FORAN MINING CORPORATION · foran mining corporation management’s discussion and analysis for the year ended september 30, 2011 page 1

FORAN MINING CORPORATION MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE YEAR ENDED SEPTEMBER 30, 2011

Page 1

The following Management’s Discussion and Analysis (“MD&A”) was prepared as of January 30, 2012 and

should be read in conjunction with the Company’s Consolidated Financial Statements and the notes thereto for the

year ended September 30, 2011.

Management’s discussion and analysis of the financial condition and results of operations contains forward-

looking statements that reflect management’s current expectations with regards to future events. By their nature,

these statements involve risk and uncertainties, many of which are beyond the Company’s control. Actual results

may differ materially from those expressed in such forward-looking statements. Readers are cautioned not to place

undue reliance on these statements. The Company disclaims any intention or obligation to update or revise any

forward-looking statements, whether as a result of new information, future events or otherwise.

NATURE OF BUSINESS

Foran Mining Corporation (the “Company”) was originally incorporated under the laws of British Columbia on

June 21, 1989 and was continued into Saskatchewan on November 13, 2007. The Company is a reporting issuer in

British Columbia, Alberta, Ontario, New Brunswick, Nova Scotia and Newfoundland and Labrador. The

Company’s common shares are traded on the TSX Venture Exchange under the symbol “FOM”. The Company’s

principal business activity is the acquisition and exploration of mineral properties with the objective of discovering

economically recoverable mineral reserves for development of an operating mine.

To date the Company has not generated any revenues.

HIGHLIGHTS AND KEY DEVELOPMENTS

In November 2010, the Company increased its direct ownership interest in its McIlvenna Bay property

(“McIlvenna Bay”) from 75% to 100% by purchasing the remaining 25% interest (the "JV Purchase

Agreement") that it did not already own from Copper Reef Mining Corporation (“Copper Reef”);

During the year ended September 30, 2011, the Company focused on building a strong management team

with proven experience and success in the mining industry, commencing with the hiring of a President and

Chief Executive Officer ("CEO") in November 2010, followed by the hiring of a Manager of Advanced

Projects and an Exploration Manager in February 2011 and March 2011, respectively, a Chief Financial

Officer ("CFO") in April 2011, a VP of Corporate Development in May 2011 and a Corporate Secretary in

June 2011;

In February 2011, the Company strengthened its Board of Directors ("BOD") by appointing two

independent members with extensive experience in the mining industry;

Subsequent to the year ended September 30, 2011, the Company released a new Copper Stockwork Zone

resource on its McIlvenna Bay deposit, including > 80% tonnage increase in the indicated category and a

60% tonnage increase in the inferred category;

In May 2011, the Company successfully completed a $1.5 million budgeted Phase I 5,081 metre drill

program on its McIlvenna Bay deposit. From August 2011 to December 2011, the Company successfully

conducted the majority of a Phase II drill program on its McIlvenna Bay deposit, which totaled 8,158 metres

in 18 drill holes, the results of which management is intending to use, along with metallurgical and other

engineering and environmental studies, to form the basis for a Preliminary Economic Assessment to be

initiated in 2012. It is anticipated that the Phase II drill program will continue in February 2012 once the

ground has frozen.



Page 2

HIGHLIGHTS AND KEY DEVELOPMENTS (continued)

In September and October, 2011, the Company completed a 1,587 line kilometre versatile time-domain

electromagnetic (“VTEM”) helicopter-borne geophysical survey over portions of its McIlvenna Bay,

Balsam and Hanson properties not previously surveyed by the Company. An additional 1,117 line

kilometer VTEM Survey was flown on the Company’s Bigstone property. Preliminary results suggest a

number of VTEM conductors which warrant follow-up diamond drill testing. The Company plans to

conduct initial testing of several high priority targets in a winter 2012 regional drill program.

Commencing in February 2012, the Company intends to conduct a 3,000 - 4,000 metre spring drill

program on McIlvenna Bay as well as 2,000 - 3,000 metres of drilling to test targets on its other

Saskatchewan properties as a result of the VTEM survey results;

Subsequent to the year ended September 30, 2011, the Company purchased the remaining 50% interest in

its Balsam property that it did not already own from Virginia Energy Resources Inc. (“Virginia”) in

consideration for 133,333 common shares of the Company at a fair value of $0.75 per share for total

consideration of $100,000.

During the year ended September 30, 2011, the Company completed three private placements, raising

gross proceeds of $14,960,000 which are being utilized for exploration activities and general working

capital purposes;

As at September 30, 2011, the Company had cash and cash equivalents of $12.3 million (2010: $3.9

million) and working capital of $11.6 million (2010: $3.8 million);

For the year ended September 30, 2011, the Company recorded a net loss of $1,803,323 (2010: $243,221),

with the most significant contributing factor being stock-based compensation expense of $1,466,850

(2010: $40,525) associated with the granting of stock options and warrants during the year;

During the year ended September 30, 2011, the Company granted a total of 2,900,000 stock options to

directors, officers and employees of the Company.

GOALS AND VISION

The Company emerged from fiscal 2010 as a restructured organization with a vision. The Company’s ultimate

goal is to become a significant base metals producer, with McIlvenna Bay as its flagship property.

To work towards this goal, the Company has to achieve a number of steps. The Company's first step was to

increase its ownership interest in McIlvenna Bay to 100%, which it completed on November 3, 2010.



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GOALS AND VISION (continued)

The next step was to recruit a high calibre management team with a proven track record to successfully run and

improve exploration projects and operations and to ultimately work toward increasing the value of the Company

through corporate development. On November 24, 2010, Mr. Patrick Soares, P.Geo. was appointed President and

CEO and joined the BOD. Mr. Soares has been instrumental in the advancement of mineral projects for many

years and has worked as President and CEO of a public junior exploration company which was taken over by a

larger mining company in 2010 and has also worked in the fields of investor relations and corporate development

since 1996. Following Mr. Soares' appointment, the Company continued to build a strong management team by

hiring a Manager of Advanced Projects and an Exploration Manager on February 14, 2011 and March 15, 2011,

respectively, a CFO on April 15, 2011 and a VP of Corporate Development on May 9, 2011, with each of these

individuals possessing extensive experience in the mining industry.

The Company also established key, long-term shareholders who have significant experience in the mining industry

both in Canada and internationally and on February 23, 2011, the Company further strengthened its BOD by

appointing two new members, both of whom have considerable mining industry experience.

In addition, in order to achieve its exploration and corporate budgets, the Company completed three private

placements during the year ended September 30, 2011, raising net proceeds of $14,017,516 on the issuance of a

total of 14,000,000 common shares and 1,000,000 share purchase warrants.

As noted in “McIlvenna Bay Deposit” below, the Company completed a successful $1.5 million Phase I drill

program in the spring of 2011 and the majority of a successful Phase II drill program in the fall of 2011 on its

McIlvenna Bay deposit. It is anticipated that the Phase II drill program will continue in February 2012 once the

ground has frozen. During the last year, the Company has made, and is continuing to make significant strides to

reach its goal of becoming a significant base metals producer.

MINERAL PROPERTIES

SASKATCHEWAN PROJECTS

The Company has 6 properties in Saskatchewan comprising a total of 60 claims for 40,114 hectares ("ha"), located

between 12 and 90 kilometres (“km’s”) west of Flin Flon. The 4 westernmost properties are highest priority,

consisting of the flagship McIlvenna Bay property (Zn-Cu-Au-Ag deposit) and 3 properties (regional targets)

occurring within the Hanson Block Volcanic Arc Assemblage at the western limit of the Flin Flon Greenstone

Belt. All 4 properties are underlain by prospective felsic volcanic stratigraphy that hosts variably significant

Volcanogenic Massive Sulphide (“VMS”) styles of alteration and mineralization. The 2 easternmost properties in

Saskatchewan are of lower priority having both gold and base metal VMS potential within the eastern limit of the

Flin Flon Arc Assemblage.



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MINERAL PROPERTIES (continued)

SASKATCHEWAN PROJECTS (continued)



Page 5



1) MCILVENNA BAY

McIlvenna Bay refers to a large claim block north, west and south of Hanson Lake, in east central

Saskatchewan. The property consists of 30 claims with a total of 20,382 ha. As at September 30, 2010, the

Company owned a 75% joint venture interest in McIlvenna Bay.

In November 2010, the Company purchased Copper Reef's 25% joint venture interest in McIlvenna Bay. The

companies exchanged certain additional assets, shares and cash, resulting in the Company owning a 100%

direct interest in McIlvenna Bay. Copper Reef has a Net Tonnage Royalty of $0.75 per tonne ore extracted,

with a right of first refusal in favor of the Company.

The JV Purchase Agreement was recorded by the Company as follows:

Purchase of 25% of McIlvenna Bay 3,795,320$

Receipt of 3,000,000 common shares of Copper Reef 450,000

Purchase of certain mineral properties (other Saskatchewan projects) 50,000

Elimination of non-controlling interest 354,680

Total minimum lease payments 4,650,000$

Cash payment to Copper Reef 1,000,000$

Issuance of 4,000,000 common shares of the Company to Copper Reef 3,400,000

Sale of certain mineral properties (Manitoba projects and other) 31,497

Gain on JV Purchase Agreement 218,503

4,650,000$

Cameco Corporation (“Cameco”) and BHP Billiton (“Billiton”) hold a combined 1% net smelter royalty

(“NSR”) interest in McIlvenna Bay, which can be purchased from Cameco and Billiton for $1,000,000.



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A) MCILVENNA BAY DEPOSIT

Of the 30 claims comprising McIlvenna Bay, the McIlvenna Bay deposit sits on 10 claims totaling 2,910

ha. The McIlvenna Bay deposit is located approximately 1 km south of Hanson Lake, Saskatchewan, 375

km northeast of Saskatoon, and 60 km west south-west of Flin Flon, Manitoba.

The McIlvenna Bay deposit was discovered in 1988 and is comprised of five different zones and includes

three distinct styles of mineralization which include massive sulphides, semi-massive sulphides and copper

stockwork.

In November 2006, a NI 43-101 compliant resource estimate conducted by Scott Wilson Roscoe Postle

and Associates Inc. on the McIlvenna Bay deposit outlined 6.7 million tonnes of 0.87% Copper, 6.51%

Zinc, and 26.0 grams Silver in the Indicated Category and 6 million tonnes of 0.83% Copper, 5.89% Zinc

and 24.8 grams Silver in the inferred category, based on copper and zinc prices of US$1.50/lb and

US$0.70/lb, respectively. The resource estimate calculated net smelter return values based on projected

mining and milling costs and used an net smelter return cut-off of $50/tonne. Cut-off grades of 1.5%

copper and 4.0% zinc were used for the massive and semi-massive sulphide zones. Only a portion of the

Copper Stockwork Zone was included in the 2006 resource estimate.

In October 2010, the Company engaged Equity Exploration Consultants (“Equity”) to review more than

twenty years’ worth of Company historic files. In May 2011, Equity completed the compilation of all

historical exploration data and re-logged core from an historic 2007-08 drill program at McIlvenna Bay.

Phase I Drill Program

Equity was also tasked with designing a drill program to demonstrate sufficient continuity in the

McIlvenna Copper Stockwork Zone, in order to have it included in the next resource estimate iteration on

the property. Together with the Company’s management team, Equity designed and implemented a drill

program focused on improving the understanding and better defining the geological controls for the

Copper Stockwork Zone mineralization hosted in the McIlvenna Bay deposit. The diamond drill program,

which commenced in February 2011 and was completed in May 2011, consisted of ten holes totaling 5,081

metres. Drilling targeted a representative portion of the Copper Stockwork Zone which lies in the footwall

to the main massive sulphide lens and outside of the 2006 resource blocks.

The program was successful in demonstrating that the Copper Stockwork Zone possesses good continuity

and thickness with wide intervals of elevated copper and gold. The additional geological and assay

information obtained from the drill program improved the understanding of the geological controls on the

Copper Stockwork Zone.



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1) MCILVENNA BAY (continued)

A) MCILVENNA BAY DEPOSIT (continued)

Updated Resource

In July 2011, pursuant to the Phase I drill program, the Company engaged Roscoe Postle Associates Inc.

(“RPA”) to complete an updated mineral resource estimate on the McIlvenna Bay deposit including the

preparation of a NI 43-101 compliant technical report. The updated resource was completed in November

2011. The results of the updated resource estimate increased the global tonnage of mineral resources in the

indicated and inferred categories > 80% and 60%, respectively. This resource update represented the first

comprehensive, independent, NI 43-101 compliant mineral resource estimate for the Copper Stockwork

Zone at the deposit. The 2011 and 2006 Resources are outlined in the following tables:

Global Resources (includes 2011 & 2006 Resources shown below; see tables below for cut-offs)

Category Tonnes CuEq Copper Gold Zinc Silver

(kt) (%) (%) (g/t) (%) (g/t)

Indicated 12,070 2.50 1.16 N/A 3.69 19

Inferred 9,570 2.42 1.07 N/A 3.86 19

2011 Resources, Copper Stockwork Zone (1.10% CuEq cut-off)


(kt) (%) (%) (g/t) (%) (g/t)

Indicated 5,560 1.91 1.55 0.53 0.27 11

Inferred 3,570 1.81 1.48 0.35 0.43 10

Metal prices for 2011 Resource are US$2.75/lb Copper, US$1.00/lb Zinc, US$1,300/oz Gold and

US$21/oz Silver.

2006 Resource, Massive to Semi-Massive Sulphides (US$50/tonne net smelter return)


(kt) (%) (%) (g/t) (%) (g/t)

Indicated 6,510 75.48 0.82 NR 6.60 26

Inferred 6,000 68.59 0.83 NR 5.89 25

Metal prices for 2006 Resource are US$1.50/lb Copper and US$0.70/lb Zinc.

The 2011 Resource was prepared by Mr. David Rennie, P. Eng., Principal Geologist with RPA and a

Qualified Person under NI43-101. Mr. Rennie is independent of the Company. The 2006 Resource was

prepared by Scott Wilson RPA. The 2006 Resource was prepared by Messrs R. Barry Cook, P.Eng., and

Mr. Chester M. Moore, P. Eng., both of whom are independent of the Company and Qualified Persons as

defined in NI 43-101.

For additional information regarding the 2006 and 2011 resources including other assumptions, refer to the

Company’s website at www.foranmining.com or the filed technical report on www.sedar.com, dated

December 9, 2011.

http://www.foranmining.com/

http://www.sedar.com/



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1) MCILVENNA BAY (continued)

A) MCILVENNA BAY DEPOSIT (continued)

In 2011, the Company engaged ASKI Resource Management and Environmental Services Inc. (“ASKI”)

to provide project management services for the collection of environmental baseline data at McIlvenna

Bay. ASKI provided the Company with a Project Regulatory Framework report in order to expedite the

permitting of future development at McIlvenna Bay. This was followed by report on a Baseline Data

Acquisition Strategy. The contract to collect the Environmental Baseline Data has been awarded to

Canada North Environmental Services L.P.

In 2011, the Company engaged Golder Associates Ltd. (“Golder”) to provide geotechnical and

geochemical consulting services at McIlvenna Bay. Golder will assist the Company in implementing a

geotechnical data collection program to begin to build a geotechnical database for the McIlvenna Bay

project at a level of detail suitable for inclusion in scoping and feasibility-level engineering studies.

Phase II Drill Program

In November 2010, a $5.5 million budget for a two drill 10,000 – 15,000 metre Phase II exploration drill

program at McIlvenna Bay was approved by the BOD. By early August 2011, planning had been

completed, certain key employees and consultants had been hired/engaged and the receipt of all necessary

permits had been received. A 34-man trailer camp was purchased, delivered to site and set up during the

second week of August. Drilling commenced in mid-August and continued until the end of November,

2011. It is expected that drilling will recommence after the ground has frozen in early 2012. As at

November 30, 2011, a total of 8,158 metres had been drilled in 18 holes, the results of which management

is intending to use as part of a Preliminary Economic Assessment to be initiated in 2012.

B) MCILVENNA BAY WEST

Of the 30 claims comprising the McIlvenna Bay property, McIlvenna Bay West refers to a large claim block

north, west and south of the McIlvenna Bay deposit totalling 20 claims and 17,472 ha. McIlvenna Bay West is

comprised of a combination of historic claims from the Cameco-Foran purchase agreement as well as newly

staked and acquired claims from 2010. The claim block covers the northwest extension of Copper Reef’s

Hanson Lake Mine stratigraphy and other mineralized occurrences such as the Miskat Zone located 10 km

south of the McIlvenna Bay deposit. The Company has a 100% interest in McIlvenna Bay West, with most

claims subject to a 1% NSR payable to Cameco and Billiton.

2) BIGSTONE

Bigstone is the westernmost property consisting of 12 claims totalling 11,126 ha oriented north-south to cover

roughly 20 km of prospective volcanic stratigraphy. The project hosts the Bigstone massive sulphide deposit

with an historic non 43-101 compliant resource estimation of 1.45 MT at 2.80% Cu with an additional 306,000

T at 11.2% Zn. Bigstone is a joint venture in which the Company owns a 65.67% interest with Cameco

owning the remaining 34.33%. Bigstone is subject to a 2% NSR payable to Vista Gold Corp, a 6% Net Profits

Interest (“NPI”) to Thundermin Resources and a back-in right to Teck Resources Limited (“Teck”). The

minimum required expenditure for Bigstone in 2012 is $185,720.



Page 9



3) BALSAM

The Balsam property is comprised of 7 claims and 4,066 ha contiguous with the McIlvenna Bay property.

Balsam claims cover the southeast strike extension of McIlvenna Bay stratigraphy and host a number of

significant VMS occurrences including the Balsam Zone with best drill hole intercept of 8.0 metres at 2.80%

Cu, 3.30% Zn and 3.0 g/t Au. Balsam is a joint venture in which the Company and Virginia Energy Resources

Inc. (“Virginia”) each own a 50% interest. Balsam is also subject to a 2% NSR, a 6% NPI and a back-in right

to Teck. The minimum required expenditure for Balsam in 2012 is $43,900.

In November 2011, the Company purchased Virginia’s 50% interest in consideration for 133,333 common

shares of the Company at a fair value of $0.75 per share for total consideration of $100,000.

4) HANSON

Hanson is a 2,565 ha property consisting of 2 claims contiguous with the McIlvenna Bay property to the north

and the Balsam property to the east. A number of exploration targets are known from past exploration. The

Company has a 100% interest in Hanson, subject to a 2% NSR, a 6% NPI and a back-in to Teck. The

minimum required expenditure for Hanson in 2012 is $30,800.

5) SAM

The Sam property is a small claim block located 12 km west of Flin Flon totaling 4 contiguous claims and

1,529 ha. Historic exploration at the Sam property has identified shear-zone hosted Au potential in addition to

limited VMS-type copper mineralization. The Company has a 100% interest in SAM, subject to a 2% NSR, a

6% NPI and a back-in to Teck. The minimum required expenditure for Sam in 2012 is $28,500.

6) COMEBACK BAY

The Comeback Bay property is comprised of 4 small, geographically separate claim areas totalling 5 claims

and 446 ha. The property is located 15 km southwest of Flin Flon. The claims are underlain by felsic volcanic

stratigraphy prospective for VMS styles of mineralization. Comeback Bay is a joint venture in which the

Company owns a 65% interest with Coronation Mines Ltd. (Formation Metals Ltd. subsidiary) owning the

remaining 35%. Comeback Bay is subject to a 2.5% NSR and a 10% NPI. The minimum required

expenditure for Comeback Bay in 2012 is $6,600.

In September 2011, the Company completed a 1,585 line km VTEM helicopter-borne geophysical survey over

portions of its McIlvenna Bay, Balsam and Hanson properties not previously surveyed by the Company.

Preliminary results suggest a number of VTEM conductors which warrant follow-up diamond drill testing, which

the Company plans to conduct in a winter 2012 regional drill program.



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MANITOBA PROJECTS

The Company has interests in two Manitoba properties.

1) REED LAKE

The Reed Lake property is comprised of a single 195 ha claim located 105 km east of Flin Flon and 21 km

southwest of Snow Lake. The Company owns a 100% interest in Reed Lake, subject to a 1% NSR (A.L.

Parres Ltd.). Geologically, the claim occurs within the Snow Lake arc assemblage at the eastern limit of the

Flin Flon Greenstone Belt. Historic drilling has intersected altered and weakly mineralized felsic to

intermediate volcanics equivalent to those hosting the HudBay Minerals Inc.’s Lalor deposit, situated 15

kilometres to the northeast. Management is currently reviewing historic exploration data and evaluating a

preliminary report drafted by Equity with recommendations for additional work. There are no required

expenditures at Reed Lake in 2012.

2) KISSEYNEW

The Kisseynew property consists of 6 claims totalling 1,408 ha, located 38 km northeast of Flin Flon. The

Company owns a 100% interest in Kisseynew, subject to a 2% NSR (BC 466951 BC Ltd). The project is

situated at the extreme northern limit of the Flin Flon Greenstone Belt. Locally significant VMS

mineralization occurs within thrust-repeated felsic stratigraphy. Management has received a summary report

on the property from Equity with strong recommendations for further work. The minimum required

expenditure for Kisseynew in 2012 is $35,200.

Equity has provided the Company with summary reports for both Manitoba properties with recommendations for

exploration at Kisseynew. Limited exploration is anticipated at Kisseynew, utilizing a portion of the $1.5M

regional budget.

OVERALL PERFORMANCE

FINANCIAL CONDITION

The net assets of the Company increased from $8,025,538 at September 30, 2010 to $24,554,450 at September 30,

2011, an increase of $16,528,912. The most significant assets at September 30, 2011 were cash and cash

equivalents of $12,299,251 (September 30, 2010: $3,867,030) and mineral properties of $11,329,402 (September

30, 2010: $3,839,098).

The increase in cash and cash equivalents of $8,432,221 from September 30, 2010 to September 30, 2011 was the

result of net proceeds of $14,019,211 received pursuant to three private placements, the receipt of $190,000 on the

exercise of 275,000 stock options and proceeds of $139,331 from the sale of available-for-sale investments,

partially offset by a cash payment of $1,000,000 to Copper Reef pursuant to the JV Purchase Agreement, mineral

property expenditures of $2,947,131, the purchase of plant and equipment of $941,119 and cash of $1,028,071

used in operating activities.



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OVERALL PERFORMANCE (continued)

FINANCIAL CONDITION (continued)

The increase in mineral properties of $7,490,304 from September 30, 2010 to September 30, 2011 was a result of

the Company increasing its mineral properties by $3,813,823 pursuant to the JV Purchase Agreement as well as the

Company capitalizing $3,676,481 of license fees and exploration costs. $2,970,396 of the capitalized costs were

spent on McIlvenna Bay, $665,734 on the Company's other Saskatchewan projects and $40,351 on the Company's

Manitoba projects. The two most significant exploration costs on McIlvenna Bay were drilling costs of $1,049,552

and consulting fees of $638,674.

RESULTS OF OPERATIONS

Year ended September 30, 2011

For the year ended September 30, 2011, the Company recorded a net loss of $1,803,323 (2010: $243,211). The

most significant expenses were stock-based compensation expense of $1,466,850 (2010: $40,525), salaries and

benefits of $583,038 (2010: $79,040), office and administration costs of $146,771 (2010: $55,346) and

professional fees of $117,961 (2010: $104,983). The expenses were partially offset by a future income tax

recovery amount of $364,500, a gain of $218,503 pursuant to the JV Purchase Agreement (see 'McIlvenna Bay

Project' above), interest income of $94,032 (2010: $153) and a gain of $73,482 (2010: $133,720) on the disposal

of available-for-sale investments.

The stock-based compensation expense was a combination of the fair value of the stock options that vested during

the year ended September 30, 2011 ($825,097), the fair value of 1,000,000 warrants that were issued pursuant to a

private placement ($401,753) and an amount of $240,000 related to the discount received to market price by the

CEO in a private placement. During the year ended September 30, 2011, the Company granted 2,900,000 stock

options to directors, officers and employees of the Company at exercise prices ranging from $0.90 to $1.25 per

share. The increase in salaries and benefits was a result of the Company recruiting a management team in fiscal

2011.

The most significant office and administration costs for the year ended September 30, 2011 were miscellaneous

office expenses of $56,227 (2010: $1,939), insurance expense of $20,749 (2010: $6,337) and telephone and

courier expenses of $13,273 (2010: $4,821).

The increase in interest income in 2011 was a direct result of the Company’s increased cash holdings pursuant to

the financings. The gain on the disposal of available-for-sale investments of $73,482 was a result of the Company

selling a portion of its available-for-sale investments for total proceeds of $139,331 during the year ended

September 30, 2011.

CASH FLOWS

Year ended September 30, 2011

Cash and cash equivalents increased by $8,432,221 during the year ended September 30, 2011 (2010: increase of

$3,856,060), from $3,867,030 at September 30, 2010 to $12,299,251 at September 30, 2011. This increase was

primarily the result of net proceeds of $14,019,211 received pursuant to three private placements and proceeds of

$139,331 received on the sale of available-for-sale investments. The increase was partially offset by a cash

payment of $1,000,000 to Copper Reef pursuant to the JV Purchase Agreement, mineral property expenditures of

$2,947,131, plant and equipment purchases of $941,119 and cash of $1,028,071 used in operating activities.



Page 12

SELECTED ANNUAL INFORMATION

The following table provides information for the years ended September 30:

2011 2010 2009

Interest income 94,032$ 153$ 493$

Net loss for the year (1,803,323)$ (243,221)$ (2,072,529)$

Basic and diluted loss per share (0.04)$ (0.01)$ (0.07)$

Total assets 25,514,953$ 8,075,210$ 3,945,765$

Total long term financial liabilities -$ -$ -$

Cash dividends declared -$ -$ -$

During the last two years, the Company recapitalized, recruited a strong management team, completed a number of

private placements and continued to further develop the McIlvenna Bay deposit. During 2010 and 2011, the

Company received net proceeds of $18,075,361 from various private placements which was the driver for the

increased interest income and increase in total assets. In 2009, $1,516,149 of the net loss of $2,072,529 related to

mineral property write-downs. In 2011, $1,466,850 of the net loss of $1,803,323 was stock-based compensation

expense. The expenses contributing to the net loss were partially offset by a future income tax recovery of

$364,500 related to the Company’s 2010 flow-through financing and a gain of $218,503 pursuant to the JV

Purchase Agreement.



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RESTATEMENT OF FINANCIAL STATEMENTS

The quarterly information for Q1 2011, Q2 2011 and Q3 2011 has been restated to correct errors relating to a

future income tax recovery resulting from the renouncement of flow-through shares and the under-expensing of

stock-based compensation. The restatement is summarized as follows:

Q1 2011 Q2 2011 Q3 2011

As reported Restated As reported Restated As reported Restated

Balance Sheet

Share capital 57,460,826 57,096,326 57,460,826 57,096,326

Contributed surplus 1,129,636 1,481,384 1,971,606 2,160,645 2,138,593 2,368,750

Deficit (34,560,511) (34,912,259) (35,520,487) (35,345,026) (35,969,755) (35,835,412)

Statement of Operations

Stock-based compensation

154,780 506,528 843,614 680,905 166,987 208,105

Future income tax recovery

(364,500)

Net loss 55,535 407,283 959,976 432,767 449,268 490,386

Loss per share (0.00) (0.00) (0.02) (0.02) (0.01) (0.01)

The cumulative effect on the first three quarters of 2011 is as follows:

As reported As restated

Balance sheet

Share capital 57,460,826 57,096,326

Contributed surplus 2,138,593 2,368,750

Deficit (35,969,755) (35,835,412)

Statement of Operations

Stock-based compensation 1,165,381 1,395,538

Future income tax recovery (364,500)

Net loss 1,464,779 1,330,436

Loss per share (0.03) (0.03)



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SUMMARY OF QUARTERLY RESULTS

Q4, 2011 Q3, 2011 Q2, 2011 Q1, 2011

Net loss for the period (472,887)$ (490,386)$ (432,767)$ (407,283)$

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

Q4, 2011 Q3, 2011 Q2, 2011 Q1, 2011

Net earnings (loss) for the period (136,958)$ (84,437)$ (90,832)$ 69,006$

Basic and diluted earnings (loss) per share (0.01)$ -$ -$ -$

Over the last eight quarters, the Company’s net earnings/loss ranged from net earnings of $69,006 in Q1, 2010 to a

net loss of $490,386 in Q3, 2011.

The most significant items contributing to the net loss of $432,767 in Q2, 2011 were stock-based compensation of

$680,905, salaries and benefits of $90,896 and office and miscellaneous expenses of $30,729. These expenses

were partially offset by a future income tax recovery of $364,500 related to the Company’s 2010 flow-through

financing.

The net earnings in Q1, 2010 were a result of operating expenses of $60,639 being offset by a gain on sale of

investment of $129,645. The gain on sale of investment resulted from the Company selling available-for-sale

investments.

The majority of the increased net loss of $490,386 in Q3, 2011 was a result of the Company granting stock options

to its directors, officers and employees. The fair value of the stock options that vested in Q3, 2011 was $208,105.

In Q1, 2011, the Company recorded a gain of $218,503 pursuant to the JV Purchase Agreement.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The

Company has in place a planning and budgeting process to determine the funds required to support the Company’s

operating requirements as well as its planned capital expenditures. The Company manages its financial resources

to ensure that there is sufficient working capital to fund near term planned exploration work and operating

expenditures. The Company has considerable discretion to reduce or increase plans or budgets depending on

current or projected liquidity. When appropriate, the Company will seek joint venture partners in order to fund or

share the funding of its exploration properties to minimize shareholder risk.

The Company does not currently own or have an interest in any producing mineral properties and does not derive

any revenues from operations. Operational activities have been funded through private placements. As at

September 30, 2011, the Company had working capital of $11.6 million (September 30, 2010: $3.8 million). In

management’s opinion, this is sufficient to cover the Company’s budgeted exploration programs and short-term

obligations as they come due.

The Company has no bank debt or banking credit facilities in place.



Page 15

OFF-BALANCE SHEET ARRANGEMENTS

The Company has the following contractual obligations:

2012 105,660$

2013 105,660$

2014 105,660$

2015 105,660$

2016 79,245$

RELATED PARTY TRANSACTIONS

For the year ended September 30, 2011, and to the date of this report, the Company did not have any related party

transactions.

FOURTH QUARTER

The most significant items contributing to the net loss of $756,162 in Q4, 2011 were stock-based compensation of

$529,739, salaries and benefits of $177,459 and office and miscellaneous expenses of $73,577. These expenses

were partially offset by a future income tax recovery of $364,500 related to the Company’s 2010 flow-through

financing.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

A detailed summary of all of the Company’s significant accounting policies is included in Note 2 to the audited

annual financial statements for the year ended September 30, 2011.

RECENT ACCOUNTING STANDARDS NOT YET EFFECTIVE

International Financial Reporting Standards (“IFRS”)

In February 2008, the Accounting Standards Board (“AcSB”) confirmed that Canadian GAAP (“GAAP”) for

publicly accountable enterprises will be converged with IFRS effective in calendar year 2011. The Company’s

first financial statements presented in accordance with IFRS, which will be the first quarter of fiscal 2012, will

contain IFRS compliant information on a comparative basis, as well as reconciliations for that quarter and as at the

October 1, 2010 transition date. Although IFRS uses a conceptual framework similar to Canadian GAAP, there are

some significant differences on recognition, measurement and disclosure requirements. As the International

Accounting Standards Board (“IASB”) will continue to issue new accounting standards during the conversion

period, the final impact of IFRS on the Company’s financial statements will only be measureable once all IFRS

applicable at the conversion date are known.



Page 16

RECENT ACCOUNTING STANDARDS NOT YET EFFECTIVE (continued)

International Financial Reporting Standards (“IFRS”) (continued)

As a result of its convergence, the Company has developed a plan to convert its financial statements to IFRS,

including the engagement of independent consultants. The Company is currently planning an enabling phase of

the conversion, which includes preparing and identifying the differences between existing Canadian GAAP and

IFRS, potential business impacts, personnel and technology resource requirements and staff training. Over the

next several months, the Company will continue to review and assess the implications of the conversion. The

conversion to IFRS is a significant initiative for the Company, for which substantial resources are being dedicated

to ensure a timely and proper implementation.

The initial analysis of IFRS in comparison to Canadian GAAP has identified a number of differences. It is

management’s belief that the impact of these differences individually may have a material impact on the reported

results and financial position. The Company expects that the majority of the adjustments required to move to IFRS

will be made retroactively against opening retained earnings and shown on the opening comparative consolidated

balance sheet, October 1, 2010. Management has currently not quantified the impact of adopting IFRS.

In the year of adoption, the Company must apply IFRS 1 to the transition. IFRS 1 mandates certain exemptions for

retroactive application and provides exceptive relief from some retroactive application to ease the transition to

IFRS. While management is still determining the full effects of adopting IFRS, the following IFRS 1 exemptions

have been identified as having the greatest potential impact on the Company’s accounting policies:

Decommissioning liabilities – the Company expects to measure its decommissioning liability in

accordance with IFRIC 1 prospectively at the date of transition to IFRS, rather than recalculating the effect

of all changes throughout the life of the liability; and

Share-based payments – it is expected that the Company will elect not to apply IFRS 2 to equity

instruments which vested or settled before the Company’s date of transition to IFRS.

Business combinations - IFRS 3 allows an entity that has conducted prior business combinations to apply

IFRS 3 on a prospective basis only from the date of transition. This avoids the requirement to restate prior

business combinations, although some adjustments may still be necessary.

Management’s preliminary assessment of the impact of adopting IFRS has also identified the following areas as

having a significant potential impact on the Company’s accounting policies.

Asset impairment – asset impairment under current Canadian GAAP is tested for and measured by

comparing the asset’s carrying value to the undiscounted cash flows on a cost centre level. Under IFRS,

asset impairment is determined by comparing the asset’s carrying value with the higher of its fair value

less the cost to sell value in use based on discounted cash flows on a cash generating unit level. This may

result in more frequent write-downs in the carrying amounts of assets under IFRS. Also under IFRS, prior

impairment losses can be reversed in the period in which circumstances indicate the reversal has occurred,

while under Canadian GAAP, impairment write-downs cannot be reversed;



Page 17

RECENT ACCOUNTING STANDARDS NOT YET EFFECTIVE (continued)

International Financial Reporting Standards (“IFRS”) (continued)

Exploration and evaluation expenditures – the Company must follow IFRS 6 for its mining assets. There

are several similarities between IFRS and Canadian GAAP with respect to the extractive industry;

however, IFRS requires the separation of exploration and evaluation expenditures from developing and

producing assets.

Gains and losses under Canadian GAAP are not recognized upon the disposition of assets unless the

disposition results in a significant change in the depletion rate. Under IFRS, gains and losses are

recognized in net income on the disposal of an asset. The amount of gain or loss is determined by

comparing the proceeds from disposal with the carrying amount of the item. This includes non-monetary

transactions such as farm-outs and asset swaps;

Equipment – IFRS and Canadian GAAP contain the same basic accounting principles, however under

IFRS, costs are required to be allocated to the significant parts of the asset and to amortize each significant

component separately and this is a departure from Canadian GAAP;

Decommissioning liabilities – under IFRS decommissioning and restoration liabilities are recognized for

both legal and constructive obligations, while under Canadian GAAP only legal obligations are

recognized;

Flow through shares - IAS 12 “Income Taxes” does not provide guidance for the appropriate treatment of

flow-through shares and indications are that Canadian GAAP approach is no longer acceptable. The

Company has opted to apply US GAAP accounting to its flow-through shares which may result in the

reclassification of balances for transition to IFRS; and

Share-based payments – stock options and warrants granted to non-employees must be measured at the fair

value of the goods or services received. Under Canadian GAAP, these transactions are measured at the

fair value of the options or warrants granted or liability incurred, whichever is more reliably measurable.

As well, under IFRS, stock option forfeiture rates must be estimated, while under Canadian GAAP,

forfeitures can be recognized at the time they occur.

FINANCIAL INSTRUMENTS

The Company classifies its financial instruments into one of the following categories: held-for-trading (assets and

liabilities), available-for-sale (assets), loans and receivables, held-to-maturity (assets), and other financial

liabilities. All financial instruments are measured at fair value on initial recognition. Financial assets classified as

held-to-maturity, loans and receivables, and financial liabilities other than those held-for-trading, are subsequently

measured at amortized cost. Available-for-sale instruments are subsequently measured at fair value with

unrealized gains and losses recognized in other comprehensive income. Instruments classified as held-for-trading

are subsequently measured at fair value with unrealized gains and losses recognized on the statement of loss.



Page 18

FINANCIAL INSTRUMENTS (continued)

The Company has designated its cash and cash equivalents as held-for-trading and are carried at fair value.

Accounts receivable are classified as loans and receivables, which are measured at amortized cost. Investments are

classified as available-for-sale. Accounts payable and accrued liabilities are classified as other liabilities, which

are measured at amortized cost.

Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest,

currency or credit risks arising from these financial instruments.

OTHER MD&A REQUIREMENTS

ADDITIONAL DISCLOSURE FOR VENTURE ISSUERS WITHOUT SIGNIFICANT REVENUE

General and administration expenses for the years ended September 30, 2010 and 2011 were as follows:

2011 2010

$ $

Agency fees 23,225 59,877

Amortization 46,399 19,724

Interest and bank charges 5,120 2,696

Investor relations 57,039 -

Office and adminstration 146,771 55,346

Professional fees 117,961 104,983

Rent 47,217 16,264

Repairs and maintenance 6,874 6,953

Salaries and benenfits 583,038 79,040

Stock-based compensation 1,466,850 40,525

Travel and accomodation 53,346 -

2,553,840 385,408

DISCLOSURE OF OUTSTANDING SHARE DATA

The Company is authorized to issue an unlimited number of common shares without par value.

As at the date of this report, there were 64,664,409 common shares issued and outstanding.

As at the date of this report, there were 5,137,500 stock options and 5,166,667 share purchase warrants

outstanding.



Page 19

DISCLOSURE CONTROLS AND PROCEDURES

As required by Multilateral Instrument 52-109, the Company has evaluated the effectiveness of its disclosure

controls and procedures and the internal control over financial reporting as of September 30, 2011.

Based on the results of this evaluation, the certifying officers have concluded that the processes in place are

sufficient to provide the knowledge required for the representations made in Form 52-109FV1, Venture Issuer

Basic Certificate.

Management is aware that internal control deficiencies have been identified in respect to segregation of duties and

a risk of management override of controls and procedures which is inherently due to the small size of the

Company.

RISKS AND UNCERTAINTIES

The principal risk faced in the advanced exploration stage is the ability to raise the funds required to further assess

the viability of a mineral deposit. This phase requires high expenditures to determine if a deposit may be profitable

to mine. The Company does not operate any producing properties and as such, is dependent on the ability to raise

funds through equity financing. Although the Company believes it has sufficient access to financial markets to

support its intended work plan, failure to do so would result in future work being suspended.

As of the date of this report, the Company believes it has sufficient funds on hand to meet its financial obligations

for the next year. Financial assets and liabilities consist of cash and cash equivalents, accounts receivable,

marketable securities and accounts payable and accrued liabilities. It is management’s opinion that the Company

is not exposed to significant interest or credit risks arising from these financial assets and liabilities.

The Company’s activities involve the application for permits from Provincial authorities and such activities are

governed by various laws and regulations that cover the protection of the environment, land use, exploration,

development, taxes, labour standards, occupational health, waste disposal, safety and other matters. Environmental

legislation in Canada provides restrictions and prohibitions on spills and various substances produced in

association with certain exploration activities which would result in environmental pollution. A breach of such

legislation may result in imposition of fines and penalties. In addition, certain types of activities require the

submission and approval of environmental impact statements. Environmental legislation is evolving in a direction

of higher standards and enforcement, and higher fines and penalties for non-compliance. Environmental

assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers

and employees. The cost of compliance with changes in governmental regulations has the potential to reduce the

profitability of future operations.

The Company believes that it is in compliance with all material laws and regulations which currently apply to its

activities. There can be no absolute assurance, however, that all permits which the Company may require for

exploration activities will be obtainable on reasonable terms or on a timely basis, or that such laws and regulations

will not have an adverse effect on any exploration projects that the Company may undertake.



Page 20

RISKS AND UNCERTAINTIES (continued)

Mineral exploration involves many risks, which even a combination of experience, knowledge and careful

evaluation may not be able to overcome. Operations within the Company will be subject to all the hazards and

risks normally incidental to exploration, development and production of minerals, any of which could result in

work stoppages, damage to property, and possible environmental damage. Unusual or unexpected formations,

formation pressures, fires, power outages, labour disruption, flooding, explosions, cave-ins, landslides, weather

conditions and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved

in extraction operations and the conduct of exploration programs. The Company’s exploration activities will be

subject to the availability of third party contractors and equipment. There are also physical risks to the exploration

personnel. If any of the Company’s properties is found to have commercial quantities of mineralization, the

Company could be subject to additional risks respecting any development and production activities.

All of the properties in which the Company has an interest are in the exploration stages only and are without an

economic mineral deposit. Development of these mineral properties will only follow upon obtaining satisfactory

exploration results, receipt of a positive feasibility study, access to adequate funding and community support.

Mineral exploration and development involves a high degree of risk and few properties which are explored, are

ultimately developed into producing mines. Substantial expenditures are required to establish reserves through

drilling and to develop the mining and processing facilities and the infrastructure at any site chosen for mining.

There is no assurance that these mineral exploration and development activities will result in any discoveries of

commercial mineral deposits. The long-term profitability of the Company’s operations will be in part directly

related to the cost and success of its exploration programs, which may be affected by a number of factors beyond

the Company’s control.

Factors beyond the control of the Company may affect the market price of minerals produced and the marketability

of any ore or minerals discovered at and extracted from the Company’s properties. Metal prices are subject to

significant fluctuation and are affected by numerous factors beyond the Company’s control including international

economic and political trends, inflation, currency exchange fluctuations, interest rates, global or regional

consumption patterns, speculative activities and increased production due to new and improved extraction and

production methods. The effect of these factors on the Company’s operations cannot accurately be predicted.

OUTLOOK

Commencing in February 2012, the Company intends to conduct a 3,000 - 4,000 metre spring drill program on

McIlvenna Bay as well as 2,000 - 3,000 metres of drilling to test targets on its other Saskatchewan properties as a

result of the VTEM survey results.

The Company is also expecting to initiate a baseline environmental study and community engagement work in

2012 which will form part of a Preliminary Assessment that is expected to be initiated in 2012.

In addition to a Preliminary Assessment on McIlvenna Bay, management’s long term goals are to complete work

requirements for an environmental impact assessment and a feasibility study.

Mr. Roger March, P.Geo., VP Project Exploration for the Company and a Qualified Person under NI-43-101, has

reviewed all technical information in this MD&A.

Additional information regarding the Company, including copies of the Company’s continuous disclosure

materials is available through the SEDAR website at www.sedar.com.

http://www.sedar.com/

Documents

FORAN MINING CORPORATION · foran mining corporation management’s discussion and analysis for the year ended september 30, 2011 page 1