XTSE:CXX Annual Report 20-F Filing - 7/24/2012

Effective Date 7/24/2012



UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
WASHINGTON, D.C.  20549
 
FORM 20-F
(Mark One)
 
 
¨
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
 
OR
 
 
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended April 30, 2012
 
OR
 
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
 
OR
 
 
¨
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report ____________
 
Commission file number 001-33439                                                                
CROSSHAIR ENERGY CORPORATION 

(Exact name of Registrant as specified in its charter)
 
 
British Columbia, Canada

(Jurisdiction of incorporation or organization)
 
 
Suite 1240, 1140 West Pender Street, Vancouver, B.C. Canada V6E 4G1

(Address of principal executive offices)
 
 
Mark Morabito, Phone:  (604) 681-8030, mmorabito@forbeswest.com
Suite 1240, 1140 West Pender Street, Vancouver, B.C. Canada V6E 4G1 

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
Name of Exchange on which registered
Common Shares, without par value
NYSE MKT LLC

Securities registered pursuant to Section 12(g) of the Act:
 
None

(Title of Class)
 
 
 

 
 
 
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
 
None 

(Title of Class)
 
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report:65,782,178
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 
¨ Yes                 þ No
 
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
¨ Yes                 þ No
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
þ Yes                 ¨ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
¨ Yes                 ¨ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):
 
Large accelerated filer ¨                                                           Accelerated filer  ¨                                                      Non-accelerated filer þ
 
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
U.S. GAAP ¨
International Financial Reporting Standards as issued
by the International Accounting Standards Board  þ
 
Other ¨
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
¨ Item 17                      þ Item 18
 
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
¨ Yes                            þ No
 
 
Index to Exhibits on Page 123
 
 
 

 
 

 
CROSSHAIR ENERGY CORPORATION
(the “Company” or “Crosshair”)

FORM 20-F ANNUAL REPORT
TABLE OF CONTENTS

Part I
 
Page
Item 1.
Identity of Directors, Senior Management and Advisers
3
Item 2.
Offer Statistics and Expected Timetable
3
Item 3.
Key Information
3
Item 4.
Information on the Company
14
Item 4A.
Unresolved Staff Comments
41
Item 5.
Operating and Financial Review and Prospects
41
Item 6.
Directors, Senior Management and Employees
48
Item 7.
Major Shareholders and Related Party Transactions
66
Item 8.
Financial Information
67
Item 9.
The Offer and Listing
69
Item 10.
Additional Information
70
Item 11.
Quantitative and Qualitative Disclosures About Market Risk
78
Item 12.
Description of Securities Other Than Equity Securities
79
Part II
   
Item 13.
Defaults, Dividend Arrearages and Delinquencies
80
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds
80
Item 15.
Controls and Procedures
80
Item 16A.
Audit Committee Financial Expert
81
Item 16B.
Code of Ethics
81
Item 16C.
Principal Accountant Fees and Services
81
Item 16D.
Exemptions from the Listing Standards for Audit Committees
82
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
82
Item 16F.
Changes in Registrant’s Certifying Accountant
82
Item 16G
Corporate Governance
82
Part III
   
Item 17.
Financial Statements
84
Item 18.
Financial Statements
84
Item 19.
Exhibits
123
 
Glossary of Geological Terms
126

 
 
 
 

 
 
RESOURCE AND RESERVE ESTIMATES
 
The terms “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” used in our disclosure are Canadian mining terms that are defined in accordance with National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Best Practice Guidelines for the Estimation of Mineral Resource and Mineral Reserves (the “CIM Standards”), adopted by the CIM Council on December 11, 2005. These definitions differ from the definitions in the United States Securities and Exchange Commission (the “SEC”) Industry Guide 7 under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Under Industry Guide 7 standards, a “final” or “bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.
 
The terms “mineral resource,” “measured mineral resource,” “indicated mineral resource” and “inferred mineral resource” used in our disclosure are Canadian mining terms that are defined in accordance with NI 43-101 under the guidelines set out in the CIM Standards; however, these terms are not defined terms under Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.
 
Accordingly, information contained in this report and the documents incorporated by reference herein containing descriptions of our mineral deposits may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.
 
FORWARD-LOOKING STATEMENTS
 
Certain statements in this document constitute “forward-looking statements” under applicable securities laws.  Forward-looking statements can be identified by the use of terminology such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,” and statements that an action or event “may,” “might,” “could,” or “should,” be taken or occur, or other similar expressions. Forward looking statements contained in this document include, but are not limited to, statements with respect to: (i) the estimation of inferred and indicated mineral resources; (ii) details and goals of exploration activities; (iii) estimations of future costs and expenditures; (iv) permitting timelines; (v) currency fluctuations; (vi) requirements for additional capital and the sufficiency of working capital; (vii) government regulation of mining operations; (viii) environmental risks; (ix) unanticipated reclamation expenses; and (x) increases in mineral resource estimates. These forward-looking statements are not guarantees or predictions of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control and which may cause our actual results, performance or achievements, or other future events, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.  Such factors include, among others, the following risks:
 
 
·
the risks associated with outstanding litigation, if any;
 
 
·
risks associated with project development;
 
 
·
the need for additional financing;
 
 
·
operational risks associated with mining and mineral processing, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in operations which may or may not be insured;
 
 
 
 
1

 
 
 
·
fluctuations in metal prices;
 
 
·
title matters;
 
 
·
environmental liability claims and insurance;
 
 
·
reliance on key personnel;
 
 
·
the receipt of necessary regulatory approvals;
 
 
·
the potential for conflicts of interest among certain officers, directors or promoters with certain other projects;
 
 
·
the absence of dividends;
 
 
·
currency fluctuations;
 
 
·
competition;
 
 
·
dilution;
 
 
·
the volatility of our common share price and volume;
 
 
·
tax consequences to U.S. shareholders;
 
 
·
risks related to our being subject to the penny stock rules;
 
 
·
risks related to our being a foreign private issuer; and
 
 
·
risks related to our possibly being a passive foreign investment company.
 
Forward-looking information and forward-looking statements are in addition based on various assumptions including, without limitation, the expectations and beliefs of management, the assumed long term price of commodities; that the Company can access financing, appropriate equipment and sufficient labour availability and that the political environment will continue to support the development and operation of mining projects.  Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in forward-looking statements.  Some of the important risks and uncertainties that could affect forward-looking statements are described further in “Item 3. Key Information—D. Risk Factors.”  Accordingly, readers are advised not to place undue reliance on forward-looking statements. The Company does not intend to update forward-looking statements or information, except as may be required by applicable law. Except as required by applicable regulations or by law, we do not undertake any obligation to publicly update or review any forward-looking statements whether as a result of new information, future events or otherwise.

FINANCIAL AND OTHER INFORMATION
 
In this Annual Report, unless otherwise specified, all dollar amounts are expressed in Canadian Dollars (“CDN$” or “$”).  The Government of Canada permits a floating exchange rate to determine the value of the Canadian Dollar against the U.S. Dollar (US$).
 

 
2

 

PART I

ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
 
Not applicable
 
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
 
Not applicable
 
ITEM 3.
KEY INFORMATION
 
3.A.           Selected Financial Data
 
Our selected financial data for the fiscal years ended April 30, 2012, 2011, 2010, 2009 and 2008 was derived from our financial statements that have been audited by Davidson & Company LLP, independent Chartered Accountants, as indicated in their audit reports.  Davidson & Company LLP is a member of the Canadian Institute of Chartered Accountants.
 
The selected financial data should be read in conjunction with and is qualified in its entirety by reference to the financial statements and notes thereto included elsewhere in this Annual Report.
 
To date, we have not generated sufficient cash flow from operations to fund ongoing operational requirements and cash commitments.  We have financed our operations principally through the sale of our equity securities.  While we believe we have sufficient capital and liquidity to finance current operations, nevertheless, our ability to continue operations is dependent on our ability to obtain additional financing.  See “Item 3. Key Information—D. Risk Factors.”
 
The information for year ended April 30, 2012 and 2011 in the following table is derived from our financial statements, which have been prepared in accordance with the International Financial Reporting Standards (“IFRS”). There were no material differences between IFRS and US GAAP for the years ended April 30, 2012 and 2011. The information for year ended April 30, 2010, 2009 and 2008 were prepared in accordance with the Canadian generally accepted accounting principles (“Canadian GAAP”).   All material numerical differences between Canadian GAAP and US GAAP, are described in footnotes to the financial statements for the years ended April 30, 2010, 2009, and 2008.
 
 
 
3

 
 

 
 
   
For the Year Ended April 30,
 
   
2012
   
2011
   
2010
       
2009
   
2008
 
   
IFRS 1
   
IFRS 1
   
CGAAP
       
CGAAP
   
CGAAP
 
Revenue
    --       --       --           --       --  
Income (Loss) for the Period
  $ (11,977,829 )   $ (4,077,470 )   $ (2,321,078 )       $ (20,724,237 )   $ (12,933,204 )
Basic Income (Loss) Per Share
  $ (0.24 )   $ (0.10 )   $ (0.02 )       $ (0.22 )   $ (0.18 )
Dividends Per Share
    --       --       --           --       --  
Weighted Average Shares (#)7
    50,377,698       41,193,459       118,114,045           93,584,687       72,997,081  
Period-end Shares (#)7 
    65,782,178       47,477,151       131,477,493           112,184,313       84,595,825  
Working Capital
  $ 5,466,961     $ 10,815,170     $ 3,403,009         $ 2,641,169     $ 13,272,006  
Mineral Properties
  $ 11,592,105     $ 10,180,650     $ 30,385,684             $ 29,336,828     $ 27,071,981  
Long-Term Debt
  $ 558,742     $ 1,146,879     $ 490,458             $ 676,484     $ 172,238  
Capital Stock
  $ 87,457,513     $ 81,021,668     $ 70,162,104             $ 67,793,186     $ 60,948,053  
Shareholders’ Equity
  $ 16,999,901     $ 20,048,338     $ 33,705,417             $ 31,849,308     $ 40,795,458  
Total Assets
  $ 17,997,243     $ 21,545,974     $ 34,998,792             $ 33,365,659     $ 42,270,262  
   
IFRS 1
   
IFRS 1
   
US GAAP 2 3 4 5 6
           
US GAAP 2 3 4 5 6
   
US GAAP 2 3 4 5 6
 
Net Income (Loss)
  $ (11,977,829 )   $ (4,077,470 )   $ (4,359,091 )           $ (16,296,230 )   $ (24,195,442 )
Loss Per Share
  $ (0.24 )   $ (0.10 )   $ (0.04 )           $ (0.17 )   $ (0.33 )
Mineral Properties
  $ 11,592,105     $ 10,180,650     $ 10,338,357             $ 10,690,539     $ 3,201,950  
Shareholders’ Equity
  $ 16,999,901     $ 20,048,338     $ 13,441,816             $ 13,172,334     $ 16,389,177  
Total Assets
  $ 17,997,243     $ 21,545,974     $ 14,951,465             $ 14,719,370     $ 18,400,231  
 
1
The financial information for years ended April 30, 2012 and 2011 are prepared using the International Financial Reporting Standards (“IFRS”). The Company’s transition date is May 1, 2010.  The application of IFRS conforms in all material respects for the years ended April 30, 2012 and 2011 with United States GAAP. All the financial information prior to the Company’s transition date is presented in accordance with the Canadian generally accepted accounting principles (“Canadian GAAP”).
2        The cumulative net loss under IFRS/US GAAP at April 30, 2012 is approximately $91.4 million.
3
Under US GAAP, options granted to non-employees as compensation for services provided are fair valued and an expense recorded.
4
Under SEC interpretation of US GAAP, all exploration costs on mineral properties prior to the establishment of proven or probable reserves are expensed as incurred.
5
Under Canadian income tax legislation, we are permitted to issue shares whereby we agree to incur qualifying expenditures (as defined under the Income Tax Act of Canada) on our mineral properties and renounce the related income tax deductions to the investors.  Under Canadian GAAP, flow-through shares are accounted for as part of the issuance of capital stock at the price paid for the shares, net of any future income tax liability. Under US GAAP/IFRS, any difference between the market price of our common shares and the fair value of the flow-through shares must be recorded as a liability if a premium is paid by investors or as an asset if investors are purchasing the shares at a discount.  The asset or liability is charged to income as the flow-through share proceeds are expended on qualifying expenditures.
6
Under both IFRS and US GAAP, basic loss per share is calculated using the weighted average number of common shares outstanding during the year.  Under US GAAP, the weighted average number of common shares outstanding excludes any shares held in escrow for which the release is subject to certain performance conditions.
7
On October 28, 2010, the common shares of the Company were consolidated on the basis of four pre-consolidation shares for one post-consolidation share.  The numbers presented for fiscal 2012 and 2011 are presented on post-consolidated basis, while the numbers presented for fiscal 2010, 2009 and 2008 are presented on a pre-consolidated basis.
 
 
 
 
4

 

 
Exchange Rates
 
The following table sets forth the high and low rates of exchange for the Canadian Dollar for each month during the previous six months. The table also sets forth the average exchange rates for the Canadian Dollar for the five most recent fiscal years ended April 30th.  The yearly average rate means the average of the exchange rates based on the daily rates during each fiscal period.
 
For purposes of this table, the rates of exchange are those quoted by the Bank of Canada.  The table sets forth the number of Canadian Dollars required under that formula to buy one U.S. Dollar.  
 
Period
 
High (1)
Low (1)
       
June 2012
 
1.0443
1.0166
May 2012
 
1.0366
0.9830
April 2012
 
1.0050
0.9800
March 2012
 
1.0035
0.9842
February 2012
 
1.0040
0.9844
January 2012
 
1.0296
0.9966
       
 
Average (2)
   
Fiscal year ended April 30, 2012
0.9928
   
Fiscal year ended April 30, 2011
1.0138
   
Fiscal year ended April 30, 2010
1.0721
   
Fiscal year ended April 30, 2009
1.1501
   
Fiscal year ended April 30, 2008
1.0175
   

The exchange rate was $1.0078 on July19, 2012.
 
 
(1)
Means the intra-day high/low rate during the period.
 
 
(2)
Means the average of the noon day rates on the last day of each month during the period.
 
3.B.
Capitalization and Indebtedness
 
Not applicable
 
3.C.
Reasons for the Offer and Use of Proceeds
 
Not applicable
 
3.D.
Risk Factors
 
We are subject to a number of risks due to the nature of our business, including our present exploration state.  The following describes the material risks that could affect us.
 
There has been significant economic uncertainty since the second half of 2008 and it has affected the Company’s operations.
 
The recent unprecedented events in global financial markets have had a profound impact on the global economy. Many industries, including the mining industry, are impacted by these market conditions.  Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a
 
 
 
5

 
 
lack of market liquidity. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates, and tax rates may adversely affect the Company’s growth and profitability.  Specifically:
 
·
the global credit/liquidity crisis could impact the cost and availability of financing and the Company’s overall liquidity;
 
·
the volatility of mineral prices would impact the Company’s revenues, profits, losses and cash flow potential;
 
·
volatile energy prices, commodity and consumables prices and currency exchange rates would impact the Company’s production costs; and
 
·
the devaluation and volatility of global stock markets would impact the valuation of the Company’s equity and other securities.
 
These factors could have a material adverse effect on the Company’s financial condition and results of operations. As a result, the Company will consider its plans and options carefully in fiscal 2013.
 
No known reserves
 
Our properties are in the exploration stage and are without a known body of mineral reserves.
 
We have no mineral producing properties at this time. Only those mineral deposits that we can economically and legally extract or produce, based on a comprehensive evaluation of cost, grade, recovery and other factors, are considered “reserves.” We have not defined or delineated any proven or probable reserves on any of our properties. Although the mineralized material and mineralized deposit estimates included herein have been carefully prepared by us, or, in some instances have been prepared, reviewed or verified by independent mining experts, these amounts are estimates only and no assurance can be given that any particular level of recovery of uranium, vanadium, copper, gold, base metals and other minerals from mineralized material will in fact be realized or that an identified mineralized deposit will ever qualify as a commercially mineable (or viable) reserve.
 
Our planned exploration programs may not result in profitable commercial mining operations
 
Our operations involve exploration, and there is no guarantee that any of our activities will result in commercial production of any mineral deposits.  The exploration for and development of mineral deposits involves significant financial and other risks which even a combination of careful evaluation, experience and knowledge may not eliminate. Most exploration projects do not result in the discovery of commercially mineable deposits.  Major expenses are required to locate and establish mineral reserves, to develop metallurgical processes, and to construct mining and processing facilities at a particular site. Our planned exploration programs may not result in a profitable commercial mining operation.  Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as quantity and quality of the minerals, costs and efficiency of the recovery methods that can be employed; proximity to infrastructure; financing costs; mineral prices, which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land  tenure, land use, importing and exporting of minerals, and environmental protection.  The exact effect of these factors cannot be accurately predicted but could have a material adverse effect upon our operations and/or our ability to receive an adequate return on our invested capital.  There is no certainty that our expenditures made towards the search and evaluation of uranium, vanadium, copper, gold, base metals and other minerals result in discoveries of mineral resources, mineral reserves or any other mineral occurrences, or in profitable commercial mining operations.
 
 
 
6

 
 
Mining operations generally involve a high degree of risk
 
Our operations are subject to all the hazards and risks normally encountered in the exploration, development and production of uranium and other minerals, including environmental pollution, accidents or spills, industrial accidents, labor disputes, changes in the regulatory environment, natural phenomena, unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, damage to life or property, environmental damage, delays in or cessation of production, exploration or development, monetary losses and cost increases which could make us uncompetitive, and could lead to possible legal liability. Although adequate precautions to minimize risk will be taken, mining operations are subject to hazards such as equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability.  In addition, due to the radioactive nature of the materials handled in uranium mining, applicable regulatory requirements result in additional costs that must be incurred.
 
Our resource estimates may not be reliable
 
There is no certainty that any of our mineral resources will be economically mineable. Until a deposit is actually mined and processed the quantity of mineral resources and grades must be considered as estimates only.  Valid estimates made at a given time may significantly change when new information becomes available. In addition, the quantity of mineral resources may vary depending on, among other things, metal prices.  Any material change in quantity of mineral resources, grade or stripping ratio may affect the economic viability of our properties or any project we undertake. In addition, there can be no assurance that mineral or other metal recoveries in small scale laboratory tests will be duplicated in a larger scale test under on-site conditions or during production.
 
Fluctuations in prices of uranium, vanadium, copper, gold, base metals and other minerals, results of drilling, metallurgical testing and production and the evaluation of studies, reports and plans subsequent to the date of any estimate may require revision of such estimate. Any material reductions in estimates of mineral resources could have a material adverse effect on our results of operations and financial condition.
 
We rely on a limited number of properties
 
Our only properties of interest are currently the Central Mineral Belt properties in Labrador, the Golden Promise, South Golden Promise and Victoria Lake properties in Newfoundland and the Bootheel, Buck Point and Juniper Ridge properties in the United States. As a result, unless we acquire additional property interests, any adverse developments affecting these properties could have a material adverse effect upon our business and would materially and adversely affect our potential mineral resource production, profitability, financial performance and results of operations.
 
Competition from other energy sources and public acceptance of nuclear energy may affect the demand for uranium
 
Nuclear energy competes with other sources of energy, including oil, natural gas, coal and hydro-electricity.  These other energy sources are to some extent interchangeable with nuclear energy, particularly over the longer term.  Lower prices of oil, natural gas, coal and hydro-electricity may result in lower demand for uranium concentrate and uranium conversion services.  Furthermore, the growth of the uranium and nuclear power industry beyond its current level will depend upon continued and increased acceptance of nuclear technology as a means of generating electricity.  Because of unique political, technological and environmental factors that affect the nuclear industry, the industry is subject to public opinion risks which could have an adverse impact on the demand for nuclear power and increase the regulation of the nuclear power industry.
 
We face strong competition for the acquisition of mining properties
 
The mining industry is competitive in all of its phases. We face strong competition from other mining companies in connection with the acquisition of properties producing, or capable of producing, uranium and precious metals.  Many of these companies have greater financial resources, operational experience and technical capabilities than
 
 
 
7

 
 
we do.  As a result of this competition, we may be unable to maintain or acquire attractive mining properties on terms we consider acceptable, if at all. Consequently, our revenues, operations and financial condition could be materially adversely affected.
 
The Nunatsiavut moratorium may adversely affect our ability to raise capital
 
In order to develop the tools to evaluate the impact of large-scale development projects and the environmental impact, on April 8, 2008, Labrador’s Nunatsiavut Government announced a moratorium on uranium mining on Inuit land it governs that was supposed to continue until March 31, 2011. Even though the majority of our uranium properties did not fall under Nunatsiavut jurisdiction, we had experienced waning shareholder interest and difficulty in raising the capital required for the development of the Labrador projects. The moratorium was lifted on March 9, 2012; however, the difficulties associated with difficulty in raising capital may continue as an ongoing effect of the moratorium being put in place.
 
We do not have a history of mineral production or operations
 
We have never had any interest in mineral producing properties.  There is no assurance that commercial quantities of minerals will be discovered at our current properties or any future properties, nor is there any assurance that our exploration programs thereon will yield any positive results.  Even if commercial quantities of minerals are discovered, there can be no assurance that any of our properties will ever be brought to a stage where mineral resources can profitably be produced thereon.  Factors which may limit our ability to produce mineral resources from our properties include, but are not limited to, the price of the mineral resources which are being explored for, availability of additional capital and financing and the nature of any mineral deposits.
 
We do not have an extensive operating history and there can be no assurance of our ability to operate our projects profitably in the future.
 
Our insurance will not cover all the potential risks associated with our operations
 
Our business is subject to a number of risks and hazards generally, including adverse environmental conditions, industrial accidents, labor disputes, unusual or unexpected geological conditions, ground or slope failures, cave-ins, changes in the regulatory environment and natural phenomena such as inclement weather conditions, floods and earthquakes.  Such occurrences could result in damage to mineral properties or production facilities, personal injury or death, environmental damage to our properties or other properties, delays in mining, monetary losses and possible legal liability.
 
Our insurance will not cover all the potential risks associated with a mining company’s operations.  We may also be unable to maintain insurance to cover these risks at economically feasible premiums.  Insurance coverage may not be available or may not be adequate to cover any resulting liability. Moreover, there are risks against which we cannot insure or against which we may elect not to insure.  Insurance against risks such as environmental pollution or other hazards as a result of exploration and production is not generally available to us or to other companies in the uranium mining industry. We might also become subject to liability for pollution or other hazards which we may not be insured against or which we may elect not to insure against because of premium costs or other reasons. Losses from these events may cause substantial delays and require us to incur significant costs that could have a material adverse effect upon our financial condition, results of operations, competitive position and potentially our financial viability.
 
Our operations are subject to environmental regulation
 
All phases of our operations are subject to environmental regulation in the various jurisdictions in which we operate or may operate in the future. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set forth limitations on the generation, transportation, storage and disposal of solid and hazardous waste.  Environmental legislation is evolving in a manner that will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects, and a heightened degree of responsibility for companies and their officers,
 
 
 
8

 
 
directors and employees.  There is no assurance that future changes in environmental regulation, if any, will not adversely affect our operations. Environmental hazards may exist on the properties on which we hold interests which are unknown to us at present and which have been caused by previous or existing owners or operators of the properties.
 
Failure to comply with applicable laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions.  Parties engaged in mining operations or in the exploration or development of mineral properties may be required to compensate those suffering loss or damage by reason of the mining activities and may have civil or criminal fines or penalties imposed for violations of applicable laws or regulations.
 
Our operations are dependent on adequate infrastructure
 
Mining, processing, development and exploration activities depend, to one degree or another, on adequate infrastructure.  Reliable roads, bridges, power sources and water supply are important determinants, which affect capital and operating costs.  Unusual or infrequent weather phenomena, sabotage, government or other interference in the maintenance or provision of such infrastructure could adversely affect our operations, financial condition and results of operations.
 
Our properties may be subject to undetected title defects
 
It is possible there may still be undetected title defects affecting our properties. Title insurance generally is not available, and our ability to ensure that we have obtained secure claim to individual mineral properties or mining concessions may be severely constrained. Furthermore, we have not conducted surveys of the claims in which we hold interests and, therefore, the precise area and location of such claims may be in doubt. Accordingly, our properties may be subject to prior unregistered liens, agreements, transfers or claims, and title may be affected by, among other things, undetected defects which could have a material adverse impact on our operations.  In addition, we may be unable to operate our properties as permitted or to enforce our rights with respect to our properties.
 
We may be subject to additional costs for land reclamation
 
It is difficult to determine the exact amounts which will be required to complete all land reclamation activities in connection with our properties.  Reclamation bonds and other forms of financial assurance represent only a portion of the total amount of money that will be spent on reclamation activities over the life of a mine.  Accordingly, it may be necessary to revise planned expenditures and operating plans in order to fund reclamation activities.  Such costs may have a material adverse impact upon our financial condition and results of operations.
 
The inability to obtain necessary permits would adversely affect our ability to operate our business
 
We may not receive the necessary permits or receive them on acceptable terms, if at all, in order to conduct further exploration and to develop our properties.  The failure to obtain such permits, or delays in obtaining such permits, could adversely affect our operations.
 
Government approvals, approval of aboriginal people and permits are currently and may in the future be required in connection with our operations. To the extent such approvals are required and not obtained; we may be curtailed or prohibited from continuing our mining operations or from proceeding with planned exploration or development of mineral properties.
 
We will require additional capital for our mining operations
 
The development and exploration of our mining properties will require substantial additional financing.  Failure to obtain sufficient financing may result in the delay or indefinite postponement of exploration, development or production on our properties or even a loss of property interest. There can be no assurance that additional capital
 
 
 
9

 
 
will be available when needed or that, if available, the terms of financing such capital will be acceptable to us.  In addition, any future financing may be dilutive to our existing shareholders.
 
Future production from our mining properties, if any, is dependent upon the prices of uranium, vanadium, copper, gold, base metals and other minerals being adequate to make these properties economically viable
 
Mineral and base metals prices received, if any, could be such that our properties cannot be mined at a profit.  The price of our common shares, and our financial results and exploration, development and mining activities may in the future be significantly and adversely affected by declines in the price of uranium, vanadium, copper, gold, base metals and other minerals. The price of uranium, vanadium, copper, gold, base metals and other minerals fluctuates widely and is affected by numerous factors beyond our control such as the sale or purchase of commodities by various central banks and financial institutions, interest rates, exchange rates, inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional supply and demand, the political and economic conditions and production costs of major mineral-producing countries throughout the world, and the cost of  substitutes, inventory levels and carrying charges.  With respect to uranium, such factors include the demand for nuclear power, political and economic conditions in uranium producing and consuming countries, uranium supply from secondary sources, uranium production levels and costs of production.  Future serious price declines in the market value of uranium, vanadium, copper, gold, base metals and other minerals could cause development of and commercial production from our properties to be impracticable.  Depending on the price of uranium, vanadium, copper, gold, base metals and other minerals, cash flow from mining operations may not be sufficient and we could be forced to discontinue production and may lose our interest in, or may be forced to sell, some of our properties.  Future production from our mining properties, if any, is dependent upon the prices of uranium, vanadium, copper, gold, base metals and other minerals being adequate to make these properties economically viable.
 
In addition to adversely affecting our reserve estimates, if any, and our financial condition, declining commodity prices can impact operations by requiring a reassessment of the feasibility of a particular project. Such a reassessment may be the result of a management decision or may be required under financing arrangements related to a particular project. Even if a project is ultimately determined to be economically viable, the need to conduct such a reassessment may cause substantial delays or may interrupt operations until the reassessment can be completed.
 
Exchange rate fluctuations may effectively increase our costs of exploration and production
 
Exchange rate fluctuations may affect the costs that we incur in our operations.  Uranium, vanadium, copper, gold, base metals and other minerals are generally sold in U.S. dollars and our costs are incurred principally in Canadian dollars.  We also operate several mineral exploration projects in the United States that require payments to be made in U.S. dollars. The appreciation of non-U.S. dollar currencies against the U.S. dollar can increase the cost of exploration and production in U.S. dollar terms, which could materially and adversely affect our profitability, results of operations and financial condition.
 
Our operations are subject to extensive governmental regulation that may adversely affect our operating costs
 
Our mining, processing, development and mineral exploration activities are subject to various laws governing prospecting, development, production, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people, and other matters.  Although our exploration and development activities are currently carried out in accordance with all applicable rules and regulations, new rules and regulations may be enacted or existing rules and regulations may be applied in a manner which could limit or curtail production or development.  Amendments to current laws and regulations governing operations and activities of mining and milling or more stringent implementation thereof could have a substantial adverse impact on our operations. Worldwide demand for uranium is directly tied to the demand for energy produced by the nuclear electric industry, which is also subject to extensive government regulations and policies.
 
Amendments to current laws, regulations and permits governing operations and activities of mining and exploration companies, or more stringent implementation thereof, could have a material adverse impact on our operations and
 
 
 
 
10

 
 
cause increases in exploration expenses, capital expenditures or production costs, or reduction in levels of production at producing properties, or require abandonment or delays in development of new mining properties.
 
The market price of our common shares may experience substantial volatility
 
In recent years, the securities markets in the United States and Canada have experienced a high level of price and volume volatility, and the market price of securities of many mineral exploration companies have experienced wide fluctuations in price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies.  The price of our common shares is also likely to be significantly affected by short-term changes in prices of uranium, vanadium, copper, gold, base metals and other minerals, or in our financial condition or results of operations as reflected in our quarterly earnings reports.  Other factors unrelated to our performance that may have an effect on the price of our common shares include the following: the extent of analytical coverage available to investors concerning our business may be limited if investment banks with research capabilities do not follow our securities; lessening in trading volume and general market interest in our securities may affect an investor’s ability to trade significant numbers of our common shares; the size of our public float may limit the ability of some institutions to invest in our securities; and a substantial decline in the price of our common shares that persists for a significant period of time could cause our securities to be delisted from such exchange, further reducing market liquidity.
 
We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future
 
No dividends on our common shares have been paid to date and we have no earnings. We currently plan to retain all future earnings and other cash resources, if any, for the future operation and development of our business.  Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account many factors, including our operating results, financial condition, and current and anticipated cash needs.
 
Future sales of common shares by existing shareholders could adversely affect the trading price of our common shares
 
Sales of a large number of our common shares in the public markets, or the potential for such sales, could decrease the trading price of the common shares and could impair our ability to raise capital through future sales of common shares.
 
We are dependent upon the services of our key executives
 
We are dependent upon the services of key executives, including our directors and a small number of highly skilled and experienced executives and personnel. Due to our relatively small size, the loss of our Chief Executive Officer, Mark Ludwig, or our Executive Chairman, Mark Morabito, or our inability to attract and retain additional highly-skilled employees may adversely affect our future operations.
 
Our directors and officers have certain conflicts of interest
 
Certain of our directors and officers also serve as directors and/or officers of other companies involved in natural resource exploration and development and, consequently, there exists the possibility for such directors and officers to be in a position of conflict.
 
We have no positive cash flow and no recent history of earnings and we are dependent upon public and private contributions of equity to obtain capital in order to sustain our operations
 
None of our properties have advanced to the commercial production stage and we have no history of earnings or positive cash flow from operations.  Our cumulative loss, as of the year ended April 30, 2012 determined in accordance with IFRS is approximately $94.1 million.  We do not know if we will ever generate material revenue from mining operations or if we will ever achieve self-sustaining commercial mining operations.  Historically, the only source of funds available to us has been through the sale of our equity securities. Any future additional equity financing would cause dilution to current shareholders.
 
 
 
 
11

 
 
 
Dilution through employee, director and consultant stock options and warrants could adversely affect our shareholders by decreasing shareholder value
 
Because our success is highly dependent upon our employees, we have granted to some or all of our key employees, directors and consultants options to purchase common shares as non-cash incentives. In addition we have also issued share purchase units and warrants to investors and brokers in connection with equity financings. To the extent that significant numbers of such options, warrants and share purchase units may be granted and exercised, the interests of our other shareholders may be diluted.
 
As of July 19, 2012 we had 6,573,121 purchase options, 1,375,000 share purchase warrants (each share purchase warrant exercisable into one unit consisting of one share and one share purchase warrant) and 21,047,463 share purchase warrants outstanding  If all of these securities were exercised, the number of common shares issued and outstanding would increase from 65,782,178 to 96,152,762.  This represents an increase of`46.17% in the number of shares issued and outstanding and would result in significant dilution to current shareholders.
 
If we become subject to the SEC’s penny stock rules, the risks associated with penny stock classification could affect the marketability of our equity securities and shareholders could find it difficult to sell their common shares
 
If we do not maintain the NYSE MKT LLC (“NYSE MKT”) listing for our common shares or a listing of our common stock on another national securities exchange in the United States, and if the trading price of our common shares is less than US $5.00 per share, our common stock will become subject to the SEC’s “penny stock” rules as defined in Rule 3a51-1 under the Securities Exchange Act of 1934 (“Exchange Act”).  The SEC has adopted the penny stock rules to regulate broker-dealer practices in connection with transactions in penny stocks.  Penny stocks generally are equity securities with a price of less than US $5.00, other than securities registered on certain national securities exchanges, provided that current price and volume information with respect to transactions in such securities is provided by the exchange.
 
Transaction costs associated with purchases and sales of penny stocks are likely to be higher than those for other securities.  The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the nature and level of risks in the penny stock market.  The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account.  The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation.
 
In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.  These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for our equity securities in the United States and shareholders may find it more difficult to sell their shares.
 
U.S. investors may not be able to enforce their civil liabilities against us or our directors, controlling persons and officers
 
It may be difficult to bring and enforce suits against us.  We are incorporated in the province of British Columbia under the Business Corporations Act (British Columbia).  The majority of our directors and officers are residents of Canada, and all or substantial portions of their assets are located outside of the United States, predominately in Canada.  As a result, it may be difficult for U.S. holders of our common shares to effect service of process on these persons within the United States or to realize in the United States upon judgments rendered against them.  In addition, a shareholder should not assume that the courts of Canada (i) would enforce judgments of U.S. courts obtained in actions against us or such persons predicated upon the civil liability provisions of the U.S. federal
 
 
 
12

 
 
securities laws or other laws of the United States, or (ii) would enforce, in original actions, liabilities against us or such persons predicated upon the U.S. federal securities laws or other laws of the United States.
 
However, U.S. laws would generally be enforced by a Canadian court provided that those laws are not contrary to Canadian public policy, are not foreign penal laws or laws that deal with taxation or the taking of property by a foreign government and provided that they are in compliance with applicable Canadian legislation regarding the limitation of actions.  Also, a Canadian court would generally recognize a judgment obtained in a U.S. Court except, for example, where:
 
a)
the U.S. court that rendered the judgment had no jurisdiction according to applicable Canadian law;
 
b)
the judgment was subject to ordinary remedy (appeal, judicial review and any other judicial proceeding which renders the judgment not final, conclusive or enforceable under the laws of the applicable state) or not final, conclusive or enforceable under the laws of the applicable state;
 
c)
the judgment was obtained by fraud or in any manner contrary to natural justice or rendered in contravention of fundamental principles of procedure; or
 
d)
a dispute between the same parties, based on the same subject matter has given rise to a judgment rendered in a Canadian court or has been decided in a third country and the judgment meets the necessary conditions for recognition in a Canadian court.
 
As a "foreign private issuer”, we are exempt from the Section 14 proxy rules and Section 16 reporting rules under the Exchange Act which may result in shareholders having less complete and timely data
 
The submission of proxy and annual shareholder meeting information (prepared to Canadian standards) on Form 6-K may result in shareholders having less complete and timely data than if we were subject to the SEC’s domestic issuer proxy rules under Section 14 of the Exchange Act.  The exemption from Section 16 rules under the Exchange Act that require the reporting of acquisitions and disposition of our equity securities by our officers, directors and greater than 10% shareholders also may result in shareholders having less data.
 
If we are characterized as a passive foreign investment company (“PFIC”), our shareholders may be subject to adverse U.S. federal income tax consequences.
 
We have not made a determination as to whether we are considered a PFIC as such term is defined in the U.S. Internal Revenue Code of 1986 (the “Code”), for U.S. federal income tax purposes for the current tax year and any prior tax years.  A non-U.S. corporation generally will be considered a PFIC of any tax year if either (1) at least 75% of its gross income is passive income or (2) at least 50% of the value of its assets (based on an average of the quarterly values of the assets during a taxable year) is attributable to assets that produce or are held for the production of passive income.
 
In general, if we are or become a PFIC, any gain recognized on the sale of our common stock and any “excess distributions” (as specifically defined in the U.S. Internal Revenue Code of 1986) paid on the common stock must be ratably allocated to each day in a U.S. taxpayer’s holding period for the securities.  The amount of any such gain or excess distribution allocated to prior years of such U.S. taxpayer’s holding period for the common stock generally will be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such prior year, and the U.S. taxpayer will be required to pay interest on the resulting tax liability for each such prior year, calculated as if such tax liability had been due in each such prior year.
 
Litigation

Due to the nature of our business, we may become subject to regulatory investigations, claims, lawsuits and other proceedings in the ordinary course of its business. The results of these legal proceedings cannot be predicted with certainty due to the uncertainty inherent in litigation, including the effects of discovery of new evidence or advancement of new legal theories, the difficulty of predicting decisions of judges and juries and the possibility that
 
 
 
13

 
 
decisions may be reversed on appeal. There can be no assurances that these matters will not have a material adverse effect on our business.
 
ITEM 4.
INFORMATION ON THE COMPANY
 
4.A.           History and Development of the Company
 
Introduction
 
Crosshair Energy Corporation (the “Company” or “Crosshair”) was incorporated as a specially limited company pursuant to the Company Act (British Columbia) (replaced by the Business Corporations Act (British Columbia) effective March 29, 2004) on September 2, 1966 under the name Shasta Mines & Oil Ltd. (Non-Personal Liability).  We converted from a Private Company to a Public Company on February 20, 1967.  On February 4, 1975 we changed our name to International Shasta Resources Ltd. (Non-Personal Liability) and consolidated our share capital on the basis of one new share for five old shares and increased our share capital from 600,000 common shares to 3,000,000 common shares.  On September 14, 1977 we increased our authorized share capital from 3,000,000 common shares to 5,000,000 common shares.  On April 5, 1982, we increased our authorized share capital from 5,000,000 common shares to 10,000,000 common shares by Special Resolution.  On March 5, 1986 we converted from a Specially Limited Company into a Limited Company under the name of International Shasta Resources Ltd. and increased our authorized share capital from 10,000,000 common shares to 30,000,000 common shares.  On May 20, 1994, we changed our name to Consolidated Shasta Resources Inc. and consolidated our share capital on the basis of one new share for ten old shares and increased our authorized share capital from 3,000,000 common shares to 20,000,000 common shares.  On November 23, 1994 we changed our name to Lima Gold Corporation and on September 21, 1999 we changed our name to International Lima Resources Corp. and consolidated our share capital on the basis of one new share for three old shares and increased our authorized share capital from 6,666,667 common shares to 20,000,000 common shares.  On November 5, 2003 we increased our authorized share capital from 20,000,000 common shares to 100,000,000 common shares.  On March 1, 2004 we changed our name to Crosshair Exploration & Mining Corp.  On June 1, 2004 we replaced our Memorandum with a Notice of Articles as required by the Business Corporations Act (British Columbia). On March 11, 2005 we changed our authorized capital to an unlimited number of common shares.  On December 15, 2010, we consolidated our share capital on the basis of one new share for four old shares.  On October 28, 2011 we changed our name from Crosshair Exploration & Mining Corp. to Crosshair Energy Corporation.
 
Our executive office is located at:
 
Suite 1240 - 1140 West Pender Street
Vancouver, British Columbia, Canada  V6E 4G1
Telephone: (604) 681-8030
Facsimile: (604) 681-8039
Website: www.crosshairenergy.com
Email: mmorabito@forbeswest.com
 
The contact person is: Mr. Mark J. Morabito, Executive Chairman.
 
Our fiscal year ends April 30th.
 
Our common shares first began trading on the Vancouver Stock Exchange under the name Shasta Mines & Oil Ltd. on March 14, 1969.  Our common shares began trading on the TSX Venture Exchange with the trading symbol “CXX” on March 1, 2004.  On February 10, 2006, we graduated to Tier 1 on the TSX Venture Exchange.  On May 7, 2007, our common shares began trading on the American Stock Exchange (now NYSE MKT) with the trading symbol “CXZ.”  On May 12, 2008, our common shares began trading on the Toronto Stock Exchange with the trading symbol “CXX” and ceased trading on the TSX Venture Exchange.
 
On March 29, 2004, the Company Act (British Columbia) (the “Company Act”) was replaced by the Business Corporations Act (British Columbia) (the “BCBCA”).  Accordingly, we are now subject to the BCBCA and are no
 
 
 
14

 
 
longer governed by the Company Act.  There are a number of differences under the BCBCA, which differences are designed to provide greater flexibility and efficiency for British Columbia companies.  
 
Under the BCBCA, every company incorporated under the Company Act was required to complete a mandatory transition rollover under the BCBCA to substitute a Notice of Articles for its Memorandum within two years of March 29, 2004.  On June 1, 2004 we replaced our Memorandum with a Notice of Articles as is required by the BCBCA.  The only information contained in the Notice of Articles is the authorized share structure of the company, the name of the company, the address of the registered and records office of the company, and the names and addresses of the directors of the company.  On March 11, 2005, we changed our authorized capital to an unlimited number of common shares.
 
On March 31, 2009, Crosshair and Target Exploration and Mining Corp. (“Target”) successfully closed a plan of arrangement whereby Crosshair acquired all the outstanding common shares of Target and Target has become a wholly owned subsidiary of Crosshair.  Target shareholders received approximately 14.7 million common shares of Crosshair (1.2 Crosshair shares for each Target common share outstanding) with an estimated market value of approximately $2.6 million. In addition, each outstanding Target warrant and stock option which gives the holder the right to acquire common shares of Target was exchanged for a warrant or stock option which gives the holder the right to acquire common shares of Crosshair on the exchange ratio of 1.2 Crosshair shares for each Target warrant or stock option exercised, with all other terms of such warrants and options (such as term and expiry) remaining unchanged.  As a result of the acquisition of Target, Crosshair acquired an interest in the Bootheel and Sinbad projects in Wyoming and Utah, USA respectively.  During fiscal 2010, we allowed all 62 mineral claims on the Sinbad property located in Emery County, Utah, to lapse, and the State Lease with the State of Utah was not renewed.
 
Property Acquisitions
 
Since the beginning of fiscal 2012, we have acquired no additional properties.
 
Property Terminations
 
Since the beginning of fiscal 2012, we have dropped a total of 549 claims from the land package acquired from Expedition Mining  Inc. (formerly Universal Uranium Ltd.) (“Expedition”).  See “Item 4.D. Property, Plants and Equipment – Labrador – Central Mineral Belt – CMB-JV Property and Agreement” for further details about this land package. A total of 68 claims were dropped from the South Golden Promise Property, 491 claims from the Golden Promise Property and 20 claims from the CMB Property.  The abandoned claims did not represent any significant value for the Company so their abandonment did not reduce the value of the respective project and consequently there was no impairment of the carrying value of costs relating to these projects. 
 
Capital Expenditures
 
Our capital expenditures, excluding property, plant and equipment, for the last three fiscal years were as follows:
 
Fiscal Year
Expenditures
Fiscal 2010
$1,278,652(1)
Fiscal 2011
$474,1832)
Fiscal 2012
$1,411.455(3)

 (1)           These funds were spent as outlined below:
 
 
 
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Expense ($)
 
CMB
   
CMB JV
   
Bootheel
Project
   
Golden
Promise
   
Other
Claims
 
Drilling and trenching
  $ 88,713     $ --     $ 2,952     $ 592,314     $ --  
Geology
    90,800       70,282       209,190       157,040       --  
Geophysics
    --       123,662       --       --       --  
Administration
    56,770       32,435       28,961       47,242       --  
Technical analysis
    37,527       3,901       --       38,974       --  
Future reclamation
    (18,665 )     (5,651 )     (366,889 )     2,005       --  
Acquisition costs
    200,000       --       46,812       20,000       --  
JCEAP refunds received
    --       (70,954 )     --       (6,569 )     --  
Recovery – JV partner
    --       (71,004 )     (18,236 )     (4,352 )     --  
Administration fees
    --       (8,260 )     --       (348 )     --  

(2)           Some of the previously reported capital expenditures for fiscal 2011 were reclassified to comply with requirements under IFRS. The funds were spent as outlined below:

Expense ($)
 
CMB
   
CMB JV
   
Bootheel
Project
   
Golden
Promise
   
Juniper
Ridge
   
Other
Claims
 
Acquisition costs
    200,000       --       40,903       335       232,945       --  
 
 


(3)           These funds were spent as outlined below:

Expense ($)
 
CMB
   
CMB JV
   
Bootheel
Project
   
Golden
Promise
   
Juniper
Ridge
   
Other
Claims
 
Acquisition costs
    653,574       --       38,589       23,185       696,107       --  

 
We expect to incur capital expenditures of approximately $1.25 million for fiscal year 2013.  Our capital expenditures are financed through sales of our common shares.  
 
Exploration and evaluation expenses
 
Upon transition to IFRS, the Company recorded the following exploration and evaluation expenses in relation to its mineral properties.
 
Fiscal Year
Expenditures
Fiscal 2011
$883,1521)
Fiscal 2012
$6,630,464(2)

(1)
The following expenses for April 30, 2011 were reclassified to comply with requirements under IFRS:
 
 
 
 
16

 

 
Expense ($)
 
CMB
   
CMB JV
   
Bootheel
Project
   
Golden
Promise
   
Juniper
Ridge
   
Other
Claims
 
Drilling and trenching
  $ --     $ --     $ --     $ 39,853     $ --     $ --  
Geology
    240,974       190,385       43,512       278,413       25,513       9,924  
Geophysics
    --       --       --       65,442       --       --  
Geochemistry
    3,637       27,800       --       43,475       --       --  
Metallurgy
    22,235       --       --       54,586       --       --  
Administration
    4,485       14,088       21,241       15,649       --       --  
Technical analysis
    (652 )     (871 )     --       (3,850 )     --       --  
Future reclamation
    (25,209 )     (5,445 )     --       (583 )     --       --  
JCEAP refunds
    --       --       --       (155,439 )     --       --  
Recovery – JV partner
    --       --       (26,011 )     --       --       --  
 
 
(2)
These funds were spent as outlined below:

Expense ($)
 
CMB
   
CMB JV
   
Bootheel
Project
   
Golden
Promise
   
Juniper
Ridge
   
Other
Claims
 
Drilling and trenching
  $ 1,033,429     $ 1,860,522     $ 710,552     $ 45,295     $ 929,475     $ --  
Geology
    441,464       514,365       466,545       98,445       427,398       --  
Geophysics
    896       896       47,398       2,500       289,556       --  
Geochemistry
    8,905       3,305       --       --       --       --  
Metallurgy
    --       --       --       --       22,987       --  
Administration
    9,456       6,561       19,300       60       6,951       --  
Technical analysis
    --       --       --       --       --       --  
Future reclamation
    (162,239 )     (43,337 )     --       --       --       (7,664 )
Pre-acquisition cost
    --       --       --       --       --       153,170  
JCEAP refunds
    --       (150,000 )     --       --       --       --  
Recovery
    --       (105,727 )     --       --       --       --  

 
4.B.           Business Overview
 
Historical Corporate Development
 
We are a mineral exploration company engaged in the acquisition and exploration of mineral properties (primarily uranium, base and precious metals).  We do not have any producing mineral properties at this time.  Our business is presently focused on the exploration and evaluation of various mineral deposits in North America.
 
We are currently focusing our exploration and evaluation activities in the Province of Newfoundland and Labrador and the State of Wyoming on the following properties:
 
 
·
Central Mineral Belt properties located in Labrador, Canada (going forward will include the CMB-JV Property located in Labrador, Canada).
 
 
·
The Bootheel Project LLC located in Wyoming, U.S.A.
 
 
·
Juniper Ridge Property located in Wyoming, U.S.A.
 

 
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Material Effects of Government Regulations
 
Our current and anticipated future operations, including further exploration activities, require permits from various Canadian Federal and Provincial and U.S. Federal and State of Wyoming governmental authorities.  Such operations are subject to various laws governing land use, the protection of the environment, production, exports, taxes, labor standards, occupational health, waste disposal, toxic substances, well safety and other matters.  Unfavorable amendments to current laws, regulations and permits governing operations and activities of resource exploration companies, or more stringent implementation thereof, could have a materially adverse impact on us and cause increases in capital expenditures which could result in our ceasing operations.  We have had no material costs related to compliance and/or permits in recent years, and anticipate no material costs in the next year.
 
Work may be prohibited on certain parts of the Bootheel Properties due to the presence of sage grouse mating areas during the period March 15th to June 30th.
 
In order to develop the tools to evaluate the impact of large-scale development projects and the environmental impact, on April 8, 2008, Labrador’s Nunatsiavut Government announced a moratorium on uranium mining on Inuit land it governs that was supposed to continue until March 31, 2011. The moratorium was officially lifted on March 9, 2012. On July 20, 2011 it was announced that a draft land use plan for the Labrador Inuit Settlement Area had been adopted-in-principle for the purpose of public hearings by the Government of Newfoundland and Labrador and the Nunatsiavut Government. The hearings took place in the five Inuit communities of Nain, Hopedale, Makkovik, Postville, and Rigolet, as well as Mud Lake, Happy Valley-Goose Bay, North West River and St. John’s.
 
The moratorium had a material adverse impact on all uranium exploration and mining companies in Labrador, regardless of whether their properties fall under Nunatsiavut jurisdiction.  Even though the majority of our uranium properties do not fall under Nunatsiavut jurisdiction, we have experienced waning shareholder interest and difficulty in raising the capital required for the development of our projects.
 
Seasonality
 
We can only carry out exploration when weather is favorable.  Typically, we cannot carry out any work at a reasonable cost during the months of November and December for winter freeze-up and March and April for spring break-up on our Canadian properties.  
 
Dependency upon Patents/Licenses/Contracts/Processes
 
Not applicable
 
Sources/Availability of Raw Materials
 
Not applicable
 
4.C.
Organization Structure
 
Crosshair is a corporation subject to the BCBCA.  Crosshair owns 100% of the issued and outstanding shares in each of the following subsidiaries:
 
 
1.
Target Exploration and Mining Corp. (“Target”), a British Columbia corporation.
 
 
a.
Target owns all of the issued and outstanding shares in 448018 Exploration Inc., a Nevada Corporation.
 
 
i.
448018 Exploration Inc. holds an 81% interest in The Bootheel Project LLC.
 
 
 
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ii.
448018 Exploration Inc. is a party to the Juniper Ridge Agreement.
 
 
2.
Gemini Metals Corp., a British Columbia corporation.
 
4.D.
Property, Plants and Equipment
 
Our properties are in the exploration stage and a substantial amount of capital will have to be spent on each property before we will know if they contain commercially viable mineral deposits.  Our material properties are located in the Province of Newfoundland and Labrador, Canada and the State of Wyoming, U.S.A.  Our properties are without known reserves and the work being done by us is exploratory in nature.
 
Our executive offices are located shared office premises of approximately 8,240 square feet at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia Canada.  We have occupied these facilities since 2006.  Beginning on January 1, 2010 (revised on October 1, 2010), we entered into a management services agreement with Forbes West Management Corp. (formerly EGM Exploration Group Management Corp.) (“Forbes West”) under which Forbes West provides shared office space for the Company and other companies that Forbes West provides management services to. As part of this agreement, Forbes West has assumed the lease for the office facilities occupied by the Company.
 
On October 1, 2011, we commenced renting two offices of approximately 131 square feet each,  in a shared executive office center located at Suite 400, 1400 16th Street, Denver, Colorado for our President and Chief Executive Officer, and our Executive Vice President, Corporate Communications.  The term of the rental agreement is one year, expiring on September 30, 2013.
 

National Instrument 43-101 Compliance
 
Except as otherwise indicated, C. Stewart Wallis, P.G., P.Geo., having a business address at Suite 1240, 1140 West Pender Street, Vancouver, British Columbia, V6E 4G1, a Director of Crosshair and a Qualified Person as defined by NI 43-101, has reviewed and is responsible for the technical information contained in this Annual Report on Form 20-F.  Stewart Wallis has consented to the inclusion of his name and the statements attributed to him in this Annual Report on Form 20-F.  Further information about the Company’s mineral properties can be found in the following technical reports which are available on SEDAR at www.sedar.com:
 
 
·
Juniper Ridge Property: The Technical Report titled “Juniper Ridge Uranium Project, 43-101 Mineral Resource Technical Report, Carbon County, Wyoming, USA” dated February 21, 2012 (filed as exhibit to our Form 6-K filed on February 28, 2012).
 
·
Bootheel Project: The Technical Report titled “Technical Report on the Bootheel Project for Crosshair Energy Corp. and The Bootheel Project LLC” dated February 27,2012 (filed as exhibit to our Form 6-K on March 5, 2012).
 
·
CMB JV Uranium Project: The Technical Report titled “Technical Report on the CMBNW Property, Labrador Canada” dated June 22, 2009 (filed as an exhibit to our Form 6-K on June 24, 2009).
 
·
CMB Property: The Technical Report titled “Form 43-101 Technical Report on the Central Mineral Belt (CMB) Uranium - Vanadium Project, Labrador, Canada” dated January 20, 2011 (Rev March 10, 2011) (filed as an exhibit to our Form 6-K on March 17, 2011).
 
·
Golden Promise Property: The Technical Report titled “Form 43-101F1 Technical Report for the Golden Promise, South Golden Promise and Victoria Lake Properties, Newfoundland and Labrador” dated April 30, 2008 and amended September 23, 2008 (filed as exhibit to our Form 6-K on October 1, 2008).

 
 
 
 
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Newfoundland
 
 
Golden Promise Property and Agreements
 
Paragon Minerals Corp. (“Paragon”) acquired an option to earn a 100% interest in the Golden Promise property subject to underlying option agreements with William Mercer and Stephen Courtney on a portion of the property surrounding the Jaclyn Zones.  A total of 192 claims (4,800 hectares) comprise the option arrangement with William Mercer with payments totaling $230,000 ($230,000 paid) and 100,000 Paragon common shares, all of which have been issued.  Mr. Mercer’s property includes the Jaclyn deposit and he is entitled to a 2% NSR subject to a $1 million buyback of 50% of the NSR at any time.  Mr. Mercer also receives $20,000 per year as Advance Royalties deductable from his NSR The Courtney Property is no longer held by the Company.
 
Under the terms of an option agreement dated May 2, 2006, as amended April 18, 2008, with Paragon, we acquired an option to earn a 60% interest in the Golden Promise Property.  To complete the exercise of the option, we were required to issue 5,000 shares by May 1, 2009 and incur project expenditures of at least $1,416,000 by May 1, 2009 and another $1,250,000 by May 1, 2010.
 
Under the terms of a Purchase and Sale Agreement dated June 4, 2008 between Gemini Metals Corp. (“Gemini”), Crosshair and Paragon, our option agreement described above was terminated and Paragon’s interest in the Golden Promise Property was to be contributed to Gemini in exchange for shares of Gemini.  Under the terms of this agreement, on closing of the proposed transaction, Gemini would hold 100% interest in the Golden Promise
 
 
 
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Property.  This agreement was terminated pursuant to the terms of Golden Promise Option and Joint Venture Agreement dated as of April 8, 2009 between Crosshair and Paragon as described below.
 
Crosshair entered into the Golden Promise Option and Joint Venture Agreement dated April 8, 2009 between Crosshair and Paragon, pursuant to which it acquired a 60% interest in the Golden Promise Gold Project in Central Newfoundland, Canada with an option to acquire up to a 70% interest. This agreement terminated the original property option earn-in agreement with Paragon, and Crosshair also abandoned the previously approved Plan of Arrangement with Gemini whereby Crosshair was to transfer its gold and volcanic-hosted massive sulfide projects located in Newfoundland to Gemini in exchange for shares for Gemini.  As a result of the current market conditions, the board of directors of Crosshair determined that it was no longer in the best interest of shareholders to spin-out the Golden Promise, South Golden Promise and Victoria Lake properties into a separate publicly traded company to be known as Gemini.

Pursuant to the Golden Promise Option and Joint Venture Agreement, Crosshair issued 663,750 common shares with a market value of approximately $686,608 to Paragon to purchase the 60% interest in Golden Promise.  Crosshair will provide Paragon with a $2.0 million carried interest in initial exploration expenditures to be completed prior to May 2013.  Crosshair can extend the timeframe to complete the initial exploration program by 12 months upon issuing 62,500 common shares to Paragon.  As of April 30, 2012, expenditures under the Golden Promise Option total $1.65 million.

Upon the successful completion of the initial $2.0 million exploration program, Crosshair can elect to earn an additional 10% interest (to 70%) in Golden Promise by providing Paragon with an additional $1.0 million carried interest in additional exploration expenditures within 24 months.   Crosshair can extend the timeframe to complete the additional exploration program by 12 months upon issuing 25,000 common shares to Paragon.  In the event Crosshair does not complete the additional expenditure program within the required timeframe, Crosshair can purchase the remaining 10% interest by paying Paragon the difference between actually incurred exploration expenditures and $1.0 million or revert to the 60% interest.

The Golden Promise Property consists of  one map-staked license  located east, and northeast of Red Indian Lake in west central Newfoundland on National Topographic System (NTS) Map Sheet 12A/16, part of the Grand Falls – Buchans Electoral District.    The claims are crosscut by an all season Highway (Route 370) connecting the towns of Buchans in the southwest to Badger at the Trans Canada Highway in the northeast end of the property.

The license cover 5,850 hectares in  234 map-staked claims. Each claim is 500 by 500 meters, which is bounded by one corner of the UTM grid square and is one quarter of the square. The claims are grouped into licenses, which are the units of ownership and assessment work requirements. The Property also includes a Mining Lease which is included within the license boundaries.

Accessibility
 
The property is accessible from Badger on the Trans Canada Highway via Route 370 to Buchans Junction about 43 km to the southwest. The Buchans Highway (Route 370) is the principal access road to the portions of the property where most of the exploration activity has been focused.  Access to the eastern and southern portions of the property is gained via logging roads trending south and west of the town of Grand Falls-Windsor, a major industrial hub for central Newfoundland.   The Exploits River, the largest river system on the Island of Newfoundland, crosses the north-western part of the property.  Secondary access to most of the property is provided by logging roads and snowmobile and ATV trails leading from Route 370 as well as the logging roads south and southwest of Grand Falls-Windsor.
 
History and Previous Work
 
The exploration history of the vast majority of the property dates back only as far as 2002, when a prospector working in an area burned by a major forest fire in 1999 located gold-bearing quartz boulders immediately north of Route 370 approximately 10 kilometers southwest of the town of Badger.  Exploration in the region prior to 2002
 
 
 
 
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traditionally focused on the productive massive sulfide districts located south and west of the current property boundaries.  The mining town of Buchans, located about 30 kilometers west - southwest of the property, produced very rich ores that carried high combined grades of zinc (14.5%), copper (1.4%), lead (7.6%), gold (1.3 grams per  tonne) and silver (126 grams per tonne) for 56 years prior to closing in 1984.
 
The property was mapped by both the Provincial and Federal Geological Surveys whose efforts included regional scale geological surveys and geochemical surveys including glacial till and lake sediment sampling.
 
In the spring of 2002, a local prospector, William Mercer, discovered several large boulders of gold bearing float of which a composite sample from 10 boulders returned 30 grams per tonne gold. The property was subsequently optioned by Mr. Mercer to Paragon in July of 2002.
 
Geological Setting
 
The property lies within the Dunnage Zone, a major tectonic and stratigraphic succession of Cambrian to Middle Ordovician aged volcanic and sedimentary rocks occupying much of central Newfoundland.  The Dunnage Zone rocks record the opening and closing of a proto-Atlantic Ocean known as Iapetus.  The Dunnage Zone has been subdivided into two subzones, the Notre Dame and the Exploits, which are separated by a major fault system known as the Red Indian Line. The bulk of the Golden Promise property is inferred to be underlain by rocks of the Exploits Subzone, which includes the Badger and Victoria Lake Groups.
 
Regional Geology and Mineralization
 
The property is largely underlain by sedimentary rocks of the Badger Group.  The Badger Group conformably overlies Caradocian black shale, which in turn overlies Ordovician volcanic and sedimentary rocks of the Victoria Lake Supergroup.  The volcanic sequences of the Victoria Lake Supergroup are among the most prolific hosts to massive sulfide copper/lead/zinc deposits in Canada.
 
Property Geology and Mineralization
 
The property is largely underlain by sedimentary rocks of the Badger Group, consisting mainly of arkose, greywacke and shale. The Badger Group rocks overlie the Victoria Lake sequences of volcaniclastic and fine grained sedimentary rocks.  A unit of black shale of Caradocian age, a regional stratigraphic marker, separates the Badger Group from the Victoria Lake Group.  The dominant structural trend is northeasterly.  All rock units have been folded into a series of tight, isoclinal, upright, northeast plunging folds and have been cut by northeasterly faults.  Mafic dykes occupy the faults at several locations.
 
The mineralization at Golden Promise consists of a series of sub-parallel gold-bearing quartz veins ranging up to 4 meters in true thickness. The veins are milky white, inclusion rich and locally bladed. Gold is hosted by the veins typically occurring within narrow intervals (20-30 cm) close to vein margins.  Fine grained arsenopyrite is the most common accessory mineral with lesser amounts of pyrite, galena, sphalerite and chalcopyrite (< 1%) occurring locally.
 
At least 5 zones of gold mineralization are known to occur at Golden Promise.  They include the Jaclyn Main, Jaclyn South, Jaclyn North, Christopher and Shawn’s Shot occurrences, of which the most important are the Jaclyn Main, Jaclyn South and Jaclyn North Zones.
 
Based on the results of 68 drill holes that penetrated the Jaclyn Main Zone, and using a 1 gram per tonne gold cutoff, an inferred resource was calculated equal to 89,500 ounces of gold in the Jaclyn Main Zone contained within a total of 921,000 tonnes of rock averaging 3.02 grams per tonne gold.
 
Exploration and Development
 
In July of 2002, the property was optioned by local prospectors to Paragon who completed a Phase 1 drilling program to follow up on the discovery of high grade gold-bearing float.  The 21 hole program (1,045 meters) tested
 
 
 
 
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the Jaclyn Zone along a 225 meter strike length and to a vertical depth of 50 meters.  Subsequent drilling in late 2003 extended the Jaclyn Zone along strike and to depth, and also tested the newly discovered Jaclyn North and Jaclyn South Zones.
 
We optioned the Golden Promise property from Paragon on May 1, 2006 and carried out further drilling in June.   This program, completed in February 2007, included 5,488 meters of drilling in 29 holes on the Jaclyn Main, Jaclyn North and Jaclyn South Zones.  From June 2007 through December 2007 a 23 hole 3,926 meter drill program was completed in the Jaclyn area.  The focus of the drilling was the continued evaluation of the Jaclyn Main Zone (19 holes, 3,135 meter), and Jaclyn North Zone (4 holes, 790 meter).
 
During fiscal 2011, the Company completed 7,220 m of drilling in 38 holes.  Twelve (12) holes (641m) were shallow infill holes located in the central part of the deposit designed to provide samples of the vein for metallurgical testing and to test for structural and grade continuity of the vein prior to the planned bulk sampling program.  Three holes (657m) tested the Jaclyn North showing and four holes (572 m) followed up an intercept 400 m west of the North zone.  The remaining 19 holes (5,350m) tested the central part of the deposit and the extension down plunge to the east
 
A composite sample from six previously completed drill holes was submitted to SGS Mineral Services Vancouver, BC (“SGS”) for preliminary metallurgical testing including gravity concentration, flotation and determination of the cyanide leaching characteristics.  Drill core samples from the 12 infill holes drilled in 2010 in the central part of the Jaclyn Main Deposit were also sent to SGS where additional metallurgical test work further defined the extraction process flow sheet.  These core samples were composited to provide two samples (labelled A and B) of 17.0 kilograms (kg) and 13.9 kg with head grades which assayed 8.02 grams per tonne (g/t) and 8.00 gpt respectively.  The composite samples were crushed, then blended and split into individual charges for the various metallurgical tests. The results confirm that the gold in the vein can be effectively recovered using gravity separation in combination with leaching, or by direct leaching.
 
A gravity separation test conducted on composite A ground to P80 of 150 microns recovered 84% of the gold.  The recovery process was further enhanced when the gravity tail was leached.  Leaching recovered 76% of the gold in the gravity tail, which resulted in a total gold recovery of 96%. The leach kinetics were fast and the recovery was complete within 24 hours.

The gold can also be recovered by direct leaching of the whole rock resulting in 93% extraction of the gold.  When composite A was ground to P80 of 150 microns and leached, 93% of the gold was recovered and only 0.16 kg/t of sodium cyanide (NaCN) was consumed.  Composite B had the same gold recovery and was ground slightly more to P80 of 100 microns and consumed slightly more NaCN (0.25 kg/t).
 
The 2,200 tonne bulk sampling program was completed in December 2010 in order to determine a more representative gold grade for the Jaclyn resource, since assay results from diamond drilling alone may not be an effective means of reliably determining grade in high-nugget effect gold systems.  The gold occurrences on the Golden Promise Property, including the Jaclyn Main Zone, exhibit many similarities to the deposits of the Bendigo-Ballarat Gold District in Australia, which have collectively produced over 31 million ounces of gold.  Studies of other high-nugget effect gold deposits, including deposits from the Bendigo Goldfield, indicate that assays from surface diamond drill holes may understate the actual in-situ gold grade in such deposits.
 
A total of 2,241 tonnes were delivered to the Nugget Pond Mill owned by Rambler Metals and Mining Plc. Two gold bars weighing 5.37 kilograms were poured and shipped to Johnson Matthey Limited in Toronto for refining.  In addition to the bars, the ball mill and SAG mill were cleaned out and 482.5 kilograms of concentrate were also shipped to Johnson Matthey for treatment and refining.  After refining, the bars and the mill concentrate produced a total of 313.59 ounces of gold and 23.05 ounces of silver which were sold for net receipts of CDN$430,001.85 after treatment charges.  The cost of the program, after receipts from the gold sales, was approximately $100,000.
 
Based on the mill records and the total gold recovered, the average recovered gold grade was 4.47 g/t gold.  The average tails grade was 1.12 g/t gold indicating a back-calculated head grade of 5.59 g/t gold with an 80% recovery.  While an overall recovery of 80% is positive it is lower than predicted by the bench scale test work.  It is believed
 
 
 
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that the lower than expected recovery is due to the presence of carbonaceous material in the waste rock.  In future, this issue can be mitigated by modifying the circuit to a carbon in leach process as opposed to a carbon in pulp process.  This would result in a minor modification to the flow sheet which will be further refined in future metallurgical test programs.
 
The Jaclyn North occurrence, located 250 meters north of the Jaclyn Zone, has been tested by 13 drill holes and has been defined over a 450 meter strike length.  The occurrence has returned values up to 5.24 grams per tonne gold over 1.70 meters.
 
The Jaclyn South occurrence, located 300 meters southeast of the Jaclyn Zone, comprises two subparallel quartz veins, one of which is up to 3.4 meters thick.  The zone has been tested by four drill holes from which the best result obtained to date is 0.30 meters grading 44.6 grams per tonne gold.
 
No work was completed on the Golden Promise property in the 2012 fiscal year.
 
South Golden Promise (and Victoria Lake) Property and Agreements
 
Paragon acquired an option to earn a 100% interest in the South Golden Promise Property pursuant to an underlying option agreement, dated January 8, 2003, with Al Keats, Calvin Keats and Kevin Keats.  The vendors are entitled to a 2.5% Net Smelter Return.  Paragon can repurchase a 1.5% Net Smelter Return for $1,500,000 and has a right of first refusal with respect to the remaining 1.0%.  As of September 2005, Paragon completed its obligations under its option agreement with the vendors and now holds a 100% interest in the South Golden Promise Property subject to the 2.5% Net Smelter Return.
 
Under the terms of an agreement dated February 14, 2003 with Paragon, we earned a 60% interest in the South Golden Promise Property in consideration for issuing a total of 100,000 common shares and incurring a minimum of $1,750,000 in exploration expenditures.
 
The South Golden Promise Property agreement includes two separate blocks of licenses, these being the South Golden Promise and the Victoria Lake claim blocks, which collectively cover 1,975 hectares in 79 map-staked claims. Each claim is 500 by 500 meters, which is bounded by one corner of the UTM grid square and is one quarter of the square. The claims are grouped into licenses, which are the units of ownership and assessment work requirements.
 
Paragon was the contractor for the execution of the exploration programs in the first year for cost plus 8% fee.  Subsequent to the first year, we have operated and carried out the exploration programs on the South Golden Promise property using in-house personnel.
 
We are responsible for paying for and renewing these licenses.  The fee for license renewals is $25 per claim every five years and failure to pay the fee will result in the loss of the claims.
 
Paragon has declined to participate in the recent programs and has currently diluted its interest to a 37.98% interest.  Once their interest falls below 10% it will convert to a 1% Net Smelter Return Royalty.
 
Property Location
 
The South Golden Promise and Victoria Lake properties consist of two separate blocks of licenses located east and southwest of Red Indian Lake in west central Newfoundland, in the Grand Falls – Buchans Electoral District.  The South Golden Promise property is underlain by similar geology to that of the Golden Promise property, which is contiguous and immediately northeast of the South Golden Promise claims.  The South Golden Promise agreement also includes the Victoria Lake claims, where exploration has focused on massive sulfide deposits as opposed to gold, which is the focus of exploration at Golden Promise and South Golden Promise.
 
 
 
 
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Accessibility
 
The South Golden Promise claims are accessible from Badger on the Trans Canada Highway via Route 370 to Buchans Junction about 43 kilometers to the southwest of Badger, and from Grand Falls-Windsor, immediately east of the property. The Millertown – Lake Ambrose logging haulage road west southwest of Buchans Junction is the principal access road to the various claim blocks to the south and southwest.  The Exploits River, the provinces largest river system, crosses the northern portion of the property.  The Victoria Lake claim group, which is the most southwestern of the two claim blocks, is best accessed by the main logging road leading west from the Exploits Dam along the south shore of Red Indian Lake.  Numerous older logging roads, generally in poor shape, crosscut the property and afford locally limited access.
 
History
 
The northeastern portion of the property has received the least amount of previous exploration.  In fact, prior to the discovery of gold-bearing boulders at Golden Promise in 2002, most of the northern half of the property had received no previous exploration for gold.
 
The sedimentary sequences that host the Jaclyn gold mineralization received very little exploration by previous explorers.  The bulk of exploration activity in the region focused on the highly prospective volcanic rocks to the southwest which are known to host numerous copper and zinc prospects in the region.  The volcanic sequences, most common on the south side of the Exploits River and occurring in the south central portion of the South Golden Promise property, received moderate amounts of exploration in the search for base metals (copper, lead and zinc).  Noranda was most active and carried out ground surveys including, line cutting, geological mapping, soil sampling and geophysics.  Several widely spaced drill holes did not intersect any mineralization.  Immediately east of the property Aur Resources (subsequently taken over by Teck/Cominco) commenced commercial production in January 2007 at the Duck Pond deposit and will produce concentrate containing copper, zinc, lead, gold and silver over the projected 10 year life of the mine.
 
The Victoria Lake claims have received the most intensive exploration of all of the South Golden Promise property.  The claims are considered highly prospective to host significant quantities of massive sulfides rich in copper, lead, zinc, gold and silver.  Noranda carried out numerous exploration programs over the past 25 years including diamond drilling.  Favorably altered volcanic rocks were encountered in several localities and suggest that massive sulfide bodies could exist on the claims.  Work by Paragon in 2002 located potentially significant gold mineralization in the extreme southwestern portion of the claim group.  Results include sulfide-bearing quartz veins that have returned assays of 2.5 and 3.6 grams per tonne gold.  The claims covering this gold showing were abandoned by us in 2009.  No work has been carried out on the Victoria Lake Claims during the current fiscal year.
 
Property Geology
 
The South Golden Promise claims are underlain mainly by sedimentary and volcanic rocks of the Ordovician Victoria Lake Group which are in turn overlain by the Badger Group sedimentary rocks.  The Victoria Lake Group is dominated in the upper sections by fine grained sedimentary sequences, while the lower portions of the Group are dominated by mafic and felsic volcanic rocks with minor interbedded sedimentary rocks.  The Victoria Lake Group and Badger Group rocks are separated by a regionally important marker horizon of Caradocian shale.
 
The prominent structures on the property are a major syncline - anticline pair as traced by folds in the Caradocian shale. The folds are tight and upright with a gentle plunge to the northeast.  A penetrative foliation is commonly developed sub parallel to bedding.  Glacial striae showing ice movement to the northeast and south-southeast are observed locally.
 
The Victoria Lake claims are underlain mainly by volcanic and sedimentary rocks of the Victoria Lake Group.  The felsic volcanic rocks in the area are considered highly prospective for hosting significant massive sulfide deposits and several areas of favorably altered and locally mineralized volcanic rocks are known to occur.  These areas will be the primary target of exploration efforts on that portion of the property.
 
 
 
 
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Exploration and Development
 
Since acquiring the properties, we have completed several phases of exploration including prospecting, mapping, till and rock sampling as well as excavator trenching on targets defined by the other works.  The Victoria Lake claims also had ground gravity surveying completed to help identify potential massive sulfide targets.  Diamond drilling has been carried out on the gold targets at South Golden Promise and the massive sulfide targets at Victoria Lake.
 
At South Golden Promise, the work to date has outlined a significant gold-bearing quartz vein system that has been exposed on surface for 170 meters and tested to about 50 meters depth by diamond drilling.  A total of 16 holes were completed at South Golden Promise in 2006 with two holes returning visible gold-bearing quartz veining which assayed a high of 19.5 grams per tonne gold over 1.15 meters.  During 2009, the Gabbro showing, which had previously sampled up to 10 g/t gold from a narrow quartz vein, was trenched without returning significant gold values.
 
In 2010, a small structural mapping program was completed over the Snow White-Linda showing.
 
Further work including diamond drilling and trenching of soil geochemical anomalies is recommended for the South Golden Promise gold target.
 
At Victoria Lake, an 11 hole (2,197 meters) diamond drilling program was completed in 2006.  The program tested several coincidental geological, rock and soil geochemical anomalies as well as geophysical (gravity) anomalies identified by us.  Favorably altered, sulfide-bearing felsic volcanic units were encountered in several of the holes.  The drilling program was managed by Paragon personnel who have extensive experience in the region and who received 8% of the program costs as a management fee.  During 2008, a borehole Pulse EM survey was conducted to test for off-hole conductors that may represent massive sulfides.  Interpretation of the data identified several anomalies suggestive of conductive sources within the vicinity of the diamond drill holes.  An airborne electromagnetic and magnetic survey was carried out in December 2010 and several anomalies were outlined.  Future work will be focused on evaluating these anomalies.
 
No work was completed on the South Golden Promise or Victoria Lake Properties in the 2012 fiscal year.
 
 
 
 
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Labrador—Central Mineral Belt
 
 
CMB Property and Agreements
 
On October 14, 2004, we entered into an agreement (the ‘Original Moran Lake Agreement”) with a private individual, local prospector Lewis Murphy, for an option to acquire a 90% interest (subject to a 2% NSR and a 10% carried interest to the vendor) in the Moran Lake Property, comprising 67 claims in Central Labrador. On March 1, 2005 we acquired another 187 claims from Lewis Murphy entered into an amending agreement with Mr. Murphy (the “Amended and Restated Moran Lake Agreement”). The Amended and Restated Moran Lake Agreement called for exploration expenditures of $3,000,000, the issuance of 400,000 common shares, and cash payments of $575,000, with the balance of the shares and cash payable over a five-year term.  The agreement also required completion of a bankable feasibility study for the commencement of commercial production on the property within 24 months of completion of the aforementioned obligations.  
 
We subsequently carried out a detailed digital compilation of all the historic work that has been carried out on the property.
 
To date, we have issued 400,000 common shares, made cash payments totaling $575,000 and spent more than the required minimum $3,000,000 on project expenditures. On May 21, 2008, we entered into a letter agreement (the “Letter Agreement”) with Mr. Murphy whereby we received a three year extension on the requirement to complete the bankable feasibility study such that the study will be due on or before November 10, 2013. Additionally, the
 
 
 
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Company was required to make advance royalty payments in the amount of $200,000 per year until the commencement of commercial production.
 
In December 2011, the Company settled a dispute with Mr. Murphy regarding the timing of the advance royalty payments. See “Item 8. Financial Information – 8.A. Consolidated Statements and Other Financial Information – Legal/Arbitration Proceedings – Litigation with Lewis Murphy.”  On December 5, 2011, the Company entered into a co-ownership agreement (the “Moran Lake Co-Ownership Agreement”) with Mr. Murphy which agreement amends, clarifies, confirms and replaces the contractual relationship created between the parties further to the Original Moran Lake Agreement, the Amended and Restated Moran Lake and the Letter Agreement.  The Moran Lake Co-Ownership Agreement sets out that ownership of the CMB Property shall be as Tenants in Common in proportions of 90% Crosshair and 10% Mr. Murphy.  Mr. Murphy shall retain his 10% ownership in the CMB Property until such time as commercial production commences on the property. The Company will be required to make advance royalty payments of $200,000 per year commencing in November 2012. Should the Company choose to bring the Moran Lake Property into production; the advance royalty payments made previously will be deducted against any Net Smelter Royalty owed to the original vendor of the property. In addition, any requirement to complete a bankable feasibility study has been irrevocably waived.
 
Property Description and Location
 
The Central Mineral Belt Property is located in the Central Mineral Belt of Labrador, about 140 km north of the town of Happy Valley-Goose Bay and 85 km southwest of the coastal community of Postville on Kaipokok Bay. In a direct line, the property is about 75 km from tidewater to the northeast.  The undeveloped Michelin uranium deposit is 60 km east-northeast of the Moran Lake Property.  The property area is within the Naskaupi Electoral District of Labrador.
 
Accessibility
 
Helicopter and fixed wing service out of Goose Bay are the most efficient means of access to the property.  Local infrastructure is confined to the limited facilities of the community of Postville, which has commercial airline service from Goose Bay and commercial ferry service from St John’s, Newfoundland.  Coastal boats are available to convey goods and passengers from Happy Valley to Postville.  Most necessary goods and services, including charter aircraft, can be obtained in Goose Bay, which has excellent commercial airline connections to St John’s, Halifax and Montreal.
 
This portion of central Labrador has a sub-Arctic climate, with strong seasonal contrasts marked by short cool summers and long cold winters.  Freeze-up typically begins in late October and lasts until early to mid June.  Snow cover is relatively heavy and usually lasts seven to eight months.  Daytime temperatures during the winter typically range from -15º Celsius to -30º Celsius, while daytime summer temperatures typically range from 15º Celsius to 25º Celsius.
 
The topography of the Moran Lake area consists of rolling highlands with maximum relief approaching 300m.  The hilltops can be partly barren while the slopes and valleys are covered in vegetation, mostly scrubby black spruce and some deciduous trees with a thick intervening growth of alders.  Almost everywhere there is a thick ground cover of moss.  The valleys are steep sided at many locations and are often host to boggy ground with small ponds or lakes.  Moran Lake, one of the largest lakes on the property, occupies a prominent valley which trends east-northeast.
 
History
 
Uranium was first discovered near Moran Lake by British Newfoundland Exploration Limited (“Brinex”), which conducted prospecting, geological mapping and radiometric surveying in the area from 1956 to 1958. In 1964, Mokta Co. Ltd. (Mokta) acquired a development license for the Moran Lake area and subsequently discovered uranium mineralization at Lady Lake, the site of the present C zone.  In following years, Mokta completed a considerable amount of prospecting, trenching and packsack drilling in the Moran Lake A, B and C zones. In 1969
 
 
 
28

 
 
however, Mokta allowed the development license to expire at which time the license was granted to Brinex, which did no further work on the property.
 
In 1976, the license was granted to Commodore Mining Company Limited (Commodore) which in turn optioned the property to Shell Canada Resources Limited (Shell).  During September of 1976, Shell performed geological, magnetometer and Track Etch surveys over the B Zone near Henry Lake and did preliminary geological mapping on the C zone.  This led to a 15 hole, 864 meter drill program to test the B Zone uranium mineralization during the winter of 1977.
 
In the summer of 1977, a full exploration program was carried out on the C Zone including detailed geological mapping, systematic trench sampling, a scintillometer survey and a small drill program totaling eight holes and 497 meters. Uranium mineralization was discovered in a fault zone over which VLF-EM, magnetometer and Track Etch surveys were performed during September.  In the winter of 1978, Shell completed a 17 hole, 1,542 meter drill program to test the uraniferous fault zone and subsequently found high grade uranium mineralization.  The following summer’s exploration program consisted of VLF-EM, magnetometer and altimeter surveys over the entire C Zone, with a 15 hole, 1,581 meter drill program to test the uraniferous zones.  Low grade uranium mineralization was located in altered sandstones above the Aphebian-Helikian unconformity near Lady Lake.  This led to a 1979 winter dril1 program of 17 drill holes totaling 1,193 meters to explore the unconformity and what became later known as Lower C Zone.
 
In the summer of 1979, Shell undertook a review of its Moran Lake project.  Drill core from the Upper C zone (C-1 to C-35) was re-logged by one person and multiple samples were taken for thin section study and 30 element spectrographic analysis.  This work led to the appreciation that the rocks were extensively altered, that the identification of primary lithologies was in many cases dubious, that the uranium mineralization was associated with alteration and that there was a definable geometry to the alteration package.  The property was considered to have good uranium potential and an 8 hole, 1,400 meter drill program was proposed but never carried out as Shell abandoned its interest in the area due to a decline in uranium prices.
 
Lewis Murphy acquired the Moran Lake claims in 2003 and optioned the ground to us in October of 2004.  In 2003, an airborne gravity survey of the area located an interpreted 4 milligal to 8 milligal gravity anomaly, elliptical in shape, about 4 km long and centered between the Moran B and C zones. Considering the spatial association of uranium with brecciated, highly silicified, carbonatized and hematized rocks, plus locally significant concentrations of copper, silver and gold mineralization, we invoked the analogy with Iron Oxide Copper Gold (IOCG) deposit types, as at the Olympic Dam copper-uranium deposit in Australia.
 
Since acquiring the Moran Lake property in October 2004, we have embarked on an aggressive program including airborne radiometric and magnetic surveys, compilation of previous work including sampling archived drill core from the 1970’s Shell Canada Resources drilling, and commencement of diamond drilling in January of 2006.  A more detailed description of the exploration program is included below under “Exploration”.
 
Property Geology
 
The Moran Lake Property was staked in a configuration to cover as much mineralized Paleoproterozoic stratigraphy as was available encompassing mostly rocks of the Moran Lake Group and the overlying Heggart Lake, Brown Lake and Sylvia Lake Formations of the Bruce River Group, both groups containing known occurrences of uranium, Cu, Pb, Zn, Ag, F and iron (as pyrite and hematite).
 
The Moran Lake Group unconformably overlies Archean gneisses and granites of the Nain Province. The basal unit, the Warren Creek Formation was deposited in a low energy, shallow shoreline or shelf environment and consists mainly of black graphitic, grey and green shale and siltstone containing local interbeds of dolostone, chert and black conglomerate with siltstone and shale clasts. The Warren Creek Formation ranges from perhaps 1,200 meter up to 3,000 meter in thickness and is overlain conformably by 100 meter to 300 meter thickness of the Joe Pond Formation, a sequence of light- to dark-green, fine grained, massive and pillowed basalt and mafic tuff with occasional interbeds of variably colored chert or grey dolostone. Rocks of the Moran Lake Group occupy a northeasterly trending belt which underlies the northern portion of the Moran Lake Property.
 
 
 
 
29

 
 
The Bruce River Group consists of a basal, polymictic conglomerate and sandstone of the Heggart Lake Formation overlain by polymictic conglomerate and tuffaceous sandstone of the Brown Lake Formation.  The uppermost and thickest unit of the Bruce River Group is the Sylvia Lake Formation, a bimodal, potassic calc-alkaline assemblage of predominantly subaerial volcanic rocks which are coeval with the plutons of the Trans Labrador Batholith.  Northerly directed compression during the Grenville orogenic event folded the Bruce River Group into a northeast-trending, open, upright syncline.
 
Exploration
 
After acquiring the property in October of 2004, we immediately launched a comprehensive review and compilation of all previous exploration carried out in the area.  The results of the review confirmed that the property had considerable potential to host several types of uranium deposits including uranium-rich iron oxide copper gold deposits (IOCG).
 
Exploration work on the property by us has included line cutting, airborne and ground geophysical surveys, lake sediment sampling, till geochemical and alpha track surveys, biogeochemical surveys, prospecting, limited hand trenching, mechanical trenching, geological mapping and diamond drilling.  An airborne radiometric and magnetic survey totaling 7,312 line kilometers covering the entire property was carried out by Fugro Airborne Surveys in 2005.  A supplemental airborne survey totaling 675 kilometers covering several claims acquired subsequent to the 2005 survey was carried out by Fugro in 2006.  In 2007, a helicopter supported electromagnetic and magnetic (HeliGEOTEM) survey totaling approximately 4,500 line kilometers was carried out over two different blocks on the property.  The ground geophysical surveys include gravity, induced potential (IP), and horizontal loop EM (Max-Min) surveys.  Follow-up of targets identified from interpretation of the various data has resulted in the discovery of several new showings and target areas, some of which have been drill tested as well as others that are being advanced to the drill ready stage.
 
In 2008 an updated resource estimate for the Upper and Lower C Zones was prepared based on drilling up to May 2008. In addition, resource estimates were prepared for two new zones of uranium mineralization discovered by Crosshair, these being the Trout Pond (Area 1) and Armstrong zones (the “2008 CMB Report”).  The mineral resource estimate included a total indicated resource for the Upper C Zone is 5.19 million pounds of U3O8 (6.92 million tonnes grading 0.034% U3O8). The Upper C Zone also contains additional resources in the inferred category which, when combined with the inferred resources in the Lower C Zone, Trout Pond and Armstrong zones total 5.83 million pounds of U3O8 (8.17 million tonnes grading 0.032% U3O8).  With the exception of the Lower C Zone, these estimates are reported at a block cut-off of 0.015% U3O8.  The cut-off grades are considered appropriate for the location and cost profile that can be expected for open pit mining.  In the case of the Lower C Zone, a cut-off grade of 0.035% U3O8 is used for reporting purposes, reflecting higher costs associated with underground mining.
 
Drilling
 
We launched our first drill program in February 2006, completing approximately 2,750 meters of drilling in 19 holes at the C Zone.  Further drilling using two drill rigs and totaling over 18,500 meters was carried out during the summer of 2006, followed by an additional 9,400 meters of drilling during the winter of 2007.  The 2007 summer program was our most aggressive program, with over 28,000 meters of drilling using three rigs.  This was followed by over 12,000 meters during the 2008 winter program.  The drilling programs focused on defining uranium mineralization at the C Zone, which represents the most advanced uranium target on the property, but also tested targets at Area 1, Armstrong, B Zone, Area 51, Moran Heights, Madsen Lake and Croteau Lake.
 
Our 2006 drill program totaled 21,486 meters and consisted of 137 holes, of which 58 tested the Upper C Zone and 10 tested the Lower C Zone.  The remainder of the holes tested seven other anomalies or showings on the property.  From late January 2007 to late April 2007, we carried out further drilling at the C Zone as well as limited drilling at Area 1 and the Armstrong and Dominion showings.  Total drilling in the winter of 2007 amounted to 9,410 meters in 34 holes.  At the C Zone, our 2007 winter drill program consisted of 8,211 meters in 26 holes.  Fifteen of the holes tested both the Upper and Lower C Zone, 6 holes (1,042 meters) tested the Upper C Zone only, and 5 holes (1,166 meters) tested the Lower C Zone.  The program expanded the C Zone mineralization along strike and to
 
 
 
30

 
 
 
depth.  The program also included the intersection of the thickest and highest grades of uranium reported from the Lower C Zone.
 
The summer 2007 drill program totaled 28,745 meters in 121 holes.  Eighty-nine of those holes (15,727 meter) were targeting the C Zone, with the goal of upgrading and expanding the existing NI 43-101 resource.  Drilling intercepted the highest and thickest grades to date including 0.202% U3O8 over 22.4 meters as part of a wider zone grading 0.100% U3O8 over 46.3 meters in hole ML-122 and 0.100% U3O8 over 45.7 meters as part of a much wider interval that assayed 0.074% U3O8 over 71.3 meters in ML-87.  A total of 26 holes (2,820 meters) were drilled at Area 1 in the 2007 summer program and 6 holes (784 meters) at Croteau Lake.
 
Our 2008 winter drill program consisted of 55 holes totaling 12,198 meters.  Drilling was focused at Armstrong, which is believed to anchor the southern end of the same 4.5 kilometer long trend that hosts the C Zone to the north and Area 1 in the middle.  A total of 6,366 meters in 30 holes were drilled in this recently discovered zone, with highlights from ML-AR-26, which returned 0.20% U3O8 over 9.5 meters including 1.10% U3O8 over 1.6 meters.
 
The summer 2008 drill program consisted of 3,516 meters in 19 holes.  Eleven of the holes (2,035 meters) tested the C Zone, while 6 of the holes (1,276 meters) tested targets at Area 1 and two holes (205 meters) were drilled at Madsen Lake in the central portion of the CMB Property.
 
In December 2008, a previously unidentified zone of uranium mineralization, referred to as the “Apollo Zone” was discovered.  During the summer of 2008, follow-up prospecting of several anomalies identified in 2006 revealed significant uranium mineralization over a 500 meter strike length. The Apollo Zone returned grab samples assaying up to 0.50% U3O8 in outcrop and 0.20% U3O8 in local boulders. This new zone appears to lie along strike of the Boiteau Lake Showing (0.79% U3O8) announced by Bayswater Uranium Corp. in November 2008.  The Boiteau Lake Showing lies very close to the Crosshair/Bayswater property boundary and the trend is open along strike for the 7 kilometers between the showing and the Apollo Zone.  The Apollo Zone lies approximately 11 kilometers NE from the C Zone uranium resource and approximately 3 kilometers south of previously discovered Blue Star, where sampling by Crosshair in 2006 returned values of up to 1.37% U3O8 outcrop. To date on the Moran Lake property, we have completed 366 holes totaling over 65,000 meters.  One hundred and ninety-three holes have been drilled at the C Zone, 55 at Area 1, and 32 at Armstrong.  Several other areas have also been drill tested, including the B Zone, Moran Heights, Area 51, Croteau Lake, and Madsen Lake.  All programs have been helicopter supported producing BTW size drill core.
 
In December 2010, the Company completed a vanadium resource expansion program and outlined an NI 43-101 resource of 42.8 million pounds of vanadium (14.7 million tonnes at 0.15% V2O5) in the indicated category and an additional 93.6 million pounds (28.3 million tonnes at 0.16% V2O5) in the inferred category.
 
In 2011, a 3,138 metre drill program was completed on the CMB Project. The drilling focused on connecting the C-Zone and Area One deposits, as well as testing the Blue Star prospect. The results confirmed that the vanadium mineralization is continuous between the C-Zone and Area One over a strike length of approximately 1.7 km The mineralization remains open along strike and at depth. Drilling on the Blue Star prospect tested coincident airborne geophysical and rock geochemical anomalies; four out of the ten holes drilled intersected uranium mineralization. The best hole was 3 metres of 0.05% U3O8.
 
Current Exploration
 
The 2012 summer program will consist of drilling, prospecting, sampling and trenching.  The goal of the program is to increase the existing uranium and vanadium resources as well as test other exploration targets. A budget of approximately $2.2 million has been allotted for this program, which is expected to take 3 months to complete.
 

 
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CMB-JV Property and Agreement
 
In July 2008, we acquired a 60% interest in 4,741 claims in the Central Mineral Belt from Expedition by paying CDN $500,000 and issuing 2,500,000 common shares and 1,875,000 warrants to Expedition.  The claims were part of a property agreement between Expedition and Silver Spruce, under which Expedition had earned a 60% interest.  The claims are host to the Two Time deposit.
 
Silver Spruce declined to participate in last summer’s program and has diluted its interest to a 2% Net Smelter Return Royalty.   Going forward the CMB and CMB-JV properties will be consolidated into one property referred to as the CMB Property.
 
Property Description and Location
 
The CMB-JV Project comprises 616 map-staked claims in several separate claim blocks located roughly 150 kilometers north of the town of Happy Valley – Goose Bay, Labrador.  Approximately half of the claims are contiguous with Crosshair’s 100% owned claims located near Moran Lake, while most of the remaining claims are situated south and southeast of the coastal community of Postville on Kaipokok Bay.
 
Property Geology
 
The CMB-JV Project is situated within the Central Mineral Belt (CMB) of Labrador, a geological province comprising six Proterozoic sequences of volcanic, sedimentary and plutonic rocks ranging in age from about 2.0 to 1.3 billion years and include, from oldest to youngest, the Post Hill, Moran Lake, Aillik, Bruce River, Letitia Lake and Seal Lake Groups.  The CMB includes portions of 4 major tectonic provinces, these being the Nain, Makkovik and Grenville provinces, and the Hopedale Block of the Archean Nain Province.  The easternmost claims of the CMB-JV Project lie within the Makkovik Province, while the westernmost claims of the CMB-JV Project generally lie along the boundary between the Nain, Churchill and Grenville Province.
 
Exploration
 
Exploration by Silver Spruce and Expedition includes an airborne magnetic radiometric survey over all the claims, as well as limited follow-up over most of the claims including geological mapping, prospecting and lake sediment sampling.  Exploration to date has focused on the claim blocks hosting the Two Time deposit, where work has been more extensive and includes line cutting, ground scintillometer surveying, soil, till, lake, and stream sediment sampling, ground radon (RadonEx) surveying, prospecting, trenching, geological mapping, and diamond drilling.
 
The most significant discovery to date on the CMB-JV claims has been the Two Time deposit, which was discovered as a result of follow-up of a high priority airborne radiometric anomaly.  The Two Time zone is hosted within brecciated and fractured granitic to dioritic intrusive rocks of the Kanairiktok Intrusive Suite characterized by hematite, carbonate, and chlorite alteration.  A number of other showings and prospects have also been discovered on the claim block, including the Firestone Showing, Doucette, HF, J, F, and W occurrences.
 
Drilling
 
Past drilling carried out on the CMB-JV Project has been focused on the ‘CMB-NW (Northwest)’ claim block, which is contiguous with the northern portion of Crosshair’s 100% owned CMB Project.  Diamond drilling carried out to date by Silver Spruce and Expedition totals 11,196 meters in 44 holes.  Highlights include 0.118% U3O8 over 28.00 meters in hole CMB-07-06, 0.101% U3O8 over 33.00 meters in hole CMB-07-14, and 0.112% U3O8 over 19.00 meters in hole CMB-07-34.
 
Based on the drilling results, an indicated mineral resource estimate of 2.33 million pounds of U3O8 (1.82 million tonnes grading 0.058% U3O8) and additional inferred mineral resource estimate of 3.73 million pounds of U3O8
 
 
 
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(3.16 million tonnes grading 0.053% U3O8) was prepared for the Two Time zone using a cut-off grade of 0.03% U3O8. The Two Time zone remains open to depth and along strike to the south.
 
During the summers of 2009 and 2010, Crosshair carried out geological mapping, prospecting and sampling programs to evaluate priority targets generated from the airborne surveys.  Several new uranium showings were discovered and were followed up during the 2011 summer drilling program.
 
Two of the new targets, South Brook and Running Man, were found on the CMB-JV Property, which is located directly to the west of the Jacques Lake Deposit, recently purchased by Paladin Energy from Aurora Energy / Fronteer Development Group.  Forty Six (46) samples from the South Brook Showing gave results ranging from 0.03% to 0.46% U3O8, averaging 0.11%.  The showing is outlined by anomalous float and bedrock occurrences for approximately 3.5 kilometres (km).  The Running Man Showing is located approximately 5.5 km southeast of the South Brook Showing and consists of a 2 km long, linear airborne radiometric anomaly where 21 samples gave values from 0.03% to 0.28% U3O8.
 
The Big Bear Showing is located on the CMB-NE Property, approximately 20 km northeast of CMB-JL.  The showing, in a 1.25 km long corridor of anomalous bedrock radioactivity, is hosted in altered granitic rocks and gave results ranging from 0.02% to 0.1% U3O8, averaging 0.06%.
 
The fiscal 2012 program consisted of 2,961 metres of diamond drilling on the Two Time Zone, and a total of 1,245 metres on four separate prospects on the property, including outlying properties near Postville. The most favorable of these prospects was the Firestone Prospect, where drill hole FS-11-007 intersected a 3.5 metre interval that returned 0.084% U3O8. Drilling on the Two Time Zone confirmed that the uranium mineralization continues at depth.
 
The goal of the fiscal 2013 drill program is to expand the mineralized zone at Two Time and to continue to test the Firestone Prospect.
 

 
 
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Wyoming – Bootheel and Buck Point Properties
 
 
On March 31, 2009, we acquired the Bootheel and Buck Point Properties in Wyoming, USA through the acquisition of Target via Plan of Arrangement.
 
On June 7, 2007, Target, now a wholly owned Crosshair subsidiary, entered into an agreement to form the Bootheel Project, LLC with URE whereby Target may acquire a 75% participating interest in two uranium properties, the Bootheel and Buck Point properties located in the Shirley Basin, Albany County, Wyoming (the “Bootheel Project”) by completing expenditures totalling US $3 million and issuing 31,250 common shares on or before June 7, 2011. Target earned its 75% interest in the property as all shares have been issued and US $3.1 million had been spent as of April 30, 2010.  As URE declined to participate in the fiscal 2012 exploration program, its participating interest was diluted from 25% to approximately 19%, and Target’s participating interest increased from 75% to approximately 81%.
 
 
 
 
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Under Agreements dated February 5, 2008 between M J Ranches, and 448018 as manager, the Bootheel Project LLC leased MJ Ranches’ 75% ownership of the minerals located under four sections and the surface access rights to six sections adjacent to portions of the ground controlled by The Bootheel Project LLC.  The initial term of the agreement is for five years with provision for two renewals.  Payment for the initial five year term is $252,651 paid in advance, increased for inflation for the renewal periods.  The Fee Lands are subject to a sliding scale Royalty tied to the sales price of uranium.
 
An additional five fractional claims were staked in December 2009, and The Bootheel Project LLC now comprises a 100% mineral interest in 274 Federal Unpatented Mining Claims, two state leases and a 75% mineral interest in four fee sections for a total of 8,524 gross acres and surface access rights to 7,882 acres.
 
Property Location
 
The Bootheel and Buck Point properties are located in Albany County on the southeast edge of the Shirley Basin approximately 60 miles southeast of Casper, Wyoming and 25 miles southeast of Medicine Bow.
 
The Bootheel property comprises about 6,113 gross mineral acres consisting of one 640 acre Wyoming State Mineral Lease No 0-40774, 167 unpatented Federal lode mining claims including approximately 2,597 acres, and one mineral lease for approximately 2,516 acres of fee land owned by MJ Ranches Inc. (MJ Ranches). The lode mining claims control the subsurface mineral rights and are administered by the U.S. Bureau of Land Management (BLM). In addition, a surface lease with MJ Ranches provides access to 5,390 acres of the land to which BP LLC has mineral rights.
 
Accessibility
 
The Shirley Basin property is readily accessible year-round by an extensive system of county gravel and unimproved ranch roads extending east from U.S. Highways 30 and 287 and Wyoming Road 487. The all season maintained gravel County Road Number 61 (Fetterman Road) crosses the Bootheel property.
 
History
 
Uranium was discovered in the Shirley Basin in 1955 by Teton Exploration Drilling Co., who found ore-grade material by drilling west of the Little Medicine Bow River in the western part of the Shirley Basin, 30 mi south of Casper.  In the summer of 1957, several thousand claims were staked over 150 square mi.  By the end of 1959, over 1,000,000 ft of drilling had been completed through the mineralized Wind River Formation, and into underlying pre-Tertiary rocks.  In 1959, Utah Mining Corp. later Utah Construction and Mining Co. (Utah) sank a shaft on their property and the first uranium was produced in March 1960, with ore shipped to the Lucky Mc mill in the Gas Hills area west of Casper.  Late in 1964, the company stopped underground mining and commenced an in-situ leach operation using sulphuric acid and ion exchange for recovery.  Production amounted to approximately 200,000 pounds of U3O8 per year through 1970. In 1970, the ISR operation was replaced by a conventional mine and mill.

In July 1960, Petrotomics Co. commenced an open-pit operation in the same area and in 1962 a solvent extraction facility was built on the property.  A second pit commenced operation in 1966.  By late 1969, there were three operating mines in the Shirley Basin, those of Petrotomics and Utah, as well as Kerr McGee Corp. (“Kerr-McGee”).

Total production from the Basin amounted to about 34 million lbs of uranium. The last mine closed in 1992 and most of the pits have been reclaimed.  Cogema Mining Inc. retains one pit, which is used for the disposal of low-level radioactive waste from the ISR operations in the Powder River Basin.

The Bootheel property was originally staked in 1958 by Kerr McGee Corp. Kerr McGee drilling (283 holes) discovered both shallow oxidized and deeper uranium mineralization in sandstones but dropped the property in 1962.  The company re-acquired the property in 1968, and again abandoned it.  Rocky Mountain Energy Corporation (Union Pacific Railroad) also conducted limited drilling in the early 1970s.  In 1977, Cherokee
 
 
 
35

 
 
Exploration Inc. (“Cherokee”) obtained a land package, as well as the Kerr McGee database and formed an exploration and drilling participation agreement with Uranium Resources and Development Company (“URADCO”), a subsidiary of Pennsylvania Power and Light.  Drilling from 1978 to 1980 partly delineated both shallow and deep sandstone mineralization.  Drilling by Kerr McGee Corporation, Cherokee, URADCO and others intersected significant uranium mineralization in sandstones at depths ranging from 150 to 600 feet. Grades and thickness range from 2 feet at 0.12% U3O8 to 22.5 feet at 0.071% U3O8.
 
Dames & Moore estimated a historical resource included in a report dated 1980, for parts of the property.  Nuclear Assurance Corporation (NAC) completed a study in 1982 reporting the reserves and resources shown in Table 4.D.-1.  As was industry standard for reporting in the 1980s, tonnages are not provided in the reports.  Reserves are reported using a minimum grade of 0.02% eU3O8 and a GT of 0.12 ft%.

TABLE 4.D.-1 – HISTORICAL RESOURCES
Classification
Age of
Formation
Av. Thick.
(ft)
Av grade
(%eU3O8)
Av GT
Pounds
eU3O8
Measured + Indicated Reserves
Jurassic
14.9
0.037
0.55
2,625,000
Measured + Indicated Resources
Tertiary
4.9
0.078
0.38
1,095,000
Inferred Resources
Jurassic
11.4
0.044
0.50
2,801,000
Geological Resources
Jurassic, Cretaceous.
Not
Reported
Not
Reported
Not
Reported
4,462,000
TOTAL
       
10,983,000

These resources are historical in nature and were compiled before the implementation of NI 43-101 reporting standards.  Readers are cautioned that recent independent verification of the data has not been performed and we have not completed sufficient exploration to verify the historical resource and reserve estimates.  The categories of mineralization used are not those prescribed by the Canadian Institute of Mining, Metallurgy and Petroleum and stipulated in NI 43-101 but with the exception of the Geological Resources they would correspond to indicated or inferred resources under those guidelines. Additional drilling will be required to verify this resource and classify it under the current standards. Given the quality of the historic work completed on the property, Crosshair believes the resource estimate to be both relevant and reliable. However, a qualified person has not completed sufficient work to classify the historic mineral resources as current mineral resources or mineral reserves as defined in NI 43-101, and Crosshair is not treating the historic resources as current. Therefore, the historical resource estimate should not be relied upon.

In 1995, Cherokee sold the project and database to Cameco Corp. (“Cameco”) who carried out limited drilling and evaluation of the in-situ recovery potential. Although the results were very favorable, Cameco abandoned the property in 1998 due to the low uranium price ($10 per pound). Total drilling on the property is estimated to be over 600,000 feet. The known uranium zone on the property remains open for expansion.
 
The Bootheel Project LLC acquired a database from Power Resources Inc. that includes reports, gamma logs, drill logs and other data which primarily cover the Federal mining claims but also include some historic data from the surrounding fee land.

On January 15, 2009 the Bootheel Project LLC acquired additional data from Cameco which covers the four fee sections under lease from MJ Ranches.  The data includes historical geological and gamma logs covering 660 drill holes totalling approximately 290,000 feet.  Compilation to date indicates that there have been approximately 1,900 drill holes totalling in excess of 600,000 ft, completed on the property and the surrounding area.

The Buck Point property was drilled in 1979 and 1980 by Cherokee and Mobil Oil Corp.   Mineralization has been found in at least six sandstone units over a 250 ft. interval, with grades up to 0.10% U3O8.  No further work has been carried out on the property since then.
 
 
 
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Property Geology
 
The Bootheel Project is located at the south-eastern margin of the Shirley Basin, along the western flank of the Laramie Mountains.  Tertiary sediments occupy the entire surface area of the property and unconformably overlie a gently dipping, relatively undisturbed sequence of Paleozoic and Mesozoic sediments.  A moderate degree of block faulting and some gentle folding are the main structural features and mostly affect pre-Tertiary rocks.

Uranium mineralization occurs within seven different sandstone beds within the gently dipping Jurassic and Cretaceous stratigraphy and within the overlying Tertiary Wind River Formation.  Five horizons host significant mineralization and have the potential to host economic resources: 1) Jurassic Sundance Formation containing the Canyon Springs B and D Beds, 2) Cretaceous Dakota Sandstone, 3) Cretaceous Rusty Beds Sandstone, 4) Cretaceous Muddy Sandstone and 5) Tertiary Wind River Formation.  Three other Cretaceous horizons (Lakota Sandstone, Fuson Shale and Wall Sandstone) contain scattered weak mineralization, but are not considered exploration targets at this time.

Two major zones of mineralization are recognized within the Sundance Formation.  The main zone in Sections 36 and 1 stretches for over 7,000 ft in length and reaches widths of up to 400 ft and is described as a series of tabular zones.  In Sections 6 and 7 the mineralization shows the characteristic roll front shape with the main northeast –trending nose extending approximately 1,900 ft in length.  These zones vary from 2 to 60 ft in thickness, averaging from 0.017% to 0.216% eU3O8 occurring at depths of 158 to 585 ft.  Length of the individual bodies ranges from 300 to 1,300 ft.

Three Cretaceous sandstone units host uranium mineralization.  The Dakota Sandstone ranges from 4 to 47 ft thick and contains abundant pyrite and carbonaceous material.  Uranium mineralization ranging from 2 to 14 ft thick, grades from 0.026% to 0.23% eU3O8 and occurs from 163 to 325 ft below the surface.  The main zone is about 300 ft wide and 1,000 ft long.  The Rusty Beds range from 5 to 87 ft thick, and contain abundant pyrite and carbonaceous debris.  Mineralization is 2 to 18 ft thick, grades from 0.020% to 0.11% eU3O8 and occurs from 232 to 297 ft below the surface.  Mineralization occurs in three small zones, 300 to 400 ft in size.  The Muddy Sandstone is 18 to 45 ft thick and is the least well mineralized of the Cretaceous units, with only one zone, about 200 ft by 400 ft in dimension, drilled to date.  This zone ranges from 2 to 6 ft thick, grades from 0.145% to 0.157% eU3O8 and is relatively shallow at 138 to 149 ft below the surface.

Tertiary Wind River Formation mineralization is typically thin, high grade, meandering and somewhat laterally discontinuous.  The Wind River ranges from 25 to 270 ft thick, averaging 150 ft.  The mineralized zones are typically 2 to 24 ft thick, averaging 5 ft, from 0.016% to 0.520% eU3O8 and occur from 50 to 215 ft below the surface.  The two main zones are up to 700 ft in width and 1,670 ft in length.

Exploration and Development
 
The 2008 drilling program, designed to further test the mineralized Sundance Formation, consisted of 93 vertical holes averaging 540 feet in depth and totaling 50,163 ft.  Of these holes, 12 were spot cored through the Sundance Formation resulting in 708.5 ft of core.  Drilling commenced in June and was completed September 20, 2008.  Virtually all historic drill hole sites within the main resource zone were resurveyed.
 
In addition to the drilling program, the historic holes were relocated, limited ground radiometric and water sampling surveys were carried out.   On February 5, 2009 Target reported that preliminary bottle roll tests had confirmed historical metallurgical test work indicating uranium recoveries of 87% or better using sodium bicarbonate as a lixiviant.
 
The final historic drill data set acquired from Cameco in January 2009 was compiled by our geological team and  combined with the results from over 50,000 feet of drilling completed by Target at Bootheel in 2008.  This compilation allowed us to complete the initial Bootheel Report.  The estimate includes an indicated resource of 1.09 million pounds of uranium oxide (1.44 million tons at 0.038% eU3O8) and an additional inferred resource of 3.25
 
 
 
37

 
 
million pounds of uranium oxide (4.40 million tons at 0.037% eU3O8).  The resource remains open for expansion with less than 60% of the historical resource area included in this initial estimate.
 
Activities in fiscal 2011 included further base line environmental studies.  A Sage Grouse and Raptor survey was completed in June.  The Nuclear Regulatory Commission was notified in August of the Company`s intention to file a permit application in 2012.
 
In the summer 2011, Crosshair carried out an $860,000 exploration program, which consisted of 35,760 feet of drilling in 76 holes.  Hydrogeological tests and continued permitting were also completed.  The program resulted in an updated Indicated mineral resource estimate of 1.48 million lbs of uranium (2.1M tons at 0.036% U3O8), and an inferred mineral resource estimate of 3.13 million lbs uranium (4.0M tons at 0.039% U3O8) Inferred.
 
The fiscal 2013 program will consist of 17,000 feet of exploration drilling and ongoing permitting.
 
Wyoming – Juniper Ridge Property
 
 
The Juniper Ridge Property, located in Carbon County, southwest Wyoming, comprises 197 claims and one state mineral lease totalling 4,710 acres (1,906 Ha) in size.
 
 
 
 
38

 
 
On October 29, 2010, we signed a definitive agreement with Strathmore Resources Ltd. (“Strathmore”), a wholly owned subsidiary of Strathmore Minerals Corp. to acquire the Juniper Ridge uranium property.  The aggregate total price for a 100% interest in the property will be satisfied as follows:
 
   
In Cash (USD)
   
In Shares (USD)
   
Total (USD)
 
Upon signing of the agreement (paid)
  $ 25,000     $ -     $ 25,000  
By November 15, 2010 (paid)
    175,000       -       175,000  
By October 29, 2011
    250,000       250,000       500,000  
By October 29, 2012 (1)
    1,250,000       1,250,000       2,500,000  
By October 29, 2013 (1)
    1,250,000       1,250,000       2,500,000  
Upon obtaining production permit (2)
    1,500,000       -       1,500,000  
                         
    $ 4,450,000     $ 2,750,000     $ 7,200,000  
 
1 These amounts are based on the estimated 5 million pounds uranium reserves at US $0.50 per pound.  Actual payments will be based on the measured, indicated and inferred uranium resources as defined by the NI 43-101 technical report.
 
2 This amount is based on the estimated 5 million pounds uranium reserves at US $0.30 per pound.  Actual payments will be based on the proven and probable uranium reserves as determined by prefeasibility or feasibility study.  At the option of Strathmore, the Company will make this payment in cash, shares or a combination of cash and shares.
 
The Company can terminate the acquisition agreement at any time upon written notice, without any further liabilities to the Company.  Strathmore will retain a 2% Gross Revenue Royalty on the property.  The Company has the option to repurchase this royalty at any time during the first three years after commencement of commercial production for US $1.5 million for each 1% of the Gross Revenue Royalty.
 
 Location
 
The property is located in Carbon County, 60 miles south of Rawlins and the I-80, 6 miles west of Baggs and 2 miles north of the Wyoming Colorado border.
 
Accessibility
 
A well maintained gravel road from Baggs crosses the property.  Numerous two-tracks provide easy access to the all of the property from the main road.  Hayden, Colorado, 75 miles southeast of Baggs, is the nearest airport with commercial air service.
 
History
 
The property has seen limited production from shallow open pits in the 1950s and 1960s.  It has been reported that 156,000 tons grading 0.172% U3O8 were mined which resulted in the production of 536,000 pounds of uranium.  Urangesellschaft (“UG”) acquired the property in the 1970s and carried out an extensive program consisting of drilling, metallurgical test work and other technical studies on the feasibility of taking the property to production as an open pit heap-leach operation. Due to low uranium prices the property was sold to AGIP Mining Company (“AGIP”) in 1981 who re-evaluated the property with additional drilling and technical studies in 1982 and 1986.  The earlier study proposed an open pit and heap-leach scenario with a projected 80% recovery while the later study proposed an open pit and conventional mill circuit with an expected 90% recovery using alkaline leaching.  The studies were based on gamma logs from over 4,000 rotary holes and 200 core holes.
 
 
 
 
39

 
 
The most recent historical estimate completed by AGIP in 1986 is 5.2 million tons grading 0.067% eU3O8 for a total 6.97 million pounds of uranium.  This historical resource estimate was based on half-foot interval gamma logs using a tonnage factor of 17.0 cubic feet per short ton, and cut-offs of 0.03% eU3O8 over a minimum 2.0 foot interval.  The resource was estimated using the polygonal method with a maximum 50 foot radius.  This resource estimate was completed prior to the implementation of NI 43-101 and is not compliant with current accepted reserve and resource classifications as set forth by the Canadian Institute of Mining and Metallurgy.  Additional drilling will be required to verify this resource and classify it under the current standards.  Given the quality of the historic work completed on the property, we believe the resource estimate to be both relevant and reliable.  However, a qualified person has not completed sufficient work to classify the historic mineral resources as current mineral resources or mineral reserves as defined in NI 43-101, and we are not treating the historic resources as current.  Therefore, the historical resource estimate should not be relied upon.
 
AGIP dropped the property in the mid 1980s due to the low price of uranium.  No work has been carried out on the property since then.
 
Geology
 
The Juniper Ridge uranium property is located within a small subsidiary basin on the southeast flank of the Washakie Basin.  This basin, as defined by the outcropping Browns Park formation is about 10 miles square appears to be a small tectonic graben down-dropped post Eocene but pre-Browns Park time.  Dominant structures are east-trending high angle normal faults.  Minor east-west trending folds cut through the basin but the effects on the Browns Park are not significant.
 
Rocks ranging from Cretaceous to recent outcrop in the region surrounding the basin.  The Browns Park is the only Miocene age outcropping in the basin and was deposited on a highly irregular erosion surface.  The formation has a dip of 5o or less.  The base of the Browns Park consists of a conglomerate, unconformably overlying the Wasatch Formation.  The conglomerate is 5 to 75 feet thick and contains quartz and igneous pebbles in a sandstone matrix. Overlying the conglomerate is tuffaceous fine-grained feldspathic sandstone with a bi-model grain size.  The upper unit consists of a similar tuffaceous sandstone but it is a very fine-grained unimodal sandstone.  Both the middle and upper units contain up to 20% clay in the form of montmorillonite or kaolinite.  The consensus of most geologists is that the upper two units are eolian in origin.
 
Mineralization
 
Oxidation of the host sandstone is generally less than 60 feet.  Secondary uranium minerals in this zone include autunite, meta-autunite uranophane and schroeckingerite.  The better mineralization is in the un-oxidized sections and is reported to contain autunite, coffinite and uraninite.  Mineralization is largely restricted to the sandstone units above the conglomerate.  It is reported that based on the electric logs there is a tendency for the mineralization to occur between finer and coarser units deposited along classical roll fronts.  Mineralization is predominately parallel to the sedimentary structures but occasionally crosses some structures.  Localization of the uranium appears to be the result of the presence of pyrite or hydrogen sulphide as there is an active gas reservoir at depth.  D Robertson determined that at very low grades, about 0.008%, the mineralization was continuous for several thousand feet but at grades above 0.05% continuity varied between tens of feet to several hundreds of feet.  In an examination of 80 twinned holes (5 to 12 feet apart) there were significant variations in grade and thickness over very short distances.
 
Exploration and Development
 
The fiscal 2012 program consisted of 78,253 feet of mud-rotary drilling in 400 holes. The program resulted in an Indicated mineral resource of 5.2 million lbs of uranium oxide (4.1M tons at 0.063% U3O8). Total expenditures were approximately $1.3 million.
 
The fiscal 2013 program will consist of 60,000 feet of resource drilling, metallurgical test work and a Pre-Feasibility Study.  Permitting will commence this summer and will include wildlife studies and the drilling of monitor wells for ongoing water quality testing.
 
 
 
40

 
 
 
ITEM 4A.
UNRESOLVED STAFF COMMENTS
 
Not applicable
 
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
 
The following discussion for the fiscal years ended April 30, 2012, 2011, and 2010 should be read in conjunction with our audited financial statements for the referenced periods and the notes thereto.  Our financial statements for the year ended April 30, 2012 have been prepared in accordance with IFRS. The Company has retrospectively applied IFRS to areas that are deemed appropriate except where specific exemptions permitted an alternative treatment upon transition to IFRS in accordance with IFRS 1. Comparative figures for 2011 have been adjusted to give effect to those changes. The functional currency of the Company and its subsidiaries is the Canadian Dollar and therefore our financial statements are reported in Canadian dollars.
 
Overview
 
The Company is a mineral exploration company engaged in acquiring, exploring and developing mineral properties and its focus is primarily uranium, base and precious metals.  The Company does not have any producing mineral properties at this time.  The Company’s business is presently focused on the exploration and evaluation of various mineral deposits in North America.  The Company’s shares trade on Toronto Stock Exchange and on NYSE MKT Exchange.
 
The Company is currently focusing on exploration and evaluation activities in the province of Newfoundland and Labrador, Canada and the State of Wyoming USA on the following properties:
 
 
·
Central Mineral Belt properties located in Labrador, Canada (going forward will include the CMB-JV Property located in Labrador, Canada).
 
 
·
The Bootheel Project LLC located in Wyoming, U.S.A.
 
 
·
Juniper Ridge Property located in Wyoming, U.S.A.
 
For fiscal year ended April 30, 2012 the Company reported a net loss of $11,977,829 or $0.24 per common share, compared with a net loss of $4,077,470 or $0.10 per common share for the prior fiscal year.   While figures have been prepared using International Financial Reporting Standards applicable to a going concern, which contemplates the realization of assets and settlement of liabilities in the normal course of business as they come due, certain conditions and events cast significant doubt on the validity of this assumption.  For the year ended April 30, 2012, the Company reported a loss of $11,977,829 and as at that date had an accumulated deficit of $91,351,849. The Company’s ability to continue as a going concern is dependent upon its ability to obtain additional funding from loans or equity financings or through other arrangements. To raise funds for operations, the Company is pursuing merger and acquisition opportunities, in conjunction with private or institutional financing.  However, there can be no assurance that these activities will be successful.
 
Accounting Standards
 
 
 
 International Financial Reporting Standards ("IFRS")
 
 
 In February 2008, the Canadian Accounting Standards Board confirmed that publicly accountable enterprises are required to adopt IFRS for fiscal years beginning on or after January 1, 2011.  Accordingly, the Company changed from Canadian GAAP reporting and commenced reporting under IFRS effective May 1, 2011 with restatement of comparative information presented. The conversion to IFRS from Canadian GAAP affects the Company’s reported financial position and results of operations and comprehensive income (loss) and affects the Company’s accounting policies, internal control over financial reporting and disclosure controls and procedures.
 
 
 
41

 
 
Recent Canadian Accounting Pronouncements
 
Financial Instruments IFRS 9, “Financial Instruments” (“IFRS 9”) was issued by the IASB on November 12, 2009 and will replace IAS 39. IFRS 9 uses a single approach to determine whether a financial asset is measured at amortized cost or fair value, replacing the multiple classification options in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2013.
 
Amendments to IFRS 7, Financial Instruments: Disclosures are effective for annual periods beginning on or after July 1, 2011 and introduce enhanced disclosure around transfer of financial assets and associated risks. These amendments are not anticipated to impact the disclosures made by the Company.
 
Amendments to IAS 1, Presentation of Financial Statements (effective for annual periods beginning on or after July 1, 2012) require that elements of other comprehensive income that may subsequently be reclassified through profit and loss be differentiated from those items that will not be reclassified.
 
IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interests in Other Entities, and consequential revisions to IAS 27 Separate Financial Statements and IAS 28 Investments in Associates and Joint Ventures (all effective January 1, 2013) provide revised guidance on the accounting treatment and associated disclosure requirements for joint arrangements and associates, and a revised definition of ‘control’ for identifying entities which are to be consolidated.
 
IFRS 13 Fair Value Measurement (effective January 1, 2013) provides new guidance on fair value measurement and disclosure requirements.
 
The Company is currently evaluating the impact of these new and amended standards on its financial statements.
 
US GAAP Reconciliation
 
Under Canadian GAAP, it is acceptable to defer mineral property acquisition and exploration costs until a decision to abandon the property is made, it is determined that the property does not have economically recoverable reserves or that a company is unlikely to pursue exploration activities on the property.  Under U.S. GAAP/IFRS, mineral exploration costs are expensed until it can be proven that economically viable reserves are present on the property and a company has the ability and intention to pursue exploitation of these reserves.
 
Under Canadian GAAP, cash flows relating to mineral property exploration costs are reported as investing activities. For U.S. GAAP/IFRS, these costs would be characterized as operating activities.
 
Under Canadian GAAP, future income taxes are calculated based on enacted or substantially enacted tax rates applicable to future years.  Under U.S. GAAP/IFRS, only enacted rates are used in the calculation of future income taxes.
 
This difference between IFRS and US GAAP did not result in a difference in our financial position, results of operations or cash flows for the years ended April 30, 2012 and 2011.
 
We have adopted the fair value based approach to share-based compensation under the provisions of IFRS 2 Share-based Payment and SFAS No. 148.  The method of adoption applied by us is permissible under both Canadian and US standards.
 
5.A.
Operating Results
 
Results of Operations for the fiscal year ended April 30, 2012 compared to the fiscal year ended April 30, 2011
 
For fiscal year ended April 30, 2012 the Company reported a net loss of $11,977,829 or $0.24 per common share, compared with a net loss of $4,077,470 or $0.10 per common share for the prior fiscal year.  The weighted average
 
 
 
42

 
 
number of common shares for fiscal 2012 increased to 50,377,698 from 41,193,459 for the previous year.  The increase in the average number of shares outstanding was primarily due to share issuances related to the following:
 
 
·
Share issuance in relation to acquisition of exploration and evaluation assets (1,925,627common shares) in the 2nd, 3rd and 4th quarters of fiscal 2012
 
·
Various financings (16,379,400 common shares) completed in the 4th quarter of fiscal 2012

Expenses
 
Expenses for the current year were $11,751,934, approximately 152% higher than in fiscal 2011 due primarily to an increase in exploration and evaluation expense, consulting fees, office and administration expenses, investor relation expenses and wages and salaries expense. The increase in these expenses was partially offset by a reduction in legal expenses. Increases in exploration and evaluation expense, consulting fees and wages and salaries caused a 89% increase in the overall loss, which was partially offset by a decrease from legal expense due to the settlement of a dispute involving the Company.
 
Exploration and evaluation expense for 2012 was 650% higher than in 2011 due largely to the drilling programs completed on the CMB Uranium/Vanadium Project, the CMB JV Project , and the Bootheel Project, as well as the Mineral Resource estimate completed on the Juniper Ridge Property and the updated Mineral Resource estimate completed on the Bootheel Project.
 
 
Consulting and management fees increased by 184%, as a direct result of increased Company activities, reflecting favorable conditions in the markets.
 
 
In addition, investor relations expenditures increased by 143% from fiscal 2011 due to increasing investor and public relations activities.
 
To fuel the Company’s continuous growth, the Company hired additional field workers which had caused the  wages and salaries to increase by 55% in 2012.
 
Audit and accounting expenditures increased by 22% compared to fiscal 2011 when additional costs attributable to the transition to IFRS were incurred.
 
Other Income (Expenses)
 
Other expense increased in fiscal 2012 by $804,941 to an expense of $225,895 compared with recorded income of $579,046 in 2011.  The Company recorded an unrealized loss on Marketable securities of $701,327 compared to a last year’s gain of $501,961.  Crosshair has accounted for its investment in marketable securities as “Financial assets at fair value through profit or loss”. These financial assets are measured at fair value and changes in fair value are recognized in net earnings. This loss was partially offset by the flow through premium in relation to the flow through shares issued in fiscal 2012. The Company also incurred a gain of $1,898 from the sale of capital assets in the current fiscal year compared with a loss of $110,291 from fiscal 2011.
 
Exploration and Evaluation Assets
 
During the current fiscal year, the Company acquired exploration and evaluation assets of $1,411,455 representing the acquisition costs related to the various mineral claims held by the Company.
 
Working Capital
 
Working capital was $5,466,961 as at April 30, 2012 compared with $10,815,170 as at April 30, 2011. The decrease of $5,348,209 was mainly due to cash used in operating activities of $9,649,032, which was then partially offset by financing activities of the Company during fiscal 2012.
 
 
 
43

 
 
Results of Operations for the fiscal year ended April 30, 2011 compared to the fiscal year ended April 30, 2010
 
For fiscal year ended April 30, 2011 the Company reported a net loss of $4,077,470 or $0.10 per common share, compared with a net loss of $2,321,078 or $0.02 per common share for the prior fiscal year.  The weighted average number of common shares for fiscal 2011 increased to 41,193,459 from 29,528,511 for the previous year.  The increase in the average number of shares outstanding was primarily due to share issuances related to the following:
 
 
·
Exercise of stock options (200,000 common shares) in the 3rd and 4th quarters of fiscal 2011
 
·
Various financings (13,749,875 common shares) completed in the 3rd quarter of fiscal 2011
 
·
Exercise of warrants (657,903 common shares) in the 3rd and 4th quarters of fiscal 2011
 
Expenses
 
Expenses for the fiscal year ended April 30, 2011 were $4,656,516, approximately 51% higher than in fiscal 2010 due primarily to recognizing exploration and evaluation expense, an increase in share-based compensation expense and management and consulting fees which was offset by a reduction in office and administration, rent, and wages and salaries expenses as a result of the engagement of a Management Services Company in October 2010. As a result of the transition to IFRS, the Company had reclassified a portion of its previously capitalized exploration expenditures as exploration and evaluation expense. The reclassified amount was $873,228 representing approximately 19% of the expense for year 2011. No such expense was reclassified in 2010. Share based compensation, management and consulting fees caused a 35% increase in the overall loss, which was offset by a 13% decrease from office and administration, rent and wages and salaries attributed to the engagement of the Management Services Company.
 
Share-based compensation expense for 2011 was 65% higher than in 2010 due largely to IFRS adjustment of $527,085 and new stock options being granted to certain employees and management in the 3rd and 4th quarters of fiscal 2011, and a resulting increase in expense recognition.
 
 
Consulting and management fees increased by 279%, as a direct result of increased Company activities, reflecting favorable conditions in the markets.
 
 
In addition, investor relations expenditures increased by 113% from fiscal 2010 due to increasing investor and public relations activities.
 
Wages and salaries decreased in 2011 by 44% from 2010 due primarily to on-going expenditure reductions achieved by the engagement of a Management Services Company which provides administrative, geological, and corporate services at lower costs.
 
The engagement of a Management Services Company also led to a decrease in office and administration expenses of 46%, and a decrease in rent of 54%.
 
Audit and accounting expenditures decreased by 42% compared to fiscal 2010 when additional costs attributable to SOX compliance were incurred.
 
Other Income (Expenses)
 
Other income increased in fiscal 2011 by $631,301 to $579,046 compared with recorded expenses of $52,255 in 2010.  The Company recorded an unrealized gain on Marketable securities of $501,961 compared to a last year’s unrealized gain of $66,667.  Crosshair has accounted for its investment in marketable securities as “Financial assets at fair value through profit or loss”. These financial assets are measured at fair value and changes in fair value are recognized in net earnings. This gain was partially offset by a loss on sale of assets of $110,291. In fiscal 2010, the Company’s Sinbad project was written off and as a result $229,796 was recorded for this write-off. No write-offs of mineral properties occurred in fiscal 2011.
 
 
 
 
44

 
 
Exploration and Evaluation Assets
 
During the current fiscal year, the Company acquired exploration and evaluation assets of $474,183 representing the acquisition costs related to the various mineral claims held by the Company. Due to the transition to IFRS, the Company had reclassified its previously capitalized exploration and evaluation assets of $20,679,217 to deficit and $873,228 to exploration and evaluation expense.
 
Working Capital
 
Working capital was $10,815,170 as at April 30, 2011 compared with $3,403,009 as at April 30, 2010. The increase of $7,412,161 was mainly due to cash provided by financing activities of $9,995,812, which was then partially offset by operating and investing activities of the Company during fiscal 2011.
 
Results of Operations for the fiscal year ended April 30, 2010 compared to the fiscal year ended April 30, 2009
 
For fiscal year ended April 30, 2010 the Company reported a net loss of $2,321,078 or $0.02 per common share, compared with a net loss of $20,724,237 or $0.22 per common share for the prior fiscal year.  The weighted average number of common shares for fiscal 2010 increased to 29,528,511 from 23,396,172 for the previous year. The increase in the average number of shares outstanding was primarily due to share issuances related to the following:
 
•           Exercise of stock options (6,250 common shares) in the 3rd quarter of fiscal 2010
 
•           Various financings (3,025,000 common shares) completed in the 3rd quarter of fiscal 2010
 
•           Settlement of vendor debt (87,500 common shares) in the 3rd quarter of fiscal 2010
 
•           Financing (1,704,545 common shares) competed in the 4th quarter of fiscal 2010
 
The net loss for the fiscal year ended April 30 2010 decreased 89% from the prior period. The decline resulted from a 105% decrease in losses on marketable securities, a 98% decrease in impairment of mineral properties, a 68% decrease in stock based compensation expense, and a 43% decrease in the general and administrative expenses of the Company.
 
During fiscal 2010 the Company took certain steps to continue its operations under unfavourable economic conditions. One of these steps was a reduction in general and administrative expenses, in particular office and administrative, audit and accounting, consulting, and investor relations. An additional measure undertaken by the Company was to reduce the number of staff on hand in order to reduce wages and salaries, and travel expenses. This corporate downsizing led also to the decrease in stock based compensation expense resulting in certain stock options being cancelled and fewer stock options being granted and vested during the fiscal year of 2010.
 
Reflecting the improving securities market, the decrease in losses on marketable securities was mainly due to the increase in carrying value of the Company’s investment recorded at fair market value.
 
The significant decline in the impairment of mineral properties was attributable to the $14,000,000 non-cash impairment charge on the Company’s uranium interest in the Central Mineral Belt of Labrador recorded in 2009 compared to the $229,796 charge on the Company’s Sinbad project recorded in 2010.
 
The changes in the following items have also had a material effect on reported net loss and the Company’s operations for the period:
 
Wages and salaries decreased in 2010 by 52% from 2009 due primarily to staff level reductions in an effort to reduce overall expenditures throughout the Company.
 
 
 
45

 
 
Audit and accounting expenses decreased by 23%, when compared to fiscal 2009 due to the fact that the Company’s auditors were not required to audit the Company’s internal controls under SOX 404(b), as was the case in fiscal 2009.
 
Investor relations expenditures decreased by 56% from fiscal 2009 due to reducing investor relations activities.
 
Legal expenditures increased by 29% over fiscal 2009 as a result of fees directly associated with the litigation with Expedition.
 
Office and administrative expenses decreased by 45% due to the overall reduction in office activities related to corporate downsizing.
 
Other Income (Expenses)
 
Other expenses decreased in fiscal 2010 by $15,058,379 to $52,255 compared with $15,110,634 in 2009.  The Company’s Sinbad project was written off during the year as a result $229,796 was recorded for this write-off. Additionally, the company’s interest income was $126,303 lower than the prior year due to the lower average cash balances and the Company realized a gain on Marketable securities of $66,667 compared to last year’s loss of $1,290,195.  Crosshair has accounted for its investment in marketable securities as “Held for Trading” in accordance with CICA Standard 3855 on Financial Instruments. Held-for-trading financial assets are measured at fair value and changes in fair value are recognized in net income.
 
Future Income Tax Recovery
 
The company recognized a recovery of future income tax of $818,750 related to the renouncing in fiscal 2010 of certain deductions for Canadian exploration expenditures incurred on the Company’s resource properties from the prior year’s flow through securities offering to shareholders.  During fiscal 2010, the Company issued 3,479,545 common shares on a flow-through basis for gross proceeds of $3,275,000 which were renounced in fiscal 2010.  The flow-through agreement requires the Company to renounce certain deductions for Canadian exploration expenditures incurred on the Company’s resource properties.
 
Mineral Property Expenditures
 
During fiscal 2010, the Company incurred total mineral property exploration expenditures of $1,048,856 due primarily to the exploration and drilling activities on the CMB Moran Lake property totaling $455,145; CMB-JV totals $74,411 (net of recoveries); Bootheel totaling $(97,210); and Golden Promise totaling $846,306.
 
Working Capital
 
Working capital was $3,403,009 as at April 30, 2010 compared with $2,641,169 as at April 30, 2009, up by $761,840. The increase was mainly due to cash provided by financing activities of $3,817,314, which was then partially offset by operating and investing activities of the Company during fiscal 2010.
 
5.B.           Liquidity and Capital Resources
 
Liquidity – April 30, 2012, April 30, 2011 and April 30, 2010
 
As of April 30, 2012, the Company had cash and cash equivalents of $5,446,298 (April 30, 2011 - $9,931,585, April 30, 2010 - $3,427,511) and working capital of $5,466,961 (April 30, 2011 - $10,815,170, April 30, 2010 - $3,403,009.  Cash used in operating activities during 2012 was $9,649,032 compared with $2,882,416 in 2011 and $2,259,493 in 2010.  Cash utilized in investing activities was $1,378,856 when compared with $609,322 in 2011 and $957,584 in 2010. Cash provided by financing activities decreased to $6,542,601 compared with $9,995,812 in 2011 and $3,817,314 in 2010 as the result of financing completed during the year.
 
 
 
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Capital Resources
 
The Company believes it has sufficient working capital to finance its intended operations, and maintain its priority mineral property licenses for the next 12 months.  To date, the Company’s operations, exploration and development activities have been almost entirely financed from equity financings.  The Company will continue to identify financing opportunities in order to provide additional financial flexibility and to continue the development of its property portfolio, meet land claim expenditure requirements and other commitments.  While the Company has been successful raising the necessary funds in the past, there can be no assurance it can do so in the future. The Company currently does not have any material commitments for capital expenditures.
 
5.C.           Research and Development, Patents and Licenses, etc.
 
We are a mineral exploration company and do not engage in conventional research and development.  We have not incurred research and development expenses or adopted research on development policies within the last three fiscal years.
 
5.D.           Trend Information
 
We are a mineral exploration company.  Consequently, we have no production, sales, or inventory in the conventional sense.  Our financial success will be dependent upon the extent to which we can discover mineralization and the economic viability of developing such properties.  Such development, if initiated, may take years to complete and the amount of resulting income, if any, is difficult to determine with any certainty.  We have no mineral reserves and to date have not produced any revenues.  The sales value of any mineralization discovered by us is largely dependent upon factors beyond our control such as the market value of the metals produced.
 
Other than as disclosed herein, we are not aware of any trends, uncertainties, demands, commitments or events which are reasonably likely to have a material effect upon our net sales or revenues, income from continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information not necessarily to be indicative of future operating results or financial condition.
 
The major factors that caused significant variations in net loss were the recording of share-based compensation when stock options were granted and the write-down of properties based on a periodic review of such properties, both of which have no identifiable trend.
 
5.E.           Off-Balance Sheet Arrangements
 
Not applicable
 
5.F.           Tabular Disclosure of Contractual Obligations
 
   
Payments due by period
Contractual Obligations
 
Total
   
Less than
1 year
 
1-3 years
3-5 years
more than 5
years
Operating Lease Obligation
  $ 13,480     $ 13,480        
Total
  $ 13,480     $ 13,480        

 
 
47

 
 
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 
6.A.           Directors and Senior Management
 
Name
Age
Position
Mark J. Morabito
45
Executive Chairman
C. Stewart Wallis 3
67
Chief Executive Officer, President and Director
Jay Sujir 2
54
Director
Ian B. Smith 4
66
Director
Chris Collingwood 1
65
Director
Derrick (Rick) Gill 1 2
64
Director
Joseph Miller 5
49
Director
Sonya Atwal 6
32
Chief Financial Officer
Sam Yik
47
Chief Financial Officer
Mark Ludwig
56
Chief Executive Officer and President
Horace Beaven
61
Vice President, Corporate Communications
Tom Bell
63
Vice President, Chief Geologist
Chris Healey 1
65
Director
1     Member of Audit Committee
2     Member of Compensation Committee
3     Mr. Wallis resigned as President & CEO on April 30, 2012.
4     Mr. Smith resigned as a director on April 25, 2012.
5     Mr. Miller resigned as a director on August 4, 2011.
6     Ms. Atwal resigned as Chief Financial Officer on December 1, 2011.

We are an exploration stage junior exploration company.  Our needs will be dependent upon our level of exploration programs and financial condition.  From 2006 to 2009, we entered into employment agreements with our senior officers and all of our full-time employees.  In August 2009, we began entering into consulting agreements with our senior management and currently have no employment agreements in effect with senior management or full-time employees.  See Item 6.B. Compensation – Compensation of Executive Officers and Directors – Employment and Consulting Agreements for a description of the current consulting agreements with senior management.  On January 1, 2010, we entered into a management services agreement with Forbes West under which Forbes West provides shared office, administration and payroll services to the Company and as of January 1, 2010, we do not employ any staff full-time.  On October 1, 2010, we entered into a revised management services agreement. See Item 7.B – Related Party Transactions and Exhibit 4.9 for a description of this agreement.
 
Set forth below are brief descriptions of recent employment and business experience of our directors and senior management.
 
Mark J. Morabito has been our Executive Chairman since March 1, 2010.   Mr. Morabito served as our Non-Executive Chairman from December 18, 2009 until his appointment as Executive Chairman on March 1, 2010.   He was also Chief Executive Officer from February 2003 until March 1, 2010 when Stewart Wallis was appointed to that position, and has been a Director since November of 1998.  Mr. Morabito also served as our President from February 2003 until February 18, 2008, when Paul Hosford was appointed to that position.  Mr. Morabito was re-appointed as President on October 21, 2008 following Mr. Hosford’s resignation from that position.  On March 31, 2009, Mr. Morabito ceased to be our President, when Stewart Wallis was appointed to that position in addition to being appointed Chief Executive Officer in 2010.  Mr. Morabito remains our Executive Chairman and a Director.
 
 
 
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Mr. Morabito devotes approximately 30% of his time during a typical work week to our business.  Mr. Morabito also serves on the board of directors of Excelsior Mining Corp., Alderon Iron Ore Corp., Ridgemont Iron Ore Corp. and Logan Resources Ltd.. He is also the Executive Chairman of Alderon Iron Ore Corp. and Ridgemont Iron Ore Corp. and the non-Executive Chairman of Excelsior Mining Corp.  Mr. Morabito graduated from Simon Fraser University in Vancouver, British Columbia with a B.A. in 1990 and completed his J.D. at the University of Western Ontario in London, Ontario in 1993.
 
C. Stewart Wallis was a member of our Board of Directors from June 2003 until July 27, 2008.  Mr. Wallis was appointed to our Board of Directors and was appointed President of the Company on March 31, 2009.  On March 1, 2010 Mr. Wallis was appointed as our CEO.  Mr. Wallis resigned as President and CEO of the Company on April 30, 2012.  Up to the time of his resignation as President and CEO of Crosshair, Mr. Wallis devoted substantially all of his time during a typical work week to our business.  Mr. Wallis is the Managing Director of Sundance Geological Ltd., a private entity owned and controlled by him, which provides geological services, including evaluations and prefeasibility studies, for individuals and mining companies based throughout the world.  He received his Bachelor of Science Degree in Geology from McMaster University, located in Hamilton, Ontario.  His professional affiliations include: Association of Professional Engineers and Geoscientists of Saskatchewan, the Association of Professional Engineers and Geoscientists of British Columbia, the Professional Engineers and Geoscientists of Newfoundland and Labrador, Wyoming Professional Geologists, Certified Professional Geologist under the American Institute of Professional Geologists, Fellow, Society of Economic Geologists and a Member of the Society of Mining Engineers.
 
Jay Sujir has been a member of our Board of Directors since February 2003.  Mr. Sujir served as our Non-Executive Chairman from his appointment on September 10, 2007 until December 18, 2009 when Mark Morabito was appointed Non-Executive Chairman.  Mr. Sujir is currently the Chairman of the Board of Directors of Sunward Resources Ltd. and is the Corporate Secretary and a Director of Santa Fe Metals Corp.  Mr. Sujir also serves on the boards of directors of AMI Resources Inc., Cannon Point Resources Ltd., DePaul capital Corporation, Excelsior Mining Corp., Midasco Capital Corp., NEMI Northern Energy & Mining Inc., Red Eagle Mining Corporation, Rio Silver Inc., Slater Mining Corporation, Uracan Resources Ltd. and Westham Resources Corp.  Mr. Sujir is a securities and natural resource lawyer who has experience with advising and assisting public companies.   He obtained his B.A. from the University of Victoria, in Victoria, British Columbia, in 1981 and obtained his LL.B. from the University of Victoria in 1985.   He has been a lawyer in the law firm of Anfield Sujir Kennedy & Durno LLP and its predecessor firm since August 1986 and has been a partner of that firm since 1991.
 
Ian B. Smith joined our Board of Directors in September 2006 and resigned from the Board on April 25, 2012.  Mr. Smith has over 40 years’ experience in corporate, operations, project management and consulting within the international base, precious metals and coal industries.  He has worked around the world including Africa, China, Southeast Asia and extensively in the Americas. Mr. Smith was President and Founding Partner of MRDI which became one of the largest and most successful mining consultancies in North America.  Mr. Smith is President, CEO and a director of Santa Fe Metals Corporation and Yellowhead Mining Inc.  Mr. Smith also serves on the board of directors of EURO Ressources S.A.  Mr. Smith was granted his Chartered Professional Management Aus. IMM in October 2000 and has been a Fellow with the Aus. IMM since 1990.  Mr. Smith obtained his BE (Mining) from the University of Queensland, Australia in 1966.
 
Chris Collingwood joined our Board of Directors in October 2007.  Mr. Collingwood received his BComm. from Memorial University of Newfoundland in 1970.   Mr. Collingwood is the Chairman and CEO of Baine Johnston Corp., a privately held Newfoundland firm active in commercial and industrial real estate, Retail operations and Marine Activities, also having investments in a number of other Newfoundland companies.  Mr. Collingwood has previously served on the Audit Committee of Barclay's Bank of Canada, is a past Public Director of the Investment Dealers Association and serves on the Audit Committee of the Newfoundland & Labrador Center for Health Information.
 
Derrick (Rick) Gill joined our Board of Directors in May 2008.  Mr. Gill has more than 30 years’ experience as an executive and director of public and private companies operating throughout North and South America. Mr. Gill is a principal consultant and director of Strategic Concepts Inc. (“SCI”), which provides strategic planning, financial
 
 
 
49

 
 
modeling and business development services to numerous resource companies. Mr. Gill co-founded SCI in 1990.  He also serves on the board of directors of Brigus Gold Corp.  Mr. Gill received his BComm. in Accounting from Memorial University of Newfoundland in 1969
 
Joseph Miller was a member of our Board of Directors from June 26, 2009 until his resignation on August 4, 2011.  He served as our Chief Financial Officer from September 2, 2008 until June 30, 2009.   Mr. Miller has over 20 years experience in financial management of public companies, including numerous energy and resource companies based in Alberta.  Prior to joining Crosshair, Mr. Miller was the Chief Financial Officer of GPS Industries Inc. and was responsible for the overall financial management of the company, including internal and external public reporting and SEC reporting and filings, and initiating the Sarbanes Oxley compliance program identifying and focusing on the high risk processes and controls.  From 1999 to 2007, Mr. Miller was employed by Transalta Corporation in Calgary, Alberta, first as the Manager of Financial Planning and Analysis and then as the Director of Financial Operations.  Mr. Miller received his CMA designation in 1992 and is a member of the Certified Management Accountants of British Columbia.  He received his diploma in Business Administration from Mount Royal College in 1989.  Mr. Miller was the Chief Financial Officer of Powerex Corp., a wholly-owned subsidiary of BC Hydro until May 24, 2011.
 
Sonya Atwal was our Chief Financial Officer (“CFO”) from February 15, 2011 until her resignation on December 1, 2011.  Ms. Atwal received her CGA designation in February 2008, and is a member of the Certified General Accountants of British Columbia.    Ms. Atwal received her Bachelor of Business Administration from the Southern Alberta Institute of Technology (SAIT in 2008).   Ms. Atwal served as our Controller from 2005 until her appointment as Chief Financial Officer.
 
Sam Yik has been our Chief Financial Officer (“CFO”) since December 1, 2011.  Mr. Yik has over 20 years experience in financial management of public companies, including numerous energy and resource companies.  Prior to joining Crosshair, Mr. Yik was the Chief Financial Officer of Kobex Minerals Inc. from November, 2007 to November 2011, the Vice President, Corporate Finance & Investor Relations of GBS Gold International Inc. from August 2006 to October 2007, the Vice President, Corporate Development and Commercial Operations of Pine Valley Mining Corp. from March 2005 to July 2006, and a Commercial Manager with Methanex Corp. from 1994 to March 2005.   Mr. Yik received his Chartered Accountant (CA) designation in March 1992 and is a member of the Institute of Chartered Accountants of British Columbia. Mr. Yik received his Bachelor of Commerce from the University of British Columbia in May 1989.  Mr. Yik is also the Chief Financial Officer of Excelsior Mining Corp.
 
Mark Ludwig was appointed Chief Executive Officer and President of Crosshair on April 30, 2012.  Prior to his appointment as Chief Executive Officer and President, Mr. Ludwig served as our Vice President and Chief Operating Officer (U.S.) from August 8, 2011 to April 30, 2012.  Mr. Ludwig devotes substantially all of his time during a typical work week to our business.   Prior to joining Crosshair, Mr. Ludwig was the Vice President of Operations of Neutron Energy. From 2005 to 2008 Mr. Ludwig was employed by Hecla Mining Company as a Senior Mining Engineer/Project Manager and later as Manager of Corporate Development. From 1984 until 2005 he worked in various positions with BHP Billiton including as a Senior Project and Mining Engineer.  Mr. Ludwig earned a Mining Engineering degree from the Colorado School of Mines and an MBA from Regis University.
 
Horace (Bevo) Beaven was appointed Vice President, Corporate Communications of Crosshair on July 5, 2011.  Mr. Beaven devotes substantially all of his time during a typical work week to our business.  Mr. Beaven  has over 12 years experience as an investor relations executive working with public companies. From June 2009 to his joining Crosshair, Mr. Beaven, through Bevo Beaven Corporate Communications, was an independent public relations and corporate communication consultant.  From July 2008 to June 2009, he was Vice President, Client Services of Metzger Associates Publications and from March 2000 to July 2009, held various positions, the latest being Senior Vice President and General Manager at CTA Integrated Communications.  Mr. Beaven has a BA in Journalism,/Public Relations and Advertising from the University of Alabama.
 
Tom Bell was appointed Vice President, Chief Geologist of Crosshair on November 16, 2011.  Dr. Bell has over 30 years experience as a geologist and devotes substantially all of his time during a typical work week to our business.  
 
 
 
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Since 1999 Dr. Bell has been President of Stratamodel, Inc.,  the firm he founded to explore for metallic commodities in Africa and North America, create state of the art geologic data collection systems, and design and implement resource based geographic information systems.  Dr. Bell received his B.Sc in Geology from San Jose State University in California in 1978 followed by an M.A at the University of California at Berkeley in 1980 and a PhD at the University of California at Berkeley in 1983. His professional affiliations include: Professional Geologist in the State of Pennsylvania; Certified Professional Geologist (AIPG); Fellow, Society of Economic Geologists.
 
 
Chris Healey joined our Board of Directors on April 25, 2012.  Mr. Healey is a licensed professional geologist in British Columbia, Saskatchewan and Wyoming with over 40 years experience in the natural resources industry, with particular emphasis on uranium exploration and extraction. He has held senior positions with Cameco Corporation, the world's largest uranium producer, where he served for over 20 years and managed its US operations. Mr. Healey has both broad and deep experience in all aspects of resource mining, especially in the uranium sector with hand-on experience at a producing in-situ operation.  He has also worked on uranium projects around the world, including Canada, the United States, Paraguay, Kazakhstan, Mongolia, Australia and Malawi.  Until February 29, 2012, he was President and CEO of Titan Uranium Corp.  He was appointed President and CEO of Galaxy Graphite Corp. (formerly Galaxy Capital Corp.) on March 1, 2012.  Mr. Healey graduated with a Bachelor of Science degree in Geology from the University of Wales, Swansea in 1968. He also served as the national president of the Geological Society of Canadian Institute of Mining, Metallurgy and Petroleum. Mr. Healey is also a Director of Galaxy Graphite Corp, Carmax Mining Corp and Ansell Capital Corp.
 
There are no family relationships between any of the Directors or senior management. There are no arrangements or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected as a Director or member of senior management.
 
6.B.           Compensation
 
Compensation of Executive Officers and Directors
 
The following table sets out the compensation information for the fiscal year ended April 30, 2012, for our directors and executive officers.
 
 
 
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Compensation of Executive Officers/Directors in Fiscal 2012

     
Annual Compensation
       
     
Salary
($)
   
Bonus
($)
   
Other Annual Compensation
($)
             
 
Name and
Principal Position
Fiscal
Year
 
Securities Under Options Granted (#)
   
Option
Exercise
Price
   
Option
Expiration
Date
 
Mark J. Morabito 1
Executive Chairman and
Director
2012
    --       --      $ 150,000       50,000     $ 0.38    
2017/04/24
 
Stewart Wallis 2
CEO, President and
Director
2012
    --     $ 88,888     $ 260,000       50,000     $ 0.38    
2017/04/24
 
Joseph Miller 3
Director
2012
    --       --     $ 6,732       --       --       --  
Jay Sujir
Director
2012
    --       --     $ 26,452       --       --       --  
Ian Smith 4
Director
2012
    --       --     $ 26,934       --       --       --  
Chris Collingwood
Director
2012
    --       --     $ 20,711       --       --       --  
Derrick Gill
Director
2012
    --       --     $ 23,859       --       --       --  
Sonya Atwal 5
Chief Financial Officer
2012
    --               --       --       --       --  
Samuel Yik 6
Chief Financial Officer
2012
    --       --       --       100,000     $ 0.38    
2017/04/24
 
Mark Ludwig 7
Chief Executive Officer &
President
2012
    --    
US$53,000
   
US$137,818
      400,000 250,000     $ 0.67 $0.38    
2016/07/20
2017/04/24
 
Horace Beaven 8
Vice President, Corporate
Communications
2012
    --    
US$25,000
   
US$143,135
      250,000     $ 0.67    
2016/07/20
 
Tom Bell, Ph.D. 9
Vice President, Chief
Geologist
2012
    --    
US$40,000
   
US$79,998
      60,000     $ 0.38    
2017/04/24
 
Chris Healey 10
Director
2012
    --       --       --       200,000     $ 0.38    
2017/04/24
 
 
1
Mr. Morabito was appointed President on October 21, 2008 and ceased to be President on March 31, 2009.  Mr. Morabito ceased to be CEO and was appointed Executive Chairman on March 1, 2010.
2
Mr. Wallis ceased to be a director on July 27, 2008 and was appointed a director on March 31, 2009.  Mr. Wallis was appointed President on March 31, 2009 and CEO on March 1, 2010.  Mr. Wallis ceased to be President and CEO on April 30, 2012.
3
Mr. Miller resigned as a director on August 4, 2011.
4
Mr. Smith resigned as a director on April 25, 2012.
5
Ms. Atwal resigned as Chief Financial Officer on December 1, 2011.
6
Mr. Yik was appointed as Chief Financial Officer on December 1, 2011
7
Mr. Ludwig was appointed Chief Executive Officer and President on April 30, 2012.  Prior to that, he was Vice President and Chief Operating Officer (U.S). from August 15, 2011 until April 30, 2012.
8
Mr. Beaven was appointed Vice President, Corporate Communications on July 5, 2011.
9
Dr. Bell was appointed Vice President, Chief Geologist on November 16, 2011.
10
Mr. Healey was appointed a Director on April 25, 2012.

 
 
 
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Director Compensation
 
Effective May 1, 2011, Crosshair adopted a formal director compensation program. Under the formal director compensation program, non-executive directors of Crosshair receive an annual board retainer of $20,000 and a fee of $1,500 for each Board meeting attended, the Chair of the Audit Committee receives an annual fee of $6,000 and each of the Chairs of the Compensation and other Committees of the Board receive an annual fee of $2,500.  Each of the aforementioned fees is paid quarterly. From December 31, 2008 to May 1, 2011, no such formal program was in place. Directors are also entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of the Board of Directors.  The Board of Directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director.  Directors are also eligible to receive options to purchase Common Shares pursuant to the terms of Crosshair’s Stock Option Plan.
 
Employment and Consulting Agreements
 
On March 1, 2011, the Company entered into a consulting agreement with MJM Consulting (“MJM”) and Mark J. Morabito (“Morabito”) (the “2011 MJM Consulting Agreement”). Under the terms of the 2011 MJM Consulting Agreement, MJM provides the services of Morabito to act as Executive Chairman of the Company and to provide such general management consulting services as the Company may require from time to time under such time as the 2011 MJM Consulting Agreement is terminated.   Under the terms of the 2011 MJM Consulting Agreement, MJM receives a monthly fee of $12,500 plus applicable taxes and is eligible to receive an annual cash bonus in an amount to be determined at the discretion of the Board of Directors.  In the event of termination of the 2011MJM Consulting Agreement, MJM will receive a lump sum payment equivalent to 12 months’ fees.  In the event of a change of control, MJM will receive the equivalent of 36 months’ fees  On September 1, 2011, the Company entered into an Assignment Agreement with MJM as Assignor, MJM Consulting Corp. as Assignee and Morabito pursuant to which MJM assigned, transferred and set over to MJM Consulting Corp. all  of the Assignor’s rights, interests, benefits, duties and obligations in and relating to the 2011 MJM Consulting Agreement.

On March 1, 2011, the Company entered into a consulting agreement with Sundance Geological Ltd. and C. Stewart Wallis (Wallis”) (the “2011 Sundance Consulting Agreement”). Under the terms of the 2011 Sundance Consulting Agreement, Sundance provided the services of Wallis to act as President and Chief Executive Officer of the Company and to provide such general management and geological consulting services as the Company may require from time to time.   The term of the 2011 Sundance Consulting Agreement was three years, commencing on March 1, 2011.   Under the terms of the 2011 Sundance Consulting Agreement, Sundance received a monthly fee of $20,000 plus applicable taxes and is eligible to receive an annual cash bonus of up to $66,666, payable within 30 days of the Company’s fiscal year end, with the final amount being determined by the Company’s Board of Directors.  In the event of termination of the 2011Sundance Consulting Agreement, Sundance was to receive a lump sum payment equivalent to the lesser of 12 months’ fees or the fees payable for the duration of the term of the 2011 Sundance Consulting Agreement.  In the event of a change of control, Sundance was to receive the equivalent of 36 months’ fees.  Upon Mr. Wallis’ resignation as Chief Executive Officer and President of Crosshair on April 30, 2012, the 2011 Sundance Consulting Agreement was terminated.

On June 28, 2011, the Company entered into a consulting agreement with Horace H. Beaven (“Beaven”) (the ‘Beaven Consulting Agreement”) pursuant to which the Company appoints and engages Beaven to perform the functions of Vice President, Corporate Communications and of a general corporate communications consultant. Under the terms of the Beaven Consulting Agreement, Beaven receives a monthly fee of US$12,500 and is eligible to receive an annual cash bonus in the amount of US$50,000, payable at the discretion of the Board of Directors based on the performance of Beaven and the overall performance of the Company.  In addition, Beaven receives a monthly lump sum cash payment of US$2,100 in lieu of medical benefits. In the event of termination of the Beaven Consulting Agreement, Beaven will receive a lump sum payment equivalent to three (3) months’ monthly fees and benefits.

On July 12, 2011, the Company entered into a consulting agreement with Ludwig and Associates LLC (“L&A”) and Mark Ludwig (“Ludwig”) (the ‘L&A Consulting Agreement”) pursuant to which the L&A provides the
 
 
 
53

 
 
personal services of Ludwig to act as Vice President and Chief Operating Officer (U.S.) and of a mining, engineering, business and management consultant of the Company.  Under the terms of the L&A Consulting Agreement, L&A receives a monthly fee of US$16,666 and is eligible to receive an annual cash bonus in the amount of US$70,000, payable at the discretion of the Board of Directors based on the performance of L&A and the overall performance of the Company.  In addition L&A receives a monthly lump sum cash payment of US$1,666 in lieu of medical benefits. In addition, as consideration for L&A and Ludwig entering into the L&A Consulting Agreement, L&A received a lump sum payment of US$25,000.  In the event of termination of the L&A Consulting Agreement, L&A will receive a lump sum payment equivalent to three (3) months’ fees and benefits.  On April 23, 2012, in anticipation of Ludwig being appointed as Chief Executive Officer and President of the Company, the parties to the L&A Consulting Agreement entered into an amendment to consulting agreement (the “Amending Agreement”) pursuant to which the fee was amended to US$20,833.33 per month.  All other terms of the L&A Consulting Agreement remain in full force and effect.

On November 1, 2011, the Company entered into a consulting agreement with Stratamodel, Inc. (“Stratamodel”) and Thomas E. Bell (“Bell) (the “Stratamodel Consulting Agreement”) pursuant to which the Stratamodel provides the personal services of  Bell to act as Vice President and Chief Geologist and of a geological consultant of the Company.  Under the terms of the Stratamodel Consulting Agreement, Stratamodel receives a monthly fee of US$13,333 and is eligible to receive an annual cash bonus in the amount of US$50,000, payable at the discretion of the Board of Directors based on the performance of Stratamodel and the overall performance of the Company.  In addition Stratamodel receives a monthly lump sum cash payment of US$1,666 in lieu of medical benefits. In addition, as consideration for Stratamodel and Bell entering into the Stratamodel Consulting Agreement, Stratamodel received a lump sum payment of US$10,000.  In the event of termination of the Stratamodel Consulting Agreement, Stratamodel will receive a lump sum payment equivalent to three (3) months’ fees and benefits.

Post Employment Compensation

No funds were set aside or accrued by us during Fiscal 2012 to provide pension, retirement or similar benefits for Directors, Executive Officers or Senior Management.
 
Other than as described above, we do not have any plans or arrangements in respect of remuneration received or that may be received by our executive officers to compensate such officers in the event of termination of employment (as a result of resignation, retirement, change of control) or a change of responsibilities following a change of control, where the value of such compensation would exceed US$60,000 per person.
 
6.C.           Board Practices
 
The Board of Directors presently consists of six directors five of whom were elected at our annual general meeting of shareholders held on October 28, 2011.  Chris Healey was appointed a director on April 25, 2012.  The directors have served in their respective capacities since their election and/or appointment and will serve until the next annual general meeting or until a successor is duly elected, unless the office is vacated in accordance with our Articles. The Board of Directors appoints senior management who serve at the discretion of the Board of Directors.
 
The following table indicates the date on which each of our directors was appointed a director of our company:
 
Name of Director
Director since
Mark Morabito
November 12, 1998
Stewart Wallis1
March 31, 2009
Jay Sujir
February 19, 2003
Chris Collingwood
October 25, 2007
Derrick Gill
May 27, 2008
Chris Healey
April 25, 2012
 
 
1
Mr. Wallis served as a director from June 19, 2003 to July 29, 2008.  He was re-appointed as a director on March 31, 2009.
 
 
 
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There are no service contracts with the Directors providing for benefits upon termination of employment except as described under the heading “Employment and Consulting Agreements” above.
 
Board of Director Committees
 
Audit Committee
 
We have an Audit Committee, which recommends to the Board of Directors the engagement of our independent auditors and reviews with the independent auditors the scope and results of our audits, our internal accounting controls, and the professional services furnished to us by our independent auditors.  The following disclosure is required pursuant to National Instrument 52-110 (“NI 52-110”) adopted by the Canadian Securities Administrators.
 
The Audit Committee's Charter
 
Following is a copy of the charter of our audit committee:
 
Purpose
 
The Audit Committee (the “Committee”) is a committee of and appointed by the Board of Directors (the “Board”) of Crosshair Exploration & Mining Corp. (the “Corporation”) to assist the Board in fulfilling its oversight responsibilities relating to financial accounting and reporting process and internal controls for the Corporation. The Committee’s primary duties and responsibilities are to:
 
 
·
conduct such reviews and discussions with management and the external auditors relating to the audit and financial reporting as are deemed appropriate by the Committee;
 
·
assess the integrity of internal controls and financial reporting procedures of the Corporation and ensure implementation of such controls and procedures;
 
·
ensure that there is an appropriate standard of corporate conduct including, if necessary, adopting a corporate code of ethics for senior financial personnel;
 
·
review the quarterly and annual financial statements and management’s discussion and analysis of the Corporation’s financial position and operating results and report thereon to the Board for approval of same;
 
·
select and monitor the independence and performance of the Corporation’s external auditors, including attending at private meetings with the external auditors and reviewing and approving all renewals or dismissals of the external auditors and their remuneration;
 
·
establish procedures for the receipt of complaints and submissions relating to accounting matters;
 
·
except as set forth below, pre-approve all audit and non-audit services provided by the Corporation’s external auditors; and
 
·
provide oversight to related party transactions entered into by the Corporation.
 
The Committee has the authority to conduct or authorize any investigation appropriate to its responsibilities, and it may request the external auditors, as well as any officer of the Corporation, or outside counsel for the Corporation, to attend a meeting of the Committee or to meet with any members of, or advisors to, the Committee to provide pertinent information as necessary.  The Committee shall have unrestricted access to the books and records of the Corporation and has the authority to retain, at the expense of the Corporation, special legal, accounting, or other consultants or experts to assist in the performance of the Committee’s duties.
 
The Committee shall review and assess the adequacy of this Charter annually and submit any proposed revisions to the Board for approval.
 
In fulfilling its responsibilities, the Committee will carry out the specific duties set out in Part IV of this Charter.
 
 
 
55

 
 
Authority of the Audit Committee
 
The Committee shall have the authority to:
 
(a)           engage independent counsel and other advisors as it determines necessary to carry out its duties;
 
(b)           set and pay the compensation for advisors employed by the Committee;
 
(c)           communicate directly with the internal and external auditors.
 
Composition and Meetings
 
 
1.
The Committee and its membership shall meet all applicable legal, regulatory and listing requirements, including, without limitation, those of the British Columbia Securities Commission, the Toronto Stock Exchange, the U.S. Securities and Exchange Commission, NYSE MKT, the Business Corporations Act (British Columbia) and all applicable securities regulatory authorities.
 
 
2.
The Committee shall be composed of three or more directors as shall be designated by the Board from time to time. The members of the Committee shall appoint from among themselves a member who shall serve as Chair.
 
 
3.
Each member of the Committee shall be “independent” and “financially literate”, for the purposes of Multilateral Instrument 52-110 (“MI 52-110”), as it may be amended from time to time.  MI 52-110 currently provides that a member is independent if the member has no direct or independent material relationship with the Corporation.  A “material” relationship is one which could, in the view of the Board, be reasonably expected to interfere with the exercise of a member’s judgment. There are certain relationships that are, however, deemed to be “material” under MI 52-110.  In assessing a proposed nominee to the Committee, the Board shall refer to MI 52-110 and any other requirements or guidelines under applicable securities laws and any stock exchanges on which the Corporation’s securities are listed.
 
 
4.
The Committee shall meet at least quarterly, at the discretion of the Chair or a majority of its members, as circumstances dictate or as may be required by applicable legal or listing requirements. A minimum of two and at least 50% of the members of the Committee present either in person or by telephone shall constitute a quorum.
 
 
5.
If within one hour of the time appointed for a meeting of the Committee, a quorum is not present, the meeting shall stand adjourned to the same hour on the next business day following the date of such meeting at the same place. If at the adjourned meeting a quorum as hereinbefore specified is not present within one hour of the time appointed for such adjourned meeting, such meeting shall stand adjourned to the same hour on the second business day following the date of such meeting at the same place. If at the second adjourned meeting a quorum as hereinbefore specified is not present, the quorum for the adjourned meeting shall consist of the members then present.
 
 
6.
If and whenever a vacancy shall exist, the remaining members of the Committee may exercise all of its powers and responsibilities so long as a quorum remains in office.
 
 
7.
The time and place at which meetings of the Committee shall be held, and procedures at such meetings, shall be determined from time to time by, the Committee. A meeting of the Committee may be called by letter, telephone, facsimile, email or other communication equipment, by giving at least 48 hours notice, provided that no notice of a meeting shall be necessary if all of the members are present either in person or by means of conference telephone or if those absent have waived notice or otherwise signified their consent to the holding of such meeting.
 
 
8.
Any member of the Committee may participate in the meeting of the Committee by means of conference telephone or other communication equipment, and the member participating in a meeting pursuant to this paragraph shall be deemed, for purposes hereof, to be present in person at the meeting.
 
 
 
 
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9.
The Committee shall keep minutes of its meetings which shall be submitted to the Board. The Committee may, from time to time, appoint any person who need not be a member, to act as a secretary at any meeting.
 
 
10.
The Committee may invite such officers, directors and employees of the Corporation and its subsidiaries as the Committee may see fit, from time to time, to attend at meetings of the Committee.
 
 
11.
Any matters to be determined by the Committee shall be decided by a majority of votes cast at a meeting of the Committee called for such purpose. Actions of the Committee may be taken by an instrument or instruments in writing signed by all of the members of the Committee, and such actions shall be effective as though they had been decided by a majority of votes cast at a meeting of the Committee called for such purpose. All decisions or recommendations of the Committee shall require the approval of the Board prior to implementation.
 
The Committee members will be elected annually at the first meeting of the Board following the annual general meeting of shareholders.
 
Responsibilities
 
Financial Accounting and Reporting Process and Internal Controls
 
 
1.
The Committee shall review the annual audited financial statements and interim financial statements of the Corporation to satisfy itself that they are presented in accordance with applicable generally accepted accounting principles (“Canadian and US GAAP” as required) and report thereon to the Board and recommend to the Board whether or not same should be approved prior to their being filed with the appropriate regulatory authorities.  The Committee shall also review the interim financial statements of the Corporation. With respect to the annual audited financial statements, the Committee shall discuss significant issues regarding accounting policies, principles, practices, estimates, reserves and judgments of management with management and the external auditors, as and when the Committee deems it appropriate to do so, and shall satisfy itself that the annual audited financial statements are accurate, complete and represent fairly the Corporation’s financial position and performance and that the audit function has been effectively carried out.  If desirable, the Committee may engage the Corporation’s external auditors to carry out a review of the interim financial statements.
 
 
2.
The Committee shall review management’s discussion and analysis relating to the Corporation’s annual and interim financial statements (“MD&A”) MD&A and any other public disclosure documents, including annual and interim earnings press releases, required to be reviewed by the Committee under any applicable laws before the Corporation publicly discloses this information or files this information with securities regulatory authorities.
 
 
3.
The Committee shall be satisfied that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s annual and interim financial statements, MD&A and annual and interim earnings press releases, and periodically assess the adequacy of these procedures.
 
 
4.
The Committee shall review the annual budget.
 
 
5.
The Committee shall review any internal control reports prepared by management and the evaluation of such reports by the external auditors, together with management’s response.
 
 
6.
The Committee shall evaluate whether management is setting the appropriate “control culture” by communicating the importance of internal control and the management of risk and ensuring that all employees have an understanding of their roles and responsibilities.
 
 
7.
The Committee shall consider how management is held to account for security of computer systems and applications, and the contingency plans for processing financial information in the event of a systems breakdown.
 
 
 
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8.
The Committee shall review, in consultation with the external auditors, the integrity of the Corporation’s financial reporting processes, both internal and external.
 
 
9.
The Committee shall consider the external auditors’ judgments about the quality and appropriateness, not just the acceptability, of the Corporation’s accounting principles and financial disclosure practices, as applied in its financial reporting, particularly about the degree of aggressiveness or conservatism of its accounting principles and underlying estimates and whether those principles are common practices or are minority practices.
 
 
10.
The Committee shall meet no less frequently than annually with the external auditors and the Chief Financial Officer or, in the absence of a Chief Financial Officer, with the officer of the Corporation in charge of financial matters, to review accounting practices, internal controls and such other matters as the Committee, Chief Financial Officer or, in the absence of a Chief Financial Officer, the officer of the Corporation in charge of financial matters, deem appropriate.
 
 
11.
The Committee shall consider and approve, if appropriate, major changes to the Corporation’s accounting principles and practices as suggested by management with the concurrence of the external auditor and ensure that the management’s reasoning is described in determining the appropriateness of changes in accounting principles and disclosure.
 
 
12.
The Committee shall inquire of management and the external auditors about significant risks or exposures, both internal and external, to which the Corporation may be subject and assess the steps management has taken to minimize such risks, including by obtaining the external auditors’ opinion of how effectively such risks are being managed or controlled.
 
 
13.
The Committee shall review the post-audit or management letter containing the recommendations of the external auditors and management’s response and subsequent follow-up to any identified weaknesses.
 
 
14.
The Committee shall provide oversight to related party transactions entered into by the Corporation.
 
 
15.
The Committee shall review policies and procedures with respect to officers’ expense accounts and management perquisites and benefits, including their expenditures related to executive travel and entertainment, and review the results of the procedures performed in these areas by the external auditor, based on terms of reference agreed upon by the external auditor and the Committee.
 
Independent Auditors
 
 
1.
The Committee shall recommend to the Board the external auditors to be nominated, for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation, and the compensation of the external auditors.
 
 
2.
The Committee shall instruct the external auditors to report directly to the Committee and ensure that significant findings and recommendations made by the external auditors are received and discussed by the Committee on a timely basis.
 
 
3.
The Committee shall be directly responsible for overseeing the work of the external auditors, including the resolution of disagreements between management and the external auditors regarding financial reporting, and shall review the performance of the external auditors and approve any proposed discharge of the external auditors when circumstances warrant.
 
 
4.
The Committee shall periodically consult the external auditors out of the presence of management about any matters that the Committee or the external auditors believes should be discussed privately, including, without limitation, significant risks or exposures, internal controls and other steps that management has taken to control such risks, and the fullness and accuracy of the Corporation’s financial statements.  Particular emphasis should be given to the adequacy of internal controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper.
 
 
 
 
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5.
Except as otherwise indicated in this Charter, the Committee shall pre-approve all audit and non-audit services not prohibited by Canadian securities laws and regulations to be provided by the external auditors and delegate, if desirable, to one or more of its members the authority to pre-approve any such audit or permitted non-audit services, provided that any such pre-approval is presented to the Committee at its next scheduled meeting following the pre-approval.
 
 
6.
The Committee shall monitor and assess the relationship between management and the external auditors, including reviewing any management letters or other reports of the external auditors and discussing and resolving any material differences of opinion between management and the external auditors.
 
 
7.
The Committee shall monitor, review, confirm and discuss with the external auditors, on an annual basis, all significant relationships the external auditors have with the Corporation and the range of services provided to determine the independence and objectivity of the external auditors.
 
 
8.
Prior to the audit, the Committee shall review the external auditors’ audit plan, including the scope, procedures, timing and staffing of the audit, and the Committee may authorize the external auditors to perform supplemental reviews or audits as the Committee may deem desirable.
 
 
9.
The Committee shall review with the external auditors the results of the annual audit and, if applicable, the results of the quarterly review, including matters related to the conduct of the audit and the review, as the case may be.
 
 
10.
The Committee shall obtain timely reports from the external auditors describing critical accounting policies and practices, alternative treatments of information within Canadian GAAP that were discussed with management, their ramifications, and the external auditors’ preferred treatment and material written communications between the Corporation and the external auditors.
 
 
11.
The Committee shall review fees paid by the Corporation to the external auditors and other professionals in respect of audit and non-audit services on an annual basis.
 
 
12.
The Committee shall review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Corporation.
 
Process Improvement
 
 
1.
The Committee shall establish regular and separate systems of reporting to the Committee by each of management and the external auditors regarding any significant judgments made in management’s preparation of the financial statements and the view of each as to appropriateness of such judgments.
 
 
2.
Following completion of the annual audit and quarterly reviews (if applicable), the Committee shall review separately with each of management and the external auditors any significant changes to planned procedures, any difficulties encountered during the course of the audit and reviews, including any restrictions on the scope of work or access to required information and the cooperation that the external auditors received during the course of the audit and reviews.
 
 
3.
The Committee shall review and resolve any significant disagreements among management and the external auditors in connection with the preparation of the financial statements and, where there are significant unsettled issues, the Committee shall ensure that there is an agreed course of action for the resolution of such matters.
 
 
4.
The Committee shall review with the external auditor and management significant findings during the year and the extent to which changes or improvements in financial or accounting practices, as approved by the Committee, have been implemented. This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as decided by the Committee.
 
 
 
 
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Ethical and Legal Compliance
 
 
1.
The Committee shall establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters.
 
 
2.
The Committee shall review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up of any non-compliance.
 
 
3.
The Committee shall review management’s monitoring of the Corporation’s system that is in place to ensure that the Corporation’s financial statements, reports and other financial information disseminated to governmental organizations and the public satisfy legal requirements.
 
 
4.
The Committee shall ensure that there is an appropriate standard of corporate conduct including, if necessary, adopting a corporate code of ethics for senior financial personnel.
 
 
5.
The Committee shall obtain regular updates from management and others, including internal and external auditors and legal counsel, concerning the Corporation’s compliance with financial related laws and regulations such as tax and financial reporting laws and regulations, legal withholding requirements, occupational health and safety laws and personal information and protection of privacy laws.
 
 
6.
The Committee shall be satisfied that all regulatory compliance matters have been considered in the preparation of financial statements.
 
 
7.
The Committee shall review the findings of any examination by regulatory agencies.
 
Other Responsibilities
 
While the Committee has the responsibilities and duties set out in this Charter, it is not the duty of the Committee to plan or conduct audits, to prepare or audit financial statements or to design or implement an effective system of internal controls.  Such matters are the responsibility of management and the internal and external auditors of the Corporation, as the case may be. In addition to the responsibilities and duties of the Committee set out in this Charter, the Committee shall perform any other activities consistent with this Charter and all applicable legal, regulatory and listing requirements (including those of the applicable securities regulatory authorities and the stock exchanges on which the Corporation’s securities are listed), as the Committee or the Board deems necessary or appropriate.
 
Procedures for Receipt of Complaints and Submissions
Relating to Accounting Matters
 
 
1.
The Corporation shall inform employees on the Corporation’s intranet, if there is one, or via a newsletter or e-mail that is disseminated to all employees at least annually, of the individual (the “Complaints Officer”) designated from time to time by the Committee to whom complaints and submissions can be made regarding accounting, internal accounting controls or auditing matters or issues of concern regarding questionable accounting or auditing matters.
 
 
2.
The Complaints Officer shall be informed that any complaints or submissions so received must be kept confidential and that the identity of employee(s) making complaints or submissions shall be kept confidential and shall only be communicated to the Committee or the Chair of the Committee.
 
 
3.
The Complaints Officer shall be informed that he or she must report to the Committee as frequently as such Complaints Officer deems appropriate, but in any event no less frequently than on a quarterly basis prior to the quarterly meeting of the Committee called to approve interim and annual financial statements of the Corporation.
 
 
 
 
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4.
Upon receipt of a report from the Complaints Officer, the Committee shall discuss the report and take such steps as the Committee may deem appropriate.
 
The Complaints Officer shall retain a record of a complaint or submission received for a period of six years following resolution of the complaint or submission.
 
Procedures for Approval of Non-Audit Services
 
 
1.
The Corporation’s external auditors shall be prohibited from performing for the Corporation the following categories of non-audit services:
 
 
(a)
bookkeeping or other services related to the Corporation’s accounting records or financial statements;
 
 
(b)
financial information systems design and implementation;
 
 
(c)
appraisal or valuation services, fairness opinion or contributions-in-kind reports;
 
 
(d)
actuarial services;
 
 
(e)
internal audit outsourcing services;
 
 
(f)
management functions;
 
 
(g)
human resources;
 
 
(h)
broker or dealer, investment advisor or investment banking services;
 
 
(i)
legal services;
 
 
(j)
expert services unrelated to the audit; and
 
 
(k)
any other service that the Canadian Public Accountability Board or any other applicable regulatory authority determines is impermissible.
 
 
2.
In the event that the Corporation wishes to retain the services of the Corporation’s external auditors for tax compliance, tax advice or tax planning, the Chief Financial Officer of the Corporation shall consult with the Chair of the Committee, who shall have the authority to approve or disapprove on behalf of the Committee, such non-audit services in accordance. All other non-audit services shall be approved or disapproved by the Committee as a whole as set forth herein.
 
 
3.
The Chief Financial Officer of the Corporation shall maintain a record of non-audit services approved by the Chair of the Committee or the Committee for each fiscal year and provide a report to the Committee no less frequently than on a quarterly basis.
 
Composition of the Audit Committee
 
The current members of our Audit Committee are Chris Healey, Christopher Collingwood and Derrick Gill, each of whom is an independent director and financially literate.
 
Relevant Education and Experience
 
Derrick Gill.  Mr. Gill received his BComm. in Accounting from Memorial University of Newfoundland in 1969.  Mr. Gill has over 30 years’ experience as an executive and director of public and private companies operating throughout North and South America and has served on the audit committees of public companies. Mr. Gill is a principal consultant and director of Strategic Concepts Inc. (“SCI”), which provides strategic planning, financial modeling and business development services to numerous resource companies. Mr. Gill co-founded SCI in 1990.  He also serves on the board of directors of Linear Gold Corp. Inc.
 
Chris Collingwood.  Mr. Collingwood received his BComm. from Memorial University of Newfoundland in 1970.  Mr. Collingwood is the Chairman and CEO of Baine Johnston Corp., a privately held Newfoundland firm active in commercial and industrial real estate, Retail operations and Marine Activities, also having investments in a number
 
 
 
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of other Newfoundland companies.  Mr. Collingwood has previously served on the Audit Committee of Barclay's Bank of Canada, is a past Public Director of the Investment Dealers Association and serves on the Audit Committee of the Newfoundland & Labrador Center for Health Information.
 
Chris Healey.  Mr. Healey graduated with a Bachelor of Science degree in Geology from the University of Wales, Swansea in 1968.   He has held senior management and geological positions with several public companies, including Cameco Corporation, where he served for over 20 years and managed its US operations. Until February 29, 2012, he was President and CEO of Titan Uranium Corp.  He was appointed President and CEO of Galaxy Graphite Corp. (formerly Galaxy Capital Corp.) on March 1, 2012.  Mr. Healey is also a Director of Galaxy Graphite Corp, Carmax Mining Corp and Ansell Capital Corp. and serves as a member of the Audit Committee of Ansell Capital Corp.
 
Reliance on Certain Exemptions
 
At no time since the commencement of the Company’s most recently completed financial year, has the Company relied on any of the exemptions contained in the followings sections of NI 52-110: section 2.4 (De Minimis Non-audit Services), section 3.2 (Initial Public Offerings), section 3.4 (Events Outside Control of Member), section 3.5 (Death, Disability or Resignation of Audit Committee Member) or an exemption from NI 52-110, in whole or in part, granted under Part 8 (Exemptions) of NI 52-110.
 
Reliance on Exemption in Subsection 3.3(2) or Section 3.6
 
At no time since the commencement of the Company’s most recently completed financial year, has the Company relied on any of the exemptions contained in the followings sections of NI 52-110: subsection 3.3(2) (Controlled Companies) or section 3.6 (Temporary Exemption for Limited and Exceptional Circumstances).
 
Reliance on Section 3.8
 
At no time since the commencement of the Company’s most recently completed financial year, has the Company relied on section 3.8 (Acquisition of Financial Literacy) of NI 52-110.
 
Audit Committee Oversight
 
At no time since the commencement of the Company’s most recently completed financial year, has the Company’s Board of Directors failed to adopt a recommendation of the Audit Committee to nominate or compensate an external auditor.
 
Pre-Approval Policies and Procedures
 
Pursuant to the terms of the Company’s Audit Committee Charter, the Audit Committee is required to review and pre-approve any non-audit services provided by the Company's external auditors. However, the Audit Committee has not adopted specific policies and procedures for the engagement of non-audit services. Subject to the requirements of NI 52-110, the engagement of non-audit services is considered by the Audit Committee, on a case-by-case basis.
 
External Auditor Service Fees
 
See Item 16.C. Principal Accountant Fees and Services.
 
Compensation Committee
 
We have established a Compensation Committee, which currently consists of Jay Sujir, Derrick Gill and Chris Healey.  The Compensation Committee does not operate pursuant to a written charter.
 
 
 
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The mandate established for the Compensation Committee is for the purposes of:
 
1.
considering appropriate levels of compensation for our directors and officers and making recommendations to the Board as to the remuneration and other compensation to be provided to our Directors, the President and our other officers; and
 
2.
carrying out periodic performance assessments of the President and CEO.
 
6.D.           Employees
 
The following table sets out the number of full-time employees who worked for us at the end of the last three completed fiscal years as well as the maximum number of temporary workers who worked for us during each fiscal year:
 
Fiscal year ended
Number of Full Time
Employees at the end
of the fiscal year
Maximum number of
Temporary Workers
during the fiscal year
April 30, 2012
0(1)
0(1)
April 30, 2011
0(1)
0(2)
April 30, 2010
0
0(2)

1
Pursuant to the Management Services Agreement with Forbes West dated October 1, 2010, Forbes West provides shared office, administration and payroll services to the Company. See Item 7.B – Related Party Transactions and Exhibit 4.9 for a description of this agreement. As such, the Company no longer employs any full-time staff or temporary staff.
2
Due to the global economic conditions during the fiscal years ended April 30, 2010 and April 30, 2011, and our cash conservation program, we did not employ any temporary workers during these fiscal years.

6.E.           Share Ownership
 
The following table presents the beneficial ownership of the directors and those persons named in Item 6.B Compensation above as of July 19, 2012.  As of July 19, 2012, we had 65,782,178 common shares issued and outstanding.  The number of common shares beneficially owned by the persons listed below includes those securities exercisable into common shares within 60 days of July 19, 2012.
 
Name
Number of
Common Shares
Percent of
Outstanding
Common Shares
Mark J. Morabito                                                                     
3,258,834 1
4.95%
Stewart Wallis                                                             &#