fc_10q-80731.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JULY 31, 2008

Commission File Number 0-20722

FIRSTGOLD CORP.

(Exact name of small business issuer as specified in its charter)

DELAWARE		16-1400479
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

3108 Ponte Morino Drive, Suite 210 Cameron Park, CA		95682
(Address of Principal Executive Offices)		Zip Code

Issuer's telephone number:	(530) 677-5974

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

YES X NO _____

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act)

YES _____ NO X

Common stock, $0.001 par value, of which 130,845,543 were issued and outstanding as of August 29, 2008.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

	Large accelerated filer _____		Accelerated filer _____

	Non-accelerated filer _____		Smaller reporting company X

INDEX

		Page

PART I - FINANCIAL INFORMATION		3

	ITEM 1. FINANCIAL STATEMENTS	3

	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS	17

	ITEM 4T. CONTROLS AND PROCEDURES	21

PART II - OTHER INFORMATION		22

	ITEM 1A. FACTORS AFFECTING FUTURE OPERATING RESULTS	22

	ITEM 2. UNREGISTERD SALES OF EQUITY SECURITIES	24

	ITEM 5. OTHER INFORMATION	24

	ITEM 6. EXHIBITS	24

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

FIRSTGOLD CORP.

INDEX TO UNAUDITED FINANCIAL STATEMENTS

	Page

Condensed Balance Sheet as of July 31, 2008 (Unaudited)
and for fiscal year ended January 31, 2008 (Audited)	4

Condensed Statements of Operations for the three and six months ended
July 31, 2008 and 2007 (Unaudited)	6

Condensed Statements of Cash Flows for the six months
ended July 31, 2008 and 2007 (Unaudited)	7

Notes to Unaudited Financial Statements	10

FIRSTGOLD CORP.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

	July 31		January 31,
	2008		2008
	(unaudited)
ASSETS

Current assets:
Cash	$	114,765	$	383,223
Receivables		146,211		196,811
Deposits		259,769		295,281
Prepaid expense		268,974		242,577
Inventory		208,026		7,721

Total current assets		997,745		1,125,613

Property, plant and equipment, net of accumulated depreciation of $443,670 and $205,084 at July 31 and January 31, 2008, respectively		11,513,110		8,438,997

Other Assets
Restricted cash		687,064		674,850
Deferred reclamation costs		680,326		680,326

Total other assets		1,367,390		1,355,176

Total assets	$	13,878,245	$	10,919,786

LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities
Accounts payable	$	2,171,920	$	2,730,596
Accrued expenses		635,931		538,987
Notes payable		1,420,945		163,726

Total current liabilities		4,228,796		3,433,309

Long-term liabilities
Convertible debenture net of deferred financing costs of
$165,567 and $148,480 at July 31 and January 31, 2008, respectively		563,396		694,211
Accrued reclamation costs		680,326		680,326
Deferred revenue		800,000		937,650

Total long-term liabilities		2,043,722		2,312,187

Total liabilities		6,272,518		5,745,496

FIRSTGOLD CORP.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

	July 31,			January 31,
	2008			2008
	(unaudited)

Commitments and contingencies

Shareholders' surplus (deficit)
Common stock, $0.001 par value
250,000,000 shares authorized at January 31, 2008 and 2007, respectively
130,845,543 and 117,432,317 shares issued and outstanding at
July 31 and January 31, 2008, respectively		130,845			117,432
Additional paid in capital		44,313,628			36,447,996
Deficit accumulated during the exploration stage		(36,838,746	)		(31,391,142	)

Total shareholders' surplus		7,605,727			5,174,290

Total liabilities and shareholders' surplus	$	13,878,245		$	10,919,786

FIRSTGOLD CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

For the Six and Three Months Ended July 31, 2008 and 2007

and for the Period from January 1, 1995 to July 31, 2008


													For the Period
	For the Six Months Ended						For the Three Months Ended						From January 1,
	July 31,						July 31,						1995 to July
	2008			2007			2008			2007			31, 2008
Net Sales	$	645,360		$	-		$	369,567		$	-		$	1,196,639

Exploration and maintenance costs		3,013,513			463,815			1,622,102			337,134			7,102,865

Gross loss		(2,368,153	)		(463,815	)		(1,252,535	)		(337,134			(5,906,226	)
Operating expenses		(2,968,926	)		(2,211,602	)		(1,497,520	)		(1,225,917	)		(24,551,900	)

Loss from operations		(5,337,079	)		(2,675,417	)		(2,750,055	)		(1,563,051	)		(30,458,129	)

Other (expense)
Interest income		22,532			83,306			1,469			77,340			301,203
Dividend income														30,188
Gain on settlement of obligations		22,851						22,851						1,149,375
Other income														6,565
Adjustments to fair value of derivatives		-			(703,992	)		-			919,263			(1,357,903	)
Interest expense		(155,910	)		(523,539	)		(121,305	)		(275,580	)		(4,031,366	)
Loss from joint venture														(859,522	)
Loss on sale of marketable securities														(281,063	)
Bad debt expense														(40,374	)
Loss on disposal of plant, property
and equipment														(334,927	)
Loss on disposal of bond														(21,000	)

Total other income (expense)		(110,527	)		(1,144,225	)		(96,985	)		(721,023	)		(5,438,824	)

Net loss	$	(5,447,606	)	$	(3,819,642	)	$	(2,847,040	)	$	(842,028	)	$	(35,896,953	)

Basic and diluted loss per share	$	(0.04	)	$	(0.04	)	$	(0.02	)	$	(0.01	)

Basic and diluted weighted-
average shares
outstanding		128,079,528			87,133,248			130,729,904			93,940,374

FIRSTGOLD CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

For the Six Months Ended July 31, 2008 and 2007

and for the Period from January 1, 1995 to July 31, 2008

							For the Period
	For the Six Months Ended July 31,						From January 1, 1995
	2008			2007			to July 31, 2008
Cash flows from operating activities
Net loss	$	(5,447,606	)	$	(3,819,642	)	$	(33,044,661	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Accretion of warrants issued as a debt discount		21,461			21,461			1,341,606
Accretion of beneficial conversion		-			-			107,468
Accretion of debt discount		-			119,919			531,110
Adjustments to fair value of derivatives		-			703,992			1,357,904
Loss from joint venture		-			-			859,522
Loss on sale of marketable securities		-			-			281,063
Depreciation and amortization		246,069			111,213			509,399
Loss on disposal of property, plant and equipment		-			-			334,927
Impairment in value of property, plant and equipment		-			-			807,266
Loss on disposal of bond		-			-			21,000
Impairment in value of Relief Canyon Mine		-			-			3,311,672
Impairment in value of joint investments		-			-			490,000
Bad debt		-			-			40,374
Assigned value of stock and warrants exchanged for services		-			358,062			2,108,452
Assigned value of stock options issue for compensation		116,639			55,039			895,864
Gain on write off of note payable		-			-			(7,000	)
Judgment loss accrued		-			-			250,000
(Increase) decrease in:
Restricted cash		(12,214	)		(423,869	)		(674,850	)
Receivables		50,600			100,000			(54,383	)
Deposits		35,512			(100,000	)		(94,468	)
Deferred reclamation costs		-			-			214,848
Prepaid expenses		(26,397	)		6,360			(284,909	)
Inventory		(200,305	)		-			(289,362	)
Reclamation bonds		-			-			185,000
Other assets		-			-			(1,600	)
Increase (decrease) in:
Accounts payable		(558,676	)		(133,812	)		517,662

Accrued expenses		96,944			70,730			1,063,320

Net cash used by operating activities		(5,677,973	)		(2,662,923	)		(19,160,132	)

Cash flows from investing activities
Proceeds from sale of marketable securities		-			-			34,124
Investment in marketable securities		-			-			(315,188	)
Advances from shareholder		-			-			7,436
Contribution from joint venture partner		-			-			775,000
Purchase of joint venture partner interest		-			-			(900,000	)
Capital expenditures		(3,312,699	)		(965,185	)		(13,966,483	)
Proceeds from disposal of property, plant and equipment		-			-			278,783
Investments in joint ventures		-			-			(490,000	)
Note receivable		-			-			(268,333	)
Repayment of note receivable		-			-			268,333

Net cash used by investing activities		(3,312,699	)		(965,185	)		(14,576,328	)

Cash flows from financing activities
Proceeds from the issuance of common stock		7,621,515			10,992,988			28,258,782
Proceeds from notes payable		1,405,966			960,000			8,646,733
Principal repayments of notes payable		(167,617	)		(8,757	)		(2,631,443	)
Repayment of advances to affiliate		-			-			(231,663	)
Deferred revenue		(137,650	)		-			800,000

Net cash provided by financing activities		8,722,214			11,944,231			34,842,409

Net increase in cash		(268,458	)		8,316,123			1,175,307

Cash, beginning of year		383,223			150,647			6,687

Cash, end of year	$	114,765		$	8,466,770		$	1,168,620

FIRSTGOLD CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

For the Six Months Ended July 31, 2008 and 2007

and for the Period from January 1, 1995 to July 31, 2008

Supplemental cash flow information for the three months ended July 31, 2008 and 2007 and January 1, 1995 through April 30, 2008 as follows:

						For the Period
						From January 1,
		For the Six Months Ended July 31,				1995 to July
		2008		2007		31, 2008

Cash paid for interest	$	-	$	-	$	161,107
Cash paid for income taxes	$	-	$	-	$	-

Non Cash Investing and Financing Activities:
Conversion of related party note payable to common stock, including interest payable of $446,193	$	-	$	-	$	2,093,573
Conversion of convertible debentures to common stock, including interest of $217,151	$	-	$	450,000	$	4,359,609
Issuance of warrants as financing costs in connection with convertible debt	$	-	$	-	$	2,093,573
Issuance of common stock as payment for settlement of liabilities	$	63,999	$	-	$	2,093,573

FIRSTGOLD CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

For the Six Months Ended July 31, 2008

NOTE 1 - ORGANIZATION AND LINE OF BUSINESS

Firstgold Corp. has been in the business of acquiring, exploring, developing, and producing gold properties. Firstgold had rights to mine properties in Nevada and Montana. Its primary focus was on the Relief Canyon mine located near Lovelock, Nevada, where it has performed development and exploratory drilling and was in the process of obtaining permits to allow operation of the Relief Canyon Mine. In December 1997, Firstgold placed the Relief Canyon Mine on care and maintenance status. From mid-2001 until the beginning of 2003 Firstgold was essentially inactive, only continuing with some of the care and maintenance at Relief Canyon, as provided for by a non-affiliate company owned by the Chief Operating Officer of Firstgold.

Firstgold has embarked on a business strategy whereby it will invest in and/or manage the exploration of gold and other mineral producing properties. Currently, Firstgold’s principal assets include various mineral leases associated with the Relief Canyon mine located near Lovelock, Nevada along with various items of mining equipment located at that site. Firstgold’s business will be to acquire, explore and, if warranted, develop various mining properties located in the state of Nevada. Firstgold plans to carryout comprehensive exploration and development programs on its properties. Firstgold plans to conduct these activities itself, although some activities may be outsourced. Consequently, Firstgold's current plan will require the hiring of significant amounts of mining employees to carry out its future mining and current exploration activities.

NOTE 2 - GOING CONCERN

These financial statements have been prepared on a going concern basis. During the years ended January 31, 2008 and 2007 and the period from January 1, 1995 to January 31, 2008, Firstgold incurred net losses of approximately $7,632,537, $4,728,070, and $30,449,347, respectively. In addition, Firstgold has been in the exploration stage since inception and through July 31, 2008. Information for the six months ended July 31, 2008 include a net loss of $5,447,606, negative cash flows from operations of $5,677,973 and a deficit accumulated during the exploration stage of $36,638,746. The Company's 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. The outcome of these matters cannot be predicted with any certainty at this time. Since inception, the Company has satisfied its capital needs by issuing equity and debt securities.

Management plans to continue to provide for its capital needs during the year ending January 31, 2009 by issuing equity securities or incurring additional debt financing, with the proceeds to be used to re-establish mining operations at Relief Canyon as well as improve its working capital position. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should Firstgold be unable to continue as a going concern.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnotes normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted pursuant to these rules and regulations. These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in Firstgold’s Form 10-KSB, as filed with the SEC for the year ended January 31, 2008.

Exploration Stage Company

Effective January 1, 1995 (date of inception), the Company is considered a development stage Company as defined in SFAS No. 7. The Company’s development stage activities consist of the development of several mining properties located in Nevada. Sources of financing for these development stage activities have been primarily debt and equity financing. The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.

Cash and Cash Equivalents

For the purpose of the statements of cash flows, Firstgold considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted Cash

Restricted cash represents a certificate of deposit with Umpqua Bank to serve as collateral for a reclamation bond with the Nevada Department of Environmental Protection at the Relief Canyon Mine.

Deferred Reclamation Costs

In August 2001, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations,” which established a uniform methodology for accounting for estimated reclamation and abandonment costs. The statement was adopted February 1, 2003. The reclamation costs will be allocated to expense over the life of the related assets and will be adjusted for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate.

Prior to adoption of SFAS No. 143, estimated future reclamation costs were based principally on legal and regulatory requirements. Such costs related to active mines were accrued and charged over the expected operating lives of the mines using the UOP method based on proven and probable reserves. Future remediation costs for inactive mines were accrued based on management’s best estimate at the end of each period of the undiscounted costs expected to be incurred at a site. Such cost estimates included, where applicable, ongoing care, maintenance and monitoring costs. Changes in estimates at inactive mines were reflected in earnings in the period an estimate was revised.

Valuation of Derivative Instruments

FAS No. 133 "Accounting for Derivative Instruments and Hedging Activities" requires bifurcation of embedded derivative instruments and measurement of their fair value for accounting purposes. In determining the appropriate fair value, the Company uses the Black Scholes model as a valuation technique. Derivative liabilities are adjusted to reflect fair value at each period end, with any increase or decrease in the fair value being recorded in results of operations as Adjustments to Fair Value of Derivatives. In addition, the fair values of freestanding derivative instruments such as warrants are valued using Black Scholes models.

Revenue Recognition

Revenues will be recognized when deliveries of gold are made, title and risk of loss passes to the buyer and collectibility is reasonably assured. Deferred revenue represents non-refundable cash received in exchange for royalties on net smelter returns on the Relief Canyon Mine. Deferred revenue will be amortized to earnings based on estimated production in accordance with the royalty agreement.

Risks Associated with Gold Mining

The business of gold mining is subject to certain types of risks, including environmental hazards, industrial accidents, and theft. Prior to suspending operations, Firstgold carried insurance against certain property damage loss (including business interruption) and comprehensive general liability insurance. While Firstgold maintained insurance consistent with industry practice, it is not possible to insure against all risks associated with the mining business, or prudent to assume that insurance will continue to be available at a reasonable cost. Firstgold has not obtained environmental liability insurance because such coverage is not considered by management to be cost effective. Firstgold currently carries no insurance on any of its properties due to the current status of the mine and Firstgold’s current financial condition.

Comprehensive Income

Firstgold utilizes SFAS No. 130, “Reporting Comprehensive Income.” This statement establishes standards for reporting comprehensive income and its components in a financial statement. Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Examples of items to be included in comprehensive income, which are excluded from net income, include foreign currency translation adjustments, minimum pension liability adjustments, and unrealized gains and losses on available-for-sale marketable securities. Comprehensive income is presented in Firstgold's financial statements since Firstgold did have unrealized gain (loss) from changes in equity from available-for-sale marketable securities.

Estimates

The preparation of financial statements 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 amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Loss Per Share

Firstgold utilizes SFAS No. 128, “Earnings per Share.” Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

The following common stock equivalents were excluded from the calculation of diluted loss per share since their effect would have been anti-dilutive:

	2008		2007
Warrants		49,332,841		39,183,820
Stock options		5,751,038		3,825,000

Recent Accounting Pronouncements

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (SFAS 159). Under the provisions of SFAS 159, Companies may choose to account for eligible financial instruments, warranties and insurance contracts at fair value on a contract-by-contract basis. Changes in fair value will be recognized in earnings each reporting period. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is required to and plans to adopt the provisions of SFAS 159 beginning in the first quarter of 2008. The Company is currently assessing the impact of the adoption of SFAS 159.

In December 2007, the FASB released FAS 141R, “Business Combinations” and FAS 160, “Non-controlling Interests in Consolidated Financial Statements.” Both standards will be effective for transactions that occur after January 1, 2009. FAS 141R applies to all business combinations and will require the acquiring entity to recognize the assets and liabilities acquired at their respective fair value. This standard changes the accounting for business combinations in several areas. If we complete an acquisition after the effective date of FAS 141R, some of these changes could result in increased volatility in our results of operations and financial position. For example, transaction costs, which are currently capitalized in a business combination, will be expensed as incurred. Additionally, pre-acquisition contingencies (such as in-process lawsuits acquired) and contingent consideration (such as additional consideration contingent on specified events in the future) will be recorded at fair value at the acquisition date, with subsequent changes in fair value reflected in our results of operations. Under current accounting guidance, adjustments to these contingencies are reflected in the allocation of purchase price if they occur within a certain period of time after the acquisition date.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment was recorded at $11,956,780 and $1,914,064 at July 31, 2008 and 2007, respectively. Depreciation expense was $443,670 and $55,735 for the six months ended July 31, 2008 and 2007, respectively

NOTE 5 - NOTES PAYABLE

Notes payable consist of the following at July 31, 2008:

Note payable	$	250,000

The note bears interest at 12% and is due January 2009. The note along with the Convertible Debenture issued in May 2008 (see Note 6 below) is secured by all property of Firstgold.

Equipment notes payable		60,298

The first note does not bear any interest and is due in December 2010. The second note bears interest at 8.6% and is due June 2011. The loans are secured by a Caterpillar loader and backhoe.

Insurance premium note payable		55,966
The note bears interest at 5.6%, is payable in monthly installments of $6,218 and is due February 2009.

Total notes payable	$	116,264

Firstgold recorded interest expense of $121,305 and $155,910 for the three months and six months ended July 31, 2008 compared to interest expense of $275,580 and $523,539 for the three months and six months ended July 31, 2007.

NOTE 6 – CONVERTIBLE DEBENTURES

September 2006 Convertible Debenture

In September 2006, Firstgold entered into a Securities Purchase Agreement (the “Purchase Agreement”) and other agreements, as amended on November 1, 2006, in connection with the private placement of convertible debentures, in the aggregate principal amount of $3,000,000 and bearing interest at 8% per annum (the “Debenture”). The Debentures were funded $1,000,000 on September 26, 2006, $1,000,000 upon the filing of a resale registration statement with the SEC on December 1, 2006 and $1,000,000 on March 15, 2007. Of the $1,000,000 funded on September 26, 2006, $120,000 was paid for various loan fees and closing costs; of the $1,000,000 funded December 1, 2006, $90,000 was paid for various loan fees and closing costs; and of the $1,000,000 funded March 19, 2007, $90,000 was paid for various loan fees and closing costs.

The Debentures were due and payable three years after the issue date unless converted into shares of common stock or repaid prior to its expiration date. The conversion rate was adjustable and at any conversion date, would be the lower of $0.45 per share or 95% of the Market Conversion Price. On July 13, 2007 $450,000 of the Debenture dated March 15, 2007 was converted into 1,000,000 shares of common stock. On September 13, 2007 the $1,000,000 Debenture dated September 26, 2006 was converted into 2,222,222 shares of common stock. On October 12, 2007 $450,000 of the Debenture dated December 1, 2006 was converted into 1,000,000 shares of common stock. On October 16, 2007 $450,000 of the Debenture dated December 1, 2006 was converted into 1,000,000 shares of common stock. On October 30, 2007 1,444,444 shares of common stock were issued in conversion of the remaining $650,000 in principal of outstanding Secured Convertible Debentures. An additional 413,784 shares of common stock was issued in conversion of $186,203 of accrued interest on the Secured Convertible Debentures.

October 2006 Convertible Debentures

In October 2006, Firstgold issued convertible debentures in the aggregate principal amount of $650,000 and bearing interest of 8% per annum. The Debentures and accrued interest are convertible into shares of Firstgold common stock at a conversion rate of $0.405 per share. The Debentures are due and payable three years from the date of issue unless they are converted into shares of the Company’s common stock or are repaid prior to their expiration date. Additionally, the investors were issued warrants to purchase an aggregate of 746,843 shares of Firstgold common stock exercisable at $0.45 per warrant. The warrants were issued as financing costs and total deferred financing cost of $173,114 was recorded in relation to this debt.

May 2008 Convertible Debenture

In May 2008, Firstgold issued a convertible debenture in the principal amount of $1,100,000 and bearing interest of 10% per annum. The Debentures and accrued interest are convertible into shares of Firstgold common stock at a conversion rate of $0.80 per share. The Debentures are due and payable 20 months from the date of issue unless they are converted into shares of the Company’s common stock or are repaid prior to their expiration date. Additionally, the investor was issued warrants to purchase an aggregate of 1,100,000 shares of Firstgold common stock exercisable at $1.00 per warrant. The warrants were issued as financing costs and total deferred financing cost of $296,102 was recorded in relation to this debt. The May 2008 Convertible Debenture along with the $250,000 Note Payable in Note 5 above is secured by all property of Firstgold.

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Except for the advance royalty and rent payments noted below, Firstgold is not obligated under any capital leases or non-cancelable operating lease with initial or remaining lease terms in excess of one year as of July 31, 2008. However, minimum annual royalty payments are required to retain the lease rights to Firstgold’s properties.

Relief Canyon Mine

Our mining property rights are represented by 141 unpatented mill site and mining lode claims which were re-staked in October 2004 and June 2006. Unpatented mining claims are generally considered subject to greater title risks than patented mining claims or real property interests that are owned in fee simple. To remain valid, such unpatented claims are subject to annual maintenance fees. As of July 31, 2008, we were current in the payment of such maintenance fees.

During 1996, Repadre Capital Corporation (“Repadre”) purchased for $500,000 a net smelter return royalty (Repadre Royalty). Repadre was to receive a 1.5% royalty from production at each of the Relief Canyon Mine and Mission Mines. In July 1997, an additional $300,000 was paid by Repadre for an additional 1% royalty from the Relief Canyon Mine. In October, 1997, when the Mission Mine lease was terminated, Repadre exercised its option to transfer the Repadre Royalty solely to the Relief Canyon Mine resulting in a total 4% royalty. The total amount received of $800,000 has been recorded as deferred revenue in the accompanying financial statements.

On February 8, 2007, a complaint was filed against ASDi, LLC, Crescent Red Caps LLC, Firstgold, and Scott Dockter by the Lessors of the Crescent Valley and Red Caps mining properties. The complaint was filed in the Sixth Judicial District Court of Lander County, Nevada (Case No. 9661). In the complaint the plaintiffs allege that ASDi, LLC wrongfully assigned its lessee rights in the Crescent Valley and Red Caps mining properties to Crescent Red Caps LLC (of which Firstgold is the Managing Member).

In late March, 2008 the parties reached a settlement agreement and the case was dismissed by the Court on April 4, 2008. As a result of the Settlement, Firstgold paid $150,000 to Plaintiffs and Firstgold, ASDi LLC and Crescent Red Caps LLC relinquished all right, title and interest in the Red Caps and Crescent Valley leases to the Plaintiffs. Consequently, Firstgold no longer has any interest in these leases and will not pursue any further exploration activity on such leased property.

On September 24, 2007, a complaint was served on Firstgold by Swartz Private Equity, LLC. The complaint was filed in the District Court for the Western District of New York (Case No. 07CV6447). In the complaint, plaintiff alleges that pursuant to an Investment Agreement dated October 4, 2000, and entered into with Firstgold’s former management, it is entitled to the exercise of certain warrants in the amount of 1,911,106 shares of Firstgold common stock or the equivalent cash value of $0.69 per share and a termination fee of $200,000. Firstgold filed an answer to the complaint on December 3, 2007 and expects to vigorously defend this action. The lawsuit is now in the discovery phase.

On January 30, 2008, a complaint was served on Firstgold by Park Avenue Consulting Group, Inc. The complaint was filed in the Supreme Court of the State of New York but was subsequently removed to the Federal District Court for the Southern District of New York (Case No. 08CV01850). In the complaint, plaintiff alleges that pursuant to a Retainer Agreement entered into on September 1, 2000, it is entitled to $100,000 in retainer fees, $43,874 in expenses, and 850,000 shares of common stock during the term of the agreement. Firstgold is currently evaluating this lawsuit and expects to vigorously defend this action.

Firstgold is involved in various other claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate dispositions of these matters will not have a material adverse effect on Firstgold’s financial position, results of operations or liquidity.

NOTE 8 - SHAREHOLDERS' SURPLUS

Common Stock

In February 2008 warrants to purchase 250,000 shares of common stock were exercised at an average exercise price of $0.25 per share.

In February 2008 Firstgold received proceeds of $3,450,975 upon the issuance of Units consisting of 5,309,193 shares of common stock and warrants to purchase 2,654,460 shares of common stock at an exercise price of $0.80 per share. The warrants have a term of 18 months.

In March 2008 Firstgold received proceeds of $4,261,822 upon the issuance of Units consisting of 6,556,650 shares of common stock and warrants to purchase 3,278,325 shares of common stock at an exercise price of $0.80 per share. The warrants have a term of 18 months.

In April 2008 Firstgold received proceeds of $330,100 upon the issuance of Units consisting of 507,846 shares of common stock and warrants to purchase 253,923 shares of common stock at an exercise price of $0.80 per share. The warrants have a term of 18 months.

In April 2008 warrants to purchase 200,000 shares of common stock were exercised at an exercise price of $0.50 per share.

In May 2008 Firstgold received proceeds of $300,000 upon the issuance of Units consisting of 461,538 shares of common stock and warrants to purchase 230,769 shares of common stock at an exercise price of $0.80 per share. The warrants have a term of 18 months.

In May 2008 Firstgold issued 127,999 shares of common stock to one person in settlement of an existing note payable and accrued interest totaling $63,999.

Warrants

The fair market value of warrants issued during the six months ended July 31, 2008 in conjunction with the issuance of common stock was determined to be $1,836,890 and was calculated under the Black-Scholes option pricing model with the following assumptions used:

Expected life	1.5 to 1.67 years
Risk free interest rate	1.53% to 2.41%
Volatility	63.39% to 104.95%
Expected dividend yield	None

The fair value of these warrants has been recorded as both a debit and credit to additional paid in capital.

The following table presents warrant activity from January 31, 2008 through July 31, 2008:

	Number of Shares			Weighted- Average Exercise Price

Outstanding, January31, 2008		39,507,146		$	0.47
Exercised		(450,000	)	$	(0.36	)
Granted		10,275,695		$	0.81
Outstanding, July 31, 2008		49,332,841		$	0.54
Exercisable, July 31, 2008		49,332,841		$	0.54

Stock options

The 2006 Plan provides for the issuance of non-qualified or incentive stock options to employees, non-employee members of the board and consultants. The exercise price per share is not to be less than the fair market value per share of the Company’s common stock on the date of grant. The Board of Directors has the discretion to determine the vesting schedule. Options may be either immediately exercisable or in installments, but generally vest over a three-year period from the date of grant. In the event the holder ceases to be employed by the Company, all unvested options terminate and all vested installment options may be exercised within an installment period following termination. In general, options expire ten years from the date of grant. Stockholders voting at the 2007 Annual Stockholders meeting held on September 20, 2007 approved an increase in the shares issuable under the 2006 Plan to a total of 10,000,000.

Effective February 1, 2006, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment (SFAS 123(R)), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including stock options based on their fair values. Firstgold had not previously issued any stock options prior to adoption of the 2006 Plan. In March 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB 107) to provide guidance on SFAS 123(R). The Company has applied SAB 107 in its adoption of SFAS 123(R).

The Company adopted SFAS 123(R) using the modified prospective transition method as of and for the three months ended April 30, 2008. In accordance with the modified prospective transition method, the Company’s financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS 123(R). Share-based compensation expense recognized is based on the value of the portion of share-based payment awards that is ultimately expected to vest. Share-based compensation expense recognized in the Company’s Statement of Operations during the three months ended April 30, 2008 includes compensation expense for share-based payment awards granted during the current fiscal year.

In conjunction with the adoption of SFAS 123(R), the Company elected to attribute the value of share-based compensation to expense using the straight-line method. Share-based compensation expense related to stock options and restricted stock grants was $59,311 for the three months ended April 30, 2008, and was recorded in the financial statements as operating expense.

For the six months ended July 31, 2008 the Company’s calculations were made using the Black-Scholes option pricing model with the following weighted average assumptions: expected life, 36 months following the grant date; stock volatility, 63.4%; risk-free interest rates of 1.77% to 2.97%; and no dividends during the expected term. As stock-based compensation expense recognized in the consolidated statement of operations pursuant to SFAS No. 123(R) is based on awards ultimately expected to vest, expense for grants beginning upon adoption of SFAS No. 123(R) on February 1, 2006 will be reduced for estimated forfeitures. SFAS No. 123(R) requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based on historical experience.

A summary of the Company’s stock option activity is as follows:

			Weighted Ave.		Aggregate
	# of Shares		Exercise Price		Intrinsic Value

Outstanding as of January 31, 2008		4,650,000	$	0.61	$	0
Granted		1,101,038	$	0.64	$	0
Exercised		0	$	0.00
Cancelled		0	$	0.00

Outstanding as of July 31, 2008		5,751,038	$	0.63	$	0


Exercisable as of July 31, 2008		4,075,260	$	0.59	$	0

NOTE 9 – SUBSEQUENT EVENT

In August 2008, Firstgold issued two Senior Secured Promissory Notes for up to a total of $15,750,000. Funding of the Notes will occur in five tranches of which the first occurred at the initial closing in August 2008 in the aggregate amount of $6,742,625 (the “Initial Note Amount”). Two interim fundings occurred in August and September 2008 and totaled $1,824,324. The second tranche which is scheduled for not later than September 25, 2008, in the amount of $3,433,051 will occur upon the expiration of appeal periods applicable to certain operating and reclamation permits relating to its Relief Canyon Mine properties. Three additional tranches of $1,250,000 each will be available during the months of November and December, 2008 and January 2009 subject to the Company achieving certain operational conditions. The loans bear an interest rate of 4% per annum with interest payments commencing in September, 2008. The loans will be due and payable on March 1, 2010.

In conjunction with the making of the loan, the Lenders were issued Warrants to purchase 15,000,000 shares of the Company’s common stock at an exercise price of $.4357 cents per share which may be adjusted downward based on future market conditions but in no event less than $.3961 cents per share. The Warrants have a term of 3 years. The Warrants also provide for a Put Right in which the Warrant holder after August 7, 2009 may require the Company to repurchase the Warrants at a redemption price of $.30 per Warrant. The Put Right is exercisable for a period of one year. In addition, participating brokers will be issued Warrants to purchase up to 1,050,000 shares of common stock having the same terms as set forth above except with no Put Right included.

In August 2008 Firstgold increased the reclamation cost deposit from $613,500 to $2,797,346 which was placed in a blocked account with its bank in Sacramento, California.

In August 2008 the May 2008 Convertible Debenture and note payable were repaid in full for the amount of $1,459,707.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Caution About Forward-Looking Statements

This Form 10-Q includes “forward-looking” statements about future financial results, future business changes and other events that haven’t yet occurred. For example, statements like Firstgold “expects,” “anticipates” or “believes” are forward-looking statements. Investors should be aware that actual results may differ materially from Firstgold's expressed expectations because of risks and uncertainties about the future. Firstgold does not undertake to update the information in this Form 10-Q if any forward-looking statement later turns out to be inaccurate. Details about risks affecting various aspects of Firstgold’s business are discussed in Firstgold’s Form 10-KSB as well as throughout this Form 10-Q and should be considered carefully.

Overview

We are an exploration-stage company engaged in the acquisition, exploration and, if warranted, development of various mining properties located in the State of Nevada. We are currently conducting a comprehensive exploration and development program on various mineral leases associated with our Relief Canyon Mine property located near Lovelock, Nevada. Since February 1, 2007 we have completed drilling 83 reverse circulation drill holes . We have also drilled a total of 57 sonic holes reverse circulation holes in the existing heap leach pads to assess the economic potential of reprocessing the ore and extracting any remaining gold. These drill results will be added to the historic drill hole database to help develop a new mining plan for Relief Canyon Mine property.

In preparation for the resumption of ore processing at the Relief Canyon Mine, on August 7, 2007 we received an “Approval of the Relief Canyon Mine Heap reprocessing amendment to the Plan of Operations” from the Bureau of Land Management (“BLM”). In conjunction with the BLM action, Firstgold increased its posted reclamation bond to $2.8 million with the BLM.

On August 16, 2008 an “Amended Reclamation Permit No. 264” issued by the Nevada Division of Environmental Protection (“NDEP”) became final. In addition, Firstgold has recently received its Water Pollution Control Permit and Air quality Permit from the NDEP.

The above approval and permits allow Firstgold to begin construction of a new heap leach pad and to construct and operate an ADR Process Plant and crushing facility at the Relief Canyon Mine site.

In October 2006, we entered into a Mineral Lease Agreement to explore, and, if warranted, develop up to 25,000 acres of property called Antelope Peak located in Elko County, Nevada. The Lease allows us the exclusive right to explore for, and, if warranted, develop gold, silver and barite minerals on the leased property. Exploration activity has commenced on this property.

We have conducted preliminary sampling of approximately 4,200 acres of potentially mineralized ground in the Horse Creek area located approximately 100 miles northeast of Reno, Nevada. During the course of the property evaluation, rock chip samples were collected showing the potential presence of intrusion-related mineral systems. During the third quarter we commenced the extensive mapping of the area’s bedrock geology. Additionally, we plan to conduct an airborne geophysical survey to map the magnetic character of the rocks. Geochemical exploration efforts continued with more rock chip sampling as well as an in-depth soil sampling survey.

On January 11, 2008 we secured claims on approximately 2,300 acres of potentially mineralized ground near Fairview, Nevada referred to as the Fairview-Hunter property. We are conducting preliminary sampling of the area. During the course of the property evaluation, rock chip samples were collected. The next phase of this project will be to conduct extensive mapping of the area’s bedrock geology. Additionally, we plan to conduct an airborne geophysical survey to map the magnetic character of the rocks. Geochemical exploration efforts will continue with more rock chip sampling as well as an in-depth soil sampling survey.

On February 22, 2008, we secured claims on approximately 3,300 acres of potentially mineralized ground north of Winnemucca, Nevada referred to as the Honorine Gold property. We are conducting preliminary sampling of the area. During the course of the property evaluation, rock chip samples were collected. The next phase of this project will be to conduct extensive mapping of the area’s bedrock geology. Additionally, we plan to conduct an airborne geophysical survey to map the magnetic character of the rocks. Geochemical exploration efforts will continue with more rock chip sampling as well as an in-depth soil sampling survey.

In July 2008, Firstgold opened a full service metals and mineral assay laboratory in Lovelock, Nevada. The laboratory will process mineral samples from Firstgold’s Relief Canyon Mine, other Firstgold exploration properties and provide excess capacity to process mined samples from other outside mining and exploration companies. At peak operation, the laboratory is designed to process up to 2,200 fire assays and up to 250 geochemical analyses per day.

Plan of Operations for the Next Twelve Months

Certain key factors and objectives will affect our future financial and operating results. These include, but are not limited to the following:

Gold prices, and to a lesser extent, silver prices;

The amount of mineralization at the Relief Canyon Mine as estimated by us (based on past and current exploration by Firstgold and work done by others).

Our proposed exploration of properties now include 146 mill site and unpatented mining claims contained in about 1,000 acres of the Relief Canyon Property; the 25,000 acre Antelope Peak property; and approximately 4,200 acres in the Horse Creek area of Nevada; 2,300 acres near Fairview, Nevada and 3,300 acres near Winnemucca, Nevada.

Our operating plan is to continue exploration work on the Relief Canyon mining property during calendar 2008. During 2008, we plan to resume heap leaching at the Relief Canyon Mine and we anticipate commencing ore processing at the Relief Canyon Mine thereafter. Through the sale of additional securities and/or the use of joint ventures, royalty arrangements and partnerships, we intend to progressively enlarge the scope and scale of our current exploration, and future mining and processing operations, thereby potentially increasing our chances of locating and processing commercially viable ore deposits which could increase both our annual revenues and ultimately our net profits. Our objective is to achieve annual growth rates in revenue and net profits for the foreseeable future.

We expect to make capital expenditures in calendar years 2008 and 2009 of between $5 million and $10 million, including costs related to the exploration, development and operation of the Relief Canyon mining property. We will have to raise additional outside capital to pay for these activities and the continuation of exploration activities and possible future production at the Relief Canyon mine.

Additional funding or the utilization of other venture partners will be required to fund exploration, research, development and operating expenses at the Horse Creek, Antelope Peak, Fairview-Hunter and Honorine Gold properties when and if such activity is commenced at these properties. In the past we have been dependent on funding from the private placement of our securities as well as loans from related and third parties as the sole sources of capital to fund operations.

Completion of the ore processing facility at the Relief Canyon site and installation of a new jaw crushing unit.

Operation of a state-of-the-art mineral assay laboratory occupying 10,000 square feet of leased space outside of Lovelock, Nevada.

Results of Operation

Our current business strategy is to invest in, explore and if warranted, conduct mining operations of our current mining properties and other mineral producing properties. Firstgold is a public company that in the past has been engaged in the exploration, acquisition and development of gold-bearing properties in the continental United States. Currently, our principal assets include various mineral leases associated with the Relief Canyon Mine located near Lovelock, Nevada along with various items of mining equipment and improvements located at that site. We have also entered into (i) a mineral lease to explore approximately 25,000 acres of property located in Elko County, Nevada; ii) the staking of approximately 4,200 acres of property located in Humboldt County, Nevada; (iii) claims to explore 2,300 acres of property located near Fairview, Nevada; and (iv) mineral leases on 3,300 acres of property located near Winnemucca, Nevada.

Operating Results for the Fiscal Quarters Ended July 31, 2008 and 2007

Although we commenced efforts to re-establish our mining business early in fiscal year 2004, no mining operations have commenced and no revenues from mining operations have been recognized during the quarters ended July 31, 2008 and 2007, respectively. We have granted a 4% net smelting return royalty to a third party related to the Relief Canyon mining property which has been recorded as an $800,000 deferred option income. During the second quarter of fiscal year 2009 we recognized revenue of $369,567 from the leasing of drill rigs and crew to other nearby mining operations.

During the quarter ended July 31, 2008 we spent $1,622,102 for exploration, reclamation and maintenance expenses related to our mining properties. Reclamation and maintenance expenses expended during the same quarter ended July 31, 2007 were $337,134. These expenses relate primarily to exploration activities and installation of processing facilities at the Relief Canyon Mine. The increase in costs was due to extensive building and facility expansion at the Relief Canyon mine and significant exploration drilling. During the quarter ended July 31, 2008 we expended approximately $78,098 on preliminary exploration activities at the Antelope Peak, Horse Creek, Fairview-Hunter and Honorine Gold properties.

We incurred operating expenses of $1,497,520 during the quarter ended July 31, 2008. Of this amount, $35,206 reflects promotion expense, $135,433 reflects officer and director compensation during the quarter and $286,085 reflect fees for outside professional services. We incurred operating expenses of $1,225,917 during the quarter ended July 31, 2007. Of this amount, $197,140 reflects outside director compensation expense, $113,882 reflects promotion expense, $93,500 reflects officer compensation and related payroll taxes during the quarter and $224,717 reflect fees for outside professional services.

A large portion of the outside professional services reflects legal and accounting work pertaining to our annual and quarterly reporting on Form 10-KSB and Form 10-Q occurring in fiscal year 2008 and 2009 respectively, as well as the preparation and filing of Amended Form SB-2’s. It is anticipated that both mining costs and operating expenses will increase significantly as we continue our exploration program and prepare for mining operations.

We incurred interest expense of $121,305 during the quarter ended July 31, 2008 which compares to interest expenses of $275,580 incurred during the same quarter of 2007. The principal balance of loans outstanding at the end of the second quarter of fiscal year 2009 decreased by $1,221,584 to $2,149,908 compared to a principal balance of $ 3,371,492 outstanding at the end of the second quarter of fiscal year 2008, which was primarily the result of a decrease in convertible debentures. The decrease in interest expense during the quarter ended July 31, 2008 was primarily due to the decrease in the principal balance of loans outstanding during the period offset by the write-off of unamortized debt costs related to convertible debt which was converted in full during the period.

Our total net loss for the quarter ended July 31, 2008 increased to $2,847,040 compared to a net loss of $842,028 incurred for the same quarter ended July 31, 2007. The larger net loss in the second quarter of fiscal 2009 reflects the substantial increase in the exploration and mine site improvement expenses as well as an increase in operating expenses. The increase in net loss for the quarter ended July 31, 2008 was partially offset by the net sales revenue recognized during the quarter.

Operation results for the Six Months Ended July 31, 2008 and 2007

During the six months ended July 31, 2008 we recognized revenue of $645,360 from the leasing of drill rigs and crew to other nearby mining operations.

During the six months ended July 31, 2008, we spent $3,013,513 on exploration, reclamation and building and facilities expansion expenses related to our mining properties. Reclamation and maintenance expenses expended during the six months ended July 31, 2007, were $463,815. These expenses relate primarily to repairing and upgrading costs required to resume exploration drilling of our Relief Canyon mining claims. We incurred operating expenses of $2,968,926 during the six months ended July 31, 2008. Of this amount, $113,505 reflects promotion expense; $363,893 reflects director and officer compensation; and $1,253,900 reflects fees for outside professional services. A large portion of the outside and professional services reflects legal and accounting work pertaining to our annual and quarterly reporting on Form 10-KSB and Form 10-Q and financing activities. During the six months ended July 31, 2007, we incurred operating expenses of $2,211,602, of which $187,000 represented officer compensation, and $349,249 reflected fees for outside professional services. It is anticipated that both mining costs and operation costs will increase significantly as we continue our exploration program and initiate mining operations.

We incurred interest expense of $155,910 during the six months ended July 31, 2008, which compares to interest expenses of $523,539 incurred during the same six months of 2007. The principal balance of loans outstanding during the first six months of the fiscal year 2009 decreased by $1,221,584, compared to the same six months for the fiscal year 2008, which was primarily the result of the increase in Convertible Debentures. The decrease in additional interest expense during the six months ended July 31, 2008, was primarily due to the decrease in outstanding Convertible Debentures.

Our total net loss of the six months ended July 31, 2008, increased to $5,447,606 compared to a net loss of $3,819,642 incurred for the same six months ended July 31, 2007. The higher net loss in the first six months of fiscal 2009 reflects the increase in exploration, maintenance, and operating expenses as we reactivate our exploration activities, construct processing facilities and establish a mineral assay laboratory which expenses were partially offset by revenues recognized during the first six months of fiscal 2009.

Liquidity and Capital Resources

We have incurred significant operating losses since inception and during the six months ended July 31, 2008 which has resulted in an accumulated deficit of $36,638,746 as of July 31, 2008. At July 31, 2008, we had cash and other current assets of $997,745 compared to $1,125,613 at January 31, 2008 and a net working capital deficit of $3,231,051 as of July 31, 2008. Since the resumption of our business in February 2003, we have been dependent on borrowed or invested funds in order to finance our ongoing operations. As of July 31, 2008, we had outstanding debentures and notes payable in the gross principal amount of $2,149,908 (net balance of $1,984,341 after $(165,567) of deferred financing costs) which reflects a decrease in the gross principal balance of $1,221,584 compared to notes payable in the gross principal amount of $3,371,492, (net balance of $4,738,773 after $(1,868,149) of note payable discount and deferred financing costs and $3,235,430 of derivative liabilities) as of July 31, 2007.

During the six months ended July 31, 2008 we received proceeds of $7,621,515 from the issuance of stock and $1,405,966 from notes payable.

Subsequent to the end of the second fiscal quarter, we secured an additional $12,000,000 in senior secured notes payable above the amounts outstanding at July 31, 2008 which should be sufficient to bring the Relief Canyon Mine into full production and carry out planned initial exploration on our other properties. Subsequent to this funding we believe we have sufficient working capital to fund our current business plan for Relief Canyon. However, should additional funds become necessary, our intention would be to pursue several possible funding opportunities including the sale of additional securities, entering into joint venture arrangements, or incurring additional debt.

Due to our continuing losses from business operations, the independent auditor’s report dated May 15, 2008, includes a “going concern” explanation relating to the fact that Firstgold’s continuation is dependent upon obtaining additional working capital either through significantly increasing revenues or through outside financing. As of July 31, 2008, Firstgold’s principal commitments included its obligation to pay ongoing maintenance fees on 146 unpatented mining claims, the annual minimum rent due on the Winchell Ranch mineral lease and mortgage payments relating to its offices in Lovelock, Nevada.

It is likely that we will need to raise additional capital to fund the long-term or expanded development, promotion and conduct of our mineral exploration. Due to our limited cash flow, operating losses and limited assets, it is unlikely that we could obtain financing through commercial or banking sources. Consequently, any future capital requirements will be dependent on cash infusions from our major stockholders or other outside sources in order to fund our future operations. Although we believe that our creditors and investors would continue to fund Firstgold’s expenses if such became necessary based upon their significant debt and/or equity interest in Firstgold, there is no assurance that such investors would continue to pay our expenses in the future. If adequate funds are not available in the future, through public or private financing as well as borrowing from other sources, Firstgold might not be able to sustain its mineral exploration or mining program.

Recent Financing Transactions

During February, March and April of 2008, Firstgold received gross proceeds of $8,042,897 upon the private placement of Units consisting of 12,373,689 shares of common stock and warrants to purchase 6,186,845 shares of common stock at an exercise price of $0.80 per share. The warrants have a term of 18 months.

On May 1, 2008, we issued a Convertible Debenture in the principal amount of $1,100,000 and bearing interest of 10% per annum. The transaction included the issuance of warrants to purchase 1,100,000 shares of Firstgold common stock at an exercise price of $1.00 per share. On July 11, 2008 we issued a Note Payable in the principal amount of $250,000 and bearing interest of 12% per annum. The transaction included the issuance of warrants to purchase 500,000 of Firstgold common stock at an exercise price of $0.50 per share. On August 7, 2008 both the Convertible Debenture and the Note Payable were repaid in full for the amount of $1,459,707.

Subsequent to the end of the second fiscal quarter and through September 15, 2008, Firstgold issued Senior Promissory Notes in the principal amount of $8,566,949 which resulted in net proceeds to Firstgold of $6,252,583. The transaction included the issuance of warrants to purchase 15,000,000 shares of Firstgold common stock at an exercise price of $0.4357 per share.

Off-Balance Sheet Arrangements

During the fiscal quarter ended July 31, 2008, Firstgold did not engage in any off-balance sheet arrangements as defined in Item 303(a) of the SEC’s Regulation S-K.

Critical Accounting Policies

The discussion and analysis of our financial conditions and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of financial statements requires management to make estimates and disclosures on the date of the financial statements. On an on-going basis, we evaluate our estimates, including, but not limited to, those related to revenue recognition. We use authoritative pronouncements, historical experience and other assumptions as the basis for making judgments. Actual results could differ from those estimates. We believe that the following critical accounting policies along with those set forth in Note 3 to the financial statements, affect our more significant judgments and estimates in the preparation of our financial statements.

Valuation of long-lived assets

Long-lived assets, consisting primarily of property and equipment, patents and trademarks, and goodwill, comprise a significant portion of our total assets. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying values may not be recoverable. Recoverability of assets is measured by a comparison of the carrying value of an asset to the future net cash flows expected to be generated by those assets. The cash flow projections are based on historical experience, management’s view of growth rates within the industry, and the anticipated future economic environment.

Factors we consider important that could trigger a review for impairment include the following:

(a) significant underperformance relative to expected historical or projected future operating results,

(b) significant changes in the manner of its use of the acquired assets or the strategy of its overall business, and

When we determine that the carrying value of long-lived assets and related goodwill and enterprise-level goodwill may not be recoverable based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in its current business model.

Exploration Costs

Exploration costs are expensed as incurred. All costs related to property acquisitions are capitalized.

Mine Development Costs

Mine development costs consist of all costs associated with bringing mines into production, to develop new ore bodies and to develop mine areas substantially in advance of current production. The decision to develop a mine is based on assessment of the commercial viability of the property and the availability of financing. Once the decision to proceed to development is made, development and other expenditures relating to the project will be deferred and carried at cost with the intention that these will be depleted by charges against earnings from future mining operations. No depreciation will be charged against the property until commercial production commences. After a mine has been brought into commercial production, any additional work on that property will be expensed as incurred, except for large development programs, which will be deferred and depleted.

Reclamation Costs

Reclamation costs and related accrued liabilities, which are based on our interpretation of current environmental and regulatory requirements, are accrued and expensed, upon determination.

Based on current environmental regulations and known reclamation requirements, management has included its best estimates of these obligations in its reclamation accruals. However, it is reasonably possible that our best estimates of our ultimate reclamation liabilities could change as a result of changes in regulations or cost estimates.

ITEM 4T. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

Firstgold maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed in reports that it files or submits under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. In addition, the disclosure controls and procedures ensure that information required to be disclosed is accumulated and communicated to management, including the chief executive officer (CEO) and the chief financial officer (CFO), allowing timely decisions regarding required disclosure. We carried out an evaluation under the supervision and with the participation of management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the quarter covered by this report. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiary) that is required to be included in our periodic reports.

Changes in Internal Control Over Financial Reporting

As described more fully in our Annual Report on Form 10-KSB for the year ended January 31, 2008, our management periodically assesses our internal controls over financial reporting based upon the criteria set forth in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO Framework”). Based on this assessment, including testing, our management determined that as of January 31, 2008 we had the following material weaknesses in our internal control over financial reporting:

Deficiencies in Segregation of Duties. Firstgold lacked adequate segregation of duties in our financial reporting process, as our CFO serves as our only qualified internal accounting and financial reporting personnel, and as such, performs substantially all accounting and financial reporting functions with the assistance of an inexperienced internal accountant.

Deficiencies in Firstgold’s financial reporting process controls. We did not consistently prepare and review account reconciliations and analyses for significant financial statement accounts on a timely basis.

To address and remediate these material weaknesses, we implemented the following changes to our internal controls over financial reporting during the period covered by this report:

For the material weakness concerning deficiencies in segregation of duties, we created the position of Operations Controller and hired an experienced accounting professional to fill the position.

For the material weakness concerning deficiencies in the financial reporting process, we have developed the following remediation plan that will enhance our current policies and procedures. All material accounts are now reconciled on a timely basis.

No changes to our financial statements as filed with the SEC have been required as a result of the ineffectiveness of our previously identified internal disclosure controls and procedures.

Other than the items identified above, during the quarter covered by this report, there was no change in Firstgold’s internal control over financial reporting that has materially affected, or is reasonably likely to materially effect, the Company’s internal control over financial reporting

PART II - OTHER INFORMATION

ITEM 1A. FACTORS AFFECTING FUTURE OPERATING RESULTS

We are a development stage company and an investment in, or ownership position in our common stock is inherently risky. Some of these risks pertain to our business in general, and others are risks which would only affect our common stock. The price of our common stock could decline and/or remain adversely affected due to any of these risks and investors could lose all or part of an investment in our company as a result of any of these risks coming to pass. Readers of this Report should, in addition to considering these risks carefully, refer to the other information contained in this Report, including disclosures in our financial statements and all related notes. If any of the events described below were to occur, our business, prospects, financial condition, or results of operations or cash flow could be materially adversely affected. When we say that something could or will have a material adverse effect on Firstgold, we mean that it could or will have one or more of these effects. We also refer readers to the information in this Report, discussing the impact of Forward-Looking Statements on the descriptions contained in this Report and included in the Factors discussed below.

As an exploration stage company with no proven mineral reserves, we may not be able to prove viable mineral reserves or achieve positive cash flows and our limited history of operations makes evaluation of our future business and prospects difficult. We reactivated our business operations in early 2003 and we have not generated any revenues, other than leasing certain of our drill rigs and crew for short periods of time, since our reactivation. As a result, we have only a limited operating history upon which to evaluate our future potential performance. Our prospects must be considered in light of the risks and difficulties encountered by companies which have not yet established their mining operations.

We believe we currently have sufficient funds to finance our near-term mining activities at the Relief Canyon Mine and preliminary exploration activities at our other properties. We had cash reserves of $114,765 and a working capital deficit of $3,231,051 as of July 31, 2008. However, our ability to fully implement our business plan and meet our long-term obligations in the ordinary course of business is dependent upon our ability to raise additional capital through public or private equity financings, establish cash flows from operations, enter into joint ventures or other arrangements with capital sources, or secure other sources of financing to fund operations. Our continuing reliance on outside capital is a consequence of our negative cash flows from operations.

At any time, a serious deficiency in cash flows could occur and it is not always possible or convenient to raise additional capital. A problem in raising capital could result in temporary or permanent insolvency and consequently potential claims by unpaid creditors and perhaps closure of the business.

Our current independent certified public accountants have expanded their opinion contained in our financial statements as of and for the years ended January 31, 2008, and January 31, 2007 to include an explanatory paragraph related to our ability to continue as a going concern, stating, in the audit report dated May 15, 2008, that “the Company has incurred a net loss of $7,632,537 and had negative cash flow from operations of $4,832,217. In addition, the Company had an accumulated deficit of $31,391,142 and a shareholders’ surplus of $5,174,290 at January 31, 2008.” These factors, among others, as discussed in “Note 2- Going Concern” to the financial statements, raise substantial doubt about our ability to continue as a going concern. The auditors recognize that the cash flow uncertainty makes their basic assumptions about value uncertain. When it seems uncertain whether an asset will be used in a “going concern” or sold at auction, the auditors assume that the business is a “going concern” for purposes of all their work, and then they disclose that there is material uncertainty about that assumption. It is certain, in any case, that analysts and investors view unfavorably any report of independent auditors expressing substantial doubt about a company's ability to continue as a going concern.

The price of gold has experienced an increase in value over the past five years, generally reflecting among other things relatively low interest rates in the United States; worldwide instability due to terrorism; inflation affecting the US dollar and a slow recovery from the global economic slump. Any significant drop in the price of gold may have a materially adverse affect on the results of our operations unless we are able to offset such a price drop by substantially increased production.

We have no proven or probable reserves and have no ability to currently measure or prove our reserves other then estimating such reserves relying on information produced in the 1990’s and thus may be unable to actually recover the quantity of gold anticipated. We have retained SRK Engineering to perform a resource evaluation. We can only estimate a potential mineral resource which is a subjective process which depends in part on the quality of available data and the assumptions used and judgments made in interpreting such data. There is significant uncertainty in any resource estimate such that the actual deposits encountered or reserves validated and the economic viability of mining the deposits may differ materially from our expectations.

Gold exploration is highly speculative in nature. Success in exploration is dependent upon a number of factors including, but not limited to, quality of management, quality and availability of geological data and availability of exploration capital. Due to these and other factors, the probability of our exploration program identifying individual prospects having commercially significant reserves cannot be predicted. It is likely that many of the claims explored will not contain any commercially viable reserves. Consequently, substantial funds will be spent on exploration which may identify only a few, if any, claims having commercial development potential. In addition, if commercially viable reserves are identified, significant amounts of capital will be required to mine and process such reserves.

Our mining property rights consist of 146 mill site and unpatented mining claims at the Relief Canyon Mine, our leasehold interest in the Antelope Peak, Fairview-Hunter and Honorine Gold properties, and recently staked claims in the Horse Creek area of Nevada. The validity of unpatented mining claims is often uncertain and is always subject to contest. Unpatented mining claims are generally considered subject to greater title risk than patented mining claims, or real property interests that are owned in fee simple. If title to a particular property is successfully challenged, we may not be able to carryout exploration programs on such property or to retain our royalty or leasehold interests on that property should production take place, which could reduce our future revenues.

Mining is subject to extensive regulation by state and federal regulatory authorities. State and federal statutes regulate environmental quality, safety, exploration procedures, reclamation, employees’ health and safety, use of explosives, air quality standards, pollution of stream and fresh water sources, noxious odors, noise, dust, and other environmental protection controls as well as the rights of adjoining property owners. We believe that we are currently operating in substantial compliance with all known safety and environmental standards and regulations applicable to our Nevada property. However, there can be no assurance that our compliance could not be challenged or that future changes in federal or Nevada laws, regulations or interpretations thereof will not have a material adverse affect on our ability to resume and sustain mining operations.

The business of gold mining is subject to certain types of risks, including environmental hazards, industrial accidents, and theft. We carry insurance against certain property damage loss (including business interruption) and comprehensive general liability insurance. While we maintain insurance consistent with industry practice, it is not possible to insure against all risks associated with the mining business, or prudent to assume that insurance will continue to be available at a reasonable cost. We have not obtained environmental liability insurance because such coverage is not considered by management to be cost effective. We currently carry insurance on our property, plant and equipment as well as comprehensive general liability insurance.

As of August 29, 2008, Firstgold had approximately 130,845,543 shares of Common Stock outstanding and options and warrants to purchase a total of 64,922,821 shares of our Common Stock were outstanding as of August 29, 2008. The possibility that substantial amounts of our outstanding Common Stock may be sold by investors or the perception that such sales could occur, often called "equity overhang," could adversely affect the market price of our Common Stock and could impair our ability to raise additional capital through the sale of equity securities in the future.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

On May 1, 2008, we issued a Convertible Debenture in the principal amount of $1,100,000 and bearing interest of 10% per annum. The Debenture and accrued interest are convertible into shares of Firstgold common stock at a conversion rate of $0.80 per share. The Debenture is due and payable 20 months from the date of issue. The Debenture was secured by all of our assets including the Relief Canyon Mine. The transaction included the issuance of warrants to purchase 1,100,000 shares of Firstgold common stock at an exercise price of $1.00 per share. The proceeds of this Debenture were used to fund working capital needs.

Subsequent to the end of the second fiscal quarter, in August 2008, Firstgold issued Senior Secured Promissory Notes in the aggregate principal amount of $7,215,597 which resulted in net proceeds to Firstgold of $5,252,584. On September 10, 2008, Firstgold issued additional Senior Promissory Notes in the aggregate principal amount of $1,351,351, which resulted in net proceeds to Firstgold of $1,000,000. The Notes bear interest of 4% per annum payable monthly and are due and payable on March 1, 2010. In addition, commencing in December 2008, Firstgold is required to make minimum monthly principal reduction payments of $400,000. The Notes are secured by all of the assets of Firstgold including its interests in the Relief Canyon Mine property and facilities. The proceeds of these Notes will be used to fund the final permitting, deposits and facility construction at the Relief Canyon Mine site.

The issuance of the above-referenced debt instruments and warrants were made without any public solicitation to a limited number of investors or related individuals or entities. Each investor represented to us that the securities were being acquired for investment purposes only and not with an intention to resell or distribute such securities. Each of the individuals or entities had access to information about our business and financial condition and was deemed capable of protecting their own interests. The debt instruments and warrants were issued pursuant to the private placement exemption provided by Section 4(2) and Regulation D there under or Section 4(6) of the Securities Act. The debenture and notes are deemed to be “restricted securities” as defined in Rule 144 under the Securities Act and the warrant certificates and stock certificates bear a legend limiting the resale thereof.

ITEM 5. OTHER INFORMATION

In January 2008, Firstgold filed an application to become listed on the Toronto Stock Exchange (“TSX”). This application had been pending with the TSX while Firstgold satisfied various listing requirements, including securing additional capital. On May 12, 2008, the TSX approved Firstgold’s application for listing its common shares and, effective May 14, 2008, Firstgold’s shares became listed for trading under the symbol “FGD”. Firstgold’s common stock continues to be listed for trading on the OTC Bulletin Board market under the symbol “FGOC”.

ITEM 6. EXHIBITS

10.20(b)	Amended Aircraft Time Sharing Agreement dated December 1, 2006
10.29(a)	Senior Secured Promissory Note dated August 27, 2008 (Platinum)
10.29(b)	Senior Secured Promissory Note dated August 27, 2008 (Lakewood)
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of2002.
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of2002.
32	Certification by CEO and CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

SIGNATURES

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

	FIRSTGOLD CORP.

Dated: September 19, 2008	By:	/s/ STEPHEN AKERFELDT
		Stephen Akerfeldt, Chief Executive Officer


		/s/ JAMES KLUBER
		James Kluber, Principal Accounting Officer and Chief Financial Officer

Exhibit 10.29(a)

SENIOR SECURED PROMISSORY NOTE

Dated: August 27, 2008

Amount: $378,378.37

For value received, FIRSTGOLD CORP., a corporation organized under the laws of the State of Delaware (the “Maker”), hereby promises to pay to the order of PLATINUM LONG TERM GROWTH, LLC, with an address of 152 West 57th Street, 4th Floor, New York, NY 10019 (together with its successors, representatives, and assigns, the “Holder”), in accordance with the terms hereinafter provided, the principal amount of Three Hundred Seventy-Eight Thousand Three Hundred Seventy-Eight Dollars and Thirty Seven Cents ($378,378.37) hereunder, together with interest and all other obligations outstanding hereunder.

All payments under or pursuant to this Note shall be made in United States Dollars in immediately available funds to the Holder at the address of the Holder first set forth above or at such other place as the Holder may designate from time to time in writing to the Maker or by wire transfer of funds to the Holder’s account, instructions for which are attached hereto as Exhibit A. The outstanding principal balance of this Note shall be due and payable on March 1, 2010 (the “Maturity Date”) or at such earlier time as provided herein.

ARTICLE I

Section 1.1 Purchase Agreement. This Note has been executed and delivered pursuant to the Note and Warrant Purchase Agreement, dated as of August 7, 2008 (the “Purchase Agreement”), by and between the Maker, the Holder (as a Lender) and each other Lender party thereto and related agreements and documents. Capitalized terms used and not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement.

Section 1.2 Interest. The outstanding principal balance of this Note shall bear interest, in arrears, at a rate per annum equal to four percent (4%), payable in cash on the first Business Day of each month following the date hereof. Interest shall be computed on the basis of a 360-day year of twelve (12) thirty-day months, shall compound monthly and shall accrue commencing on the date hereof. Furthermore, upon the occurrence of an Event of Default (as defined in Section 2.1 hereof), the Maker will pay interest to the Holder, payable on demand, on the outstanding principal balance of the Note and on all unpaid interest from the date of the Event of Default at a per annum rate equal to the lesser of eighteen percent (18%) and the maximum applicable legal rate per annum, calculated based on a 360-day year.

Section 1.3 Payment of Principal; Prepayment.

(a) The principal amount hereof shall be paid in full on the Maturity Date or, if earlier, upon acceleration of this Note in accordance with the terms hereof. Any amount of principal repaid hereunder may not be reborrowed. The Maker may prepay all or any portion of the principal amount of this Note upon not less than three (3) Business Days prior written notice to the Holder, without penalty or premium.

(b) Not later than the fifteenth (15th) day of each calendar month, the Maker shall make a mandatory prepayment to the Holder equal to its Pro Rata Share of forty percent (40%) of the Maker’s Free Cash Flow in and for the preceding calendar month;

provided, however, that commencing with the payment to be made in December, 2008 and continuing in each month thereafter, such monthly payment be equal to the Holder’s Pro Rata Share of the greater of (i) forty percent (40%) of the Maker’s Free Cash Flow in the preceding calendar month, and (ii) $400,000. Each such payment shall be accompanied by financial calculations of such prior month’s Free Cash Flow certified as being complete and correct by the Maker’s president or chief financial officer, in such detail and with such supporting financial documents as the Collateral Agent (as defined below) may require. Each such mandatory prepayment shall be applied first to any interest, fee or expense obligation hereunder which is then due and unpaid and then on account of the principal balance hereof. Prepayments applied to principal shall be made against the principal balance of this Note and of all other outstanding Notes issued under the Purchase Agreement on a pro-rata basis. For the purposes hereof, “Free Cash Flow” shall mean the Maker’s gross revenue from all sources less direct operating costs in the period for which such calculation is made (all in accordance with GAAP).

Section 1.4 Security Documents. The obligations of the Maker hereunder are secured by a continuing security interest in substantially all of the assets of the Maker pursuant to the terms of a Security Agreement bearing even date herewith by and between the Maker and the Collateral Agent, a Deed or Deeds of Trust, and other collateral documents. For the purposes hereof, the term “Collateral Agent” shall have the meaning given thereto in the Security Agreement.

Section 1.5 Payment on Non-Business Days. Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws of the State of New York, such payment shall be due on the next succeeding Business Day and such next succeeding day shall be included in the calculation of the amount of accrued interest payable on such date.

Section 1.6 Transfer. This Note may be transferred or sold, and may also be pledged, hypothecated or otherwise granted as security, by the Holder; provided, however, that any transfer or sale of this Note must be in compliance with any applicable securities laws.

Section 1.7 Replacement. Upon receipt of a duly executed, notarized and unsecured written statement from the Holder with respect to the loss, theft or destruction of this Note (or any replacement hereof) and a standard indemnity, or, in the case of a mutilation of this Note, upon surrender and cancellation of such Note, the Maker shall issue a new Note, of like tenor and amount, in lieu of such lost, stolen, destroyed or mutilated Note.

Section 1.8 Use of Proceeds. The Maker shall use the proceeds of this Note as set forth in the Purchase Agreement.

ARTICLE II

EVENTS OF DEFAULT; REMEDIES

Section 2.1 Events of Default. The occurrence of any of the following events shall be an “Event of Default” under this Note:

(a) any default in respect of any payment of the principal amount, interest or any other monetary obligation under this Note, as and when the same shall be due and payable (whether on the Maturity Date or by acceleration or otherwise) or within three (3) days thereafter; or

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(b) the Maker shall fail to observe or perform any other condition, covenant or agreement contained in this Note, which failure is not cured within five (5) Business Days after the Maker’s receipt of notice of such failure; or

(c) the suspension from listing, without subsequent listing on any one of, or the failure of the Common Stock to be listed on at least one of the OTC Bulletin Board, the American Stock Exchange, the Nasdaq Capital Markets, the Nasdaq Global Market, the Nasdaq Global Select Market or The New York Stock Exchange, Inc. for a period of five (5) consecutive Trading Days, such a suspension to only constitute an Event of Default if the Holder provides the Maker written notification that it deems such suspension to be an Event of Default; or

(d) the Maker shall default in the performance or observance of (i) any undertaking, covenant, condition or agreement contained in the Purchase Agreement or any other Transaction Document and such default is not fully cured within five (5) Business Days after the Maker’s receipt of notice of such default; or

(e) any representation or warranty made by the Maker herein or in the Purchase Agreement or any other Transaction Document shall prove to have been false or incorrect or breached in a material respect on the date as of which made; or

(f) any failure by Maker to cure within five (5) Business Days after the Maker’s receipt of notice of (A) a default in any payment of any amount or amounts of principal of or interest on any Indebtedness of the Maker (other than the Indebtedness hereunder) the aggregate principal amount of which Indebtedness is in excess of $50,000 or (B) a default in the observance or performance of any other agreement or condition relating to any Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders or beneficiary or beneficiaries of such Indebtedness to cause with the giving of notice if required, such Indebtedness to become due prior to its stated maturity; or

(g) the Maker shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium, reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing; or

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(h) a proceeding or case shall be commenced in respect of the Maker, without its application or consent, in any court of competent jurisdiction, seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets in connection with the liquidation or dissolution of the Maker or (iii) similar relief in respect of it under any law providing for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed and in effect, for a period of thirty (30) days or any order for relief shall be entered in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against the Maker or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken with respect to the Maker and shall continue undismissed, or unstayed and in effect for a period of thirty (30) days; or

(i) any default or event of default, or event that, with the passage of time or giving of notice or both would constitute a default or event of default, shall have occurred under any mining lease or mining rights or claims agreement to which Maker is now or at any time hereafter a party or any such agreement is terminated by any of the parties thereto; or

(j) a judgment or judgments in the aggregate amount exceeding $25,000 is/are entered against the Maker and not dismissed or discharged within twenty (20) days following the entry thereof; or

(k) Maker shall cease to actively conduct its business operations for a period of five (5) consecutive Business Days; or

(l) any material portion of the properties or assets of the Maker is seized by any governmental authority; or

(m) the Maker is indicted for the commission of any criminal activity; or

(n) closing of a purchase, tender or exchange offer made to the holders of more than fifty percent (50%) of the outstanding shares of Common Stock in which more than fifty percent (50%) of the outstanding shares of Common Stock were tendered and accepted.

Section 2.2 Remedies Upon An Event of Default. If an Event of Default shall have occurred and shall be continuing, the Collateral Agent may at any time at its option (a) declare the entire unpaid principal balance of this Note, together with all interest accrued hereon, plus fees and expenses, due and payable, and thereupon, the same shall be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally and irrevocably waived by the Maker; provided, however, that upon the occurrence of an Event of Default described in Sections 2.1 (g) or (h) above, the outstanding principal balance and accrued interest hereunder, plus fees and expenses, shall be immediately and automatically due and payable, and/or (b) exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests as well as its own rights, powers and remedies under this Note, the Purchase Agreement, the Security Agreement or other Transaction Document or applicable law. No course of delay on the part of the Collateral Agent or the Holder shall operate as a waiver thereof or otherwise prejudice the right of the Collateral Agent or the Holder.

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No remedy conferred hereby shall be exclusive of any other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise. Upon and after an Event of Default, this Note shall bear interest at the default rate set forth in Section 1.2 hereof.

ARTICLE III

MISCELLANEOUS

Section 3.1 Notices. Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and shall be effective (a) upon hand delivery, telecopy or facsimile at the address or number designated in the Purchase Agreement (if delivered on a Business Day during normal business hours where such notice is to be received), or the first Business Day following such delivery (if delivered other than on a Business Day during normal business hours where such notice is to be received) or (b) on the second Business Day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur.

Section 3.2 Governing Law. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction. This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

Section 3.3 Headings. Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute a part of this Note for any other purpose.

Section 3.4 Remedies, Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Note shall be cumulative and in addition to all other remedies available under this Note, at law or in equity (including, without limitation, a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Maker to comply with the terms of this Note. Amounts set forth or provided for herein with respect to payments, conversion and the like (and the computation thereof) shall be the amounts to be received by the holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Maker (or the performance thereof). The Maker acknowledges that a breach by it of its obligations hereunder will cause irreparable and material harm to the Holder and that the remedy at law for any such breach may be inadequate. Therefore the Maker agrees that, in the event of any such breach or threatened breach, the Collateral Agent (on behalf of the Holder) shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity of showing economic loss and without any bond or other security being required.

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Section 3.5 Enforcement Expenses. The Maker agrees to pay all costs and expenses incurred from time to time by the Holder with respect to any modification, consent or waiver of the provisions of this Note or the Transaction Documents and any enforcement of this Note and the Transaction Documents, including, without limitation, reasonable attorneys’ fees and expenses.

Section 3.6 Amendments. This Note may not be modified or amended in any manner except in writing executed by the Maker and the Holder.

Section 3.7 Compliance with Securities Laws. The Holder of this Note acknowledges that this Note is being acquired solely for the Holder’s own account and not as a nominee for any other party, and for investment, and that the Holder shall not offer, sell or otherwise dispose of this Note except in accordance with applicable law.

Section 3.8 Consent to Jurisdiction. Each of the Maker and the Holder (i) hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in New York county for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or proceeding is improper. Each of the Maker and the Holder consents to process being served in any such suit, action or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 3.8 shall affect or limit any right to serve process in any other manner permitted by law. Each of the Maker and the Holder hereby agree that the prevailing party in any suit, action or proceeding arising out of or relating to this Note shall be entitled to reimbursement for reasonable legal fees from the non-prevailing party.

Section 3.9 Binding Effect. This Note shall be binding upon, inure to the benefit of and be enforceable by the Maker, the Holder and their respective successors and permitted assigns. The Maker shall not delegate or transfer this Note or any obligations or undertakings contained in this Note.

Section 3.10 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege.

Section 3.11 Maker Waivers; Dispute Resolution.

(a) Except as otherwise specifically provided herein, the Maker and all others that may become liable for all or any part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands’ and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable hereon, all without affecting the liability of the other persons, firms or Maker liable for the payment of this Note, AND DO HEREBY WAIVE TRIAL BY JURY.

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(b) No delay or omission on the part of the Collateral Agent or the Holder in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver of such rights or any other right of the Collateral Agent or the Holder, nor shall any waiver by the Collateral Agent or the Holder of any such right or rights on any one occasion be deemed a waiver of the same right or rights on any future occasion.

(c) THE MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.

Section 3.12 Definitions. Terms used herein and not defined shall have the meanings set forth in the Purchase Agreement. For the purposes hereof, the following terms shall have the following meanings:

“Business Day” (whether or not capitalized) shall mean any day banking transactions can be conducted in New York City, NY, USA and does not include any day which is a federal or state holiday in such location.

“Person” means an individual or a corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or political subdivision thereof) or other entity of any kind.

“Trading Day” means (a) a day on which the Common Stock is traded on the OTC Bulletin Board or a registered national securities exchange, or (b) if the Common Stock is not traded on the OTC Bulletin Board or a registered national securities exchange, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding its functions of reporting prices); provided, however, that in the event that the Common Stock is not listed or quoted as set forth in (a) or (b) hereof, then Trading Day shall mean any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other government action to close.

“Transaction Documents” means this Note, the Purchase Agreement, the Security Agreement, any Deed of Trust and all other security documents or related agreements now or hereafter entered into in connection with and/or as security for this Note and all amendments and supplements thereto and replacements thereof and any other Transaction Document (as that term is defined in the Purchase Agreement).

[Signature appears on following page]

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IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed by its duly authorized officer as of the date first above indicated.

	FIRSTGOLD CORP.

	By:	/s/ STEVEN AKERFELDT
		Name: Steven Akerfeldt
		Title: CEO

[Signature Page to Senior Secured Promissory Note]

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	LESSOR:

	ASD AVIATION, INC.

	By:	/s/ A. Scott Dockter
		A. Scott Dockter
	Its:	President/CEO

	LESSOR:

	ASD AVIATION, INC.

	By:	/s/ A. Scott Dockter
		A. Scott Dockter
	Its:	President/CEO

	LESSEE:

	FIRSTGOLD CORP.

	By:	/s/ James Kluber
		James Kluber
	Its:	Chief Financial Officer

Date: September 19, 2008		/s/ STEPHEN AKERFELDT
		Stephen Akerfeldt, Chief Executive Officer

Date: September 19, 2008		/s/ JAMES KLUBER
		James Kluber, Chief Financial Officer