Alberta Star Development 20-F 2009 FY Annual report (foreign)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

FORM 20-F

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended November 30, 2009
OR
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ______
OR
o	SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report:

Commission file number: 0-31172

ALBERTA STAR DEVELOPMENT CORP.

 (Exact name of Registrant as specified in its charter)

Province of Alberta, Canada

(Jurisdiction of incorporation or organization)

506 – 675 West Hastings Street, Vancouver, British Columbia V6B 1N2 Canada

(Address of principal executive offices)

Tim Coupland, President and CEO
Alberta Star Development Corp.
506 – 675 West Hastings Street

Vancouver, British Columbia V6B 1N2 Canada

Tel: (604) 681-3131

Facsimile: (604) 408-3884

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

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

Securities registered pursuant to Section 12(g) of the Act:  

Common Shares, no par value

(Title of Class)

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

Indicate the number of outstanding shares of each of the Registrant’s classes of capital or common stock as of the close of the period covered by the annual report:  21,403,979 common shares as at November 30, 2009

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. YesoNox

If this report is an annual or transition report, indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. YesoNox

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every  Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the

preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes oNo o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one)

Large accelerated filer  o  Accelerated filer  oNon-accelerated filer  x

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  o

International Reporting Standards as issued  

o

Other  x

by the International Accounting Standards Board

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  x  Item 18  o

If this is an annual report, indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   YesoNox

TABLE OF CONTENTS

ITEM 4 – INFORMATION ON THE COMPANY

1

CAUTIONARY NOTE TO U.S. INVESTORS REGARDING RESOURCE AND RESERVE ESTIMATES

This Annual Report on Form 20-F has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws.  The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms as defined in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) -CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended. These definitions differ from the definitions in United States Securities and Exchange Commission (“SEC”) Industry Guide 7 under the United States Securities Act of 1993, as amended (the “Securities Act”).  Under SEC Industry Guide 7 standards, a “final” or  7;bankable” feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority.

In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC.  Investors are cautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves.  “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable.  Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute “reserves” by SEC Industry Guide 7 standards as in place tonnage and grade without reference to unit measures.

Accordingly, information contained in this Annual Report on Form 20-F and the documents incorporated by reference herein contain descriptions of our mineral deposits that may not be comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.

GLOSSARY OF MINING TERMS

The following are abbreviations and definitions of terms commonly used in the mining industry and this Annual Report on Form 20-F:

Aeromagnetic survey	A geophysical survey using a magnetometer aboard, or towed behind, an aircraft.
Ag	The chemical symbol for silver.
Au	The chemical symbol for gold.
Andesite	Fine-grain generally volcanic rock composed of feldspar, hornblende and other minor minerals.
Anomaly	Any departure from the norm which may indicate the presence of mineralization in the underlying bedrock.
Anorthosite	Light grey to almost black rock, composed chiefly of calcium feldspar.
Aphebian	Period of time in the Earth’s history between 2.5 and 1.8 billion years ago.
Archean	Period of time in the Earth’s history between 3.8 and 2.5 billion years ago.
Assay	A chemical test performed on a sample of ores or core to determine the amount of valuable metals contained.
Assessment Work	The amount of work, specified by mining law, that must be performed each year in order to retain legal control of mining claims.
Audio-Magnetotellurics (AMT)	An geophysical method that measures the Earth’s varying electric and magnetic fields.
Basin	A round or oval depression in the Earth's surface, containing the youngest section of rock in its lowest, central part.
Batholith	A large mass of igneous rock extending to great depth with its upper portion dome-like in shape. Similar, smaller masses of igneous rocks are known as bosses or plugs.
Breccia	A rock in which angular fragments are surrounded by a mass of fine-grained minerals.
Chalcopyrite	A sulphide mineral of copper and iron; the most important ore mineral of copper.
Channel Sample	A sample composed of pieces of vein or mineral deposit that have been cut out of a small trench or channel, usually about 10 cm wide and 2 cm deep.
Chip Sample	A method of sampling a rock exposure whereby a regular series of small chips of rock is broken off along a line across the face.
Claim	Holder usually has the right to carry out mineral exploration and apply to mine on the located area.
Cretaceous	The third and latest of the periods in the Mesozoic Era.
Diamond Drill	A rotary type of rock drill that cuts a core of rock that is recovered in long cylindrical sections, 2 cm or more in diameter.
Dickite	Dickite is a polymorphic alumino-silicate clay that is formed from hydrothermal environments.
Diorite	An intrusive igneous rock composed chiefly of plagioclase, hornblende, biotite or pyroxene.
EM Survey	A geophysical survey method which measures the electromagnetic properties of rocks.
Exploration	Prospecting, sampling, mapping, diamond drilling and other work involved in searching for ore.
Fault	Fracture in the Earth’s crust, along which there has been displacement of the sides relative to one another parallel to the fracture.
Gabbro	A dark, coarse-grained intrusive igneous rock composed chiefly of feldspar and pyroxene.
Geophysical Surveys	The use of one or more geophysical techniques in geophysical exploration.
Grab Samples	A sample of rock or sediment taken more or less indiscriminately at any place.
Gravity Gradient Survey	A geophysical method used to map and mathematically model underground fault structures based on measurements of the gravity of rocks.
Gneiss	Layered granite-like rock.
Gossan	An iron-oxide rich weathered product overlying a sulphide deposit.
Granite	A coarse-grained intrusive igneous rock consisting of quartz, feldspar and mica.
g/t	Grams per tonne.
Hydrothermal Alteration	Rock alteration simply means changing the mineralogy of the rock.  The old minerals are replaced by new ones because there has been a change in the conditions.  These changes could be changes in temperature, pressure, or chemical conditions or any combination of these.  Hydrothermal alteration is a change in the mineralogy as a result of interaction of the rock with hot water fluids, called “hydrothermal fluids”.
Hydrothermal Fluids	Hydrothermal fluids cause hydrothermal alteration of rocks by passing hot water fluids through the rocks and changing their composition by adding or removing or redistributing components.  Temperatures can range from weakly elevated to boiling.  Fluid composition is extremely variable.  They may contain various types of gases, salts (briney fluids), water, and metals.
Illite	Illite is a layered alumino-silicate clay that is formed from hydrothermal environments.
Induced Polarization (IP)	A geophysical survey method which measures the electrochemical properties of rocks.  Time domain IP methods measure the voltage decay or chargeability over a specified time interval after the induced voltage is removed.  Frequency domain IP methods use alternating currents (AC) to induce electric charges in the subsurface, and the apparent resistivity is measured at different AC frequencies.
IOCG	Iron-Oxide Copper Gold style mineralization.
Km	A measure of distance known as a kilometre.
Leach	To dissolve from a rock. For example, when acidic water passes through fractured rocks, soluble minerals leach or dissolve from the rocks.
Lode	Zone of  mineralization (or ore) in rock, as opposed to placer.
Mo	The chemical symbol for molybdenum.
Mg	The chemical symbol for magnesium.
Mafic	Igneous rocks with dark minerals.
Mesozoic Era	One of the eras of geologic time, follows the Paleaozoic and succeeded by the Cenozoic.
Metallurgy	The study of extracting metals from their ores.
Mineralization	The concentration of metals and their chemical compounds within a body of rock.
Monzonite	Coarse grain igneous rock composed of feldspar, hornblende, biotite and often quartz.
Ni	The chemical symbol for nickel.
NSR	Net Smelter Returns.  A royalty paid from the sale of mined minerals.
NT	Northwest Territories, Canada.
Opt	Ounce per short ton.
Ore	A natural aggregate of one or more minerals, which at a specified time and place, may be mined and sold at a profit, or which from some part may be profitably separated.
Oz	A measure of weight known as an ounce.  Precious metals are generally reported in ounces troy weight.  One troy ounce equals about 31.1 grams.
Paleozoic	Era of geologic time  between Proterozoic and Mesozoic.
Phanerozoic	Period of time in Earth’s history between 544 million year ago and present.
Placer	A deposit of sand and gravel containing valuable metals such as gold, tin or diamonds.
Proterozoic	Period of time in Earth’s history between 2.5 billion years ago and 544 million years ago.
Ppm	Parts per million. Most often reported by weight which is then equivalent to grams per metric ton.
Pyrite	A yellow iron sulphide mineral, normally of little value. It is sometimes referred to as "fool's gold".
Radiometric dating	The calculation of an age in years of geologic materials by any one of several age determination methods based on nuclear decay of natural radioactive elements contained in the material.
Sample	A small portion of rock or a mineral deposit taken so that the metal content can be determined by assaying.
Sampling	Selecting a fractional but representative part of a mineral deposit for analysis.
Shear or shearing	The deformation of rocks by lateral movement along innumerable parallel planes, generally resulting from pressure and producing such metamorphic structures as cleavage and schistosity.
Strike	The coarse or bearing of a bed or layer of rock.
Tailings	Material rejected from a mill after most of the recoverable valuable minerals have been extracted.
Th	The chemical symbol for thorium.
Tonne	Metric ton equals 1,000 kilograms or approximately 2,204 pounds.
Ton	Short ton (or standard ton) equals 2,000 pounds.
U	The chemical symbol for uranium.
U3O8	Uranium oxide. The mixture of uranium oxides produced after milling uranium ore from a mine.  Sometimes loosely called “yellowcake”.  It is yellow in colour and is usually represented by the empirical formula U3O8. Uranium is sold in this form.
Unconformity	A boundary separating two or more rocks of markedly different ages, marking a gap in the geologic record.
Uraninite	A mineral consisting of uranium oxide and trace amounts of radium and thorium and polonium and lead and helium; uraninite in massive form is called pitchblende which is the chief uranium ore.
V2O5	Vanadium oxide. It is usually represented by the empirical formula V2O5.
Vein	A fissure, fault or crack in a rock filled by minerals that have travelled upwards from some deep source.
Volcanic rocks	Igneous rocks formed from magma that has flowed out or has been violently ejected from a volcano.

VTEM Variable time-domain electro-magnetics.  A geophysical survey method.

CONVERSION TABLE

In this Annual Report on Form 20-F a combination of Imperial and metric measures are used.  Conversions from Imperial measure to metric and from metric to Imperial are provided below:

Imperial Measure          =	Metric Unit	Metric Measure       =	Imperial Unit
2.47 acres	1 hectare	0.4047 hectares	1 acre
3.28 feet	1 meter	0.3048 meters	1 foot
0.62 miles	1 kilometer	1.609 kilometers	1 mile
0.032 ounces (troy)	1 gram	31.1 grams	1 ounce (troy)
1.102 tons (short)	1 tonne	0.907 tonnes	1 ton
0.029 ounces (troy)/ton	1 gram/tonne	34.28 grams/tonne	1 ounce (troy/ton)

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 20-F and the exhibits attached hereto contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern the Company’s anticipated results and developments in the Company’s operations in future periods, planned exploration and development of its properties, plans related to its business and other matters that may occur in the future.  These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.  Statements concerning reserves and mineral resource estimates may also be deemed to constitute forward-looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed, and in the case of mineral reserves, such statements reflect the conclusion based on ce rtain assumptions that the mineral deposit can be economically exploited.  Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” (or the negative and grammatical variations of any of these terms and similar expressions) be taken, occur or be achieved,) are not statements of historical fact and may be forward-looking statements.  Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results t o differ from those expressed or implied by the forward-looking statements, including, without limitation:

·

risks related to our status as a passive foreign investment company for U.S. tax purposes;

·

risks related to our history of operating losses;

·

risks related to our lack of production history;

·

risks related to our limited financial resources;

·

risks related to our need for additional financing;

·

risks related to competition in the mining industry;

·

risks related to increased costs;

·

risks related to possible shortages in equipment;

·

risks related to mineral exploration activities;

·

risks related to our lack of insurance for certain activities;

·

risks related to all our properties being in the exploration stage;

·

risks related to uncertainty that our properties will ultimately be developed;

·

risks regarding resource estimates;

·

risks related to differences between U.S. and Canadian practices for reporting resources and reserves

·

risks related to our management’s limited experience in mineral exploration;

·

risks related to fluctuations in precious and base metal prices;

·

risks related to the possible loss of key management personnel;

·

risks related to possible conflicts of interest;

·

risks related to our mineral properties being subject to prior unregistered agreements, transfers, or claims and other defects in title;

·

risks related to governmental and environmental regulations;

·

risks related to our ability to obtain necessary permits;

·

risks related to our status as a foreign corporation;

·

risks related to our bid for Sterling Mining Corporation and if successful, its funding and operations thereafter;

·

risks related to current economic conditions; and

·

other risks related to our securities.

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further in the sections entitled “Risk Factors”, “Information on the Company” and “Operating and Financial Review and Prospects” and in the exhibits attached to this Annual Report on Form 20-F.  Should one or more of these risks and uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements.  The Company’s forward-looking statements are based on beliefs, expectations and opinions of management on the date the statements are made and the Company does not assume any obligation to update forward-looking statements if circumstances or management’s beliefs, expectations or opinions change, except as required by law. For t he reasons set forth above, investors should not place undue reliance on forward-looking statements.

2

PART I

All references in this Annual Report on Form 20-F (“Annual Report”) to the terms “we”, “our”, “us”, “the Company” and “Alberta Star” refer to Alberta Star Development Corp.   

ITEM 1 – IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2 – OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3 – KEY INFORMATION

A.

Selected Financial Data

The following information has been extracted from the Company’s financial statements for the years indicated and is expressed in Canadian dollars.  The information should be read in conjunction with “Item 5.  Operating and Financial Review and Prospects – A. Operating Results and B. Liquidity and Capital Resources” and the audited annual financial statements of the Company filed herewith.

Our financial statements included in this Annual Report have been prepared in accordance with generally accepted accounting principles (“GAAP”) in Canada. There are several material differences between Canadian GAAP and U.S. GAAP that are applicable to the financial information disclosed or summarized herein. The first table presents this financial data in accordance with U.S. GAAP, the second table presents the data in accordance with Canadian GAAP. Reference is also made to Note 19 in the attached financial statements for an explanation of material differences between Canadian GAAP and U.S. GAAP.  The following table summarizes information pertaining to operations of the Company for the last five fiscal years ended November 30.

All amounts within this Annual Report are in Canadian dollars, unless otherwise indicated.

US GAAP		Fiscal Year Ended November 30
	2009		2008	2007	2006	2005
Net operating revenue	Nil		Nil	Nil	Nil	Nil
Loss from operations	($3,399,442)		($6,489,209)	($14,784,688)	($13,060,169)	($2,832,810)
Loss from continuing operations	($3,399,442)		($6,489,209)	($14,784,688)	($13,060,169)	($2,832,810)
Comprehensive loss for the year	($3,399,442)		($6,489,209)	($14,870,688)	($13,022,169)	($2,784,810)
Loss from operations per share	($0.159)		($0.30)	($0.71)	($0.68)	($0.20)
Loss from continuing operations per share	($0.159)		($0.30)	($0.71)	($0.68)	($0.20)
Total assets	$15,224,722		$17,880,351	$24,384,800	$30,798,020	$11,978,824
Net assets	$13,505,838		$16,107,618	$22,758,444	$30,332,098	$11,899,236
Capital stock	$60,316,791		$59,518,839	$59,680,456	$52,469,422	$20,976,391
Number of shares	21,403,979		20,937,312	20,907,312	19,250,343	14,182,997
Dividends per common share	Nil		Nil	Nil	Nil	Nil
Diluted net (loss) per share	($0.16)		($0.30)	($0.71)	($0.68)	($0.20)

Canadian GAAP	Fiscal Year Ended November 30
	2009	2008	2007	2006	2005
Net operating revenue	Nil	Nil	Nil	Nil	Nil
Loss from operations	($3,364,852)	($6,489,209)	($7,916,250)	($11,630,209)	($2,832,810)
Loss from continuing operations	($3,364,852)	($6,489,209)	($7,916,250)	($11,630,209)	($2,832,810)
Comprehensive loss for the year	($3,364,852)	($6,489,209)	($7,916,250)	($11,630,209)	($2,832,810)
Loss from operations per share	($0.157)	($0.31)	($0.379)	($0.604)	($0.20)
Loss from continuing operations per share	($0.157)	($0.31)	($0.379)	($0.604)	($0.20)
Total assets	$15,224,722	$17,880,351	$24,384,800	$30,798,020	$11,978,824
Net assets	$13,505,838	$16,107,618	$22,758,444	$30,332,098	$11,899,236
Capital stock	$50,719,869	$49,956,797	$50,118,414	$49,775,818	$19,712,747
Number of shares	21,403,979	20,937,312	20,907,312	19,250,343	14,182,997
Dividends per share	Nil	Nil	Nil	Nil	Nil
Diluted net (loss) per share	($0.16)	($0.31)	($0.38)	($0.60)	($0.20)

Currency and Exchange Rates

Since June 1, 1970, the Government of Canada adopted a floating exchange rate to determine the value of the Canadian dollar as compared to the US dollar. On April 8, 2010, the exchange rate in effect for Canadian dollars exchanged for US dollars, expressed in terms of Canadian dollars was $1.0020. This exchange rate is based on the noon buying rates of the Bank of Canada, as obtained from the websitewww.bankofcanada.ca.

For the past five fiscal years ended November 30, 2009, and for the three month period between December 1, 2009, and February 28, 2010, the following exchange rates were in effect for Canadian dollars exchanged for US dollars, calculated in the same manner as above:

Period				Average
Year ended November 30, 2005		$		1.2163
Year ended November 30, 2006		$		1.1350
Year ended November 30, 2007		$		1.0865
Year ended November 30, 2008		$		1.0469
Year ended November 30, 2009		$		1.1565
	Period				Low		High
	Month ended December 31, 2009		$		1.0366	$	1.0748
	Month ended January 31, 2010		$		1.0225	$	1.0695
	Month ended February 28, 2010		$		1.0371	$	1.0772

B.

Capitalization and Indebtedness

Not Applicable.

C.

Reasons for the Offer and Use of Proceeds

Not Applicable.

D.

Risk Factors

An investment in our common shares is highly speculative and subject to a number of known and unknown risks.  Only those persons who can bear the risk of the entire loss of their investment should purchase our securities.  An investor should carefully consider the risks described below and the other information that we file with the SEC and with Canadian securities regulators before investing in our common shares.  The risks described below are not the only ones faced.  Additional risks that we are not currently aware of or that we currently believe are immaterial may become important factors that affect our business.  If any of these risks occur, operating results and financial conditions could be seriously harmed, the market price of our common shares could decline and the investor may lose all of their investment.  The risk factors set forth below and elsewhere in this Annual Report, an d the risks discussed in our other filings with the SEC and Canadian securities regulators may have a significant impact on our business, operating results and financial condition and could cause actual results to differ materially from those projected in any forward-looking statements.  See “Cautionary Note Regarding Forward-Looking Statements”.

In addition to other information in this Annual Report, you should carefully consider the following risk factors in evaluating our business.

Risks Related to the Business of Alberta Star

Likely Passive Foreign Investor Company (“PFIC”) Status Has Possible Adverse Tax Consequences for U.S. Investors

Current holders of and potentialinvestors in our common shares who are U.S. taxpayers should be aware that Alberta Star expects to be a passive foreign investment company (“PFIC”) for the current fiscal year, and may have been a PFIC in prior years and may also be a PFIC in subsequent years.   If Alberta Star is a PFIC for any year during a U.S. taxpayer’s holding period, then such U.S. taxpayers generally will be required to treat any so-called “excess distribution” received on its common shares, or any gain realized upon a disposition of common shares, as ordinary income and to pay an interest charge on a portion of such distributions or gain, unless the taxpayer makes a qualified electing fund (“QEF”) election or a mark-to-market election with respect to the shares of Alberta Star.  In certain circumstances, the sum of the tax and the interest charge may exceed the amount of the excess distribution received, or the amount of proceeds of disposition realized, by the taxpayer.  A U.S. taxpayer who makesa QEF election generally must report on a current basis its share of Alberta Star’s net capital gain and ordinary earnings for any year in which Alberta Star is a PFIC, whether or not Alberta Star distributes any amounts to its shareholders.  A U .S. taxpayer who makes the mark-to-market election generally must include as ordinary income each year the excess of the fair market value of the common shares over the taxpayer’s basis therein.  U.S. taxpayers are advised to seek the counsel of their professional tax advisors.  This paragraph is qualified in its entirety by the discussion below under the heading “Taxation—Certain U.S. Federal Income Tax Considerations.”  Each U.S. taxpayer should consult his or her own tax advisor regarding the U.S. federal, U.S. state and local, and foreign tax consequences of the PFIC rules and the acquisition, ownership, and disposition of our common shares.

We have a history of losses.

We have incurred losses in our business operations since inception, and we expect that we will continue to lose money for the foreseeable future.  Since our incorporation on September 6, 1996, to November 30, 2009, we incurred losses determined under US GAAP totalling $46,810,663. Very few junior mining resource companies ever become profitable. Failure to achieve and maintain profitability may adversely affect the market price of our common stock.   There can be no assurance that we will achieve profitability in the future or at all.

We have not identified any commercially viable mineral deposits.  We have not commenced development or commercial production on any of our properties.  We have no history or earnings or cash flow from operations.  We do not have a line of credit and our only present source of funds available may be through the sale of our equity shares or assets.  Even if the results of exploration are encouraging, we may not have the ability to raise sufficient funds to conduct further explorations to determine whether a commercially mineable deposit exists on any of our properties.  While additional working capital may be generated through the issuance of equity or debt, the sale of properties or possible joint venturing of the properties, we cannot assure you that any such funds will be available for operations on acceptable terms, if at all.

In addition, should we be unable to continue as a going concern, realization of assets and settlement of liabilities in other than the normal course of business may be at amounts significantly different from those contained in our financial statements.

We have no production history from our mineral properties.

We have no history of producing metals from any of our properties as each of our properties are in the exploration stage.  Advancing properties from exploration into the development stage requires significant capital and time, and successful commercial production from a property, if any, will be subject to completing positive feasibility studies, permitting and construction of the mine, processing plants and roads and other related works and infrastructure.  As a result, we are subject to all the risks associated with developing and establishing new mining operations and business enterprises including:

·

Completion of feasibility studies to define reserves and commercial viability, including the ability to find sufficient mineral reserves to support a commercial mining operation;

·

The timing and cost, which can be considerable, of further exploration, preparing feasibility studies, permitting and construction of infrastructure, mining and processing facilities;

·

The availability and costs of drill equipment, qualified exploration personnel, skilled and reliable labour and mining and processing equipment, if required;

·

The availability and cost of appropriate smelting and/or refining arrangements, if required;

·

Compliance with environmental and other governmental approval and permit requirements;

·

The availability of funds to finance exploration, development and construction activities, as warranted;

·

Potential opposition from non-governmental organizations, environmental groups, local groups or local inhabitants which may delay or prevent development activities; and

·

Potential increases in exploration, construction and operating costs due to changes in the cost of fuel, power, materials and supplies.

The costs, timing and complexities of exploration, development and construction activities may be increased by the location of our properties and demand by other mineral exploration and mining companies.  It is common in exploration programs to experience unexpected problems and delays during drill programs and, if warranted, development, construction and mine start-up.  Accordingly, our activities may not result in profitable mining operations and we may not succeed in establishing mining operations or profitability producing metals at any of our properties.

We generally have limited financial resources and no source of cash flow.

Although we believe we have sufficient funds to meet our current obligations, we currently have no external sources of liquidity, and all additional funding required for our activities for the foreseeable future will be obtained from the sale of our securities.  Should we elect to satisfy our cash commitments through the issuance of securities, by way of either private placement or public offering, there can be no assurance that our efforts to raise such funding will be successful, or achieved on terms favourable to us or our shareholders.  Such financings, to the extent they are available may result in substantial dilution to our existing shareholders.

Failure to obtain additional financing on a timely basis could cause us to forfeit all or a portion of our interests in the assets or rights now held by us and our ability to continue as a going concern ..   As described in Note 1 to our financial statements, our financial statements have been prepared on the assumption that we will continue as a going concern, meaning that we will continue in operation for the foreseeable future, and will be able to realize assets and discharge our liabilities in the ordinary course of operations.  There can be no assurance that we will be able to continue as a going concern.

If we do not obtain additional financing, our business will fail.

Our current operating funds are less than necessary to complete exploration of our mineral claims, and therefore we will need to obtain additional financing in order to complete our business plan.  As of November 30, 2009, we had $14,700,318 in cash on hand.  Cash on hand at the date of filing this Annual Report is approximately $14,000,000.

Our business plan calls for significant expenses in connection with the exploration of our mineral claims. We will require additional financing in order to complete these activities. In addition, we will require additional financing to sustain our business operations if we are not successful in earning revenues once exploration is complete. We do not currently have any arrangements for financing and we can provide no assurance to investors that we will be able to find such financing if required.

The business of mineral exploration is highly competitive and there is no assurance we can compete with other competitors for financing, qualified personnel and other resources related to the operation of our business.

Significant competition exists for the limited number of property acquisition opportunities available.  As a result of this competition, some of which is with large, established mining companies with substantial capabilities and greater financial and technical resources than us, we may be unable to acquire attractive mining properties on terms we consider acceptable.  Competition in the precious metals mining industry is primarily for mineral rich properties which can be developed and exploited economically; the technical expertise to find, develop, and produce such properties; the labour to operate the properties; and the capital for the purpose of funding such properties.  Many competitors not only explore for and mine precious metals and minerals but conduct refining and marketing operations on a worldwide basis.  Such competition may result in our being unable to acquire desired properties, to recruit or retain qualified employees, to obtain necessa ry exploration, development or production equipment or to acquire the capital necessary to fund our operations and develop our properties.  Our inability to compete with other mining companies for these resources may have a material adverse effect on our results of operation and business.  There can be no assurance that our exploration and acquisition programs will yield any reserves or result in any commercial mining operation.

Increased costs could affect our financial condition.

We anticipate that costs at our projects that we may explore or develop, will frequently be subject to variation from one year to the next due to a number of factors, such as changing ore grade, metallurgy and revisions to mine plans, if any, in response to the physical shape and location of the ore body.  In addition, costs are affected by the price of commodities such as fuel, rubber and electricity.  Such commodities are at times subject to volatile price movements, including increases that could make production at certain operations less profitable. A material increase in costs at any significant location could have a significant effect on our profitability.

A shortage of equipment and supplies could adversely affect our ability to operate our business.

We are dependent on various supplies and equipment to carry out our mining exploration and, if warranted, development operations. The shortage of such supplies, equipment and parts could have a material adverse effect on our ability to carry out our operations and therefore limit or increase the cost of production.

Our operations are subject to the inherent risk associated with mineral exploration activities.

Mineral exploration activities and, if warranted, development activities generally involve a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to overcome.  Environmental hazards, industrial accidents, unusual or unexpected geological formations, fires, power outages, labour disruptions, flooding, explosions, cave-ins, land-slides and the inability to obtain suitable or adequate machinery, equipment or labour are other risks involved in the operation of mines and the conduct of exploration programs.  Operations and activities in which we have a direct or indirect interest will be subject to all the hazards and risks normally incidental to exploration, development and production of precious and base metals, any of which could result in work stoppages, damage to or destruction of mines, if any, and other producing facilities, damage to life and property, environmental damage and possible legal liability fo r any or all damage.  We plan to obtain insurance, in amounts that we consider to be adequate, to protect ourselves against certain of these mining risks once we commence mining operations.  However, we may become subject to liability for certain hazards which we cannot insure against or which we may elect not to insure against because of premium costs or other reasons.  The payment of such liabilities may have a material, adverse effect on our financial position.  At the present time, we do not conduct any mining operations and none of our properties are under development, and, therefore, we do not carry insurance to protect us against certain inherent risks associated with mining.  Reclamation requirements vary depending on the location and the managing regulatory agency, but they are similar in that they aim to minimize long term effects of exploration and mining disturbance by requiring the operating company to control possible deleterious effluents and to re-establish to some de gree pre-disturbance landforms and vegetation.

Mineral exploration involves a high degree of risk against which we are not currently insured.

The Company’s exploration activities are subject to the hazards and risks normally incident to the exploration for and development and production of precious minerals, any of which could result in damage for which the Company may be held responsible. Hazards such as unusual or unexpected weather, rock formations, formation pressures, fires, power outages, landslides, flooding cave-ins or other adverse conditions such as the inability to obtain suitable or adequate machinery, equipment or labor may be encountered in the drilling and removal of material.  While Alberta Star may obtain insurance against certain risks in such amounts as we consider adequate, the nature of these risks is such that liabilities could exceed policy limits or could be excluded from coverage.  There are also risks against which Alberta Star cannot insure or against which we may decide not to insure.  

It is not always possible to fully insure against such risks and we may decide to forego insuring against such risks as a result of high premiums or other reasons. Should such liabilities arise, they could reduce or eliminate any future profitability and result in increasing costs and a decline in the value of our common shares. We do not currently maintain insurance against environmental risks relating to our mineral property interests, though we have obtained third party liability insurance, to counter the effects of these risks.

All of our properties are in the exploration stage and are highly speculative in nature, which means there can be no assurance that our programs will result in the discovery of any economically feasible mineral deposit.

At present, none of our properties have a known body of ore and all our proposed exploration programs are an exploratory search for ore.  We will only develop our mineral properties if we obtain satisfactory results from our exploration programs.   The development of uranium, cobalt, gold, silver, copper, zinc and other 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 processing equipment and other factors such as government regulations, including regulations relating to royalties, allowable production, importing and exporting of minerals and environmental protection.  We have relied and may continue to rely upon consultants and others for exploration expertise.  Substantial expenditures are required to establish reserves through drilling, to develop metallurgical processes to extract the metal from the ore and, in the case of new properti es, to develop the mining and processing facilities and infrastructure at any site chosen for mining.  We cannot assure you that any mineral deposits will be discovered in sufficient quantities to justify commercial operations or that funds required for development can be obtained on a timely basis.  Depending on the price of uranium or other minerals produced, if any, we may determine that it is impractical to commence or, if commenced, continue commercial production.

The marketability of any minerals acquired or discovered may be affected by numerous factors which are beyond our control and which cannot be accurately predicted, such as market fluctuations, the global marketing conditions for uranium and other metals, the proximity and capacity of milling facilities, mineral markets and processing equipment, and such other factors as government regulations, including regulations relating to royalties, allowable production, importing and exporting minerals and environmental protection.  Our properties are located in the Northwest Territories, Canada.  This jurisdiction imposes certain requirements and obligations on the owners of exploratory properties which includes, among other things, certain application and permit requirements, certain limitations on mining and exploration activities, periodic reporting requirements, limited terms and certain fees and royalty payments.  

Very few mineral properties are ultimately developed into producing mines.

The business of exploration for minerals and mining involves a high degree of risk such as unusual or unexpected geological formations and the inability to obtain suitable or adequate machinery, equipment or labour and is highly speculative in nature. Few properties that are explored are ultimately developed into commercially viable mining operations. At present, our existing properties have no known significant body of commercial ore. Most exploration projects do not result in the discovery of commercially mineable deposits of ore. The occurrence of unsuccessful exploration efforts may eventually lead to us needing to cease operations.

The success of commodity exploration is determined in part by the following factors:

·

Identification of potential mineralization based on surficial analysis;

·

Exploration permits, as granted by the various government bodies;

·

Experience and quality of management and geological consultants; and

·

Capital available for exploration activity.

Substantial expenditures are required for us to establish proven and probable ore reserves through drilling and analysis, 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.  In making the determination as to the commercial viability of a mineral deposit, a number of factors are considered, which include, without limitation, the particular attributes of the deposit, such as size, grade, and proximity to infrastructure; metal prices, which fluctuate widely; and government regulations, including, without limitation, regulations relating to prices, taxes, royalties, land tenure, and use importing and exporting or minerals and environmental protection.  

Although substantial benefits may be derived from the discovery of a major mineral deposit, no assurance can be given that we will discover minerals in sufficient quantities to justify commercial operations or that we can obtain the funds required for development on a timely basis.

We may invest significant capital and resources in exploration activities and abandon such investments if we are unable to identify commercially exploitable mineral reserves.  The decision to abandon a project may have an adverse effect on the market value of our securities and the ability to raise future financing.

We have no producing mines at this time.

Risks associated with our bid for Sterling Mining Company

On June 12, 2009, we announced our bid to acquire 100% of the issued and outstanding shares of Sterling Mining Company remaining after satisfaction of claims of its creditors and existing security holders under bankruptcy proceedings.  Sterling’s primary asset is the Sunshine Mine – a former producing silver mine which is now on a care and maintenance basis.  If our bid is accepted by the Court and the transaction completes, we intend, subject to financing, to re-commence production from the Sunshine Mine.  We have limited experience in operation of a producing mine.   None of our mineral properties in production and all or mining efforts to date have been exploratory in nature. If we are successful with this bid, we will need to make a number of changes to our personnel and infrastructure in order to allow us to engage in actual mining operations including hiring additional experienced personnel and making a number of changes in our oper ating structure.  There can be no assurance that we will be able to obtain the services of personnel with the requisite experience and skills on commercially favourable terms or at all or that we will be able to make the changes which are necessary to allow us successfully engage in such operations.

On or about March 8, 2010, we entered into an agreement with Kootenay Gold Inc. whereby we agreed to jointly participate with Kootenay in the bid for Sterling on a 50/50% basis with equal financial contributions by both parties. Completion of the transaction is subject to a number of conditions, including court and regulatory approval.  There can be no assurance that these conditions will be met and the acquisition will be completed on the terms set out in the bid or at all.  If the bid is accepted and the transaction completes, we will be required to pay a total of US$11,750,000, substantially reducing cash on hand.  In addition further cash will be required to re-commence production at Sterling’s Sunshine Mine, which is currently on care and maintenance, and to fund operations thereafter. While Kootenay has agreed to fund 50% of these costs, there can be no assurance that the Company and Kootenay will be successful in their bid for Sterling or, if suc cessful, that Kootenay will contribute its share of funding necessary to allow it to participate in the bid or that it will thereafter provide additional operating capital, should such be required.  If Kootenay does not contribute such funds, we will have to obtain funds from equity financings or other sources, which we may not be able to do on favourable terms or at all.  Further, if the transaction does not complete, we may not be entitled to recover our transaction costs or other incidental expenditures.   See “Item 4 “Sterling Mining Company” and “Item 5 – B. Liquidity and Capital Resources”.  See also “Cautionary Note Regarding Forward Looking Statements”.

Calculations of mineral reserves and of mineralized material are estimates only, subject to uncertainty due to factors including metal prices, inherent variability of the ore, and recoverability of metal in the mining process.

There is a degree of uncertainty attributable to the calculation of reserves and corresponding grades dedicated to future production. Until mineral reserves are actually mined and processed, the quantity of ore and grades must be considered as an estimate only. In addition, the quantity of mineral reserves and ore may vary depending on metal prices. Estimates of mineral resources under Canadian guidelines are subject to uncertainty as well. The estimating of mineral reserves and mineral resources under Canadian guidelines is a subjective process and the accuracy of such estimates is a function of the quantity and quality of available data and the assumptions used and judgments made in interpreting engineering and geological information. There is significant uncertainty in any reserve or estimate of mineral resources under Canadian guidelines, and the actual deposits encountered and the economic viability of mining a deposit may differ materially from our estimates. Estimat ed mineral reserves or mineral resources under Canadian guidelines may have to be recalculated based on changes in metal prices, further exploration or development activity or actual production experience. This could materially and adversely affect estimates of the volume or grade of mineralization, estimated recovery rates or other important factors that influence estimates of mineral reserves or mineral resources under Canadian guidelines. Any material change in the quantity of mineral reserves, mineralization, grade or stripping ratio may affect the economic viability of our properties. In addition, there can be no assurance that metal recoveries in small-scale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production.

Differences in U.S. and Canadian reporting of reserves and resources

Our reserve and resource estimates are not directly comparable to those made in filings subject to SEC reporting and disclosure requirements, as the Company generally reports reserves and resources in accordance with Canadian practices. These practices are different from those used to report reserve and resource estimates in reports and other materials filed with the SEC.  It is Canadian practice to report measured, indicated and inferred resources, which are not permitted in disclosure filed with the SEC by United States issuers. In the United States, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made.  United States investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves.

Further, "inferred resources" have a great amount of uncertainty as to their existence and as to whether they can be mined legally or economically. Disclosure of "contained ounces" is permitted disclosure under Canadian regulations; however, the SEC permits issuers to report "resources" only as in-place tonnage and grade without reference to unit of metal measures.

Accordingly, information concerning descriptions of mineralization, reserves and resources contained in this Annual Report, or in the documents incorporated herein by reference, may not be comparable to information made public by United States companies subject to the reporting and disclosure requirements of the SEC.

Our management has only limited experience in resource exploration and our business has a higher risk of failure.

Our management, while experienced in business operations, has only limited experience in resource exploration.  During the 2008 fiscal year, we retained, on a consulting basis, the full-time services of a qualified geologist, Dr. Michael Bersch to act as the Company’s Chief Geologist.  While we try to hire and retain management with proper expertise, none of our directors or officers have any significant technical training or experience in resource exploration or mining despite their diverse business backgrounds.  Management may not be fully aware of the specific requirements related to working in mineral exploration, whether technical or operational.  Therefore, our managerial decisions and choices may not always reflect standard engineering or mineral exploration practices commonly used. We rely on the opinions of consulting geologists and mining experts that we retain from time to time for specific exploration projects or property reviews.

We cannot be certain that the measures we take will ensure that we implement and maintain adequate financial resources or profitability. Management’s lack of experience may cause failure to implement appropriate financial decisions, or cause difficulties in implementing proper decisions, ultimately harming our operating results.

The prices of precious metal and base metal fluctuate and directly impact on our business activities.

Our business activities are significantly affected by the prices of uranium, precious metals and base metals on international markets.  The price of minerals affects our ability to raise financing, the commercial feasibility of our properties, the future profitability of our properties should they be developed and our future business prospects. The prices of uranium, precious metals and base metals fluctuate widely and are affected by numerous factors beyond our control, including expectations with respect to the rate of inflation, the strength of the U.S. dollar and of other currencies, interest rates, and global or regional political or economic crisis.  

Our business is affected by market fluctuations in the prices of the minerals sought, which are highly volatile.  Depending on the price of such minerals, we may determine that it is impractical to continue our exploration activities or, if warranted, to commence commercial development or production of our properties, if a mineral deposit is identified.

Uranium, precious metals and base metals prices may fluctuate widely and are affected by numerous industry factors, such as demand for precious metals, forward selling by producers, central bank sales and purchases of gold and production and cost levels in major mineral-producing regions.  Moreover, mineral prices are also affected by macro-economic factors that are beyond our control, including international economic and political trends, expectations of inflation, currency exchange fluctuations (specifically, the Canadian dollar relative to other currencies), interest rates and global or regional consumption patterns, speculative activities and increased production due to improved mining and production methods.  We cannot assure you that the price of such minerals will remain stable or that such prices will be at a level that will prove feasible to continue our exploration activities, or, if applicable, begin development of our properties.

The current demand for and supply of uranium, precious metals and base metals affects their respective prices, but not necessarily in the same manner as current demand and supply affect the prices of other commodities.  If prices of such minerals should decline for a sustained period, we could determine that it is not economically feasible to continue our exploration activities and such decision will have a material adverse affect on our business and results of operations.

The loss of key management personnel may adversely affect our business and results of operations.

The success of our operations and activities is dependent to a significant extent on the efforts and abilities of our management team, particularly our CEO, Tim Coupland.  Investors must be willing to rely to a significant extent on their discretion and judgment.  While we do maintain key-man employee insurance on Mr. Coupland to the extent reasonably available on normal commercial terms, the amount of coverage may not be adequate to compensate us for the full financial loss should we lose his services.

Certain directors may be in a position of conflicts of interest.

Certain members of our board also serve as directors of other companies involved in natural resource exploration and development. Consequently, there exists the possibility that those directors may be in a position of conflict. Any decision made by those directors will be made in accordance with their duties and obligations to deal fairly and in good faith of our company and such other companies. In addition, such directors will declare, and refrain from voting on, any matter in which such directors may have a conflict of interest.

There may be defects in the title to our properties.

In accordance with mining industry practice, we attempt to acquire satisfactory title to our properties but have not obtained title insurance with the attendant risk that some titles, particularly titles to undeveloped properties, may be defective.  In accordance with mining industry practice, we have not obtained title insurance on the mineral claims held by us.  The Company carries out all normal procedures to obtain title and make a conscientious search of mining records to confirm that the Company has satisfactory title to the properties it has acquired by staking, purchase or option, and/or that satisfactory title is held by the optionor/owner of properties the Company may acquire pursuant to an option agreement, and/or that satisfactory title is held by the owner of properties in which the Company has earned a percentage interest in the property pursuant to a joint venture or other type of agreement.  However, the possibility exists that title to one o r more of the claims held by the Company, or an optionor/owner, or the owner of properties in which the Company has earned a percentage interest, might be defective for various reasons.  The Company will take all reasonable steps to perfect title to any particular claims found to be in question or deficient.

There is no assurance of the title to or boundaries of our resource properties.

Our mineral property interests may be subject to prior unregistered agreements of transfers or native land claims and title may be affected by undetected defects. We have not conducted surveys on the property and there is a risk that the boundaries could be challenged.

Our operations may be adversely affected by government and environmental regulations.

Each phase of the Company’s operations are subject to government and environmental regulations promulgated by government agencies from time to time.  Environmental legislation provides for restrictions and prohibitions on spills, release or emissions of various substances produced in association with certain mining industry operations, such as seepage from tailings disposal areas, which would result in environmental pollution. A breach of such legislation may result in the imposition of fines and penalties. In addition, certain types of operations require the submission and approval of environmental impact assessments.

Environmental legislation is evolving in a manner which means that standards, enforcements, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for us and our directors, officers and consultants. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of our operations. We do not maintain environmental liability insurance.

Our activities are subject to extensive regulations governing various matters, including management and use of toxic substances and explosives, management of natural resources, exploration, development of mines, production and post-closure reclamation, exports, price controls, taxation, regulations concerning business dealings with indigenous peoples, labour standards on occupational health and safety, including mine safety, and historic and cultural preservation.

Failure to comply with applicable laws and regulations may result in civil or criminal fines or penalties, enforcement actions thereunder, including orders issued by regulatory or judicial authorities causing operations to cease or be curtailed, and may include corrective measures requiring capital expenditures, installation of additional equipment, or remedial actions, any of which could result in the Company incurring significant expenditures.  We may also be required to compensate those suffering loss or damage by reason of a breach of such laws, regulations or permitting requirements.  It is also possible that future laws and regulations, or more stringent enforcement of current laws and regulations by governmental authorities, could cause additional expense, capital expenditures, restrictions on or suspension of our operations and delays in the exploration and development of its mineral properties.

We may require permits and licenses that we may not be able to obtain.

Our operations may require licenses and permits from various governmental authorities. There can be no assurance that we will be able to obtain all of the necessary licenses and permits that may be required to conduct exploration, development and mining operations at our projects on certain properties in the Northwest Territories.

We are a foreign corporation and most of our directors and officers are outside of the United States, which may make enforcement of civil liabilities difficult.

We are incorporated under the laws of the Province of Alberta, Canada.  All of our directors and officers are residents of Canada, and all of our assets are located outside of the United States.  Consequently, it may be difficult for United States investors to effect service of process within the United States upon those directors or officers who are not residents of the United States, or to realize in the United States upon judgments of United States courts predicated upon civil liabilities under the United States Securities Exchange Act of 1934, as amended.  A judgment of a US court predicated solely upon such civil liabilities would probably be enforceable in Canada by a Canadian court if the US court in which the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter.  There is substantial doubt whether an original action could be brought successfully in Canada against any of such persons or us predicated solely u pon such civil liabilities.

As a foreign private issuer, our shareholders may have less complete and timely data.

The Company is a “foreign private issuer” as defined in Rule 3b-4 under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Equity securities of the Company are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 of the Exchange Act.  Therefore, the Company is not required to file a Schedule 14A proxy statement in relation to the annual meeting of shareholders.  The submission of proxy and annual meeting of shareholder information on Form 6-K may result in shareholders having less complete and timely information in connection with shareholder actions. The exemption from Section 16 rules regarding reports of beneficial ownership and purchases and sales of common shares by insiders and restrictions on insider trading in our securities may result in shareholders having less data and there being fewer restrictions on insiders’ activ ities in our securities.

Recent market events and conditions

Throughout 2009, the U.S. credit markets experienced serious disruption due to a deterioration in residential property values, defaults and delinquencies in the residential mortgage market (particularly, sub-prime and non-prime mortgages) and a decline in the credit quality of mortgage backed securities. Theseproblems led to a slow-down in residential housing market transactions, declining housing prices, delinquencies in non-mortgage consumer credit and a general decline in consumer confidence. These conditions continued and worsened in early 2009, causing a loss of confidence in the broader U.S. and global credit and financial markets and resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers and creating a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter c redit conditions. Notwithstanding various actions by the U.S. and foreign governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions caused the broader credit markets to further deteriorate and stock markets to decline substantially in early 2009. In addition, general economic indicators have deteriorated, including declining consumer sentiment, increased unemployment and declining economic growth and uncertainty about corporate earnings.

These unprecedented disruptions in the current credit and financial markets have had a significant material adverse impact on a number of financial institutions globally and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult to obtain, or increase the cost of obtaining, capital and financing for the operations.  Our access to additional capital may not be available on terms acceptable to us or at all.

General economic conditions

The recent unprecedented events in global financial markets have had a profound impact on the global economy. Many industries, including the mining industry, are impacted by these market conditions. Some of the key impacts of the current financial market turmoil include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates, and tax rates may adversely affect our growth and profitability.  Specifically:

·

The global credit/liquidity crisis could impact the cost and availability of financing and our overall liquidity;

·

the volatility prices of base and precious metals may impact our potential revenues, profits and cash flow;

·

volatile energy prices, commodity and consumables prices and currency exchange rates may impact potential production costs; and

·

the devaluation and volatility of global stock markets may impact the valuation of our equity securities.

These factors could have a material adverse effect on our financial condition and results of operations.

Risks Related to Our Common Stock

We do not intend to pay cash dividends.

We have never, and we do not have any intention of paying cash dividends in the foreseeable future.  In particular, there can be no assurance that our Board of Director’s will ever declare cash dividends, which action is completely within their discretion.

Economic conditions and fluctuation and volatility of stock price may negatively impact shareholder value

The market price of our common shares is highly volatile.  If investors’ interest in the sector in which we operate declines, the price for our common shares would likely also decline.  In addition, trading volumes in our common shares can be volatile and if the trading volume of our common shares experiences significant changes, the price of our common shares could be adversely affected.  The price of our common shares could also be significantly affected by other factors, many of which are beyond our control.

Fluctuations in economic conditions, such as the continuing downturn in the global economy, may also significantly affect our ability to meet our objectives which could adversely affect our share price.

Broker-dealers may be discouraged from effecting transactions in our shares because they are considered a penny stock and are subject to the penny stock rules.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC, which provides in formation about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of r educing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

As of November 30, 2010 we will be required to provide an auditor’s attestation on the effectiveness of our internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002.  Any adverse results from such attestation could result in a loss of investor confidence in our financial reports and have an adverse effect on the price of our shares of common stock.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we have furnished a report by management on our internal control over financial reporting in this Annual Report.  Such report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting, including a statement as to whether or not our internal control over financial reporting is effective.

For our Annual Report the fiscal year ended November 30, 2010, such report must also contain a statement that our auditors have issued an attestation report on the effectiveness of such internal controls.

We have evaluated our internal control over financial reporting and have concluded that our internal control over financial reporting is effective.  Our auditors have not conducted the evaluation necessary to provide an attestation report on the effectiveness of our internal control over financial reporting.  During the auditor’s evaluation and testing process, they may identify one or more material weaknesses in our internal control over financial reporting, and they will be unable to attest that such internal control is effective. If our auditor’s are unable to attest that our internal control over financial reporting is effective as of November 30, 2010, we could lose investor confidence in the accuracy and completeness of our financial reports, which would have a material adverse effect on our stock price.

Failure to comply with the new rules may make it more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage and/or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors, or as executive officers.

If we raise additional funding through equity financings, then our current shareholders will suffer dilution.

We believe the only realistic source of future funds presently available to us is through the sale of equity capital. Any sale of equity capital will result in dilution to existing shareholders. The only other alternative for the financing of further exploration would be the offering by us of an interest in our properties to be earned by another party or parties carrying out further exploration thereof.

Dilution through contractor, director and consultant options could adversely affect our stockholders.

Because our success is highly dependent on our contractors, we grant some or all of our key contractors, officers, directors and consultants options to purchase common shares, as non-cash incentives. If significant numbers of these options are granted and exercised, the interests of other stockholders may be diluted.

As at March 29, 2010 there are currently options outstanding to purchase an additional 2,040,000common shares and warrants to purchase an additional 466,667 common shares which upon exercise would result in a total of 23,910,646common shares being issued and outstanding.

Our common stock is thinly traded.

The trading market for our shares is not always liquid. The market price of Alberta Star’s common shares has ranged from a high of $1.30 and a low of $0.50 during the twelve month period ended November 30, 2009.  Although our shares trade on the TSX Venture Exchange (“TSX-V”), FINRA Over-the-Counter Bulletin Board (“OTCBB”) and the Frankfurt Exchange (“QLD”), the volume of shares traded at any one time can be limited, and, as a result, there may not be a liquid trading market for our shares.

ITEM 4 – INFORMATION ON THE COMPANY

A.

History and Development of the Company

The Company was incorporated under the name “Alberta Star Mining Corp.” pursuant to theBusiness Corporations Actin the Province of Alberta, Canada by registration of our articles of incorporation and the issuance by the Registrar of Companies of a Certificate of Incorporation on September 6, 1996. On September 20, 2001, we consolidated our share capital such that every five common shares in our capital stock pre-consolidation were exchanged for one post-consolidation common share. Concurrently, we changed our name to “Alberta Star Development Corp.” On March 11, 2010, we consolidated our share capital such that every five common shares in our capital stock pre-consolidation were exchanged for one post-consolidation common share with no change to the Company name.

Our head office is located at 506 – 675 West Hastings Street, Vancouver, British Columbia, Canada, V6B 1N2. Our telephone number is (604) 488 – 0860.

We have not been involved in any bankruptcy, receivership or similar proceedings, nor have we been a party to any material reclassification, merger, consolidation or purchase or sale of a significant amount of assets.

We are engaged in the business of the acquisition, exploration and development of resource properties. At present, our properties are in the exploration stage and further exploration will be required before final evaluations as to the economic and legal feasibility can be determined.

Our properties have no known significant body of commercial ore, nor are any such properties at the commercial development or production stage.  No assurance can be given that commercially viable mineral deposits exist on any of our properties. Further, our interest in joint ventures which own properties will be subject to dilution if we fail to expend further funds on the projects. We have not generated cash flows from operations. These facts increase the uncertainty and risks faced by investors in our Company. For more information see Item 3D – Risk Factors.

Our principal mineral property assets are located in the Northwest Territories and include an interest in:

·

Contact Lake Mineral Claims

·

Contact Lake

·

North Contact Lake

·

Great Bear Lake

·

Port Radium – Glacier Lake Mineral Claims

·

Eldorado South IOCG & Uranium Project

·

K4 – Uranium Project

As these projects are in the exploration stage, we have no current operating income or cash flow.

Sterling Mining Company – Sunshine Silver Mine, Idaho, USA

During the year ended November 30, 2009, the Company entered into an acquisition agreement with Sterling Mining Company (“Sterling”) to acquire a 100% interest in Sterling and its assets and provide for financing of Sterling’s ongoing operations (the “Agreement”).  

Sterling is currently a debtor-in-possession in Chapter 11 Bankruptcy in the District of Idaho, U.S.A.  Sterling is engaged in the business of acquiring, exploring, developing and mining mineral properties primarily those containing silver and associated base and precious metals.  Sterling operates the Sunshine Silver Mine in Idaho and has exploration projects in Idaho, U.S.A.  Sterling was incorporated under the laws of the State of Idaho on February 3, 1903 and its common shares are currently listed on the OTCBB: SRLMQ and Frankfurt Stock Exchange: SMX.

The Agreement provides that Sterling file a Disclosure Statement (“Disclosure Statement”) in the bankruptcy proceedings.  The Disclosure Statement has been approved by the Court and contains a Plan of Reorganization for Sterling (the “Plan”).  The Plan of Reorganization proposed a bidding process for 100% of the remaining authorized, but un-issued, common stock of Sterling (after satisfaction of outstanding claims of its creditors and existing security holders).  The key dates for the sale process are as follows:

February 15, 2010

Due date for deposits and qualification of bidders

April 19, 2010

Due date for bids

April 21, 2010

Auction

May 3, 2010

Plan confirmation hearing and sale approval hearing

May 14, 2010

Sale closing date.

The Company is a qualified bidder and has submitted an offer to acquire 100% of the common shares of Sterling, on a fully diluted basis, (by subscription for the unissued common shares of Sterling remaining after satisfaction of all claims of Sterling creditors and existing security holders under bankruptcy proceedings) in exchange for US$10,500,000, subject to court approval and other conditions.  In addition, the Company has agreed to make available up to US$1,250,000 (US$250,000 per month) in interim term debtor-in-possession financing to Sterling, which amount will bear interest at a rate of 10% per annum, bringing the total value of the agreement to US$11,750,000.  The Agreement prohibits Sterling from soliciting or initiating any discussion regarding any other business combination or sale of material assets, contains provisions for the Company to match competing, unsolicited proposals and provides for a US$250,000 ter mination fee payable to the Company in certain circumstances.

The Agreement contains a number of conditions precedent to the obligations of the parties.  Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent that they may be capable of waiver, the proposed transaction will not proceed.  There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all. Such conditions include: an order of the Court approving the Plan of reorganization of Sterling; all claims of all the creditors of Sterling are paid, satisfied, settled or compromised under the Plan of reorganization and that all other consents and approvals, including regulatory approvals, are obtained.  

The Company upon meeting of the above referenced conditions, including the confirmation of a Chapter 11 Plan, will reconstitute the Sterling Board of Directors and make additions to senior management of Sterling.

On March 8, 2010, the Company entered into a letter agreement with Kootenay Gold Inc. (“Kootenay”), whereby the Company and Kootenay agreed to cooperate in a joint bid to acquire a 100% interest in Sterling and its assets, and provide for financing of Sterling’s continuing operations and development.  Under the terms of the agreement, Kootenay and the Company will participate equally in the bid and will thereafter become jointly responsible to fund and operate Sterling.

Sterling Mining Co.’s primary asset is the Sunshine Mine located near Coeur d'Alene, Idaho, USA, a large historical silver producer.  Sterling acquired its rights to the Sunshine Mine in 2003 and, after completing extensive rehabilitation of surface and underground facilities, commenced initial production in late 2007.  Sterling suspended production in September 2008 due to financial difficulties and filed for US Bankruptcy protection in March 2009.  The Sunshine Mine is currently not in production and is held on a care and maintenance basis.   

If our offer to acquire Sterling shares is accepted by the Court, we intend, subject to financing, to re-commence production from the Sunshine Mine.  Under our agreement with Kootenay, we will jointly own an equal share of Sterling and will operate the Sunshine Mine on a mutually agreed co-operative basis.  In addition to funding the acquisition, further sums will be required to cover the cost of mine start up and commissioning costs and working capital requirements.  We anticipate that, if we are successful in the bid, we will fund these costs jointly with Kootenay, however, if we do not complete our proposed agreement with Kootenay, we will be required to raise additional funds to cover such anticipated expenses.  All of our other mineral properties are exploratory in nature and therefore this transaction, if successful, will require us to become engaged in actual mining operations, which will require us to make a number of changes to our operations a nd infrastructure including hiring additional staff and making certain changes in our management beyond that now maintained by us.  We intend to do so by selective hiring of experienced personnel and consultants in addition to those currently retained by Sterling, including a number of former Sterling employees.   The above transaction remains subject to court and regulatory approval and there can be no assurance that it will be completed on the terms contemplated or at all.  If the transaction does not complete, for any reason, we may be entitled, subject to court approval, to recover funds advanced to Sterling under the interim debtor-in possession financing structure, plus interest and may be entitled to a US$250,000 termination fee, but will not be entitled to recover our transaction costs or other incidental expenditures.  The foregoing contains a number of forward looking statements which are dependant in part upon a number of factors which are out of the control of the Company .  See “Cautionary Note Regarding Forward Looking Statements”.  See also “Risk Factors – Risks related to our bid for Sterling Mining Company”.

B.

Business Overview

Background

Cautionary Note to U.S. Investors –In this Annual Report we use the terms “Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource” and “Inferred Mineral Resource”, which are geological and mining terms as defined in accordance with NI 43-101 under the guidelines adopted by CIM, as CIM Standards in Mineral Resources and Reserve Definition and Guidelines adopted by the CIM. US investors in particular are advised to read carefully the definitions of these terms as well as the “Cautionary Note to U.S. Investors Regarding Reserve and Resource Estimates” above.

We are engaged in the exploration and acquisition of mineral properties in Canada, and specifically, hold all of our interests in the Northwest Territories. During the year ended November 30, 2009, we entered into an acquisition agreement with Sterling to acquire a 100% interest in Sterling and its assets and provide for financing of Sterling’s ongoing operations in Idaho.  The Agreement contains a number of conditions precedent to the obligations of the parties.  Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent that they may be capable of waiver, the proposed transaction will not proceed.  There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all.

We are a junior mining company in the exploration stage and none of our properties are currently beyond the initial exploration stage. There is no assurance that a commercially viable mineral deposit exists on any of our properties and further exploration work will be required before a final evaluation as to the economic and legal feasibility is determined. For further information, see “Item 3D – Risk Factors.”

We have conducted acquisitions and initial surveys for the purpose of determining the viability of exploration work on properties located in the Northwest Territories, Canada.  The equity markets for junior mineral exploration companies are unpredictable. We may also and have historically entered into cost sharing arrangements through joint venture agreements and interest agreements in the form of letters of intent. For detailed property descriptions please refer to “Item 4D – Property, Plant and Equipment.”

At present, we have no income from our operations and none of our properties have significant reserves nor are in production. Our ability to finance the future acquisition, exploration and development, if warranted, of our mineral properties, to make concession payments and to fund general and administrative expenses is therefore dependent upon our ability to secure additional financing.

Competition

The mineral property exploration business, in general, is intensively competitive and there is not any assurance that even if commercial quantities of ore are discovered, a ready market will exist for sale of same. Numerous factors beyond our control may affect the marketability of any substances discovered. These factors include market fluctuations; the proximity and capacity of natural resource markets and processing equipment; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of mineral and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may make it difficult for us to receive an adequate return on investment.

We compete with many companies possessing greater financial resources and technical facilities for the acquisition of mineral concessions, claims, leases and other mineral interests as well as for the recruitment and retention of qualified employees.

Office Space

We utilize about 1,467 square feet of office space in Vancouver, British Columbia. On April 1, 2006, we entered into a five year lease (lease expires March 1, 2011) with a property management firm with minimum lease commitments of approximately $3,575 per month.  

Environmental Regulations

Mineral exploration in the Northwest Territories is governed by Indian and Northern Affairs Canada, a Federal Government office which is responsible for negotiating the development of healthy and sustainable communities on behalf of the First Nation and Inuit peoples. Applicable statutes are the Canadian Environmental Assessment Act (1992) and the Canadian Environmental Protection Act (1999).

In order to conduct exploration on any of our properties, we obtain land use permits. When exploration ceases on a Northwest Territories property, the land affected needs to be reclaimed in order to protect public health and safety, to reduce or prevent environmental degradation and to allow future productive land use of the property.

The reclamation plan for any property is site specific. In general, the reclamation plan consists of ensuring that the physical structures that remain do not impose a long-term hazard to public health and safety and the environment, which includes ensuring that the land and watercourses are returned to a safe and environmentally sound state. We do not anticipate incurring any reclamation costs in connection with our other mineral property interests.

Seasonality

The prevailing climate in the Northwest Territories is severe, with extremely cold and dark winters and short warm summers.  Programs typically are completed between the end of spring thaw and fall/winter freeze-up.  Programs are suspended throughout the winter due to harsh conditions and remote locations.

C.

Organizational Structure

We are not part of a group, nor do we hold any subsidiary companies.

D.

Property, Plant and Equipment

We are engaged in the acquisition and exploration of mineral property interests in Canada, and specifically hold all of our current property interests within the Northwest Territories, Canada (Figures 1 and 2). What follows is a description of our current and former properties, including information on expenses for the years ended November 30, 2009, and, if applicable, November 30, 2008 and 2007. We have also included information on exploration work completed and, if applicable, planned for the upcoming fiscal year.

We are an exploration stage company and have no mineral producing properties at this time.  All of our properties are exploration projects, and we receive no revenues from production.  All work presently planned by us is directed at defining mineralization and increasing understanding of the characteristics and economics of that mineralization.  There is no assurance that a commercially viable mineral deposit exists in any of our properties nor do we anticipate same until after completion of further exploration work and a comprehensive evaluation based upon unit cost, grade, recoveries and other factors conclude economic feasibility.  The information contained herein respecting our mineral properties is based upon information reviewed by Dr. Michael Bersch, LPG, CPG.  Dr. Bersch is a “qualified person” pursuant to NI 43-101 concerning standards of disclosure for mineral projects.

3

Figures 1 and 2

4

Eldorado-Contact Lake Area Geological Setting

Regional Geology

Adapted from Hildebrand, 1981; Hildebrand et al.1987; and Hoffman and Hall, 1993

The Eldorado-Echo Bay Project is located in the northern portion of the Great Bear Magmatic Zone (GBMZ), part of the Bear Structural Province of the Canadian Shield (Figure 3).  The Bear province covers some 40,000 square kilometres (100 x 400 km) and consists of the gneissic Coronation Geosyncline to the east, and the GBMZ to the west, with the long-lived, polyphase Wopmay Deformation Zone (WDZ) separating the two terranes (Hildebrand, 1986) (Figure 4).  This orogenic zone developed on the western side of the Archean Slave craton between 2.1 and 1.8 Ga. Hoffman (1980a) divided the Wopmay Deformation Zone into four distinct tectonic zones: (1) a thin autochthonous cratonic cover and foreland basal sequence overlies the northwestern area of the Slave Craton (2) the Asiak fold and thrust belt of continental shelf and carbonate sequences overthrust on the Craton (3) the Hepburn orthotectonic zone of deformed rift sediment-volcanic sequences intruded by post tectonic S-type plutons (4) the little deformed GBMZ, of subgreenschist facies volcano-sedimentary sequences intruded by I-type plutons. The GBMZ is on lapped by platformal Paleozoic cover sequences to the west.  The Eldorado-Echo Bay Property is situated in the western part of the GBMZ.

The Hottah Terrane is a basement continental calc-alkaline volcano-plutonic arc and associated sedimentary rocks which formed above an eastward subducting plate along the western margin of the Slave Province (Hildebrand et al. 1987; Clowes, 1997).  The volcano-sedimentary rocks of this terrane were cut by calc-alkaline biotite-hornblende bearing plutons with ages ranging from 1.914 Ga to 1.902 Ga.  A depositional prism of geosynclinal shelf and slope sediments (Epworth, Snare and Akaitcho Groups) of the Coronation Supergroup formed at the edge of the continental margin and at about 1.90 Ga, arc magmatism stopped and a bimodal suite of submarine volcanic rocks erupted onto the block faulted and subsided sediments of the margin.  This tectono-magmatic episode lasted only 5-10 Ma, related to intra-arc extension which also generated a marginal basin originally to the east of the Hottah arc. The basin filled with siliciclastic and carbonate rocks overlying the vo lcanic succession and lapping on to the Slave Craton to the east.

Within 5-10 Ma, the sedimentary basin was simultaneously shortened and intruded by peraluminous to metalumious plutons of the Hepburn intrusive suite (1.896-1.879 Ma).  The shortening resulted in detachment and eastward thrusting of the imbricated basinal sediments into the Calderian accretionary wedge forming the Asiak Fold belt in the east and the Hepburn plutonic and metamorphic zone (Turmoil Klippe) in the west part of the former basin.  As the hot plutons of the Hepburn suite were emplaced over the colder authochton of the western Slave Craton, inverted metamorphic isograds developed.

The 1.878 Ga closure of the marginal basin resulted in the initiation and growth of the 1.876 -1.850 Ga continental, arc complex of the GBMZ at the suture between the Hottah arc to the west and the Hepburn suite to the east.  The Great Bear Magmatic Zone is a 100 x 400 km wide corridor which is the product of the final stages of continental volcanism and related plutonic activity.

It consists of low titanium/high aluminum calc-alkaline volcano-plutonic rocks which have been intruded by a suite of hornblende and biotite bearing plutons of similar age (Hoffman and Bowring, 1984; Hildebrand and Bowring, 1084).  The thick supracrustal sequences are referred to as the McTavish Supergroup, and consist of sub-greenschist facies, calc-alkaline andesitic to rhyolitic volcanic, volcaniclastic and sedimentary rocks, which have been interpreted as remnants of ancient stratovolcanoes and the products of caldera collapse (Hildebrand, 1984).

The occurrence of these sequences as isolated roof pendants within larger batholiths of the GBMZ hinders regional stratigraphic correlations between widely spaced regions.  The northern part of the GBMZ is underlain by a 10 km thick section of supracrustal rocks of the MacTavish Supergroup, which comprises three Groups: the Labine, Dumas and Sloan, in ascending order.  The southern part of the GBMZ is underlain by a 5 km thick section of the Faber Group, which has been interpreted as broadly correlatable with the Sloan Group.  These units occupy the central core of the GBMZ, and are flanked to the west and east, by rocks of the Labine and Dumas Groups, respectively. Cannuli (1989) also suggested that the Labine and Dumas may be broadly correlative and that the distribution of supracrustal sequences define a regional scale syncline within the GBMZ volcano-plutonic complex.  Ghandi (1994) noted that synvolcanic quartz monzonitic plutons within the stratig raphy of both the Labine and Faber Groups were closely coeval; however, the predominantly basaltic and less andesitic strata of the Labine Group contrasts with the more felsic strata of the Faber and Sloan Groups.  The Faber Group volcanic sequences were suggested to be texturally and chemically similar to products formed in anorogenic extensional settings, such as in the Missouri granite-rhyolite terrane and the Gawler ranges of South Australia, rather than a subduction setting (Ghandi, 1994).

The Labine Group, which represents the main magmatic arc in the western part of the GBMZ, consists of a 7 km thick section of volcanic-derived rocks which is exposed in the Port Radium-Echo Bay area.  The Labine Group consists of the lower Port Radium Formation and the overlying Echo Bay and Cameron Bay Formations, which collectively define a minimum of two caldera collapse sequences.  The rocks of the Labine Group have been intruded along a minimum of two stratigraphic levels, by intermediate plutons and largely concordant sills of the Mystery Island Intrusive Complex.  The lower sheet includes the Bertrand and Mystery Island plutons and the upper sheet includes the Contact Lake and Glacier/Tut plutons.  These intrusive typically have pronounced zoned alteration haloes within the intrusions and/or their flanking host rocks.  Large, felsic syn- to post-volcanic, granite to monzonite plutons of the Great Bear batholith also intrude this sequence. &n bsp;These intrusions have locally developed hornfels aureoles but lack the strong alteration associated with the earlier intermediate sills.

The cessation of volcanism in the GBMZ may have been the result of subduction of an oceanic spreading ridge or other high topographic features such as remnant arcs.  Gravity studies have suggested the presence of another arc further to the west (Fort Simpson arc) existed on the western side of the ocean, and now under Paleozoic cover.  The cessation of arc magmatism due to ridge subduction is common to Mesozoic-Cenozoic volcanic arcs worldwide, such as in South America, where the Chile Rise and Nazca Ridge were subducted into the Peru-Chile Trench and in California, where the East Pacific Rise was subducted under North America (Hildebrand, et al. 1987).  Such an event may also have resulted in a change in plate motion in the GBMZ, to transpression (dextral wrenching) and folding oblique to the original subduction direction (Bowring, 1984).  As a result, the concordant plutons and their host rocks were folded around northwest trending axes at about 1.843 Ga (Bowring, 1984), exposing the plutons and their altered wall rocks in oblique cross-section.

Post-dating the development of the northwest trending folds, large, discordant, epizonal, biotite bearing granites and quartz diorites were emplaced between about 1.858 and 1.843 Ga (Bowring and van Schmus, 1987), formed as a result of melting due to crustal thickening from folding (Hildebrand et al, 1987).  Bodies of this syenogranitic suite are also offset by continued movement on a swarm of later transcurrent, predominantly north to northeast trending faults.  These structures were developed as a result of east-west shortening which generated the northeast trending, dextral strike-slip structures (Hoffman, 1980; Hildebrand et al., 1987).  Evidence of plutonism in this setting is noted as swarms of related northeast trending dykes.

Movement on these northeast faults is related to displacement on north-south, transcurrent fault zones, parallel to the Wopmay Deformation Zone.  Displacement along these structures continued after the development of the igneous and sedimentary rock assemblages in the GBMZ, commonly resulting in kilometre scale offset of units.

The northeast trending faults are also cut by Cleaver diabase (Hoffman, 1984; Hildebrand, 1982), and both are unconformably overlain by the sedimentary basin of the 1.663 Ga Hornby Bay Group (McGrath and Hildebrand, 1984; Bowring and Ross, 1985).  Hildebrand (1988) noted that many of the northeasterly faults were reactivated during a period of normal faulting which occurred during the late stages of, or after, the deposition of the Hornby Bay Group (Hildebrand, 1988). Gabbro sills known as Western Channel diabase are considered to be the youngest rocks in the area (Hildebrand, 1982).

5

Figure 3

6

Figure 4

7

Local Geology

Adapted from Hoffman & McGlynn, 1977; Hildebrand, 1981; Reardon, 1992; Robinson & Ohmoto, 1971.  The geology of the Eldorada-Contact Lake area, as shown inFigure 5, has been compiled from mapping completed by Hildebrand, 1981, and Reardon, 1992.

Figure 5

8

Stratigraphy

The Port Radium-Echo Bay area is underlain by volcano-sedimentary rocks of the Labine Group, which is subdivided into 3 main formations: Port Radium, Echo Bay, Cameron Bay.  These are further subdivided into members which represent two main eruptive caldera phases: an early phase characterized by relatively gas-poor eruptions of andesitic lavas (Port Radium and Echo Bay Formations) and a younger, more gas-charged phase of voluminous siliceous volcanics and volcaniclastics (within the Cameron Bay and Feniak Formations) (Hildebrand, 1981).  The stratigraphy can be locally isolated into distinct calderas, 3 to 5 km in diameter.  The two cycles of caldera collapse, resurgence and intermediate plutonism are characterized by cone facies andesite, marr diatreme breccias and caldera fill sediments.

Lithogeochemical studies indicate that the Labine sequence is high in potassium (K), calc-alkaline belt of stratavolcanoes similar to Andean continental arc sequences (Ewart and LeMaitre, 1980). The sequence has only been subjected to low grade metamorphism (zeolite facies), with local contact metamorphic effects (i.e. hornfels) noted in supracrustal rocks flanking large plutons of the Great Bear Batholith series.

The Eldorado & Contact Lake IOCG & Uranium Projects 2010 Explorations Program

Management has determined that due to the remote location of the projects, high cost of exploration in Canada’s far north, the current depressed market conditions and volatile commodity prices, the exploration success risk/reward ratio for this property is high.  Accordingly, we decided to suspend field operations for the 2009 field season in order to conserve cash, but continued to study historical data and newly generated data to formulate a comprehensive exploration plan for the Property, which has not yet been completed..

Mineral Claim and Lease Claim Payments in the Northwest Territories

In order to retain property title or mineral claims in the Northwest Territories, the Company must complete and file assessment work of at least $4 per acre during the two-year period immediately following the date the claim is recorded.  In respect to the representation of work, the types of undertakings on the claims are as follows:

·

Drilling

·

Trenching

·

Sinking shafts

·

Geochemical and geophysical investigation made on the ground or by aircraft

·

Surveyor claims must be proved by the surveyor general

·

Work done in constructing roads and airstrips

The Company must pay annual payments to the federal government in order to maintain lease claims.

There is no electricity available at the Northwest Territories property sites, with surface water abundant within the property boundaries.

Contact Lake Mineral Claims – Contact Lake, NT (Eldorado-Contact Lake Project)

During the year ended November 30, 2005, the Company acquired a 100% undivided right, title and interest, subject to a 1% net smelter return royalty (“NSR”), in five (5) mineral claims, totalling 1,801.82 ha (4,450.50 acres) located five miles southeast of Port Radium on Great Bear Lake, NT for cash payments of $60,000 (paid) and 60,000 common shares (issued and valued at $72,000) of the Company.  The Company may purchase the NSR for a one-time payment of $1,000,000.  The Company completed additional staking in the area in order to increase the project size to sixteen (16) contiguous claims, totalling 10,563.76 ha (26,103.52 acres).  Collectively, the properties are known as the Contact Lake Mineral Claims. (Figure 6).

The area has traditionally been underexplored, but encompasses a mineral rich portion of the Great Bear Magmatic Zone, and includes the Contact Lake Mineral Belt itself, approximately 15 km long.

A summary of our claims can be found below:

Name	Tag Number	Size (ha)
BEN 1	F91861	1,003.30
BEN 2	F91862	752.47
BON 1	F91863	1,003.30
BON 2	F91864	1,003.30
BON 3	F91865	1,003.30
COBALT 1	F91852	1,045.10
COBALT 2	F91853	1,045.10
COBALT 3	F91854	418.04
COBALT 4	F91855	250.82
COBALT 5	F91856	752.47
COBALT 6	F91857	522.53
Lease # 4748		554.82
Lease # 4749		533.38
Lease # 4750		346.01
Lease # 4751		227.03
Lease # 4752		102.79
		10,563.76

9

Figure 6

10

Our expenditures related to the Contact Lake Mineral Claims can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Amortization		272,162		65,497		122,091		84,574
Assaying and geochemical		412,906		1,097		93,816		126,745
Camp costs and field supplies		1,549,817		120,468		141,074		499,322
Claim maintenance and permitting		87,787		260		4,544		13,452
Community relations and government		215,000		19,153		70,930		50,603
Drilling		3,318,148		12,304		105,994		1,741,790
Equipment rental		200,831		-		3,750		75,693
Geology and engineering		665,122		28,682		227,902		171,399
Geophysics		16,643		-		16,643		-
Ortho-photography		199,451		-		-		103,306
Staking and line cutting		339,160		6,500		-		-
Surveying		1,473,493		-		-		336,349
Transportation and fuel		4,938,609		212,326		289,276		1,357,400
Wages, consulting and management fees		4,533,670		626,682		771,526		1,407,434
		18,222,799		1,092,969		1,847,546		5,968,067
Acquisition of mineral property interests		132,000		-		-		-
		18,354,799		1,092,969		1,847,546		5,968,067

Accessibility, Local Resources and Infrastructure

The best access to the area is from Yellowknife, NT, using charter fixed wing aircraft which can land at the 900 meter long unmaintained gravel airstrip at the western shore of Glacier Lake, which lies in the centre of the Eldorado-Contact Lake Project area.  A road extends west from the airstrip to the area of the Echo Bay and Eldorado Mines.  Bulk freight has also previously been mobilized by seasonal barging along the Mackenzie River, from Alberta to Tulita (Fort Norman), NT, on the western shore of Great Bear Lake.  When mining was active in the area, a barge service also operated along the Bear River from Tulita to Deline, and across Great Bear Lake to the various mining operations. Lake barging service is in limited operation.

Currently, the Northwest Territories Department of Transport maintains a winter road from Yellowknife to Rae-Edzo and beyond, to Rae Lakes which is approximately 100 km south of the property.  Recent records indicate that local conditions have allowed this road to be open for a period of approximately 6 weeks, from mid- February to late March/early April.  During operation of the silver mines at Camsell River and Echo Bay prior to 1984, the winter road was extended to Port Radium, via Marian Lake and Camsell River.

Although the area immediately surrounding the property lacks any significant infrastructure, logistical support and supplies are available from Yellowknife.  There is no electricity available at the property site, but surface water is abundant within the property boundaries.  Established fishing camps on the eastern side of Great Bear Lake also provide some support.  The town of Yellowknife has a long history of mining, where the services of many experienced explorers can be obtained.  As well, personnel may be available from several smaller communities within the Great Bear Lake area.

11

In 2006, the Company undertook a successful exploratory drill program (Phase 1) on the Company’s Eldorado & Contact Lake Projects.  From June to October, 2006, 14,475 metres of NQ drill core was recovered, and 6,470 samples including 289 standards were assayed.  The 2006 drill program targeted seven areas, 1) the K2 area in which there is a low-grade Cu+ Co, Au and Ag mineralized breccia system that has strong affinities to an IOCG system, 2) the Echo Bay gossan at the end of the southeast arm of Echo Bay which marks the location of a newly discovered silver zone; 3) a high-grade Cu-Ag-Mo-Zn-Pb-W mineralized hydrothermal breccia at Mile Lake, 4) uranium, nickel, cobalt and silver mineralized zones adjacent to the past producing Eldorado mine site, 5) uranium, nickel, cobalt and silver mineralized zones adjacent to the past producing Echo Bay mine site, 6) an area centered on a strong VTEM plus magnetic anomaly near the southeast end of Echo Bay; a nd 7) the Thompson Showing of a high-grade Cu-Ag-Co-Ni-Au-U polymetallic vein.  

In 2007, the Company completed Phase 2 of the exploratory drill program based on the preliminary investigations from the 2006 drill program at the Eldorado & Contact Lake Project areas.  The Company’s two base exploration camps, personnel and supporting infrastructures were fully operational from May to October, 2007.  The Company completed almost 20,000 meters of drilling in 72 drill holes and collected over 10,000 surface samples.  The 2007 drill program targeted ten areas; K2, Echo Bay South, Mag Hill, Glacier Creek, Breccia Island, Camelback, Skinny Lake and Contact Lake, located on the Contact Lake Mineral Claims and Eldorado and Echo Bay, located on the Glacier Lake Mineral Claims.  

In 2008, the Company targeted five areas on its Eldorado-Contact Lake Project for further exploration drilling: K2, Skinny Lake, K4, Long Bay, and Gossan Island.  

In 2009, because of the significant decline in the price of uranium, coupled with the very high cost of exploration cost in the Northwest Territories, the Company carried out no on-site exploration activities, demobilized the field camp and placed it in storage and completed a review and summary report.

We have no work planned for these properties in 2010.

12

Port Radium – Glacier Lake Mineral Leases, NT (Eldorado-Contact Lake Project)

In 2005, the Company acquired a 100% undivided right, title and interest, subject to a 2% NSR in four (4) mineral leases, totalling 2,520.78 ha (6,229.00 acres) (the “Glacier Lake Mineral Leases”) located one mile east of Port Radium on Great Bear Lake, NT. For cash payments of $30,000 (paid) and 72,000 common shares (issued and valued at $72,000) of the Company.  The Company may purchase one-half of the NSR for a one-time payment of $1,000,000.

The Echo Bay lease (produced 23,779,178 ounces of silver) and the Port Radium – Eldorado lease (produced 15 million pounds of uranium and 8 million ounces of silver).  The Port Radium uranium belt was formerly one of Canada’s principal producers of Pitchblende uranium during the 1930s and 1940s.

A summary of our claims can be found below:

Name	Size (ha)
Lease # 4815	843.77
Lease # 4816	104.81
Lease # 4817	872.50
Lease # 4818	699.70
	2,520.78

13

Figure 8

14

Our expenditures related to the Port Radium – Glacier Lake Mineral Leases can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Amortization		26,894		8,371		10,727		7,796
Assaying and geochemical		197,313		-		54,136		143,177
Camp costs and field supplies		383,489		-		1,178		256,581
Claim maintenance and permitting		19,598		6,227		6,241		6,867
Community relations and government		21,472		-		-		21,472
Drilling		758,681		-		-		758,681
Equipment rental		58,038		-		-		45,643
Geology and engineering		69,879		-		36,206		33,673
Metallurgical studies		62,977		-		-		62,977
Ortho-photography		25,522		-		-		25,522
Staking and line cutting		88,335		-		-		88,335
Surveying		17,309		-		-		-
Transportation and fuel		5,029,890		-		344,031		3,754,918
Wages, consulting and management fees		840,723		-		159,905		505,775
		7,600,120		14,598		612,424		5,711,417
Acquisition of mineral property interests		102,000		-		-		-
Recovery of mineral property costs		(603,750)		-		-		(186,651)
		7,098,370		14,598		612,424		5,524,766

15

Figure 9

16

Eldorado South IOCG & Uranium Project, NT (Eldorado South Project)

During the year ended November 30, 2007, the Company staked sixteen (16) claims (the “Eldorado South Uranium Mineral Claims”), and four (4) additional claims (the “Eldorado West Uranium Mineral Claims”) located ten miles south of Eldorado uranium mine on the east side of Great Bear Lake, NT and 680 km (423 miles) north of the city of Yellowknife, NT, collectively known as the Eldorado South Uranium Project.  During the year ended November 30, 2009, fourteen claims were allowed to lapse.  The Eldorado South Uranium Project now consists of sixteen (16) mineral claims totalling 11,281.85 ha (27,878.62 acres) (Figure 10).

The Eldorado South claims cover a radiometric anomaly that is over 3.5 kilometers in length and the expression suggests a potential near surface IOCG & uranium target.  The radiometric maps show a well defined uranium anomaly with a marked correlation of strong thorium (Th) and potassium (k) ratio patterns.  The Eldorado South Anomaly has never been drill tested.  The Eldorado South Anomaly was discovered in 2006 as a result of the completion of a High Resolution, Multi-Parameter Regional radiometric and magnetic geophysical survey which was conducted in July, 2006.  The survey consisted of 16,708 line-kilometers at 100 meter line-spacing’s.  The purpose of the radiometric survey was to measure the gamma radiation field and locate prospective areas of high-grade uranium and poly-metallic deposition.

In December 2007, the Deline Land Corporation passed a resolution placing a moratorium on any further uranium exploration and development on Deline District lands.  The Deline Land Corporation has stated publicly and reiterated that all current agreements between the Deline Land Corporation and the Company would be fully honored.  Several uranium mining moratoriums have been placed in several mining jurisdictions in Canada recently.  They include a three year moratorium on uranium mining in Labrador (April 2008) and a moratorium issued in the Deline District (January 2008) in the Northwest Territories stating that they will not approve or consent to new uranium exploration or development until the 26 recommendations of the Canada-Deline Uranium Table have been addressed to the satisfaction of the leadership of the local community.  The moratoriums do not apply to exploration for other minerals and mineral exploration activity is expected to continue in full force.  

On June 16, 2008, the Company completed its Community Consultation in the community of Deline and finalized an expanded TEK (Traditional Education Knowledge) study for the region.  The Company’s’ Land-Use permit application #SO7C-008 was deemed completed by the Sahtu Land and Water Board.

On July 14, 2008, the Company received final permit approval from the Sahtu Land and Water Board (SLWB) for the issuance of a third “Class A”- 5 year 75,000 meter drill permit (#S07C-008) for its Eldorado South Iron oxide, copper, gold, silver, and uranium project located in Canada’s Northwest Territories. The Eldorado South permit (#S07C-008) is valid until July 10, 2013.  

The Company completed a comprehensive First Nations Traditional Educational Knowledge Report for this region which was completed to the satisfaction of the Deline Land Corporation and the Community of Deline.  The Company intends to further expand wildlife and environmental programs and baseline studies in the Eldorado & Contact Lake uranium districts as the projects advance.  On December 19, 2005 we signed a 5 Year Cooperation, Access and Benefits Agreement with the Deline Land Corp and the Sahtu Dene & Metis for the eastern Great Bear Lake Region.  

In its effort to maintain strong relations and an ongoing working relationship with the Deline Land Corp. and the people of Sahtu-Dene First Nations peoples living in Deline, we visited and participated in a comprehensive Community Consultation on June 18, 2008 in the community of Deline, NT.  We made a detailed presentation to the community of the  results of our 2007 exploration & drilling program and our future plans for expanded exploration and drilling in the 2008 season.  We addressed various environmental issues, environmental best practices management strategy, sustainable development philosophy and its policy of First Nations community outreach and development in the Sahtu Region.  The Company continues to maintain strong relations and a solid working relationship with the Deline Land Corp. and the people of Deline Sahtu-Dene First Nations.  The Company places the long term relationship and well-being of the Community of Deline, as the cornerstone to a successful working relationship and a corporate priority, governing its long-term principles with regard to the responsible sustainable development in the Sahtu Region.

No work is planned by the Company on this property in 2010.

A summary of our claims can be found below:

Name	Tag Number	Size (ha)
PR 1	K06181	1,045.10
PR 2	K06182	1,045.10
PR 3	K06183	1,045.10
PR 4	K06194	1,045.10
PR 5	K06195	1,045.10
PR 8	K06198	1,045.10
PR 9	K06199	1,045.10
PR 11	K06201	480.77
PR 12	K06202	1,045.10
PR 13	K06203	1,045.10
PR 14	K06204	449.40
PR 15	K06205	41.80
PR 16	K06206	585.18
PR 18	K06208	94.09
PR 19	K06209	161.98
PR 20	K06210	62.73
		11,281.85

17

Figure 10

Our expenditures related to the Eldorado South Uranium Project can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Camp costs and field supplies		27,967		-		8,989		18,978
Claim maintenance and permitting		17,153		10,762		916		5,475
Community relations and government		3,555		-		3,555		-
Equipment rental		2,623		-		1,778		845
Geology and engineering		301,883		71,193		118,858		111,832
Geophysics		3,000		-		-		3,000
Staking and line cutting		415,099		71,500		237,944		105,655
Transportation and fuel		176,011		2,230		171,561		2,220
Wages, consulting and management fees		278,323		48,942		210,381		19,000
		1,225,614		204,627		753,982		267,005

Port Radium - Crossfault Lake Mineral Claims, NT (Eldorado-Contact Lake Project)

In 2005, we acquired a 100% undivided right, title and interest, subject to a 2% NSR, in five mineral claims totalling 1,820.56 ha (4,498.68 acres) (the “Port Radium – Crossfault Lake Mineral Claims”) located north of Port Radium on Great Bear Lake, NT, for cash payments of $60,000 (paid) and 90,000 common shares (issued and valued at $297,000) of the Company.  The Company may purchase one-half of the NSR for a one-time payment of $1,000,000 (Figure 11).

We have no work planned on this property in 2010.

A summary of our claims can be found below:

Name	Tag Number	Size (ha)
GOSSAN 1	F91851	418.04
GOSSAN 2	F91858	418.04
CROSS	F91458	33.44
RAD 1	F91859	627.06
RAD 2	F91860	323.98
		1,820.56

Our expenditures related to the Crossfault Lake Property, can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Camp maintenance and permitting		682		-		682		-
Transportation and fuel		817		-		817		-
Wages, consulting and management fees		16,258		-		16,258		-
		17,757		-		17,757		-
Acquisition of mineral property interests		357,000		-		-		-
Recovery of mineral property costs		(12,645)		-		(12,645)		-
		362,112		-		5,112		-

18

Figure 11

19

Port Radium - Eldorado Uranium Mineral Claims, NT (Eldorado-Contact Lake Project)

In 2005, we entered into a lease agreement with South Malartic Exploration Inc. to purchase a 50% undivided interest, title and right in three mineral claims, totalling 106.53 ha (263.13 acres) (the “Eldorado Uranium Mineral Claims”) located at Port Radium on Great Bear Lake, NT, for a cash payment of $20,000 (paid) (Figure 12).

Acquisition of the 50% ownership in the property entitled us to full access and possession to a detailed technical library, exploration reports and historical data in South Malartic’s possession.  Also, included in the data acquisition were reports, maps, historical uranium production records, drill logs and uranium assay reports.

The property is located on Labine Point at Port Radium, NT.  Starting in 1933, the mine produced 15 million pounds of high grade uranium and 8 million ounces of silver, plus copper, nickel, radium, lead and polonium.  The mine currently has about 40 km of existing underground workings on 14 levels.

J. Fingler, P.Geo., of Vancouver, British Columbia completed a National Instrument 43-101 compliant technical report dated August 21, 2006 (“Technical Report”) on the Eldorado-Port Radium Property.  The Technical Report provides a comprehensive description of the Eldorado-Port Radium Property including previous work, geology and mineralization and also makes recommendations for further work on the Property.

We have no work planned for this property in 2010.

A summary of our claims can be found below:

Name	Tag Number	Size (ha)
ELDORADO	Lease # 3032	30.32
ELDORADO	Lease # 3033	44.81
ELDORADO	Lease # 3034	31.40
		106.53

Our expenditures related to the Eldorado Uranium Mineral Claims can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expense
Claim maintenance and permitting		1,052		526		-		526
Acquisition of mineral property interests		20,000		-		-		-
		21,052		526		-		526

20

Figure 12

21

North Contact Lake Mineral Claims, NT (Eldorado-Contact Lake Project)

In  2006, we acquired a 100% right, interest and title, subject to a 2% NSR, in eleven mineral claims (the “North Contact Lake Mineral Claims”), for a payment of $75,000 cash (paid) and the issuance of 50,000 common shares of the Company (issued and valued at $182,500).  The Company may purchase one-half of the NSR for a one-time payment of $1,000,000.  The North Contact Lake Mineral Claims are situated north of Contact Lake on Great Bear Lake approximately 680 km (423 miles) north of Yellowknife, NT, totalling 6,305.22 ha (15,580.48 acres) (Figure 13).

The property is the northern extension of the Contact Lake Project and includes the Contact Lake – Echo Bay Stato-volcanic complex, having hundreds of known or recorded copper, gold, silver, nickel, cobalt, REE and high grade uranium occurrences identified in Proterozoic rocks.

We have no work planned for this property in 2010.

A summary of our claims can be found below:

Name	Tag Number	Size (ha)
EC 1	F98661	250.82
EC 2	F98662	940.59
EC 3	F98663	940.59
EC 4	F98664	587.35
EC 5	F98665	55.60
EC 6	F98666	192.30
EC 7	F98667	477.82
EC 8	F98668	1,045.10
EC 9	F98669	1,045.10
EC 10	F98670	731.57
EC 24	F98369	38.38
		6,305.22

Total expenditures related to the North Contact Lake Mineral Claims can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expense
Camp costs and field supplies		1,034		-		1,034		-
Drilling		353,182		-		353,182		-
Transportation and fuel		9,606		-		9,606		-
Wages, consulting and management fees		13,012		-		13,012		-
		376,834		-		376,834		-
Acquisition of mineral property interests		257,500		-		-		-
		634,334		-		376,834		-

22

Figure 13

23

Longtom Property (Damp Claim Lease), NT

We hold a 50% undivided interest subject to a 2% NSR, totalling 355.34 ha (878.05 acres), in the Longtom Property (the “Longtom Property”) located about 350 km northwest of Yellowknife, NT.  The Longtom Property is registered in the name of the Company . (Figure 14).

The Company has the right to acquire the remaining 50% interest in the Longtom Property (the “Longtom Option”) for $315,000 payable either in cash or50% ($157,500) in cash and 50% in common shares of the Company.  The deemed price of our shares issued on the exercise of the Longtom Option would be the average TSX Venture Exchange closing market price of its common shares on the five trading days immediately preceding and the five trading days immediately following the date that the option is exercised. The Company is  compelled to exercise the Longtom Option: 1) within 90 days from the date it has incurred $5,000,000 in exploration expenditures on the Longtom Property; or 2) at the date we advise the optionor in writing that it will complete the Longtom Option to purchase the remaining 50% interest in the Longtom Property.

The Company has  the right to enter into joint venture or option agreements related to the Longtom Property with third parties prior to the exercise of the Longtom Option.

In 2003, the Company entered into a Letter of Intent (the “Letter of Intent”) with Fronteer Development Group Inc. (“Fronteer”).  On October 26, 2006, Fronteer earned its 75% interest in the Longtom Property by paying the Company $15,000 cash (received) and spending an aggregate of $500,000 (incurred) on exploration expenditures over three years.

The Longtom Property is located 50 km southeast of Great Bear Lake, NT.

The Longtom property is located within the Bear Geological Province, bounded by the Coronation Geo-syncline to the East and the Great Bear Magmatic Zone to the West. All known mineral deposits and showings occur along north-south and north-east fault zones and north-west fold axial planes. These features are related to the Wopmay Deformation Zone, which was reactivated during an east-west shortening event, resulting in north-south folding and the development of pervasive north-east striking strike slip faults. The development of these faults undoubtedly played a role in the development of IOCG style mineralization in the Bear Province.

The rocks of the main Longtom claim area have been divided into seven lithological units. Volcanic and sedimentary units dip moderately to steeply to the south in the area of the Damp prospect and gently to the north northeast in the Devil’s Lake area. All units except the later diabase dykes are affected by northeast trending faults and fractures.

A summary of our Damp mineral lease claim can be found below:

Claim Name	Tag Number	Size (ha)
DAMP	Mineral Lease # 3759	355.34

24

Figure 14

25

Our expenditures related to the Longtom Property are summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Assaying and geochemical		335		-		-		-
Camp costs and field supplies		147,024		-		-		-
Claim maintenance and permitting		2,679		893		-		893
Drilling		210,057		-		-		-
Geology and engineering		418,998		-		-		-
Transportation and fuel		322,529		-		-		-
Wages, consulting and management fees		200,899		-		10,626		-
		1,302,521		893		10,626		893
Recovery of mineral property costs		(52,497)		-		-		-
Sales of mineral property interests		(55,000)		-		-		-
Write-off of mineral properties and related costs		220,552		-		-		-
		1,415,576		893		10,626		893

Most previous work on the property was concentrated on the Damp Zone, a relatively small area near its north end.  The mineralization occurs in a specular hematite-magnetite breccia, similar to that seen at major IOCG deposits.  Shallow holes were drilled at the Damp Zone in 1988 (16 holes by CEGB totalling 1200m) and 1997 (4 holes by Mongolia Gold Resources totalling 944).  Appreciable copper, gold, cobalt, silver, uranium bismuth and nickel were obtained over considerable widths in a zone of albite and hematite-magnetite alteration in volcanic flows.  The Damp Zone is near the north end of a strong magnetic anomaly.

In 2003, the Company carried out semi-regional gravity and IP surveys and followed up with a diamond drill program. A 12-hole (2634 m) drill program was carried out to test anomalies arising from the magnetic, gravity and IP surveys.  This drill program intersected IOCG-style mineralization and anomalous copper values. The strongest combined magnetic-gravity-chargeability anomalies on the property remain untested.

During July and early August 2004, a nine-hole NQ diamond drilling program was completed on the Longtom Property.  A total of 2132 metres were drilled over the course of the program.  Drilling was designed to target IOCG style mineralization.  In January 2005, a five day reconnaissance program was carried out in order to re-examine drill core from historic operations.

No work is planned by the Company on this property in 2010.

26

Longtom Property (Target 1), NT

During the year ended  November 30, 2003, the Company acquired a 50% interest in a 710.67 ha (1,756.10 acres) mineral property located in the Longtom Lake area of the Northwest Territories for cash proceeds of $15,000 and 40,000 common shares of the Company valued at $56,000 (Figure 15).

Travel to the Target 1 claim can be accessed via aircraft. As of December 31, 2004, it was known that no electricity was available at the site and that surface water was plentiful within the boundaries of the property. No known mineralization had been found in this target, nor were there any known resources or reserves; sufficiency of surface rights and availability of power, water, tailings storage and waste disposal areas, heap leach pad sites and potential processing plant sites had not been addressed.

A summary of our claim can be found below:

Claim Name	Tag Number	Size (ha)
TARGET 1	F71013	710.67

Total expenditures related to the Longtom Property (Target 1) can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Geology and engineering		2,103		-		-		-
Wages, consulting and management fees		21,648		-		-		-
				-		-		-
Acquisition of mineral property interests		71,000		-		-		-
Recovery of mineral property costs		(3,530)		-		-		-
		91,221		-		-		-

No work is planned by the Company on this property in 2010.

27

Figure 15

28

MacInnis Lake Property, NT

In 2005, the Company acquired a 100% interest, subject to a 2% NSR, in twelve mineral claims (the “MacInnis Lake Uranium Claims”) and three additional mineral claims (the “Kult Claims”) located approximately 275 km southeast of Yellowknife, NT, collectively known as the MacInnis Lake Uranium Project. The acquisition was completed for cash proceeds of $100,000 (paid) and 130,000 common shares (issued and valued at $158,000) of the Company.  The MacInnis Lake Uranium Project now consists of fifteen mineral claims totalling 10,701.16 ha (26,431.87 acres) (Figure 16).

The MacInnis Lake uranium block is located in the Nonacho Basin, 150 km northeast of Fort Smith, which is 275 km southeast of Yellowknife, NT. The area contains 28 known high-grade uranium showings discovered, between 1954 and 1988, by previous explorers Cominco, Shell, PNC and Uranerz. The basin itself is a sandstone terrain of the Proterozoic age, geographically analogous with the Athabasca Basin in Northwest Saskatchewan.

In June 2005, an airborne survey was completed of the area by Fugro Airborne Surveys, with a focus on uranium deposits discovery and a emphasis on unconformity related deposits. The surveys covered 950 line km along east-west orientation, with 200 meters spacings, using a specially modified Dash-7 aircraft. Max Resources also planned regional mapping, trenching, review of archived drill data and follow up ground geophysics.

During the year ended November 30, 2007, the Company completed a High Resolution Aeromagnetic Radiometric geophysical survey.  The geophysical survey consisted of 2,093 line-kilometers at 100 meter line spacings and was flown by Fugro Airborne Surveys.  

The Company entered into an option agreement dated April 1, 2005, as amended April 11, 2006, and again on September 29, 2008, with Max Resource Corp. (“Max Resource”), whereby Max Resource can earn an interest, subject to a 2% NSR, in the MacInnis Lake Uranium Project. The terms of the option agreement calls for Max Resource to make payments as follows:

i.

cash payments totalling $30,000 (received);

ii.

the issuance of 200,000 common shares of Max Resource (received and sold for proceeds of $198,466); and

iii.

work commitments totalling $2,000,000 over a five year period ($250,000 on or before 31 October 2008 (incurred); $750,000 on or before 31 October 2009 ($234,307 incurred); $500,000 on or before 31 October 2010  and $500,000 on or before 31 October 2011.

The Company was unable to obtain exploration permits from regulatory authorities in the Northwest Territories due to outstanding and ongoing First Nation land claim issues.  Max Resources terminated the agreement on January 18, 2010.  The Company does not plan further work on this property.

A summary of our claims can be found below:

Name	Tag Number	Size (ha)
KULT 2	F90257	1,045.10
KULT 3	F90258	1,045.10
KULT 4	F70809	836.08
KULT 5	F90260	1,045.10
INN 2	F79832	167.22
INN 3	F79833	250.74
INN 4	F79834	940.59
INN 5	F67474	1,045.10
INN 6	F79836	652.98
INN 7	F79837	1,024.20
INN 8	F79838	1,003.30
INN 9	F79839	42.20
INN 10	F79840	235.43
INN 11	F79808	1,024.00
INN 12	F79809	344.02
		10,701.16

29

Figure 16

30

Our expenditures related to the MacInnis Lake Property can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Operating expenses
Claim maintenance and permitting		2,670		-		-		2,670
Geology and engineering		19,446		-		6,438		832
Surveying		323,117		-		-		110,092
Transportation and fuel		8,734		-		-		-
Wages, consulting and management fees		74,951		-		-		3,925
		428,918		-		6,438		117,519
Acquisition of mineral property interests		258,000		-		-		-
Recovery of mineral property costs		(480,540)		-		-		(130,792)
		206,378		-		6,438		(13,273)

ITEM 4A - UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5 - OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The Company is engaged in the acquisition, exploration and development of resource properties. As we are currently in the exploration stage, we have had no operating revenue during the years ended November 30, 2009, 2008, and 2007. As of November 30, 2009, we have conducted exploration work on several properties located in the Northwest Territories, Canada.

This discussion and analysis of the operating results and financial position of our Company for the three years ended November 30, 2009, 2008, and 2007 should be read in conjunction with the financial statements and the related notes included in Item 17.  This section contains ‘forward-looking statements”.  See “Cautionary Note on Forward-Looking Statements”.

General Assumptions and Policies

Exchange Rates

Transaction amounts denominated in foreign currencies are translated into functional currency at exchange rates prevailing at transaction dates.

Inflation

Based on prior history for at least the past two fiscal years, we do not believe that inflation will have a materially adverse effect on our financial condition. However, no assurance can be given that we will not experience a substantial increase in inflation.

Financial Instruments and Other Instruments

Fair Value

The fair value of cash and cash equivalents, amounts receivable and accounts payable approximates their carrying value due to the short-term nature of these financial instruments.

Exchange Risk

We operate in Canada and so are not subject to foreign currency risk arising from changes in exchange rates with other currencies.

Interest Rate Risk

We are exposed to interest rate risk on our short-term investments, but this risk relates only to investments held to fund future activities and does not affect our current operating activities.

Credit Risk

The Company’s cash resources are invested in R1-High bankers acceptance notes on deposit with large Canadian chartered Banks.  None of the Company’s funds are exposed to repayment risks associated with short term commercial paper or asset-backed commercial paper.  These securities comply with the Company’s strict investment criteria and policy of utilizing only R1-High investment guaranteed instruments that are paid promptly on maturity.

A.

Operating Results

Year ended November 30, 2009 compared to year ended November 30, 2008

The Company incurred a net loss of $3,364,852 for the fiscal year ended November 30, 2009 as compared to a loss of $6,489,209  for fiscal 2008. The decrease in our net loss in the 2009 fiscal year over 2008 can be attributed to reduced exploration costs relating to our mineral property interests in the Northwest Territories, and in particular, to our Contact Lake Mineral Claims and Eldorado/Port Radium – Glacier Lake Mineral Claims, on which we spent a total of $1,092,969 (2008 - $1,847,546) and $14,598 (2008 - $612,424) respectively.  Our exploration program budget was reduced due to market conditions.  The decision was made to conserve capital until more favourable market conditions return.  This decrease was partially attributed to an increase in future income tax recovery to $104,590 from the $Nil recorded during fiscal 2008, a decrease in interest income during fiscal 2009 to $166,287 from the $767,768  earned during the prior fiscal peri od and a decrease in stock-based compensation, a non-cash expense, to $539,159 from the $548,070  incurred during fiscal 2008.

This decrease in development activities incurred a corresponding decrease in general and administration expenses for the year ended November 30, 2009 of $1,321,899; a total of $2,322,116 was spent in fiscal year 2009, as compared to $3,644,015 in the comparable period of 2008. There were notable decreases in the areas of advertising and promotion expenses (2009 - $30,649, 2008 - $265,378), salaries and benefits (2009 – $479,878, 2008 - $575,269), Part XII.6 tax (2009 - $7,392, 2008 - $711,124), legal and accounting expenses (2009 - $332,372, 2008 - $349,567) and transfer fees and shareholder information (2009 - $279,242, 2008 - $477,635).  There were several increases in the areas of filing and financing fees (2009 – $153,211, 2008 - $119,881), and meals and entertainment (2009 - $78,346, 2008 - $68,989).

Year ended November 30, 2008 compared to year ended November 30, 2007

The Company incurred a net loss of $6,489,209 for the fiscal year ended November 30, 2008 as compared to a loss of $7,916,250 for fiscal 2007. The decrease in our net loss in the 2008 fiscal year over 2007 can be attributed to reduced exploration costs relating to our mineral property interests in the Northwest Territories, and in particular, to our Contact Lake Mineral Claims and Eldorado/Port Radium – Glacier Lake Mineral Claims, on which we spent a total of $1,847,546 (2007 - $5,968,067) and $612,424 (2007 - $5,524,766) respectively.  Our exploration program budget was reduced due to market conditions.  The decision was made to conserve capital until more favourable market conditions return.  This decrease was partially attributed to a decrease in future income tax recovery to $Nil from the $7,123,638 recorded during fiscal 2007, a decrease in interest income during fiscal 2008 to $767,768 from the $1,279,560 earned during the prior fiscal period and a decrease in stock-based compensation, a non-cash expense, to $548,070 from the $1,970,027 incurred during fiscal 2007.

This decrease in development activities incurred a corresponding decrease in general and administration expenses for the year ended November 30, 2008 of $1,047,418; a total of $3,644,015 was spent in fiscal year 2008, as compared to $4,691,433 in the comparable period of 2007. There were notable decreases in the areas of advertising and promotion expenses (2008 - $265,378, 2007 - $475,043), and filing and financing fees (2008 - $119,881, 2007 - $136,896).  There were several increases in the areas of salaries and benefits (2008 – $575,269, 2007 - $397,982), Part XII.6 tax (2008 - $711,124, 2007 - $556,200), legal and accounting expenses (2008 - $349,567, 2007 - $314,683) and transfer fees and shareholder information (2008 - $477,635, 2007 - $248,649).

Year ended November 30, 2007 compared to year ended November 30, 2006

The Company incurred a net loss of $7,916,250 for the fiscal year ended November 30, 2007 as compared to a loss of $11,630,209 for fiscal 2006. The decrease in our net loss in the 2007 fiscal year over 2006 can be attributed mainly to the increase in future income tax recovery to $7,123,638 from the $1,429,960 recorded during fiscal 2006, an increase in interest income during fiscal 2007 to $1,279,560 from the $802,010 earned during the prior fiscal period and a decrease in stock-based compensation, a non-cash expense, to $1,970,027 from the $3,237,869 incurred during fiscal 2006.  Our exploration costs increased slightly from $9,447,131 in 2006 to $11,747,984 in 2007.  Our mineral property interests in the Northwest Territories, and in particular, the Contact Lake Mineral Claims and Eldorado/Port Radium – Glacier Lake Mineral Claims, included exploration costs of $5,968,067 (2006 - $8,359,925) and $5,524,766 (2006 - $844,582).

This increase in development activities incurred a corresponding increase in general and administration expenses for the year ended November 30, 2007 of $288,740; a total of $4,691,433 was spent in fiscal year 2007, as compared to $4,402,693 in the comparable period of 2006. There were notable increases in the areas of advertising and promotion expenses (2007 - $475,043, 2006 - $247,563), filing and financing fees (2007 - $136,896, 2006 - $93,387), Part XII.6 tax (2007 - $556,200, 2006 - $Nil), legal and accounting expenses (2007 - $314,683, 2006 - $178,794) and salaries and benefits (2007 – $397,982, 2006 - $Nil)

B.

Liquidity and Capital Resources

General

Since incorporation, the Company has financed its operations almost exclusively through the sale of common shares to investors. As the Company is a mining exploration and development company with no producing resource properties, it does not generate operating income or cash flow from business operations. Until a significant body of ore is found, working capital requirements are minimal, and the Company expects to continue to finance operations through the sale of equity in fiscal 2010. There is no guarantee that the Company will be successful in arranging financing on acceptable terms.  See “Cautionary Note on Forward-Looking Statements”.

To a significant extent, the ability to raise capital is affected by trends and uncertainties beyond the Companies control. These include the market prices for base and precious metals and results from our exploration programs. Our ability to attain our business objectives may be significantly impaired if prices for metals such as gold and uranium fall or if results from our intended exploration programs on our properties are unsuccessful.

The Company currently has no operating revenues other than interest income and proceeds from the sale of available for sale investments.  The Company relies primarily on equity financing as well as the exercise of warrants to fund its exploration and administrative costs.

Our cash resources are invested in R1-High bankers acceptance notes on deposit with an AAA rated Canadian Banking Institution.  None of the Company’s funds are exposed to repayment risks associated with short term commercial paper or asset-backed commercial paper.  These securities comply with the Company’s strict investment criteria and policy of utilizing only R1-High investment guaranteed instruments that are paid promptly on maturity.

As at November 30, 2009, the Company had cash and cash equivalents on its balance sheet of $14,700,318 and working capital of $13,132,754 as compared to cash and cash equivalents on its balance sheet of $17,367,576 and working capital of $15,655,748 at November 30, 2008.  The reduction in cash and cash equivalents and working capital of $2,667,258 and $2,522,994, respectively, is in part due to annual exploration expenditures and general and administrative costs.

During the year ended November 30, 2009, the Company received $350,000 from the issuance of 466,667 flow-through units at a price of $0.75 per unit.  These funds were spent on Canadian mineral exploration expenditures before December 31, 2009.  As at March 29, 2010, the Company has cash and cash equivalents of approximately $14,000,000 on its balance sheet.  

The Company believes that this is sufficient to fund its currently planned exploration and administrative budget through the balance of fiscal 2010.   During the fiscal year ended November 30, 2009, we offered to subscribe for unissued common shares of  Sterling Mining Company -which is currently in Bankruptcy – giving us 100% of the its common shares remaining after satisfaction of claims of its creditors and existing security holders under bankruptcy proceedings. We also agreed to advance up to US$1,250,000 to Sterling under interim debtor-in possession financing.  Completion of his transaction is subject to a number of conditions, including granting of a final Court order authorizing the agreement, a number of which are out of our control.   If the transaction completes, we will pay a total of US$11,750,000 in this transaction, substantially reducing cash on hand.  We will also be required to obtain additional funds in order to re - -commence production at Sterling’s Sunshine Mine, which is currently on care and maintenance, as well as requiring additional working capital in order to sustain an ongoing mining operation.  We have entered into an agreement with Kootenay Gold Inc. whereby Kootenay and the Company will jointly participate in the bid for Sterling on a 50/50% basis with equal financial contributions by both parties. Kootenay, would then also become equally responsible for providing its share of any capital necessary to fund such operations, There can be no assurance that the Company and Kootenay will be successful in their bid for Sterling or, if successful, that Kootenay will contribute its share of funding necessary to allow it to participate in the bid or that it will thereafter provide additional operating capital, should such be required.  If Kootenay does not contribute such funds, we would have to obtain funds from equity financings or other sources.  Completion of the acquisition will use a signifi cant portion of our finds on hand and will require us to raise additional capital to fund Sterlings’ operations.  These funding requirements will be significantly increased if Kootenay does not contribute its share of funds contemplated under the agreement.  Accordingly, the foregoing transactions, should they complete, may have a significant impact on our liquidity and capital resources, the amount and significance of which cannot be accurately quantified or predicted at this time.  See “Item 4 – Information on the Company – Sterling Mining Company- Sunshine Silver Mine, Idaho, USA” and “Risk Factors – Risks related to our bid for Sterling Mining Company”.  See also, “Cautionary Note RegardingForward Looking Statements”.

Recently, the poor conditions in the U.S. housing market and the credit quality of mortgage backed securities continued and worsened in early 2009, causing a loss of confidence in the broader U.S. and global credit and financial markets and resulting in the collapse of, and government intervention in, major banks, financial institutions and insurers and creating a climate of greater volatility, less liquidity, widening of credit spreads, a lack of price transparency, increased credit losses and tighter credit conditions.  These disruptions in the current credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult to obtain, or increase the cost of obtaining, capital and financing for the operations.   Our access to additional capital may not be available on terms acceptable to us or at all.

We expect to rely upon our current available capital throughout the current fiscal year.  If costs increase substantially or we incur greater losses than expected, our exploration activities and other operations will be reliant upon equity financings to continue into the future.  The current market conditions could make it difficult or impossible for us to raise necessary funds to meet our capital requirements.  If we are unable to obtain financing through equity investments, we will seek multiple solutions including, but not limited to, credit facilities or debenture issuances.

We do not have any loans outstanding at this time.

Financing Activities

A summary of the components of the funds raised in 2009 and the two prior years is as follows:

	2009 $	2008 $	2007 $
Issuance of common shares	-	-	-
Issuance of flow-through shares	350,000	-	-
Warrants exercised	-	-	5,183,706
Options exercised	-	30,000	320,000
	350,000	30,000	5,503,706

The particulars of all capital raising transactions for the last two years are detailed below. Proceeds of these financings have been used for exploration and for development expenditures (only when and if warranted) in connection with our mineral projects, for working capital and for acquisition of additional projects.

1.

During the year ended November 30, 2009, the Company issued 100,000 stock options to consultants of the Company with an exercise price of $1.00 per share.  The 100,000 options vest in four equal quarters starting March 4, 2010.  All options in this series expire November 3, 2014.

2.

During the year ended November 30, 2009, the Company issued 790,000 stock options to directors, officers, employees and consultants of the Company with an exercise price of $1.00 per share.  A total of 720,000 options vested immediately upon issuance and the remaining 70,000 options vest in four equal quarters starting November 3, 2009.  All options in this series expire July 2, 2014.

3.

During the year ended November 30, 2009, the Company issued 466,667 units at a price of $0.75 per unit.  Each unit consists of one flow-through common share and one non flow-through share purchase warrant.  Each whole share purchase warrant entitles the holder to purchase an additional common share at a price of $0.90 up to December 12, 2010.

4.

During the year ended November 30, 2009, 480,000 stock options with an exercise price of $3.00 per share expired.  As at November 30, 2009, no stock options in this series remain outstanding.

5.

During the year ended November 30, 2009, 65,000 stock options with an exercise price of $4.25 per share were cancelled.  As at November 30, 2009, 575,000 stock options in this series remain outstanding.

6.

During the year ended November 30, 2009, 125,000 stock options with an exercise price of $1.75 per share were cancelled.  As at November 30, 2009, 555,000 stock options in this series remain outstanding.

7.

During the year ended November 30, 2008, the Company issued 30,000 common shares valued at a price of $1.00 per share upon the exercise of previously outstanding stock options.  As at November 30, 2008, a total of 10,000 stock options expired.  As at November 30, 2008, no stock options in this series remain outstanding.

8.

During the year ended November 30, 2008, 10,000 stock options with an exercise price of $4.25 per share expired.  As at November 30, 2008, 640,000 stock options in this series remain outstanding.

9.

During the year ended November 30, 2008, a total of 638,000 share purchase warrants valued at a price of $10.75 per share expired.  As at November 30, 2008, no share purchase warrants in this series remain outstanding.

10.

During the year ended November 30, 2008, a total of 101,659 agent compensation warrants valued at a price of $11.00 per share expired.  As at November 30, 2008, no agent compensation warrants in this series remain outstanding.

11.

During the year ended November 30, 2008, the Company issued 700,000 stock options to directors, officers, employees and consultants of the Company.  Of the options issued, 680,000 were issued with an exercise price of $1.75 and the remaining 20,000 were issued with an exercise price of $5.00.  A total of 605,000 options vested immediately upon issuance and the remaining 95,000 options vest in four equal quarters starting December 1, 2008.  All options in this series expire July 31, 2011.

12.

During the year ended November 30, 2008, the Company was required to amend its flow-through filings related to the flow-through shares issued and renounced in 2006 to reflect a reduction in the amount renounced of approximately $2,000,000.  The Company has accrued a charge against capital stock and recorded a payable amount of $739,687 (2007 - $Nil, 2006 - $Nil) as the estimated costs to the Company for amending its flow-through filings.

Financial Instruments

All financial instruments we use are predominantly denominated in Canadian dollars.  We do not engage in any hedging operations with respect to currency or in-situ minerals. Funds which are currently in excess of our current expenditures are invested in low risk, highly liquid investments with original maturations of three months or less.

Capital Expenditure Commitments

At November 30, 2009, we were not party to any capital expenditure commitments other than the potential Sterling Silver mine acquisition of US$11,750,000.

C.

Research and Development, Patents and Licenses, etc.

None.

D.

Trend Information

As we are an exploration company with no producing properties, information regarding trends in: production, sales and inventory, and similar are not meaningful. We have recently acquired interests in properties and it is likely that we will expand our exploration activities. As a result, we expect that our  operating losses will increase over the next 12 months.

E.

Off-balance Sheet Arrangements

We have no off-balance sheet arrangements that would require disclosure.

F.

Tabular Disclosure of Contractual Obligations

In the year ended November 30, 2009, we were not party to any agreements or arrangements which gave rise to any contractually obligated payments.  We are party to an agreement with Sterling Mining Company to subscribe for all of its issued and outstanding shares after satisfaction of claims under ongoing bankruptcy proceedings which, if accepted by the Court and completed, would require us to pay the sum of US$ 11,750,000 in consideration therefore, however such obligation remains subject to court approval and a number of other conditions which remain outstanding as of the date of filing of this Annual Report.

G.

Safe Harbour

Certain statements contained in this Annual Report may be viewed as "forward-looking statements" within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the US Securities Exchange Act of 1934, as amended. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause actual events, and/or the actual performance, financial condition or results of operations of our company to be materially different from any future performance, financial condition or results of operations implied by such forward-looking statements. Further information regarding these risks, uncertainties and other factors is included in this Annual Report under “Item 3D” and such other documents that we may file with the SEC from time to time.  See “Cautionary Note on Forward-Looking Statements.”

ITEM 6 - DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.

Directors and Senior Management

Directors

Name of Director	Age	Date of First Election or Appointment
Tim Coupland	51	September 14, 2000
Robert Hall	32	September 27, 2006
Stuart Rogers	53	March 1, 2007
Brian Morrison	28	September 5, 2008
Edward Burylo	66	December 17, 2008

Executive Officers and Management

Name of Officer	Age	Office
Tim Coupland	51	President, Chief Executive Officer
Gordon Steblin	50	Chief Financial Officer
Robert Hall	32	Director, Manager of Field Operations

The following describes the business experience of our directors and executive officers, including other directorships held in reporting companies:

Tim Coupland, President and Chief Executive Officer

Tim Coupland has acted as President and Chief Executive Officer of the Company since September 14, 2000. Mr. Coupland has held numerous officer and directorship positions with TSX-V listed companies and OTCBB listed junior mining companies.

Mr. Coupland has over 20 years of business experience with both public and private companies and has been involved in both debt and equity financings of up to $60 million dollars. He brings expertise in raising equity capital and then assembling highly seasoned teams of professionals, consultants, financial consultants and mineral exploration advisors who have proven track records in financing, negotiation and promotion required to secure and develop successful mineral exploration projects. Mr. Coupland oversaw the rigorous permitting process with regulatory authorities responsible for issuing land use permits, water licences and conducting environmental assessments for the Eldorado & Contact Lake projects in Canada's Northwest Territories. Mr. Coupland was the lead negotiator who secured the impacts and benefits agreement with the Sahtu-Dene First Nations on their traditional Territories. Renowned as a company builder, he has been instrumental in acquiring key land packages and then permitting these lan d packages for exploration.

He brings a wealth of technical and financial experience as well as long-term business relationships with many First Nations, Inuit and Métis groups operating in Canada's Northwest Territories.

Mr. Coupland has a Bachelor's Degree in Geography from Simon Fraser University.

Gordon Steblin, Chief Financial Officer

Mr. Steblin obtained a Bachelor of Commerce degree in 1983 from the University of British Columbia (UBC), and in 1985 he became a Certified General Accountant. Mr. Steblin has over 20 years of financial experience in the junior mining/exploration sector. Mr. Steblin was previously the Chief Financial Officer of CanAlaska Uranium Ltd., El Nino Ventures Inc. and Pacific North West Capital Corp.  Mr. Steblin is currently the Chief Financial Officer of Freegold Ventures Limited, Dynamic Gold Corp. and Next Gen Metals Inc.

Robert Hall, Director, Manager of Field Operations

In September 2006, Robert Hall joined Alberta Star as a director. Mr. Hall has successfully managed Phase 1, 2 and 3 drilling on the Eldorado & Contact Lake Projects .  Mr. Hall also acts as a director and officer of Arctic Hunter Uranium Inc. which trades on the CNSX and Dynamic Gold Corp., a company trading on the FINRA OTC Bulletin Board.  Mr. Hall holds a Bachelor's degree in Education from the University of British Columbia.

Stuart Rogers, Director

A director since March 2007, Stuart Rogers has been involved in the venture capital community since 1987.  He is the President and founder of West Oak Capital Group, Inc., a privately held investment banking firm specializing in the early stage finance of technology and resource projects through the junior capital markets in Canada and the United States, and has served as a director of client companies listed on the TSX Venture Exchange, the Toronto Stock Exchange, NASDAQ Small Capital Market and FINRA OTC Bulletin Board.   Mr. Rogers is the President of MAX Resource Corp. and serves as a director and Chief Financial Officer of Prophecy Resource Corp. and TerraX Minerals Inc.

Brian Morrison, Director

Mr. Morrison received a Bachelor of Commerce degree from the University of Northern British Columbia in 2004 and completed the Canadian Securities Course in 2006. Mr. Morrison has spent the past four years working in the area of public company administration.

Currently, Mr. Morrison is a business consultant for a number of listed Junior Mining Companies on the TSX Venture Exchange. Prior to that, Mr. Morrison was Manager at Computershare Investor Services.

Edward Burylo

Edward Burylo is a successful businessman with over 40 years of Public Market Experience. Mr. Burylo is currently a Director of Arctic Hunter Uranium Ltd., a CNSX listed Company.

Family Relationships

There are no familial or marital relationships that exist amongst our officers and directors.

Arrangements

There are no arrangements or understandings between any of our directors or executive officers, and with our major shareholders, customers, suppliers or others, pursuant to which they were selected to be a director or executive officers.

B.

Compensation

We are required, under applicable securities legislation in Canada, to disclose to our shareholders details of compensation paid to our directors and members of our administrative, supervisory or management bodies.  The following fairly reflects all material information regarding compensation paid to our directors and members of our administrative, supervisory or management bodies in our fiscal year ended November 30, 2009.

We currently pay $1,000 per month to our directors for their services in their capacity as directors.  The board of directors may award special remuneration to any director undertaking any special services on our behalf other than services ordinarily required of a director. Other than indicated below, no director received any compensation for his or her services as a director, including committee participation and/or special assignments.

31

2009 Summary Compensation Table

NAME AND PRINCIPAL POSITION			ANNUAL COMPENSATION			LONG-TERM COMPENSATION
			Salary	Bonus	Other Annual Compensation	Awards		LTIP payouts	Other
						Restricted Stocks	Options/ SARs(1)
Tim Coupland :  President, Chief Executive Officer and Director			$300,000	$50,000	-	Nil	340,000	Nil	Nil
Chantal Schutz: (resigned 12/17/08) Former CFO and Corporate Secretary				/Nil	$13,875(2)	Nil	Nil	Nil	Nil
Gord Steblin:  CFO				/Nil	$59,001(3)	Nil	50,000	Nil	Nil
Robert Hall:  Manager of Field Operations and Director			$80,000	$25,000	-	Nil	50,000	Nil	Nil
Stuart Rogers:   Director				Nil	$27,000(4)	Nil	50,000	Nil	Nil
Brian Morrison (appointed Sept. 5, 2008)  Director				Nil	$17,000(4)	Nil	30,000	Nil	Nil
Edward Burylo (appointed Dec. 17, 2008)  Director				Nil	$10,000(4)	Nil	50,000	Nil	Nil
Notes:
	(1)	“Securities Under Options/SARs Granted” are grants made under the stock option plan of the Company. “SAR” means stock appreciation rights.
	(2)	Fee paid to a company controlled by Ms. Schutz for accounting services.
	(3)	Fee paid to a company controlled by Mr. Steblin for accounting services.
	(4)	These amounts are directors fees paid to entities controlled by the named director.

In accordance with our stock option plan, summarized below, we award the above members of the board of directors with the annual compensation, in the form of employee incentive stock options, as is set forth beside their names. Each option is exercisable from $1.00 to $4.25 per common share, exercisable for a maximum period of up to five years, excepting those terms, found below.

Stock Option Plan

Our stock option plan provides for equity participation by eligible directors, officers, employees and consultants through the acquisition of common shares pursuant to the grant of options. Our board of directors administers the plan. Options may be granted to purchase common shares on terms that the directors may determine, subject to the limitations of the stock option plan and the requirements of the TSX-Venture Exchange.   

The following is a summary of the terms of the stock option plan and is qualified in its entirety by the full text of the stock option plan which is available for review at our offices:

1.

The number of common shares to be reserved and authorized for issuance, pursuant to options granted under the stock option plan, is 10% of our issued and outstanding common shares from time to time;

2.

Under the stock option plan, the aggregate number of optioned common shares granted to any one optionee in a 12-month period must not exceed 5% of the issued and outstanding common shares. The number of optioned common shares granted to any one consultant in a 12-month period must not exceed 2% of the issued and outstanding common shares. The aggregate number of optioned common shares granted to optionees who are employed to provide investor relations activities must not exceed 2% of our issued and outstanding common shares in any 12-month period;

3.

The exercise price for options granted under the our stock option plan will not be less than the market price of the common shares less applicable discounts permitted by the TSX-Venture Exchange;

4.

Options will be exercisable for a term of up to five years, subject to earlier termination in the event of death or the optionee’s cessation of services to us; and;

5.

Options granted under the stock option plan are non-assignable, except by will or the laws of descent and distribution.

See “Item 6.E. – Share Ownership of Director and Officers” for table setting out the stock options currently outstanding to our directors and officers.

Pension or Retirement Benefits

We do not have a pension, retirement fund or similar benefits plan or other arrangement for non-cash compensation to our directors or senior officers, with the exception of incentive stock options.

C.

Board Practices

General

For a discussion of the Company’s directors’ term in office, please see “Item 6.A.”

The directors hold office until the next annual general meeting of the shareholders, at which time they may stand for re-election. We are required to hold an annual general meeting within fifteen months from the last annual general meeting.  Our most recent annual general meeting was held on February 8, 2010.

Service Contracts

There are no director service contracts.

Audit Committee

Our Board of Directors has one committee, an audit committee.  We do not have a compensation or remuneration committee.

Our audit committee is comprised of Tim Coupland, Brian Morrison, Edward Burylo, Robert Hall and Stuart Rogers. The audit committee performs the following functions, among others:

·

Directly appoints, retains and compensates our independent auditor and pre-approves all auditing and non-auditing services of the independent auditor;

·

Evaluates the independent auditor's qualifications, performance and independence;

·

Discusses the scope of the independent auditors' examination;

·

Reviews and discusses the annual audited financial statements and quarterly financial statements with management and the independent auditor and the report of the independent auditor thereon;

·

Assesses our accounting practices and policies;

·

Reviews and approves of all related-party transactions, including transactions between our company and our officers or directors or affiliates of officers or directors;

·

Develops, and monitors compliance with, a code of ethics for senior financial officers;

·

Develops, and monitors compliance with, a code of conduct for all our employees, officers and directors;

·

Establishes procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters; and

·

Establishes procedures for the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

The specific functions and responsibilities of the audit committee are set forth in our audit committee charter. We have determined that Stuart Rogers qualifies as an audit committee financial expert, pursuant to SEC regulations and section 803 of the NYSE AMEX company guide.  Members of the audit committee satisfy the financial literacy requirements for audit committee members under the SEC rules and regulations.  We have determined that Messrs. Morrison, Durylo and Rogers are independent directors in accordance with Rule 10A3 under the Securities Exchange Act of 1934 and Section 803 of the NYSE AMEX Company Guide.

In order to act in a forward-thinking manner, our board of directors intends to elect in 2010 a compensation committee, whose members will include members of the audit committee, to complete the following functions, among others:

·

Develops executive compensation philosophy and establishes and annually reviews and approves policies regarding executive compensation programs and practices;

·

Reviews and approves corporate goals and objectives relevant to the Chief Executive Officer's compensation, evaluates the Chief Executive Officer's performance in light of those goals and objectives and sets the Chief Executive Officer's compensation based on this evaluation;

·

Reviews the Chief Executive Officer's recommendations with respect to, and approves annual compensation for, our other executive officers;

·

Establishes and administers annual and long-term incentive compensation plans for key executives;

·

Recommends to the board for its approval and, where appropriate, submission to our stockholders, incentive compensation plans and equity-based plans;

·

Recommends to the board for its approval changes to executive compensation policies and programs; and

·

Reviews and approves all special executive employment, compensation and retirement arrangements.

D.

Employees

At the end of the fiscal year ended November 30, 2009, the Company had three employees consisting of the Chief Executive Officer, Manager of Field Operations and an office assistant.  All employees were located in British Columbia.  We hire contractors on an as-needed basis for geological services and other trades and when required, we have retained geological and other consultants to conduct work programs on our mineral property interests.

For each of the years ended November 30, 2006, and 2005, our Company did not hire or use the services of employees.  We had two contractors who provided their services on a part-time basis for corporate secretarial services and controllership responsibilities.  Our President received compensation through a consulting agreement with a company that he controls.  All were classified as independent contractors but the individuals became employees of the Company in 2007.

E.

Share Ownership

Our directors and officers beneficially own the following shares as of the date of this Annual Report having given effect to a 5 old for 1 new share consolidation on March 11, 2010:

Common Shares

Director or Officer			Number of Common Shares Owned(1)	Percentage of Outstanding (%)(1)(2)
Tim Coupland(3)			1,667,827	7.79
Brian Morrison(4)			35,800	0.17
Edward Burylo(5)			53,800	0.25
Stuart Rogers(6)			119,000	0.56
Robert Hall(7)			149,900	0.70
Gord Steblin(8)			50,000	0.23
Notes:
	(1)	Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days of March 20, 2010, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
	(2)	Percentages are based on 21,403,979 shares of common stock issued and outstanding as of March 20, 2010 unless otherwise noted.
	(3)	Includes 900,000 common shares Tim Coupland has the right to acquire pursuant to outstanding stock options and 100,000 warrants which are exercisable within 60 days of March 20, 2010.  Tim Coupland holds 611,795 shares directly, 900,000 stock options and 100,000 warrants and T8X Capital Ltd., of which Tim Coupland is a 100% owner, holds 56,032 shares.
	(4)	Includes 5,800 common shares and 30,000 common shares Brian Morrison has the right to acquire pursuant to outstanding stock options which are exercisable.
	(5)	Includes 3,800 common shares and 50,000 common shares Edward Burylo has the right to acquire pursuant to outstanding stock options which are exercisable.
	(6)	Includes 4,000 common shares and 115,000 common shares Stuart Rogers has the right to acquire pursuant to outstanding stock options which are exercisable.
	(7)	Includes 34,900 common shares and 115,000 common shares Robert Hall has the right to acquire pursuant to outstanding stock options which are exercisable.
	(8)	Includes 50,000 common shares Gord Steblin has the right to acquire pursuant to outstanding stock options which are exercisable.

Stock Options

The following incentive stock options are currently outstanding to our directors and officers having given effect to a 5 old for 1 new share consolidation on March 11, 2010:

Shares that may be Purchased Upon Exercise of Stock Options

Director or Officer	Number of Common Shares	Exercise Price ($)	Expiry Date
Tim Coupland	300,000	4.25	November 7, 2010
	260,000	1.75	July 31, 2011
	340,000	1.00	July 2, 2014
Brian Morrison	30,000	1.00	July 2, 2014
Edward Burylo	50,000	1.00	July 2, 2014
Stuart Rogers	30,000	4.25	November 7, 2010
	35,000	1.75	July 31, 2011
	50,000	1.00	July 2, 2014
Robert Hall	30,000	4.25	November 7, 2010
	35,000	1.75	July 31, 2011
	50,000	1.00	July 2, 2014
Gord Steblin	50,000	1.00	July 2, 2014

At the 2009 annual general meeting of our shareholders, held on February 8, 2010, our company’s stock option plan was proposed, and approved, and subsequently filed with the TSX-V.

We grant share options in accordance with the policies of the TSX Venture Exchange. Under the general guidelines of the TSX Venture Exchange, we may reserve up to 10% of our issued and outstanding shares to our employees, directors or consultants to purchase.

Our stock option plan provides for equity participation by eligible directors, officers, employees and consultants through the acquisition of common shares pursuant to the grant of options. Our board of directors administers the plan. Options may be granted to purchase common shares on terms that the directors may determine, subject to the limitations of the stock option plan and the requirements of the TSX-V. For a summary of the terms of the stock option plan, see “Item 6B.”

ITEM 7 - MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.

Major Shareholders

We are a publicly-held corporation, with our common shares held by residents of Canada, the United States of America and other countries. As of the date of filing this Annual Report, we are authorized to issued an unlimited number of common shares without par value, of which 21,403,979 common shares were issued and outstanding and unlimited number of preferred shares without par value, of which no preferred share was issued and outstanding.

As of the date of this report, there are no shareholders known to us that are beneficial owners of more than 5% of our common shares.

Changes in Ownership Percentage

There were no significant changes over the last three years in the percentage of the issued share capital for the Company held by major shareholders, either directly or by virtue of ownership of our common shares.

Identity of Person or Group(1)			2009	2008	2007
Tim Coupland(3)			<5%	<5%	<5%
Notes:
	(1)	Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.  Shares of common stock subject to options or warrants currently exercisable, or exercisable within 60 days, are deemed outstanding for purposes of computing the percentage ownership of the person holding such option or warrants, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
	(2)	Percentages are based on in: (1)  2009:  21,403,979 shares of common stock issued and outstanding as of  March 29, 2010; (2)  2008:  21,403,979 shares of common stock issued and outstanding as of  March 20, 2009; (3)  2007: and 20,907,312 shares of common stock issued and outstanding as of April 4, 2008;  unless otherwise noted.
	(3)	Tim Coupland holds 1,667,827 common shares (7.79%) including 900,000 common shares, the right to acquire pursuant to outstanding stock options and 100,000 warrants which are exercisable within 60 days of March 20, 2010.  Tim Coupland holds 611,795 shares directly, 900,000 stock options and 100,000 warrants and T8X Capital Ltd., of which Tim Coupland is a 100% owner, holds 56,032 shares.

1,667,827 7.79

There has not been a significant change in the ownership percentage held by any major shareholders during the past three years.

Voting Rights

Our major shareholders do not have any different voting rights than other shareholders.

Corporate or Foreign Government Ownership

We are not controlled directly or indirectly by any other corporation or any other foreign government or by any other natural or legal person, severally or jointly.

Geographic Breakdown of Shareholders

The following lists the geographical distribution of shareholders at February 28, 2010:

	Number of registered
Location	shareholders	Number of shares
Canada	17	21,217,747
United States	16	156,172
Other	5	30,060
Total	38	21,403,979

Shares registered in intermediaries were assumed to be held by residents of the same country in which the clearing-house was located.

Change of Control

There are no arrangements for which through their operation, at a subsequent date, may result in a change in our control.

CONTINGENCIES

The Company is aware of no contingencies or pending legal proceedings as of March 29, 2010.

OFF-BALANCE SHEET ARRANGEMENTS

The Company has no off-balance sheet arrangements that would require disclosure.

B.

Related Party Transactions

TRANSACTIONS WITH RELATED PARTIES

The Company’s board of directors consists of Tim Coupland, Robert Hall, Brian Morrison, Edward Burylo and Stuart Rogers.  Tim Coupland is the Company’s President and Chief Executive Officer, Robert Hall is the Company’s Manager of Field Operations and  Gord Steblin is the Company’s Chief Financial Officer.  The Company paid or accrued amounts to related parties as follows:

	For the Year Ended November 30
	2009	2008	2007
Secretarial fees paid to an individual related to Mr. Tim Coupland(1)	15,000	15,000	8,500
Management fees paid to a company controlled by Mr. Tim Coupland	50,000	50,000	117,500
Director fees paid to a company controlled by Mr. Robert  Hall(1)	25,000	25,000	14,000
Director fees paid to Mr. Stuart Rogers	27,000	32,000	9,000
Director fees paid to Mr. Edward Burylo	10,000	-	-
Director fees paid to Mr. Brian Morrison	17,000	3,000	-
Accounting fees paid to a proprietorship controlled by Ms. Chantal Schutz(1)	13,875	-	-
Accounting fees paid to a company controlled by Mr. Gord Steblin	59,001	-	-
Salaries and benefits paid to directors and/or officers of the Company(1)	479,878	575,269	397,982
	$696,754	$700,269	$546,982

  Prior to January 1, 2007, the Company incurred management, director, accounting and secretarial fees paid to various executives and officers who provided services on a consulting basis.  In 2007, these individuals became employees of the Company and the corresponding salaries and benefits are included in salaries and benefits expense.

These transactions were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties.

PROPOSED TRANSACTIONS

As is typical of the mineral exploration and development industry, the Company is continually reviewing potential merger, acquisition, investment and joint venture transactions and opportunities that could enhance shareholder value.  

At present,the Company is a party to the following potential acquisition agreement with Sterling Mining Company.

Sterling Mining Company – Sunshine Silver Mine, Idaho, USA

During the year ended 30 November 2009, the Company entered into an acquisition agreement with Sterling Mining Company (“Sterling”) to acquire a 100% interest in Sterling and its assets and provide for financing of Sterling’s ongoing operations (the “Agreement”).  

Sterling is currently a debtor-in-possession in Chapter 11 Bankruptcy in the District of Idaho, U.S.A.  Sterling is engaged in the business of acquiring, exploring, developing and mining mineral properties primarily those containing silver and associated base and precious metals.  Sterling operates the Sunshine Silver Mine in Idaho and has exploration projects in Idaho, U.S.A.  Sterling was incorporated under the laws of the State of Idaho on February 3, 1903 and its common shares are currently listed on the OTCBB: SRLMQ and Frankfurt Stock Exchange: SMX.

The Agreement provides that Sterling must make an application for reorganization to the Court on or before December 15, 2009 and receive an Order confirming the Plan on or before February 28, 2010, staying all claims and actions against Sterling and its assets and whereby the Company will subscribe for unissued common shares remaining after satisfaction of claims of creditors representing 100% of the issued and outstanding common shares of Sterling, on a fully diluted basis, in exchange for US$10,500,000.  In addition, the Company has agreed to make available up to US$1,250,000 (US$250,000 per month) in interim term debtor-in-possession financing to Sterling, which amount will bear interest at a rate of 10% per annum, bringing the total value of the agreement to US$11,750,000.  The Agreement prohibits Sterling from soliciting or initiating any discussion regarding any other business combination or sale of material assets, contains prov isions for the Company to match competing, unsolicited proposals and provides for a US$250,000 termination fee payable to the Company in certain circumstances.

The Agreement contains a number of conditions precedent to the obligations of the parties.  Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent that they may be capable of waiver, the proposed transaction will not proceed.  There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all. Such conditions include: an order of the Court approving the Plan of reorganization of Sterling; all claims of all the creditors of Sterling are paid, satisfied, settled or compromised under the Plan of reorganization and that all other consents and approvals, including regulatory approvals, are obtained.  The Company also entered into an agreement On March 8, 2010 with Kootenay Gold Inc. providing for joint participation by Kootenany in the bid and a joint obligation to fund the bid on an equal basis.

The Company upon meeting of the above referenced conditions, including the confirmation of a Chapter 11 Plan, will reconstitute the Sterling Board of Directors and make additions to senior management of Sterling.  See “Item 4 – Information on the Company – Sterling Mining Company- Sunshine Silver Mine, Idaho, USA”.  See also, “Cautionary Note Regarding Forward Looking Statements”.

The amounts charged to us for the services provided have been determined by negotiation among the parties, and in certain cases, are covered by signed agreements. It is the position of management that these transactions were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties.

Other than disclosed herein, no director or senior officer, and no associate or affiliate of the foregoing persons, and no insider has or has had any material interest, direct or indirect, in any transactions, or in any other proposed transaction, during the year ended November 30, 2009.

C.

Interests of Experts and Counsel

Not applicable.

ITEM 8 - FINANCIAL INFORMATION

A.

Consolidated Statements and Other Financial Information

Financial Statements

As required, we have included the following (see “Item 17”), as audited by an independent auditor and accompanied by an audit report, as of November 30, 2009:

·

Balance sheets as at November 30, 2009 and 2008;

·

Statements of loss, comprehensive loss and deficit for the fiscal years ended November 30, 2009, 2008, 2007 and cumulative from inception to November 30, 2009;

·

Statements of cash flows for the fiscal years ended November 30, 2009, 2008, 2007 and cumulative from inception to November 30, 2009;

·

Statements of changes in shareholders’ equity; and

·

Related notes and schedules.

Legal Proceedings

We are not involved in any litigation or legal proceedings and to our knowledge, no material legal proceedings involving us are to be initiated against us.

Dividends

We have never paid any dividends and do not intend to pay any dividends in the near future.

B.

Significant Changes

Since the fiscal period ended November 30, 2009, no changes have taken place which may materially affect the interpretation of our company’s financial statements.

ITEM 9 - THE OFFER AND LISTING

A.

Offer and Listing Details

Our common shares trade on the TSX-V under symbol “ASX”, on the OTCBB under symbol “ASXSD” and on the Frankfurt Exchange under symbol “QLD”. Our shares have traded on the TSX-V, and on its predecessor, the Alberta Stock Exchange, since December 5, 1997. The following table sets forth the high and low closing prices in Canadian funds of our common shares traded on the TSX-V and its predecessor:

Period		High		Low
December 1, 2004 to November 30, 2005	$	4.80	$	0.90
December 1, 2005 to November 30, 2006	$	13.80	$	3.00
December 1, 2006 to November 30, 2007	$	13.10	$	2.90
December 1, 2007 to November 30, 2008	$	3.45	$	0.60
December 1, 2008 to November 30, 2009	$	1.30	$	0.50
Period		High		Low
December 2007 to February 2008	$	3.45	$	1.78
March 2008 to May 2008	$	2.45	$	1.60
June 2008 to August 2008	$	1.95	$	1.20
September 2008 to November 2008	$	1.30	$	0.60
December 2008 to February 2009	$	1.00	$	0.50
March 2009 to May 2009	$	1.20	$	0.60
June 2009 to August 2009	$	1.30	$	0.65
September 2009 to November 2009	$	0.95	$	0.65
December 2009 to February 2010	$	1.20	$	0.70

Period		High		Low
August 2009	$	0.80	$	0.65
September 2009	$	0.90	$	0.65
October 2009	$	0.90	$	0.65
November 2009	$	0.95	$	0.80
December 2009	$	1.20	$	0.75
January 2010	$	1.10	$	0.80
February 2010	$	0.80	$	0.70

Our common shares have been quoted for trading on the OTCBB since July 16, 2002; no trades in our common shares occurred on this quotation system until January 29, 2003. The following sets forth the high and low closing prices in United States funds of our common shares traded on the OTCBB since this date:

Period		High		Low
December 1, 2004 to November 30, 2005	US$	4.10	US$	0.60
December 1, 2005 to November 30, 2006	US$	12.25	US$	2.58
December 1, 2006 to November 30, 2007	US$	11.40	US$	2.80
December 1, 2007 to November 30, 2008	US$	3.50	US$	0.50
December 1, 2008 to November 30, 2009	US$	1.10	US$	0.40

Period		High		Low
December 2007 to February 2008	US$	3.50	US$	1.75
March 2008 to May 2008	US$	2.50	US$	1.55
June 2008 to August 2008	US$	1.95	US$	1.05
September 2008 to November 2008	US$	1.20	US$	0.50
December 2008 to February 2009	US$	0.90	US$	0.40
March 2009 to May 2009	US$	1.05	US$	0.45
June 2009 to August 2009	US$	1.10	US$	0.50
September 2009 to November 2009	US$	0.90	US$	0.55
December 2009 to February 2010	US$	1.20	US$	0.60

Period		High		Low
August 2009	US$	0.80	US$	0.50
September 2009	US$	0.85	US$	0.55
October 2009	US$	0.85	US$	0.60
November 2009	US$	0.90	US$	0.75
December 2009	US$	1.20	US$	0.70
January 2010	US$	1.10	US$	0.75
February 2010	US$	0.80	US$	0.60

B.

Plan of Distribution

Not applicable.

C.

Markets

Our common shares trade on the TSX-V under the symbol “ASX”, on the OTCBB under the symbol “ASXSD” and on the Frankfurt Exchange under the symbol “QLD”. Our shares have traded on the TSX-V and on its predecessor, the Alberta Stock Exchange, since December 5, 1997; the OTCBB since July 16, 2002.  However, no trades in our common shares occurred on the OTCBB market until January 29, 2003.

D.

Selling Shareholders

Not applicable.

E.

Dilution

Not applicable.

F.

Expenses of the Issue

Not applicable.

ITEM 10 - ADDITIONAL INFORMATION

A.

Share Capital

Not required, as this form 20-F filing is made as an Annual Report.

B.

Memorandum and Articles of Association

The information required by this Section was previously disclosed, along with our Certificate of Incorporation, Certificate of Amendment, Registration of Restated Articles, Bylaws and Articles of Association, all of which is hereby incorporated by reference, in our Form 20-F registration statement filed with the Securities and Exchange Commission on June 8, 2001.

C.

Material Contracts

We are a party to the following material contracts for the two years preceding publication of this Annual Report, all of which are referred to in the exhibits section of this Annual Report:

1.

Employment Agreement between Tim Coupland and the Company with respect to services in the capacity of President and Chief Executive Officer at an annual salary of $200,000 (filed as an exhibit to Form 20-F filed April 8, 2008);

2.

Financial Public Relations Service Agreement with Progressive IR Consultants Corp. and the Company dated November 4, 2009 with respect to services in the capacity of Public Relation Advisors for fees of $7,500 per month as filed as an exhibit to this Form 20-F.

3.

Agreement dated November 17, 2009 between Sterling Mining Company and the Company, filed as an exhibit to this Form 20-F.

4.

Letter Agreement dated March 8, 2010 between Kootenay Gold Inc. and the Company, filed as an exhibit to this Form 20-F.

D.

Exchange Controls

There is no law or governmental decree or regulation in Canada that restricts the export or import of capital, or affects the remittance of dividends, interest or other payments to a non-resident holder of Common Shares, other than withholding tax requirements. Any such remittances to United States residents are generally subject to withholding tax, however no such remittances are likely in the foreseeable future. See “Taxation”, below.

There is no limitation imposed by the laws of Canada or by our charter or other constituent documents on the right of a non-resident to hold or vote the Common Shares, other than as provided in theInvestment Canada Act (Canada) (the “Investment Act”). The following discussion summarizes the material features of the Investment Act for a non-resident who proposes to acquire a controlling number of our Common Shares.  It is general only, it is not a substitute for independent advice from an investor’s own advisor, and it does not anticipate statutory or regulatory amendments. We do not believe the Investment Act will have any effect on us or on our non-Canadian shareholders due to a number of factors including the nature of our operations and our relatively small capitalization.

The Investment Act generally prohibits implementation of a “reviewable” investment by an individual, government or agency thereof, corporation, partnership, trust or joint venture (each an “entity”) that is not a “Canadian” as defined in the Investment Act (a “non-Canadian”), unless after review the Director of Investments appointed by the minister responsible for the Investment Act is satisfied that the investment is likely to be of net benefit to Canada. The size and nature of a proposed transaction may give rise to an obligation to notify the Director to seek an advance ruling. An investment in our Common Shares by a non-Canadian (other than a “WTO Investor” as that term is defined in the Investment Act and which term includes entities which are nationals of or are controlled by nationals of member states of the World Trade Organization) when we are not controlled by a WTO Investor, would be reviewable under the Investme nt Act if it was an investment to acquire control of us and the value of our assets, as determined in accordance with the regulations promulgated under the Investment Act, was over a certain figure, or if an order for review was made by the federal cabinet on the grounds that the investment related to Canada’s cultural heritage or national identity, regardless of the value of our assets. An investment in our Common Shares by a WTO Investor, or by a non-Canadian when we are controlled by a WTO Investor, would be reviewable under the Investment Act if it was an investment to acquire control of us and the value of our assets, as determined in accordance with the regulations promulgated under the Investment Act, was not less than a specified amount, which for 2009 exceeds CAD$312 million. A non-Canadian would acquire control of us for the purposes of the Investment Act if the non-Canadian acquired a majority of our Common Shares. The acquisition of less than a majority but one-third or more of our Common Sh ares would be presumed to be an acquisition of control of us unless it could be established that, on the acquisition, we were not controlled in fact by the acquiror through the ownership of our Common Shares.

E.

Taxation

Certain U.S. Federal Income Tax Considerations

The following is a general summary of certain material U.S. federal income tax considerations applicable to a U.S. Holder (as defined below) arising from and relating to the acquisition, ownership, and disposition of common shares.

This summary is for general information purposes only and does not purport to be a complete analysis or listing of all potential U.S. federal income tax considerations that may apply to a U.S. Holder arising from and relating to the acquisition, ownership, and disposition of common shares.  In addition, this summary does not take into account the individual facts and circumstances of any particular U.S. Holder that may affect the U.S. federal income tax consequences to such U.S. Holder, including specific tax consequences to a U.S. Holder under an applicable tax treaty.  Accordingly, this summary is not intended to be, and should not be construed as, legal or U.S. federal income tax advice with respect to any U.S. Holder.  Each U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local tax, and foreign tax consequences relating to the acquisition, ownership a nd disposition of common shares.

No legal opinion from U.S. legal counsel or ruling from the Internal Revenue Service (the “IRS”) has been requested, or will be obtained, regarding the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.  This summary is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the positions taken in this summary.  In addition, because the authorities on which this summary is based are subject to various interpretations, the IRS and the U.S. courts could disagree with one or more of the positions taken in this summary.

Scope of this Summary

Authorities

This summary is based on the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations (whether final, temporary, or proposed), published rulings of the IRS, published administrative positions of the IRS, U.S. court decisions, the Convention Between Canada and the United States of America with Respect to Taxes on Income and on Capital, signed September 26, 1980, as amended (the “Canada-U.S. Tax Convention”), and U.S. court decisions that are applicable and, in each case, as in effect and available, as of the date of this document.  Any of the authorities on which this summary is based could be changed in a material and adverse manner at any time, and any such change could be applied on a retroactive or prospective basis which could affect the U.S. federal income tax considerations described in this summary.  This summary does not discuss the potential effects, whether adverse or beneficial, of any proposed legislation that, if enacted, could be applied on a retroactive or prospective basis.

U.S. Holders

For purposes of this summary, the term "U.S. Holder" means a beneficial owner of common shares that is for U.S. federal income tax purposes:

·

an individual who is a citizen or resident of the U.S.;

·

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized under the laws of the U.S., any state thereof or the District of Columbia;

·

an estate whose income is subject to U.S. federal income taxation regardless of its source; or

·

a trust that (1) is subject to the primary supervision of a court within the U.S. and the control of one or more U.S. persons for all substantial decisions or (2) has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person.

Non-U.S. Holders

For purposes of this summary, a “non-U.S. Holder” is a beneficial owner of common shares that is not a U.S. Holder.  This summary does not address the U.S. federal income tax consequences to non-U.S. Holders arising from and relating to the acquisition, ownership, and disposition of common shares.  Accordingly, a non-U.S. Holder should consult its own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local tax, and foreign tax consequences (including the potential application of and operation of any income tax treaties) relating to the acquisition, ownership, and disposition of common shares.

U.S. Holders Subject to Special U.S. Federal Income Tax Rules Not Addressed

This summary does not address the U.S. federal income tax considerations applicable to U.S. Holders that are subject to special provisions under the Code, including the following U.S. Holders:  (a) U.S. Holders that are tax-exempt organizations, qualified retirement plans, individual retirement accounts, or other tax-deferred accounts; (b) U.S. Holders that are financial institutions, underwriters, insurance companies, real estate investment trusts, or regulated investment companies; (c) U.S. Holders that are dealers in securities or currencies or U.S. Holders that are traders in securities that elect to apply a mark-to-market accounting method; (d) U.S. Holders that have a “functional currency” other than the U.S. dollar; (e) U.S. Holders that own common shares as part of a straddle, hedging transaction, conversion transaction, constructive sale, or other arrangement involving more than one position; (f) U.S. Holders that acquired common shares in connectio n with the exercise of employee stock options or otherwise as compensation for services; (g) U.S. Holders that hold common shares other than as a capital asset within the meaning of Section 1221 of the Code (generally, property held for investment purposes); (h) partnerships and other pass-through entities (and investors in such partnerships and entities); or (j) U.S. Holders that own or have owned  (directly, indirectly, or by attribution) 10% or more of the total combined voting power of the outstanding shares of the Company.  This summary also does not address the U.S. federal income tax considerations applicable to U.S. Holders who are (a) U.S. expatriates or former long-term residents of the U.S. subject to Section 877 of the Code, (b) persons that have been, are, or will be a resident or deemed to be a resident in Canada for purposes of the Tax Act; (c) persons that use or hold, will use or hold, or that are or will be deemed to use or hold common shares in connection with carrying on a busin ess in Canada; (d) persons whose common shares constitute “taxable Canadian property” under the Tax Act; or (e) persons that have a permanent establishment in Canada for the purposes of the Canada-U.S. Tax Convention.  U.S. Holders that are subject to special provisions under the Code, including U.S. Holders described immediately above, should consult their own tax advisor regarding the U.S. federal, U.S. federal alternative minimum, U.S. federal estate and gift, U.S. state and local tax, and foreign tax consequences relating to the acquisition, ownership and disposition of common shares.

If an entity that is classified as a partnership for U.S. federal income tax purposes holds common shares, the U.S. federal income tax consequences to such partnership and the partners of such partnership generally will depend on the activities of the partnership and the status of such partners.  Partners of entities that are classified as partnerships for U.S. federal income tax purposes should consult their own tax advisor regarding the U.S. federal income tax consequences arising from and relating to the acquisition, ownership, and disposition of common shares.

Tax Consequences Not Addressed

This summary does not address the U.S. state and local, U.S. federal estate and gift, U.S. federal alternative minimum tax or foreign tax consequences to U.S. Holders of the acquisition, ownership, and disposition of common shares.  Each U.S. Holder should consult its own tax advisor regarding the U.S. state and local, U.S. federal estate and gift, U.S. federal alternative minimum tax and foreign tax consequences of the acquisition, ownership, and disposition of common shares.

Passive Foreign Investment Company Rules

If the Company is considered a “passive foreign investment company” under the meaning of Section 1297 of the Code (a “PFIC”) at any time during a U.S. Holder’s holding period, the following sections will generally describe the U.S. federal income tax consequences to the U.S. Holder of the acquisition, ownership, and disposition of common shares.

PFIC Status of the Company

The Company generally will be a PFIC if, for a tax year, (a) 75% or more of the gross income of the Company for such tax year is passive income or (b) 50% or more of the value of the Company’s assets either produce passive income or are held for the production of passive income, based on the quarterly average of the fair market value of such assets.  “Gross income” generally means all revenues less the cost of goods sold, and “passive income” generally includes, for example, dividends, interest, certain rents and royalties, certain gains from the sale of stock and securities, and certain gains from commodities transactions.

Active business gains arising from the sale of commodities generally are excluded from passive income if substantially all of a foreign corporation’s commodities are (a) stock in trade of such foreign corporation or other property of a kind which would properly be included in inventory of such foreign corporation, or property held by such foreign corporation primarily for sale to customers in the ordinary course of business, (b) property used in the trade or business of such foreign corporation that would be subject to the allowance for depreciation under Section 167 of the Code, or (c) supplies of a type regularly used or consumed by such foreign corporation in the ordinary course of its trade or business.

For purposes of the PFIC income test and asset test described above, if the Company owns, directly or indirectly, 25% or more of the total value of the outstanding shares of another corporation, the Company will be treated as if it (a) held a proportionate share of the assets of such other corporation and (b) received directly a proportionate share of the income of such other corporation.  In addition, for purposes of the PFIC income test and asset test described above, “passive income” does not include any interest, dividends, rents, or royalties that are received or accrued by the Company from a “related person” (as defined in Section 954(d)(3) of the Code), to the extent such items are properly allocable to the income of such related person that is not passive income.

In addition, under certain attribution rules, if the Company is a PFIC, U.S. Holders will be deemed to own their proportionate share of any subsidiary of the Company which is also a PFIC (a ‘‘Subsidiary PFIC’’), and will be subject to U.S. federal income tax on their proportionate share of (i) a distribution on the shares of a Subsidiary PFIC and (ii) a disposition or deemed disposition  of shares of a Subsidiary PFIC, both as if such U.S. Holders directly held the shares of such Subsidiary PFIC.

The Company believes that it qualified as a PFIC for its taxable year ended November 30, 2009, and based on current business plans and financial projections, the Company anticipates that it may qualify as a PFIC for the current taxable year and subsequent taxable years.  The determination of whether a corporation was, or will be, a PFIC for a tax year depends, in part, on the application of complex U.S. federal income tax rules, which are subject to differing interpretations.  In addition, whether a corporation will be a PFIC for any tax year depends on the assets and income of such corporation over the course of each such tax year and, as a result, cannot be predicted with certainty as of the date of this document.  Accordingly, there can be no assurance that the IRS will not challenge any determination made by the Company (or a Subsidiary PFIC) concerning its PFIC status or that the Company (and each Subsidiary PFIC) was not, or will not be, a PFIC for any tax year.  Each U.S. Holder should consult its own tax advisor regarding the PFIC status of the Company and each Subsidiary PFIC.

Default PFIC Rules Under Section 1291 of the Code

If the Company is a PFIC, the U.S. federal income tax consequences to a U.S. Holder of the acquisition, ownership, and disposition of common shares will depend on whether such U.S. Holder makes an election to treat the Company as a “qualified electing fund” or “QEF” under Section 1295 of the Code (a “QEF Election”) or a mark-to-market election under Section 1296 of the Code (a “Mark-to-Market Election”).  A U.S. Holder that does not make either a QEF Election or a Mark-to-Market Election will be referred to in this summary as a “Non-Electing U.S. Holder.”

A Non-Electing U.S. Holder will be subject to the rules of Section 1291 of the Code with respect to (a) any gain recognized on the sale or other taxable disposition of common shares and (b) any excess distribution received on the common shares.  A distribution generally will be an “excess distribution” to the extent that such distribution (together with all other distributions received in the current tax year) exceeds 125% of the average distributions received during the three preceding tax years (or during a U.S. Holder’s holding period for the common shares, if shorter).

Under Section 1291 of the Code, any gain recognized on the sale or other taxable disposition of common shares, and any “excess distribution” received on common shares, must be ratably allocated to each day in a Non-Electing U.S. Holder’s holding period for the respective common shares.  The amount of any such gain or excess distribution allocated to the tax year of disposition or distribution of the excess distribution and to years before the entity became a PFIC, if any, would be taxed as ordinary income.  The amounts allocated to any other tax year would be subject to U.S. federal income tax at the highest tax applicable to ordinary income in each such year, and an interest charge would be imposed on the tax liability for each such year, calculated as if such tax liability had been due in each such year.  A Non-Electing U.S. Holder that is not a corporation must treat any such interest paid as “personal interest,” which is not dedu ctible.

If the Company is a PFIC for any tax year during which a Non-Electing U.S. Holder holds common shares, the Company will continue to be treated as a PFIC with respect to such Non-Electing U.S. Holder, regardless of whether the Company ceases to be a PFIC in one or more subsequent tax years.  A Non-Electing U.S. Holder may terminate this deemed PFIC status by electing to recognize gain (which will be taxed under the rules of Section 1291 of the Code discussed above) as if such common shares were sold on the last day of the last tax year for which the Company was a PFIC.

QEF Election

A U.S. Holder that makes a QEF Election for the first tax year in which its holding period of its common shares begins, generally, will not be subject to the rules of Section 1291 of the Code discussed above with respect to its common shares.  However, a U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such U.S. Holder’s pro rata share of (a) the net capital gain of the Company, which will be taxed as long-term capital gain to such U.S. Holder, and (b) and the ordinary earnings of the Company, which will be taxed as ordinary income to such U.S. Holder.  Generally, “net capital gain” is the excess of (a) net long-term capital gain over (b) net short-term capital loss, and “ordinary earnings” are the excess of (a) “earnings and profits” over (b) net capital gain.  A U.S. Holder that makes a QEF Election will be subject to U.S. federal income tax on such amounts fo r each tax year in which the Company is a PFIC, regardless of whether such amounts are actually distributed to such U.S. Holder by the Company.  However, for any tax year in which the Company is a PFIC and has no net income or gain, U.S. Holders that have made a QEF Election would not have any income inclusions as a result of the QEF Election.  If a U.S. Holder that made a QEF Election has an income inclusion, such a U.S. Holder may, subject to certain limitations, elect to defer payment of current U.S. federal income tax on such amounts, subject to an interest charge.  If such U.S. Holder is not a corporation, any such interest paid will be treated as “personal interest,” which is not deductible.

A U.S. Holder that makes a QEF Election generally (a) may receive a tax-free distribution from the Company to the extent that such distribution represents “earnings and profits” of the Company that were previously included in income by the U.S. Holder because of such QEF Election and (b) will adjust such U.S. Holder’s tax basis in the common shares to reflect the amount included in income or allowed as a tax-free distribution because of such QEF Election.  In addition, a U.S. Holder that makes a QEF Election generally will recognize capital gain or loss on the sale or other taxable disposition of common shares.

The procedure for making a QEF Election, and the U.S. federal income tax consequences of making a QEF Election, will depend on whether such QEF Election is timely.  A QEF Election will be treated as “timely” if such QEF Election is made for the first year in the U.S. Holder’s holding period for the common shares in which the Company was a PFIC.  A U.S. Holder may make a timely QEF Election by filing the appropriate QEF Election documents at the time such U.S. Holder files a U.S. federal income tax return for such year.

A QEF Election will apply to the tax year for which such QEF Election is made and to all subsequent tax years, unless such QEF Election is invalidated or terminated or the IRS consents to revocation of such QEF Election.  If a U.S. Holder makes a QEF Election and, in a subsequent tax year, the Company ceases to be a PFIC, the QEF Election will remain in effect (although it will not be applicable) during those tax years in which the Company is not a PFIC.  Accordingly, if the Company becomes a PFIC in another subsequent tax year, the QEF Election will be effective and the U.S. Holder will be subject to the QEF rules described above during any subsequent tax year in which the Company qualifies as a PFIC.

U.S. Holders should be aware that there can be no assurance that we will satisfy record keeping requirements that apply to a QEF, or that we will supply U.S. Holders with information that such U.S. Holders require to report under the QEF rules, in event that we are a PFIC and a U.S. Holder wishes to make a QEF Election.  Each U.S. Holder should consult its own financial advisor, legal counsel, or accountant regarding the availability of, and procedure for making, a QEF Election.  Thus, U.S. Holders may not be able to make a QEF Election with respect to their common shares.

Mark-to-Market Election

A U.S. Holder may make a Mark-to-Market Election only if the common shares are marketable stock.  The common shares generally will be “marketable stock” if the common shares are regularly traded on (a) a national securities exchange that is registered with the Securities and Exchange Commission, (b) the national market system established pursuant to section 11A of the Securities and Exchange Act of 1934, or (c) a foreign securities exchange that is regulated or supervised by a governmental authority of the country in which the market is located, provided that (i) such foreign exchange has trading volume, listing, financial disclosure, and other requirements and the laws of the country in which such foreign exchange is located, together with the rules of such foreign exchange, ensure that such requirements are actually enforced and (ii) the rules of such foreign exchange ensure active trading of listed stocks.  If such stock i s traded on such a qualified exchange or other market, such stock generally will be “regularly traded” for any calendar year during which such stock is traded, other than in de minimis quantities, on at least 15 days during each calendar quarter.

A U.S. Holder that makes a Mark-to-Market Election with respect to its common shares generally will not be subject to the rules of Section 1291 of the Code discussed above with respect to such common shares.  However, if a U.S. Holder does not make a Mark-to-Market Election beginning in the first tax year of such U.S. Holder’s holding period for the common shares or such U.S. Holder has not made a timely QEF Election, the rules of Section 1291 of the Code discussed above will apply to certain dispositions of, and distributions on, the common shares.

A U.S. Holder that makes a Mark-to-Market Election will include in ordinary income, for each tax year in which the Company is a PFIC, an amount equal to the excess, if any, of (a) the fair market value of the common shares, as of the close of such tax year over (b) such U.S. Holder’s tax basis in such common shares.  A U.S. Holder that makes a Mark-to-Market Election will be allowed a deduction in an amount equal to the excess, if any, of (i) such U.S. Holder’s adjusted tax basis in the common shares, over (ii) the fair market value of such common shares (but only to the extent of the net amount of previously included income as a result of the Mark-to-Market Election for prior tax years).

A U.S. Holder that makes a Mark-to-Market Election generally also will adjust such U.S. Holder’s tax basis in the common shares to reflect the amount included in gross income or allowed as a deduction because of such Mark-to-Market Election.  In addition, upon a sale or other taxable disposition of common shares, a U.S. Holder that makes a Mark-to-Market Election will recognize ordinary income or ordinary loss (not to exceed the excess, if any, of (a) the amount included in ordinary income because of such Mark-to-Market Election for prior tax years over (b) the amount allowed as a deduction because of such Mark-to-Market Election for prior tax years).

A Mark-to-Market Election applies to the tax year in which such Mark-to-Market Election is made and to each subsequent tax year, unless the common shares cease to be “marketable stock” or the IRS consents to revocation of such election.  Each U.S. Holder should consult its own tax advisor regarding the availability of, and procedure for making, a Mark-to-Market Election.

Although a U.S. Holder may be eligible to make a Mark-to-Market Election with respect to the common shares, no such election may be made with respect to the stock of any Subsidiary PFIC that a U.S. Holder is treated as owning, because such stock is not marketable.  Hence, the Mark-to-Market Election will not be effective to eliminate the interest charge described above with respect to deemed dispositions of Subsidiary PFIC stock or distributions from a Subsidiary PFIC.

Other PFIC Rules

Under Section 1291(f) of the Code, the IRS has issued proposed Treasury Regulations that, subject to certain exceptions, would cause a U.S. Holder that had not made a timely QEF Election to recognize gain (but not loss) upon certain transfers of common shares that would otherwise be tax-deferred (e.g., gifts and exchanges pursuant to corporate reorganizations).  However, the specific U.S. federal income tax consequences to a U.S. Holder may vary based on the manner in which common shares are transferred.

Certain additional adverse rules will apply with respect to a U.S. Holder if the Company is a PFIC, regardless of whether such U.S. Holder makes a QEF Election.  For example under Section 1298(b)(6) of the Code, a U.S. Holder that uses common shares as security for a loan will, except as may be provided in Treasury Regulations, be treated as having made a taxable disposition of such common shares.

Special rules also apply to the amount of foreign tax credit that a U.S. Holder may claim on a distribution from a PFIC.  Subject to such special rules, foreign taxes paid with respect to any distribution in respect of stock in a PFIC are generally eligible for the foreign tax credit.  The rules relating to distributions by a PFIC and their eligibility for the foreign tax credit are complicated, and a U.S. Holder should consult with their own tax advisor regarding the availability of the foreign tax credit with respect to distributions by a PFIC.

In addition, a U.S. Holder who acquires common shares from a decedent will not receive a “step up” in tax basis of such common shares to fair market value.

The PFIC rules are complex, and each U.S. Holder should consult its own tax advisor regarding the PFIC rules and how the PFIC rules may affect the U.S. federal income tax consequences of the acquisition, ownership, and disposition of common shares.

U.S. Federal Income Tax Consequences of the Acquisition, Ownership, and Disposition of Common Shares

If either (a) the Company is not treated as a PFIC with respect to a U.S. Holder; (b) the Company is no longer a PFIC in the current taxable year and a U.S. Holder has recognized unrealized gain as of the last day of the taxable year in which the Company was a PFIC; or (c) a U.S. Holder has made a timely QEF Election and the Company is no longer a PFIC in the current taxable year, then a U.S. Holder generally will not be subject to the rules described above under the heading “Passive Foreign Investment Company Rules.”  Instead, the U.S. Holder will have the tax consequences described below.

General Taxation of Distributions

Subject to the PFIC rules discussed above, a U.S. Holder that receives a distribution, including a constructive distribution, with respect to a Common Share will be required to include the amount of such distribution in gross income as a dividend (without reduction for any Canadian income tax withheld from such distribution) to the extent of the current or accumulated “earnings and profits” of the Company, as computed for U.S. federal income tax purposes.  A dividend generally will be taxed to a U.S. Holder at ordinary income tax rates.  To the extent that a distribution exceeds the current and accumulated “earnings and profits” of the Company, such distribution will be treated first as a tax-free return of capital to the extent of a U.S. Holder's tax basis in the common shares and thereafter as gain from the sale or exchange of such common shares.  (See “ Sale or Other Taxable Disposition of common shares” below).  However , the Company may not maintain the calculations of earnings and profits in accordance with U.S. federal income tax principles, and each U.S. Holder should therefore assume that any distribution by the Company with respect to the common shares will constitute ordinary dividend income.  Dividends received on common shares generally will not be eligible for the “dividends received deduction”.  In addition, the Company does not anticipate that its distributions will be eligible for the preferential tax rates applicable to long-term capital gains.  The dividend rules are complex, and each U.S. Holder should consult its own tax advisor regarding the application of such rules.

Sale or Other Taxable Disposition of Common Shares

Subject to the PFIC rules discussed above, upon the sale or other taxable disposition of common shares, a U.S. Holder generally will recognize capital gain or loss in an amount equal to the difference between the amount of cash plus the fair market value of any property received and such U.S. Holder's tax basis in such common shares sold or otherwise disposed of.  Subject to the PFIC rules discussed above, gain or loss recognized on such sale or other disposition generally will be long-term capital gain or loss if, at the time of the sale or other disposition, the common shares have been held for more than one year.

Gain or loss recognized by a U.S. Holder on the sale or other taxable disposition of common shares generally will be treated as “U.S. source” for purposes of applying the U.S. foreign tax credit rules unless the gain is subject to tax in Canada and is resourced as “foreign source” under the Canada-U.S. Tax Convention and such U.S. Holder elects to treat such gain or loss as “foreign source.”

Preferential tax rates apply to long-term capital gain of a U.S. Holder that is an individual, estate, or trust.  There are currently no preferential tax rates for long-term capital gain of a U.S. Holder that is a corporation.  Deductions for capital losses are subject to significant limitations under the Code.

Receipt of Foreign Currency

The amount of any distribution paid to a U.S. Holder in foreign currency, or on the sale, exchange or other taxable disposition of common shares, generally will be equal to the U.S. dollar value of such foreign currency based on the exchange rate applicable on the date of receipt (regardless of whether such foreign currency is converted into U.S. dollars at that time).  If the foreign currency received is not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt.  Any U.S. Holder who receives payment in foreign currency and engages in a subsequent conversion or other disposition of the foreign currency may have a foreign currency exchange gain or loss that would be treated as ordinary income or loss, and generally will be U.S. source income or loss for foreign tax credit purposes.  Each U.S. Holder should consult its own U.S. tax advisor regarding the U.S. federal income tax consequences of receiving, owning, and disposing of foreign currency.

Foreign Tax Credit

Subject to the PFIC rules discussed above, a U.S. Holder who pays (whether directly or through withholding) Canadian income tax with respect to dividends paid on the common shares generally will be entitled, at the election of such U.S. Holder, to receive either a deduction or a credit for such Canadian income tax paid.  Generally, a credit will reduce a U.S. Holder’s U.S. federal income tax liability on a dollar-for-dollar basis, whereas a deduction will reduce a U.S. Holder’s income subject to U.S. federal income tax.  This election is made on a year-by-year basis and applies to all foreign taxes paid (whether directly or through withholding) by a U.S. Holder during a year.

Complex limitations apply to the foreign tax credit, including the general limitation that the credit cannot exceed the proportionate share of a U.S. Holder’s U.S. federal income tax liability that such U.S. Holder’s “foreign source” taxable income bears to such U.S. Holder’s worldwide taxable income.  In applying this limitation, a U.S. Holder’s various items of income and deduction must be classified, under complex rules, as either “foreign source” or “U.S. source.”  In addition, this limitation is calculated separately with respect to specific categories of income.  Dividends paid by the Company generally will constitute “foreign source” income and generally will be categorized as “passive category income.”  The foreign tax credit rules are complex, and each U.S. Holder should consult its own tax advisor regarding the foreign tax credit rules.

Backup Withholding and Information Reporting

Under U.S. federal income tax law and Treasury regulations, certain categories of U.S. Holders must file information returns with respect to their investment in, or involvement in, a foreign corporation.  Penalties for failure to file certain of these information returns are substantial.  U.S. Holders should consult with their own tax advisors regarding the requirements of filing information returns, and, if applicable mark-to-market and QEF elections.

Payments made within the U.S. or by a U.S. payor or U.S. middleman, of dividends on, and proceeds arising from the sale or other taxable disposition of, common shares generally may be subject to information reporting and backup withholding tax, at the rate of 28%, if a U.S. Holder (a) fails to furnish such U.S.  Holder’s correct U.S. taxpayer identification number (generally on Form W-9), (b) furnishes an incorrect U.S. taxpayer identification number, (c) is notified by the IRS that such U.S. Holder has previously failed to properly report items subject to backup withholding tax, or (d) fails to certify, under penalty of perjury, that such U.S. Holder has furnished its correct U.S. taxpayer identification number and that the IRS has not notified such U.S. Holder that it is subject to backup withholding tax.  However, certain exempt persons, such as corporations, generally are excluded from these information reporting and backup withholding rules.  Any a mounts withheld under the U.S. backup withholding tax rules will be allowed as a credit against a U.S. Holder’s U.S. federal income tax liability, if any, or will be refunded, if such U.S. Holder furnishes required information to the IRS in a timely manner.  Each U.S. Holder should consult its own tax advisor regarding the information reporting and backup withholding rules.

Certain Canadian Federal Income Tax Consequences

The following discussion summarizes the principal Canadian federal income tax considerations generally applicable to a person who owns one or more common shares of the Company (the "Shareholder"), and who at all material times for the purposes of the Income Tax Act (Canada)  (the  "Canadian  Act") deals at arm's length with the Company,  holds all common shares solely as capital property, is a  non-resident  of Canada,  and does not, and is not deemed to, use or hold any Common  share in or in the course of  carrying  on  business  in  Canada.  It is assumed that the common shares will at all material times be listed on a stock exchange that is prescribed for the purposes of the Canadian Act.  

This summary is based on the current provisions of the Canadian Act, including the regulations  thereunder,  and the Canada-United States Income Tax Convention (1980) (the  "Treaty") as amended.  This summary takes into account all specific proposals  to amend the Canadian Act and the  regulations  thereunder  publicly announced  by the  government  of Canada to the date  hereof  and the  Company's understanding of the current published administrative and assessing practices of Canada Customs and Revenue  Agency.  It is assumed that all such amendments will be enacted substantially as currently proposed, and that there will be no other material change to any such law or practice, although no assurances can be given in these respects. Except to the extent otherwise expressly set out herein, this summary does not take into account any provincial, territorial or foreign income tax law or treaty.

This summary is not, and is not to be construed as, tax advice to any particular Shareholder. Each prospective and current Shareholder is urged to obtain independent advice as to the Canadian income tax consequences of an investment in common shares applicable to the Shareholder's particular circumstances.

A Shareholder generally will not be subject to tax pursuant to the Canadian Act on any capital gain realized by the Shareholder on a disposition of a Common share unless the Common share constitutes "taxable Canadian property" to the Shareholder for purposes of the Canadian Act and the Shareholder is not eligible for relief pursuant to an applicable bilateral tax treaty.  A Common share that is disposed of by a Shareholder will not constitute taxable Canadian property of the  Shareholder  provided  that the Common share is listed on a stock  exchange that is  prescribed  for the purposes of the  Canadian  Act (the  Toronto  Stock Exchange is so prescribed),  and that neither the  Shareholder,  nor one or more persons  with  whom  the  Shareholder  did not deal at  arm's  length,  alone or together at any time in the five years  immediately  prec eding  the  disposition owned,  or owned any right to acquire,  25% or more of the issued  shares of any class of the capital  stock of the Company.  In addition,  the Treaty  generally will  exempt a  Shareholder  who is a  resident  of the  United  States  for the purposes of the Treaty, and who would otherwise be liable to pay Canadian income tax  in  respect  of  any  capital  gain  realized  by  the  Shareholder  on the disposition of a Common share,  from such  liability  provided that the value of the  Common  share is not  derived  principally  from real  property  (including resource property) situated in Canada or that the Shareholder does not have, and has not had within the 12-month period preceding the  disposition,  a "permanent establishment"  or "fixed  base," as tho se terms are defined for the purposes of the  Treaty,  available  to the Shareholder  in  Canada.  The Treaty may not be available to a  non-resident Shareholder that is a U.S. LLC, which is not subject to tax in the U.S. Any dividend on a Common share, including a stock dividend, paid or credited, or deemed to be paid or credited,  by the Company to a Shareholder  will be subject to  Canadian  withholding  tax at the  rate of 25% on the gross  amount  of the dividend, or such lesser rate as may be available under an applicable income tax treaty.  Pursuant to the Treaty, the rate of withholding tax applicable to a dividend paid on a Common share to a Shareholder who is a resident of the United States for the purposes of the Treaty will be reduced to 5% if the beneficial owner of the dividend is a company that owns at least 10% of the voting stock of the Company, and in any other case will be reduced to 15%, of the gross amount of the dividend.  It is Canada Customs and Revenue Agency’s position that the Treaty reductions are not available to a Shareholder that is a "limited liability company" resident in the United States. The Company will be required to withhold any such tax from the dividend, and remit the tax directly to Canada Customs and Revenue Agency for the account of the Shareholder.

ALL PROSPECTIVE INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF PURCHASING THE COMMON SHARES.

F.

Dividends and Paying Agents

Not applicable.

G.

Statement by Experts

Not applicable.

H.

Documents on Display

You may review a copy of our filings with the SEC, including exhibits and schedules filed with it, in the SEC's Public Reference Room at 100 F Street NE, Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 or the Conventional Reading Rooms’ Headquarters Office at 212-551-8090 for further information on the public reference rooms. The SEC maintains a web site (www.sec.gov) that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC.

I.

Subsidiary Information

Not applicable.

ITEM 11 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A.  Quantitative Information About Market Risk

Transaction Risk and Currency Risk Management

The Company’s operations do not employ financial instruments or derivatives; and given that the Company keeps its excess funds in high-grade short-term instruments, it does not have significant or unusual financial market risks.

B.  Qualitative Information About Market Risk

Exchange Rate Sensitivity

A significant portion of our administrative operations and other operations are denominated in Canadian funds, there is little exposure to foreign exchange movements between the Canadian and international currencies.

We typically hold most of our funds in Canadian dollars and report the results of our operations in Canadian dollars and are therefore are not subject to any material exchange rate risk.

We do not hedge foreign currency risk, and it does not consider this exposure to be material in the context of its operations.

There has been virtually no difference in our operations due to the affect of foreign exchange rate fluctuation in the period ended November 30, 2009.

Interest Rate Risk and Equity Price Risk

We are primarily equity financed and do not have any long term debt and, therefore, do not believe that the interest rate market’s risk is material.

Commodity Price Risk

While the value of the Company’s resource properties, if any, can always be said to relate to the price of precious metals and the outlook for same, the Company does not have any operating mines and hence does not have any hedging or other commodity based operations risks respecting its business activities. We are exposed to market risk, primarily related to fluctuating prices in our common stock.  See “Risk Factors”.

ITEM 12 - DESCRIPTIONS OF SECURITIES OTHER THAN EQUITY SECURITIES

Not applicable.

PART II

ITEM 13 - DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable.

ITEM 14 - MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

A-D.

None.

E. Use of Proceeds

Not applicable.

ITEM 15 - CONTROLS AND PROCEDURES

A.    Disclosure Controls and Procedures  

At the end of the period covered by this annual report for the fiscal year ended November 30, 2009, an evaluation was carried out under the supervision of, and the with the participation of, the Company’s management, including its Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act).  Based upon that evaluation, the Company’s CEO and CFO have concluded that the disclosure controls and procedures were effective to give reasonable assurance that the information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and (ii) accumulated and communicated to management, including its principal executive and principal financial officer s, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

B.    Management’s Annual Report on Internal Control over Financial Reporting  

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act.  A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.  It should be noted that a control system, no matter how well conceived or operated, can only provide reasonable assurance, not absolute assurance, that the obje ctives of the control system are met.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with policies and procedures may deteriorate.

Management, including the CEO and CFO, assessed the effectiveness of the Company’s internal control over financial reporting as of November 30, 2009.  In making this assessment, management used the criteria set forth in the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on its assessment, management has concluded that, as of November 30, 2009, the Company’s internal control over financial reporting was effective and no material weaknesses in the Company’s internal control over financial reporting were discovered.

C.    Attestation Report of the Registered Public Accounting Firm

This Annual Report does not include an attestation report of the company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the company to provide only management’s report in this Annual Report. These temporary rules permits a “non-accelerated filer” to provide only management’s report on internal control over financial reporting in an Annual Report and omit an attestation report of the issuer’s registered public accounting firm regarding management’s report on internal control over financial reporting until it is required to file an Annual Report for its first fiscal year ending after June 30, 2010.

D.    Changes in Internal Control Over Financial Reporting

Based upon their evaluation of our controls, senior management of the Company have concluded that, there were no significant changes in our internal control over financial reporting or in other factors during our last fiscal year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16A - AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that Stuart Rogers, a member of our Audit Committee, is the Audit Committee financial expert and an independent director as defined in Item 16A of Form 20-F and section 803 of the NYSE AMEX Company Guide.

ITEM 16B - CODE OF ETHICS

We have adopted a written Code of Ethics that applies to all employees and executive officers, including our Chief Executive Officer and Chief Financial Officer.  A copy of the Code of Ethics is available on our website at www.alberta-star.com.

During the most recently completed fiscal year, the Company has neither: (a) amended its Code of Ethics; nor (b) granted any waiver (including any implicit waiver) form any provision of its Code of Ethics.

ITEM 16C - PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees and Services

James Stafford, Chartered Accountants, audited our financial statements for fiscal 2009 and 2008, and reviewed our first quarterly statement ended February 28, 2009.   The following is an aggregate of fees rendered during each of the years ended November 30, 2009 and 2008 for professional services rendered by our principal accountants:

	2009	2008
Audit fees - auditing of our annual financial statements and preparation of auditors’ report.	$67,070	$75,180
Audit-related fees - review of each of the quarterly financial statements.	12,881	38,253
Tax fees - preparation	20,439	-
All other fees – other services provided by our principal accountants.	-	2,951
Total fees paid or accrued to our principal accountants	$100,390	$116,384

Pre-Approval Policies and Procedures

We have adopted certain policies and procedures intend to ensure our principal accountants will maintain objectivity and independence in their audit of our financial statements. To minimize relationships that could appear to impair the objectivity of our principal accountants, our audit committee has restricted the non-audit services that our principal accountants may provide to us primarily to tax services and review assurance services.

In general, we seek to obtain non-audit services from our principal accountants only when the services offered by our principal accountants are more effective or economical than services available from other service providers, and, to the extent possible, only after competitive bidding. These determinations are among the key practices adopted by the audit committee effective during fiscal 2009. The board has adopted policies and procedures for pre-approving work performed by our principal accountants.

After careful consideration, the audit committee of the board of directors has determined that payment of the above audit fees is in conformance with the independent status of our company’s principal independent accountants. Before engaging the auditors in additional services, the audit committee considers how these services will impact the entire engagement and independence factors.

The Audit Committee has pre-approved specifically identified non-audit related services, including tax compliance, review of tax returns, and documentation of processes and controls as submitted to the Audited Committee from time to time.

ITEM 16D - EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

ITEM 16E - PURCHASES OF EQUITY SECURITIES BY THE ISSUERS AND AFFILIATED PURCHASERS

The Company did not repurchase any common shares in the fiscal year ended November 30, 2009.

ITEM 16F – CHANGE IN CERTIFYING ACCOUNTANT

None.

ITEM 16G – CORPORATE GOVERNANCE

Not applicable.

PART III

ITEM 17 - FINANCIAL STATEMENTS

The financial statements appear on Pages F-1 through F-41 of this Annual Report and are incorporated herein by reference.  Our audited financial statements as prepared by our management and approved by the audit committee include:

·

our balance sheets as at November 30, 2009, and 2008;

·

the following statements for the fiscal years ended November 30, 2009, 2008, and 2007, as well as information from our inception to November 30, 2009:

·

statements of loss, comprehensive loss and deficit

·

statements of cash flows; and

·

statements of changes in shareholders’ equity for the fiscal years ended November 30, 2009, 2008 and 2007.

All of these were audited by our auditor, James Stafford, Chartered Accountants.

The financial statements are prepared in accordance with Canadian GAAP and are reconciled to US GAAP in note 19 to the financial statements.   All figures are expressed in Canadian dollars.

ITEM 18 - FINANCIAL STATEMENTS

The Company elected to provide financial statements pursuant to Item 17.

ITEM 19 - EXHIBITS

The following exhibits are included herein, except for the exhibits marked with a bracketed number, which are incorporated herein by reference.

Exhibit No.	Exhibit Title
1.1(1)	Certificate of Incorporation and Certificate of Amendment and Registration of Restated Articles
1.2(1)	Bylaws
1.3(1)	Articles of Association
4.1(3)	Stock Option Plan as approved annually without change by Shareholders
4.2*(3)	Employment Agreement dated March 30, 2007 between Alberta Star Development Corp. and Mr. Tim Coupland, President and CEO
4.3(3)	Financial Public Relations Service Agreement dated December 15, 2007 between Alberta Star Development Corp. and MI3 Communications Financieres Inc.
4.4(4)	Shareholder Rights Plan Agreement dated October 10, 2008 between Alberta Star Development Corp. and MI3 Computershare Trust Company of Canada
4.5	Financial Public Relations Service Agreement dated November 4, 2009 between Alberta Star Development Corp. and Progressive IR Consultants Corp.
4.6	Agreement dated November 17, 2009 between Alberta Star Development Company and Sterling Mining Company
4.7	Letter agreement dated March 8, 2010 between Alberta Star Development Company and Kootenay Gold Inc.
11.1(3)	Code of Ethics
12.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
12.2	Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.2	Certificate of Consent by Auditor
15.3(2)	Technical Report on the Port Radium – Echo Bay Project dated April 21, 2006 and revised August 10, 2006 prepared by J. Fingler, M.Sc., P.Geo
*	Indicates management contract or compensatory plan or arrangement.
(1)	incorporated by reference from our Form 20-F that was filed with the commission on June 8, 2001.
(2)	incorporated by reference from our Form 6-K that was filed with the commission on August 30, 2006.
(3)	incorporated by reference from our Form 20-F that was filed with the commission on April 8, 2008.
(4)	incorporated by reference from our Form 20-F that was filed with the commission on March 24, 2009.

32

Alberta Star Development Corp.

(An Exploration Stage Company)

Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

33

JAMES STAFFORD

Independent Auditors’ Report

To Shareholders of

Alberta Star Development Corp.

We have audited the balance sheets ofAlberta Star Development Corp. (an Exploration Stage Company) (the “Company”) as at 30 November 2009 and 2008, the related statements of loss, comprehensive loss and deficit and cash flows for the period from 6 September 1996 (Date of Inception) to 30 November 2009 and for each of the years in the three-year period ended 30 November 2009 and the statements of changes in shareholders’ equity for each of the years in the three-year period ended 30 November 2009.  These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States of America).  Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at 30 November 2009 and 2008 and the results of its operations and its cash flows for the period from 6 September 1996 (Date of Inception) to 30 November 2009 and for each of the years in the three-year period ended 30 November 2009 and its changes in shareholders’ equity for each of the years in the three-year period ended 30 November 2009 in accordance with Canadian generally accepted accounting principles.

/s/ James Stafford  

Vancouver, British Columbia, Canada

Chartered Accountants

22 March 2010, except as to Note 17 which is as of 29 March 2010.

Comments by Independent Registered Chartered Accountants for United States of America Readers on Canada – United States of America Reporting Differences

The standards of the Public Company Accounting Oversight Board (United States of America) require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 1 to the financial statements.  Although we conducted our audits in accordance with both Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States of America), our report to the Shareholders dated 22 March 2010, except as to Note 17 which is as of 29 March 2010 is expressed in accordance with Canadian reporting standards, which do not permit a reference to such conditions and events in the report when these are adequately disclosed in the financial statements.

/s/ James Stafford

Vancouver, British Columbia, Canada

Chartered Accountants

22 March 2010, except as to Note 17 which is as of 29 March 2010.

34

Alberta Star Development Corp.

(An Exploration Stage Company)

Balance Sheets

(Expressed in Canadian Dollars)

As at 30 November

	2009	2008
	$	$
Assets
Current
Cash and cash equivalents (Note 15)	14,700,318	17,367,576
Amounts receivable (Note 6)	125,865	60,905
Prepaid expenses	25,455	-
	14,851,638	17,428,481
Property, plant and equipment (Note 7)	373,084	451,870
	15,224,722	17,880,351
Liabilities
Current
Accounts payable and accrued liabilities (Note 9)	1,718,884	1,772,733
Shareholders’ equity
Share Capital (Note 11)
Authorized
Unlimited number of preferred shares
Unlimited number of voting common shares
Issued and outstanding
2009 – 21,403,979 common shares
2008 – 20,937,312 common shares	37,397,902	37,305,053
Contributed surplus(Note 11)	13,190,903	12,651,744
Warrants(Note 11)	131,064	-
Deficit, accumulated during the exploration stage	(37,214,031)	(33,849,179)
	13,505,838	16,107,618
	15,224,722	17,880,351

Nature and Continuance of Operations(Note 1),Commitments and Other Obligations(Note 13),Subsequent Events(Note 17) andReconciliation of Canadian and United States Generally Accepted Accounting Principles (Note 19)

On behalf of the Board:

“/s/ Tim Coupland”

Director

“/s/ Robert Hall”

Director

Tim Coupland

Robert Hall

35

Alberta Star Development Corp.

(An Exploration Stage Company)

Statements of Loss, Comprehensive Loss and Deficit

(Expressed in Canadian Dollars)

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Expenses
Mineral properties (Schedule 1)		31,232,181		1,313,613		3,612,962		11,747,984
General and administrative (Schedule 2)		18,373,923		2,322,116		3,644,015		4,691,433
Net loss before other items and income taxes		(49,606,104)		(3,635,729)		(7,256,977)		(16,439,417)
Other items
Interest income		3,015,625		166,287		767,768		1,279,560
Gain on sale of available-for-sale securities (Note 5)		126,466		-		-		126,466
Write-down of available-for-sale securities		(10,000)		-		-		-
Write-off of property, plant and equipment		(12,517)		-		-		(6,497)
Net loss before income taxes		(46,486,530)		(3,469,442)		(6,489,209)		(15,039,888)
Future income tax recovery(Note 14)		9,833,756		104,590		-		7,123,638
Net loss for the period		(36,652,774)		(3,364,852)		(6,489,209)		(7,916,250)
Deficit, accumulated during the exploration stage, beginning of period		-		(33,849,179)		(27,359,970)		(19,443,720)
Adjustment for change in accounting policy(Note 2)		(561,257)		-		-		-
Deficit, accumulated during the exploration stage, end of period		(37,214,031)		(37,214,031)		(33,849,179)		(27,359,970)
Basic and diluted loss per share				(0.157)		(0.310)		(0.393)
Weighted average number of common shares outstanding				21,388,636		20,920,782		20,147,840
Other comprehensive income (loss)
Net loss for the period before other comprehensive income (loss)		(36,652,774)		(3,364,852)		(6,489,209)		(7,916,250)
Unrealized gain on available-for-sale securities		69,000		-		-		69,000
Realized gain on available-for-sale securities		(69,000)		-		-		(69,000)
Comprehensive loss for the period		(36,652,774)		(3,364,852)		(6,489,209)		(7,916,250)
Basic and diluted comprehensive loss per share				(0.157)		(0.310)		(0.393)

36

 Alberta Star Development Corp.

(An Exploration Stage Company)

Statements of Cash Flows

(Expressed in Canadian Dollars)

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Cash flows used in operating activities
Net loss for the period		(37,214,031)		(3,364,852)		(6,489,209)		(7,916,250)
Adjustments to reconcile loss to net cash used by operating activities
Acquisition of mineral property interests		1,241,000		-		-		-
Amortization of property, plant and equipment		406,032		97,126		153,352		112,490
Gain on sale of available-for-sale securities		(126,466)		-		-		(126,466)
Financing fees		38,000		-		-		-
Future income tax recovery		(9,833,756)		(104,590)		-		(7,123,638)
Recovery of mineral property costs		(82,000)		-		-		-
Stock-based compensation		6,702,370		539,159		548,070		1,970,027
Write-down of available-for-sale securities		10,000		-		-		-
Write-off of property, plant and equipment		12,517		-		-		6,497
Gain on sale of mineral property interests		(16,565)		-		-		-
Changes in operating assets and liabilities
(Increase) decrease in amounts receivable		(125,865)		(64,960)		616,072		(318,550)
(Increase) decrease in prepaid expenses		(25,455)		(25,455)		-		111,016
Increase (decrease) in accounts payable and accrued liabilities		1,046,115		(53,849)		(593,310)		1,160,434
		(37,968,104)		(2,977,421)		(5,765,025)		(12,124,440)
Cash flows used in investing activities
Purchase of property, plant and equipment		(792,060)		(18,340)		(48,744)		(568,040)
Proceeds on sale of property, plant and equipment		428		-		-		-
Proceeds on sale of available-for-sale securities		215,031		-		-		198,466
		(576,601)		(18,340)		(48,744)		(369,574)
Cash flows from financing activities
Issuance of common shares for cash		5,612,822		-		-		-
Issuance of flow-through shares for cash		22,684,064		350,000		-		-
Issuance of warrants for cash		11,099,845		-		-		-
Warrants exercised		14,443,891		-		-		5,183,706
Options exercised		1,432,442		-		30,000		320,000
Share issuance costs		(2,028,041)		(21,497)		-		-
Share subscriptions received in advance		-		-		-		(7,500)
		53,245,023		328,503		30,000		5,496,206
Increase (decrease) in cash and cash equivalents		14,700,318		(2,667,258)		(5,783,769)		(6,997,808)
Cash and cash equivalents, beginning of period		-		17,367,576		23,151,345		30,149,153
Cash and cash equivalents, end of period		14,700,318		14,700,318		17,367,576		23,151,345

Supplemental Disclosures with Respect to Cash Flows(Note 15)

Alberta Star Development Corp.

(An Exploration Stage Company)

Statements of Changes in Shareholders’ Equity

(Expressed in Canadian Dollars)

	Number of shares issued		Share capital		Contributed surplus and share subscriptions received in advance		Warrants		Accumulated other comprehensive income		Deficit accumulated during the exploration  stage		Total shareholders’ equity
				$		$		$		$		$		$
Balance at 30 November 2006		19,250,343		36,879,416		3,437,008		9,459,394		-		(19,443,720)		30,332,098
Warrants exercised ($3.75 per share)		368,890		1,959,931		-		(576,594)		-		-		1,383,337
Warrants exercised ($3.25 per share)		1,154,250		5,705,169		-		(1,953,857)		-		-		3,751,312
Agents compensation warrants exercised ($2.25 per unit)		1,867		7,968		-		(3,766)		-		-		4,202
Agents compensation warrants exercised ($3.75 per share)		11,962		44,856		-		-		-		-		44,856
Stock options exercised ($1.00 per share)		20,000		29,279		(9,279)		-		-		-		20,000
Stock options exercised ($3.00 per share)		100,000		497,840		(197,840)		-		-		-		300,000
Warrants expired		-		-		3,401,433		(3,401,433)		-		-		-
Agent compensation warrants expired		-		-		621,511		(621,511)		-		-		-
Stock-based compensation		-		-		1,970,027		-		-		-		1,970,027
Subscriptions received in advance		-		-		(7,500)		-		-		-		(7,500)
Tax benefits renounced to flow-through share subscribers (Note 14)		-		(7,123,638)		-		-		-		-		(7,123,638)
Transition adjustment to opening balance		-		-		-		-		69,000		-		69,000
Realized gain on available-for-sale investments		-		-		-		-		(69,000)		-		(69,000)
Net loss for the year		-		-		-		-		-		(7,916,250)		(7,916,250)
Balance at 30 November 2007		20,907,312		38,000,821		9,215,360		2,902,233		-		(27,359,970)		22,758,444
Stock options exercised ($1.00 per share) (Note 11)		30,000		43,919		(13,919)		-		-		-		30,000
Warrants expired (Note 11)		-		-		2,508,552		(2,508,552)		-		-		-
Agent compensation warrants expired (Note 11)		-		-		393,681		(393,681)		-		-		-
Stock-based compensation (Note 12)		-		-		548,070		-		-		-		548,070
Provision for flow-through liability (Notes 9, 11, 13 and 15)		-		(739,687)		-		-		-		-		(739,687)
Net loss for the year		-		-		-		-		-		(6,489,209)		(6,489,209)
Balance at 30 November 2008		20,937,312		37,305,053		12,651,744		-		-		(33,849,179)		16,107,618
Flow-through shares issued – cash ($0.75 per unit) (Note 11)		466,667		350,000		-		-		-		-		350,000
Warrants granted		-		(131,064)		-		131,064		-		-		-
Share issue costs – cash paid		-		(21,497)		-		-		-		-		(21,497)
Stock-based compensation (Note 12)		-		-		539,159		-		-		-		539,159
Provision for flow-through liability (Notes 9, 11, 13 and 15)		-		(104,590)		-		-		-		-		(104,590)
Net loss for the year		-		-		-		-		-		(3,364,852)		(3,364,852)
Balance at 30 November 2009		21,403,979		37,397,902		13,190,903		131,064		-		(37,214,031)		13,505,838

37

Alberta Star Development Corp.

(An Exploration Stage Company)

Schedule 1 – Summary of Mineral Properties Expenditures

(Expressed in Canadian Dollars)

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Amortization		299,056		73,868		132,818		92,370
Assays and geochemical		610,554		1,097		147,952		269,922
Camp costs and field supplies		2,134,725		120,468		152,275		774,881
Claim maintenance and permitting		131,622		18,668		12,383		29,883
Community relations and government		240,027		19,153		74,485		72,075
Drilling		4,640,068		12,304		459,176		2,500,471
Equipment rental		261,492		-		5,528		122,181
Geology and engineering		1,504,196		99,875		389,404		317,736
Geophysics		19,643		-		16,643		3,000
Metallurgical studies		62,977		-		-		62,977
Orthophotography		224,973		-		-		128,828
Staking and line cutting		842,594		78,000		237,944		193,990
Surveying		1,813,919		-		-		446,441
Transportation and fuel		10,502,486		214,556		815,291		5,114,538
Wages, consulting and management fees		6,122,760		675,624		1,181,708		1,936,134
		29,411,092		1,313,613		3,625,607		12,065,427
Acquisition of mineral property interests(Notes 8 and 15)		2,831,197		-		-		-
Recovery of mineral property costs(Note 8)		(1,159,095)		-		(12,645)		(317,443)
Sales of mineral property interests (Note 8)		(71,565)		-		-		-
Write-off of mineral properties and related costs		220,552		-		-		-
		31,232,181		1,313,613		3,612,962		11,747,984

Details on Mineral Properties Expenditures(Note 8)

38

Alberta Star Development Corp.

(An Exploration Stage Company)

Schedule 2 – General and Administrative Expenses

(Expressed in Canadian Dollars)

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Advertising and promotion		1,365,086		30,649		265,378		475,043
Amortization		106,975		23,258		20,534		20,119
Automotive		58,951		4,758		6,999		7,824
Bank charges and interest		27,480		1,195		3,896		1,817
Consulting fees		504,622		13,438		2,658		-
Directors fees (Note 10)		261,950		54,000		121,000		56,000
Filing and financing fees		661,723		153,211		119,881		136,896
Legal and accounting (Note 10)		1,738,417		332,372		349,567		314,683
Management fees (Note 10)		785,887		75,000		50,000		117,500
Meals and entertainment		304,852		78,346		68,989		38,351
Office and miscellaneous		786,278		81,910		136,414		187,973
Part XII.6 tax (Note 9)		1,274,716		7,392		711,124		556,200
Rent and utilities		265,208		67,199		50,017		47,681
Salaries and benefits (Note 10)		1,453,129		479,878		575,269		397,982
Secretarial fees (Note 10)		264,971		15,000		15,000		8,500
Stock-based compensation (Note 12)		6,702,370		539,159		548,070		1,970,027
Telephone and internet		97,971		15,843		26,736		17,335
Transfer fees and shareholder information		1,388,194		279,242		477,635		248,649
Travel		325,143		70,266		94,848		88,853
		18,373,923		2,322,116		3,644,015		4,691,433

1.

Nature and Continuance of Operations

Alberta Star Development Corp. (the “Company”) was incorporated under the laws of the province of Alberta on 6 September 1996 and is in the exploration stage.  

The Company is in the business of acquiring and exploring mineral properties.  The recoverability of the amounts expended by the Company on acquiring and exploring mineral properties is dependent upon the existence of economically recoverable reserves, the ability of the Company to complete the acquisition and/or development of the properties and upon future profitable production.

The Company’s financial statements as at 30 November 2009 and for the year then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business.  The Company has a loss of $3,364,852 for the year ended 30 November 2009 (2008 - $6,489,209, 2007 - $7,916,250) and has working capital of $13,132,754 at 30 November 2009 (2008 - $15,655,748).

The Company had cash and cash equivalents of $14,700,318 at 30 November 2009 (2008 - $17,367,576), but management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital.  However, based on its prior demonstrated ability to raise capital, management believes that the Company’s capital resources should be adequate to continue operating and maintain its business strategy during fiscal 2010.  However, if the Company is unable to raise additional capital in the future, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favourable terms and/or pursue other remedial measures.  These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

On 10 March 2010, the TSX Venture Exchange approved a share consolidation on a one new common share without par value for every five existing common shares without par value basis.  All common shares and per share amounts have been restated to give retroactive effect to the share consolidation (Notes 11 and 17).

2.

Changes in Accounting Policies and Presentation

a)

Goodwill and Other Intangible Assets

Effective 1 December 2008, the Company adopted Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3064, “Goodwill and Other Intangible Assets”.The new requirements of Section 3064 are for recognition, measurement, presentation and disclosure.  Section 3064 replaces Section 3062, “Goodwill and Other Intangible Assets”. The new standard establishes revised standards for the recognition, measurement, presentation and disclosure of goodwill and intangible assets. The new standard also provides guidance for the treatment of preproduction and start-up costs and requires that these costs be expensed as incurred.

39

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

b)

Credit Risk and the Fair Value of Financial Assets and Financial Liabilities

On 20 January 2009, the Emerging Issues Committee (“EIC”) of the Accounting Standards Board (“AcSB”) issued EIC Abstract 173, “Credit Risk and the Fair Value of Financial Assets and Financial Liabilities”, which establishes that an entity’s own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments.  EIC 173 should be applied retrospectively without restatement of prior years to all financial assets and liabilities measured at fair value in interim and annual financial statements for periods ending on or after 20 January 2009.

c)

Mining Exploration Costs

On 27 March 2009, the EIC of the AcSB issued EIC Abstract 174, “Mining Exploration Costs”, which provides guidance on capitalization of exploration costs related to mining properties.  It also provides guidance for development and exploration stage entities that cannot estimate future cash flows from its properties in assessing whether impairment in such properties is required.  EIC 174 is to be applied retrospectively without restatement of prior periods in interim and annual financial statements for periods ending on or after 27 March 2009.  

d)

In 2001, the CICA issued Accounting Guideline No. 11, which covers the Company’s exploration activities.  In the past, the Company had capitalized certain exploration costs on mineral properties that were not covered by feasibility studies, whereas under the new guideline, the Company was required to expense these amounts in the year incurred.  Effective 1 January 2001, the Company adopted these new recommendations on a retroactive basis.  The impact as at 1 January 2001 of the adoption of these new recommendations was to reduce mineral properties by $561,257 and to increase deficit, accumulated during the exploration stage by $561,257.

3.

Significant Accounting Policies

The accounting policies of the Company are in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”).  These policies conform, in all material respects, with accounting principles generally accepted in the United States of America (“United States GAAP”), except as discussed in Note 19. Outlined below are those policies considered particularly significant.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

40

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Property, plant and equipment

Property, plant and equipment are recorded at cost and are amortized over their estimated useful lives using the declining balance method at the following annual rates:

Computer equipment	i.	30%
Computer software	ii.	100%
Furniture and fixtures	iii.	20%
Field equipment	iv.	20%
Office equipment	v.	20%

Amortization of assets used in exploration is expensed to mineral properties expenditures.

Mineral properties and deferred exploration costs

Mineral exploration costs and option maintenance payments are expensed as incurred.  When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, costs incurred prospectively to develop the property are capitalized as incurred and are depreciated using the unit-of-production depreciation method over the estimated life of the ore body based on proven and probable reserves.

Major development costs incurred after the commencement of production, are capitalized as incurred and are depreciated using the unit-of-production depreciation method based on proven and probable reserves.

Ongoing development expenditures to maintain production are charged to operations as incurred.

Mineral property, deferred exploration costs and option maintenance payments are currently charged to operations as incurred since the Company has not met the criteria for deferral of acquisition and development costs under Canadian GAAP.

Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title.  Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

Reclamation costs

The Company’s policy for recording reclamation costs is to record a liability for the estimated costs to reclaim mined land by recording charges to production costs for each tonne of ore mined over the life of the mine.  The amount charged is based on management’s estimation of reclamation costs to be incurred.  The accrued liability is reduced as reclamation expenditures are made.  Certain reclamation work is performed concurrently with mining and these expenditures are charged to operations at that time.

41

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Stock-based compensation

Effective 1 December 2002, the Company adopted, on a prospective basis, the provisions of the CICA Handbook Section 3870, “Stock-Based Compensation and Other Stock Based Payments”, which establishes standards for the recognition, measurement and disclosure of stock-based compensation and other stock-based payments to both employees and non-employees.  Section 3870 recommends that certain stock-based transactions, such as the grant of stock options, be accounted for at fair value.  The Company uses the Black-Scholes option pricing model to estimate the fair value of each stock option at the granted date.  Any consideration received from the exercise of stock options is credited to share capital.  This section is only applicable to transactions that occurred on or after 1 December 2002.

Loss per share

Basic loss per share is calculated based on the weighted average number of shares outstanding during the period.  The treasury stock method is used for determining the dilutive effect of options and warrants issued in calculating diluted earnings per share.  Under this method, the dilutive effect on loss per share is recognized on the use of the proceeds that could be obtained upon exercise of options, warrants and similar instruments.  It assumes that the proceeds would be used to purchase common shares at the average market price during the year.  For the periods presented, this calculation proved to be anti-dilutive.

Impairment of long-lived assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  An impairment loss would be recognized when the carrying amount of an asset exceeds the estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition.  The amount of the impairment loss to be recorded is calculated by the excess of the assets carrying value over its fair value.  Fair value is determined using a discounted cash flow analysis.

Asset retirement obligations

Effective 1 December 2004, the Company adopted the recommendations of CICA Handbook Section 3110, “Asset Retirement Obligations”.  This section requires recognition of a legal liability for obligations relating to retirement of property, plant and equipment, and arising from the acquisition, construction, development or normal operation of those assets.  Such asset retirement cost must be recognized at fair value in the period in which it is incurred, added to the carrying value of the asset, and amortized into income on a systematic basis over its useful life.  Adoption of this standard has not affected the Company’s financial statements.

42

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Flow-through common shares

The Company has financed a portion of its exploration activities through the issuance of flow-through shares, which transfers the income tax deductibility of exploration expenditures to the investor.  Proceeds received on the issue of such shares have been credited to share capital and the related exploration costs have been charged to exploration properties and deferred exploration expenditures.  

The Company follows the recommendations of the EIC of the CICA with respect to flow-through shares, as outlined in EIC 146.  The application of EIC 146 requires the recognition of the foregone tax benefit on the date the Company renounces the tax credits associated with the exploration expenditures, provided there is reasonable assurance that the expenditures will be made.  The recommendations apply to all flow-through share transactions initiated after 19 March 2004.

Income taxes

Future income tax assets and liabilities are determined based on temporary differences between the accounting and the tax bases of the assets and liabilities and for loss carry forwards and are measured using the tax rates expected to apply when these differences reverse.  A valuation allowance is recorded against any future income tax asset if it is not more likely than not that the asset will be realized.  As at 30 November 2009, the Company’s net future income tax assets are fully offset by a valuation allowance.

Foreign currency translation

Transaction amounts denominated in foreign currencies are translated into functional currency at exchange rates prevailing at transaction dates.

Use of estimates

The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reported period.  Actual results could differ from these estimates.

Values

The amounts shown for mineral properties and for deferred exploration costs represent costs to date, and do not necessarily represent present or future values, as they are entirely dependent upon the economic recovery of future reserves.

43

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Financial Instrument Standards

Financial Assets and Financial Liabilities

Financial assets and liabilities are initially recognized at fair value and are subsequently measured based on their classification as held-to-maturity, loans and receivables, available-for-sale or held-for-trading, as described below.  The classification is not changed subsequent to initial recognition.

Held-to-Maturity and Loans and Receivables

Financial instruments that have a fixed maturity date, where the Company intends and has the ability to hold to maturity are classified as held-to-maturity and measured at amortized cost using the effective interest rate method.  Loans and receivables are measured at amortized cost using the effective interest method.

Available-for-Sale

Financial assets classified as available-for-sale are carried at fair value (where determinable based on market prices of actively traded securities) with changes in fair value recorded in other comprehensive income.  Available-for-sale securities are written down to fair value through earnings whenever it is necessary to reflect an other-than-temporary impairment.  Transaction costs that are directly attributable to the acquisition or issue of a financial asset or financial liability are added to its fair value.

Held-for-Trading

Financial assets and financial liabilities that are purchased and incurred with the intention of generating profits in the near term are classified as held-for-trading.  These instruments are measured at fair value with the change in the fair value recognized in income.

Derivatives and Hedge Accounting

The Company does not hold or have any exposure to derivative instruments and accordingly is not impacted by CICA Handbook Section 3865, “Hedges”.

Comprehensive Income

Comprehensive income is composed of the Company’s earnings and other comprehensive income.  Other comprehensive income includes unrealized gains and losses on available-for-sale securities, foreign currency translation gains and losses on the net investment in self-sustaining operations and changes in the fair market value of derivative instruments designated as cash flow hedges, all net of income taxes.  Cumulative changes in other comprehensive income are included in accumulated other comprehensive income which is presented (if applicable) as a new category in shareholders’ equity.

Comparative figures

Certain comparative figures have been adjusted to conform to the current year’s presentation.  

44

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Recent Accounting Pronouncements

a)

Business Combinations

In January 2009, the CICA issued Handbook Section 1582, “Business Combinations”, which replaces Section 1581, “Business Combinations”, and provides the equivalent to IFRS 3, “Business Combinations” (January 2008).  The new section expands the definition of a business subject to an acquisition and establishes significant new guidance on the measurement of consideration given, and the recognition and measurement of assets acquired and liabilities assumed in a business combination.  

The new section requires that all business acquisitions be measured at the full fair value of the acquired entity at the acquisition date even if the business combination is achieved in stages, or if less than 100 percent of the equity interest in the acquiree is owned at the acquisition date.  The measurement of equity consideration given in a business combination will no longer be based on the average of the fair value of the shares a few days before and after the day the terms and conditions have been agreed to and the acquisition announced, but rather at the acquisition date.  Subsequent changes in fair value of contingent consideration classified as a liability will be recognized in earnings and not as an adjustment to the purchase price.  

Restructuring and other direct costs of a business combination are no longer considered part of the acquisition accounting.  Instead, such costs will be expensed as incurred, unless they constitute the costs associated with issuing debt or equity securities.  

The Section applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2011.  Earlier adoption is permitted.  

b)

Consolidated Financial Statements and Non-Controlling Interests

In January 2009, the CICA issued Handbook Section 1601, “Consolidated Financial Statements” and Section 1602, “Non-Controlling Interests”, which together replace Section 1600, “Consolidated Financial Statements”.  These two Sections are the equivalent to the corresponding provisions of International Accounting Standard 27, “Consolidated and Separate Financial Statements” (January 2008).  Section 1602 applies to the accounting for non-controlling interests and transactions with non-controlling interest holders in consolidated financial statements.  The new Sections require that, for each business combination, the acquirer measure any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.  The new Sections also require non-controlling inte rest to be presented as a separate component of shareholders’ equity.

45

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Under Section 1602, non-controlling interest in income is not deducted in arriving at consolidated net income or other comprehensive income.  Rather, net income and each component of other comprehensive income are allocated to the controlling and non-controlling interests based on relative ownership interests.  These Sections apply to interim and annual consolidated financial statements relating to fiscal years beginning on or after 1 January 2011, and should be adopted concurrently with Section 1582.  

International Financial Reporting Standards (“IFRS”)

In 2006, the AcSB published a new strategic plan that will significantly affect financial reporting requirements for Canadian companies. The AcSB strategic plan outlines the convergence of Canadian GAAP with IFRS over an expected five year transitional period. In February 2008, the AcSB announced that 2011 is the changeover date for publicly-listed companies to use IFRS, replacing Canada’s own GAAP. The date is for interim and annual financial statements relating to fiscal years beginning on or after 1 January 2011. The transition date of 1 January 2011 will require the restatement for comparative purposes of amounts reported by the Company for the year ended 30 November 2011. While the Company has begun assessing the adoption of IFRS for 2011, the financial reporting impact of the transition to IFRS cannot be reasonably estimated at this time.

1.

Fair Value of Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, amounts receivable, and accounts payable.  The fair value of these financial instruments approximates their carrying values, due to their short-term maturity or capacity of prompt liquidation.

Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from their financial instruments.  

a)

Credit Risk

Credit risk is the risk of an unexpected loss if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises primarily from the Company’s cash and cash equivalents and amounts receivable.  The Company manages its credit risk relating to cash and cash equivalents by dealing only with highly-rated Canadian financial institutions.  As at 30 November 2009, amounts receivable were comprised of Goods and Services Tax receivable of $15,810 (2008 - $51,142) and interest earned on the Company’s redeemable short-term investment of $110,055 (2008 - $9,763).  As a result, credit risk is considered insignificant.

b)

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due.  The Company manages liquidity risk by continuously monitoring actual and projected cash flows and matching the maturity profile of financial assets and liabilities.  As the Company’s financial instruments are substantially comprised of cash and cash equivalents, liquidity risk is considered insignificant.

46

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

a)

Currency Risk

The majority of the Company’s cash flows and financial assets and liabilities are denominated in Canadian dollars, which is the Company’s functional and reporting currency.  Foreign currency risk is limited to the portion of the Company’s business transactions denominated in currencies other than the Canadian dollar. The Company has cash and cash equivalents held in US dollars.

The Company’s objective in managing its foreign currency risk is to minimize its net exposures to foreign currency cash flows by holding most of its cash and cash equivalents in Canadian dollars.  The Company monitors and forecasts the values of net foreign currency cash flow and balance sheet exposures and from time to time could authorize the use of derivative financial instruments such as forward foreign exchange contracts to economically hedge a portion of foreign currency fluctuations.

The following tables provide an indication of the Company’s significant foreign currency exposures during the year ended 30 November 2009 and 2008:

	30 November 2009	30 November 2008
Cash and cash equivalents	US$ 1,250,066	US$ 38

The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

d)

Interest Risk

The Company’s interest rate risk is primarily related to the Company’s cash and cash equivalents for which amounts were invested at interest rates in effect at the time of investment.  Changes in market interest rates affect the fair market value of the cash and cash equivalents.  However, as these investments come to maturity within a short period of time, the impact would likely not be significant.

e)

Commodity Price Risk

The Company is in the exploration stage and is not subject to commodity price risk.

1.

Available-for-Sale Securities

During the year ended 30 November 2009, the Company sold Nil common shares of Max Resource Corp. (2008 – Nil, 2007 – 200,000) for total proceeds of $Nil (2008 - $Nil, 2007 - $198,466) and a net gain of $Nil (2008 - $Nil, 2007 - $126,466).

47

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

2.

Amounts Receivable

Amounts receivable are non-interest bearing, unsecured and have settlement dates within one year.

	2009	2008
	$	$
Goods and Services Tax receivable	15,810	51,142
Interest receivable	110,055	9,763
	125,865	60,905

3.

Property, Plant and Equipment

		Accumulated	Net book value
	Cost	amortization	2009	2008
	$	$	$	$
Computer equipment	57,869	29,925	27,944	17,650
Computer software	86,947	86,947	-	2,796
Equipment	58,720	31,393	27,327	34,158
Field equipment	479,319	203,231	276,088	345,110
Furniture and fixtures	67,205	25,480	41,725	52,156
	750,060	376,976	373,084	451,870

During the year ended 30 November 2009, total additions to property, plant and equipment were $18,340 (2008 - $48,744).

4.

Mineral Properties

Sterling Mining Company – Sunshine Silver Mine, Idaho, USA

During the year ended 30 November 2009, the Company entered into an acquisition agreement with Sterling Mining Company (“Sterling”) to acquire a 100% interest in Sterling and its assets and provide for financing of Sterling’s ongoing operations (the “Agreement”).  

Sterling is currently a debtor-in-possession in Chapter 11 Bankruptcy in the District of Idaho, USA.  Sterling is engaged in the business of acquiring, exploring, developing and mining mineral properties primarily those containing silver and associated base and precious metals.  Sterling operates the Sunshine Silver Mine in Idaho and has exploration projects in Idaho, USA.  Sterling was incorporated under the laws of the State of Idaho on 3 February 1903 and its common shares are currently listed on the OTCBB: SRLMQ and Frankfurt Stock Exchange: SMX.

48

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

The Agreement provides that Sterling file a Disclosure Statement in the bankruptcy proceedings (the “Disclosure Statement”).  The Disclosure Statement has been approved by the Court and contains a Plan of Reorganization for Sterling (the “Plan”).  The Plan proposed a bidding process for 100% of the remaining authorized, but un-issued, common stock of Sterling entitling the Company to purchase all of the assets of Sterling.  The key dates for the sale process are as follows:

15 February 2010

Due date for deposits and qualification of bidders

19 April 2010

Due date for bids

21 April 2010

Auction

3 May 2010

Plan confirmation hearing and sale approval hearing

14 May 2010

Sale closing date

The Company is a qualified bidder and has submitted an offer to acquire 100% of the remaining authorized, but un-issued, common shares of Sterling, on a fully diluted basis, in exchange for US$10,500,000.  In addition, the Company has agreed to make available up to US$1,250,000 (US$250,000 per month) in interim term debtor-in-possession financing to Sterling, which amount will bear interest at a rate of 10% per annum, bringing the total value of the agreement to US$11,750,000.  The Agreement prohibits Sterling from soliciting or initiating any discussion regarding any other business combination or sale of material assets, contains provisions for the Company to match competing, unsolicited proposals and provides for a US$250,000 termination fee payable to the Company in certain circumstances.

The Agreement contains a number of conditions precedent to the obligations of the parties.  Unless all of such conditions are satisfied or waived by the party for whose benefit such conditions exist, to the extent that they may be capable of waiver, the proposed transaction will not proceed.  There is no assurance that the conditions will be satisfied or waived on a timely basis, or at all. Such conditions include: an order of the Court approving the Plan; all claims of all the creditors of Sterling are paid, satisfied, settled or compromised under the Plan and that all other consents and approvals, including regulatory approvals, are obtained.  

The Company, upon meeting of the above referenced conditions, including the confirmation of a Chapter 11 Plan, will reconstitute the Sterling Board of Directors and make additions to senior management of Sterling.

On 8 March 2010, the Company entered into a letter agreement with Kootenay Gold Inc. (“Kootenay”), whereby the Company and Kootenay have agreed to cooperate in a joint bid to acquire a 100% interest in Sterling and its assets, and provide for financing of Sterling’s continuing operations and development (Note 17).

49

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Contact Lake Property – Contact Lake, Northwest Territories

During the year ended 30 November 2005, the Company acquired a 100% undivided right, title and interest, subject to a1% net smelter return royalty (“NSR”), infive mineral claims, totaling 1,801.82 hectares (“ha”) (4,450.50 acres) located five miles southeast of Port Radium on Great Bear Lake, Northwest Territories (“NT”), for cash payments of $60,000 (paid) and 60,000 common shares (issued and valued at $72,000) of the Company (Note 15).  The Company may purchase the NSR for a one-time payment of $1,000,000.  The Company completed additional staking in the area in order to increase the project size to sixteen contiguous claims, totalling 10,563.76 ha (26,103.52 acres).  Collectively the properties are known as the Contact Lake Mineral Claims.

Expenditures related to the Contact Lake Mineral Claims can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Amortization		272,162		65,497		122,091		84,574
Assaying and geochemical		412,906		1,097		93,816		126,745
Camp costs and field supplies		1,549,817		120,468		141,074		499,322
Claim maintenance and permitting		87,787		260		4,544		13,452
Community relations and government		215,000		19,153		70,930		50,603
Drilling		3,318,148		12,304		105,994		1,741,790
Equipment rental		200,831		-		3,750		75,693
Geology and engineering		665,122		28,682		227,902		171,399
Geophysics		16,643		-		16,643		-
Orthophotography		199,451		-		-		103,306
Staking and line cutting		339,160		6,500		-		-
Surveying		1,473,493		-		-		336,349
Transportation and fuel		4,938,609		212,326		289,276		1,357,400
Wages, consulting and management fees		4,533,670		626,682		771,526		1,407,434
		18,222,799		1,092,969		1,847,546		5,968,067
Acquisition of mineral property interests		132,000		-		-		-
		18,354,799		1,092,969		1,847,546		5,968,067

50

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Port Radium – Glacier Lake Property, Northwest Territories

During the year ended 30 November 2005, the Company acquired a 100% undivided right, title and interest, subject to a2%NSR, in four mineral claims, totaling 2,520.78 ha (6,229.00 acres) (the “Glacier Lake Mineral Claims”) located one mile east of Port Radium on Great Bear Lake, NT, for cash payments of $30,000 (paid) and 72,000 common shares (issued and valued at $72,000) of the Company (Note 15).  The Company may purchase one-half of the NSR for a one-time payment of $1,000,000.

Expenditures related to the Glacier Lake Mineral Claims can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Amortization		26,894		8,371		10,727		7,796
Assaying and geochemical		197,313		-		54,136		143,177
Camp costs and field supplies		383,489		-		1,178		256,581
Claim maintenance and permitting		19,598		6,227		6,241		6,867
Community relations and government		21,472		-		-		21,472
Drilling		758,681		-		-		758,681
Equipment rental		58,038		-		-		45,643
Geology and engineering		69,879		-		36,206		33,673
Metallurgical studies		62,977		-		-		62,977
Orthophotography		25,522		-		-		25,522
Staking and line cutting		88,335		-		-		88,335
Surveying		17,309		-		-		-
Transportation and fuel		5,029,890		-		344,031		3,754,918
Wages, consulting and management fees		840,723		-		159,905		505,775
		7,600,120		14,598		612,424		5,711,417
Acquisition of mineral property interests		102,000		-		-		-
Recovery of mineral property costs		(603,750)		-		-		(186,651)
		7,098,370		14,598		612,424		5,524,766

51

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Port Radium – Crossfault Lake Property, Northwest Territories

During the year ended 30 November 2005, the Company acquired a 100% undivided right, title and interest, subject to a 2% NSR, in five mineral claims, totalling 1,820.56 ha (4,498.68 acres) (the “Port Radium – Crossfault Lake Mineral Claims”) located north of Port Radium on Great Bear Lake, NT, for cash payments of $60,000 (paid) and 90,000 common shares (issued and valued at $297,000) of the Company (Note 15).  The Company may purchase one-half of the NSR for a one-time payment of $1,000,000.

Expenditures related to the Port Radium – Crossfault Lake Mineral Claims for the year ended 30 November 2009 consists of claim maintenance and permitting of $Nil (2008 - $682, 2007 - $Nil, cumulative - $682), transportation and fuel of $Nil (2008 - $817, 2007 - $Nil, cumulative - $817), wages, consulting and management fees of $Nil (2008 - $16,258, 2007 - $Nil, cumulative - $16,258), acquisition of mineral property interests of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $357,000) and recovery of mineral property costs of $Nil (2008 - $12,645, 2007 - $Nil, cumulative - $12,645).

Port Radium – Eldorado Property, Northwest Territories

During the year ended 30 November 2005, the Company entered into a lease agreement with South Malartic Exploration Inc. to purchase a 50% undivided right, title and interest in three mineral claims, totalling 106.53 ha (263.13 acres) (the “Eldorado Uranium Mineral Claims”) located at Port Radium on Great Bear Lake, NT, for a cash payment of $20,000 (paid).

Expenditures related to the Eldorado Uranium Mineral Claims for the year ended 30 November 2009 consists of claim maintenance and permitting of $526 (2008 - $Nil, 2007 - $526, cumulative - $1,052) and acquisition of mineral property interests of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $20,000).

North Contact Lake Mineral Claims – Great Bear Lake, Northwest Territories

During the year ended 30 November 2006, the Company acquired a 100% right, interest and title, subject to a 2% NSR, in eleven mineral claims (the “North Contact Lake Mineral Claims”), for cash payments of $75,000 and the issue of 50,000 common shares of the Company valued at $182,500 (Note 15).  The Company may purchase one-half of the NSR for a one-time payment of $1,000,000.  The North Contact Lake Mineral Claims are situated north of Contact Lake on Great Bear Lake approximately 680 km (423 miles) north of Yellowknife, NT, totaling 6,305.22 ha (15,580.48 acres).

Expenditures related to the North Contact Lake Mineral Claims for the year ended 30 November 2009 consists of camp costs and field supplies of $Nil (2008 - $1,034, 2007 - $Nil, cumulative - $1,034), drilling of $Nil (2008 - $353,182, 2007 - $Nil, cumulative - $353,182), transportation and fuel of $Nil (2008 - $9,606, 2007 - $Nil, cumulative - $9,606), wages, consulting and management fees of $Nil (2008 - $13,012, 2007 - $Nil, cumulative - $13,012) and acquisition of mineral property interests of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $257,500).

52

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Eldorado South IOCG & Uranium Project, Northwest Territories

During the year ended 30 November 2007, the Company staked sixteen claims (the “Eldorado South Uranium Mineral Claims”) and four additional claims (the “Eldorado West Uranium Mineral Claims”) located ten miles south of the Eldorado uranium mine on the east side of Great Bear Lake, NT and 680 km (423 miles) north of the city of Yellowknife, NT, collectively known as the Eldorado South Uranium Project.

During the year ended 30 November 2009, fourteen claims were allowed to lapse.  The Eldorado South Uranium Project now consists of sixteen mineral claims totaling 11,281.85 ha (27,878.62 acres).

Expenditures related to the Eldorado South Uranium Project can be summarized as follows:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
Exploration operating expenses
Camp costs and field supplies		27,967		-		8,989		18,978
Claim maintenance and permitting		17,153		10,762		916		5,475
Community relations and government		3,555		-		3,555		-
Equipment rental		2,623		-		1,778		845
Geology and engineering		301,883		71,193		118,858		111,832
Geophysics		3,000		-		-		3,000
Staking and line cutting		415,099		71,500		237,944		105,655
Transportation and fuel		176,011		2,230		171,561		2,220
Wages, consulting and management fees		278,323		48,942		210,381		19,000
		1,225,614		204,627		753,982		267,005

53

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Longtom Property – Longtom Lake, Northwest Territories

The Company holds a 50% undivided interest subject to a 2% NSR, totaling 361.38 ha (892.61 acres), in the Longtom Property (the “Longtom Property”) located about 350 km northwest of Yellowknife, NT.  The Longtom Property is registered 100% in the name of the Company.

The Company has the right to acquire the remaining 50% interest in the Longtom Property (the “Longtom Option”) for $315,000 payable either in cash or50% ($157,500) in cash and 50% in common shares of the Company.  The deemed price of the Company’s shares issued on the exercise of the Longtom Option would be the average TSX Venture Exchange closing market price of its common shares on the five trading days immediately preceding and the five trading days immediately following the date that the option is exercised. The Company is compelled to exercise the Longtom Option: 1) within 90 days from the date it has incurred $5,000,000 in exploration expenditures on the Longtom Property; or 2) at the date the Company advises the optionor in writing that it will complete the Longtom Option to purchase the remaining 50% interest in the Longtom Property (Note 13).

The Company has the right to enter into joint venture or option agreements related to the Longtom Property with third parties prior to the exercise of the Longtom Option.

In 2003, the Company entered into a Letter of Intent (the “Letter of Intent”) with Fronteer Development Group Inc. (“Fronteer”).  On 26 October 2006, Fronteer earned its 75% interest in the Longtom Property by paying the Company $15,000 cash (received) and spending an aggregate of $500,000 (incurred) on exploration expenditures over three years.

Expenditures related to the Longtom Property for the year ended 30 November 2009 consists of assaying and geochemical of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $335), camp costs and field supplies of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $147,024), claim maintenance and permitting of $893 (2008 - $Nil, 2007 - $893, cumulative - $2,679), drilling of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $210,057), geology and engineering of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $418,998), transportation and fuel of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $322,529), wages, consulting and management fees of $Nil (2008 - $10,626, 2007 - $Nil, cumulative - $200,899), recovery of mineral property costs of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $52,497), sale of mineral property interests of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $55,000) and write-off of mineral properties and related costs of $Nil (2008 - $Nil, 2007 - - $Nil, cumulative - $220,552).

54

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Longtom Property (Target 1) – Longtom Lake, Northwest Territories

During the year ended 30 November 2003, the Company acquired a 50% interest in a 710.67 ha (1,756.10 acres) mineral property located in the Longtom Lake area of the Northwest Territories for cash proceeds of $15,000 and 40,000 common shares of the Company valued at $56,000 (Note 15).

During the year ended 30 November 2009, the Company has not done any work recently and has not budgeted for any in 2010.

Expenditures related to the Longtom Property Target 1 for the year ended 30 November 2009 consists of geology and engineering of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $2,103), wages, consulting and management fees of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $21,648), acquisition of mineral property interests of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $71,000) and recovery of mineral property costs of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $3,530).

MacInnis Lake Property – MacInnis Lake, Northwest Territories

During the year ended 30 November 2005, the Company acquired a 100% interest, subject to a 2% NSR, in twelve mineral claims (the “MacInnis Lake Uranium Claims”) and three additional mineral claims (the “Kult Claims”) located approximately 275 km southeast of Yellowknife, NT, collectively known as the MacInnis Lake Uranium Project.  The acquisition was completed for cash proceeds of $100,000 (paid) and 130,000 common shares (issued and valued at $158,000) of the Company (Note 15).

The MacInnis Lake Uranium Project now consists of fifteen mineral claims totaling 10,701.16 ha (26,431.87 acres).

The Company entered into an option agreement dated 1 April 2005, as amended 11 April 2006 and again on 29 September 2008 with Max Resource Corp. (“Max Resource”), whereby Max Resource can earn an interest, subject to a 2% NSR, in the MacInnis Lake Uranium Project. The terms of the option agreement called for Max Resource to make payments as follows:

i.

Cash payments totalling $30,000 (received);

ii.

The issuance of 200,000 common shares of Max Resource (received and sold for proceeds of $198,466 (Note 15));

iii.

Work commitments totalling $2,000,000 ($250,000 on or before 31 October 2008 (incurred); $750,000 on or before 31 October 2009 ($234,307 incurred); $500,000 on or before 31 October 2010; and $500,000 on or before 31 October 2011).

The Company was unable to obtain exploration permits from regulatory authorities in the Northwest Territories due to outstanding and ongoing First Nations land claim issues.  Max Resource terminated the agreement on 18 January 2010 (Note 17).

55

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Expenditures related to the MacInnis Lake Property for the year ended 30 November 2009 consists of claim maintenance and permitting of $Nil (2008 - $Nil, 2007 - $2,670, cumulative - $2,670), geology and engineering of $Nil (2008 - $6,438, 2007 - $832, cumulative - $19,446), surveying of $Nil (2008 - $Nil, 2007 - $110,092, cumulative - $323,117), transportation and fuel of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $8,734), wages, consulting and management fees of $Nil (2008 - $Nil, 2007 - $3,925, cumulative - $74,951), acquisition of mineral property interests of $Nil (2008 - $Nil, 2007 - $Nil, cumulative - $258,000) and recovery of mineral property costs of $Nil (2008 - $Nil, 2007 - $130,792, cumulative - $480,540).

Recovery of Mineral Property Costs

Recovery of Mineral Property Costs consists mainly of amounts paid to the Company under existing option agreements and camp rental fees paid to the Company:

	Cumulative amounts from inception to 30 November 2009		For the year ended 30 November 2009		For the year ended 30 November 2008		For the year ended 30 November 2007
		$		$		$		$
General cash payments related to mineral property option agreements		45,000		-		-		-
Cash reimbursements of mineral property expenditures related to mineral properties		1,032,095		-		12,645		317,443
Shares received – 200,000 common shares of Max Resource Corp. (Note 15)		82,000		-		-		-
		1,159,095		-		12,645		317,443

5.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

Included in the accounts payable and accrued liabilities at 30 November 2009 is $639,893 (2008 - $685,941, 2007 - $556,200) related to Part XII.6 tax on funds raised by the Company on flow-through share offerings (Note 11).

Included in the accounts payable and accrued liabilities at 30 November 2009 is $739,687 (2008 - $739,687 2007 - $Nil) related to the estimated costs to the Company for amending its flow-through filings (Notes 11, 13 and 15).

56

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

6.

Related Parties Transactions

During the year ended 30 November 2009, the Company entered into the following transactions with related parties:

i.

Paid or accrued secretarial fees of $15,000 (2008 - $15,000, 2007 - $8,500) to an individual related to a director of the Company.  

ii.

Paid or accrued accounting fees of $59,001 (2008 – $Nil, 2007 - $Nil) to a company controlled by the chief financial officer of the Company.  

iii.

Paid or accrued accounting fees of $13,875 (2008 - $Nil, 2007 - $Nil) to a company controlled by the former chief financial officer of the Company.

iv.

Paid or accrued management fees of $50,000 (2008 - $50,000, 2007 - $117,500) to a company controlled by a director of the Company.  

v.

Paid or accrued management fees of $25,000 (2008 - $Nil, 2007 - $Nil) to a company controlled by a director of the Company.

vi.

Paid or accrued directors fees of $27,000 (2008 - $32,000, 2007 - $9,000) to a company controlled by a director of the Company.

vii.

Paid or accrued directors fees of $Nil (2008 - $25,000, 2007 - $14,000) to a company controlled by a director of the Company.  

viii.

Paid or accrued directors fees of $17,000 (2008 - $3,000, 2007 - $Nil) to a director of the Company.

ix.

Paid or accrued directors fees of $10,000 (2008 - $Nil, 2007 - $Nil) to a director of the Company.

x.

Paid or accrued salaries and benefits of $479,878 (2008 - $575,269, 2007 - $397,982) to employees who are directors and/or officers of the Company.

The amounts charged to the Company for the services provided have been determined by negotiation among the parties and in certain cases, are covered by signed agreements.  It is the position of the management of the Company that these transactions were in the normal course of operations and were measured at the exchange value which represented the amount of consideration established and agreed to by the related parties.

57

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

1.

Share Capital

Authorized share capital consists of an unlimited number of voting common shares.  Authorized share capital also consists of an unlimited number of preferred shares, to be issued in series, with the directors being authorized to determine the designation, rights, privileges, restrictions and conditions attached to all of the preferred shares.

On 10 March 2010, the TSX Venture Exchange approved the share consolidation on a one new common share without par value for every five existing common shares without par value basis.  All common shares and per share amounts have been restated to give retroactive effect to the share consolidation (Notes 1 and 17).

Share capital transactions of the Company during the year ended 30 November 2009 and 2008 are summarized as follows:

i.

On 4 November 2009, the Company issued 100,000 stock options to consultants of the Company with an exercise price of $1.00 per share.  The 100,000 options vest in four equal quarters starting 4 March 2010.  All options in this series expire 3 November 2014 (Note 12).

ii.

On 3 July 2009, the Company issued 790,000 stock options to directors, officers, employees and consultants of the Company with an exercise price of $1.00 per share.  A total of 720,000 options vested immediately upon issuance and the remaining 70,000 options vest in four equal quarters starting 3 November 2009.  All options in this series expire 2 July 2014 (Note 12).

iii.

On 12 December 2008, the Company issued 466,667 units at a price of $0.75 per unit for a total proceeds of $350,000. Each unit consists of one flow-through common share and one non flow-through share purchase warrant.  Each whole share purchase warrant entitles the holder to purchase an additional common share at a price of $0.90 up to 12 December 2010.

iv.

During the year ended 30 November 2009, a total of 480,000 stock options with an exercise price of $3.00 per share expired.  As at 30 November 2009, no stock options in this series remain outstanding.

v.

During the year ended 30 November 2009, a total of 65,000 stock options with an exercise price of $4.25 per share were cancelled.  As at 30 November 2009, a total of 575,000 stock options in this series remain outstanding.

vi.

During the year ended 30 November 2009, a total of 125,000 stock options with an exercise price of $1.75 per share were cancelled.  As at 30 November 2009, a total of 555,000 stock options in this series remain outstanding.

vii.

During the year ended 30 November 2008, the Company issued 30,000 common shares valued at a price of $1.00 per share upon the exercise of previously outstanding stock options.  As at 30 November 2008, a total of 10,000 stock options expired.  As at 30 November 2008, no stock options in this series remain outstanding.

viii.

During the year ended 30 November 2008, a total of 10,000 stock options with an exercise price of $4.25 per share expired.  As at 30 November 2008, a total of 640,000 stock options in this series remain outstanding.

ix.

During the year ended 30 November 2008, a total of 638,000 share purchase warrants valued at a price of $10.75 per share expired.  As at 30 November 2008, no share purchase warrants in this series remain outstanding.

x.

During the year ended 30 November 2008, a total of 101,659 agent compensation warrants valued at a price of $11.00 per share expired.  As at 30 November 2008, no agent compensation warrants in this series remain outstanding.

xi.

During the year ended 30 November 2008, the Company issued 700,000 stock options to directors, officers, employees and consultants of the Company.  Of the options issued, 680,000 were issued with an exercise price of $1.75 and the remaining 20,000 were issued with an exercise price of $5.00.  A total of 605,000 options vested immediately upon issuance and the remaining 95,000 options vest in four equal quarters starting 1 December 2008.  All options in this series expire 31 July 2011 (Note 11).

xii.

During the year ended 30 November 2008, the Company was required to amend its flow-through filings related to the flow-through shares issued and renounced in 2006 to reflect a reduction in the amount renounced of approximately $2,000,000. The Company has accrued a charge against capital stock and recorded a payable amount of $739,687 (2007 - $Nil, 2006 - $Nil) as the estimated costs to the Company for amending its flow-through filings (Notes 8, 12 and 13).

Stock options

The Company grants share options in accordance with the policies of the TSX Venture Exchange.  Under the general guidelines of the TSX Venture Exchange, the Company may reserve up to 10% of its issued and outstanding shares for its employees, directors or consultants to purchase shares of the Company.  The exercise price for options granted under the plan will not be less than the market price of the common shares less applicable discounts permitted by the TSX Venture Exchange and options will be exercisable for a term of up to five years, subject to earlier termination in the event of death or the cessation of services.

The following incentive stock options were outstanding at 30 November 2009:

	Exercise price	Number of options	Remaining contractual life (years)
	$
Options	4.25	575,000	0.94
	1.75	555,000	1.67
	5.00	20,000	1.67
	1.00	790,000	4.58
	1.00	100,000	4.93
		2,040,000

58

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

The following is a summary of stock option activities during the years ended 30 November 2009 and 2008:

	Number of options	Weighted average exercise price
		$
Outstanding and exercisable at 1 December 2007	1,170,000	3.65
Granted	700,000	1.85
Exercised	(30,000)	1.00
Expired	(20,000)	2.65
Outstanding and exercisable at 30 November 2008	1,820,000	3.00
Weighted average fair value of options granted during the year		0.90

	Number of options	Weighted average exercise price
		$
Outstanding and exercisable at 1 December 2008	1,820,000	3.00
Granted	890,000	1.00
Exercised	-	-
Expired / Cancelled	(670,000)	2.90
Outstanding and exercisable at 30 November 2009	2,040,000	2.15
Weighted average fair value of options granted during the year		0.70

Warrants and agent compensation warrants

The following share purchase warrants were outstanding at 30 November 2009:

	Exercise price	Number of warrants	Remaining contractual life (years)
	$
Warrants	0.90	466,667	1.04

59

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

The following is a summary of warrant activities during the years ended 30 November 2009 and 2008:

	Number of warrants	Weighted average exercise price
		$
Outstanding and exercisable at 1 December 2007	739,659	10.80
Granted	-	-
Exercised	-	-
Expired	(739,659)	10.80
Outstanding and exercisable at 30 November 2008	-	-
Weighted average fair value of warrants granted during the year		-

	Number of warrants	Weighted average exercise price
		$
Outstanding and exercisable at 1 December 2008	-	-
Granted	466,667	0.90
Exercised	-	-
Expired	-	-
Outstanding and exercisable at 30 November 2009	466,667	0.90
Weighted average fair value of warrants granted during the year		0.28

The weighted average grant date fair value of warrants issued during the year ended 30 November 2009, amounted to $0.28 per warrant (2008 - $Nil per warrant).  The fair value of each warrant granted was determined using the Black-Scholes option pricing model and the following weighted average assumptions:

	2009	2008	2007
Risk free interest rate	0.78%	-	-
Expected life	2.0 years	-	-
Annualized volatility	108.25%	-	-
Expected dividends	-	-	-

60

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

1.

Stock-Based Compensation

During the year ended 30 November 2009, the Company granted 100,000 stock options to consultants of the Company to purchase common shares of the Company for proceeds of $1.00 per common share expiring 3 November 2014.  A total of 100,000 of these stock options vest on the following dates (Note 11):

Vesting Date	Number of options
4 March 2010	25,000
4 June 2010	25,000
4 September 2010	25,000
4 November 2010	25,000
	100,000

The fair value of the options which vested in the period, estimated using the Black-Scholes, model will be expensed as stock-based compensation in the statement of operations with a corresponding amount recorded as contributed surplus in shareholders’ equity.

During the year ended 30 November 2009, the Company granted 790,000 stock options to employees, directors and consultants of the Company to purchase common shares of the Company for proceeds of $1.00 per common share expiring 2 July 2014.  A total of 720,000 of these stock options vested on the grant date of 3 July 2009.  A total of 70,000 of these stock options granted to consultants of the Company vest on the following dates (Note 11):

Vesting Date	Number of options
3 November 2009	17,500
3 February 2010	17,500
3 May 2010	17,500
3 August 2010	17,500
	70,000

The fair value of the portion of the options which vested in the year, estimated using the Black-Scholes model, was $508,434.  This amount has been expensed as stock-based compensation in the statement of operations with a corresponding amount recorded as contributed surplus in shareholders’ equity.  

During the year ended 30 November 2008, the Company granted 700,000 stock options to employees, directors and consultants of the Company.  A total of 680,000 of the stock options entitle holders to purchase common shares of the Company for proceeds of $1.75 per common share expiring 31 July 2011 and the remaining 20,000 options entitle holders to purchase common shares of the Company for proceeds of $5.00 per common share expiring 31 July 2011.  A total of 605,000 of these stock options vested on the grant date of 1 August 2008.  A total of 95,000 of these stock options vest on the following dates (Note 11):

61

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Vesting Date	Number of options
1 December 2008	23,750
1 March 2009	23,750
1 June 2009	23,750
1 September 2009	23,750
	95,000

The fair value of the portion of the options which vested in the year, estimated using the Black-Scholes model, was $30,725 (30 November 2008 - $548,070).  This amount has been expensed as stock-based compensation in the statement of operations with a corresponding amount recorded as contributed surplus in shareholders’ equity.  

The following assumptions were used for the Black-Scholes valuation of stock options granted and vested during the year:

	2009	2008	2007
Risk free interest rate	2.29%	2.86%	4.46%
Expected life	4.7 years	3.0 years	3.0 years
Annualized volatility	107.04%	100.99%	91.34%
Expected dividends	-	-	-

Effective 10 October 2008, the Board of Directors has approved and adopted a shareholders rights plan (the “Rights Plan”) subject to shareholder and regulatory approval which was received on 3 February 2009.  The Rights Plan extends the minimum expiry period for a takeover bid to 60 days and requires a bid to remain open for an additional 10 business days after an offeror publicly announces it has received tenders for more than 50% of the Company’s voting shares.  The principle purpose of the Rights Plan is to ensure that all shareholders will be treated equally and fairly in the event of a bid for control of the Company through an acquisition of its common shares.  It is designed to provide the Company shareholders with sufficient time to properly consider a takeover bid without undue time constraints.  In addition, it will provide the board with additional time for review and consideration of unsolicit ed takeover bids, and if necessary, for the consideration of alternatives.

62

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

2.

Commitments and Other Obligations

i.

The Company has outstanding and future commitments under mineral property option agreements to pay cash and issue common shares of the Company (Note 8).

ii.

On 1 April 2006, the Company entered into a five year lease for premises with the following lease payments to the expiration of the lease on 1 March 2011:

	i.	$
	ii.
30 November 2010	iii.	42,900
30 November 2011  (expiry in 1 March 2011)	iv.	10,725
	v.
Total	vi.	53,625

i.

The Company has certain obligations related to the amendments of its flow-through filings (Notes 9, 11 and 15).

1.

Income Taxes

Provision for income taxes

The provision for (recovery of) income taxes differs from the amount that would have resulted by applying Canadian federal and provincial statutory tax rates of 30.08% (2008 – 31.00%, 2007 – 32.12%).

	2009	2008	2007
	$	$	$
Loss before income taxes	(3,469,442)	(6,489,209)	(15,039,888)
Expected income tax recovery	1,043,724	2,011,655	4,830,812
Adjustments to benefits resulting from:
Stock-based compensation	(162,197)	(169,902)	(632,773)
Share issue costs	6,467	-	-
Other	39,781	(113,196)	(142,492)
Change in enacted rates	(446,140)	(31,083)	(45,611)
Change in valuation allowance	(377,045)	(1,697,474)	3,113,702
Future income tax recovery	104,590	-	7,123,638

63

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Future tax balances

The tax effects of temporary differences that give rise to future income tax assets and liabilities are as follows:

	2009	2008	2007
	$	$	$
Non-capital loss carryforwards	1,328,038	761,624	1,530,636
Plant, property and equipment	19,979	(6,955)	48,972
Mineral properties	1,548,106	1,661,935	(980,910)
Share issue costs	69,811	172,286	292,718
	2,965,934	2,588,890	891,416
Less: valuation allowance	(2,965,934)	(2,588,890)	(891,416)
Future tax assets (liabilities)	-	-	-

The Company has non-capital losses for Canadian tax purposes of approximately $4,964,628 available to offset against taxable income in future years, which, if unutilized, will expire as follows:

Year	Amount
2026	672,083
2027	-
2028	2,495,893
2029	1,796,652
	4,964,628

Additionally, the Company has approximately $5,787,312 of Canadian development expenses and Canadian exploration expenditures as at 30 November 2009 which, under certain circumstances, may be utilized to reduce taxable income of future years.  The potential income tax benefits of these losses have been offset by a full valuation allowance.

During the year ended 30 November 2009, the Company renounced the tax benefits of a total of 466,667 flow-through common shares (2008 - Nil, 2007 - 11,880,000) resulting in an income tax recovery of $104,590 (2007 - $Nil, 2007 - $7,123,638).  The flow-through agreements require the Company to renounce certain tax deductions for Canadian exploration expenditures incurred on the Company’s mineral properties to the flow-through participants.

64

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

2.

Supplemental Disclosures with Respect to Cash Flows

Cash and cash equivalents comprise the following:

	2009	2008
	$	$
Cash on hand and balance in bank	3,378,568	734,242
Short term deposits(i)	10,000,000	16,633,334
Trust account(ii)	1,321,750	-
	14,700,318	17,367,576

(i)

Short term deposits include investments that are cashable after 30 days without penalty, with interest rate guarantees extending up to one year.

(ii)

$1,321,750 (US$ 1,250,000) held in trust with US legal counsel as part of the Sterling acquisition.

During the year ended 30 November 2008, the Company has accrued a charge against capital stock and recorded a payable amount of $739,687 as the estimated costs to the Company for amending its flow-through filings (Notes 9, 11 and 13).  

During the year ended 30 November 2006, the Company issued 40,045 common shares valued at $252,751 and 407,384 warrants valued at $1,015,191 for agent services rendered.

During the year ended 30 November 2006, the Company issued 50,000 common shares valued at $182,500 for the acquisition of the mineral property interests (Note 8).

During the year ended 30 November 2005, the Company issued 262,715 common shares valued at $303,074 and 530,357 warrants valued at $1,027,318 for agent services rendered.

During the year ended 30 November 2005, the Company issued 352,000 common shares valued at $599,000 for the acquisition of the mineral property interests (Note 8).

During the year ended 30 November 2004, the Company issued 44,166 common shares valued at $49,153 and warrants valued at $140,214 for agent services rendered.

During the year ended 30 November 2004, the Company issued 30,000 common shares valued at $30,000 for the acquisition of the mineral property interests (Note 8).

During the year ended 30 November 2004, the Company received 200,000 common shares of Max Resource Corp. valued at $82,000 as payment under a mineral property option agreement (Note 8).

65

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

During the year ended 30 November 2003, the Company issued 20,000 common shares valued at $23,000 for financing fees and 140,000 warrants valued at $58,478 for agent services rendered.

During the year ended 30 November 2003, the Company issued 90,000 common shares valued at $112,500 for the acquisition of the mineral property interests (Note 8).

On 21 January 2003, the Company sold its interest in the Harrison Lake Property to Candorado for proceeds of 40,000 shares of Candorado valued at $16,565.  These shares were sold for proceeds of $16,565 on the same date.

During the year ended 30 November 2000, the Company issued 26,767 common shares valued at $66,918 for the settlement of debt.

3.

Segmented Information

The Company operates solely in Canada in one reporting segment, mineral production and related activities.

4.

Subsequent Events

The following subsequent events occured from the date of the year ended 30 November 2009 to the date the annual financial statements were available to be issued on 29 March 2010:

i.  

On 18 January 2010, Max Resource Corp. terminated the MacInnis Lake Property option agreement (Note 8).

ii.

On 8 March 2010, the Company entered into a letter agreement with Kootenay Gold Inc. (“Kootenay”), whereby the Company and Kootenay have agreed to cooperate in a joint bid to acquire a 100% interest in Sterling and its assets, and provide for financing of Sterling’s continuing operations and development (Note 8).

iii.

On 10 March 2010, the TSX Venture Exchange approved the share consolidation ratio on a one new common share without par value for every five existing common shares without par value basis.  All common shares and per share amounts have been restated to give retroactive effect to the share consolidation (Notes 1 and 11).

66

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

18.

Capital Disclosure

The capital structure of the Company consists of equity attributable to common shareholders, comprising of issued capital, contributed surplus, warrants and deficit.  The Company’s objectives when managing capital are to: (i) preserve capital, (ii) obtain the best available net return, and (iii) maintain liquidity.

The Company manages the capital structure and makes adjustments to it in light of changes in economic condition and the risk characteristics of the underlying assets.  To maintain or adjust the capital structure, the Company may attempt to issue new shares, issue new debt, acquire or dispose of assets or adjust the amount of cash and cash equivalents and investments.

The Company’s policy is to invest its excess cash in highly liquid, fully guaranteed, bank sponsored instruments.

19.

Reconciliation of Canadian and United States Generally Accepted Accounting Principles

The financial statements of the Company have been prepared in accordance with Canadian GAAP, which differ in certain material respects from United States GAAP.  Had the Company prepared the financial statements in accordance with United States GAAP, certain items on the balance sheets and statements of operations, deficit and cash flows would have been reported as follows:

	30 November 2009	30 November 2008	30 November 2007
	$	$	$
Statement of loss
Net loss for the year based on Canadian GAAP	(3,364,852)	(6,489,209)	(7,916,250)
Income tax expense on current year United States GAAP adjustments – Flow-through shares (Note 19(i))	(34,590)	-	(6,868,438)
Net loss for the year based on United States GAAP	(3,399,442)	(6,489,209)	(14,784,688)
Other comprehensive income (loss) (Note 19(iv))	-	-	(86,000)
Comprehensive loss for the year based on United States GAAP	(3,399,442)	(6,489,209)	(14,870,688)
Loss per share, basic and diluted	(0.159)	(0.310)	(0.734)
Comprehensive loss per share, basic and diluted	(0.159)	(0.310)	(0.738)

67

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

	30 November 2009	30 November 2008	30 November 2007
	$	$	$
Shareholders’ equity
Canadian GAAP	13,505,838	16,107,618	22,758,444
Other comprehensive income (Note 19(iv))	-	-	(86,000)
United States GAAP	13,505,838	16,107,618	22,672,444

Accumulated other comprehensive income
Canadian GAAP	-	-	-
Unrealized (realized) gain on available-for-sale securities	-	-	(86,000)
United States GAAP	-	-	(86,000)

Balance sheet difference

	30 November 2009	30 November 2008
	$	$
Share capital and contributed surplus
Canadian GAAP	50,719,869	49,956,797
Flow-through shares (Note 19(i))	9,407,456	9,372,866
Stock-based compensation (Note 19(ii))	189,176	189,176
United States GAAP	60,316,501	59,518,839
Deficit
Canadian GAAP	(37,214,031)	(33,849,179)
Flow-through shares (Note 19(i))	(9,407,456)	(9,372,866)
Stock-based compensation (Note 19(ii))	(189,176)	(189,176)
United States GAAP	(46,810,663)	(43,411,221)

i.

Flow-through shares

Flow-through shares are typically issued by Canadian Exploration Stage Companies.  The flow-through shares permit the investor to claim deductions for tax purposes related to expenditures incurred by the issuer.  The issuer explicitly renounces the right to claim these deductions.  The investor’s tax base related to the flow-through shares is reduced by the amount of deductions taken.

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Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Under Canadian GAAP, when the flow-through shares are issued they are recorded at their face value.  When the entity acquires assets, the carrying value of the assets may exceed the tax basis as a result of the enterprise renouncing the related tax deductions to the investors.  The tax effect of this temporary difference is recorded as a reduction in share capital and an increase in deferred tax liability.

Under United States GAAP, when the flow-through shares are issued, the proceeds related to the issuance of the flow through shares are allocated between the offering of shares and the sale of tax benefits.  A balance of the proceeds equal to the excess of the price paid for the flow-through shares by the investor over the quoted market price is recorded as a liability.  The remaining proceeds are recognized as an increase in share capital.  The liability is reversed when the tax benefits are renounced to the investor and a deferred tax liability is recognized at that time.  Income tax expense is the difference between the amount of the deferred tax liability and the liability recognized on issuance.  

Under both Canadian and United States GAAP, to the extent that the Company has available tax pools for which a full valuation allowance has been provided, any deferred tax liability is recognized in earnings as a reduction in the valuation allowance at the time of renunciation of the flow-through shares.  

During the year ended 30 November 2006, the Company issued 1,100,000 and 1,276,000 flow-through common shares for total proceeds of $10,175,000 and $12,122,000, respectively.  The excess of the price paid for the shares over the quoted market price was $255,200.  All of these amounts were renounced to the respective investors during the year ended 30 November 2007.

During the year ended 30 November 2009, the Company issued 466,667 flow-through common shares for total proceeds of $350,000.  The excess of the price paid for the shares over the quoted market price was $70,000.  All of these amounts were renounced to the respective investors during the year ended 30 November 2009.

During the year ended 30 November 2009, under Canadian GAAP, the Company recorded a reduction in share capital and corresponding increase in deferred tax liability of $104,590 (2008 - $Nil, 2007 - $7,123,638).  All deferred tax liabilities were recognized in earnings as a reduction in the valuation allowance at the time of renunciation of the flow-through shares.  

During the year ended 30 November 2009, under United States GAAP, the Company recorded an increase in liability of $70,000 related to the excess of the price paid for the flow-through shares by the investor over the quoted market price (2008 - $Nil, 2007 - $Nil) and the remaining proceeds of $280,000 were recognized as an increase in share capital (2008 - $Nil, 2007 - $Nil).  

Upon renunciation during the year ended 30 November 2009, the Company reversed the liability of $70,000 (2008 - $Nil, 2007 - $255,200) and recorded an increase in deferred tax liability of $104,590 (2008 - $Nil, 2006 - $7,123,638).  All deferred tax liabilities were recognized in earnings as a reduction in the valuation allowance at the time of renunciation of the flow-through shares.  This resulted in an income tax expense of $34,590 for the year ended 30 November 2009 (2008 - $Nil, 2007 - $6,868,438).

69

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

The net effect to report net loss for the year ended 30 November 2009 under United States GAAP rather than Canadian GAAP is to increase the net loss as reported in Canadian GAAP by $34,590 (2008 - $Nil, 2007 - $6,868,438).

The net effect to report share capital for the year ended 30 November 2009 under United States GAAP rather than Canadian GAAP is to increase the share capital as reported in Canadian GAAP by $9,407,456 (2008 - $9,372,866, 2007 - $9,372,866).  Deficit is also increased by this amount under United States GAAP.

ii.

Stock-based compensation

On 1 December 2006, the Company adopted Accounting Standards Codification (the “Codification” or “ASC”) 718, “Compensation – Stock Compensation”, which establishes accounting for equity instruments exchanged for employee services.  Under the provisions of ASC 718, stock-based compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the employees’ requisite service period (generally the vesting period of the equity grant).  The Company adopted ASC 718 using the modified prospective method, which requires the Company to record compensation expense over the vesting period for all awards granted after the date of adoption.  Adoption of ASC 718 does not change the way the Company accounts for share-based payments to non-employees, with guidance provided by ASC 505-50, “Equity-Base d Payments to Non-Employees”.  As the Company had previously applied the fair value method of accounting for stock-based compensation under Canadian GAAP since 1 December 2002, the adoption of ASC 718 did not result in any significant differences between Canadian and United States GAAP with respect to stock-based compensation expense in 2009.  The Company is required to estimate forfeitures at the date of grant under United States GAAP, whereas Canadian GAAP requires that forfeitures are accounted for when they occur.  They were no material United States and Canadian GAAP differences attributable to forfeitures.  The Company uses the Black-Scholes option pricing model to value its stock options as described in Notes 3 and 12.

Prior to 1 December 2002, the Company accounted for stock options under Canadian GAAP as capital transactions when the options were recognized.  Effective 1 December 2002, the Company began accounting for stock option expense on a prospective basis under Canadian GAAP following the fair value method of accounting for stock options.  The Company’s reported increase of $189,176 in both share capital and deficit as at 30 November 2009 and 2008 is the result of the difference in accounting for stock options under Canadian GAAP and United States GAAP prior to 1 December 2002.

iii.

Earnings (loss) per share

Under both Canadian and United States GAAP, basic earnings (loss) per share is computed by dividing the earnings (loss) to common shareholders by the weighted average number of shares outstanding during the year.  For Canadian reporting purposes, fully diluted earnings per share is calculated under the assumption that any convertible notes are converted at the date issued, and stock options and warrants are exercised at the date of grant.  

70

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

Under United States GAAP, diluted earnings per share takes into consideration the weighted average number of shares outstanding during the year and the potentially dilutive common shares.  For the years ended 30 November 2009, 2008 and 2007, this calculation proved to be anti-dilutive.

Under United States GAAP, the weighted average number of common shares outstanding excludes any shares that remain in escrow, but may be earned out based on the Company incurring a certain amount of exploration and development expenditures.

The weighted average number of common shares outstanding for calculating basic earnings (loss) per share under United States GAAP for the years ended 30 November 2009, 2008 and 2007 were 21,388,636, 20,920,782, and 20,147,840, respectively.  The calculation of diluted earnings per share for the years ended 30 November 2009, 2008 and 2007 proved to be anti-dilutive.

iv.

Comprehensive income

ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive income and its components (revenues, expenses, gains, and losses).  ASC 220 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in the financial statements for the Company.  

v.

Mineral property expenditures

For US GAAP purposes, the Company expenses, as incurred, the exploration and development costs relating to unproven mineral properties.  When proven and probable reserves are determined for a property and a feasibility study prepared, then subsequent exploration and development costs of the property would be capitalized.  Under US GAAP mineral property acquisition costs are initially capitalized as tangible assets when purchased and the Company then assesses the carrying costs for impairment.

As of the date of these financial statements, the Company has not established any proven or probable reserves on its mineral properties and has written all mineral property acquisition costs down to $Nil during the year of incurrence and has expensed all mineral property exploration and development costs during the year of incurrence.

Although the Company has taken steps to verify title to mineral properties in which it has an interest, according to the usual industry standards for the stage of exploration of such properties, these procedures do not guarantee the Company’s title.  Such properties may be subject to prior agreements or transfers and title may be affected by undetected defects.

vi.

Accounting for impairment of long-lived assets and for long-lived assets to be disposed of

For United States reporting purposes, the Company has adopted ASC 360-10-35, “Impairment or Disposal of Long-Lived Assets”.  In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future and undiscounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized.  

71

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

vii.

Concentration of credit risk

The Company is exposed to credit losses in the event of non-performance by the counter-parties to the financial instruments but does not expect any counter-parties to fail to meet their obligations.  The Company generally does not obtain collateral or other security to support financial instruments subject to credit risk, but monitors the credit standing of counter-parties.

viii.

Asset retirement obligations

The Company has adopted ASC 410, “Assets Retirement and Environmental Obligations”, which requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred.  ASC 410 is substantially consistent with CICA Handbook Section 3110,“Asset Retirement Obligations,”which is effective for fiscal years beginning on or after 1 January 2004.  The Company adopted CICA 3110 for Canadian GAAP purposes effective 1 December 2004, and ASC 410 for US GAAP purposes effective 1 December 2004.  

ix.

Costs associated with exit or disposal activities

On 1 December 2003, the Company adopted ASC 420, “Exit or Disposal Cost Obligations”.  This standard requires that a liability associated with an exit or disposal activity be recognized when the liability is incurred rather than at the date of the Company’s commitment to an exit plan.

x.

Accounting for certain financial instruments with characteristics of both liabilities and equity

On 1 December 2003, the Company adopted ASC 480, “Distinguishing Liabilities from Equity”.  This standard requires that certain financial instruments embodying an obligation to transfer assets or to issue equity securities be classified as liabilities.  This standard has no impact on the Company’s financial statements.

xi.

Income taxes

Under United States GAAP, deferred income tax assets and liabilities are revalued for all enacted changes in tax rates.  Under Canadian GAAP, deferred income tax assets and liabilities are revalued for all enacted or substantially enacted changes in tax rates.

xii.

Trading and available-for-sale securities

Under United States GAAP, the Company’s securities are considered to be either trading securities or available-for-sale securities.  Trading securities are recorded at fair value with unrealized gains or losses included in earnings or loss for the year.  Available-for-sale securities are recorded at fair value and unrealized gains or losses are included as part of comprehensive income.  Prior to 1 December 2006, under Canadian GAAP there is no adjustment made for unrealized gains.

72

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

xiii.

Recent pronouncements

In August 2009, the FASB issued Accounting Standards Update (“ASU” or “Update”) No. 2009-05, “Fair Value Measurement and Disclosure (Topic 820) – Measuring Liabilities at Fair Value”, which provides valuation techniques to measure fair value in circumstances in which a quoted price in an active market for the identical liability is not available.  The guidance provided in this update is effective 1 December 2009.  The Company does not expect that the adoption of ASU No. 2009-05 will have a material impact on its financial statements.

From June 2009 to November 2009, the FASB issued various other updates, ASU No. 2009-2 through ASU No. 2009-15, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities.  These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)”.  SFAS No. 167, which amends ASC 810-10, “Consolidation”, prescribes a qualitative model for identifying whether a company has a controlling financial interest in a variable interest entity (“VIE”) and eliminates the quantitative model.  The new model identifies two primary characteristics of a controlling financial interest: (1) provides a company with the power to direct significant activities of the VIE, and (2) obligates a company to absorb losses of and/or provides rights to receive benefits from the VIE.  SFAS 167 requires a company to reassess on an ongoing basis whether it holds a controlling financial interest in a VIE.  A company that holds a controlling financial interest is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE.  SFAS No. 167, which is referenced in ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative.  SFAS No. 167 is effective 1 December 2009.  The Company does not expect that the adoption of SFAS No. 167 will have a material impact on its financial statements.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfer of Financial Assets – an amendment of FASB Statement”.  SFAS No. 166 removes the concept of a qualifying special-purpose entity from ASC 860-10, “Transfers and Servicing”, and removes the exception from applying ASC 810-10, “Consolidation”. This statements also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting.  SFAS No. 166, which is referenced in ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative.  This statement is effective 1 December 2009.  The Company does not expect that the adoption of SFAS No. 166 will have a material impact on its consolidated financial statements.

In May 2009, the FASB issued new guidance for accounting for subsequent events.  The new guidance, which is now part of ASC 855, “Subsequent Events” is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date, but before financial statements are issued or are available to be issued.  It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date.  This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented.  The new guidance was effective on a prospective basis for interim or annual reporting periods ending after 15 June 2009.  The adoption of this guidance did not have a material impact on the Company’s financial statements.

73

Alberta Star Development Corp.

(An Exploration Stage Company)

Notes to Financial Statements

(Expressed in Canadian Dollars)

30 November 2009

In May 2008, the FASB issued new guidance for accounting for convertible debt instruments that may be settled in cash.  The new guidance, which is now part of ASC 470-20, “Debt with Conversion and Other Options” requires the liability and equity components to be separately accounted for in a manner that will reflect the entity’s nonconvertible debt borrowing rate.  The Company will allocate a portion of the proceeds received from the issuance of convertible notes between a liability and equity component by determining the fair value of the liability component using the Company’s nonconvertible debt borrowing rate.  The difference between the proceeds of the notes and the fair value of the liability component will be recorded as a discount on the debt with a corresponding offset to paid-in capital.  The resulting discount will be accreted by recording additional non-cash interest expense over the expected life of the convertible notes using the effective interest rate method.  The new guidance was to be applied retrospectively to all periods presented upon those fiscal years.  The adoption of this guidance did not have a material impact on the Company’s financial statements.

In April 2008, the FASB issued new guidance for determining the useful life of an intangible assets.  The new guidance, which is now part of ASC 350, “Intangibles – Goodwill and Other”.  In determining the useful life of intangible assets, ASC 350 removes the requirement to consider whether an intangible asset can be renewed without substantial cost of material modifications to the existing terms and conditions and, instead, requires an entity to consider its own historical experience in renewing similar arrangements.  ASC 350 also requires expanded disclosure related to the determination of intangible asset useful lives.  The new guidance was effective for financial statements issued for fiscal years beginning after 15 December 2008.  The adoption of this guidance did not have a material impact on the Company’s financial statements.

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SIGNATURE

The registrant hereby certifies that it meets all of the requirements for annual report filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	ALBERTA STAR DEVELOPMENT CORP.
Dated: April 9, 2010	By: /s/ Tim Coupland
	Tim Coupland, President

Endnotes

James Stafford

Chartered Accountants

Suite 350 – 1111 Melville Street

Vancouver, British Columbia

Canada V6E 3V6

Telephone +1 604 669 0711

Facsimile +1 604 669 0754

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