Management s Discussion & Analysis For the three month period ended March 31, 2012

Transcription

1 CASTLE PEAK MINING LTD. (formerly Critical Capital Corporation) Management s Discussion & Analysis For the three month period ended March 31, 2012

2 Introduction The following Management s Discussion and Analysis ( MD&A ) provides information that management considers to be relevant to an assessment and understanding of s (formerly Critical Capital Corporation) ( Castle Peak or the Company ) financial condition as at March 31, 2012 and the results of its operations and cash flows for the three months ended March 31, 2012 and follows the requirements of National Instrument ( NI ). This discussion should be read in conjunction with the Company s unaudited financial statements and the related notes for the three months ended March 31, 2012 which have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and the annual audited financial statements and the related notes for the year ended December 31, 2011 which have been prepared in accordance with IFRS. All dollar amounts included therein and in the following MD&A are expressed in Canadian Dollars unless otherwise noted. We report in accordance with IFRS and the following disclosures, and associated consolidated financial statements, are presented in accordance with IFRS. This MD&A is prepared as of May 29, 2012 and includes certain statements that may be deemed forward-looking statements. We direct readers to the sections entitled Risk Factors and Forward Looking Statements in this MD&A as well as the risk factors identified in the Company s Annual MD&A and Filing Statement filed under the Company s SEDAR profile. Highlights On April 16, 2012, the Company announced the Board s approval of a $5 million phased exploration budget for 2012 which includes: - A 5,000 metre ( m ) drill program on the Apankrah target with additional evaluation drilling to be undertaken on the Nana and Dansuom targets, - Ground geophysics over key structural and geological targets, - Mapping and sampling programs, and - New target evaluation of up to 5,000m On April 16, 2012, the Company announced the appointment of Clive Arthur as Vice-President, Exploration of Castle Peak. On January 20, 2012, the Company entered into an agreement with Euro Pacific Canada Inc. (the Agent ) to proceed with a private placement, under which the Company will offer for sale 12 million units ( Units ) at $0.25 per Unit for gross proceeds of up to $3.0 million (the Offering ). On March 16, 2012, the Company closed the first tranche ( First Tranche ) of the Offering representing 5,470,000 Units sold to Grizal Enterprises Ltd. ( Grizal ) for gross proceeds of $1,367,500. The closing of the final tranche representing 6,530,000 Units sold to Grizal is awaiting clearance of certain documentation from the TSX Venture Exchange ( TSX-V ). The Company announced on February 2, 2012 that it had entered into a memorandum of understanding ( MOU ) with Beijing Donia Resources Co., Ltd. ( Beijing Donia ) to provide the framework for a proposed agreement whereby Beijing Donia and its designated business partner, subsequently recognized as East China Mineral Exploration & Development Bureau ( East China Mining ), together (the Investors ) intend to make a strategic investment in Castle Peak by acquiring securities which would give the Investors a 30.5% equity interest in the Company on a fully-diluted basis for gross proceeds to the Company of approximately $5.5 million (the Investment ). Closing of the Investment is subject to completion of satisfactory due diligence, which is currently being performed, and receipt of all necessary regulatory approvals (including the approval of the TSX- V) and shareholder approval. The Investment was approved by the Company s shareholders at the Company s Annual General and Special Meeting of shareholders held on April 30,

3 Further information can be obtained from the Company s filings on the SEDAR website at Development of Business Castle Peak is a public, junior exploration company listed on the TSX-V with the symbol CAP-V. The Company s Akorade Project comprises a strategic land package in the prolific Ashanti Gold Belt in Ghana, West Africa adjacent to several producing gold mines. The Company is focused on the acquisition, exploration and evaluation of early stage, high potential gold properties. The Company s material properties are the Nkwanta, Asuogya and Ayiem concessions located within the Company s Akorade gold project. Castle Peak, formerly Critical Capital Corporation ( Critical ), was incorporated under the laws of British Columbia on June 3, 2009, as a capital pool company. On March 4, 2011, Critical completed a qualifying transaction by acquiring Castle Peak Mining (2006) Ltd. (formerly ). ( Castle Peak 2006 ), a company incorporated on September 13, 2006 under the laws of British Columbia, Canada. The acquisition was accomplished through an exchange of shares which resulted in the former shareholders of Castle Peak 2006 obtaining control of the Company. This transaction constituted Critical s qualifying transaction in accordance with the policies of the TSX-V. As a result of the share exchange, Castle Peak 2006 changed its name to Castle Peak Mining (2006) Ltd. and became Critical s wholly-owned subsidiary. Accordingly, the acquisition was considered a reverse takeover with Castle Peak 2006 being the acquirer of Critical, and the accompanying consolidated financial statements are a continuation of the financial statements of Castle Peak 2006 while the capital structure is that of the Company. Upon completion of the acquisition, Critical changed its name to Concurrent with closing the acquisition, the Company completed a private placement financing for gross proceeds of $8,000,000. The proceeds received from the financing enabled the Company to complete a Phase I exploration program during The Company commenced trading as on March 9, 2011 on the TSX-V, with the symbol CAP-V. 2

4 Intercorporate Relationships The following is a condensed chart which shows the Company s intercorporate relationships: CASTLE PEAK MINING LTD. (British Columbia) CASTLE PEAK MINING (2006) LTD. (British Columbia) 100% Canterbury Mining Company Limited (Ghana) 100% Windsor Mining Company Limited (Ghana) 100% Great Yorkshire Mining Company Limited (Ghana) 95% 95% Nkwanta Ayiem 90% 100% Bonsaso (10% beneficial interest) Dompem (2.5% NSR) 100% Great Yorkshire 95% 95% Asuogya Kedadwen (Essamang) 83% POW International Limited (Ghana) (Ghana) 100% 100% Enyinase (1) (2% NSR) POW (Dompim) 1 The Enyinase prospecting license is under option-assignment. Project review The Akorade Project consists of nine contiguous mineral concessions covering a total of approximately 225 square kilometres situated within the Ashanti Gold Best, southwest Ghana. The licenses are known as Nkwanta, Ayiem, Asuogya, POW, Kedadwen, Bonsaso, Dompem, Enyinase and Great Yorkshire (see Appendix 1). The Project is centrally located approximately 20 kilometres southwest of the city of Tarkwa and 40 kilometres north-northwest of the port city of Takoradi and lies immediately south and southwest of AngloGold Ashanti s Iduapriem mine. The properties are early stage exploration properties and host no known gold deposits or resources. 3

5 The Ashanti Belt in the region covered by the claim areas consists of Birimian-age metavolcanics and Tarkwanian metasediments. These are intruded by two, chemically distinct, granitic suites. Deformation of the metavolcanics and metasediments occurred during the Eburnean II orogeny, and occurred in five distinct phases. The metavolcanic rocks on the property host numerous shear zones and quartz vein systems associated with hydrothermal activity that occurred during emplacement of the granites. Gold mineralisation on the Akorade concessions has been observed as free gold in association with quartz veins, reefs and stockworks in the metavolcanics, and also in association with sulphides including pyrite, arsenopyrite, galena, pyrrhotite and sphalerite. The Company has completed an exploration program on the Akorade project including soil and stream sediment sampling, auger sampling and trenching. Additionally, a 3,425km project wide geophysical VTEM survey was completed in 2011 and the subsequent geological interpretation confirmed initial interpretations of controls and demonstrated that geochemical anomalies are structurally and geologically controlled. Specifically, flexures on the inferred north-south structures and cross structures on the Tarkwaian-Birimian boundary resemble similar controls for deposits currently being mined in the area. The initial target generation data was prioritized to focus drill targeting. During 2011, the Company initiated and completed the first ever drill program on this land package with a single core drill completing 6,814m on four initial drill ready targets on the Nkwanta (Apankrah and Nana targets), Asuogya-Ayiem (AA Veins target) and POW (Dansuom target) concessions (see Appendix 2). Results from drilling included: 20m of 3.1 grams/tonne ( g/t ) gold, including 2.8m of 17.4 g/t gold, at Apankrah target 3.0m of 1.9 g/t gold at Nana target 16.5m of 1.1 g/t gold at AA Veins target 10.8 of 2.9 g/t gold, including 3.6m of 8.0 g/t gold, at Dansuom target Further background on the drilling targets is as follows: Nkwanta The structures on the Nkwanta concession are located in the eastern half of the soil anomaly and are east-north-east ( ENE ) trending structures cutting metavolcanic rock units (basalt flows). Alteration envelopes vary from meter scale to centimeter scale and are composed of chlorite, carbonate, pyrite, arsenopyrite and silica. Increased gold grades are associated with increased silica, arsenopyrite and pyrite content. Additional structures between Nana and Apankrah have been identified in the field as potential link structures (Scorpio Vein) between the Apankrah and Nana structures. Apankrah Target: The Apankrah structural zone is found on the Nkwanta concession where intense artisanal activity has been observed immediately upslope of a 3,000m by 200m gold-in-soil anomaly located in a small valley. The artisanal workings include several shafts, pits, drifts and trenches as well as the tailings from the washing of alluvial material in the valley bottom. Historical grab samples on this structure returned values ranging from detection limit to 38.6 g/t gold. A VTEM/magnetics/radiometrics airborne geophysical survey was completed by Geotech Airborne over the Apankrah target on 100m line spacing. This information assisted in generating an inferred geology map of the target area. A total of eight holes were drilled on the Apankrah target in The first drill hole delivered high grade results, 7.5m of 7.2 g/t gold including 2.2m of 24.2 g/t gold. The additional holes targeting Apankrah returned anomalous gold in the targeted structural corridor. Approximately 500m of strike was evaluated; the structure remains open on strike and down dip. The final 2011 drill hole, NKDDH016, was a 100m step down plunge further evaluating the initial high grade intercept and returned 16m grading 3.3 g/t gold including 4.0m of 12.5 g/t gold. This indicates the presence of high grade shoots on ENE trending shear structures within the metavolcanic rock package. An additional 36m of sampling was completed on drill hole NKDDH016 in January 2012 and the previously mineralized interval was expanded from 16m of 3.3 g/t gold to 20m of 3.1 g/t gold. This high grade target is now 4

6 contained within an anomalous interval of 52m at 1.2 g/t gold (uncut). The anomalous interval is defined by grades above background (0.03 g/t gold) and may include small sub zones of up to 7m in length that grade less than background. The Company has completed an induced polarization orientation survey to be followed by a detailed ground magnetics survey in order to characterize our target zone; positive characterization will reduce drill risk on evaluating additional strike length and parallel structures. Additional drilling is planned to expand the zone and better understand its geometry. Using this information, combined with the detailed geophysical surveying, we believe we may target additional high grade shoots with fewer drill holes. Nana Target: The Nana structures are located on the Nkwanta concession approximately 500m north of and generally parallel to the Apankrah structures. The structures of interest are locally silicified and/or contain narrow, up to +1m wide, quartz veins hosting visible gold, arsenopyrite, pyrite and pyrrhotite with decimeter to meter scale carbonate + pyrite alteration haloes. The host rock is a series of mafic volcanic flows. A total of eight core holes were completed evaluating approximately 450m of strike and ~100m of elevation on 100m spaced drill fences in an area of abundant historical artisanal workings. Hole NKDDH012 returned 3.0m of 1.9 g/t gold, which is interpreted to be immediately adjacent to a high grade shoot similar the confirmed shoot on Apankrah. The Company performed mapping, sampling and line cutting in preparation for geophysical surveys and follow up drilling. An induced polarisation survey has been completed to be followed by a ground magnetics survey to evaluate for similar characteristics to the Apankrah shoot. Asuogya-Ayiem The Asuogya and Ayiem concessions host the Asuogya-Ayiem anomaly, the largest gold in soil anomaly in the project area at 9,500m by 1,000m. The Asuogya-Ayiem trend target is a northerly trending structure, now understood by geophysical surveys to be at least 20km in length within metasedimentary rocks (argillites and greywackes) and adjacent to the eastern contact with metavolcanic rocks. AA Veins Target: This initial target tested an approximate 500m portion of the extensive trend on which artisanal mining activity centres along a >100m area host to meter-scale quartz vein blocks appearing to represent two parallel veins. All drill holes intersected variably sheared metasedimentary rock units with those more carbonaceous sections host to increased quartz veining, presence of pyrite mineralization and increased gold grades. Intersections of wide sheared zones hosting anomalous gold values indicate that the structural corridor has the potential to host significant gold resources. Locating the metasediment metavolcanic contact and more importantly flexures on this contact, in this gold enriched structural corridor, is a priority for classifying high potential target locations for evaluation. Highlights of the drill holes include 16.5m of 1.1 g/t gold and 13.0m of 1.0 g/t gold. Additional results from on strike testing and down dip testing of the AA Veins target returned narrow intercepts of higher grades, 0.6m of 4.0 g/t gold, and longer intercepts of anomalous grades, 21.0m of 0.21 g/t gold, associated with carbonaceous, sheared metasedimentary rock units. POW The POW concession covers portions of two key trends: the north east trending southern Tarkwaian-Birimian boundary structural corridor and a regional north-south trending structural corridor within the Birimian volcanic sequence. Within both of these structural corridors intrusive units have been inferred from the property wide airborne geophysical data (VTEM, magnetics and radiometrics). The POW concession is located in a forest reserve which eliminates artisanal miners from entering and operating in the area and allowed the trenches to remain intact. 5

7 Limited grid based soil sampling was completed guided by anomalous stream sediment sampling. A forest road is currently being constructed to support exploration activities in the area. Dansuom Target: The Dansuom target is one of a number of soil anomalies located on the POW concession. It is a north-south, open 1,400m x 200m gold-in-soil anomaly defined by gold values >50 ppb which has been further identified by trenching to be controlled by a sheared contact between an intrusive granitoid unit and volcanosedimentary units. The Dansuom structure is a high potential area showing wide zones of quartz veining and silicification associated with elevated gold values. The structural trend appears to be a splay off of a larger (20km+) regional structure located east of the granitoid unit which extends southward becoming the Asuogya-Ayiem trend. To date, drilling has tested below a series of historical trenches with the geology and the assay results in the drill holes correlating well with those observed in the trenches. A total of seven holes were drilled on the Dansuom target in The initial drill holes targeted approximately 50m and 100m below historical trench #5, trench #4, and trench #6. Drilling on the Dansuom target beneath historical trench #5 (18.5m of 0.99 g/t gold), returned intercepts of 16.5m of 0.7 g/t gold including 6.9m of 1.2 g/t gold and 15.0m of 0.6 g/t gold including 4.5m of 1.6 g/t gold. A 200m step out south under trench #6 (3.4m of 4.3 g/t gold), returned 10.8m of 2.9 g/t gold including 3.6m of 8.0 g/t gold. The drill was demobilized in December 2011 due to road safety concerns which are currently being addressed. Additional target compilation and evaluation of this and the newly recognised larger target area are on-going. As part of the Phase 1 drill program and associated exploration work, the Company published NI technical reports on the Nkwanta, Ayiem and Asuogya concessions, however, these do not detail defined resource estimates. Q1 Exploration Update Based on the results of its 2011 exploration and drilling activities, the Company has embarked on a $5 million exploration program in 2012 which includes a Phase 2 drill program comprising 5,000m focusing on three targets: Apankrah, Nana and Dansuom. Drilling is scheduled to commence in late-may with an initial 2,000m follow-up on Apankrah. Other exploration work is underway including ground geophysics over key structural and geological targets, mapping and sampling programs. Additionally, the Company expects to undertake new target evaluation of up to 5,000m. The current geophysical program includes an approximate 32 kilometres ( km ) of IP surveys on a series of four target areas: Apankrah/Nana, Ayiem South, Ayiem North and the Asuogya-Ayiem trend. The first three of which are completed (approximately 22km), with preliminary results available for Apankrah/Nana. The results over the Apankrah and Nana targets indicate a coincident north-northeast ( NNE ) trending high chargeability and moderate resistivity anomaly in what has been considered to be the secondary control orientation for the high grade intercepts returned from our previous drilling (highlights noted above). Signatures over known ENE target structures indicate additional potential to the west on the Apankrah target and to the east on Nana target. These results confirm proposed follow up drilling to be initiated later in May 2012, as well as, identify additional exploration targets. A systematic program of channel or chip sampling of road cuts on all concessions has returned 342 samples to date. The results range from detection limit (0.01 g/t gold) to 4.4 g/t gold, of which 201 samples (approximately 59%) returned above our anomalous background of 0.03 g/t gold. Of interest are a series of thirty samples located between the Nana and Apankrah targets returning greater than 0.1 g/t gold. Additional work is required to determine if these samples are part of a halo around a new ENE trending target structure or if they are reflecting the presence of a NNE link or controlling structure. Additional channel and chip sampling is being completed on the Nkwanta concession, prior to additional samples being collected on the POW concession and expansion of the program to other concessions. Initial prospecting passes of sampling have been returned with values ranging from detection limit to 6.6 g/t gold. A total of 192 prospecting or 'grab' samples have been collected over the Great Yorkshire, Enyinase, Nkwanta and POW concessions to date. A total of 51 samples returned above our anomalous cut off (0.03 g/t gold), representing approximately 26% of the samples. Of note are: a small cluster of anomalous samples including 0.26 g/t gold within 6

8 our grid area covering the interpreted Birimian-Tarwaian structural corridor on the Great Yorkshire concession; samples of exposed veins adjacent to our drilled area at the Dansuom target returning up to 2.5 g/t gold; and samples up to 6.5 g/t gold on artisanal mining extensions to the Nana target. The Great Yorkshire concession has been an area of interest since acquiring the reconnaissance license last fall. The concession is located on the prospective Birimian-Tarkwaian boundary which is a structural control for deposits currently being mined by neighbouring companies. The magnetics survey will be expanded to include a 2.5km x 2.0km grid, located in an area of inferred structural complication on the Birimian-Tarkwaian structural corridor. Once established, this grid will be used as a basis for soil sampling, mapping and additional prospecting. Review by Qualified Person Technical information about the Company s mineral properties contained in this MD&A has been prepared by Darren Lindsay, P.Geo., Castle Peak's President and CEO, who serves as a Qualified Person under the definition in National Instrument (NI ) which outlines standards of disclosure for mineral projects. Further information about the Company s material mineral properties is available in the compliant technical report entitled NI Technical Evaluation Report on Nkwanta & Ayiem Concessions dated February 14, 2011 and prepared by Alain-Jean Beauregard, P.Geo. and Daniel Gaudreault, P.Eng., P.Geo. of Geologica Groupe-Conseil Inc., and in the NI compliant technical report dated January 2, 2012 and entitled NI Technical Report on the Asuogya License, Ghana authored by Gareth O Donavan, Corporate Exploration Consultant, of SRK, copies of which are filed under the Company s profile on SEDAR at The Akorade project is an early stage exploration project and does not contain any mineral resources as defined by NI The potential quantities and grades disclosed herein are conceptual in nature and there has been insufficient exploration to define a mineral resource for the targets disclosed herein. It is uncertain if further exploration will result in these targets being delineated as a mineral resource. Exploration and Evaluation Assets Expenditures - for the three months ended March 31, 2012 Total capitalized exploration and evaluation assets were $9,983,214 as at March 31, 2012 (December 31, 2011: $9,734,951). During the three months ended March 31, 2012, exploration and evaluation assets expenditures totaled $248,263 compared to $584,142 for the three months ended March 31, 2011, lower mainly due to $231,038 paid for the airborne geophysical survey during the three months ended March 31, 2011 (March 31, 2012: $Nil). A summary of expenditures is as follows: Land acquisition costs $ 59,949 Field logistics 53,238 Exploration salaries and wages 73,905 Geophysics - Geochemistry 37,508 Environmental, permitting and other 58,427 Exploration management and consulting services 26,446 General and administrative 77,074 Translation adjustment (138,284) $ 248,263 Land acquisition costs were $59,949 for the three months ended March 31, 2012 compared to $140,772 for the three months ended March 31, 2011 and included additional consideration paid to the vendor as per the assignment agreements for the Ayiem and Kedadwen concessions with a final payment of US$60,000 due in January The Company incurred $53,238 in field logistics for the three months ended March 31, 2012 compared to $24,894 for the three months ended March 31, 2011 which included expenditures for supplies, food, accommodation and 7

9 transportation costs related to the Akorade project. Environmental, permitting and other costs totaled $58,427 for the three months ended March 31, 2012 compared to $6,249 for the three months ended March 31, 2011 and represents payments for the renewal of the Dompem and POW licenses, and the renewal of the prospecting permits for the Company s nine concessions. The exploration management and consulting services totaled $26,446 for the three months ended March 31, 2012 which was in line with $24,326 incurred for the three months ended March 31, 2011 and included amounts paid to SRK Exploration Ltd. ( SRK ) for completion of the Asuogya NI technical report. General and administrative expenses (G&A) of $77,074 for the three months ended March 31, 2012 were primarily related to costs associated with the Company s office and operations in Ghana. Total G&A was $53,750 lower for the three months ended March 31, 2012 compared to the three months ended March 31, 2011 due to lower consulting fees, travel costs and legal fees. Outlook The Company s plan is to continue to consolidate its highly prospective land position in the southern Ashanti Belt, and to aggressively explore and evaluate for new significant gold resources within its strategically located land package. In 2011, the Company completed its initial Phase I drill program evaluating four potential resource targets with a single core drill completing 6,814m of drilling on initial drill ready targets on Nkwanta (Apankrah and Nana targets), Asuogya-Ayiem (AA Veins target), and POW (Dansuom target). The Company intends to complete a further 2,000m of follow-up drilling at the Apankrah target with a further 3,000m of drilling on the Apankrah, Nana and Dansuom target areas. Additionally, a regional target generation, prioritization and drill evaluation program will also be undertaken totaling up to 5,000m. As part of the new target generation program, ground based geophysical surveys to complement the existing comprehensive geological database are being completed. Selected Annual Financial Data For the Years Ended December 31, December 31, December 31, Expenses for the period $ $ $ 2,434,277 $ 366,525 $ 213,648 Revenue for the period - Net loss for the period (2,531,398) (317,921) (203,287) Net loss per share (0.06) (0.02) (0.01) Exploration expenditures 6,420, , ,237 Total assets 10,446,514 3,481,412 2,893,816 Capitalized exploration costs 9,734,951 3,314,149 2,842,638 Total liabilities 99, ,733 1,019,235 1 Reported using International Financial Reporting Standards ( IFRS ) 2 Reported using Canadian generally accepted accounting standards, except for total assets, capitalized exploration costs, and total liabilities, which are reported using IFRS. 8

10 Summary of Quarterly Results Quarterly Information For the Three Months Ended 1 March 31, 2012 December 31, September June 30, March 31, December 31, September June 30, , , Revenue for the period $ - $ - $ - $ - $ - $ - $ - $ - Expenses for the period 346, , , , , ,694 59,730 81,900 Net loss for the period 335,810 (581,164) (596,487) (665,248) (688,499) (168,888) (64,299) (33,533) Net loss per share (0.01) (0.01) (0.01) (0.01) (0.03) (0.01) (0.00) (0.00) Exploration expenditures 248,243 1,076,671 1,924,976 2,835, , ,349 66,753 95,697 Total assets 11,261,242 10,446,514 11,244,624 9,818,877 10,241,816 3,481,412 3,132,488 3,044,060 Capitalized exploration costs 9,983,214 9,734,951 8,658,280 6,733,304 3,898,291 3,314,149 3,057,800 2,991,047 Total liabilities 191,294 99, , , , , , ,194 1 These amounts have been adjusted due to the adoption of IFRS as explained in Note 17 to the Company s December, 2011 financial statements. The Company is in the business of exploration and evaluating assets in Ghana, Africa and as a result has no revenues. Expenses consist of general corporate administrative costs not attributable to the exploration activities. All costs that are attributable to exploration activities are capitalized to the mineral concessions to which they relate. During the three month period ended March 31, 2012, the Company evaluated the results of the 2011 drill program and planned its 2012 exploration program which include additional exploration activities to provide greater confidence in follow-up drilling and new target generation. Drilling is expected to commence later in May With the absence of drilling activities during the three months ended March 31, 2012, exploration expenditures were lower compared to all previous quarters in Expenses for the three month period ended March 31, 2012 totaled $346,992 excluding share-based compensation of $18,679, which was in line with previous quarters excluding share-based compensation amounts. Total assets for the quarter ended March 31, 2012 were higher than previous quarters, reflecting the closing of a private placement financing for gross proceeds of $1,367,500 on March 16, Total liabilities of $191,294 at March 31, 2012 were higher than at December 31, 2011 due to accrued professional fees related to the private placement; and lower than previous quarters of 2011 due to no drilling activity and lower expenditures during the three months ended March 31, Results of Operations Three months ended March 31, 2012 compared to the three months ended March 31, 2011 The Company incurred a net loss of $335,810 for the three months ended March 31, 2012 compared to a net loss of $688,499 for the three months ended March 31, Total expenses for the three months ended March 31, 2012 were $346,992 compared to $691,923 for the three months ended March 31, 2011, lower primarily due to lower share-based compensation expense. Expenses for the three months ended March 31, 2012 included $155,322 in salaries and benefits for Vancouver employees, higher than $98,151 for the same period last year as new employees were hired during Professional fees for the three months ended March 31, 2012 were $33,488 compared to $37,411 for the three months ended March 31, 2011, mainly including legal and accounting costs. Additionally, for the three months ended March 31, 2012, the Company incurred $32,484 for office and administrative expenses which was in line with $37,897 incurred for the three months ended March 31, The Company paid $36,370 in rent for the three 9

11 months ended March 31, 2012 compared to $9,900 for the same period in the prior year as the Vancouver office of Castle Peak was relocated to its current Vancouver office premises in May Other expenses for the three months ended March 31, 2012 included $27,955 for investor relations and $25,929 for travel compared to $18,041 and $9,283, respectively, for the three months ended March 31, 2011, higher due to the increased activity since the Company became listed on the TSX-V on March 9, The Company recorded $18,679 in share-based compensation for the three months ended March 31, 2012 compared to $442,584 for the same period in the prior year, lower as no stock options were granted for the three months ended March 31, 2012 compared to 3,350,000 stock options granted during the three months ended March 31, The Company incurred a foreign exchange gain of $10,951 for the three months ended March 31, 2012 compared to a foreign exchange gain of $Nil for the three months ended March 31, 2011 mainly due to the translation of a loan receivable denominated in Euros. Interest income for the three months ended March 31, 2012 was $231 compared to $3,424 for the three months ended March 31, 2011, lower due to lower cash balances on hand. Liquidity and Capital Resources As at March 31, 2012, the Company had cash and cash equivalents of $905,443 compared to $232,528 as at December 31, The funds were held in accounts at a major Canadian Chartered bank and short-term money market instruments with maturities not exceeding 90 days. The Company had a working capital surplus of $981,136 as at March 31, 2012 compared to a working capital surplus of $502,066 as at December 31, The increase in working capital is mainly due to the closing of the $1,367,500 private placement. On January 20, 2012, the Company entered into an agreement with Euro Pacific Canada Inc. (the Agent ) to proceed with a private placement, under which the Company offered for sale 12 million units ( Units ) at $0.25 per Unit for gross proceeds of up to $3.0 million (the Offering ). Each Unit consists of one common share of the Company and one-half of one common share purchase warrant (each whole warrant, a Warrant ). Each Warrant allows the holder to purchase one common share of the Company at an exercise price of $0.50 for a period of 24 months from the date of closing, subject to adjustment and/or acceleration in certain stated events. On March 16, 2012, the Company closed the First Tranche of the Offering representing 5,470,000 Units sold to Grizal for gross proceeds of $1,367,500. The 2,735,000 warrants issued in connection with the First Tranche were valued at $159,188.The final tranche representing 6,530,000 Units to be sold to Grizal for gross proceeds of $1,632,500 will close upon receipt of clearance from the TSX-V. The Company agreed to pay a cash commission to the Agent equal to 3.5% of the total gross proceeds, with $47,863 paid in connection with the closing of the First Tranche. Castle Peak also agreed to issue non-transferable agent warrants with an exercise price of $0.25 per share exercisable for a period of 12 months from the date of closing to acquire such number of common shares as is equal to 7% of the aggregate number of Units issued under the Offering to the Agent and its permitted assigns, with 382,900 agent warrants issued in connection with the closing of the First Tranche with a value of $29,825. The 382,900 agent warrants are exercisable into one common share of the Company at a price of $0.25 until March 16, Additionally, miscellaneous cash issuance costs related to the First Tranche totaled $21,648. The Company had cash expenditures of $362,005 on exploration and evaluation assets, $Nil on property and equipment purchases, and used $144,529 on operating activities during the three month period ended March 31, Receivables decreased by $103,091 reflecting the reversal of value added tax ( VAT ) receivable in Ghana to exploration and evaluation assets. During the three months ended March 31, 2012, it was determined by management that the collectability of the VAT receivable is uncertain as VAT will only be recovered by the Company when its starts production and export supplies. Since the Company is an early stage exploration company, the future 10

12 recoverability of the VAT is uncertain. Accounts payable and accrued liabilities increased by $70,154 largely due to amounts payable for professional fees associated with the private placement. Contractual Obligations As at March 31, 2012, the Company had the following contractual obligations under operating leases for office premises through 2014 in the total amount of approximately $368,626. Annual payments are as follows: 2012 $ 106, , ,351 Total $ 368,626 Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements. Proposed Transactions On February 2, 2012, the Company entered into the MOU with the Investors in respect of the Investment. Under the terms of the proposed Investment, the Investors may purchase up to 22 million units ( Units ) on a private placement basis at $0.25 per Unit. Each Unit will consist of one common share of the Company and one-half of one share purchase warrant (each whole warrant, a Warrant ). Each Warrant will allow the holder to purchase one common share of the Company at an exercise price of $0.50 for a period of 24 months from the date of closing. The MOU contemplates that the proposed subscription agreement would include a right for the Investors to nominate two individuals to be appointed to the board of directors of Castle Peak, a pre-emptive right to participate in any future equity financings of Castle Peak, subject to certain exceptions, and a pre-emptive right to provide contract geological, geophysical, drilling and other technical services to Castle Peak at its Akorade project in Ghana, if applicable. The MOU is subject to the Investors completing satisfactory due diligence, which is currently being performed, and the Investors and the Company obtaining receipt of all necessary government and regulatory approvals (including the approval of the TSX Venture Exchange) and shareholder approvals. The Investment was approved by the Company s shareholders at the Company s Annual General and Special Meeting of shareholders held on April 30, The Investment is expected to increase the Company s cash and cash equivalents balance by approximately $5.5 million and enable the Company to continue with its planned exploration activities into Related Party Transactions The Company s related parties consist of directors and officers, senior management, members of the Advisory Committee, companies owned by directors and consultants: Related Party Position Nature of Transactions Brian Lock Chairman of the Board Share-based compensation, loans Randy Smallwood Director Share-based compensation, loans Peter Hawley Director and former CEO Share-based compensation Randal Gindi Director and Founder Share-based compensation, loans Darryl Cardey Director Share-based compensation, loans 11

13 Darren Lindsay President and CEO, Director Salaries, share-based compensation, loans Paula Rogers Chief Financial Officer Salaries, share-based compensation, loans Clive Arthur VP Exploration Share-based compensation Marlo Hamer-Jackson Investor Relations Manager Salaries, share-based compensation Henry Sowah Exploration Manager Salaries, share-based compensation Andrew Smith Advisory Committee Member Share-based compensation David Groves Advisory Committee Member Share-based compensation, stipend David Smalley Assistant Corporate Secretary Share-based compensation, loans Brigill Investments Ltd. Company owned by Brian Lock Loans Fraser & Company LLP Law firm of which David Smalley is a partner Legal fees March 31, 2012 March 31, 2011 Consulting fees paid to a former director of the Company capitalized to exploration and evaluation assets $ - $ 21,894 Consulting fees paid to a member of the Company s Advisory Committee 3,163 - Professional fees accrued to a law firm of which one partner is a former director of the Company - 8,360 Salaries and benefits paid to officers and senior management 75,232 98,151 Share-based compensation to directors, officers, employees and consultants 18, ,584 a) The Company paid $3,163 for the three month period ended March 31, 2012 (March 31, 2011: $Nil) to Orebusters Pty Ltd., principal David Groves, a member of the Company s Advisory Committee for the retention of David Groves as technical advisor. b) Professional fees of $Nil were accrued for the three month period ended March 31, 2012 (March 31, 2011: $8,360) to Fraser and Company LLP, a law firm in which David Smalley, Assistant Corporate Secretary of Castle Peak, is a partner of. c) Salaries totaling $75,232 were paid to the officers and senior management of the Company for the three month period ended March 31, 2012 (March 31, 2011: $98,151). d) No new stock options were issued during the three months ended March 31, 2012 (March 31, 2011: 3,350,000). As at March 31, 2012, $17,498 (December 31, 2011: $17,633) was due to various directors, officers and advisors of the Company. The amounts due to related parties are non-interest bearing, with no fixed terms of the repayment. Critical Accounting Estimates Significant areas requiring the use of management estimates relate to going concern assessments, the future tax rates used to determine future income taxes and the recognition of deferred tax assets. The fair values of financial instruments and share based payments also require estimates. Where estimates have been used financial results as determined by actual events could differ from those estimates. Significant assumptions about the future and other sources of estimation uncertainty that management has made at the end of the reporting period, that could result in a material adjustment to the carrying amounts of assets and liabilities in the event that actual results differ from assumptions made, relate to, but are not limited to, the following: 12

14 i) The recoverability of receivables and prepayments that are included in the consolidated statement of financial position. ii) iii) iv) The carrying value and the recoverability of exploration and evaluation assets, which are included in the consolidated statement of financial position. Estimates used in the calculation of share-based payments. The estimated useful lives of equipment which are included in the consolidated statement of financial position and the related depreciation included in the consolidated statement of comprehensive loss. v) The recognition of deferred tax assets Significant accounting policies For a complete summary of the Company s significant accounting policies, see Note 3 to the audited financial statements for the year ended December 31, New accounting pronouncements In November 2009 and October 2010, the IASB issued IFRS 9, Financial Instruments ( IFRS 9 ), which represents the completion of the first part of a three-part project to replace IAS 39, Financial Instruments: Recognition and Measurement, with a new standard. Per the new standard, an entity choosing to measure a liability at fair value will present the portion of the change in its fair value due to changes in the entity s own credit risk in the other comprehensive income or loss section of the entity s statement of comprehensive loss, rather than within profit or loss. Additionally, IFRS 9 includes revised guidance related to the derecognition of financial instruments. IFRS 9 applies to financial statements for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company currently is evaluating any impact that this new guidance may have on the Company s consolidated financial statements. In May 2011, the IASB issued IFRS 10, Consolidated Financial Statements ( IFRS 10 ), which builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of a parent company. IFRS 10 also provides additional guidance to assist in the determination of control where this is difficult to assess. IFRS 10 applies to financial statements for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company currently is evaluating any impact that this new guidance may have on the Company s consolidated financial statements. In May 2011, the IASB issued IFRS 11, Joint Arrangements ( IFRS 11 ), which enhances accounting for joint arrangements, particularly by focusing on the rights and obligations of the arrangement, rather than the arrangement s legal form. IFRS 11 also addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interests in jointly controlled entities and prohibits proportionate consolidation. IFRS 11 applies to financial statements for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company currently is evaluating any impact that this new guidance may have on the Company s consolidated financial statements. In May 2011, the IASB issued IFRS 12, Disclosure of Interests in Other Entities ( IFRS 12 ), which is a comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off-balance sheet vehicles. IFRS 12 applies to financial statements for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company currently is evaluating any impact that this new guidance may have on the Company s consolidated financial statements. In May 2011, the IASB issued IFRS 13, Fair Value Measurement ( IFRS 13 ), which defines fair value, set out in a single IFRS framework for measuring fair value and requires disclosures about fair value measurements. IFRS 13 13

15 does not determine when an asset, a liability or an entity s own equity instrument is measured at fair value. Rather, the measurement and disclosure requirements of IFRS 13 apply when another IFRS requires or permits the item to be measured at fair value (with limited exceptions). IFRS 13 applies to financial statements for annual periods beginning on or after January 1, 2013, with early adoption permitted. The Company currently is evaluating any impact that this new guidance may have on the Company s consolidated financial statements. In June 2011, the IASB amended IAS 1, Presentation of Financial Statements ( IAS 1 ), to change the disclosure of items presented in other comprehensive income into two groups, based on whether those items may be recycled to profit or loss in the future. The amendments to IAS 1 apply to financial statements for annual periods beginning after July 1, 2012, with early adoption permitted. The Company currently is evaluating any impact that this new guidance may have on the Company s consolidated financial statements. Financial Instruments and Other Instruments The fair value of the Company s receivables, deposits, loans receivables, accounts payable and accrued liabilities, loan payables and due to related parties approximate carrying value which is the amount recorded on the consolidated statement of financial position. The Company s other financial instrument, cash and cash equivalents, under the fair value hierarchy is measured at fair value based on level one quoted prices in active markets for identical assets and liabilities. The Company s risk exposures and the impact on the Company s financial instruments are summarized below: Credit risk Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financial loss. The Company s credit risk is primarily attributable to cash. Cash is held with highly rated financial institutions and management believes the risk of loss to be remote. The Company has no significant concentration of credit risk arising from operations. Receivables consist of input tax credits receivable from the Government of Canada. The Company does not believe it is subject to significant credit risk in relation to its receivables. Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company s objective in managing liquidity risk is to maintain sufficient readily available reserves in order to meet its liquidity requirements at any point in time. As at March 31, 2012, the Company had cash and cash equivalents of $905,443 (December 31, $232,528) and current liabilities of $191,294 as at March 31, 2012 (December 31, $99,005). The Company has historically relied on equity financings and loans from related parties to satisfy its capital requirements. There can be no assurance the Company will be able to obtain the required financing in the future on acceptable terms. The ability of the Company to arrange additional financing in the future will depend, in part, on the prevailing market conditions. Market risk Market risk is the risk of loss that may arise from changes in market factors such as interest rates, foreign exchange rates, and commodity and equity prices. a) Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of the Company s financial instruments will fluctuate due to changes in market interest rates. The Company is exposed to interest rate risk on its cash balances 14

16 which earn interest at variable market interest rates, however, this exposure is considered to be minimal. The Company has no interest-bearing debt and, therefore, is not exposed to risk in the event of interest rate fluctuations. b) Currency risk The Company is exposed to the financial risk related to the fluctuation of foreign exchange rates. The Company s expenditures are predominantly in Canadian dollars, US dollars, Euros, and Ghanaian cedis and the Company has financial assets and liabilities denominated in foreign currencies. Based on the Company s net exposure as at March 31, 2012, a 10% depreciation or appreciation of the Canadian dollar against the US dollar, Ghanaian cedis and Euro would result in a change of $6,990 in accumulated other comprehensive income and $17,194 in net income. c) 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 closely monitors commodity prices of gold, individual equity movements and the stock market to determine the appropriate course of action to be taken by the Company. Risk Factors An investment in the Company is speculative and involves a high degree of risk due to the nature of the Company s business and the present stage of exploration and development of its mineral properties. The following risk factors, those risk factors set out in the Company s Filing Statement dated February 29, 2011, as well as risks not currently known to the Company, could materially adversely affect the Company s future business, operations and financial condition and could cause them to differ materially from the estimates described in forward-looking statements contained herein. Early Stage Status and Nature of Exploration The terms Resource(s) or Reserve(s) cannot be used to describe the Akorade Project due to the early stage of exploration at this time. Any reference to potential quantities and/or grade is conceptual in nature, as there has been insufficient exploration to define any mineral resource and it is uncertain if further exploration will result in the determination of any mineral resource. Quantities and/or grade described by the Company should not be interpreted as assurances of a potential resource or reserve, or of potential future mine life or of the profitability of future operations. Few properties that are explored are ultimately developed into producing mines. Substantial expenditures are required to establish ore reserves through drilling, to develop metallurgical processes to extract the metal from the ore and in the case of new properties, to develop the mining and processing facilities and infrastructure at any site chosen for mining. The economics of exploring and developing mineral properties is affected by many factors including the cost of operations, variations in the grade of ore mined, fluctuations in metal markets, costs of mining and processing equipment and such other factors as governmental regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection. No assurance can be given that any particular level of recovery of minerals will be realized or that any potential quantities and/or grade will ever qualify as a resource, or that any such resource will ever qualify as a commercially mineable (or viable) deposit which can be legally and economically exploited. Where expenditures on a property have not led to the discovery of mineral reserves, incurred expenditures will generally not be recoverable. 15

17 Mineralization Figures are Estimates based on Interpretation and Assumptions The mineralization figures presented by the Company are based upon estimates made by qualified persons. These estimates are imprecise and depend upon interpretation of geologic formations, grade and metallurgical characteristics, and upon statistical inferences drawn from drilling and sampling analysis, any or all of which may prove unreliable. Estimates can also be affected by such factors as environmental permitting regulations and requirements, weather, environmental factors, unforeseen technical difficulties, unusual or unexpected geological formations and work interruptions. There can be no assurance that the estimates made by qualified persons upon which the Company s mineralization figures are based will be accurate or that this mineralization could be mined or processed profitably. History of Losses and Expectation of Future Losses The Company has incurred losses and may continue to incur losses for the foreseeable future. Further exploration and development of the Akorade Project will require the commitment of substantial financial resources. It may be several years before Castle Peak will generate any revenues from operations, if at all. There can be no assurance that the Company will realize revenue or achieve profitability. Competition for Employees and Good Employee Relations We depend on our workforce in Ghana to explore for mineral reserves and resources and to develop our projects. We recruit and train the necessary manpower for our operations from the local community near the Akorade Project and from the capital, Accra. Castle Peak faces competition for skilled labour from other mining companies operating in the same area and there is no assurance that suitable labour requirements will be maintained. We work hard at maintaining good relations with our workforce to minimize the possibility of disputes and other stoppages at our work sites. A prolonged labour disruption could have a material and adverse effect on our overall operations. Influence of Third Party Stakeholders Some of the land in which Castle Peak holds an interest, or the exploration equipment and roads or other means of access which Castle Peak intends to utilize in carrying out its work programs or general business mandates, may be subject to interests or claims by third party individuals, groups or companies. If such third parties assert any claims, Castle Peak s work programs may be delayed even if such claims are without merit. Such delays may result in significant financial loss and loss of opportunity for Castle Peak. Price and Volatility of Public Stock The market price of securities of Castle Peak has experienced wide fluctuations which may not necessarily be related to the financial condition, operating performance, underlying asset values or prospects of Castle Peak. Securities of micro-cap and small-cap companies have experienced substantial volatility in the past, often based on factors unrelated to the financial performance or prospects of the companies involved. These factors include macroeconomic developments in North America and globally and market perceptions of the attractiveness of particular industries. The price of the common shares is also likely to be significantly affected by short term changes in gold, copper or other mineral prices. Other factors unrelated to the Company s performance that may have an effect on the price of common shares include: (a) the extent of analytical coverage available to investors concerning the Company s business may be limited if investment banks with research capabilities do not follow the Company s common shares; (b) lessening in trading volume and general market interest in the Company s common shares may affect an investor s ability to trade significant numbers of common shares; (c) the size of the Company s public float may limit the ability of some institutions to invest in the Company s common shares; and (iv) a substantial decline in the price of the common shares that persists for a significant period of time could cause the Company s common shares to be delisted from the TSX Venture Exchange or from any other exchange upon which the Company s common shares 16

18 may trade from time to time, further reducing market liquidity. As a result of any of these factors, the market price of the common shares at any given point in time may not accurately reflect the Company s long term value. Current Arrangements, if Completed, Will Result in Major Shareholders with Control Block Positions The Company s current financing arrangements with Grizal Enterprises Ltd., Beijing Donia Resources Co., Ltd. and East China Mining, if completed, will result in three major shareholders holding, collectively, 40.8% of the voting securities of the Company on an undiluted basis. As a result, these major shareholders may have the ability to influence the outcome of matters submitted to the Castle Peak shareholders for approval, which could include the election and removal of directors, amendments to Castle Peak s corporate governance documents and potential business combinations. Castle Peak s interests and those of its major shareholders may at times conflict, and this conflict might be resolved against Castle Peak s interests. Future Sales of Common Shares by Existing Shareholders Sales of a large number of common shares in the public markets, or the potential for such sales, could decrease the trading price of the common shares and could impair the Company s ability to raise capital through future sales of common shares. In particular, if any of the Company s major shareholders decide to liquidate all or a significant portion of its position, it could adversely affect the price of the common shares. Dilution to Common Shares There are currently 54,743,165 common shares issued and outstanding and 9,213,411 securities convertible into common shares. In addition, if the Company s current proposed financing arrangements are completed, an additional 28,530,000 common shares and 14,707,100 securities convertible into common shares will be issued. Further, in connection with those proposed financing arrangements, certain entities will be granted pre-emptive rights to participate in future equity offerings under certain circumstances. The increase in the number of common shares issued and outstanding through future issuances may have a depressive effect on the price of the common shares and will dilute the voting power of the Company s existing shareholders. Internal Controls Internal controls over financial reporting are procedures designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. A control system, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance with respect to the reliability of financial reporting and financial statement preparation. Castle Peak has undertaken to put into place a system of internal controls appropriate for its size, and reflective of its operations. The Company s certifying officers have assessed internal control over financial reporting to be effective as at March 31, Dividend Policy No dividends on common shares have been paid by the Company to date. Payment of any future dividends will be at the discretion of the Company s board of directors after taking into account many factors, including the Company s operating results, financial condition and current and anticipated cash needs. At this time, the Company has no source of cash flow and anticipates using all available cash resources towards its stated business objectives. 17

19 Outstanding Share Information Common shares, stock options and warrants issued and outstanding as at March 31, 2012 are described in detail in Note 10 to the unaudited condensed consolidated financial statements for the three month period ended March 31, Summarized balances as at March 31, 2012 and May 29, 2012 are as follows: Common shares outstanding 54,743,165 Stock options 4,240,000 Share purchase warrants 4,973,411 Fully-diluted 63,956,576 Forward Looking Statements This MD&A contains forward looking information within the meaning of applicable Canadian securities legislation. Forward looking information may include, but is not limited to, information with respect to our planned exploration and evaluation activities, costs and timing of future exploration, results of future exploration and drilling, timing and receipt of approvals, consents and permits under applicable legislation, our executive compensation approach and practice, the composition of our board of directors and committees, and adequacy of financial resources. Wherever possible, words such as plans, expects or does not expect, budget, scheduled, estimates, forecasts, anticipate or does not anticipate, believe, intend and similar expressions or statements that certain actions, events or results may, could, would, might or will be taken, occur or be achieved, have been used to identify forward looking information. Forward looking information is subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward looking information, including, without limitation: risks related to commodity price fluctuations, including gold price volatility; risks related to the exploration and evaluation of our mineral property; risks related to the fact that we are a new company with no mineral properties in production or development and no history of production or revenue; uncertainties related to title to our mineral properties and surface rights; risks and uncertainties relating to the interpretation of drill results and the geology, grade and continuity of our mineral deposits; risks related to governmental regulations, including environmental regulations; increased costs and restrictions on operations due to compliance with environmental laws and regulations; increased costs affecting the mining industry; increased competition in the mining industry for properties, qualified personnel and management; risks related to some of our directors and officers involvement with other natural resource companies; risks related to the delay in obtaining or failure to obtain required permits, or non-compliance with permits that have been obtained; risks related to our ability to obtain adequate financing for our planned exploration and evaluation activities and to complete further exploration programs; risks related to general economic conditions; 18

20 recent market events and conditions; and currency fluctuations. This list is not exhaustive of the factors that may affect any of our forward-looking information. Although we have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Forward-looking information involves statements about the future and is inherently uncertain, and our actual achievements or other future events or conditions may differ materially from those reflected in the forward-looking information due to a variety of risks, uncertainties and other factors, including, without limitation, those referred to in the filing statement dated May 29, 2012 filed on the SEDAR website at Our forward-looking information is based on the beliefs, expectations and opinions of management on the date the statements are made and we do not assume any obligation to update forward looking information, whether as a result of new information, future events or otherwise, other than as required by applicable law. For the reasons set forth above, prospective investors should not place undue reliance on forward looking information. APPROVAL Management is responsible for all information disclosed in the financial statements. The Board of Directors of Castle Peak Mining Ltd. has approved the disclosures contained in this MD&A. 19

21 APPENDIX 1

22 APPENDIX 2