/or Canadian Exchange Co. or otherwise, and may retain or employ such assistance as may be necessary to the proper determination and discharge of its powers and duties and determination of its rights or duties hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid;

(b) employ such agents and other assistance as it may reasonably require for the proper determination and/or discharge of its powers and duties hereunder; and

(c) pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all reasonable disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust.


6.11	Investment of Moneys Held By Trustee

Unless otherwise provided in this agreement, any moneys held by or on behalf of the Trustee which under the terms of this agreement may or ought to be invested or which may be on deposit with the Trustee or which may be in the hands of the Trustee may be invested or reinvested in the name or under the control of the Trustee in securities in which, under the laws of the Province of Ontario, trustees are authorized to invest trust moneys, provided that such securities are stated to mature within two years after their purchase by the Trustee and the Trustee shall so invest such money on the written direction of Canadian Exchange Co. Pending the investment of any money as herein provided such moneys may be deposited in the name of the Trustee in any chartered bank in Canada or, with the consent of Canadian Exchange Co., in the deposit department of the Trustee or any other loan or trust company authorized to accept deposits under the laws of Canada or any province thereof at the rate of interest then current on similar deposits.


6.12	Trustee Not Required to Give Security

The Trustee shall not be required to give any bond or security in respect of the execution of the trusts, rights, duties, powers and authorities of this agreement or otherwise in respect of the premises.

I-15


6.13	Trustee Not Bound to Act on Request

Except as in this agreement otherwise specifically provided, the Trustee shall not be bound to act in accordance with any direction or request of US Gold, Alberta ULC and/or Canadian Exchange Co. or of the respective directors thereof until a duly authenticated copy of the instrument or resolution containing such direction or request shall have been delivered to the Trustee, and the Trustee shall be empowered to act upon any such copy purporting to be authenticated and believed by the Trustee to be genuine.


6.14	Authority to Carry on Business

The Trustee represents to US Gold, Alberta ULC and Canadian Exchange Co. that at the date of execution and delivery by it of this agreement it is authorized to carry on the business of a trust company in each of the provinces and territories of Canada but if, notwithstanding the provisions of this Section 6.14, it ceases to be so authorized to carry on business, the validity and enforceability of this agreement and the Voting Rights, the Exchange Right, the Automatic Exchange Right and the other rights granted in or resulting from the Trustee being a party to this agreement shall not be affected in any manner whatsoever by reason only of such event but the Trustee shall, within 90 days after ceasing to be authorized to carry on the business of a trust company in any province or territory of Canada, either become so authorized or resign in the manner and with the effect specified in Article 9.


6.15	Conflicting Claims

(1) If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting claims or demands being made in connection with such interest, then the Trustee shall be entitled, in its sole discretion, to refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may elect not to exercise any Voting Rights, Exchange Right, Automatic Exchange Right or other rights subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until:

(a) the rights of all adverse claimants with respect to the Voting Rights, Exchange Right, Automatic Exchange Right or other rights subject to such conflicting claims or demands have been adjudicated by a final judgement of a court of competent jurisdiction; or

(b) all differences with respect to the Voting Rights, Exchange Right or other rights subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement.

(2) If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands.


6.16	Acceptance of Trust

The Trustee hereby accepts the Trust created and provided for, by and in this agreement and agrees to perform the same upon the terms and conditions herein set forth and to hold all rights, privileges and benefits conferred hereby and by law in trust for the various persons who shall from time to time be Beneficiaries, subject to all the terms and conditions herein set forth.

I-16

ARTICLE 7

COMPENSATION


7.1	Fees and Expenses of the Trustee

The Trustee will invoice US Gold for its fees and expenses under this agreement. US Gold, Alberta ULC and Canadian Exchange Co. jointly and severally agree to pay the Trustee reasonable compensation for all of the services rendered by it under this agreement and will reimburse the Trustee for all reasonable expenses (including, but not limited to, taxes other than taxes based on the net income or capital of the Trustee, fees paid and disbursements reimbursed to legal counsel and other experts and advisors and agents and assistants, and travel expenses) and disbursements, including the cost and expense of any suit or litigation of any character and any proceedings before any governmental agency, and including fees and expenses for attendance at any US Gold Meeting, reasonably incurred by the Trustee in connection with its duties under this agreement; provided that US Gold, Alberta ULC and Canadian Exchange Co. shall have no obligation to reimburse the Trustee for any expenses or disbursements paid, incurred or suffered by the Trustee in any suit or litigation or any such proceedings in which the Trustee is determined to have acted in bad faith or with fraud, negligence, recklessness or wilful misconduct.

ARTICLE 8

INDEMNIFICATION AND LIMITATION OF LIABILITY


8.1	Indemnification of the Trustee

(1) US Gold, Alberta ULC and Canadian Exchange Co. jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors, officers, employees and agents appointed and acting in accordance with this agreement (collectively, the “Indemnified Parties”) against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee’s legal counsel) which, without fraud, negligence, recklessness, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee’s acceptance or administration of the Trust, its compliance with its duties set forth in this agreement, or any written or oral instruction delivered to the Trustee by US Gold, Alberta ULC or Canadian Exchange Co. pursuant hereto. Notwithstanding the foregoing, in no case will the Trustee be indemnified for consequential damages.

(2) In no case shall US Gold, Alberta ULC or Canadian Exchange Co. be liable under this indemnity for any claim against any of the Indemnified Parties unless US Gold, Alberta ULC and Canadian Exchange Co. shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to (ii) below, US Gold, Alberta ULC and Canadian Exchange Co. shall be entitled to participate at their own expense in the defence and, if US Gold, Alberta ULC and Canadian Exchange Co. so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by US Gold, Alberta ULC or Canadian Exchange Co.; or (ii) the named parties to any such suit include both the Trustee and US Gold, Alberta ULC or Canadian Exchange Co. and the Trustee shall have been advised by counsel acceptable to US Gold, Alberta ULC or Canadian Exchange Co. that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to US Gold, Alberta ULC or Canadian Exchange Co. and that, in the judgement of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case US Gold, Alberta ULC and Canadian Exchange Co. shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). The indemnities contained in this Article 8 shall survive the termination of the Trust and the resignation or removal of the Trustee.

I-17


8.2	Limitation of Liability

The Trustee shall not be held liable for any loss which may occur by reason of depreciation of the value of any part of the Trust Estate or any loss incurred on any investment of funds pursuant to this agreement, except to the extent that such loss is attributable to the fraud, negligence, recklessness, wilful misconduct or bad faith on the part of the Trustee.

ARTICLE 9

CHANGE OF TRUSTEE


9.1	Resignation

The Trustee, or any trustee hereafter appointed, may at any time resign by giving written notice of such resignation to US Gold, Alberta ULC and Canadian Exchange Co. specifying the date on which it desires to resign, provided that such notice shall not be given less than sixty (60) days before such desired resignation date unless US Gold, Alberta ULC and Canadian Exchange Co. otherwise agree and provided further that such resignation shall not take effect until the date of the appointment of a successor trustee and the acceptance of such appointment by the successor trustee. Upon receiving such notice of resignation, Canadian Exchange Co. shall promptly appoint a successor trustee, which shall be a corporation organized and existing under the laws of Canada and authorized to carry on the business of a trust company in all provinces and territories of Canada, by written instrument in duplicate, one copy of which shall be delivered to the resigning trustee and one copy to the successor trustee. Failing the appointment and acceptance of a successor trustee, a successor trustee may be appointed by order of a court of competent jurisdiction upon application of one or more of the parties to this agreement. If the retiring trustee is the party initiating an application for the appointment of a successor trustee by order of a court of competent jurisdiction, US Gold, Alberta ULC and Canadian Exchange Co. shall be jointly and severally liable to reimburse the retiring trustee for its legal costs and expenses in connection with same.


9.2	Removal

The Trustee, or any trustee hereafter appointed, may (provided a successor trustee is appointed) be removed at any time on not less than sixty (60) days’ prior notice by written instrument executed by US Gold, Alberta ULC and Canadian Exchange Co., in duplicate, one copy of which shall be delivered to the trustee so removed and one copy to the successor trustee, provided that such removal shall not take effect until the date of acceptance of appointment by the successor trustee.


9.3	Successor Trustee

Any successor trustee appointed as provided under this agreement shall execute, acknowledge and deliver to US Gold, Alberta ULC and Canadian Exchange Co. and to its predecessor trustee an instrument accepting such appointment. Thereupon the resignation or removal of the predecessor trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, duties and obligations of its predecessor under this agreement, with the like effect as if originally named as trustee in this agreement. However, on the written request of US Gold, Alberta ULC and Canadian Exchange Co. or of the successor trustee, the trustee ceasing to act shall, upon payment of any amounts then due to it pursuant to the provisions of this agreement, execute and deliver an instrument transferring to such successor trustee all the rights and powers of the trustee so ceasing to act. Upon the request of any such successor trustee, US Gold, Alberta ULC, Canadian Exchange Co. and such predecessor trustee shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor trustee all such rights and powers.


9.4	Notice of Successor Trustee

Upon acceptance of appointment by a successor trustee as provided herein, US Gold, Alberta ULC and Canadian Exchange Co. shall cause to be mailed notice of the succession of such trustee hereunder to each Beneficiary specified in a List. If US Gold, Alberta ULC or Canadian Exchange Co. shall fail to cause such notice to

I-18

be mailed within 10 days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be mailed at the expense of US Gold, Alberta ULC and Canadian Exchange Co.

ARTICLE 10

AMENDMENTS AND SUPPLEMENTAL TRUST AGREEMENTS


10.1	Amendments, Modifications, etc.

Subject to Section 10.2 thereof, this agreement may not be amended or modified except by an agreement in writing executed by US Gold, Alberta ULC, Canadian Exchange Co. and the Trustee and approved by the Beneficiaries in accordance with Section 9.2 of the Share Provisions.


10.2	Ministerial Amendments

Notwithstanding the provisions of Section 10.1, the parties to this agreement may in writing, at any time and from time to time, without the approval of the Beneficiaries, amend or modify this agreement for the purposes of:

(a) adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the board of directors of each of Canadian Exchange Co., Alberta ULC and US Gold shall be of the good faith opinion (confirmed in writing by each to the Trustee) that such additions will not be prejudicial to the rights or interests of the Beneficiaries;

(b) making such amendments or modifications not inconsistent with this agreement (as confirmed in writing by Canadian Exchange Co. which may be relied upon by the Trustee), as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of US Gold, Alberta ULC and Canadian Exchange Co. (confirmed in writing by each to the Trustee) and in the opinion of the Trustee, in reliance upon a certificate of Canadian Exchange Co., having in mind the best interests of the Beneficiaries, it may be expedient to make, provided that such boards of directors (confirmed in writing by each to the Trustee) and the Trustee, acting in reliance upon a certificate of Canadian Exchange Co., shall be of the opinion that such amendments and modifications will not be prejudicial to the rights or interests of the Beneficiaries as a whole; or

(c) making such changes or corrections which, on the advice of counsel to US Gold, Alberta ULC, Canadian Exchange Co. and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error.


10.3	Meeting To Consider Amendments

Canadian Exchange Co., at the request of US Gold, shall call a meeting or meetings of the Beneficiaries for the purpose of considering any proposed amendment or modification requiring approval pursuant hereto. Any such meeting or meetings shall be called and held in accordance with the by-laws of Canadian Exchange Co., the Share Provisions and all applicable laws.


10.4	Changes in Capital of US Gold and Canadian Exchange Co.

At all times after the occurrence of any event contemplated pursuant to Section 2.7 or 2.8 of the Support Agreement or otherwise, as a result of which either US Gold Common Stock or the Exchangeable Shares or both are in any way changed, this agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which US Gold Common Stock or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental trust agreement giving effect to and evidencing such necessary amendments and modifications.


10.5	Execution of Supplemental Trust Agreements

Notwithstanding Section 10.1, from time to time Canadian Exchange Co. (when authorized by a resolution of its Board of Directors), US Gold (when authorized by a resolution of its board of directors) and the Trustee may,

I-19

subject to the provisions of these presents, and they shall, when so directed by these presents, execute and deliver by their proper officers, trust agreements or other instruments supplemental hereto, which thereafter shall form part hereof. In executing or accepting the supplemental trusts created by any supplemental indenture permitted by this Article 10, the Trustee will be entitled to receive and (subject to Article 6) will be fully protected in relying upon an Officer’s Certificate and opinions of counsel stating that the execution of such supplemental indenture is authorized or permitted in this agreement.

ARTICLE 11

TERMINATION


11.1	Term

The Trust created by this agreement shall continue until the earliest to occur of the following events:

(a) no outstanding Exchangeable Shares are held by a Beneficiary;

(b) each of US Gold, Alberta ULC and Canadian Exchange Co. elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with Section 9.2 of the Share Provisions; and

(c) 21 years after the death of the last survivor of the descendants of His Majesty King George VI of Canada and the United Kingdom of Great Britain and Northern Ireland living on the date of the creation of the Trust.


11.2	Survival of Agreement

This agreement shall survive any termination of the Trust and shall continue until there are no Exchangeable Shares outstanding held by a Beneficiary; provided, however, that the provisions of Article 7 and Article 8 shall survive any termination of this agreement.

ARTICLE 12

GENERAL


12.1	Severability

If any term or other provision of this agreement is invalid, illegal or incapable of being enforced by reason of any rule or law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.


12.2	Enurement

This agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and permitted assigns and, subject to the terms hereof, to the benefit of the Beneficiaries.


12.3	Notices to Parties

Any notice and other communications required or permitted to be given pursuant to this agreement shall be in writing and shall be deemed sufficiently given if delivered in person or if sent by facsimile transmission (provided such transmission is recorded as being transmitted successfully) at or to the address or facsimile telephone number set forth beneath the name of such party below:

I-20

If to Canadian Exchange Co. or Alberta ULC:

2900 Manulife Place
10180-101 Street
Edmonton, Alberta
T5J 3V5

Facsimile No.: (780) 423-7276
Attention: Corporate Secretary

If to US Gold:

2201 Kipling Street
Suite 100
Lakewood, Colorado
80215

Facsimile No.: (303) 238-1438
Attention: William F. Pass

In the case of Canadian Exchange Co., Alberta ULC and US Gold, with copy to:

Fraser Milner Casgrain LLP
1 First Canadian Place
100 King Street West, Suite 3900
Toronto, Ontario
M5X 1B2

Attention: Michael Melanson
Fax: (416) 863-4592

If to the Trustee:

[<>]

Attention: [<>]
Fax: [<>]

or at such other address as the party to which such notice or other communication is to be given has last notified the party giving the same in the manner provided in this section. Any notice given shall be deemed to have been received on the date of such delivery or sending. Provided that if any notice or other communication to which this section applies is given or delivered by facsimile transmission and is recorded as having been transmitted successfully after 5:00 pm (local time of recipient) on a business day or at any time on a day that is not a business day, such notice or other communication shall be deemed to have been given or delivered and received on the following business day.


12.4	Notice to Beneficiaries

Any notice, request or other communication to be given to a Beneficiary shall be in writing and shall be valid and effective if given by mail (postage pre-paid or by delivery, to the address of the holder recorded in the securities register of Canadian Exchange Co. or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the fifth day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares, or any defect in such notice, shall not invalidate or otherwise alter or affect any action or proceeding to be taken pursuant thereto.

I-21


12.5	Risk of Payments By Post

Whenever payments are to be made or certificates or documents are to be sent to any Beneficiary by the Trustee or by Canadian Exchange Co., Alberta ULC, US Gold or by such Beneficiary to the Trustee or to US Gold or Alberta ULC or Canadian Exchange Co., the making of such payment or sending of such certificate or document sent through the post shall be at the risk of Canadian Exchange Co., in the case of payments made or documents by the Trustee or Canadian Exchange Co. or Alberta ULC or US Gold and the Beneficiary, in the case of payments made or documents by the Beneficiary.


12.6	Counterparts

This agreement may be executed in counterparts (by facsimile or otherwise), each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.


12.7	Jurisdiction

This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein.


12.8	Attornment

Each of the Trustee, US Gold, Alberta ULC and Canadian Exchange Co. agrees that any action or proceeding arising out of or relating to this agreement or any of the transactions contemplated by this agreement may be instituted in the courts of Ontario, waives any objection which it may have now or hereafter to the venue of any such action or proceeding, irrevocably submits to the non-exclusive jurisdiction of the said courts in any such action or proceeding, agrees to be bound by any judgement of the said courts and not to seek, and hereby waives, any review of the merits of any such judgement by the courts of any other jurisdiction, and each of US Gold and Alberta ULC hereby appoint Canadian Exchange Co. at its registered office in the Province of Alberta as attorney for service of process.

I-22

APPENDIX J

FORM OF SUPPORT AGREEMENT

AGREEMENT made as of , 2007, between U.S. Gold Corporation, a corporation existing under the laws of Colorado (“US Gold”), US Gold Alberta ULC, a corporation existing under the laws of Alberta (“Alberta ULC”) and US Gold Canadian Acquisition Corporation, a corporation existing under the laws of Alberta (“Canadian Exchange Co.”).

WHEREAS US Gold, together with Canadian Exchange Co. has offered, by way of a public take-over bid, to acquire all of the outstanding common shares of each of White Knight Resources Ltd., Nevada Pacific Gold Ltd. and Tone Resources Ltd. in consideration for exchangeable shares (“Exchangeable Shares”) of Canadian Exchange Co.;

AND WHEREAS holders of Exchangeable Shares will be entitled to require Canadian Exchange Co. to redeem such Exchangeable Shares and upon such redemption each Exchangeable Share shall be exchanged by Canadian Exchange Co. for one share of common stock of US Gold (“US Gold Common Stock”);

AND WHEREAS US Gold intends to grant to and in favour of Non-Affiliated Holders (as hereinafter defined) from time to time of Exchangeable Shares the right to require US Gold or, at the option of US Gold, Alberta ULC, to purchase from each Non-Affiliated Holder all or any part of the Exchangeable Shares held by the Non-Affiliated Holder;

AND WHEREAS the parties desire to make appropriate provision and to establish a procedure whereby US Gold will take certain actions and make certain payments and deliveries necessary to ensure that Canadian Exchange Co. and Alberta ULC will be able to make certain payments and to deliver or cause to be delivered shares of US Gold Common Stock in satisfaction of the obligations of Canadian Exchange Co. and/or Alberta ULC under the Share Provisions (as hereinafter defined) and this agreement;

ARTICLE 1

DEFINITIONS AND INTERPRETATION


1.1	Defined Terms

In this agreement, each initially capitalized term and the terms used and not otherwise defined herein shall have the meaning ascribed thereto in the rights, privileges, restrictions and conditions (collectively, the “Share Provisions”) attaching to the Exchangeable Shares as set out in the articles of Canadian Exchange Co. and the following terms shall have the following meanings:

“Effective Date” means the earliest date on which Canadian Exchange Co. first takes up shares of White Knight Resources Ltd., Nevada Pacific Gold Ltd. or Tone Resources Ltd. under the offers to purchase pursuant to the take-over bids referred to in the Recitals hereto.

“including” means “including without limitation” and “includes” means “includes without limitation”.

“Non-Affiliated Holders” means the registered holders of Exchangeable Shares other than US Gold and its Subsidiaries.

“Special Voting Share” means the one share of special voting preference stock no par value, issued by US Gold to and deposited with the Trustee, which entitles the holder of record to a number of votes at meetings of holders of US Gold Common Stock equal to the number of Exchangeable Shares outstanding from time to time that are held by Non-Affiliated Holders.

J-1

“Trustee” means and, subject to the provisions of the Voting and Exchange Trust Agreement, includes any successor trustee or permitted assigns.


1.2	Interpretation Not Affected By Headings

The division of this agreement into articles, sections and other portions and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this agreement. Unless otherwise specified, references to an “Article” or “Section” refer to the specified Article or Section of this agreement.


1.3	Number, Gender, etc.


1.4	Date for any Action

If any date on which any action is required to be taken under this agreement is not a Business Day, such action shall be required to be taken on the next succeeding Business Day.


1.5	Payments

All payments to be made hereunder will be made without interest and less any tax required by Canadian law to be deducted and withheld.

ARTICLE 2

COVENANTS OF US GOLD AND CANADIAN EXCHANGE CO.


2.1	Covenants Regarding Exchangeable Shares

So long as any Exchangeable Shares owned by Non-Affiliated Holders are outstanding, US Gold will:

(a) not declare or pay any dividend on the US Gold Common Stock unless Canadian Exchange Co. shall (i) simultaneously declare or pay, as the case may be, an equivalent dividend on the Exchangeable Shares (an “Equivalent Dividend”), and (ii) have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of any such Equivalent Dividend;

(b) advise Canadian Exchange Co. sufficiently in advance of the declaration by US Gold of any dividend on the US Gold Common Stock and take all such other actions as are reasonably necessary, in co-operation with Canadian Exchange Co., to ensure that the respective declaration date, record date and payment date for an Equivalent Dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend on the US Gold Common Stock and that such dividend on the Exchangeable Shares shall comply with any requirements of the stock exchange on which the Exchangeable Shares are listed;

(c) ensure that the record date for determining shareholders entitled to receive any dividend declared on the US Gold Common Stock is not less than 10 Business Days after the declaration date for such dividend or such shorter period as may be permitted under applicable law;

(d) take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Canadian Exchange Co., in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, in respect of each issued and outstanding Exchangeable Share upon the liquidation, dissolution or winding-up of Canadian Exchange

J-2

Co. or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs including, without limitation, all such actions and all such things as are necessary or desirable to enable and permit Canadian Exchange Co. to cause to be delivered shares of US Gold Common Stock to the holders of Exchangeable Shares in accordance with the provisions of Article 5 of the Share Provisions;

(e) take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Canadian Exchange Co., in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Retraction Price and the Redemption Price, including, without limitation, all such actions and all such things as are necessary or desirable to enable and permit Canadian Exchange Co. to cause to be delivered shares of US Gold Common Stock to the holders of Exchangeable Shares, upon the retraction or redemption of Exchangeable Shares in accordance with the provisions of Article 6 or Article 7 of the Share Provisions, as the case may be;

(f) take all such actions and do all such things as are reasonably necessary or desirable to enable and permit Alberta ULC or US Gold, in accordance with applicable law, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, including all such actions and all such things as are necessary or desirable to enable and permit Alberta ULC or US Gold to cause to be delivered shares of US Gold Common Stock to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right or the Redemption Call Right, as the case may be; and

(g) not exercise its vote as a shareholder to initiate the voluntary liquidation, dissolution or winding up of Canadian Exchange Co. or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs, nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding up of Canadian Exchange Co. or any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs.


2.2	Segregation of Funds

US Gold will cause Canadian Exchange Co. to deposit a sufficient amount of funds in a separate account of Canadian Exchange Co. and segregate a sufficient amount of such other assets and property as is necessary to enable Canadian Exchange Co. to pay or otherwise satisfy the applicable dividends, Liquidation Amount, Retraction Price or Redemption Price, once such amounts become payable under the terms of this agreement or the Share Provisions, in each case for the benefit of Non-Affiliated Holders from time to time of the Exchangeable Shares, and to use such funds and other assets so segregated exclusively for the payment of dividends and the payment or other satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price, as applicable net of any corresponding withholding tax obligations and for the remittance of such withholding tax obligations.


2.3	Reservation of US Gold Common Stock

US Gold hereby represents, warrants and covenants in favour of Canadian Exchange Co. and Alberta ULC that US Gold has reserved for issuance and will, at all times while any Exchangeable Shares are outstanding, keep available, free from pre-emptive and other rights, out of its authorized and unissued capital stock such number of shares of US Gold Common Stock (or other shares or securities into which US Gold Common Stock may be reclassified or changed as contemplated by Section 2.7): (a) as is equal to the sum of (i) the number of Exchangeable Shares issued and outstanding from time to time and (ii) the number of Exchangeable Shares issuable upon the exercise of all rights to acquire Exchangeable Shares outstanding from time to time; and (b) as are now and may hereafter be required to enable and permit each of US Gold, Alberta ULC and Canadian Exchange Co. to meet its obligations under the Voting and Exchange Trust Agreement, under the Share Provisions and under any other security or commitment pursuant to which US Gold, Alberta ULC and Canadian Exchange Co. may now or hereafter be required to issue and/or deliver shares of US Gold Common Stock to the Non-Affiliated Holders.

J-3


2.4	Notification of Certain Events

In order to assist US Gold to comply with its obligations hereunder and to permit Alberta ULC to exercise the Liquidation Call Right, Retraction Call Right and Redemption Call Right, Canadian Exchange Co. will notify US Gold of each of the following events at the time set forth below:

(a) in the event of any determination by the board of directors of Canadian Exchange Co. to institute voluntary liquidation, dissolution or winding-up proceedings with respect to Canadian Exchange Co. or to effect any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution, winding-up or other distribution;

(b) immediately, upon the earlier of (i) receipt by Canadian Exchange Co. of notice of, and (ii) Canadian Exchange Co. otherwise becoming aware of, any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution or winding-up of Canadian Exchange Co. or to effect any other distribution of the assets of Canadian Exchange Co. among its shareholders for the purpose of winding up its affairs;

(d) at least 30 days prior to any Redemption Date determined by the board of directors of Canadian Exchange Co. in accordance with the Share Provisions; and

(e) as soon as practicable upon the issuance by Canadian Exchange Co. of any Exchangeable Shares or rights to acquire Exchangeable Shares.


2.5	Delivery of US Gold Common Stock

Upon notice of any event that requires Canadian Exchange Co. or Alberta ULC to cause to be delivered US Gold Common Stock to any holder of Exchangeable Shares, US Gold shall, in any manner deemed appropriate by it, provide such shares or cause such shares to be provided to Canadian Exchange Co. or Alberta ULC, as appropriate, which shall forthwith deliver or cause to be delivered the requisite number of US Gold Common Stock to or for the benefit of the former holder of the surrendered Exchangeable Shares. All such shares of US Gold Common Stock shall be duly authorized and validly issued as fully paid, non-assessable, free of pre-emptive rights and shall be free and clear of any lien, claim, encumbrance, security interest or adverse claim. In consideration for the issuance and delivery of each such share of US Gold Common Stock, Canadian Exchange Co. or Alberta ULC, as the case may be, shall subscribe a cash amount or pay a purchase price equal to the fair market value of the shares of US Gold Common Stock.


2.6	Qualification of US Gold Common Stock

US Gold covenants that it will make such filings and seek such regulatory consents and approvals as are necessary so that the shares of US Gold Common Stock to be issued to holders of Exchangeable Shares pursuant to the terms of the Share Provisions, the Voting and Exchange Trust Agreement and this agreement will be issued in compliance with the applicable securities laws in Canada and the United States and may be freely traded thereafter (other than by reason of a holder being a “control person” of US Gold for purposes of Canadian securities laws or by holders who are Affiliates of US Gold within the meaning of U.S. securities laws). US Gold will in good faith expeditiously take all such actions and do all such things as are reasonably necessary or desirable to cause all shares of US Gold Common Stock to be delivered hereunder to be listed, quoted or posted for trading on all stock exchanges and quotation systems on which outstanding shares of US Gold Common Stock have been listed by US Gold and remain listed and are quoted or posted for trading at such time.

J-4


2.7	Economic Equivalence

(a) US Gold will not without prior approval of Canadian Exchange Co. and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 of the Share Provisions:

(i) issue or distribute shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock) to the holders of all or substantially all of the then outstanding US Gold Common Stock by way of stock dividend or other distribution, other than an issue of shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock) to holders of shares of US Gold Common Stock who exercise an option to receive dividends in US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire US Gold Common Stock) in lieu of receiving cash dividends; or

(ii) issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding shares of US Gold Common Stock entitling them to subscribe for or to purchase shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock); or

(iii) issue or distribute to the holders of all or substantially all of the then outstanding shares of US Gold Common Stock (A) shares or securities (including evidences of indebtedness) of US Gold of any class other than US Gold Common Stock (or securities convertible into or exchangeable for or carrying rights to acquire shares of US Gold Common Stock), or (B) rights, options or warrants other than those referred to in Section 2.7(a)(ii) above, or (C) assets of US Gold;

unless (x) Canadian Exchange Co. is permitted under applicable law to issue or distribute the economic equivalent on a per share basis of such rights, options, securities, shares, evidences of indebtedness or other assets to holders of the Exchangeable Shares and (y) Canadian Exchange Co. shall issue or distribute such rights, options, securities, shares, evidences of indebtedness or other assets simultaneously to holders of the Exchangeable Shares.

(b) US Gold will not without the prior approval of Canadian Exchange Co. and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 9.2 of the Share Provisions:

(i) subdivide, redivide or change the then outstanding shares of US Gold Common Stock into a greater number of shares of US Gold Common Stock; or

(ii) reduce, combine, consolidate or change the then outstanding shares of US Gold Common Stock into a lesser number of shares of US Gold Common Stock; or

(iii) reclassify or otherwise change the shares of US Gold Common Stock or effect an amalgamation, merger, reorganization or other transaction affecting the shares of US Gold Common Stock;

unless (x) Canadian Exchange Co. is permitted under applicable law simultaneously to make the same or an economically equivalent change to, or in the rights of holders of, the Exchangeable Shares, and (y) the same or an economically equivalent change is made to, or in the rights of the holders of, the Exchangeable Shares.

(c) US Gold will ensure that the record date for any event referred to in Section 2.7(a) or Section 2.7(b), or (if no record date is applicable for such event) the effective date for any such event, is not less than ten Business Days after the date on which such event is declared or announced by US Gold (with simultaneous notification thereof by US Gold to Canadian Exchange Co.).

(d) The board of directors of Canadian Exchange Co. shall determine, acting in good faith and in its sole discretion (with the assistance of such reputable and qualified independent financial advisors and/or other experts as the board may require), economic equivalence for the purposes of any event referred to in Section 2.7(a) or Section 2.7(b) and each such determination shall be conclusive and binding on US Gold. In making each such

J-5

determination, the following factors shall, without excluding other factors determined by the board of directors of Canadian Exchange Co. to be relevant, be considered by the board of directors of Canadian Exchange Co.:

(i) in the case of any stock dividend or other distribution payable in shares of US Gold Common Stock, the number of such shares issued in proportion to the number of shares of US Gold Common Stock previously outstanding;

(ii) in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase shares of US Gold Common Stock (or securities exchangeable for or convertible into or carrying rights to acquire shares of US Gold Common Stock), the relationship between the exercise price of each such right, option or warrant and the Current Market Price of a share of US Gold Common Stock;

(iii) in the case of the issuance or distribution of any other form of property (including, without limitation, any shares or securities of US Gold of any class other than US Gold Common Stock, any rights, options or warrants other than those referred to in Section 2.7(d)(ii), any evidences of indebtedness of US Gold or any assets of US Gold), the relationship between the fair market value (as determined by the board of directors of Canadian Exchange Co. in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding share of US Gold Common Stock and the Current Market Price of a share of US Gold Common Stock;

(iv) in the case of any subdivision, redivision or change of the then outstanding shares of US Gold Common Stock into a greater number of shares of US Gold Common Stock or the reduction, combination, consolidation or change of the then outstanding shares of US Gold Common Stock into a lesser number of shares of US Gold Common Stock or any amalgamation, merger, reorganization or other transaction affecting the US Gold Common Stock, the effect thereof upon the then outstanding shares of US Gold Common Stock; and

(v) in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of shares of US Gold Common Stock as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares).


2.8	Tender Offers

In the event that a cash offer, share exchange offer, issuer bid, take-over bid or similar transaction with respect to US Gold Common Stock (an “Offer”) is proposed by US Gold or is proposed to US Gold or its shareholders and is recommended by the board of directors of US Gold, or is otherwise effected or to be effected with the consent or approval of the board of directors of US Gold, US Gold will use reasonable efforts (to the extent, in the case of an Offer by a third party, within its control) expeditiously and in good faith to take all such actions and do all such things as are necessary or desirable to enable and permit holders of Exchangeable Shares to participate in such Offer to the same extent and on an economically equivalent basis as the holders of shares of US Gold Common Stock, without discrimination. Without limiting the generality of the foregoing, US Gold will use reasonable efforts expeditiously and in good faith to ensure that holders of Exchangeable Shares may participate in each such Offer without being required to retract Exchangeable Shares as against Canadian Exchange Co. (or, if so required, to ensure that any such retraction, shall be effective only upon, and shall be conditional upon, the closing of such Offer and only to the extent necessary to tender or deposit to the Offer). Nothing herein shall affect the right of Canadian Exchange Co. to redeem, or US Gold or Alberta ULC to purchase pursuant to the Redemption Call Right, Exchangeable Shares.


2.9	US Gold and Affiliates Not To Vote Exchangeable Shares

US Gold covenants and agrees that it will appoint and cause to be appointed proxyholders with respect to all Exchangeable Shares held by it and its Subsidiaries for the sole purpose of attending each meeting of holders of Exchangeable Shares in order to be counted as part of the quorum for each such meeting. US Gold further covenants and agrees that it will not, and will cause its Subsidiaries not to, exercise any voting rights that may be exercisable by

J-6

holders of Exchangeable Shares from time to time pursuant to the Share Provisions or pursuant to the provisions of the (or any successor or other corporate statute by which Canadian Exchange Co. may in the future be governed) with respect to any Exchangeable Shares held by it or by its Subsidiaries in respect of any matter considered at any meeting of holders of Exchangeable Shares.


2.10	Stock Exchange Listing

US Gold covenants and agrees in favour of Canadian Exchange Co. that US Gold will use its best efforts to maintain a listing of the Exchangeable Shares on the Toronto Stock Exchange or another stock exchange in Canada prescribed under the Income Tax Act (Canada).


2.11	Due Performance

On and after the Effective Date, US Gold shall, and shall cause Alberta ULC to, duly and timely perform all of its obligations provided for herein and that may arise under the Share Provisions, and US Gold shall be responsible for the due performance of all of such obligations hereunder and under the Share Provisions.


2.12	Issue of Additional Shares

During the term of this agreement, US Gold will not issue any Special Voting Shares other than the one Special Voting Share to be issued to the Trustee.


2.13	Ownership of Outstanding Shares

Without the prior approval of Canadian Exchange Co. and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11.2 of the Share Provisions, US Gold covenants and agrees in favour of Canadian Exchange Co. that, as long as any outstanding Exchangeable Shares are owned by Non-Affiliated Holders, US Gold will be and remain the direct or indirect beneficial owner of all issued and outstanding common shares in the capital of Canadian Exchange Co. and all of the issued and outstanding common shares in the capital of all of the issued and outstanding voting shares in the capital of Alberta ULC.

ARTICLE 3

US GOLD SUCCESSORS


3.1	Certain Requirements in Respect of Combination, etc.

US Gold shall not enter into any transaction (whether by way of reconstruction, reorganization, consolidation, arrangement, merger, transfer, sale, lease or otherwise) whereby all or substantially all of its undertaking, property and assets would become the property of any other person or, in the case of a merger, of the continuing corporation resulting therefrom unless, but may do so if:

(a) such other person or continuing corporation (the “US Gold Successor”) by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the US Gold Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such US Gold Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of US Gold under this agreement; and

(b) such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the other parties hereunder or the holders of the Exchangeable Shares.

J-7


3.2	Vesting of Powers in Successor

Whenever the conditions of Section 3.1 have been duly observed and performed, the parties, if required by Section 3.1, shall execute and deliver the supplemental agreement provided for in Section 3.1(a) and thereupon the US Gold Successor and such other person that may then be the issuer of the US Gold Common Stock shall possess and from time to time may exercise each and every right and power of US Gold under this agreement in the name of US Gold or otherwise and any act or proceeding by any provision of this agreement required to be done or performed by the board of directors of US Gold or any officers of US Gold may be done and performed with like force and effect by the directors or officers of such US Gold Successor.


3.3	Wholly-Owned Subsidiaries

Nothing herein shall be construed as preventing the amalgamation or merger of any wholly-owned Subsidiary of US Gold with or into US Gold or the winding-up, liquidation or dissolution of any wholly-owned Subsidiary of US Gold, provided that all of the assets of such Subsidiary are transferred to US Gold or another wholly-owned Subsidiary of US Gold, and any such transactions are expressly permitted by this Article 3.

ARTICLE 4

GENERAL


4.1	Term

This agreement shall come into force and be effective as of the date hereof and shall terminate and be of no further force and effect at such time as no Exchangeable Shares (or securities or rights convertible into or exchangeable for or carrying rights to acquire Exchangeable Shares) are held by Non-Affiliated Holders.


4.2	Changes in Capital of US Gold and Canadian Exchange Co.

Notwithstanding the provisions of Section 4.4 hereof, at all times after the occurrence of any event contemplated pursuant to Section 2.7 and Section 2.8 hereof or otherwise, as a result of which either the US Gold Common Stock or the Exchangeable Shares or both are in any way changed, this agreement shall forthwith be amended and modified as necessary in order that it shall apply with full force and effect, mutatis mutandis, to all new securities into which the US Gold Common Stock or the Exchangeable Shares or both are so changed and the parties hereto shall execute and deliver a supplemental agreement in writing giving effect to and evidencing such necessary amendments and modifications.


4.3	Severability

Notwithstanding the provisions of Section 4.4 hereof, if any term or other provision of this agreement is invalid, illegal or incapable of being enforced by any rule or law, or public policy, all other conditions and provisions of this agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.


4.4	Amendments, Modifications

(a) Subject to Section 4.2, Section 4.3, and Section 4.5 of this agreement may not be amended or modified except by an agreement in writing executed by Canadian Exchange Co., Alberta ULC and US Gold and approved by the holders of the Exchangeable Shares in accordance with Section 9.2 of the Share Provisions.

J-8

(b) No amendment or modification or waiver of any of the provisions of this agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto.


4.5	Ministerial Amendments

Notwithstanding the provisions of Section 4.4 hereof, the parties to this agreement may in writing at any time and from time to time, without the approval of the holders of the Exchangeable Shares, amend or modify this agreement for the purposes of:

(a) adding to the covenants of any or all of the parties hereto for the protection of the Non-Affiliated Holders;

(b) evidencing the succession of US Gold Successors and the covenants of and obligations assumed by each such US Gold Successor in accordance with the provisions of Article 3;

(c) making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the opinion of the board of directors of each of Canadian Exchange Co., Alberta ULC and US Gold, having in mind the best interests of the Non-Affiliated Holders as a whole, it may be expedient to make, provided that each such board of directors shall be of the opinion that such amendments or modifications will not be prejudicial in any material respect to the rights or interests of the Non-Affiliated Holders as a whole of the Exchangeable Shares; or

(d) making such changes or corrections which, on the advice of counsel to Canadian Exchange Co., Alberta ULC and US Gold, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the boards of directors of each of Canadian Exchange Co., Alberta ULC and US Gold shall be of the opinion that such changes or corrections will not be prejudicial in any material respect to the rights or interests of the Non-Affiliated Holders.


4.6	Meeting to Consider Amendments

Canadian Exchange Co., at the request of US Gold, shall call a meeting or meetings of the holders of Exchangeable Shares for the purpose of considering any proposed amendment or modification requiring approval pursuant to Section 4.4 hereof. Any such meeting or meetings shall be called and held in accordance with the bylaws of Canadian Exchange Co., the Share Provisions and all applicable laws.


4.7	Enurement

This agreement shall be binding upon and enure to the benefit of the parties hereto and their respective successors and assigns.


4.8	Notices to Parties

Any notice and other communications required or permitted to be given pursuant to this agreement shall be sufficiently given if delivered in person or if sent by facsimile transmission (provided such transmission is recorded as being transmitted successfully) to the parties at the following addresses:

(a) in the case of US Gold, to the following address:

2201 Kipling Street
Suite 100
Lakewood, Colorado
80215
Facsimile No.: (303) 238-1438
Attention: William F. Pass

with a copy to:

Fraser Milner Casgrain LLP
1 First Canadian Place
100 King Street West, Suite 3900
Toronto, Ontario
M5X 1B2

J-9

Attention: Michael Melanson
Fax: (416) 863-4592

(b) in the case of Alberta ULC, to the following address:

2900 Manulife Place
10180-101 Street
Edmonton, Alberta
T5J 3V5
Facsimile No.: (780) 423-7276
Attention: Corporate Secretary

with a copy to:

Fraser Milner Casgrain LLP
1 First Canadian Place
100 King Street West, Suite 3900
Toronto, Ontario
M5X 1B2
Attention: Michael Melanson
Fax: (416) 863-4592

2900 Manulife Place
10180-101 Street
Edmonton, Alberta
T5J 3V5
Facsimile No.: (780) 423-7276
Attention: Corporate Secretary

with a copy to:

U.S. Gold Corporation
2201 Kipling Street
Suite 100
Lakewood, Colorado
80215
Facsimile No.: (303) 238-1438
Attention: William F. Pass

or at such other address as the party to which such notice or other communication is to be given has last notified the party given the same in the manner provided in this Section, and if not given the same shall be deemed to have been received on the date of such delivery or sending.


4.9	Counterparts

This agreement may be executed in counterparts (by facsimile or otherwise), each of which shall be deemed an original, and all of which taken together shall constitute one and the same instrument.


4.10	Jurisdiction

This agreement shall be construed and enforced in accordance with the laws of the Province of Ontario and the laws of Canada applicable therein. Each party hereto irrevocably submits to the non-exclusive jurisdiction of the courts of the Province of Ontario with respect to any matter arising hereunder or related hereto.

J-10

THE DEPOSITARY FOR THE OFFER IS:

KINGSDALE SHAREHOLDER SERVICES INC.


For Delivery by Mail:		For Delivery by Courier or by Hand:
The Exchange Tower 130 King Street West Suite 2950, P.O. Box 361 Toronto, Ontario M5X 1E2		The Exchange Tower 130 King Street West Suite 2950 Toronto, Ontario M5X 1C7

THE DEALER MANAGER FOR THE OFFER IS:


GEORGESON SECURITIES CORPORATION (United States) 17 State Street 10th Floor New York, NY 10004 Telephone: (212) 440-9800 Fax: (212) 440-9009		GMP SECURITIES L.P. (Canada and Countries Outside the United States) 145 King Street West Suite 300 Toronto, Ontario M5H 1J8 Telephone: (416) 367-8600 Toll Free: 1-888-301-3244 Fax: (416) 367-8164


*THE INFORMATION AGENT FOR THE OFFER IN THE UNITED STATES IS:* 17 State Street 10th Floor New York, NY 10004		*THE INFORMATION AGENT FOR THE OFFER IN CANADA AND OTHER COUNTRIES OUTSIDE THE UNITED STATES IS:* The Exchange Tower 130 King Street West Suite 2950, P.O. Box 361 Toronto, Ontario M5X 1E2


Any questions and requests for assistance by Tone Resources shareholders resident in the United States may be directed to Georgeson Inc. at the telephone numbers set out below: United States Toll Free Telephone: 1-866-425-8280 Fax: (212) 440-9009 Banks and Brokers call collect: (212) 440-9800		Any questions and requests for assistance by Tone Resources shareholders outside the United States may be directed to Kingsdale Shareholder Services Inc. at the telephone numbers set out below: Canada Toll Free Telephone: 1-866-639-8026 Fax: (416) 867-2271 Toll Free Fax: 1-866-545-5580 Outside North America, Banks and Brokers call collect: (416) 867-2272 E-Mail: contactus@kingsdaleshareholder.com


Metric Measurement	U.S. Equivalent	Multiply Metric Figure by:

Hectares	Acres		2.471
Meters	Feet (ft.)		3.281
Kilometers (km)	Miles		0.621
Tonnes	Tons (2000 pounds)		1.102
Grams/tonne	Ounces (troy/tonne)		0.029


(ii)		On January 13, 2006, the Company issued 200,000 units to an officer of the Company. Each unit was issued at a price of $0.64 CDN for gross proceeds of $128,000 CDN. Each unit is comprised of one common share of the Company and one share purchase warrant with each purchase warrant entitling the holder to purchase one common share of the Company at $0.80 CDN until January 13, 2008. The shares and warrants comprising the units and the shares underlying such warrants are subject to a four-month hold period. No finder’s fees were paid on this issue.


Note 6	Related Party Transactions — Notes 4, 5 and 9


Consolidated Balance Sheet			D-21
Consolidated Statement of Operations and Deficit			D-22
Consolidated Statement of Cash Flows			D-23
Notes to Consolidated Financial Statements			D-25



Statements of Cash Flows

Operating Activities per Canadian GAAP	$	(221,513	)	$	(63,977	)
Mineral property costs		(11,972	)		(13,282	)

Operating Activities per US GAAP	$	(233,485	)	$	(77,259	)

Financing Activities per Canadian and US GAAP	$	74,502		$	99,409

Investing Activities per Canadian GAAP	$	(11,972	)	$	(13,282	)
Mineral property costs		11,972			13,282

Investing Activities per US GAAP	$	—		$	—


Balance Sheet as of September 30, 2006			E-3
Notes to Balance Sheet			E-4


	As of
	September 30, 2006

Assets
Current Assets:
Cash	$	1.00
Total current assets	$	1.00

Liabilities and Shareholder’s Equity
Liabilities	$	—

Shareholder’s equity Common shares, authorized — unlimited, issued and outstanding — 1 share	$	1.00

Total shareholder’s equity	$	1.00


Net assets acquired:
Cash and cash equivalents	$	9,463,838
Temporary investments		1,995,810
Accounts receivable		120,000
Other current assets — prepaid expenses		43,300
Property and equipment, net		955,949
Mineral property interests		701,226
Restrictive time deposits for reclamation bonding		214,273
Accounts payable and accrued liabilities		(155,434	)
Due to related parties		(90,476	)
Retirement obligation		(149,387	)
Future income tax liability		(33,646,748	)
Acquired mineral property interests		152,953,289

	$	132,405,640


Street Address or P.O. Box		Signature of Shareholder

City, Province and Postal Code		Signature Guaranteed by


NOTE:	If this Retraction Request is for less than all of the share(s) represented by this certificate, a certificate representing the remaining share of the Corporation will be issued and registered in the name of the shareholder as it appears on the register of the Corporation, unless the Share Transfer Power on the share certificate is duly completed in respect of such share(s).