(Unaudited) · The financial statements reflect the financial position, results of operations and cash flows of the Company and its 100% owned subsidiaries, Cornerstone Resources

Condensed Consolidated Interim Financial Statements of Cornerstone Capital Resources Inc.

For the three months and six months ended June 30, 2013 and 2012

(Unaudited)

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

The accompanying unaudited condensed interim financial statements of Cornerstone Capital Resources Inc. for

the three months and six months ended June 30, 2013 and 2012 have been prepared by and are the

responsibility of the Company’s management.

The Company’s independent auditors have not performed a review of these financial statements in accordance

with the standards established by the Canadian Institute of Chartered Accountants for a review of interim

financial statements by an entity’s auditor.

CORNERSTONE CAPITAL RESOURCES INC.

Table of Contents PAGE Condensed Consolidated Interim Statements of Financial Position 2 Condensed Consolidated Interim Statements of Operations, Comprehensive Loss and Deficit 3 Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity 4 Condensed Consolidated Interim Statements of Cash Flows 5 Notes to the Condensed Consolidated Interim Financial Statements 6 - 19


Condensed Consolidated Statements of Financial Position

(Expressed in Canadian Dollars - Unaudited)

As at As at

June 30 December 31,

2013 2012

$ $

ASSETS

CURRENT

Cash 223,848 822,521

Marketable securities 4,500 9,400

Receivables 176,852 338,410

Refundable staking deposits 300 10,440

Prepaid expenses 42,898 37,897

448,398 1,218,668

MINERAL EXPLORATION AND EVALUATION ASSETS (Note 7) 3,112,445 2,847,660

PROPERTY AND EQUIPMENT (Note 8) 200,120 223,301

3,760,963 4,289,629

LIABILITIES

CURRENT

Trade payables and accrued liabilities 308,131 547,036

EQUITY (Note 9)

Shareholders' equity 3,415,729 3,742,593 Non-controlling interest 37,103 -

3,452,832 3,742,593

3,760,963 4,289,629

BASIS OF PRESENTATION (Note 2)

APPROVED BY THE BOARD OF DIRECTORS ON AUGUST 28, 2013:

"Brooke Macdonald" Director "John Fleming" Director

See accompanying notes to the condensed consolidated interim financial statements

Page 2


Condensed Consolidated Statements of Operations, Comprehensive Loss and Deficit

(Expressed in Canadian Dollars - Unaudited)

For the three For the three For the six For the six

months ended months ended months ended months ended

June June June June

30, 2013 30, 2012 30, 2013 30, 2012

$ $ $ $

Revenue

Project revenue 77,435 145,069 192,907 298,016

Investment income 3,221 2,270 4,451 7,860

Foreign exchange gain 1,972 13,810 7,377 -

82,628 161,149 204,735 305,876

Expenses

General and administrative 179,878 404,552 466,180 805,518

Unrealized loss on value of marketable securities 4,400 45,508 4,900 176,842

Share-based payments 10,835 93,909 15,410 223,482

Accounting, audit and legal 38,954 59,140 71,480 90,303

Consulting fees 80,812 85,857 165,392 184,817

Public relations 1,704 12,672 4,799 23,520

Write-down of mineral exploration and evaluation assets 34,785 21,367 192,981 87,944

Depreciation 12,405 16,174 24,815 31,393

Loss (gain) on disposal of property and equipment (428) - 144 -

Foreign exchange loss - - - 4,534

Interest and bank charges 2,009 2,590 5,399 5,062

365,354 741,769 951,500 1,633,415

Net loss and comprehensive loss for the period (282,726) (580,620) (746,765) (1,327,539)

Net loss attributable to:Common shareholders (312,501) (580,620) (776,540) (1,327,539)

Non-controlling interest 29,775 - 29,775 -

(282,726) (580,620) (746,765) (1,327,539)

DEFICIT, BEGINNING OF PERIOD (38,916,292) (31,809,246) (38,452,253) (31,062,327)

DEFICIT, END OF PERIOD (39,228,793) (32,389,866) (39,228,793) (32,389,866)

LOSS PER SHARE - BASIC AND DILUTED (0.002) (0.005) (0.005) (0.01)

WEIGHTED-AVERAGE NUMBER OF

SHARES OUTSTANDING - BASIC AND DILUTED 151,326,959 140,872,515 148,014,228 140,768,276


Page 3


Condensed Consolidated Statements of Changes in Shareholders' Equity(Expressed in Canadian Dollars - Unaudited)

Share-based Expired Total Non-

Share capital Warrants payment reserve Share-based payments Deficit Shareholders' controlling Total equity

and warrants Equity interest

Number of shares $ $ $ $ $ $ $ $

Balance, December 31, 2011 140,662,879 33,339,712 592,931 3,947,868 3,851,527 (31,062,327) 10,669,711 - 10,669,711

Total comprehensive loss to June 30, 2012 (1,327,539) (1,327,539) (1,327,539)

Shares issued for property acquisitions 307,692 20,000 - - - - 20,000 - 20,000

Share-based payment - - - 223,482 - - 223,482 - 223,482

Share-based payments expired - - - (39,787) 39,787 - - - -

Share issuance costs - (11,396) - - - - (11,396) - (11,396) -

Balance, June 30, 2012 140,970,571 33,348,316 592,931 4,131,563 3,891,314 (32,389,866) 9,574,258 9,574,258

Balance, December 31, 2012 142,931,355 33,542,329 566,900 4,145,242 3,940,375 (38,452,253) 3,742,593 - 3,742,593

Total comprehensive loss to June 30, 2013 (776,540) (776,540) 29,775 (746,765)

Non-controlling interest - - - - - - - 7,328 7,328 Shares issued for private placements 9,000,000 442,672 - - - - 442,672 - 442,672 Share-based payments - - - 15,410 - - 15,410 - 15,410

Share-based payments expired - - - (706) 706 - - - -

Share issuance costs - (8,406) - - - - (8,406) - (8,406) -

Balance, June 30, 2013 151,931,355 33,976,595 566,900 4,159,946 3,941,081 (39,228,793) 3,415,729 37,103 3,452,832


Page 4


Condensed Consolidated Statements of Cash Flows(Expressed in Canadian Dollars - Unaudited)

For the six For the six

months ended months ended

June June

30, 2013 30, 2012

$ $

OPERATING ACTIVITIES

Net loss (746,765) (1,327,539)

Items not affecting cash:

Depreciation 24,815 31,393

Write-down of mineral exploration and evaluation assets 192,981 87,944

Unrealized loss (gain) on value of marketable securities 4,900 176,842

Share-based payments 15,410 223,482

Loss on disposal of property and equipment 144 -

Changes in non-cash operating working capital (72,208) (378,637)

(580,723) (1,186,515)

INVESTING ACTIVITIES

Mineral exploration and evaluation expenditures - net (457,766) (1,131,568)

Purchase of property and equipment - net (1,778) (9,667)

(459,544) (1,141,235)

FINANCING ACTIVITIES

Proceeds from issuance of common shares - net 434,266 (11,396)

Non-controlling interest 7,328 -

441,594 (11,396)

INCREASE (DECREASE) IN CASH (598,673) (2,339,146)

CASH, BEGINNING OF PERIOD 822,521 3,263,996

CASH, END OF PERIOD 223,848 924,850

SUPPLEMENTAL CASH FLOW INFORMATION (NOTE 11)


Page 5

CORNERSTONE CAPITAL RESOURCES INC. Notes to the Condensed Consolidated Interim Financial Statements For the three months and six months ended June 30, 2013 and 2012 (Expressed in Canadian Dollars - Unaudited)

Page 6

1. DESCRIPTION OF BUSINESS

Cornerstone Capital Resources Inc. (“Cornerstone” or the “Company”), is incorporated under the laws of Alberta, Canada and has its principal office in Mount Pearl, Newfoundland and Labrador, Canada. The Company, through its wholly-owned subsidiaries, Cornerstone Resources Inc., Cornerstone Ecuador S.A., La Plata Minerales S.A., Minera Cornerstone Chile Limitada, and its 70% owned subsidiary Exploraciones Novomining S.A. (“ENSA”), is engaged in the evaluation, acquisition and exploration of mineral properties in Canada and South America, of which substantially all of the exploration activities of the Company are carried on with joint parties. The Company plans to ultimately develop the properties as joint ventures, bring them into production, option or lease properties to third parties, or sell the properties outright. The Company has not determined whether these properties contain ore reserves that are economically recoverable and the Company is considered to be in the exploration stage. These consolidated financial statements for the period ended June 30, 2013 were authorized for issuance by the Board of Directors of the Company on August 28, 2013.

2. BASIS OF CONSOLIDATION AND PRESENTATION Statement of Compliance

These condensed consolidated interim financial statements, (the “financial statements”), are unaudited and have been prepared in accordance with IAS 34, Interim Financial Reporting, (“IAS 34”), using accounting policies consistent with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) and Interpretations of the IFRS Interpretations Committee (“IFRIC”).

Basis of Consolidation and Presentation

The financial statements reflect the financial position, results of operations and cash flows of the Company and its 100% owned subsidiaries, Cornerstone Resources Inc., Cornerstone Ecuador S.A., La Plata Minerales S.A., Minera Cornerstone Chile Limitada and its 70% owned subsidiary, Exploraciones Novomining S.A. All inter-company transactions and balances have been eliminated upon consolidation.

The financial statements of the Company have been prepared in accordance with IFRS on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. Several adverse conditions, however, cast substantial doubt on the validity of this assumption. The Company does not have any proven economically recoverable reserves, has continuous losses, and at June 30, 2013, the Company had an accumulated deficit of $39,228,793 (December 31, 2012 - $38,452,253). The success of the Company and the recoverability of exploration costs are dependent upon the existence of economically recoverable reserves, the ability of the Company to obtain financing to find and complete the development of such reserves, the ability of the Company to satisfy obligations as they come due and upon future profitable production from the properties or proceeds from disposition. The Company, however, believes it has properties which will continue to attract equity investors and joint venture partners. The amounts shown as exploration and evaluation assets represent net costs to date less write offs and do not necessarily represent present or future values.


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2. BASIS OF CONSOLIDATION AND PRESENTATION (Continued) Although the Company has taken steps to verify title to mineral properties in which it has an interest, in accordance with industry standards for the current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to unregistered prior agreements or transfers and may be affected by undetected defects. If the going concern assumption was not appropriate for these financial statements, adjustments would be necessary to the carrying value of assets and liabilities, the reported net loss and the balance sheet classifications used.

Basis of measurement

These consolidated financial statements have been prepared on a historical cost basis, except for derivative assets and liabilities, and other financial assets classified as at fair value through profit or loss, or available-for-sale which are measured at fair value. Additionally, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash flow information.

Currency of presentation

All amounts are expressed in Canadian dollars, unless otherwise stated.

3. SIGNIFICANT ACCOUNTING POLICIES

These interim condensed consolidated financial statements should be read in conjunction with the Company’s annual consolidated financial statements and accompanying notes for the year ended December 31, 2012. These interim condensed consolidated financial statements have been prepared using the same accounting policies and judgments and estimates as described in the Company’s December 31, 2012 annual consolidated financial statements.

4. FUTURE ACCOUNTING CHANGES

The following standards are effective for annual periods beginning on or after January 1, 2013, with earlier adoption permitted. The Company has not early adopted these standards and is currently assessing the impact they will have on the financial statements.

IFRS 10, Consolidated Financial Statements: IFRS 10 establishes principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities. IFRS 10 supersedes IAS 27, Consolidated and Separate Financial Statements, and SIC-12, Consolidation – Special Purpose Entities. IFRS 11, Joint Arrangements: IFRS 11 establishes principles for financial reporting by parties to a joint arrangement. IFRS 11 supersedes current IAS 31, Interests in Joint Ventures and SIC-13, Jointly Controlled Entities - Non - Monetary Contributions by Venturers. IFRS 12, Disclosure of Interests in Other Entities: IFRS 12 applies to entities that have an interest in a subsidiary, a joint arrangement, an associate or an unconsolidated structured entity.


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4. FUTURE ACCOUNTING CHANGES (Continued) IFRS 13, Fair Value Measurements: IFRS 13 defines fair value, sets out in a single IFRS framework for measuring value and requires disclosures about fair value measurements. IFRS 13 applies to IFRSs that require or permit fair value measurements or disclosures about fair value measurements (and measurements, such as fair value less costs to sell, based on fair value or disclosures about those measurements), except in specified circumstances.

IAS 27, Separate Financial Statements: IAS 12 has been updated to require an entity presenting separate financial statements to account for those investments at cost or in accordance with IFRS 9 Financial Instruments. The new IAS 27 excludes the guidance on the preparation and presentation of consolidated financial statements for a group of entities under the control of a parent, which is within the scope of the current IAS 27 Consolidated and Separate Financial Statements, and is replaced by IFRS 10.

IAS 28, Investments in Associates and Joint Ventures: IAS 28 has been updated and it is to be applied by all entities that are investors with joint control of, or significant influence over, an investee. The scope of the current IAS 28 Investments in Associates does not include joint ventures.

IAS 1 – Presentation of Financial Statements: In June 2011, the IAS issued amendments to IAS 1 that requires an entity to group items presented in the statement of comprehensive income on the basis of whether they may be reclassified to earnings subsequent to initial recognition. For those items presented before taxes, the amendments to IAS 1 also require that the taxes related to the two separate groups be presented separately. The amendments are effective for annual periods beginning on or after July 1, 2012, with earlier adoptions permitted. The Company does not anticipate the application of the amendments to IAS 1 to have a material impact on its consolidated financial statements. IFRS 9, Financial Instruments: IFRS 9 was issued in 2009 and will replace IAS 39 Financial Instruments: Recognition and Measurement (“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 rules in IAS 39. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2015. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

IAS 32, Offsetting Financial Assets and Financial Liabilities (Amendments to IAS 32): On

December 16, 2011 the IASB published amendments to IAS 32, Financial Instruments: Presentation to clarify the application of the offsetting requirements. The amendments are effective for annual periods beginning on or after January 1, 2014, with earlier application permitted.

Disclosures, Offsetting Financial Assets and Financial Liabilities (Amendments to IFRS 7): On December 16, 2011 the IASB published new disclosure requirements jointly with the Financial Accounting Standards Board “(FASB”) that enables users of financial statements to better compare financial statements prepared in accordance with IFRS and US Generally Accepted Accounting


Page 9

4. FUTURE ACCOUNTING CHANGES (Continued)

Principles. The new requirements are effective for annual periods beginning on or after January 1, 2013.

5. CAPITAL MANAGEMENT

The capital structure of the Company consists of capital and equity comprised of share capital, warrants, reserves and deficit. The Company manages its capital structure and makes adjustments to it, based on the funds available to the Company, in order to support the acquisition, exploration and development of mineral assets. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company’s management to sustain future development of the business.

The properties in which the Company has an interest are in the exploration stage; as such the Company has historically relied on the equity markets to fund its activities. The Company will continue to assess new properties and seek to acquire an interest in additional properties if it feels there is sufficient geologic or economic potential and if it has adequate financial resources to do so. Management reviews its capital management approach on an ongoing basis. The Company is not subject to externally imposed capital requirements.

6. FINANCIAL INSTRUMENTS

Financial instruments recorded at fair value on the balance sheet are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – valuation based on quoted prices (unadjusted) observed in active markets for identical assets or liabilities

Level 2 – valuation techniques based on inputs that are quoted prices or similar instruments in active markets; inputs other than quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived principally from or corroborated by observable market data by correlation or other means

Level 3 – valuation techniques with significant unobservable market inputs

The Company does not have any level 2 or 3 fair value measurements, and there have been no transfers between levels.


Page 10

6. FINANCIAL INSTRUMENTS (Continued)

Total financialassets/financial liabilities at fair

As at June 30, 2013 Level 1 Level 2 Level 3 value

Financial assets $ $ $ $

Marketable securities 4,500 - - 4,500

Financial liabilities - - - -

Total financialassets/financial liabilities at fair

As at December 31, 2012 Level 1 Level 2 Level 3 value

Financial assets $ $ $ $

Marketable securities 9,400 - - 9,400

Financial liabilities - - - -

Financial Risk Factors

The Company has exposure to credit risk, liquidity risk and market risk. The Company’s Board of Directors has the overall responsibility for the oversight of these risks and reviews the Company’s policies on an ongoing basis to ensure that these risks, which are summarized below, are appropriately managed:

Credit risk

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. The Company’s credit risk is primarily attributable to accounts receivable and marketable securities. Accounts receivable are either from the government for tax refunds or from joint venture partners, who have a history of paying quickly when invoiced. The marketable securities are held in an account at the Company’s financial institution. Management believes that the credit risk concentration with respect to financial instruments included in the accounts receivable and marketable securities is remote.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. As at June 30, 2013, the Company had a cash balance of $223,848 (December 31, 2012 - $822,521), plus receivables of $176,852 (December 31, 2012 – $338,410) to settle current liabilities of $308,131 (December 31, 2012 - $547,036). To the extent that the Company does not


Page 11


believe it has sufficient liquidity to meet its current obligations, the Board of Directors considers securing additional funds through equity or partnering transactions. All of the Company’s financial liabilities are normally paid within 30 days and are subject to normal trade terms. The Company has no source of operating cash flow to fund its exploration and development projects. Any further significant work would likely require additional equity or debt financing. The Company has limited financial resources and there is no assurance that additional funding will be available to allow the Company to fulfill its obligations on existing or future exploration projects. Failure to obtain additional financing could result in delay or indefinite postponement of further exploration.

Market risk

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates, and equity prices will affect the Company’s income or the value of its financial instruments.

(a) Interest rate risk – The Company has cash balances subject to interest rate risk. The Company’s current policy is to invest excess cash in interest bearing deposit accounts with its banking institutions. A 1/2% change in interest rates would have an impact on the Company’s net loss of approximately $1,119.

(b) Price risk – The Company is exposed to price risk with respect to commodity and equity prices. Equity price risk is defined as the potential adverse impact on the Company’s earnings due to movements in individual equity prices or general movements in the level of the stock market. Commodity price risk is defined as the potential adverse impact on earnings and economic value due to commodity price movements and volatilities. The Company monitors commodity prices of gold, copper and other metals, individual equity movements, and the stock market to determine the appropriate course of action to be taken by the Company. The Company believes that both commodity and equity price movements can have a substantial effect on the market value of the Company’s investments. Such price movements are monitored by the Company.

(c) Foreign exchange risk - The Company transacts certain business in U.S. dollars, and therefore is subject to foreign exchange risk on U.S. dollar receivables, trade payables and cash balances. The Company attempts to mitigate these risks by managing its U.S. dollar inflows and outflows. No hedging instruments have been used by the Company, however, depending upon the nature and level of future foreign exchange transactions, consideration may be given to the use of hedging instruments. The Company believes that it adequately manages its foreign exchange risk, and the risk is minimal. The following table shows the net exposures in US dollars.


Page 12


June 30, December 31,

2013 2012$US $US

Cash 179,782 316,431 Receivables 122,996 300,572 Trade payables and accrued liabilities (173,357) (367,881)

Net US dollar exposure 129,421 249,122

Based upon the above net exposures to the US dollar, as at June 30, 2013, a 2% change in the value of the US dollar to the Canadian dollar exchange rate would impact the Company’s net loss by approximately $2,588.

Sensitivity analysis

The Company has share investments in Thundermin Resources Inc., Benton Resources Inc. and Mountain Lake Minerals Inc. These companies are listed on either the Toronto Stock Exchange or the Toronto Venture Stock Exchange. Share investments are classified by the Company as “F.V.T.P.L.” and are measured at fair value.

Based on management’s knowledge and experience of the financial markets, the Company believes the following movements are “reasonably possible” during the third quarter of 2013: the Company’s investments in publicly traded companies are denominated in Canadian dollars. During the last two years there have been significant changes in the values of these investments. A 20% change in the June 30, 2013 value of these investments would result in an increase or decrease in net loss and the carrying value of the investments of $900.

The carrying amount of cash, receivables, refundable staking deposits, trade payables and accrued liabilities approximate fair value due to their short-term nature.

7. MINERAL EXPLORATION AND EVALUATION ASSETS

As at June 30, 2013, the Company has been issued 19 (2012 - 29) licenses by the Government of Newfoundland and Labrador which consist of 1,196 (2012 – 1,439) mineral exploration claims covering various areas of Newfoundland and Labrador. Of these 1,196 mineral exploration claims, 44 are held 50% by Thundermin Resources Inc. The Government of New Brunswick has issued 1 (2012 – 2) license to the Company which covers 60 (2012 – 202) claims in New Brunswick. The Company also holds 8 (2012 – 19) mineral concessions in Ecuador and 49 (2012 – 63) in Chile. A summary of mineral exploration and evaluation assets is as follows:


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7. MINERAL EXPLORATION AND EVALUATION ASSETS (Continued) As at June 30, 2013

Geographical Balance, JV Payments Properties Balance,Area Number Beginning of and Government Written End of

of Claims Period Additions Grants Off Period$ $ $ $ $

Canada 1,256 1,228,707 12,954 - (3,202) 1,238,459 Chile 49 611,957 92,235 - (17,740) 686,452 Ecuador 8 1,006,996 1,121,897 (769,320) (172,039) 1,187,534

1,313 2,847,660 1,227,086 (769,320) (192,981) 3,112,445

As at December 31, 2012

Geographical Balance, JV Payments Properties Balance,Area Number Beginning of and Government Written End of

of Claims Year Additions Grants Off Year$ $ $ $ $

Canada 1,641 4,646,584 708,296 (42,442) (4,083,731) 1,228,707 Chile 63 1,033,132 542,123 - (963,298) 611,957 Ecuador 19 1,216,894 3,081,660 (2,891,232) (400,326) 1,006,996

1,723 6,896,610 4,332,079 (2,933,674) (5,447,355) 2,847,660


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8. PROPERTY AND EQUIPMENT

Equipment Computers Vehicles Total$ $ $ $

Cost:At December 31, 2012 234,462 304,681 317,938 857,081 Additions 2,527 - - 2,527 Disposals 3,828 - 2,373 6,201 At June 30, 2013 233,161 304,681 315,565 853,407

Depreciation:At December 31, 2012 162,449 284,263 187,068 633,780 Additions 7,196 4,594 13,025 24,815 Disposals 3,556 - 1,752 5,308 At June 30, 2013 166,089 288,857 198,341 653,287

Net book valueAt June 30, 2013 67,072 15,824 117,224 200,120

Equipment Computers Vehicles Total$ $ $ $

Cost:At December 31, 2011 242,129 296,937 317,938 857,004 Additions 8,520 7,744 - 16,264 Disposals 16,187 - - 16,187 At December 31, 2012 234,462 304,681 317,938 857,081

Depreciation:At December 31, 2011 157,670 270,205 154,350 582,225 Additions 17,084 14,058 32,718 63,860 Disposals 12,305 - - 12,305 At December 31, 2012 162,449 284,263 187,068 633,780

Net book valueAt December 31, 2012 72,013 20,418 130,870 223,301


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9. EQUITY

Shareholders’ Equity

Share Capital

Authorized An unlimited number of common shares with no par value. An unlimited number of first preferred and second preferred shares with no par value.

Issued and outstanding

June 30, 2013 December 31, 2012

Number of Number of Shares $ Shares $

Common shares 151,931,355 33,976,595 142,931,355 33,542,329

Preferred shares The first and second preferred shares which have been authorized may be issued in one or more series and the directors are authorized to fix the number of shares in each series and to determine the designation, rights, privileges, restrictions and conditions attached to the shares of each series. No first or second preferred shares have been issued. Stock options The Company has a stock option plan under which options to purchase common shares in the Company may be granted to directors, officers, key employees and consultants of the Company. Details of the activity of the stock option plan are as follows:


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9. EQUITY (Continued)

Stock Options For the six For the year months ended ended

Number

Weighted-Average Exercise

Price Number

Weighted-Average Exercise

Price

Balance, beginning of period 10,027,669 0.33 9,569,335 0.39

Granted during the periodTo employees, officers,

directors and consultants 1,115,000 0.10 1,475,000 0.14Forfeited or cancelled during the period (1,233,588) 0.27 (1,016,666) 0.65Balance, end of period 9,909,081 0.31 10,027,669 0.33Exercisable, end of period 8,797,410 0.33 9,527,670 0.34

June 30, 2013 December 31, 2012

The following table summarizes information about stock options outstanding and exercisable at June 30, 2013.

To tal O ptio ns O utstanding To tal Exercisable O ptio ns

Exercise A verage W eighted- A verage W eighted-Price N um ber o f R em aining A verage N um ber o f R em aining A verage

R ange O utstanding C o ntractual Strike Price Exercisable C o ntractual Strike Price$ O ptio ns L ife $ O ptio ns L ife $

0.00 - 0 .19 4,910,415 2 .79 0.12 3,798,733 2.31 0.13

0.20 - 0 .39 1,311,666 2 .55 0.33 1,311,677 2.55 0.33

0.40 - 0 .59 3,687,000 2 .33 0.55 3,687,000 2.33 0.55

9,909,081 2 .59 0.31 8,797,410 2.35 0.33


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9. EQUITY (Continued)

Warrants Warrants have been issued by the Company in the course of issuing shares. No warrants have been issued during the period.

For the six months ended June 30, 2013

Weighted-Average

PriceNumber $ $

Balance, beginning of period 14,172,500 566,900 0.30

Balance, end of period 14,172,500 566,900 0.30

For the year ended December 31, 2012

Weighted-Average

PriceNumber $ $

Balance, beginning of period 14,478,750 592,931 0.30 Expired during the period (306,250) (26,031) 0.30 Balance, end of period 14,172,500 566,900 0.30

Reserves

Share-based payment reserve

The share-based payment reserve records items recognized as stock-based compensation expense until such time that the stock options are exercised, at which time the corresponding amount will be transferred to share capital.

Share purchase warrant reserve

The share purchase warrant reserve records the value of any warrants that expire during the period.

Non-Controlling Interest

The Non-controlling interest represents 30% of ENSA owned by a third party.


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10. RELATED PARTY TRANSACTIONS

The following represents a summary of transactions with parties under common influence and shareholders for the three months and six months ended June 30, 2013. The amounts, which are all expensed as professional and administrative charges, are recorded at the exchange amounts: Sealan Capital Corporation Inc., controlled by retired Director Glen H. McKay, was paid a total of $Nil (2012 - $6,000) for the six months ended June 30, 2013, $Nil (2012 - $3,000) for the three months ended June 30, 2013, for management consulting services. Director W. John Clarke provided legal services in the amount of $150 (2012 - $150) for the six months ended June 30, 2013, $150 (2012 - $150) for the three months ended June 30, 2013. D.R. Loveys & Associates Inc., controlled by Director David Loveys, the Company’s Vice President Finance, CFO and Corporate Secretary, billed a total of $71,892 (2012 - $73,402) for the six months ended June 30, 2013, $36,312 (2012 - $37,858) for the three months ended June 30, 2013, for accounting and management consulting services. Director Brooke Macdonald, who serves as the Company’s President and CEO, provided the Company with management consulting services of $87,500 (2012 – $105,416) for the six months ended June 30, 2013, $42,500 (2012 - $45,000) for the three months ended June 30, 2013. These transactions are considered to be in the normal course of business. Compensation for the six months ended June 30, 2013 for key management personnel, not included above, is $183,613 (2012 - $365,459), which includes salary and other short-term benefits of $173,387 (2012 - $212,993), and share-based payments of $10,226 (2012 – $152,466). Compensation for the three months ended June 30, 2013 for key management personnel, not included above, is $62,252 (2012 - $166,603), which includes salary and other short-term benefits of $54,590 (2012 - $101,699), and share-based payments of $7,662 (2012 – $64,904).

11. SUPPLEMENTAL CASH FLOW INFORMATION

For the six For the six

months ended months endedJune 30, 2013 June 30, 2012

$ $

Non-cash investing activitiesAcquisition of mineral exploration & evaluation asset for share consideration - (20,000)

- (20,000)


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12. SUBSEQUENT EVENTS

In July 2013, the Company offered to sell its 50% participating interest in the Little Deer Joint Venture copper property located near Springdale, Newfoundland (“Little Deer”) to its joint venture partner in the project, Thundermin Resources Inc. (“Thundermin”). The purchase price is $550,000, consisting of $200,000 in cash on closing and $350,000 in common shares of Thundermin to be issued on closing, plus a 0.75% interest in net smelter returns (“NSR”) on the Company’s proportionate share of all products provided that Thundermin may, at its sole option, purchase, free from all encumbrances: (a) at any time, 0.5% of the NSR royalty for $500,000; and (b) at any time after the completion of the project’s feasibility study, 0.25% for the fair market value to be determined in accordance with said feasibility study. Should Thundermin fail to exercise its right to purchase the Company’s 50% interest by September 15, 2013, then the Company may sell that interest to a third party for the same financial consideration and the purchaser will be bound by the terms and conditions of the current Thundermin – Cornerstone Joint Venture Agreement.

Also in July 2013, the Company completed the sale of its Cape Ray gold property to Benton Resources Inc. (“Benton”). The purchase price paid to the Company was $200,000 cash plus 350,000 common shares of Benton. The Company will retain a 0.25% interest in net smelter returns from the project.

On August 23, 2013, the Company received the Environmental License to allow drilling to occur at its Cascabel property in Ecuador. The Company’s partner, SolGold plc has elected to complete a further $500,000 private placement in the Company’s shares and increase its ownership percentage of ENSA to 50%. The Company has received the $500,000 and will be issuing an additional 7,692,308 common shares to SolGold plc.

Documents

(Unaudited) · The financial statements reflect the financial position, results of operations and cash flows of the Company and its 100% owned subsidiaries, Cornerstone Resources